Allegheny Energy 8K In addition to historical information, this presentation contains a number of " forward-looking | AYE 7 Nov 05

Allegheny Energy

Edison Electric Institute

Financial Conference

November 6-9, 2005

Exhibit 99.1

Forward-Looking Statements

In addition to historical information, this presentation contains 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: regulation and the status of retail generation service supply

competition in states served by Allegheny Energy's delivery business, Allegheny Power; the closing of

various agreements; 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; 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: changes in the price of power and fuel for electric

generation; general economic and business conditions; changes in

access

to capital; 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's competitors; changes in the weather and other natural phenomena; 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, its markets or its

activities; the loss of any significant customers and suppliers;

dependence

on other electric

transmission and gas transportation systems and their constraints on availability; changes in PJM,

including changes to participants 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 and

registration statements filed with the Securities and Exchange Commission.

Non-GAAP Financial Measures

This presentation includes non-GAAP financial measures as defined in the

Securities and Exchange Commission’s Regulation G. Where noted, the

presentation shows certain financial information on an “as adjusted”

basis, to

exclude the effect of certain items as described herein. By presenting

“as

adjusted”

results, management intends to provide investors with a better

understanding of the core results and underlying trends from which to consider

past performance and prospects for the future.

Users of this financial information should consider the types of

events and

transactions for which adjustments have been made. “As adjusted”

information

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 measures of our

operating performance or liquidity. In addition, the “as adjusted”

information is not

necessarily comparable to similarly titled measures provided by other companies.

Pursuant to the requirements of Regulation G, we have attached

table

that

reconciles the non-GAAP financial measures in this presentation to the most

directly comparable GAAP measures. The table is also available at

www.alleghenyenergy.com.

Paul J. Evanson

Chairman, President and

Chief Executive Officer

Allegheny Energy

Allegheny

Energy

Generation

Coal-fired, PJM

47.8 million MWH*

Delivery

1.6 million customers,

PA-MD-WV-VA-OH

12 months ended September 30, 2005

Turnaround

•

Restructured and

reduced debt

•

Strengthened financial

reporting, internal

controls

•

Refocused on core

business

•

Launched high

performance organization

•

Returned to profitability

Entering a Growth Phase

Growth

Earnings Growth Drivers

Reduce interest expense

Decrease O&M expense

Improve plant availability

Increase Pennsylvania POLR rates

Transition to market-based rates

Growth Driver:

Reduce Interest Expense

Goal:

reduce

debt

$1.5

billion

(Dec.

2003

–

Dec.

31,

2005)

Achieved: $1.9 billion* (through Oct. 15, 2005)

Potential future sources: Ohio sale, other asset

sales, cash flow

Projected reduction in interest expense: ~$65 million

in 2006

* Includes tender offer for convertible trust preferred securities ..

$818

<$800

$985

2003

2004

2005

2006

2007

$700-750

Growth Driver:

Decrease O&M Expense

Target

Further

decrease

83%

78%

82%

76%

79%

91%

83%

2002

2003

2004

2008

Goal

Proforma*

Actual

* Adjusted for extended outages at Hatfield, Pleasants

Improvement of ~$100 million if goal achieved

(supercritical units)

2005

Est.

Growth Driver:

Improve Plant Availability

Achieving 91% Availability

by 2008

2002

2003

2004

2005

2006

2007

2008

Outage Rate

(supercritical units)

22%

24%

17%

15%

Reduce planned

outages

Reduce unplanned

outages

18%

$20

$25

$30

$35

$40

$45

$50

$55

2005

2006

2007

2008

2009

2010

$50

$100

$150

$200

$250

$300

$350

$400

$450

2006

2007

2008

2009

2010

Generation Rate

$ per MWH

Cumulative Increase in

Pre-Tax Operating Income

$ millions; estimates

Growth Driver:

Increase Pennsylvania POLR Rates

Growth Driver:

Transition to Market-Based Rates

Market: Current

POLR: Maryland,

Ohio

Generation Rates

$ per MWH

Assumption for

2006 Outlook

$25

$30

$35

$40

$45

$50

$55

$60

$65

$70

$75

$80

2005

2006

2007

2008

Growth Driver:

Transition to Market-Based Rates

2006

2009

State

Maryland,

Maryland

Ohio

MWH transitioning

4.8 million

3.5 million

to market

Increase in pre-tax income

$90 million

$60 million

Total: $150 million

Managing Risk and

Limiting Exposure

Managing regulatory/political risk

Reducing SO

emissions

Contracting coal supply needs

Exposure to

Allowance Market

Tons of SO

Emitted

in Excess of Allowances

* Average per year (estimates)

2006

20,000 to 30,000

2007-2008

<50,000*

Reducing SO

Emissions:

Action Plan

Under consideration

Hatfield scrubbers

(Pennsylvania)

Seeking regulatory

approvals

Funded by securitized

surcharge

In service 2010

Fort Martin scrubbers

(West Virginia)

