Exhibit 99.1

LOGO


800 Cabin Hill Drive, Greensburg, PA 15601-1650

Media contact:				Investor contact:
David Neurohr				Max Kuniansky
Director, External Communications				Executive Director, Investor Relations and Corporate Communications
Phone: (724) 838-6020
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 Strong Financial Results for Year 2010

GREENSBURG, Pa., February 23, 2011 – Allegheny Energy, Inc. (NYSE: AYE) today reported financial results for the fourth quarter and full year 2010.

Consolidated Net Income Attributable to Allegheny Energy, Inc.


	$ millions				Per share
	2010		2009		2010		2009
Three Months Ended December 31
GAAP	$	88.2	$	109.3	$	0.52	$	0.64
Adjusted		105.9		112.7		0.62		0.66

Twelve Months Ended December 31
GAAP	$	411.7	$	392.8	$	2.42	$	2.31
Adjusted		430.6		396.6		2.53		2.33

Adjusted net income for the fourth quarter of 2010 excludes $3.2 million of pre-tax expense related to the proposed merger with FirstEnergy Corp. and unrealized pre-tax losses of $25.4 million from economic hedges that do not qualify for hedge accounting. Adjusted net income for the fourth quarter of 2009 excludes $13.4 million of pre-tax interest expense related to a debt tender offer and unrealized pre-tax gains of $7.9 million from 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.

“2010 marks our seventh consecutive year of earnings growth,” said Paul J. Evanson, Chairman, President and Chief Executive Officer of Allegheny Energy. “During the year, we again held O&M costs flat, substantially completed our TrAIL transmission line in record time, and charted a new future for Allegheny with our pending merger with FirstEnergy. We look forward to the opportunities created by joining a larger and more diversified energy company.”

Fourth Quarter Consolidated Results

Adjusted net income for the fourth quarter of 2010 decreased by $6.8 million compared with the same period in 2009. Adjusted results for 2009 included a $10.5 million after-tax benefit associated with the purchase of hydro generation facilities. Key positive factors contributing to results for the fourth quarter of 2010 include increased revenue from transmission expansion, a base rate increase in West Virginia, increased industrial sales and favorable weather. These positive factors were offset by the effect of power hedges and the sale of the Virginia distribution business.

A reduction in tax provisions benefited adjusted net income from regulated operations by $18.8 million in the fourth quarter of 2010. In the fourth quarter of the prior year, changes in Pennsylvania tax law benefited adjusted net income from merchant generation by $18.1 million.

Adjusted EBITDA for the fourth quarter of 2010 was $304.2 million, a decrease of $8.2 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.

Fourth Quarter Segment Results

Net Income Attributable to Allegheny Energy, Inc.

Three Months Ended December 31

($ millions)


	2009		2010		Increase (Decrease)
Regulated Operations:
GAAP	$	80.2	$	34.8	$	45.4
Adjusted		81.7		34.8		46.9

Merchant Generation:
GAAP	$	7.8	$	74.3	$	(66.5	)
Adjusted		24.0		77.7		(53.7	)

Adjusted net income for both segments for 2010 excludes merger-related costs. Adjusted net income for the Merchant Generation segment in both 2010 and 2009 excludes net unrealized gains and losses from economic hedges that do not qualify for hedge accounting. Adjusted net income in the Merchant Generation business for 2009 also excludes expenses related to a debt tender offer. There were no adjustments in the Regulated Operations segment in 2009.

Twelve-Month Consolidated Results

Adjusted net income for the twelve months ended December 31, 2010 increased by $34.0 million compared to the same period in 2009. Key factors contributing to the improved results include increased generation output, higher energy and capacity prices, increased revenue from transmission expansion, higher retail electricity sales, and a base rate increase in West Virginia, partially offset by higher fuel costs, the effect of power hedges, the sale of the Virginia distribution business, and increased interest and depreciation expense reflecting the operation of new scrubbers.

Adjusted EBITDA for the twelve-month period increased by $111.7 million compared to the same period of the prior year. 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.

Twelve-Month Segment Results

Net Income Attributable to Allegheny Energy, Inc.

