ALLEGHENY ENERGY SERVICE CORPORATION EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN

Exhibit 10.2

ALLEGHENY ENERGY SERVICE CORPORATION
EXECUTIVE CHANGE IN CONTROL SEVERANCE PLAN

(Effective as of July 10, 2008)

ARTICLE I				PURPOSE AND TERM OF PLAN			1
		Section 1.1		Purpose of the Plan			1
		Section 1.2		Term and Effect of the Plan			1
ARTICLE II				DEFINITIONS			2
		Section 2.1		“AE Companies”			2
		Section 2.2		“Allegheny”			2
		Section 2.3		“Base Salary”			2
		Section 2.4		“Board”			2
		Section 2.5		“Cause”			2
		Section 2.6		“Change in Control”			2
		Section 2.7		“Change in Control Termination”			3
		Section 2.8		“Code”			3
		Section 2.9		“Committee”			3
		Section 2.10		“Company”			3
		Section 2.11		“Effective Date”			4
		Section 2.12		“Eligible Employee”			4
		Section 2.13		“Employee”			4
		Section 2.14		“Employer”			4
		Section 2.15		“ERISA”			4
		Section 2.16		“Exchange Act”			4
		Section 2.17		“Good Reason Resignation”			4
		Section 2.18		“Involuntary Termination”			5
		Section 2.19		“Outstanding Voting Securities”			5
		Section 2.20		“Participant”			5
		Section 2.21		“Permanent Disability”			5
		Section 2.22		“Plan”			5
		Section 2.23		“Plan Administrator”			5
		Section 2.24		“Release”			5
		Section 2.25		“Severance Benefits”			5
		Section 2.26		“Successor”			6
		Section 2.27		“Target Bonus”			6
		Section 2.28		“Termination Date”			6
		Section 2.29		“Tier 1 Employee”			6
		Section 2.30		“Tier 2 Employee”			6
ARTICLE III				PARTICIPATION AND ELIGIBILITY FOR BENEFITS			7
		Section 3.1		Participation			7
		Section 3.2		Conditions			7
ARTICLE IV				DETERMINATION OF SEVERANCE BENEFITS			9
		Section 4.1		Amount of Severance Benefits Upon Change in Control Termination			9
		Section 4.2		Other Terminations			10
		Section 4.3		Termination for Cause			10
		Section 4.4		Reduction of Severance Benefits			10

TABLE OF CONTENTS
(continued)

						Page
		Section 4.5		Reimbursement of Legal Fees and Costs			11
ARTICLE V				METHOD AND DURATION OF PAYMENT OF SEVERANCE BENEFITS			12
		Section 5.1		Method of Payment			12
		Section 5.2		Termination of Eligibility for Benefits			12
ARTICLE VI				COVENANTS			13
		Section 6.1		General			13
		Section 6.2		Confidential Information			13
		Section 6.3		Employment with Conflicting Organizations			13
		Section 6.4		Non-Competition			13
		Section 6.5		Non-Solicitation			14
		Section 6.6		Return of Confidential Information			14
		Section 6.7		Cooperation			14
		Section 6.8		Non-Disparagement			15
		Section 6.9		Equitable Relief			15
		Section 6.10		Survival of Provisions			16
ARTICLE VII				PLAN ADMINISTRATION; DUTIES OF THE COMPANY, THE COMMITTEE AND THE PLAN ADMINISTRATOR; AND CLAIMS			17
		Section 7.1		Authority and Duties			17
		Section 7.2		Payment			17
		Section 7.3		Discretion			17
		Section 7.4		Claims Administration			17
ARTICLE VIII				AMENDMENT, TERMINATION AND DURATION			19
		Section 8.1		Amendment, Suspension and Termination			19
		Section 8.2		Duration			19
ARTICLE IX				MISCELLANEOUS			20
		Section 9.1		Nonalienation of Benefits			20
		Section 9.2		Notices			20
		Section 9.3		Successors			20
		Section 9.4		Other Payments			20
		Section 9.5		No Mitigation			20
		Section 9.6		No Contract of Employment			20
		Section 9.7		Severability of Provisions			20
		Section 9.8		Heirs, Assigns, and Personal Representatives			20
		Section 9.9		Headings and Captions			21
		Section 9.10		Gender and Number			21
		Section 9.11		Unfunded Plan			21
		Section 9.12		Payments to Incompetent Persons			21
		Section 9.13		Lost Payees			21

