Allegheny Energy (AYE) 8-K Allegheny Energy Reports First Quarter 2010 Financial 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 First Quarter 2010 Financial Results

GREENSBURG, Pa., May 5, 2010 — Allegheny Energy, Inc.(NYSE: AYE) today reported financial results for the first quarter of 2010.

Consolidated Net Income Attributable to Allegheny Energy, Inc.

	$ millions				Per share
Three Months Ended March 31	2010		2009		2010		2009
GAAP	$	88.2	$	133.9	$	0.52	$	0.79
Adjusted		102.9		114.1		0.61		0.67

Adjusted net income for the first quarter of 2010 excludes unrealized pre-tax losses of $10.9 million from economic hedges that do not qualify for hedge accounting and $13.2 million of pre-tax expenses related to the proposed merger with FirstEnergy Corp. Adjusted net income for the first quarter of 2009 excludes a net unrealized pre-tax gain of $32.4 million on economic hedges.

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

“Both merchant generation and regulated operations earned a solid profit during the quarter, but earnings were down due to nearly $30 million of costs incurred for the biggest storm-related service restoration in our history,” said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. “Transmission expansion contributed to earnings and retail electricity sales grew, the first year-over-year increase in two years. Going forward, we remain focused on the fundamentals of running our business well and completing our proposed merger with FirstEnergy.”

1

First Quarter Consolidated Results

Adjusted net income for the first quarter of 2010 decreased by $11.2 million compared with the same period in 2009. Key factors contributing to the results include:

• Adjusted operating revenues increased by $135.0 million compared to the first quarter of 2009, reflecting increased transmission expansion and capacity revenues, power hedges and higher rates in West Virginia for fuel and purchased power costs. Generation output increased, but this improvement was offset by lower power prices.

• Fuel expense increased by $58.9 million due to higher coal prices, increased generation output and higher costs associated with new scrubber operations.

• Purchased power costs increased by $15.0 million, primarily due to increased purchases from third parties to serve Maryland and Virginia customers.

• Deferred energy cost income decreased by $25.0 million, largely due to the timing of fuel and purchased power cost recovery in West Virginia.

• Adjusted operations and maintenance expense increased by $38.3 million, reflecting costs of $29.3 million to restore service following severe winter weather in February 2010, and an adjustment to employee benefit plan liabilities.

• Depreciation increased by $11.4 million, primarily due to placing scrubber equipment in service at the Hatfield’s Ferry and Fort Martin power plants in 2009.

• Interest expense increased by $19.6 million, primarily reflecting a decrease in capitalized interest due to placing scrubber equipment in service and higher interest costs to finance transmission expansion.

• Adjusted income tax expense decreased by $23.1 million, due to lower pre-tax income and a lower effective tax rate. 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.

Adjusted EBITDA for the first quarter of 2010 was $324.9 million, a decrease of $3.3 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.

2

First Quarter Segment Results

Net Income Attributable to Allegheny Energy, Inc.

Three Months Ended March 31

($ millions)

	2010		2009		Decrease
Merchant Generation:
GAAP	$	42.5	$	79.9	$	(37.4	)
Adjusted		51.0		60.1		(9.1	)
Regulated Operations:
GAAP	$	45.5	$	53.8	$	(8.3	)
Adjusted		51.7		53.8		(2.1	)

Adjusted net income for the Merchant Generation segment in 2010 and 2009 excludes net unrealized gains and losses from economic hedges that do not qualify for hedge accounting. Adjusted net income for both segments for 2010 excludes merger costs. There were no adjustments for the Regulated Operations segment in 2009.

Merchant Generation:Adjusted net income decreased by $9.1 million compared to the same period a year earlier. Results were adversely impacted by lower market prices, higher fuel costs reflecting higher coal prices and increased generation output, and higher interest and depreciation expense due to placing scrubber equipment in service. These negative factors were partially offset by power hedges, increased capacity revenues and lower income taxes. In the first quarter of 2009, income taxes reflected the $9.5 million non-cash charge previously mentioned.