Twelve Months Ended December 31

($ millions)


	2009		2010		Increase (Decrease)
Regulated Operations:
GAAP	$	247.7	$	157.9	$	89.8
Adjusted		236.1		157.9		78.2

Merchant Generation:
GAAP	$	163.1	$	234.0	$	(70.9	)
Adjusted		193.6		237.8		(44.2	)

Adjusted net income for both segments for 2010 excludes merger-related costs. Adjusted net income in the Regulated Operations segment for 2010 excludes a gain from the sale of the company’s Virginia distribution business. There were no adjustments in the Regulated Operations segment in 2009. Adjusted net income for the Merchant Generation segment for 2010 and 2009 excludes net unrealized gains and losses from economic hedges that do not qualify for hedge accounting, as well as interest expense related to debt tender offers.

Allegheny Energy: An Era of Accomplishments

“We’ve achieved a great deal since we refocused on our core business and began restoring the company’s financial health in 2003,” said Mr. Evanson. “Success would not have been possible without the dedication of our hard-working employees. Together, we’ve made great progress.”

Key accomplishments since 2003 include:

Restored Financial Condition

•

Reduced debt

•

Returned to profitability from brink of bankruptcy

•

Restored investment grade credit ratings

•

Reinstated dividend

Created a High-Performance Culture

•

Achieved high customer satisfaction ratings; ranked #1 among northeastern US utilities for six consecutive years by TQS Research (large commercial and industrial customer survey)

•

Improved safety performance to record levels (see Exhibit 1)

•

Reduced operations and maintenance expense and held costs virtually unchanged for past five years (see Exhibit 2)

Launched Transmission Expansion Business

•

Nearly completed multi-state Trans-Allegheny Interstate Line (TrAIL) in unprecedented 5-year period

Increased Profitability

•

Achieved growth in adjusted earnings per share each year since 2003 (see Exhibit 3)

Committed to Environmental Stewardship

•

Invested $1.3 billion to add scrubbers at two power plants

•

Completed scrubber projects on time, on budget

“As we move forward, Allegheny will become part of FirstEnergy, a much larger company with a strong balance sheet, a diversified generation fleet including nuclear plants, solid regulated operations, and better access to capital markets,” Mr. Evanson said. “The new FirstEnergy will be positioned to prosper and grow well into the future.”

Merger Update

The companies have received approvals for their merger from the Virginia State Corporation Commission, the Public Service Commission of West Virginia, and the Maryland Public Service Commission, and have a comprehensive settlement with the majority of the parties to the merger application pending before the Pennsylvania Public Utility Commission. The merger has received approval from the Federal Energy Regulatory Commission and completed the U.S. Department of Justice review process. Shareholders of both FirstEnergy and Allegheny Energy overwhelmingly approved proposals related to the merger.

Investor Call Will Not Be Held

Due to the imminent merger with FirstEnergy, Allegheny Energy will not host an investor conference call to discuss its quarterly results. The companies expect to complete the merger in the first quarter of this year.

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. Additional reconciliations are available at www.alleghenyenergy.com.

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 1.5 million customers in Pennsylvania, West Virginia and Maryland. For more information, visit www.alleghenyenergy.com.

###

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended December 31,					Twelve Months Ended December 31
(In millions, except per share amounts)	2010		2009			2010			2009
Operating revenues	$	864.6	$	861.1		$	3,902.9		$	3,426.8

Operating expenses:
Fuel		255.7		222.9			1,192.6			886.6
Purchased power and transmission		113.2		121.7			502.9			502.0
Deferred energy costs, net		10.0		(25.5	)		38.1			(64.4	)
Gain on sale of Virginia distribution business		0.5		0			(44.6	)		0
Operations and maintenance		159.5		168.2			732.9			687.1
Depreciation and amortization		81.8		74.9			323.5			282.1
Taxes other than income taxes		54.1		53.9			226.0			213.6

Total operating expenses		674.8		616.1			2,971.4			2,507.0

Operating income		189.8		245.0			931.5			919.8
Other income (expense), net		3.5		0.9			13.3			7.0
Interest expense		76.3		89.7			316.4			291.1

Income before income taxes		117.0		156.2			628.4			635.7
Income tax expense		28.8		46.4			216.7			241.6

Net income		88.2		109.8			411.7			394.1
Net income attributable to noncontrolling interests		0		(0.5	)		0			(1.3	)

Net income attributable to Allegheny Energy, Inc.	$	88.2	$	109.3		$	411.7		$	392.8

Earnings per common share attributable to Allegheny Energy, Inc.:
Basic	$	0.52	$	0.64		$	2.42		$	2.32
Diluted	$	0.52	$	0.64		$	2.42		$	2.31