TABLE OF CONTENTS
(continued)

						Page
Section 9.14 Controlling Law							21
Section 9.15 Code Section 409A Compliance							21
SCHEDULE A		ELIGIBLE EMPLOYEES					A-1
SCHEDULE B		RELEASE AGREEMENT					B-1
SCHEDULE C		ADDITIONAL BENEFITS					C-1
SCHEDULE D		TAX INDEMNITY					D-1

ARTICLE I

PURPOSE AND TERM OF PLAN

      Section 1.1 Purpose of the Plan . The purpose of the Plan is to provide Eligible Employees with certain severance benefits as set forth in the Plan in the event the Eligible Employee’s employment with the AE Companies is terminated due to a Change in Control Termination. The Plan is not intended to be an “employee pension benefit plan” or “pension plan” within the meaning of section 3(2) of ERISA. Rather, this Plan is intended to be a “welfare benefit plan” within the meaning of section 3(1) of ERISA and to meet the descriptive requirements of a plan constituting a “severance pay plan” within the meaning of regulations published by the Secretary of Labor at Title 29, Code of Federal Regulations , section 2510.3-2(b). Accordingly, the benefits paid by the Plan are not deferred compensation for purposes of ERISA and no Employee shall have a vested right to such benefits.

      Section 1.2 Term and Effect of the Plan . The Plan generally shall be effective as of the Effective Date and shall supersede any prior plan, program, policy, or agreement under which the AE Companies provided severance benefits in connection with the occurrence of a change in control (however such term is defined in such other plan, program, policy, or agreement); provided , however that the Plan shall not apply to any Employee who is subject to an existing change in control agreement until the term of such agreement expires (or, if earlier, such date as the Employee executes an acknowledgement that the Plan supersedes such agreement). Further, the Plan shall not be construed so as to supersede any prior or existing plan, program, policy or agreement (or any portion of such prior arrangement) pursuant to which an Eligible Employee accrued benefits other than severance benefits. The Plan shall continue until terminated pursuant to Article VIII of the Plan.

ARTICLE II

DEFINITIONS

      Section 2.1 “ AE Companies ” shall mean the Company, Allegheny, the affiliates and subsidiaries of Allegheny and the Company, and any successor or assigns of any of the foregoing.

      Section 2.2 “ Allegheny ” shall mean Allegheny Energy, Inc., the Company’s parent and any successor to all or a major portion of the assets or business of Allegheny Energy, Inc.

      Section 2.3 “ Base Salary ” shall mean the annual base salary in effect as of the Participant’s Termination Date.

      Section 2.4 “ Board ” shall mean the Board of Directors of Allegheny, or any successor thereto.

      Section 2.5 “ Cause ” shall mean an Eligible Employee’s: (i) conviction of, or plea of guilty or nolo contendere to, (A) a felony, or (B) a lesser crime or offense which, in the reasonable opinion of the Company, could adversely affect the business or reputation of the AE Companies; (ii) repeated failure to follow specific lawful directions of the Board or any officer to whom he reports; (iii) willful misconduct, fraud, embezzlement, or dishonesty either in connection with his duties to the AE Companies or which otherwise causes damage or, in the reasonable opinion of the Company, is likely to cause damage, to the AE Companies; (iv) failure to perform a substantial part of his duties following notice and a reasonable opportunity to cure (if such failure is capable of cure); (v) material violation of any policy, procedure, or guideline of the AE Companies following notice and a reasonable opportunity to cure (if such violation is capable of cure); (vi) abuse of alcohol or legal drugs which has a significant effect on his ability to perform his duties or the Eligible Employee’s use of illegal drugs; or (vii) violation of any applicable confidentiality, non-competition, non-solicitation, or non-disparagement covenants relating to the AE Companies (including, without limitation, the covenants set forth in Article VI). The Committee, in its sole and absolute discretion, shall determine Cause.

