Allegheny Energy (AYE) 8-K Allegheny Energy Reports First Quarter 2009 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

Allegheny Energy Reports First Quarter 2009 Results

GREENSBURG, Pa., May 5, 2009— Allegheny Energy, Inc.(NYSE: AYE)today reported financial results for the first quarter of 2009.

Three Months Ended March 31

	$ millions				Per share
	2009		2008		2009		2008
Consolidated net income — GAAP	$	133.9	$	136.1	$	0.79	$	0.80
Adjusted net income		114.1		136.1		0.67		0.80

Adjusted net income for the first quarter of 2009 excludes a net unrealized pre-tax gain of $32.4 million from economic hedges that do not qualify for hedge accounting. There were no adjustments for the first quarter of 2008.

Adjusted net income is a non-GAAP financial measure. For information on adjustments and the calculation of adjusted net income for all periods, see the attached reconciliations of non-GAAP financial measures.

“We had solid financial performance in the quarter. Adjusted pre-tax income increased $8 million due to increased cost recovery in Virginia and higher generation rates, but earnings per share were down due to higher income taxes,” said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. “In these tough economic and financial times, we’re staying focused on the fundamentals of running our business, especially controlling costs and maintaining a strong liquidity position.”

First Quarter Consolidated Results

Adjusted net income for the first quarter of 2009 decreased by $22.0 million compared with the same period in 2008. Key factors contributing to the results include:

• Adjusted operating revenues increased by $49.8 million, reflecting higher generation rates in Pennsylvania and Maryland, increased purchased power cost recovery in Virginia and higher sales to third parties. These benefits were partially offset by reduced generation volume due to lower power plant availability and less demand.

• Fuel and deferred energy expense increased by $2.6 million, reflecting higher coal prices, partially offset by decreased generation volume and a change in Maryland PURPA generation cost recovery.

• Purchased power costs were higher by $36.5 million, primarily due to increased purchases from third parties.

• Operations and maintenance costs decreased by $1.5 million, reflecting cost control efforts, partially offset by higher special maintenance at power plants and increased work to restore service following a severe windstorm in February.

• Adjusted income tax expense increased by $30.0 million, reflecting an effective tax rate of 44 percent for the first quarter of 2009 compared to 30 percent in the same period a year ago. In the first quarter of 2009, the company recorded a non-cash charge of $9.5 million reflecting lower estimated future benefits from net operating loss carryforwards under Pennsylvania tax rules. In the first quarter of 2008, the effects of favorable audit settlements and West Virginia tax law changes reduced income taxes by $15.2 million.

Adjusted EBITDA for the first quarter of 2009 was $328.2 million, an increase of $5.1 million compared to the same quarter of the prior year. EBITDA and adjusted EBITDA are non-GAAP financial measures. Details on the calculation of EBITDA and adjusted EBITDA, as well as reconciliations of these financial measures to net income, are attached to this release.

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First Quarter Segment Results

Three Months Ended March 31
($ millions)

					Increase
	2009		2008		(Decrease)
Generation and Marketing:
Net income — GAAP	$	87.7	$	102.4	$	(14.7	)
Adjusted net income		67.9		102.4		(34.5	)
Delivery and Services:
Net income — GAAP	$	46.2	$	33.7	$	12.5
Adjusted net income		46.2		33.7		12.5

Adjusted net income for the Generation and Marketing segment in the first quarter of 2009 excludes the net unrealized gain previously discussed. There were no adjustments in the Delivery and Services segment for the first quarter of 2009, or in either segment for the first quarter of 2008.

Generation and Marketing: Adjusted net income for the quarter decreased by $34.5 million compared to the same period a year earlier. Results were adversely impacted by decreased generation volume and the elimination of an intercompany transfer payment, partially offset by benefits from marketing contracts, hedging activities and capacity prices. The effect of higher coal prices was offset by lower coal consumption. Income taxes increased, reflecting the non-cash charge previously mentioned.

Delivery and Services: Net income for the quarter increased by $12.5 million compared to the same period a year earlier. Key factors contributing to the improved results include increased cost recovery in Virginia, revenues from transmission expansion, lower operations and maintenance expense and the elimination of an intercompany transfer payment. These benefits were offset by the expiration of an earnings benefit related to stranded cost recovery, and higher income taxes due to an increase in pre-tax income and a higher effective tax rate.

Reconciliation of Non-GAAP Financial Measures

This news release includes presentation of adjusted net income, EBITDA, adjusted EBITDA and other non-GAAP financial measures as defined in the Securities and Exchange Commission’s Regulation G.