Average common shares outstanding:
Basic		170.1		169.6			169.8			169.5
Diluted		170.6		170.1			170.3			170.0

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	As of December 31,
(In millions)	2010			2009
ASSETS
Current Assets:
Cash and cash equivalents	$	490.2		$	286.6
Accounts receivable:
Customer		245.9			188.2
Unbilled utility revenue		124.1			116.4
Wholesale and other		53.7			64.4
Allowance for uncollectible accounts		(15.7	)		(14.0	)
Materials and supplies		108.4			110.6
Fuel		151.3			206.4
Deferred income taxes		0			81.5
Prepaid taxes		48.9			48.4
Collateral deposits		30.7			20.8
Derivative assets		24.5			4.6
Restricted funds		46.9			25.9
Regulatory assets		177.5			132.7
Assets held for sale		0			32.4
Other		29.2			40.4

Total current assets		1,515.6			1,345.3


Property, Plant and Equipment:
Generation		7,623.2			7,469.4
Transmission		1,421.1			1,313.2
Distribution		3,937.5			3,784.4
Other		515.0			440.7
Accumulated depreciation		(5,362.9	)		(5,104.9	)

Subtotal		8,133.9			7,902.8
Construction work in progress		1,168.0			800.6
Property, plant and equipment held for sale, net		0			253.7

Total property, plant and equipment, net		9,301.9			8,957.1


Other Noncurrent Assets:
Regulatory assets		706.1			717.3
Goodwill		367.3			367.3
Restricted funds		29.4			60.2
Investments in unconsolidated affiliates		49.8			26.7
Other		105.7			115.2

Total other noncurrent assets		1,258.3			1,286.7

Total Assets	$	12,075.8		$	11,589.1

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)


	As of December 31,
(In millions, except share amounts)	2010			2009
LIABILITIES AND EQUITY
Current Liabilities:
Long-term debt due within one year	$	15.5		$	140.8
Accounts payable		383.4			411.4
Accrued taxes		99.5			87.3
Payable to PJM for FTRs, excluding portion netted against derivative assets		0			31.7
Derivative liabilities		6.0			24.4
Regulatory liabilities		9.8			37.4
Accrued interest		72.2			68.3
Security deposits		55.6			51.0
Liabilities associated with assets held for sale		0			10.1
Deferred income taxes		26.1			0
Other		122.8			123.2

Total current liabilities		790.9			985.6


Long-term Debt:
Securitized debt-Environmental Control Bonds		481.0			496.5
Other long-term debt		4,205.0			3,920.5

Total long-term debt		4,686.0			4,417.0


Deferred Credits and Other Liabilities:
Derivative liabilities		7.4			6.7
Income taxes payable		43.4			85.7
Investment tax credit		58.3			61.6
Deferred income taxes		1,653.6			1,501.3
Regulatory liabilities		512.8			461.2
Pension and other postretirement employee benefit plan liabilities		596.8			597.4
Adverse power purchase commitment		96.3			114.4
Liabilities associated with assets held for sale		0			53.1
Other		188.6			177.0

Total deferred credits and other liabilities		3,157.2			3,058.4

Equity:
Common stock - $1.25 par value per share, 260,000,000 shares authorized and 170,028,499 and 169,620,917 shares issued at December 31, 2010 and 2009, respectively		212.5			212.0
Other paid-in capital		1,987.8			1,970.2
Retained earnings		1,307.0			1,022.7
Treasury stock at cost - 54,955 and 51,313 shares at December 31, 2010 and 2009, respectively		(1.9	)		(1.8	)
Accumulated other comprehensive loss		(63.7	)		(89.9	)

Total Allegheny Energy, Inc. common stockholders’ equity		3,441.7			3,113.2
Noncontrolling interest		0			14.9

Total equity		3,441.7			3,128.1

Total Liabilities and Equity	$	12,075.8		$	11,589.1

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

SEGMENT STATEMENTS OF INCOME

THREE MONTHS ENDED DECEMBER 31, 2010 AND 2009


(In millions)	Merchant Generation			Regulated Operations			Eliminations			Total
2010
Operating revenues	$	353.5		$	806.0		$	(294.9	)	$	864.6
Operating expenses:
Fuel		178.3			77.4			0			255.7
Purchased power and transmission		10.7			396.2			(293.7	)		113.2
Deferred energy costs, net		0			10.0			0			10.0
Gain on sale of Virginia distribution business		0			0.5			0			0.5
Operations and maintenance		61.9			98.8			(1.2	)		159.5
Depreciation and amortization		32.6			49.6			(0.4	)		81.8
Taxes other than income taxes		12.8			41.3			0			54.1