By early 2008

Close Pleasants bypass

STATUS

Began in 3rd

quarter 2005

Low-sulfur PRB coal

ACTION

Coal Supply Under Contract

99%

95%

85%

70%

2005

2006

2007

2008

% of Total Requirements

100%

95%

2005

2006

2007

2008

% of POLR Requirements

Coal Costs and Usage

$38

$31

$35

$37

2004

2005

2006

2007

2008

Average Delivered Cost/Ton

Existing contracts only

Currently burn 18 million

tons/year

Expect to burn over 19

million tons in 2006

Increasing Coal

Tonnage

Transforming Allegheny Energy

Financial

Operational

Environmental

Risk profile

Earnings growth

Jeffrey D. Serkes

Senior Vice President and

Chief Financial Officer

Improving Financial Results

($2.80)

($1.83)

$0.38

($0.37)

$0.47

$0.90

2003

2004

2005

As Reported

As Adjusted

(9 Months)

Earnings per share; diluted

Increasing Free Cash Flow

($ millions)

Cash from Operations

Free Cash Flow

(adjusted cash from operations

net of capital expenditures)

$507

$326

$403*

$347*

2004

2005

$81

$199

>$300

2004

2005

2006

(9 months)

As reported

As adjusted

2004 excludes OVEC proceeds and California contract escrow release. 2005 excludes

costs for St. Joe’ s notes redemption and convertible trust preferred securities tender offer.

Achieve Investment Grade Rating:

Strengthening the Balance Sheet

Debt Outstanding

($ billions)

Sept.

2003

Sept.

2004

Sept.

2005

Equity Ratio

21%

18%

28%

>40%

Sept.

2003

Sept.

2005

Sept.

2004

$6.0

$5.2

$4.2

Target

Achieve Investment Grade Rating:

Improving Credit Statistics

9.0

6.5

4.5

<3.5

Dec.

2003

Dec.

2004

Sept.

2005

Target

Debt/EBITDA*

1.5

2.0

2.8

>4.0

Dec.

2003

Dec.

2004

Sept.

2005

Target

EBITDA/Interest*

* based on adjusted EBITDA and adjusted interest for 12-month periods

2006 Earnings Growth:

Key Drivers

CONTRIBUTION TO PRE-TAX INCOME

($ millions; estimates*)

Pennsylvania rates

~$55

Maryland transition to market

~ 55

Ohio territory sale

~ 35

Market prices

positive/negative

Plant availability

no impact

Higher coal costs

~(80)

allowance costs

~(25)

Lower O&M expense

~20

Lower interest expense

~65

Other factors

positive/negative

* 2006 vs. 2005 as adjusted

Supplemental

Information

Earnings (Loss) Per Share

As Reported

As Adjusted

2003:

(0.46)

$ (0.32)

(1.82)

(0.23)

(0.40)

0.11

(0.11)

(0.14)

Year

(2.80)

(0.37)

2004:

0.25

(0.03)

(0.31)

(0.21)

(2.40)

0.37

0.48

0.22

Year

(1.83)

0.47

2005:

0.29

0.39

(0.12)

0.08

0.21

0.45

Year to date

0.38

0.90

EBITDA

$ millions

As Reported

As Adjusted

2003:

77.6

92.9

(203.5)

150.1

117.3

225.3

197.4

185.6

Year

156.8

634.9

2004:

247.8

175.5

110.3

122.0

243.2

303.9

221.8

Year

473.7

762.5

2005:

261.3

210.6

192.7

254.7

274.2

Year to date

726.5

728.1

$80

$130

$180

$230

$280

$330

$380

AYE

Dow Electric Utilities

S&P 500

Brought

reporting

up to date

PA rate

proposal

approved

Completed

convertible

financing

Completed

tender offer

Completed

equity

financing

Completed

OVEC, Lincoln

sales

Exited

Western

energy

markets

Refinanced

bank debt

Completed

Wheatland

sale

Announced

Ohio sale

Completed

Mountaineer

sale

The Road to Recovery

Stock Price Performance

$100 Invested on July 1, 2003

Enhance Operating Performance

Financial

Performance

Engaged

Employees

Environmental

Stewardship

Shareholder

Value

Operational

Excellence

VISION:

“To Be a Top Performing Utility by

Year-End 2007”

Customer

Satisfaction

Generation and Marketing:

Overview

Capacity

Coal

94%

Gas

Hydro & Oil

* For year ended December 31, 2004

Capacity: 9,611 MW

Primarily base load coal-fired plants

Predominantly in Pennsylvania-New Jersey-Maryland

(“PJM”) region

Hydro & Oil

12%

Gas

Coal

79%

MWH Output*

$20

$40

$60

$80

$100

$120

$140

$160

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

Low-Cost Generation Fleet

Allegheny has an advantaged dispatch in PJM

PJM Dispatch Cost (Ozone Season): $/MWh

Dispatch curve assumptions: natural gas delivered at approximately $9.00/mmBTU; coal at approximately

$42.00/ton; SO2

at $870/ton; NOx

at $2,765/ton. Expanded PJM including PJM Traditional, PJM West, AEP,

ComEd, DPL, DQE and Virginia Power.