      Section 2.6 “ Change in Control ” shall mean the occurrence of any of the following events:

          (a) Any “person” (as defined in Sections 13(d) and 14(d) of the Exchange Act), excluding for this purpose, (i) any of the AE Companies, or (ii) any employee benefit plan of the AE Companies, or any person or entity organized, appointed or established by the AE Companies for or pursuant to the terms of any such plan which acquires beneficial ownership of voting securities of Allegheny, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly of securities of Allegheny representing more than 20% of the combined voting power of Allegheny’s then Outstanding Voting Securities; provided , however , that no Change in Control will be deemed to have occurred as a result of a change in ownership percentage resulting solely from an acquisition of securities by Allegheny;

          (b) Persons who, as of the Effective Date constitute the Board (the “ Incumbent Directors ”) cease for any reason, including without limitation, as a result of a tender

offer, proxy contest, merger or similar transaction, to constitute at least a majority thereof, provided that any person becoming a director of Allegheny subsequent to the Effective Date shall be considered an Incumbent Director if such person’s election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors; but provided further , that any such person whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of members of the Board or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as defined in Sections 13(d) and 14(d) of the Exchange Act) other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall not be considered an Incumbent Director;

          (c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of Allegheny (a “ Business Combination ”); in each case, unless, following such Business Combination, all or substantially all of the individuals and entities who were the beneficial owners of Outstanding Voting Securities of Allegheny immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the combined voting power of the then-Outstanding Voting Securities entitled to vote generally in the election of directors, as the case may be, of the company resulting from such Business Combination (including, without limitation, a company which, as a result of such transaction, owns Allegheny or all or substantially all of Allegheny’s assets either directly or through one or more subsidiaries); or

          (d) Approval by the stockholders of Allegheny of a complete liquidation or dissolution of Allegheny.

      Section 2.7 “ Change in Control Termination ” shall mean an Eligible Employee’s Involuntary Termination or Good Reason Resignation that occurs within the 24-month period following a Change in Control; provided , however , that if, before the occurrence of a Change in Control, an Eligible Employee is terminated or resigns and such termination or resignation would have otherwise constituted a Change in Control Termination but for the fact that it occurred before the Change in Control, the Change in Control occurs, and such termination or event giving rise to the resignation (i) was undertaken at the request of a third party who has taken steps reasonably calculated to effect the Change in Control, or (ii) otherwise arose in connection with or in anticipation of the Change in Control then, for all purposes of the Plan, such termination or resignation shall constitute a Change in Control Termination.

      Section 2.8 “ Code ” shall mean the Internal Revenue Code of 1986, as amended.

      Section 2.9 “ Committee ” shall mean the Management Compensation and Development Committee of the Board or such other committee appointed by the Board to assist the Company in making determinations required under the Plan in accordance with its terms. The Committee may delegate all or a portion of its authority under the Plan to an individual or another committee.

      Section 2.10 “ Company ” shall mean Allegheny Energy Service Corporation and any successor to all or a major portion of the assets or business of Allegheny Energy Service Corporation.

      Section 2.11 “ Effective Date ” shall mean July 10, 2008.

      Section 2.12 “ Eligible Employee ” shall mean any Employee who is employed by the AE Companies as a Deputy General Counsel, Vice President or in a more senior position and who is designated for participation in the Plan by the Committee or, pursuant to authority delegated to him by the Committee, the Company’s Chief Executive Officer. The Employees who have been designated as Eligible Employees are set forth in Schedule A , as amended and updated by the Company from time to time.

      Section 2.13 “ Employee ” shall mean a person who receives salary, wages or commissions from the AE Companies that are subject to withholding for the purposes of federal income and employment taxes. The term Employee shall not include an independent contractor or any other person who the Committee or its designee determines is not subject to withholding for purposes of federal income and employment taxes, regardless of any contrary governmental or judicial determination relating to such employment or withholding tax status.

      Section 2.14 “ Employer ” shall mean the Company or any of the AE Companies with respect to which this Plan has been adopted.

      Section 2.15 “ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended, and regulations thereunder.

      Section 2.16 “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

      Section 2.17 “ Good Reason Resignation ” shall mean an Eligible Employee’s written resignation within 60 days of the occurrence of:

          (a) any reduction in the Eligible Employee’s then-current annual Base Salary or Target Bonus without the Eligible Employee’s consent, unless such events are fully corrected by the Company within ten days following receipt of written notice from the Eligible Employee;

          (b) any reduction in the Eligible Employee’s then-current long-term incentive annual opportunity without the Eligible Employee’s consent (such determination as to whether a reduction has occurred to be made by an independent third-party executive compensation consulting organization (as selected by the Committee) using generally accepted methodologies and reasonable assumptions including, without limitation, fair value principles such as those identified in Statement of Financial Accounting Standards No. 123, Share-Based Payment, annualizing the value of such awards over the frequency of their grant and disregarding special retention or sign on grants), unless such events are fully corrected by the Company within ten days following receipt of written notice from the Eligible Employee;