Total operating expenses		296.3			673.8			(295.3	)		674.8

Operating income		57.2			132.2			0.4			189.8
Other income (expense), net		0.6			5.3			(2.4	)		3.5
Interest expense		32.8			43.9			(0.4	)		76.3

Income before income taxes		25.0			93.6			(1.6	)		117.0
Income tax expense		15.4			13.4			0			28.8

Net income		9.6			80.2			(1.6	)		88.2
Net income attributable to noncontrolling interests		(1.8	)		0			1.8			0

Net income attributable to Allegheny Energy, Inc.	$	7.8		$	80.2		$	0.2		$	88.2


(In millions)	Merchant Generation			Regulated Operations			Eliminations			Total
2009
Operating revenues	$	420.6		$	741.5		$	(301.0	)	$	861.1
Operating expenses:
Fuel		185.4			37.5			0			222.9
Purchased power and transmission		(0.9	)		422.1			(299.5	)		121.7
Deferred energy costs, net		0			(25.5	)		0			(25.5	)
Operations and maintenance		46.0			123.7			(1.5	)		168.2
Depreciation and amortization		30.6			44.8			(0.5	)		74.9
Taxes other than income taxes		13.5			40.4			0			53.9

Total operating expenses		274.6			643.0			(301.5	)		616.1

Operating income		146.0			98.5			0.5			245.0
Other income (expense), net		(0.2	)		4.0			(2.9	)		0.9
Interest expense		50.6			39.6			(0.5	)		89.7

Income before income taxes		95.2			62.9			(1.9	)		156.2
Income tax expense		18.8			27.6			0			46.4

Net income		76.4			35.3			(1.9	)		109.8
Net income attributable to noncontrolling interests		(2.1	)		(0.5	)		2.1			(0.5	)

Net income attributable to Allegheny Energy, Inc.	$	74.3		$	34.8		$	0.2		$	109.3

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

SEGMENT STATEMENTS OF INCOME

YEAR ENDED DECEMBER 31, 2010 AND 2009


(In millions)	Merchant Generation			Regulated Operations			Eliminations			Total
2010
Operating revenues	$	1,758.6		$	3,440.3		$	(1,296.0	)	$	3,902.9
Operating expenses:
Fuel		876.0			316.6			0			1,192.6
Purchased power and transmission		38.4			1,755.2			(1,290.7	)		502.9
Deferred energy costs, net		0			38.1			0			38.1
Gain on sale of Virginia distribution business		0			(44.6	)		0			(44.6	)
Operations and maintenance		250.7			487.5			(5.3	)		732.9
Depreciation and amortization		129.7			195.5			(1.7	)		323.5
Taxes other than income taxes		51.2			174.8			0			226.0

Total operating expenses		1,346.0			2,923.1			(1,297.7	)		2,971.4

Operating income		412.6			517.2			1.7			931.5
Other income (expense), net		3.6			22.2			(12.5	)		13.3
Interest expense		145.8			173.7			(3.1	)		316.4

Income before income taxes		270.4			365.7			(7.7	)		628.4
Income tax expense		98.7			118.0			0			216.7

Net income		171.7			247.7			(7.7	)		411.7
Net income attributable to noncontrolling interests		(8.6	)		0			8.6			0

Net income attributable to Allegheny Energy, Inc.	$	163.1		$	247.7		$	0.9		$	411.7


(In millions)	Merchant Generation			Regulated Operations			Eliminations			Total
2009
Operating revenues	$	1,608.6		$	3,051.2		$	(1,233.0	)	$	3,426.8
Operating expenses:
Fuel		675.5			211.1			0			886.6
Purchased power and transmission		26.4			1,702.8			(1,227.2	)		502.0
Deferred energy costs, net		0			(64.4	)		0			(64.4	)
Operations and maintenance		247.0			445.9			(5.8	)		687.1
Depreciation and amortization		106.8			177.1			(1.8	)		282.1
Taxes other than income taxes		47.2			166.4			0			213.6

Total operating expenses		1,102.9			2,638.9			(1,234.8	)		2,507.0

Operating income		505.7			412.3			1.8			919.8
Other income (expense), net		1.0			17.1			(11.1	)		7.0
Interest expense		134.9			157.4			(1.2	)		291.1

