Allegheny Energy (AYE) 8-K Allegheny Energy Reports Second Quarter 2008 Results

Exhibit 99.1

NEWS RELEASE

800 Cabin Hill Drive, Greensburg, PA 15601-1650

Media contact:	Investor contact:
David Neurohr	Max Kuniansky
Director, External Communications	Executive Director, Investor Relations
Phone: (724) 838-6020	and Corporate Communications
Media Hotline: 1-888-233-3583	Phone: (724) 838-6895
E-mail: dneuroh@alleghenyenergy.com	E-mail: mkunian@alleghenyenergy.com

FOR IMMEDIATE RELEASE

Allegheny Energy Reports Second Quarter 2008 Results

GREENSBURG, Pa., July 30, 2008— Allegheny Energy, Inc.(NYSE: AYE)today reported financial results for the three months and six months ended June 30, 2008.

	$ millions				Per share
	2008		2007		2008		2007
Three Months Ended June 30
Consolidated net income-GAAP	$	154.1	$	77.0	$	0.91	$	0.45
Adjusted net income		76.5		77.0		0.45		0.45
Six Months Ended June 30
Consolidated net income-GAAP	$	290.3	$	186.8	$	1.71	$	1.10
Adjusted net income		212.7		186.8		1.25		1.10

Adjusted net income for the second quarter of 2008 excludes unrealized gains of $196.6 million associated with an increase in the fair value of financial transmission rights, partially offset by $56.2 million of unrealized losses related to the mark-to-market effect of power hedges and a $13.1 million unrealized loss associated with hedges of a natural gas transportation contract. All of these unrealized gains and losses relate to effective economic hedges that do not qualify for hedge accounting.There were no adjustments to net income for the second quarter of 2007.

“We benefited from higher market prices and increased generation rates in the second quarter. However, these factors were offset by increased coal costs and lower generation output,” said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. “The outlook for continued growth in 2008 and beyond remains strong. Transmission expansion and the transition to market-based rates will remain key drivers of long-term earnings growth.”

Second Quarter Consolidated Results

Adjusted net income for the second quarter of 2008 decreased by $0.5 million compared with the same period in 2007. Key factors contributing to the results include:

• Adjusted operating revenues decreased by $0.3 million compared to the second quarter of 2007, reflecting decreased generation output, primarily offset by higher market prices for power and higher generation rates.

• Fuel expense increased by $13.9 million due to higher costs for coal partially offset by lower gas costs.

• Purchased power and transmission expense decreased by $9.2 million, primarily due to the expiration of an Ohio power sales contract in place during 2007.

• Deferred energy costs increased expenses by $9.4 million due to fuel and energy cost recovery clauses in West Virginia and Maryland.

• Operations and maintenance expense decreased by $0.6 million due to lower special maintenance expenses at power plants, partially offset by higher storm-related costs.

• Taxes other than income taxes increased by $4.0 million due to a favorable state tax settlement in 2007 and increased gross receipts tax in Pennsylvania.

• Interest expense decreased by $4.5 million due to an increase in capitalized interest and lower interest rates.

• Adjusted income taxes decreased by $12.8 million, largely due to a change in the effective tax rate and lower pre-tax income.

Adjusted EBITDA for the second quarter of 2008 was $244.1 million, a decrease of $19.7 million compared to the same quarter of the prior year. EBITDA and adjusted EBITDA are non-GAAP financial measures. Details on the calculation of these figures and a reconciliation of EBITDA to net income are attached to this release.

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Second Quarter Segment Results

Three Months Ended June 30
($ millions)

	2008		2007
Generation and Marketing:
Net income — GAAP	$	149.6	$	43.6
Adjusted net income		72.0		43.6
Delivery and Services:
Net income — GAAP	$	4.5	$	33.4
Adjusted net income		4.5		33.4

Adjusted net income for the Generation and Marketing segment in the second quarter of 2008 excludes the unrealized gains and losses previously discussed. There were no adjustments in the Delivery and Services segment for the second quarter of 2008, or in either segment for the second quarter of 2007.