          (c) a material diminution in the Eligible Employee’s responsibilities, duties or authority; provided , however , that the fact the Company, following a Change in Control, is a subsidiary or division of another entity, rather than a public company, shall not, by itself, be deemed to result in a material diminution in the Employee’s responsibilities, duties or authority under this clause; provided , further , that a change in reporting relationship shall not, by itself, be

deemed to result in a material diminution in the Eligible Employee’s responsibilities, duties or authority under this clause; or

          (d) the relocation of the Eligible Employee’s principal place of employment to a location that is outside both: (i) a 50-mile radius from the Eligible Employee’s principal place of employment before the relocation; and (ii) the service territory of the AE Companies (as such service territory exists immediately before the Change in Control).

      Section 2.18 “ Involuntary Termination ” shall mean an Eligible Employee’s termination of employment initiated by the AE Companies for any reason other than Cause as provided under and subject to the conditions of Article III. Involuntary Termination does not include a termination of employment due to a Permanent Disability or death.

      Section 2.19 “ Outstanding Voting Securities ” shall mean the outstanding voting securities of Allegheny entitled to vote generally in the election of Allegheny’s directors.

      Section 2.20 “ Participant ” shall mean any Eligible Employee who meets the requirements of Article III and thereby becomes eligible for benefits under the Plan.

      Section 2.21 “ Permanent Disability ” shall mean that an Employee has a permanent and total incapacity from engaging in any employment for the Employer for physical or mental reasons. A “Permanent Disability” shall be deemed to exist: (i) if the Employee meets the requirements for disability benefits under the Employer’s long-term disability plan; (ii) if the Employee is not covered by a long-term disability plan of the Employer, the Employee satisfies the requirements to receive disability benefits under the Social Security law then in effect; or (iii) if the Employee is designated with an inactive employment status at the end of a disability or medical leave.

      Section 2.22 “ Plan ” shall mean the Allegheny Energy Service Corporation Executive Change in Control Plan, as set forth herein, and as the same may from time to time be amended.

      Section 2.23 “ Plan Administrator ” shall mean the individual(s) appointed by the Committee to administer the terms of the Plan as set forth herein and if no individual is appointed by the Committee to serve as the Plan Administrator for the Plan, the Plan Administrator shall be the Company’s Vice President who is responsible for human resources. Notwithstanding the preceding sentence, in the event the Plan Administrator is entitled to Severance Benefits under the Plan, the Committee or its delegate shall act as the Plan Administrator for purposes of administering the terms of the Plan with respect to the Plan Administrator. The Plan Administrator may delegate all or any portion of its authority under the Plan to any other person(s).

      Section 2.24 “ Release ” shall mean a release and discharge of the AE Companies and all affiliated persons and entities from any and all claims, demands and causes of action, other than as to amounts or benefits due to the Participant under any qualified employee retirement plan of the AE Companies, which shall be substantially in the form attached hereto as Schedule B .

      Section 2.25 “ Severance Benefits ” shall mean the severance benefits that a Participant is eligible to receive pursuant to Article IV.

      Section 2.26 “ Successor ” shall mean any other corporation or unincorporated entity or group of corporations or unincorporated entities which acquires ownership, directly or indirectly, through merger, consolidation, purchase or otherwise, of all or substantially all of the assets of the Company or Allegheny.

      Section 2.27 “ Target Bonus ” shall mean the Participant’s annual target bonus opportunity under Allegheny’s Annual Incentive Plan (or any other such successor plan or arrangement).

      Section 2.28 “ Termination Date ” shall mean the date on which the active employment of the Eligible Employee by the AE Companies is severed due to a Change in Control Termination.

      Section 2.29 “ Tier 1 Employee ” shall mean an Eligible Employee who is designated as such by the Company, in its sole discretion.

      Section 2.30 “ Tier 2 Employee ” shall mean an Eligible Employee who is designated as such by the Company, in its sole discretion.

ARTICLE III

PARTICIPATION AND ELIGIBILITY FOR BENEFITS

      Section 3.1 Participation . Each Eligible Employee in the Plan who incurs a Change in Control Termination and who satisfies the conditions of Section 3.02 shall be eligible to receive the Severance Benefits described in the Plan. An Eligible Employee shall not be eligible to receive any other severance benefits from the AE Companies on account of a Change in Control Termination, unless otherwise provided in the Plan.