Management believes that these additional financial measures 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. These financial measures should not be considered in isolation or viewed as a substitute for, or superior to, net income or other data prepared in accordance with GAAP as a measure of operating performance or liquidity. In addition, these measures are not necessarily comparable to similarly titled measures provided by other companies.

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

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Investor Conference Call

Allegheny Energy will discuss these results in a live Internet broadcast at 2:00 p.m. Eastern Daylight Time on Tuesday, May 5, 2009. To listen to the broadcast, visitwww.alleghenyenergy.com. Slides to be used in the Webcast presentation will be available at www.alleghenyenergy.com at approximately 9:30 a.m. Eastern Daylight Time on Tuesday, May 5. 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 atwww.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; and regulatory matters. 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 and actions of rating agencies; complications or other factors 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; inflationary and interest rate trends changes in market rules, including changes to PJM participant rules and tariffs; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies and accounting issues facing our organization; 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.

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

	Three Months Ended
	March 31,
(In thousands, except per share amounts)	2009			2008
Operating revenues	$	957,173		$	875,026
Operating expenses:
Fuel		258,961			249,826
Purchased power and transmission		133,895			97,380
Deferred energy costs, net		(17,007	)		(10,454	)
Operations and maintenance		167,174			168,700
Depreciation and amortization		68,511			70,289
Taxes other than income taxes		55,814			52,439
Total operating expenses		667,348			628,180
Operating income		289,825			246,846
Other income (expense), net		2,457			6,209
Interest expense		57,279			58,431
Income before income taxes		235,003			194,624
Income tax expense		100,906			58,293
Net income		134,097			136,331
Less net income attributable to noncontrolling interest		(172	)		(206	)
Net income attributable to Allegheny Energy, Inc.	$	133,925		$	136,125
Earnings per common share attributable to Allegheny Energy, Inc.:
Basic	$	0.79		$	0.81
Diluted	$	0.79		$	0.80
Average common shares outstanding:
Basic		169,443			167,560
Diluted		169,873			169,950
Dividends per common share	$	0.15		$	0.15

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

	March 31,			December 31,
(In thousands)	2009			2008
ASSETS
Current Assets:
Cash and cash equivalents	$	205,878		$	362,145
Accounts receivable:
Customer		263,899			188,309
Unbilled utility revenue		93,861			122,695
Wholesale and other		74,329			61,445
Allowance for uncollectible accounts		(13,062	)		(13,280	)
Materials and supplies		114,375			115,107
Fuel		172,568			128,238
Deferred income taxes		2,418			69,617
Prepaid taxes		84,641			44,766
Collateral deposits		113,773			33,441
Derivative assets		143,735			113,087
Regulatory assets		147,829			158,835
Other		89,589			111,317
Total current assets		1,493,833			1,495,722
Property, Plant and Equipment:
Generation		6,119,553			6,107,344
Transmission		1,187,581			1,171,716
Distribution		3,987,054			3,944,068
Other		466,375			463,377
Accumulated depreciation		(5,042,594	)		(4,994,099	)
Subtotal		6,717,969			6,692,406
Construction work in progress		1,486,957			1,309,790
Total property, plant and equipment, net		8,204,926			8,002,196
Investments and Other Assets:
Goodwill		367,287			367,287
Restricted funds — Fort Martin scrubber project		83,761			133,346
Investments in unconsolidated affiliates		28,356			27,955
Other		21,252			19,695
Total investments and other assets		500,656			548,283
Deferred Charges:
Regulatory assets		677,596			687,696
Derivative assets		12,744			9,816
Other		64,334			67,335
Total deferred charges		754,674			764,847
Total Assets	$	10,954,089		$	10,811,048