Generation and Marketing: Adjusted net income for the quarter increased $28.4 million compared to the same period a year earlier. Key factors contributing to the improved results were increased market prices, higher generation rates, lower O&M expenses and lower interest expense. These benefits were partially offset by lower generation output, higher coal costs and higher income taxes.

Delivery and Services: Adjusted net income for the quarter decreased by $28.9 million compared to the same quarter of the prior year. Key factors contributing to the results were higher costs for purchasing power to serve Virginia customers, decreased rates in West Virginia, and higher storm-related costs. These increased costs were partially offset by revenues from transmission expansion projects and lower income taxes.

Six-Month Segment Results

Six Months Ended June 30
($ millions)

	2008		2007
Generation and Marketing:
Net income — GAAP	$	252.1	$	107.9
Adjusted net income		174.5		107.9
Delivery and Services:
Net income- GAAP	$	38.2	$	78.9
Adjusted net income		38.2		78.9

Adjusted net income for the Generation and Marketing segment in the six-month period of 2008 excludes the unrealized gains and losses previously discussed. There were no adjustments in the Delivery and Services segment for the six-month period of 2008, or in either segment for the six-month period of 2007.

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Reconciliation of Non-GAAP Financial Measures

This news release and the attached tables include non-GAAP financial measures as defined in the Securities and Exchange Commission’s Regulation G. Where noted, we present financial information on an adjusted basis to exclude the effect of certain items as described herein. By presenting adjusted results, management intends to provide investors with a more complete understanding of the core results and underlying trends from which to consider past performance and prospects for the future. We also present EBITDA as an additional measure of our operating performance.

Users of this financial information should consider the types of events and transactions for which adjustments have been made. Neither the adjusted information, nor EBITDA, should be considered in isolation or viewed as substitutes for, or superior to, net income or other data prepared in accordance with GAAP as measures of our operating performance or liquidity. In addition, neither the adjusted information, nor EBITDA, is necessarily comparable to similarly titled measures provided by other companies.

Pursuant to the requirements of Regulation G, we have attached tables that reconcile non-GAAP financial measures, including those presented in this release, to the most directly comparable GAAP measures.

Investor Conference Call

Allegheny Energy will discuss these results in a live Internet broadcast at 8:30 a.m. Eastern Daylight Time on Thursday, July 31, 2008. To listen to the broadcast, visit www.alleghenyenergy.com. A taped replay will be available after the live broadcast.

Allegheny Energy

Headquartered in Greensburg, Pa., Allegheny Energy is an investor-owned electric utility with total annual revenues of over $3 billion and more than 4,000 employees. The company owns and operates generating facilities and delivers low-cost, reliable electric service to 1.6 million customers in Pennsylvania, West Virginia, Maryland and Virginia. For more information, visit our Web site at www.alleghenyenergy.com.

Forward-Looking Statements

In addition to historical information, this release may contain a number of “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Words such as anticipate, expect, project, intend, plan, believe, and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements. These include statements with respect to: rate regulation and the status of retail generation service supply competition in states served by Allegheny Energy’s distribution business, Allegheny Power; financing plans; demand for energy and the cost and availability of raw materials, including coal; provider-of-last-resort and power supply contracts; results of litigation; results of operations; internal controls and procedures; capital expenditures; status and condition of plants and equipment; capacity purchase commitments; regulatory matters; and accounting issues. Forward-looking statements involve estimates, expectations and projections and, as a result, are subject to risks and uncertainties. There can be no assurance that actual results will not materially differ from expectations. Actual results have varied materially and unpredictably from past expectations. Factors that could cause actual results to differ materially include, among others, the following: plant performance and unplanned outages; changes in the price of power and fuel for electric generation; general economic and business conditions; changes in access to capital markets; complications or other factors