Regulated Operations:Adjusted net income decreased by $2.1 million compared to the same period a year earlier. Results were adversely impacted by higher operations and maintenance expense, primarily due to storm restoration efforts in February, partially offset by increased retail sales and higher revenue from transmission expansion.

3

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 presenting 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.

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

Investor Conference Call

Allegheny Energy will discuss these results in a live Internet broadcast at 1:00 p.m. Eastern Daylight Time on Wednesday, May 5, 2010. To listen, visitwww.alleghenyenergy.com. Slides to be used in the Webcast presentation will be available atwww.alleghenyenergy.com several hours prior to the broadcast. 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 the company’s 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. These forward-looking statements speak only as of the date of this document. Allegheny Energy undertakes no obligation to update its forward-looking statements to reflect events or circumstances after the date of this release.

-###-

4

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

	Three Months Ended March  31,
(In millions, except per share amounts)	2010		2009
Operating revenues	$	1,048.9	$	957.2
Operating expenses:
Fuel		317.9		259.0
Purchased power and transmission		148.9		133.9
Deferred energy costs, net		8.0		(17.0	)
Operations and maintenance		218.7		167.2
Depreciation and amortization		79.9		68.5
Taxes other than income taxes		57.0		55.8
Total operating expenses		830.4		667.4
Operating income		218.5		289.8
Other income (expense), net		2.4		2.5
Interest expense		76.9		57.3
Income before income taxes		144.0		235.0
Income tax expense		55.8		100.9
Net income		88.2		134.1
Net income attributable to noncontrolling interest		—		(0.2	)
Net income attributable to Allegheny Energy, Inc.	$	88.2	$	133.9
Earnings per common share attributable to Allegheny Energy, Inc.:
Basic	$	0.52	$	0.79
Diluted	$	0.52	$	0.79
Average common shares outstanding:
Basic		169.7		169.4
Diluted		170.1		169.9
Dividends per common share	$	0.15	$	0.15

5

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)

(In millions)	March 31, 2010			December 31, 2009
ASSETS
Current Assets:
Cash and cash equivalents	$	185.9		$	286.6
Accounts receivable:
Customer		271.2			188.2
Unbilled utility revenue		98.0			116.4
Wholesale and other		46.5			64.4
Allowance for uncollectible accounts		(15.5	)		(14.0	)
Materials and supplies		112.2			110.6
Fuel		187.7			206.4
Deferred income taxes		39.0			81.5
Prepaid taxes		87.6			48.4
Collateral deposits		20.1			20.8
Derivative assets		24.4			4.6
Restricted funds		16.8			25.9
Regulatory assets		129.0			132.7
Assets held for sale		39.1			32.4
Other		37.3			40.4
Total current assets		1,279.3			1,345.3
Property, Plant and Equipment:
Generation		7,513.5			7,469.4
Transmission		1,312.6			1,313.2
Distribution		3,823.0			3,784.4
Other		439.1			440.7
Accumulated depreciation		(5,160.0	)		(5,104.9	)
Subtotal		7,928.2			7,902.8
Construction work in progress		912.7			800.6
Property, plant and equipment held for sale, net		257.3			253.7
Total property, plant and equipment, net		9,098.2			8,957.1
Other Noncurrent Assets:
Regulatory assets		723.7			717.3
Goodwill		367.3			367.3
Restricted funds		45.9			60.2
Investments in unconsolidated affiliates		44.1			26.7
Derivative assets		36.7			—
Other		105.0			115.2
Total other noncurrent assets		1,322.7			1,286.7
Total Assets	$	11,700.2		$	11,589.1

6

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

(unaudited)