Capacity in MW

Allegheny Coal Units

Dispatch Cost

Allegheny –

Other Units

Hydro

Allegheny

58 MW

Nuclear

2005 Average

Pumped Storage

Allegheny 985 MW

Coal

Allegheny 7,617MW

2005 Peak

Oil & Gas

Allegheny 951 MW

World’s largest competitive power market

51 million people

700 million MWH of energy annually

160,000 MW of capacity

Nation’s most liquid spot power market

Model for FERC’s

proposed Standard Market Design

Provides transactional flexibility: contracts not

required

Generation and Marketing:

PJM --

An Attractive Market

Expanded PJM includes PJM Traditional, PJM West, AEP, ComEd,

DPL, DQE and Virginia Power

Only 15% of Coal

Delivered by Rail

Note: Some barge coal originates on short line railroads.

Rail

15%

Barge

50%

Conveyor

15%

Truck

20%

Coal Delivery Methods

2006

Delivery and Services:

Overview

In 5 states (PA, WV, MD,

VA, OH)

1.6 million electric customers

Load growth: 2.2% compounded

annually (1994-2004)

Allegheny Power

West Penn

Power

Monongahela

Power

Potomac

Edison

VIRGINIA

CHARLESTON

OHIO

HARRISBURG

MARYLAND

KENTUCKY

PENNSYLVANIA

CLEVELAND

BALTIMORE

PITTSBURGH

WASHINGTON, DC

WEST

VIRGINIA

43%

29%

20%

Delivery and Services:

Retail Revenue Mix, 2004

By State

By Customer Class

Residential

43%

Industrial

32%

Commercial

24%

Other

6.77

7.01

6.94

6.81

6.82

9.58

6.33

8.08

7.37

8.84

0.00

2.00

4.00

6.00

8.00

10.00

12.00

Pennsylvania

West Virginia

Maryland

Virginia

Ohio

Allegheny Power

State Average

Delivery and Services:

Competitive Rates

National

Average =

9.15 ¢/kWh

Residential Rates

¢/kWh as of January 1, 2005

Regulatory Timeline

Generation rate caps extend through 2010 and include rate increases in each year, 2006-2010.

One-time T&D increase can be requested through 2007. After 2007, can

request recovery of

purchased power and annual incremental T& D reliability and environmental costs, and one additional

T&D cost increase.

Ohio transfers to AEP by year-end 2005.

2004

2005

2006

2007

2008

Through 2005

Other classes through 2005

Through 2005

Small through 2005

Through 2005

Regulated Generation and T&D

Through 2008

Through 2004

Through 2007

Other classes through 2005

Large through 2003

Small through 2005

Through 2003

Through 2005

Large C&I through 2003

T&D

Gen.

T&D

Gen.

T&D

Gen.

T&D

Gen.

T&D

Gen.

2003

Through 2007 ²

Through 2004

Through 2003

State

OH3

Res.

Com.

Ind.

Res.

Com.

Ind.

Res.

Ind.

Res.

Com.

Ind.

Res.

Com.

–

Ind.

–

Through 2004

Gen.

Com.

–

Distribution through 2007

Through 2010 ²

Increases

through

2010

Increases

through

2010

Increases

through

2010

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in millions, except per share data)

(unaudited)


THREE MONTHS ENDED SEPTEMBER 30, 2005	INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET INCOME			DILUTED INCOME PER SHARE
Calculation of Adjusted Income:
Income - GAAP basis	$	65.3		$	35.7		$	0.21

Adjustments:
Loss from discontinued operations					7.8
Receipt of Hatfield power station insurance proceeds¹		(11.0	)		(6.8	)
Redemption costs of 10.25% and 13.0% Senior Notes²		32.6			20.1
Impairment charge on Ohio T&D assets		30.5			18.0

Adjusted Income	$	117.4		$	74.8		$	0.45

Calculation of Adjusted EBITDA:
Net Income - GAAP basis				$	35.7
Loss from discontinued operations					7.8
Interest expense and preferred dividends					113.1
Income tax expense					21.4
Depreciation and amortization					76.7

EBITDA from continuing operations					254.7
Receipt of Hatfield power station insurance proceeds					(11.0	)
Impairment charge on Ohio T&D assets					30.5

Adjusted EBITDA from continuing operations				$	274.2


THREE MONTHS ENDED SEPTEMBER 30, 2004	INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET (LOSS) INCOME			DILUTED (LOSS) INCOME PER SHARE
Calculation of Adjusted Income (Loss):
Income (Loss) - GAAP basis	$	70.8		$	(376.8	)	$	(2.40	)

Adjustments:
Loss from discontinued operations					427.4

Adjusted Income	$	70.8		$	50.6		$	0.37

Calculation of Adjusted EBITDA:
Net Loss - GAAP basis				$	(376.8	)
Loss from discontinued operations					427.4
Interest expense and preferred dividends					91.4
Income tax expense					26.1
Depreciation and amortization					75.1

EBITDA from continuing operations					243.2
No adjustments					—

Adjusted EBITDA from continuing operations				$	243.2

FOOTNOTES:

¹	This amount is included in operations and maintenance expense on the Consolidated Statement of Operations.