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

	March 31,			December 31,
(In thousands, except share amounts)	2009			2008
LIABILITIES AND EQUITY
Current Liabilities:
Long-term debt due within one year	$	198,441		$	93,848
Accounts payable		393,376			374,229
Accrued taxes		66,558			119,431
Payable to PJM for FTRs		65,964			110,774
Derivative liabilities		20,329			22,153
Regulatory liabilities		54,390			69,208
Accrued interest		68,575			58,048
Other		157,787			155,809
Total current liabilities		1,025,420			1,003,500
Long-term Debt, Excluding Amounts Due within One Year		4,054,544			4,115,921
Deferred Credits and Other Liabilities:
Derivative liabilities		10,303			11,886
Income taxes payable		79,059			75,669
Investment tax credit		64,955			65,768
Deferred income taxes		1,301,343			1,277,439
Regulatory liabilities		532,972			528,937
Pension and other postretirement employee benefit plan liabilities		585,162			578,440
Adverse power purchase commitment		127,856			132,334
Other		162,671			165,500
Total deferred credits and other liabilities		2,864,321			2,835,973
Equity:
Common stock — $1.25 par value per share, 260 million shares authorized and 169,448,538 and 169,413,887 shares issued at March 31, 2009 and December 31, 2008, respectively		211,788			211,767
Other paid-in capital		1,975,996			1,952,440
Retained earnings		840,122			731,615
Treasury stock at cost — 49,493 shares		(1,756	)		(1,756	)
Accumulated other comprehensive loss		(21,424	)		(43,318	)
Total Allegheny Energy, Inc. common stockholders’ equity		3,004,726			2,850,748
Noncontrolling interest		5,078			4,906
Total equity		3,009,804			2,855,654
Total Liabilities and Equity	$	10,954,089		$	10,811,048

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

	Three Months Ended												Three Months Ended
	March 31, 2009												March 31, 2008
	Delivery			Generation									Delivery			Generation
	and			and									and			and
(In millions)	Services			Marketing			Eliminations			Total			Services			Marketing			Eliminations			Total
Operating revenues	$	892.7		$	587.0		$	(522.5	)	$	957.2		$	774.5		$	568.2		$	(467.7	)	$	875.0
Fuel		—			259.0			—			259.0			—			249.8			—			249.8
Purchased power and transmission		625.4			29.2			(520.7	)		133.9			535.5			27.5			(465.6	)		97.4
Deferred energy costs, net		(4.0	)		(13.0	)		—			(17.0	)		3.1			(13.6	)		—			(10.5	)
Operations and maintenance		87.0			82.0			(1.8	)		167.2			91.9			78.9			(2.1	)		168.7
Depreciation and amortization		40.0			28.5			—			68.5			42.7			27.6			—			70.3
Taxes other than income taxes		38.1			17.7			—			55.8			36.1			16.4			—			52.5
Total operating expenses		786.5			403.4			(522.5	)		667.4			709.3			386.6			(467.7	)		628.2
Operating income		106.2			183.6			—			289.8			65.2			181.6			—			246.8
Other income (expense), net		1.5			1.0			—			2.5			3.4			4.2			(1.4	)		6.2
Interest expense		26.5			30.8			—			57.3			21.9			37.9			(1.4	)		58.4
Income before income taxes		81.2			153.8			—			235.0			46.7			147.9			—			194.6
Income tax expense		34.8			66.1			—			100.9			12.8			45.5			—			58.3
Net income		46.4			87.7			—			134.1			33.9			102.4			—			136.3
Less net income attributable to noncontrolling interest		(0.2	)		—			—			(0.2	)		(0.2	)		—			—			(0.2	)
Net income attributable to Allegheny Energy, Inc.	$	46.2		$	87.7		$	—		$	133.9		$	33.7		$	102.4		$	—		$	136.1

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
CONSOLIDATED DATA FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(in millions, except per share data)
(unaudited)

				NET INCOME
				ATTRIBUTABLE TO
THREE MONTHS ENDED	INCOME BEFORE			ALLEGHENY			DILUTED INCOME
MARCH 31, 2009	INCOME TAXES			ENERGY, INC.			PER SHARE
Calculation of Adjusted Income:
Income — GAAP Basis	$	235.0		$	133.9		$	0.79
Adjustments:
Net unrealized gain associated with economic hedges1		(32.4	)		(19.8	)
Adjusted Income	$	202.6		$	114.1		$	0.67
Calculation of Adjusted EBITDA:
Net Income attributable to Allegheny Energy, Inc. — GAAP basis				$	133.9
Interest expense					57.3
Income tax expense					100.9
Depreciation and amortization					68.5
EBITDA					360.6
Net unrealized gain associated with economic hedges1					(32.4	)
Adjusted EBITDA				$	328.2