	March 31,			December 31,
(In millions, except share amounts)	2010			2009
LIABILITIES AND EQUITY
Current Liabilities:
Long-term debt due within one year	$	167.0		$	140.8
Accounts payable		412.7			411.4
Accrued taxes		65.8			87.3
Payable to PJM for FTRs		24.9			31.7
Derivative liabilities		7.8			24.4
Regulatory liabilities		20.9			37.4
Accrued interest		89.7			68.3
Security deposits		52.5			51.0
Liabilities associated with assets held for sale		8.9			10.1
Other		108.8			123.2
Total current liabilities		959.0			985.6
Long-term Debt		4,397.7			4,417.0
Deferred Credits and Other Liabilities:
Derivative liabilities		5.8			6.7
Income taxes payable		87.6			85.7
Investment tax credit		61.0			61.6
Deferred income taxes		1,537.2			1,501.3
Regulatory liabilities		468.8			461.2
Pension and other postretirement employee benefit plan liabilities		619.2			597.4
Adverse power purchase commitment		109.9			114.4
Liabilities associated with assets held for sale		51.2			53.1
Other		176.8			177.0
Total deferred credits and other liabilities		3,117.5			3,058.4
Equity:
Common stock - $1.25 par value per share, 260 million shares authorized and 169,629,317 and 169,620,917 shares issued at March 31, 2010 and December 31, 2009, respectively		212.0			212.0
Other paid-in capital		1,974.1			1,970.2
Retained earnings		1,085.5			1,022.7
Treasury stock at cost - 51,313 shares at March 31, 2010 and December 31, 2009, respectively		(1.8	)		(1.8	)
Accumulated other comprehensive loss		(43.8	)		(89.9	)
Total Allegheny Energy, Inc. common stockholders’ equity		3,226.0			3,113.2
Noncontrolling interest		—			14.9
Total equity		3,226.0			3,128.1
Total Liabilities and Equity	$	11,700.2		$	11,589.1

7

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

SEGMENT STATEMENTS OF INCOME

(unaudited)

	Three Months Ended March 31, 2010
(In millions)	Merchant Generation			Regulated Operations			Eliminations			Total
Operating revenues	$	462.6		$	961.0		$	(374.7	)	$	1,048.9
Operating expenses:
Fuel		234.4			83.5			—			317.9
Purchased power and transmission		9.6			512.6			(373.3	)		148.9
Deferred energy costs, net		—			8.0			—			8.0
Operations and maintenance		66.0			154.1			(1.4	)		218.7
Depreciation and amortization		32.2			48.1			(0.4	)		79.9
Taxes other than income taxes		13.2			43.8			—			57.0
Total operating expenses		355.4			850.1			(375.1	)		830.4
Operating income		107.2			110.9			0.4			218.5
Other income (expense), net		0.6			5.0			(3.2	)		2.4
Interest expense		36.0			41.6			(0.7	)		76.9
Income before income taxes		71.8			74.3			(2.1	)		144.0
Income tax expense		27.0			28.8			—			55.8
Net income		44.8			45.5			(2.1	)		88.2
Net income attributable to noncontrolling interest		(2.3	)		—			2.3			—
Net income attributable to Allegheny Energy, Inc.	$	42.5		$	45.5		$	0.2		$	88.2
	Three Months Ended March 31, 2009
(In millions)	Merchant Generation			Regulated Operations			Eliminations			Total
Operating revenues	$	455.6		$	857.9		$	(356.3	)	$	957.2
Operating expenses:
Fuel		185.4			73.6			—			259.0
Purchased power and transmission		9.4			479.4			(354.9	)		133.9
Deferred energy costs, net		—			(17.0	)		—			(17.0	)
Operations and maintenance		62.0			106.6			(1.4	)		167.2
Depreciation and amortization		23.8			45.2			(0.5	)		68.5
Taxes other than income taxes		12.8			43.0			—			55.8
Total operating expenses		293.4			730.8			(356.8	)		667.4
Operating income		162.2			127.1			0.5			289.8
Other income (expense), net		0.7			4.6			(2.8	)		2.5
Interest expense		17.9			39.6			(0.2	)		57.3
Income before income taxes		145.0			92.1			(2.1	)		235.0
Income tax expense		62.8			38.1			—			100.9
Net income		82.2			54.0			(2.1	)		134.1
Net income attributable to noncontrolling interest		(2.3	)		(0.2	)		2.3			(0.2	)
Net income attributable to Allegheny Energy, Inc.	$	79.9		$	53.8		$	0.2		$	133.9