²	This amount is included in interest expense on the Consolidated Statement of Operations.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in millions, except per share data) (unaudited)


NINE MONTHS ENDED SEPTEMBER 30, 2005	INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET INCOME			DILUTED INCOME PER SHARE
Calculation of Adjusted Income:
Income - GAAP basis	$	127.3		$	59.9		$	0.38

Adjustments:
Loss from discontinued operations					11.8
Interest expense related to Merrill Lynch summary judgment¹		38.5			24.3
Expense related to conversion of trust preferred securities²		47.2			29.8
Cash receipt from former trading executive’s forfeited assets³		(11.2	)		(6.9	)
Receipt of Hatfield power station insurance proceeds⁴		(17.7	)		(10.9	)
Redemption costs of 10.25% and 13.0% Senior Notes²		32.6			20.1
Impairment charge on Ohio T&D assets		30.5			18.0

Adjusted Income	$	247.2		$	146.1		$	0.90

Calculation of Adjusted EBITDA:
Net Income - GAAP basis				$	59.9
Loss from discontinued operations					11.8
Interest expense and preferred dividends					369.7
Income tax expense					54.6
Depreciation and amortization					230.5

EBITDA from continuing operations					726.5
Cash receipt from former trading executive’s forfeited assets					(11.2	)
Receipt of Hatfield power station insurance proceeds					(17.7	)
Impairment charge on Ohio T&D assets					30.5

Adjusted EBITDA from continuing operations				$	728.1


NINE MONTHS ENDED SEPTEMBER 30, 2004	INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET (LOSS) INCOME			DILUTED (LOSS) INCOME PER SHARE
Calculation of Adjusted Income (Loss):
Income (Loss) - GAAP basis	$	68.9		$	(383.0	)	$	(2.97	)

Adjustments:
Loss from discontinued operations					431.5
Gain on California contract escrow release⁵		(68.1	)		(39.2	)
Write-off of 2003 financing costs²		14.1			8.1
Gain on land sale, New York office space charge, net⁶		(4.2	)		(2.4	)
Loss on release of gas pipeline capacity⁷		11.7			6.7

Adjusted Income⁸	$	22.4		$	21.7		$	0.17

Calculation of Adjusted EBITDA:
Net Loss - GAAP basis				$	(383.0	)
Loss from discontinued operations					431.5
Interest expense and preferred dividends					304.8
Income tax expense					25.2
Depreciation and amortization					222.9

EBITDA from continuing operations					601.4
Gain on California contract escrow release					(68.1	)
Gain on land sale, New York office space charge, net					(4.2	)
Loss on release of gas pipeline capacity					11.7

Adjusted EBITDA from continuing⁸				$	540.8

FOOTNOTES:

¹	This amount is included in interest expense on the Consolidated Statement of Operations. This amount represents the estimated interest owed to Merrill Lynch from March 16, 2001 thru March 31, 2005. It does not include interest accrued subsequent to March 31, 2005.

²	These amounts are included in interest expense on the Consolidated Statements of Operations.

³	This amount is included in other income and expenses, net, on the Consolidated Statement of Operations.

⁴	This amount is included in operations and maintenance expense on the Consolidated Statement of Operations.

⁵	This amount is included in operating revenues on the Consolidated Statement of Operations.

⁶	These amounts are included in other income and expenses, net, and operations and maintenance expense on the Consolidated Statement of Operations.

⁷	This amount is included in purchased power and transmission on the Consolidated Statement of Operations.

⁸	Not adjusted for $9.2 million of charges related to Allegheny Ventures for write-downs of inventory and discontinued product ($4.3 million), equity interests ($2.3 million) and adjustments in revenue recognition for a percentage of completion contract ($2.6 million).

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in millions)

(unaudited)


ADJUSTED EXPENSES	THREE MONTHS ENDED SEPTEMBER 30, 2005			THREE MONTHS ENDED SEPTEMBER 30, 2004
Operations and maintenance:
As reported	$	182.1		$	190.2
Receipt of Hatfield power station insurance proceeds		11.0			—

As Adjusted	$	193.1		$	190.2

Interest expense and preferred dividends of subsidiary:
As reported	$	113.1		$	91.4
Redemption costs of 10.25% and 13.0% Senior Notes		(32.6	)		—

As Adjusted	$	80.5		$	91.4

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in millions, except per share data)

(unaudited)


THREE MONTHS ENDED JUNE 30, 2005	INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET (LOSS) INCOME			DILUTED (LOSS) INCOME PER SHARE
Calculation of Adjusted Income (Loss):
Income (Loss) - GAAP basis	$	3.8		$	(18.4	)	$	(0.12	)

Adjustments:
Loss from discontinued operations¹					12.3
Expense related to conversion of trust preferred securities²		47.2			29.8
Cash receipt from former trading executive’s forfeited assets³		(11.2	)		(6.9	)
Receipt of Hatfield power station insurance proceeds⁴		(6.7	)		(4.1	)

Adjusted Income	$	33.1		$	12.7		$	0.08

Calculation of Adjusted EBITDA:
Net Loss - GAAP basis				$	(18.4	)
Loss from discontinued operations					12.3
Interest expense and preferred dividends					129.5
Income tax expense					9.8
Depreciation and amortization					77.4