Income before income taxes		371.8			272.0			(8.1	)		635.7
Income tax expense		128.8			112.8			0			241.6

Net income		243.0			159.2			(8.1	)		394.1
Net income attributable to noncontrolling interests		(9.0	)		(1.3	)		9.0			(1.3	)

Net income attributable to Allegheny Energy, Inc.	$	234.0		$	157.9		$	0.9		$	392.8

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

(in millions, except per share data)

(unaudited)


THREE MONTHS ENDED DECEMBER 31, 2010	INCOME BEFORE INCOME TAXES			NET INCOME ATTRIBUTABLE TO ALLEGHENY ENERGY, INC.			DILUTED EARNINGS PER SHARE

Calculation of Adjusted Income:

Income - GAAP Basis	$	117.0		$	88.2		$	0.52


Adjustments:
Net unrealized loss associated with economic hedges¹		25.4			15.5
Expense associated with the planned merger²		3.2			1.9
Gain on sale of Virginia distribution business³		0.5			0.3

Adjusted Income	$	146.1		$	105.9		$	0.62


Calculation of Adjusted EBITDA:
Net Income attributable to Allegheny Energy, Inc. - GAAP basis				$	88.2
Interest expense					76.3
Income tax expense					28.8
Depreciation and amortization					81.8

EBITDA					275.1
Net unrealized loss associated with economic hedges¹					25.4
Expense associated with the planned merger²					3.2
Gain on sale of Virginia distribution business³					0.5

Adjusted EBITDA				$	304.2


THREE MONTHS ENDED DECEMBER 31, 2009	INCOME BEFORE INCOME TAXES			NET INCOME ATTRIBUTABLE TO ALLEGHENY ENERGY, INC.			DILUTED EARNINGS PER SHARE

Calculation of Adjusted Income:

Income - GAAP Basis	$	156.2		$	109.3		$	0.64


Adjustments:
Net unrealized gain associated with economic hedges¹		(7.9	)		(4.8	)
Expense associated with Allegheny Energy Supply’s purchase of outstanding notes⁴		13.4			8.2

Adjusted Income	$	161.7		$	112.7		$	0.66


Calculation of Adjusted EBITDA:
Net Income attributable to Allegheny Energy, Inc. - GAAP basis				$	109.3
Interest expense					89.7
Income tax expense					46.4
Depreciation and amortization					74.9

EBITDA					320.3
Net unrealized gain associated with economic hedges¹					(7.9	)

Adjusted EBITDA				$	312.4

See accompanying Notes to Reconciliation of Non-GAAP Financial Measures

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

(in millions)

(unaudited)


	MERCHANT GENERATION						REGULATED OPERATIONS
THREE MONTHS ENDED DECEMBER 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	$	25.0		$	7.8		$	93.6	$	80.2

Adjustments:
Net unrealized loss associated with economic hedges¹		25.4			15.5			—		—

Expense associated with the planned merger²		1.2			0.7			2.0		1.2

Gain on sale of Virginia distribution business³		—			—			0.5		0.3

Adjusted Income	$	51.6		$	24.0		$	96.1	$	81.7


Calculation of Adjusted EBITDA:
Net income attributable to Allegheny Energy, Inc. - GAAP basis				$	7.8				$	80.2
Interest expense					32.8					43.9
Income tax expense					15.4					13.4
Depreciation and amortization					32.6					49.6

EBITDA					88.6					187.1
Net unrealized loss associated with economic hedges¹					25.4					—
Expense associated with the planned merger²					1.2					2.0
Gain on sale of Virginia distribution business³					—					0.5

Adjusted EBITDA				$	115.2				$	189.6


	MERCHANT GENERATION						REGULATED OPERATIONS
THREE MONTHS ENDED DECEMBER 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 - GAAP Basis	$	95.2		$	74.3		$	62.9	$	34.8

Adjustments:
Net unrealized gain associated with economic hedges¹		(7.9	)		(4.8	)		—		—
Expense associated with Allegheny Energy Supply’s purchase of outstanding notes⁴		13.4			8.2			—		—

Adjusted Income	$	100.7		$	77.7		$	62.9	$	34.8


Calculation of Adjusted EBITDA:
Net income attributable to Allegheny Energy, Inc. - GAAP basis				$	74.3				$	34.8
Interest expense					50.6					39.6
Income tax expense					18.8					27.6
Depreciation and amortization					30.6					44.8