8

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

CONSOLIDATED DATA FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009

(in millions, except per share data)

(unaudited)

THREE MONTHS ENDED MARCH 31, 2010	INCOME BEFORE INCOME TAXES			NET INCOME ATTRIBUTABLE TO ALLEGHENY ENERGY, INC.			DILUTED EARNINGS PER SHARE
Calculation of Adjusted Income:
Income - GAAP Basis	$	144.0		$	88.2		$	0.52
Adjustments:
Net unrealized loss associated with economic hedges1		10.9			6.6
Expense associated with the planned merger2		13.2			8.1
Adjusted Income	$	168.1		$	102.9		$	0.61
Calculation of Adjusted EBITDA:
Net Income attributable to Allegheny Energy, Inc. - GAAP basis				$	88.2
Interest expense					76.9
Income tax expense					55.8
Depreciation and amortization					79.9
EBITDA					300.8
Net unrealized loss associated with economic hedges1					10.9
Expense associated with the planned merger2					13.2
Adjusted EBITDA				$	324.9
THREE MONTHS ENDED MARCH 31, 2009	INCOME BEFORE INCOME TAXES			NET INCOME ATTRIBUTABLE TO ALLEGHENY ENERGY, INC.			DILUTED EARNINGS 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

See accompanying Notes to Reconciliation of Non-GAAP Financial Measures

9

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

SEGMENT DATA FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009

(in millions)

(unaudited)

	MERCHANT GENERATION						REGULATED OPERATIONS
THREE MONTHS ENDED MARCH 31, 2010	INCOME BEFORE INCOME TAXES			NET INCOME ATTRIBUTABLE TO ALLEGHENY ENERGY, INC.			INCOME BEFORE INCOME TAXES		NET INCOME ATTRIBUTABLE TO ALLEGHENY ENERGY, INC.
Calculation of Adjusted Income:
Income - GAAP Basis	$	71.8		$	42.5		$	74.3	$	45.5
Adjustments:
Net unrealized loss associated with economic hedges1		10.9			6.6			—		—
Expense associated with the planned merger2		3.1			1.9			10.1		6.2
Adjusted Income	$	85.8		$	51.0		$	84.4	$	51.7
Calculation of Adjusted EBITDA:
Net income attributable to Allegheny Energy, Inc. - GAAP basis				$	42.5				$	45.5
Interest expense					36.0					41.6
Income tax expense					27.0					28.8
Depreciation and amortization					32.2					48.1
EBITDA					137.7					164.0
Net unrealized loss associated with economic hedges1					10.9					—
Expense associated with the planned merger2					3.1					10.1
Adjusted EBITDA				$	151.7				$	174.1
	MERCHANT GENERATION						REGULATED OPERATIONS
THREE MONTHS ENDED MARCH 31, 2009	INCOME BEFORE INCOME TAXES			NET INCOME ATTRIBUTABLE TO ALLEGHENY ENERGY, INC.			INCOME BEFORE INCOME TAXES		NET INCOME ATTRIBUTABLE TO ALLEGHENY ENERGY, INC.
Calculation of Adjusted Income:
Income/(loss) - GAAP Basis	$	145.0		$	79.9		$	92.1	$	53.8
Adjustments:
Net unrealized gain associated with economic hedges1		(32.4	)		(19.8	)		—		—
Adjusted Income	$	112.6		$	60.1		$	92.1	$	53.8
Calculation of Adjusted EBITDA:
Net income/(loss) attributable to Allegheny Energy, Inc. - GAAP basis				$	79.9				$	53.8
Interest expense					17.9					39.6
Income tax expense					62.8					38.1
Depreciation and amortization					23.8					45.2
EBITDA					184.4					176.7
Net unrealized gain associated with economic hedges1					(32.4	)				—
Adjusted EBITDA				$	152.0				$	176.7