EBITDA from continuing operations					210.6
Cash receipt from former trading executive’s forfeited assets					(11.2	)
Receipt of Hatfield power station insurance proceeds					(6.7	)

Adjusted EBITDA from continuing operations				$	192.7


THREE MONTHS ENDED JUNE 30, 2004	LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET LOSS			DILUTED LOSS PER SHARE
Calculation of Adjusted Loss:
Loss - GAAP basis	$	(57.5	)	$	(39.5	)	$	(0.31	)

Adjustments:
Loss from discontinued operations					6.6
Loss on release of gas pipeline capacity⁵		11.7			6.7

Adjusted Loss	$	(45.8	)	$	(26.2	)	$	(0.21	)

Calculation of Adjusted EBITDA:
Net Loss - GAAP basis				$	(39.5	)
Loss from discontinued operations					6.6
Interest expense and preferred dividends					92.3
Income tax benefit					(24.0	)
Depreciation and amortization					74.9

EBITDA from continuing operations					110.3
Loss on release of gas pipeline capacity					11.7

Adjusted EBITDA from continuing operations				$	122.0

FOOTNOTES:

¹	This amount includes a net after-tax charge of $8.9 million relating to adjustments to the carrying values of assets held-for-sale.

²	This amount is included in Interest expense on the Consolidated Statement of Operations.

³	This amount is included in Other income on the Consolidated Statement of Operations.

⁴	This amount is included in Operations and maintenance expense on the Consolidated Statement of Operations.

⁵	This amount is included in Purchased power and transmission on the Consolidated Statement of Operations.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in millions, except per share data)

(unaudited)


THREE MONTHS ENDED MARCH 31, 2005	INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET INCOME			DILUTED INCOME PER SHARE
Calculation of Adjusted Income:
Income - GAAP basis	$	58.2		$	42.6		$	0.29

Adjustments:
Income from discontinued operations					(8.2	)
Interest expense related to Merrill Lynch summary judgment¹		38.5			24.3

Adjusted Income	$	96.7		$	58.7		$	0.39

Calculation of Adjusted EBITDA:
Net Income - GAAP basis				$	42.6
Income from discontinued operations					(8.2	)
Interest expense and preferred dividends					127.1
Income tax expense					23.4
Depreciation and amortization					76.4

EBITDA from continuing operations					261.3
No adjustments					—

Adjusted EBITDA from continuing operations				$	261.3


THREE MONTHS ENDED MARCH 31, 2004	INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET INCOME (LOSS)			DILUTED INCOME (LOSS) PER SHARE
Calculation of Adjusted Income:
Income - GAAP basis	$	55.5		$	33.3		$	0.25

Adjustments²:
Income from discontinued operations					(2.6	)
Gain on California contract escrow release³		(68.1	)		(40.5	)
Write-off of 2003 financing costs¹		14.1			8.4
Gain on land sale, New York office space charge, net⁴		(4.2	)		(2.5	)

Adjusted Income	$	(2.7	)	$	(3.9	)	$	(0.03	)

Calculation of Adjusted EBITDA:
Net Income - GAAP basis				$	33.3
Income from discontinued operations					(2.6	)
Interest expense and preferred dividends					121.1
Income tax expense					23.0
Depreciation and amortization					73.0

EBITDA from continuing operations					247.8
Gain on California contract escrow release					(68.1	)
Gain on land sale, New York office space charge, net					(4.2	)

Adjusted EBITDA from continuing operations²				$	175.5

FOOTNOTES:

¹	These amounts are included in Interest expense on the Consolidated Statements of Operations.

²	Not adjusted for $9.2 million of charges related to Allegheny Ventures for write-downs of inventory and discontinued product ($4.3 million), equity interests ($2.3 million) and adjustments in revenue recognition for a percentage of completion contract ($2.6 million).

³	This amount is included in Operating revenues on the Consolidated Statement of Operations.

⁴	These amounts are included in Operations and maintenance expense and Other income, net, on the Consolidated Statement of Operations.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in millions, except per share data)

(unaudited)


THREE MONTHS ENDED DECEMBER 31, 2004	INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET INCOME			DILUTED INCOME PER SHARE
Calculation of Income As Adjusted:
Income - GAAP basis	$	139.7		$	72.4		$	0.48

Adjustments:
Gain on sale of OVEC power agreement and shares		(94.8	)		(59.4	)
Write-off of deferred financing costs¹		9.2			5.8
Severance accrual²		3.9			2.4
Loss from discontinued operations					8.8

As Adjusted	$	58.0		$	30.0		$	0.22

Calculation of EBITDA As Adjusted:
Net Income - GAAP basis				$	72.4
Interest expense and preferred dividends					100.5
Income tax expense					54.5
Depreciation and amortization					76.5

EBITDA					303.9
Gain on sale of OVEC power agreement and shares					(94.8	)
Severance accrual					3.9
Loss from discontinued operations					8.8