EBITDA					174.3					146.8
Net unrealized gain associated with economic hedges¹					(7.9	)				—

Adjusted EBITDA				$	166.4				$	146.8

See accompanying Notes to Reconciliation of Non-GAAP Financial Measures

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

CONSOLIDATED DATA FOR THE YEAR ENDED DECEMBER 31, 2010 AND 2009

(in millions, except per share data)

(unaudited)


YEAR ENDED DECEMBER 31, 2010	INCOME BEFORE INCOME TAXES			NET INCOME ATTRIBUTABLE TO ALLEGHENY ENERGY, INC.			DILUTED EARNINGS PER SHARE

Calculation of Adjusted Income:

Income - GAAP Basis	$	628.4		$	411.7		$	2.42


Adjustments:
Net unrealized loss associated with economic hedges¹		29.1			17.7
Expense associated with the planned merger²		39.9			24.5
Gain on sale of Virginia distribution business³		(44.6	)		(27.7	)
Expense associated with Allegheny Energy Supply’s purchase of outstanding notes⁴		7.3			4.4

Adjusted Income	$	660.1		$	430.6		$	2.53


Calculation of Adjusted EBITDA:
Net Income attributable to Allegheny Energy, Inc. - GAAP basis				$	411.7
Interest expense					316.4
Income tax expense					216.7
Depreciation and amortization					323.5

EBITDA					1,268.3
Net unrealized loss associated with economic hedges¹					29.1
Expense associated with the planned merger²					39.9
Gain on sale of Virginia distribution business³					(44.6	)

Adjusted EBITDA				$	1,292.7


YEAR ENDED DECEMBER 31, 2009	INCOME BEFORE INCOME TAXES			NET INCOME ATTRIBUTABLE TO ALLEGHENY ENERGY, INC.			DILUTED EARNINGS PER SHARE

Calculation of Adjusted Income:

Income - GAAP Basis	$	635.7		$	392.8		$	2.31


Adjustments:
Net unrealized gain associated with economic hedges¹		(26.6	)		(16.3	)
Expense associated with Allegheny Energy Supply’s purchase of outstanding notes⁴		32.7			20.1

Adjusted Income	$	641.8		$	396.6		$	2.33


Calculation of Adjusted EBITDA:
Net Income attributable to Allegheny Energy, Inc. - GAAP basis				$	392.8
Interest expense					291.1
Income tax expense					241.6
Depreciation and amortization					282.1

EBITDA					1,207.6
Net unrealized gain associated with economic hedges¹					(26.6	)

Adjusted EBITDA				$	1,181.0

See accompanying Notes to Reconciliation of Non-GAAP Financial Measures

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

SEGMENT DATA FOR THE YEAR ENDED DECEMBER 31, 2010 AND 2009

(in millions)

(unaudited)


	MERCHANT GENERATION						REGULATED OPERATIONS
YEAR ENDED DECEMBER 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	$	270.4		$	163.1		$	365.7		$	247.7

Adjustments:
Net unrealized loss associated with economic hedges¹		29.1			17.7			—			—

Expense associated with the planned merger²		13.6			8.4			26.3			16.1

Gain on sale of Virginia distribution business³		—			—			(44.6	)		(27.7	)
Expense associated with Allegheny Energy Supply’s purchase of outstanding notes⁴		7.3			4.4			—			—

Adjusted Income	$	320.4		$	193.6		$	347.4		$	236.1


Calculation of Adjusted EBITDA:
Net income attributable to Allegheny Energy, Inc. - GAAP basis				$	163.1					$	247.7
Interest expense					145.8						173.7
Income tax expense					98.7						118.0
Depreciation and amortization					129.7						195.5

EBITDA					537.3						734.9
Net unrealized loss associated with economic hedges¹					29.1						—
Expense associated with the planned merger²					13.6						26.3
Gain on sale of Virginia distribution business³					—						(44.6	)

Adjusted EBITDA				$	580.0					$	716.6


	MERCHANT GENERATION						REGULATED OPERATIONS
YEAR ENDED DECEMBER 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 - GAAP Basis	$	371.8		$	234.0		$	272.0		$	157.9

Adjustments:
Net unrealized gain associated with economic hedges¹		(26.6	)		(16.3	)		—			—
Expense associated with Allegheny Energy Supply’s purchase of outstanding notes⁴		32.7			20.1			—			—