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that render it difficult or impossible to obtain necessary lender consents or regulatory authorizations on a timely basis; environmental regulations; the results of regulatory proceedings, including proceedings related to rates; changes in industry capacity, development and other activities by Allegheny Energy’s competitors; changes in the weather and other natural phenomena; changes in customer switching behavior and their resulting effects on existing and future load requirements; changes in the underlying inputs and assumptions, including market conditions used to estimate the fair values of commodity contracts; changes in laws and regulations applicable to Allegheny Energy, its markets or its activities; the loss of any significant customers or suppliers; dependence on other electric transmission and gas transportation systems and their constraints or availability; changes in PJM, including changes to participant rules and tariffs; the effect of accounting policies issued periodically by accounting standard-setting bodies; and the continuing effects of global instability, terrorism and war. Additional risks and uncertainties are identified and discussed in Allegheny Energy’s reports filed with the Securities and Exchange Commission.

-###-

5

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
(In thousands, except per share amounts)	2008		2007			2008			2007
Operating revenues	$	953,500	$	826,482		$	1,828,526		$	1,674,107
Operating expenses:
Fuel		245,252		231,330			495,078			463,555
Purchased power and transmission		97,207		106,407			194,587			199,673
Deferred energy costs, net		1,103		(8,245	)		(9,351	)		(9,700	)
Operations and maintenance		189,931		190,514			358,631			351,058
Depreciation and amortization		68,794		70,726			139,083			142,707
Taxes other than income taxes		52,879		48,868			105,318			104,758
Total operating expenses		655,166		639,600			1,283,346			1,252,051
Operating income		298,334		186,882			545,180			422,056
Other income (expense), net		4,661		6,905			10,870			12,767
Interest expense and preferred dividends of subsidiary		58,704		63,212			117,135			122,741
Income before income taxes and minority interest		244,291		130,575			438,915			312,082
Income tax expense		89,820		52,878			148,113			124,256
Minority interest in net income of subsidiaries		345		653			551			1,040
Net income	$	154,126	$	77,044		$	290,251		$	186,786
Common share data:
Weighted average common shares outstanding:
Basic		168,236		165,794			167,898			165,645
Diluted		170,106		169,469			170,028			169,326
Basic income per common share	$	0.92	$	0.46		$	1.73		$	1.13
Diluted income per common share	$	0.91	$	0.45		$	1.71		$	1.10
Dividends per common share	$	0.15	$	—		$	0.30		$	—

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ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)

	June 30,			December 31,
(In thousands)	2008			2007
ASSETS
Current Assets:
Cash and cash equivalents	$	120,620		$	258,750
Accounts receivable:
Customer		193,616			195,545
Unbilled utility revenue		96,466			110,569
Wholesale and other		125,826			57,626
Allowance for uncollectible accounts		(15,384	)		(14,252	)
Materials and supplies		108,537			103,075
Fuel		117,565			72,506
Deferred income taxes		217,194			286,440
Prepaid taxes		54,682			48,343
Collateral deposits		38,308			59,527
Derivative assets		314,978			29
Restricted funds		85,364			47,501
Regulatory assets		84,872			73,299
Other		39,937			16,001
Total current assets		1,582,581			1,314,959
Property, Plant and Equipment, Net:
Generation		6,055,122			5,992,919
Transmission		1,150,929			1,126,657
Distribution		3,856,454			3,761,438
Other		466,403			452,525
Accumulated depreciation		(4,880,280	)		(4,795,925	)
Subtotal		6,648,628			6,537,614
Construction work in progress		932,035			658,966
Total property, plant and equipment, net		7,580,663			7,196,580
Investments and Other Assets:
Goodwill		367,287			367,287
Restricted funds — Fort Martin scrubber project		255,570			347,023
Investments in unconsolidated affiliates		27,833			27,875
Other		17,535			15,974
Total investments and other assets		668,225			758,159
Deferred Charges:
Regulatory assets		531,843			601,603
Other		65,794			35,288
Total deferred charges		597,637			636,891
Total Assets	$	10,429,106		$	9,906,589

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ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(unaudited)