Adjusted EBITDA				$	221.8


THREE MONTHS ENDED DECEMBER 31, 2003	INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET LOSS			DILUTED LOSS PER SHARE
Calculation of Income (Loss) As Adjusted:
Income (Loss) - GAAP basis	$	16.5		$	(13.7	)	$	(0.11	)

Adjustments:
Receipt of payment from PURPA hydro facility³		(19.9	)		(12.1	)
Loss from discontinued operations					8.1

As Adjusted	$	(3.4	)	$	(17.7	)	$	(0.14	)

Calculation of EBITDA As Adjusted:
Net Loss - GAAP basis				$	(13.7	)
Interest expense and preferred dividends					117.5
Income tax expense					20.1
Depreciation and amortization					73.5

EBITDA					197.4
Receipt of payment from PURPA hydro facility					(19.9	)
Loss from discontinued operations					8.1

Adjusted EBITDA				$	185.6

FOOTNOTES:

¹	This amount is included in Interest expense on the Consolidated Statement of Operations.

²	This amount is included in Operations and maintenance expense on the Consolidated Statement of Operations.

³	This amount is included in Purchased power and transmission expense on the Consolidated Statement of Operations.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in millions, except per share data)

(unaudited)


YEAR ENDED DECEMBER 31, 2004	INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET (LOSS) INCOME			DILUTED (LOSS) INCOME PER SHARE
Calculation of Income (Loss) As Adjusted:
Income (Loss) - GAAP basis	$	208.5		$	(310.6	)	$	(1.83	)

Adjustments¹:
Gain on California contract escrow release²		(68.1	)		(42.7	)
Write-off of deferred financing costs³		23.3			14.6
Gain on land sale, New York office space charge (net)⁴		(4.2	)		(2.6	)
Loss on release of gas pipeline capacity⁵		11.7			7.3
Gain on sale of OVEC power agreement and shares		(94.8	)		(59.4	)
Severance accrual⁶		3.9			2.4
Loss from discontinued operations					440.3

As Adjusted	$	80.3		$	49.3		$	0.47

Calculation of EBITDA As Adjusted:
Net Loss - GAAP basis				$	(310.6	)
Interest expense and preferred dividends					405.2
Income tax expense					79.7
Depreciation and amortization					299.4

EBITDA					473.7
Gain on California contract escrow release					(68.1	)
Gain on land sale, New York office space charge (net)					(4.2	)
Loss on release of gas pipeline capacity					11.7
Gain on sale of OVEC power agreement and shares					(94.8	)
Severance accrual					3.9
Loss from discontinued operations					440.3

Adjusted EBITDA¹				$	762.5

YEAR ENDED DECEMBER 31, 2003	LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET LOSS			DILUTED LOSS PER SHARE
Calculation of Loss As Adjusted:
Loss - GAAP basis	$	(518.2	)	$	(355.0	)	$	(2.80	)

Adjustments⁷:
Gain on SFAS 71⁸		(75.8	)		(45.9	)
Loss on assets retired/held for sale⁴		37.5			22.7
Special termination and other benefits⁶		15.7			9.5
Impairment of New York office⁶		4.6			2.8
Losses on West Book and other exited trading activities²		434.9			263.6
Baltimore Gas & Electric contract termination costs⁶		32.0			19.4
Gain on land sale⁸		(9.5	)		(5.8	)
Receipt of payment from PURPA hydro facility⁵		(19.9	)		(12.1	)
Other^{6 & 9}		12.6			7.6
Cumulative effect of accounting changes					20.7
Loss from discontinued operations					25.3

As Adjusted	$	(86.1	)	$	(47.2	)	$	(0.37	)

Calculation of EBITDA As Adjusted:
Net Loss - GAAP basis				$	(355.0	)
Interest expense and preferred dividends					427.8
Income tax benefit					(202.2	)
Depreciation and amortization					286.2

EBITDA					156.8
Gain on SFAS 71					(75.8	)
Loss on assets retired/held for sale					37.5
Special termination and other benefits					15.7
Impairment of New York office					4.6
Losses on West Book and other exited trading activities					434.9
Baltimore Gas & Electric contract termination costs					32.0
Gain on land sale					(9.5	)
Receipt of payment from PURPA hydro facility					(19.9	)
Other⁹					12.6
Cumulative effect of accounting changes					20.7
Loss from discontinued operations					25.3

Adjusted EBITDA⁷				$	634.9

FOOTNOTES:

¹	Not adjusted for $8.8 million of charges related to Allegheny Ventures for write-downs of inventory and discontinued product ($4.3 million), equity interests ($1.9 million) and adjustments in revenue recognition for a percentage of completion contract ($2.6 million).

²	These amounts are included in Operating revenues on the Consolidated Statements of Operations.

³	This amount is included in Interest expense on the Consolidated Statement of Operations.

⁴	These amounts are included in Operations and maintenance expense and Other income, net, on the Consolidated Statements of Operations.

⁵	These amounts are included in Purchased power and transmission expense on the Consolidated Statements of Operations.

⁶	These amounts are included in Operations and maintenance expense on the Consolidated Statements of Operations.

⁷	Not adjusted for estimated energy trading losses totaling $34.9 million. These losses were primarily the result of trading activities in the Western United States energy markets, which Allegheny exited in 2003.

