Item 1.01 Entry into a Material Definitive Agreement.

On July 6, 2009, Allegheny Energy Supply Company, LLC ("AE Supply"), a wholly-owned subsidiary of Allegheny Energy, Inc., completed a transaction pursuant to which the Pennsylvania Economic Development Financing Authority ("PEDFA") issued $235 million in tax-exempt bonds (the "Bonds") and, pursuant to a Loan Agreement by and between PEDFA and AE Supply (the "Loan Agreement"), loaned the proceeds therefrom to AE Supply to finance a portion of the flue gas desulfurization project at AE Supply's Hatfield's Ferry Power Station in Greene County, Pennsylvania.

The coupon rate on the bonds is 7.00%, and the interest on the Bonds is payable semi-annually on each January 15 and July 15, beginning January 15, 2010. The Bonds will mature on July 15, 2039. At any time and from time to time on or after July 15, 2019, at the option of AE Supply, the Bonds may be redeemed in whole or in part at a redemption price equal to 100% of the principal amount of the Bonds to be redeemed, plus accrued and unpaid interest to the redemption date. Pursuant to the Loan Agreement, AE Supply agreed to make principal, interest, premium payments, if any, or any purchase price payments as and when due to The Bank of New York Mellon Trust Company, N.A., as trustee, on behalf of PEDFA, with respect to the Bonds.

The Loan Agreement and other transaction documents contain standard representations, covenants and events of default for transactions of this type, including acceleration of the indebtedness upon certain events of default. The Loan Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits.

Exhibit No. Description
10.1 Loan Agreement

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