			NET INCOME
			ATTRIBUTABLE TO
THREE MONTHS ENDED	INCOME BEFORE		ALLEGHENY		DILUTED INCOME
MARCH 31, 2008	INCOME TAXES		ENERGY, INC.		PER SHARE
Calculation of Adjusted Income:
Income — GAAP Basis	$	194.6	$	136.1	$	0.80
Adjustments:
No adjustments		—		—
Adjusted Income	$	194.6	$	136.1	$	0.80
Calculation of Adjusted EBITDA:
Net Income attributable to Allegheny Energy, Inc. — GAAP basis			$	136.1
Interest expense				58.4
Income tax expense				58.3
Depreciation and amortization				70.3
EBITDA				323.1
No adjustments				—
Adjusted EBITDA			$	323.1

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 MARCH 31, 2009 AND 2008
(in millions)
(unaudited)

	DELIVERY AND SERVICES				GENERATION AND MARKETING
			NET INCOME					NET INCOME
			ATTRIBUTABLE					ATTRIBUTABLE
THREE MONTHS ENDED	INCOME BEFORE		TO ALLEGHENY		INCOME BEFORE			TO ALLEGHENY
MARCH 31, 2009	INCOME TAXES		ENERGY, INC.		INCOME TAXES			ENERGY, INC.
Calculation of Adjusted Income:
Income — GAAP Basis	$	81.2	$	46.2	$	153.8		$	87.7
Adjustments:
Net unrealized gain associated with economic hedges1		—		—		(32.4	)		(19.8	)
Adjusted Income	$	81.2	$	46.2	$	121.4		$	67.9

	DELIVERY AND SERVICES				GENERATION AND MARKETING
			NET INCOME				NET INCOME
			ATTRIBUTABLE				ATTRIBUTABLE
THREE MONTHS ENDED	INCOME BEFORE		TO ALLEGHENY		INCOME BEFORE		TO ALLEGHENY
MARCH 31, 2008	INCOME TAXES		ENERGY, INC.		INCOME TAXES		ENERGY, INC.
Calculation of Adjusted Income:
Income — GAAP Basis	$	46.7	$	33.7	$	147.9	$	102.4
Adjustments:
No adjustments		—		—		—		—
Adjusted Income	$	46.7	$	33.7	$	147.9	$	102.4

See accompanying Note to Reconciliation of Non-GAAP Financial Measures

10

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(in millions)
(unaudited)

	THREE MONTHS			THREE MONTHS
	ENDED			ENDED
	MARCH 31, 2009			MARCH 31, 2008
ADJUSTED OPERATING REVENUE
Operating revenue:
As reported	$	957.2		$	875.0
Adjustments:
Net unrealized gains associated with economic hedges1		(32.4	)		—
Adjusted operating revenue	$	924.8		$	875.0
ADJUSTED INCOME TAXES
Income tax expense:
As reported	$	100.9		$	58.3
Adjustments:
Income taxes related to net unrealized gain associated with economic hedges1		(12.6	)		—
Adjusted income tax expense	$	88.3		$	58.3

See accompanying Note to Reconciliation of Non-GAAP Financial Measures

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Note to Reconciliation of Non-GAAP Financial Measures:

⁽¹⁾ Consists of unrealized gains of $21.2 million on financial transmission rights (“FTRs”), $9.1 million of unrealized losses on power hedges, and a $20.3 million unrealized gain associated with a hedging strategy pertaining to a natural gas transportation contract. These unrealized mark-to-market gains and losses were included in operating revenues on the Consolidated Statements of Income.

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ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

OPERATING STATISTICS

(unaudited)

Three Months Ended March 31,

	2009			2008			Change
DELIVERY AND SERVICES:
Retail electricity sales (thousand MWh):
Residential		5,243			5,063			3.6	%
Commercial		2,775			2,753			0.8	%
Industrial		3,489			3,955			-11.8	%
Street lighting		24			25			-4.0	%
Total		11,531			11,796			-2.2	%
Usage per customer (KWh):
Residential		3,836			3,719			3.1	%
Commercial		14,951			15,004			-0.4	%
Industrial		128,380			146,963			-12.6	%
GENERATION AND MARKETING:
Generation (thousand MWh):
Supercritical coal		8,922			10,363			-13.9	%
Other coal		718			1,623			-55.8	%
Gas		83			47			76.6	%
Hydro and other		383			508			-24.6	%
Total		10,106			12,541			-19.4	%
Net capacity factor:
Supercritical coal		68	%		78	%		-10	%
All coal		59	%		73	%		-14	%
Equivalent availability factor:
Supercritical coal		80	%		89	%		-9	%
All coal		81	%		88	%		-7	%
DEGREE DAYS:
Heating		2,760			2,714			1.7	%
Cooling		2			0		NM*

* Not meaningful

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