Adjusted Income	$	377.9		$	237.8		$	272.0		$	157.9


Calculation of Adjusted EBITDA:
Net income attributable to Allegheny Energy, Inc. - GAAP basis				$	234.0					$	157.9
Interest expense					134.9						157.4
Income tax expense					128.8						112.8
Depreciation and amortization					106.8						177.1

EBITDA					604.5						605.2
Net unrealized gain associated with economic hedges¹					(26.6	)					—

Adjusted EBITDA				$	577.9					$	605.2

See accompanying Notes to Reconciliation of Non-GAAP Financial Measures

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

SUMMARY OF ADJUSTMENTS

(in millions)

(unaudited)


ADJUSTED OPERATING REVENUE	THREE MONTHS ENDED DEC 31, 2010			THREE MONTHS ENDED DEC 31, 2009
Operating revenue:
As reported	$	864.6		$	861.1

Net unrealized loss/(gain) associated with economic hedges¹		25.4			(7.9	)

As Adjusted	$	890.0		$	853.2


ADJUSTED OPERATIONS AND MAINTENANCE EXPENSE	THREE MONTHS ENDED DEC 31, 2010			THREE MONTHS ENDED DEC 31, 2009
Operations and maintenance expense:
As reported	$	159.5		$	168.2

Expense associated with the planned merger²		(3.2	)		—

As Adjusted	$	156.3		$	168.2


ADJUSTED INTEREST EXPENSE	THREE MONTHS ENDED DEC 31, 2010			THREE MONTHS ENDED DEC 31, 2009
Interest expense:
As reported	$	76.3		$	89.7

Expense associated with Allegheny Energy Supply’s purchase of outstanding notes⁴		—			(13.4	)

As Adjusted	$	76.3		$	76.3


ADJUSTED INCOME TAX EXPENSE	THREE MONTHS ENDED DEC 31, 2010			THREE MONTHS ENDED DEC 31, 2009
Income taxes:
As reported	$	28.8		$	46.4

Income taxes related to net unrealized losses/(gains) associated with economic hedges¹		9.9			(3.1	)
Income taxes related to expense associated with the planned merger²		1.3			—
Income taxes related to gain on sale of the Virginia distribution business³		0.2			—
Income taxes associated with Allegheny Energy Supply’s purchase of outstanding notes⁴		—			5.2

As Adjusted	$	40.2		$	48.5

See accompanying Notes to Reconciliation of Non-GAAP Financial Measures

Notes to Reconciliation of Non-GAAP Financial Measures:

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


	THREE MONTHS ENDED DEC 31, 2010			THREE MONTHS ENDED DEC 31, 2009
Financial transmission rights	($	1.2	)	($	11.9	)
Power hedges		20.8			(3.7	)
Hedging strategy relating to a natural gas transportation contract		5.8			7.7

Total adjustments	$	25.4		($	7.9	)


	YEAR ENDED DEC 31, 2010			YEAR ENDED DEC 31, 2009
Financial transmission rights	($	21.9	)	($	33.2	)
Power hedges		19.0			10.1
Hedging strategy relating to a natural gas transportation contract		32.0			(3.5	)

Total adjustments	$	29.1		($	26.6	)

⁽²⁾	In February, 2010, Allegheny Energy, Inc. and FirstEnergy Corp. entered into an Agreement and Plan of Merger. Incremental merger costs were included in operations and maintenance expense on the Consolidated Statements of Income.

⁽³⁾

On June 1, 2010, Potomac Edison sold its electric distribution operations in Virginia (the “Virginia distribution business”) to Rappahannock Electric Cooperative and Shenandoah Valley Electric Cooperative, resulting in a pre-tax gain of approximately $45.1 million. In December 2010, a true-up to the gain of ($0.5 million) was recognized resulting in an overall transaction net pre-tax gain of approximately $44.6 million. The gain on sale is presented as “Gain on sale of Virginia distribution business” on the Consolidated Statements of Income.

⁽⁴⁾	In July, 2010, Allegheny Energy Supply redeemed all $150.5 million of its outstanding 7.80% Medium Term Notes due 2011. The osts associated with this purchase in the amount of $7.3 million were charged to interest expense in the GAAP basis Consolidated Statements of Income.

In September, 2009, Allegheny Energy Supply purchased its outstanding 7.80% Notes due 2011 and its 8.25% Notes due 2012 in the aggregate principal amount of $244.3 million, pursuant to a cash tender offer. The costs associated with this purchase in the amount of $19.3 million were charged to interest expense in the GAAP basis Consolidated Statements of Income.