		June 30,			December 31,
(In thousands, except share amounts)		2008			2007
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-term debt		$	10,000		$	10,000
Long-term debt due within one year			88,845			95,367
Accounts payable			359,652			380,688
Accrued taxes			45,854			83,580
Derivative liabilities			158,452			14,117
Regulatory liabilities			107,645			4,029
Accrued interest			57,231			65,583
Security deposits			41,341			38,976
Other			103,751			95,163
Total current liabilities			972,771			787,503
Long-term Debt			4,007,329			3,943,947
Deferred Credits and Other Liabilities:
Derivative liabilities			51,267			12,815
Income taxes payable			73,238			68,050
Investment tax credit			67,727			69,353
Deferred income taxes			1,382,481			1,345,953
Obligations under capital leases			43,053			38,765
Regulatory liabilities			529,641			488,393
Adverse power purchase commitment			141,067			149,799
Other			434,138			453,418
Total deferred credits and other liabilities			2,722,612			2,626,546
Minority Interest			5,014			13,241
Common Stockholders’ Equity:
Common stock—$1.25 par value per share, 260 million shares authorized and 168,758,746 and 167,273,069 shares issued at June 30, 2008 and December 31, 2007, respectively	��		210,948			209,091
Other paid-in capital			1,937,711			1,924,072
Retained earnings			683,925			444,177
Treasury stock at cost—49,493 shares			(1,756	)		(1,756	)
Accumulated other comprehensive loss			(109,448	)		(40,232	)
Total common stockholders’ equity			2,721,380			2,535,352
Total Liabilities and Stockholders’ Equity		$	10,429,106		$	9,906,589

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Income Summary

	Three Months Ended
	June 30, 2008
	Delivery		Generation
	and		and
(In millions)	Services		Marketing			Eliminations			Total
Operating revenues	$	672.3	$	684.5		$	(403.3	)	$	953.5
Fuel		—		245.3			—			245.3
Purchased power and transmission		474.1		24.4			(401.3	)		97.2
Deferred energy costs, net		3.3		(2.1	)		—			1.2
Operations and maintenance		91.8		100.1			(2.0	)		189.9
Depreciation and amortization		40.7		28.1			—			68.8
Taxes other than income taxes		34.3		18.5			—			52.8
Total operating expenses		644.2		414.3			(403.3	)		655.2
Operating income		28.1		270.2			—			298.3
Other income (expense), net		3.6		1.9			(0.8	)		4.7
Interest expense and preferred dividends of subsidiary		23.9		35.6			(0.8	)		58.7
Income before income taxes and minority interest		7.8		236.5			—			244.3
Income tax expense		2.9		86.9			—			89.8
Minority interest		0.4		—			—			0.4
Net income	$	4.5	$	149.6		$	—		$	154.1

	Three Months Ended
	June 30, 2007
	Delivery			Generation
	and			and
(In millions)	Services			Marketing			Eliminations			Total
Operating revenues	$	678.5		$	525.3		$	(377.3	)	$	826.5
Fuel		—			231.4			—			231.4
Purchased power and transmission		454.1			27.4			(375.1	)		106.4
Deferred energy costs, net		(1.3	)		(6.9	)		—			(8.2	)
Operations and maintenance		84.6			108.2			(2.2	)		190.6
Depreciation and amortization		41.1			29.6			—			70.7
Taxes other than income taxes		30.1			18.7			—			48.8
Total operating expenses		608.6			408.4			(377.3	)		639.7
Operating income		69.9			116.9			—			186.8
Other income (expense), net		4.4			4.1			(1.6	)		6.9
Interest expense and preferred dividends of subsidiary		18.6			46.2			(1.6	)		63.2
Income before income taxes and minority interest		55.7			74.8			—			130.5
Income tax expense		22.3			30.6			—			52.9
Minority interest		—			0.6			—			0.6
Net income	$	33.4		$	43.6		$	—		$	77.0

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Income Summary (continued)