See accompanying Notes to Reconciliation of Non-GAAP Financial Measures

10

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(in millions)

(unaudited)

ADJUSTED OPERATING REVENUE	THREE MONTHS ENDED MAR 31, 2010			THREE MONTHS ENDED MAR 31, 2009
Operating revenue:
As reported	$	1,048.9		$	957.2
Net unrealized (gain)/loss associated with economic hedges1		10.9			(32.4	)
As Adjusted	$	1,059.8		$	924.8
ADJUSTED OPERATIONS AND MAINTENANCE EXPENSE	THREE MONTHS ENDED MAR 31, 2010			THREE MONTHS ENDED MAR 31, 2009
Operations and maintenance expense:
As reported	$	218.7		$	167.2
Expense associated with the planned merger2		(13.2	)		—
As Adjusted	$	205.5		$	167.2
ADJUSTED INCOME TAXES	THREE MONTHS ENDED MAR 31, 2010			THREE MONTHS ENDED MAR 31, 2009
Income taxes:
As reported	$	55.8		$	100.9
Income taxes related to net unrealized gain/(losses) associated with economic hedges1		4.3			(12.6	)
Income taxes related to expense associated with the planned merger2		5.1			—
As Adjusted	$	65.2		$	88.3

See accompanying Notes to Reconciliation of Non-GAAP Financial Measures

11

NOTES TO RECONCILIATION OF NON-GAAP FINANCIAL MEASURES:

(1) Adjustments relating to certain unrealized gains/(losses) included in GAAP operating revenues:

	THREE MONTHS ENDED MAR 31, 2010			THREE MONTHS ENDED MAR 31, 2009
Financial transmission rights	$	0.1		$	21.2
Power hedges		(5.1	)		(9.1	)
Hedging strategy relating to a natural gas transportation contract		(5.9	)		20.3
Total adjustments	$	(10.9	)	$	32.4

(2) In February, 2010, Allegheny Energy, Inc. and FirstEnergy Corp. entered into an Agreement and Plan of Merger. Incremental merger costs are included in GAAP operations and maintenance expense.

12

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

OPERATING STATISTICS

(unaudited)

Three Months Ended March 31,

	2010		2009		Change
REGULATED OPERATIONS
Retail electricity sales (thousand MWh):
Residential	5,256		5,243		0.2	%
Commercial	2,823		2,775		1.7	%
Industrial and other	3,721		3,513		5.9	%
Total	11,800		11,531		2.3	%
Usage per customer (KWh):
Residential	3,833		3,836		-0.1	%
Commercial	15,101		14,951		1.0	%
Industrial	134,958		128,380		5.1	%
Regulated generation (thousand MWh):
Supercritical coal	2,484		2,471		0.5	%
Other coal	223		147		51.7	%
Hydro and other	120		101		19.0	%
Total	2,827		2,719		4.0	%
MERCHANT GENERATION
Generation (thousand MWh):
Supercritical coal	7,158		6,451		11.0	%
Other coal	814		571		42.6	%
Gas	90		83		8.4	%
Hydro and other	346		283		22.3	%
Total	8,408		7,388		13.8	%
Net capacity factor:
Supercritical coal	74	%	67	%	7.0	%
All coal	70	%	62	%	8.0	%
Equivalent availability factor:
Supercritical coal	81	%	79	%	2.0	%
All coal	83	%	80	%	3.0	%
DEGREE DAYS
Heating	2,766		2,760		0.2	%
Cooling	0		2		NM	*

* Not meaningful

13