⁸	These amounts are included in Other income, net, on the Consolidated Statement of Operations.

⁹	Charges related to the St. Joseph’s generating plant lease ($2.0 million), additional Enron litigation reserves ($7.0 million) and additional costs attributable to asset sales ($3.6 million).

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in millions, except per share data)

(unaudited)


THREE MONTHS ENDED SEPTEMBER 30, 2004	INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET (LOSS) INCOME			DILUTED (LOSS) INCOME PER SHARE
Calculation of Income (Loss) As Adjusted:
Income (Loss) - GAAP basis	$	70.8		$	(376.8	)	$	(2.40	)

Adjustments:
Loss from discontinued operations					427.4

As Adjusted	$	70.8		$	50.6		$	0.37

Calculation of EBITDA As Adjusted:
Net Loss - GAAP basis				$	(376.8	)
Interest expense and preferred dividends					91.4
Income tax expense					26.1
Depreciation and amortization					75.1

EBITDA					(184.2	)
Loss from discontinued operations					427.4

Adjusted EBITDA				$	243.2


THREE MONTHS ENDED SEPTEMBER 30, 2003	(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES AND MINORITY INTEREST			NET (LOSS) INCOME			DILUTED (LOSS) INCOME PER SHARE
Calculation of Loss As Adjusted:
Loss - GAAP basis	$	(72.1	)	$	(51.0	)	$	(0.40	)

Adjustments:
Loss from discontinued operations					4.2
Losses on West Book and other exited trading activities¹		113.3			66.2
Gain on land sale²		(9.5	)		(5.6	)

As Adjusted	$	31.7		$	13.8		$	0.11

Calculation of EBITDA As Adjusted:
Net Loss - GAAP basis				$	(51.0	)
Interest expense and preferred dividends					116.1
Income tax benefit					(23.7	)
Depreciation and amortization					75.9

EBITDA					117.3
Loss from discontinued operations					4.2
Losses on West Book and other exited trading activities					113.3
Gain on land sale					(9.5	)

Adjusted EBITDA				$	225.3

FOOTNOTES:

¹	This amount is included in Operating revenues on the Consolidated Statement of Operations.

²	This amount is included in Other income, net, on the Consolidated Statement of Operations.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in millions, except per share data; unaudited)


THREE MONTHS ENDED JUNE 30, 2004	NET LOSS			DILUTED LOSS PER SHARE
Calculation of adjusted net loss:

Net loss – GAAP basis		($39.5	)		($0.31	)

Adjustments:
Loss from discontinued operations		6.7
Loss on release of gas pipeline capacity¹		6.7

Adjusted Net Loss	$	(26.1	)		($0.21	)

Calculation of adjusted EBITDA:
Net loss – GAAP basis	$	(39.5	)
Loss from discontinued operations		6.7
Interest expense and preferred dividends		100.2
Income tax benefit		(29.3	)
Depreciation and amortization		85.2

EBITDA from continuing operations		123.3
Loss on release of gas pipeline capacity		11.7

Adjusted EBITDA from continuing operations	$	135.0


THREE MONTHS ENDED JUNE 30, 2003	NET LOSS			DILUTED LOSS PER SHARE
GAAP basis	$	(231.5	)	$	(1.82	)

Adjustments²:
Unrealized loss on renegotiation of CDWR contract³		87.4
Unrealized losses on West Book trading activities³		97.2
Baltimore Gas & Electric contract termination costs⁴		18.4

As Adjusted	$	(28.5	)	$	(0.23	)

GAAP basis	$	(231.5	)
Interest expense and preferred dividends		115.9
Income tax benefit		(167.4	)
Depreciation and amortization		79.5

EBITDA		(203.5	)
Unrealized loss on renegotiation of CDWR contract		152.2
Unrealized losses on West Book trading activities		169.4
Baltimore Gas & Electric contract termination costs		32.0

Adjusted EBITDA²	$	150.1

FOOTNOTES:

¹	This amount is included in Purchased power and transmission on the Consolidated Statement of Operations.

²	Not adjusted for estimated net energy trading gains of $18.2 million, consisting of realized gains of $19.7 million and unrealized losses of $1.5 million.

³	These amounts are included in Operating revenues on the Consolidated Statement of Operations.

⁴	This amount is included in Operations and maintenance expense on the Consolidated Statement of Operations.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in millions, except per share data)

(unaudited)


THREE MONTHS ENDED MARCH 31, 2004	INCOME BEFORE INCOME TAXES AND MINORITY INTEREST			NET INCOME (LOSS)			DILUTED EARNINGS PER SHARE
GAAP basis	$	60.7		$	33.3		$	0.25
Adjustments¹:
Gain on California contract escrow release		(68.1	)		(39.4	)
Write-off of 2003 financing costs		14.1			8.2
Gain on land sale, New York office space charge (net)		(4.2	)		(2.4	)

As Adjusted	$	2.5		($	0.3	)	$	—

GAAP basis				$	33.3
Interest expense and preferred dividends					132.2
Income tax expense					25.5
Depreciation and amortization					83.3