	Six Months Ended
	June 30, 2008
	Delivery		Generation
	and		and
(In millions)	Services		Marketing			Eliminations			Total
Operating revenues	$	1,446.8	$	1,252.8		$	(871.0	)	$	1,828.6
Fuel		—		495.1			—			495.1
Purchased power and transmission		1,009.6		51.9			(866.9	)		194.6
Deferred energy costs, net		6.4		(15.7	)		—			(9.3	)
Operations and maintenance		183.7		179.0			(4.1	)		358.6
Depreciation and amortization		83.4		55.7			—			139.1
Taxes other than income taxes		70.4		34.9			—			105.3
Total operating expenses		1,353.5		800.9			(871.0	)		1,283.4
Operating income		93.3		451.9			—			545.2
Other income (expense), net		7.0		6.1			(2.2	)		10.9
Interest expense and preferred dividends of subsidiary		45.8		73.5			(2.2	)		117.1
Income before income taxes and minority interest		54.5		384.5			—			439.0
Income tax expense		15.7		132.4			—			148.1
Minority interest		0.6		—			—			0.6
Net income	$	38.2	$	252.1		$	—		$	290.3

	Six Months Ended
	June 30, 2007
	Delivery			Generation
	and			and
(In millions)	Services			Marketing			Eliminations			Total
Operating revenues	$	1,436.4		$	1,049.8		$	(812.1	)	$	1,674.1
Fuel		—			463.6			—			463.6
Purchased power and transmission		954.9			51.6			(806.8	)		199.7
Deferred energy costs, net		(2.8	)		(6.9	)		—			(9.7	)
Operations and maintenance		170.9			185.5			(5.3	)		351.1
Depreciation and amortization		81.3			61.4			—			142.7
Taxes other than income taxes		65.6			39.1			—			104.7
Total operating expenses		1,269.9			794.3			(812.1	)		1,252.1
Operating income		166.5			255.5			—			422.0
Other income (expense), net		7.4			8.2			(2.8	)		12.8
Interest expense and preferred dividends of subsidiary		37.2			88.3			(2.8	)		122.7
Income before income taxes and minority interest		136.7			175.4			—			312.1
Income tax expense		57.8			66.5			—			124.3
Minority interest		—			1.0			—			1.0
Net income	$	78.9		$	107.9		$	—		$	186.8

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
CONSOLIDATED DATA FOR THE THREE MONTHS ENDED JUNE 30, 2008 AND 2007
(in millions, except per share data)
(unaudited)

	INCOME BEFORE
	INCOME TAXES AND						DILUTED INCOME
THREE MONTHS ENDED JUNE 30, 2008	MINORITY INTEREST			NET INCOME			PER SHARE
Calculation of Adjusted Income:
Income — GAAP Basis	$	244.3		$	154.1		$	0.91
Adjustments:
Net unrealized gain associated with economic hedges1		(127.3	)		(77.6	)
Adjusted Income	$	117.0		$	76.5		$	0.45
Calculation of Adjusted EBITDA:
Net Income — GAAP basis				$	154.1
Interest expense					58.7
Income tax expense					89.8
Depreciation and amortization					68.8
EBITDA					371.4
Net unrealized gain associated with economic hedges1					(127.3	)
Adjusted EBITDA				$	244.1

	INCOME BEFORE
	INCOME TAXES AND				DILUTED INCOME
THREE MONTHS ENDED JUNE 30, 2007	MINORITY INTEREST		NET INCOME		PER SHARE
Calculation of Adjusted Income:
Income — GAAP Basis	$	130.5	$	77.0	$	0.45
Adjustments:
No adjustments		—		—
Adjusted Income	$	130.5	$	77.0	$	0.45
Calculation of Adjusted EBITDA:
Net Income — GAAP basis			$	77.0
Interest expense				63.2
Income tax expense				52.9
Depreciation and amortization				70.7
EBITDA				263.8
No adjustments				—
Adjusted EBITDA			$	263.8