In October, 2009, Allegheny Energy Supply purchased its outstanding 7.80% Medium Term Notes due 2011 in the aggregate principal amount of $152.0 million, pursuant to a cash tender offer. The costs associated with this purchase in the amount of $13.4 million were charged to interest expense in the GAAP basis Consolidated Statements of Income.

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

OPERATING STATISTICS

(unaudited)

Three Months Ended December 31,


	Actual			Actual						Excluding Virginia Operations*
	2010			2009			Change			2010		2009		Change
REGULATED OPERATIONS
Retail electricity sales (thousand MWh):
Residential		4,070			4,283			-5.0	%		4,070		3,953		3.0	%
Commercial		2,558			2,691			-4.9	%		2,558		2,513		1.8	%
Industrial and other		3,536			3,533			0.1	%		3,536		3,310		6.8	%
Total		10,164			10,507			-3.3	%		10,164		9,776		4.0	%
Usage per customer (KWh):
Residential		3,163			3,129			1.1	%		3,163		3,082		2.6	%
Commercial		14,776			14,413			2.5	%		14,776		14,611		1.1	%
Industrial		134,884			128,187			5.2	%		134,884		127,400		5.9	%
Regulated generation (thousand MWh):
Supercritical coal		2,348			975			140.8	%
Other coal		185			108			71.3	%
Hydro and other		120			136			-11.8	%
Total		2,653			1,219			117.6	%

MERCHANT GENERATION
Generation (thousand MWh):
Supercritical coal		5,616			5,764			-2.6	%
Other coal		521			479			8.8	%
Gas		206			321			-35.8	%
Hydro and other		314			330			-4.8	%
Total		6,657			6,894			-3.4	%
Net capacity factor:
Supercritical coal		57	%		58	%		-1.0	%
All coal		53	%		54	%		-1.0	%
Equivalent availability factor:
Supercritical coal		77	%		83	%		-6.0	%
All coal		76	%		84	%		-8.0	%

DEGREE DAYS
Heating		2,130			1,882			13.2	%
Cooling		6			3			100.0	%

*	Represents actual results for both 2010 and 2009 excluding amounts relating to the Virginia distribution operations that were sold on June 1, 2010.

ALLEGHENY ENERGY, INC. AND SUBSIDIARIES

OPERATING STATISTICS

(unaudited)

Twelve Months Ended December 31,


	Actual			Actual						Excluding Virginia Operations*
	2010			2009			Change			2010		2009		Change
REGULATED OPERATIONS
Retail electricity sales (thousand MWh):
Residential		17,008			16,892			0.7	%		16,417		15,593		5.3	%
Commercial		10,923			11,141			-2.0	%		10,622		10,396		2.2	%
Industrial and other		14,458			14,007			3.2	%		14,068		13,111		7.3	%
Total		42,389			42,040			0.8	%		41,107		39,100		5.1	%
Usage per customer (KWh):
Residential		12,887			12,356			4.3	%		12,771		12,170		4.9	%
Commercial		61,197			59,857			2.2	%		61,549		60,636		1.5	%
Industrial		540,820			509,987			6.0	%		539,054		506,355		6.5	%
Regulated generation (thousand MWh):
Supercritical coal		9,552			6,596			44.8	%
Other coal		720			392			83.7	%
Hydro and other		627			538			16.5	%
Total		10,899			7,526			44.8	%

MERCHANT GENERATION
Generation (thousand MWh):
Supercritical coal		26,625			22,375			19.0	%
Other coal		2,906			1,504			93.2	%
Gas		1,049			828			26.7	%
Hydro and other		1,471			1,297			13.4	%
Total		32,051			26,004			23.3	%
Net capacity factor:
Supercritical coal		69	%		58	%		11.0	%
All coal		65	%		53	%		12.0	%
Equivalent availability factor:
Supercritical coal		82	%		80	%		2.0	%
All coal		82	%		81	%		1.0	%

DEGREE DAYS
Heating		5,327			5,225			2.0	%
Cooling		1,208			816			48.0	%

*	Represents actual results for both 2010 and 2009 excluding amounts relating to the Virginia distribution operations that were sold on June 1, 2010.

Exhibit 1

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Exhibit 2

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Exhibit 3

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ALLEGHENY ENERGY, INC 8-K