EBITDA					274.3
Gain on California contract escrow release					(68.1	)
Gain on land sale, New York office space charge (net)					(4.2	)

Adjusted EBITDA¹				$	202.0


THREE MONTHS ENDED MARCH 31, 2003	LOSS BEFORE INCOME TAXES, MINORITY INTEREST AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES			NET LOSS			DILUTED LOSS PER SHARE
GAAP basis	($	79.0	)	($	58.8	)	($	0.46	)
Adjustments²:
Gain on SFAS 71		(75.8	)		(39.3	)
Loss on assets retired/held for sale		37.5			19.4
Special termination and other benefits		15.7			8.1
Impairment of New York office		4.6			2.4
Other³		12.6			6.5
Cumulative effect of accounting changes					20.7

As Adjusted	($	84.4	)	($	41.0	)	($	0.32	)

GAAP basis				($	58.8	)
Interest expense and preferred dividends					96.8
Income tax benefit					(38.0	)
Depreciation and amortization					77.6

EBITDA					77.6
Gain on SFAS 71					(75.8	)
Loss on assets retired/held for sale					37.5
Special termination and other benefits					15.7
Impairment of New York office					4.6
Other³					12.6
Cumulative effect of accounting changes					20.7

Adjusted EBITDA²				$	92.9

FOOTNOTES:

¹	Adjustments for 2004 exclude $9.2 million of charges related to Allegheny Ventures for write-downs of inventory and discontinued product ($4.3 million), equity interests ($2.3 million) and adjustments in revenue recognition for a percentage of completion contract ($2.6 million).

²	Adjustments for 2003 exclude estimated energy trading losses totaling $102.2 million. These losses were primarily the result of trading activities in the Western United States energy markets, which Allegheny exited in 2003.

³	Charges related to the St. Joseph’s generating plant lease ($2.0 million), additional Enron litigation reserves ($7.0 million) and additional costs attributable to asset sales ($3.6 million).

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in millions)

(unaudited)


ADJUSTED EBITDA	TWELVE MONTHS ENDED DECEMBER 31, 2003			TWELVE MONTHS ENDED DECEMBER 31, 2004			TWELVE MONTHS ENDED SEPTEMBER 30, 2005
Calculation of Adjusted EBITDA:
Net (Loss) Income - GAAP basis	$	(355.0	)	$	(310.6	)	$	132.3
Cumulative effect of accounting changes		20.7
Loss from discontinued operations		25.3			440.3			20.6
Interest expense and preferred dividends		427.8			405.2			470.2
Income tax (benefit) expense		(202.2	)		79.7			109.1
Depreciation and amortization		286.2			299.4			307.0

EBITDA from continuing operations		202.8			914.0			1,039.2
Gain on SFAS 71		(75.8	)
Loss on assets retired/held-for-sale		37.5
Special termination and other benefits		15.7
Impairment of New York office		4.6
Losses on West Book and other exited trading activities		434.9
Baltimore Gas & Electric contract termination costs		32.0
Gain on land sale		(9.5	)
Receipt of payment from PURPA hydro facility		(19.9	)
Other		12.6
Gain on California contract escrow release					(68.1	)
Gain on land sale, New York office space charge (net)					(4.2	)
Loss on release of gas pipeline capacity					11.7
Gain on sale of OVEC power agreement and shares					(94.8	)		(94.8	)
Severance accrual					3.9			3.9
Cash receipt from former trading executive’s forfeited assets								(11.2	)
Receipt of Hatfield power station insurance proceeds								(17.7	)
Impairment charge on Ohio T&D assets								30.5

Adjusted EBITDA from continuing operations	$	634.9		$	762.5		$	949.9


ADJUSTED INTEREST EXPENSE	TWELVE MONTHS ENDED DECEMBER 31, 2003			TWELVE MONTHS ENDED DECEMBER 31, 2004			TWELVE MONTHS ENDED SEPTEMBER 30, 2005
Calculation of Adjusted Interest Expense:
Interest Expense - GAAP basis	$	422.8		$	400.2		$	465.1
Write-off of deferred financing costs					(23.3	)		(9.2	)
Interest expense related to Merrill Lynch summary judgment								(38.5	)
Expense related to conversion of trust preferred securities								(47.2	)
Redemption costs of 10.25% and 13.0% Senior Notes								(32.6	)

Adjusted Interest Expense	$	422.8		$	376.9		$	337.6


RATIOS	TWELVE MONTHS ENDED DECEMBER 31, 2003			TWELVE MONTHS ENDED DECEMBER 31, 2004			TWELVE MONTHS ENDED SEPTEMBER 30, 2005
Total Debt Outstanding	$	5,725.9		$	4,925.9		$	4,232.0
Total Debt Outstanding / EBITDA:
GAAP basis		28.2x			5.4x			4.1x
Adjusted basis		9.0x			6.5x			4.5x
EBITDA / Interest Expense:
GAAP basis		0.5x			2.3x			2.2x
Adjusted basis		1.5x			2.0x			2.8x

Allegheny Energy (AYE) Inactive 8-KIn addition to historical information, this presentation contains a number of " forward-looking