See accompanying Note to Reconciliation of Non-GAAP Financial Measures

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
SEGMENT DATA FOR THE THREE MONTHS ENDED JUNE 30, 2008 AND 2007
(in millions)
(unaudited)

	DELIVERY AND SERVICES				GENERATION AND MARKETING
	INCOME BEFORE INCOME				INCOME BEFORE INCOME
	TAXES AND MINORITY		NET		TAXES AND MINORITY			NET
THREE MONTHS ENDED JUNE 30, 2008	INTEREST		INCOME		INTEREST			INCOME
Calculation of Adjusted Income:
Income — GAAP Basis	$	7.8	$	4.5	$	236.5		$	149.6
Adjustments:
Net unrealized gain associated with economic hedges1		—		—		(127.3	)		(77.6	)
Adjusted Income	$	7.8	$	4.5	$	109.2		$	72.0

	DELIVERY AND SERVICES				GENERATION AND MARKETING
	INCOME BEFORE INCOME				INCOME BEFORE INCOME
	TAXES AND MINORITY		NET		TAXES AND MINORITY		NET
THREE MONTHS ENDED JUNE 30, 2007	INTEREST		INCOME		INTEREST		INCOME
Calculation of Adjusted Income:
Income — GAAP Basis	$	55.7	$	33.4	$	74.8	$	43.6
Adjustments:
No adjustments		—		—		—		—
Adjusted Income	$	55.7	$	33.4	$	74.8	$	43.6

See accompanying Note to Reconciliation of Non-GAAP Financial Measures

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
CONSOLIDATED DATA FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(in millions, except per share data)
(unaudited)

	INCOME BEFORE
	INCOME TAXES AND						DILUTED INCOME
SIX MONTHS ENDED JUNE 30, 2008	MINORITY INTEREST			NET INCOME			PER SHARE
Calculation of Adjusted Income:
Income — GAAP Basis	$	439.0		$	290.3		$	1.71
Adjustments:
Net unrealized gain associated with economic hedges1		(127.3	)		(77.6	)
Adjusted Income	$	311.7		$	212.7		$	1.25
Calculation of Adjusted EBITDA:
Net Income — GAAP basis				$	290.3
Interest expense					117.1
Income tax expense					148.1
Depreciation and amortization					139.1
EBITDA					694.6
Net unrealized gain associated with economic hedges1					(127.3	)
Adjusted EBITDA				$	567.3

	INCOME BEFORE
	INCOME TAXES AND				DILUTED INCOME
SIX MONTHS ENDED JUNE 30, 2007	MINORITY INTEREST		NET INCOME		PER SHARE
Calculation of Adjusted Income:
Income — GAAP Basis	$	312.1	$	186.8	$	1.10
Adjustments:
No adjustments		—		—
Adjusted Income	$	312.1	$	186.8	$	1.10
Calculation of Adjusted EBITDA:
Net Income — GAAP basis			$	186.8
Interest expense				122.7
Income tax expense				124.3
Depreciation and amortization				142.7
EBITDA				576.5
No adjustments				—
Adjusted EBITDA			$	576.5

See accompanying Note to Reconciliation of Non-GAAP Financial Measures

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
SEGMENT DATA FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(in millions)
(unaudited)

	DELIVERY AND SERVICES				GENERATION AND MARKETING
					INCOME BEFORE
	INCOME BEFORE				INCOME TAXES
	INCOME TAXES AND				AND MINORITY
SIX MONTHS ENDED JUNE 30, 2008	MINORITY INTEREST		NET INCOME		INTEREST			NET INCOME
Calculation of Adjusted Income:
Income — GAAP Basis	$	54.5	$	38.2	$	384.5		$	252.1
Adjustments:
Net unrealized gain associated with economic hedges1		—		—		(127.3	)		(77.6	)
Adjusted Income	$	54.5	$	38.2	$	257.2		$	174.5

	DELIVERY AND SERVICES				GENERATION AND MARKETING
					INCOME BEFORE
	INCOME BEFORE				INCOME TAXES
	INCOME TAXES AND				AND MINORITY
SIX MONTHS ENDED JUNE 30, 2007	MINORITY INTEREST		NET INCOME		INTEREST		NET INCOME
Calculation of Adjusted Income:
Income — GAAP Basis	$	136.7	$	78.9	$	175.4	$	107.9
Adjustments:
No adjustments		—		—		—		—
Adjusted Income	$	136.7	$	78.9	$	175.4	$	107.9

See accompanying Note to Reconciliation of Non-GAAP Financial Measures

14

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(in millions)
(unaudited)

	THREE MONTHS			THREE MONTHS
ADJUSTED OPERATING REVENUE	ENDED JUNE 30, 2008			ENDED JUNE 30, 2007
Operating revenue:
GAAP Basis	$	953.5		$	826.5
Net unrealized gain associated with economic hedges1		(127.3	)		—
As Adjusted	$	826.2		$	826.5

	THREE MONTHS			THREE MONTHS
ADJUSTED INCOME TAXES	ENDED JUNE 30, 2008			ENDED JUNE 30, 2007
Income taxes:
GAAP Basis	$	89.8		$	52.9
Income taxes related to net unrealized gain associated with economic hedges1		(49.7	)		—
As Adjusted	$	40.1		$	52.9

See accompanying Note to Reconciliation of Non-GAAP Financial Measures

15

Note to Reconciliation of Non-GAAP Financial Measures:

⁽¹⁾ Represents unrealized gains of $196.6 million associated with an increase in the fair value of financial transmission rights, partially offset by $56.2 million of unrealized losses related to the mark-to-market effect of power hedges, and a $13.1 million unrealized loss associated with a recently implemented hedging strategy pertaining to a natural gas transportation contract. These unrealized gains and losses were included in operating revenue on the Consolidated Statements of Operations.

16

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
OPERATING STATISTICS
(unaudited)
Three Months Ended June 30,

	2008			2007			Change
DELIVERY AND SERVICES:
Retail electricity sales (million KWH)		10,478			10,666			-1.8	%
Usage per customer (KWH):
Residential		2,639			2,745			-3.9	%
Commercial		14,833			15,232			-2.6	%
Industrial		153,182			155,522			-1.5	%
GENERATION AND MARKETING:
Total generation (million KWH):
Supercritical coal		8,824			9,311			-5.2	%
Other coal		1,145			1,461			-21.6	%
Gas		91			388			-76.5	%
Hydro and other		543			599			-9.3	%
Total		10,603			11,759			-9.8	%
Net capacity factor:
Supercritical coal		67	%		71	%		-4.0	%
All coal		61	%		66	%		-5.0	%
Equivalent availability factor:
Supercritical coal		79	%		80	%		-1.0	%
All coal		78	%		78	%		0.0	%
DEGREE DAYS:
Heating		541			593			-8.8	%
Cooling		230			280			-17.9	%

17

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES
OPERATING STATISTICS (cont.)
(unaudited)
Six Months Ended June 30,

	2008			2007			Change
DELIVERY AND SERVICES:
Retail electricity sales (million KWH)		22,274			22,377			-0.5	%
Usage per customer (KWH):
Residential		6,358			6,484			-1.9	%
Commercial		29,837			30,338			-1.7	%
Industrial		300,150			301,657			-0.5	%
GENERATION AND MARKETING:
Total generation (million KWH):
Supercritical coal		19,187			20,060			-4.4	%
Other coal		2,768			3,213			-13.8	%
Gas		138			479			-71.2	%
Hydro and other		1,051			1,099			-4.4	%
Total		23,144			24,851			-6.9	%
Net capacity factor:
Supercritical coal		72	%		76	%		-4.0	%
All coal		67	%		72	%		-5.0	%
Equivalent availability factor:
Supercritical coal		84	%		84	%		0.0	%
All coal		83	%		83	%		0.0	%
DEGREE DAYS:
Heating		3,255			3,337			-2.5	%
Cooling		230			282			-18.4	%

18