      Section 3.2 Conditions .

          (a) Eligibility for any Severance Benefits is expressly conditioned on: (i) an Eligible Employee’s written acknowledgment and agreement to comply with the confidentiality, non-competition, non-solicitation, and non-disparagement provisions in Article VI during and after the Eligible Employee’s employment with the AE Companies; (ii) to the extent requested by the Company, execution of a written acknowledgement and agreement that this Plan supersedes an existing arrangement that provides severance benefits to the Eligible Employee upon the occurrence of a change in control and/or that the Eligible Employee is no longer entitled to receive severance benefits upon the occurrence of a change in control pursuant to a prior arrangement that has expired; (iii) execution by the Participant of a Release in the form provided by the Company within 60 days following the Participant’s Termination Date (or such shorter period of time specified in the Release); and (iv) execution by the Participant of a written agreement that authorizes the deduction of amounts owed to the Company prior to the payment of any Severance Benefits (or in accordance with any other schedule as the Committee may, in its sole discretion, determine to be appropriate); provided , that such deduction is not in violation of Code section 409A.

          (b) If the Committee determines, in its sole discretion, that the Participant has not fully complied with any of the terms of the Release, the Committee may deny Severance Benefits not yet in pay status or discontinue the payment of the Participant’s Severance Benefits and may require the Participant, by providing written notice of such repayment obligation to the Participant, to repay any portion of the Severance Benefits already received under the Plan. If the Committee notifies a Participant that repayment of all or any portion of the Severance Benefits received under the Plan is required, such amounts shall be repaid within 30 calendar days of the date the written notice is sent. Any remedy under this paragraph (b) shall be in addition to, and not in place of, any other remedy, including injunctive relief, that the AE Companies may have.

          (c) An Eligible Employee who experiences a termination of employment that is not a Change in Control Termination shall not be eligible to receive Severance Benefits under the Plan. Specifically, and without limiting the foregoing, an Eligible Employee shall not be eligible to receive Severance Benefits upon the Eligible Employee’s: (i) voluntary resignation or retirement (other than a voluntary resignation or retirement that constitutes a Good Reason Resignation); (ii) resignation of employment (other than a Good Reason Resignation) before the job-end date specified by the Employer or while the Employer still desires the Eligible Employee’s services; (iv) termination for Cause; (v) termination due to death or Permanent

Disability; or (vi) failure to return to work within six months of the onset of an approved leave of absence, other than a military leave and/or as otherwise required by applicable statute. Further, an Eligible Employee shall not be eligible to receive Severance Benefits upon his termination of employment if the Eligible Employee receives severance benefits pursuant to another plan, policy, program or arrangement providing benefits upon a termination of employment; provided , however , that if an Eligible Employee terminated employment and received severance benefits under any other plan, program, agreement, or arrangement (including, without limitation, the Allegheny Energy Service Corporation Executive Severance Plan) before the occurrence of a Change in Control, a Change in Control occurs, and it is later determined that the Participant’s termination constituted a Change in Control Termination, the Participant shall be eligible for Severance Benefits under the Plan subject to the Participant’s satisfaction of the Plan’s other eligibility requirements and subject to offset as described in Section 4.01(f).

          (d) Except as otherwise set forth herein, the Committee has the sole discretion to determine an Eligible Employee’s eligibility to receive Severance Benefits.

          (e) An Eligible Employee returning from approved military leave shall be eligible for Severance Benefits if: (i) he or she is eligible for reemployment under the provisions of the Uniformed Services Employment and Reemployment Rights Act; (ii) his or her pre-military leave job is eliminated; and (iii) the Employer’s circumstances are changed so as to make reemployment in another position impossible or unreasonable, or re-employment would create an undue hardship for the Employer. If the Eligible Employee returning from military leave qualifies for Severance Benefits, his or her Severance Benefits will be calculated as if he or she had remained continuously employed from the date he or she began his or her military leave. The Eligible Employee must also satisfy any other relevant conditions for payment, including execution of a Release.

ARTICLE IV

DETERMINATION OF SEVERANCE BENEFITS

      Section 4.1 Amount of Severance Benefits Upon Change in Control Termination . The Severance Benefits to be provided to a Participant who incurs a Change in Control Termination and who satisfies the conditions of Section 3.02 shall be as follows:

          (a) Salary and Bonus Severance . Participants shall receive salary and bonus severance as follows:

               (i) Tier 1 Employees shall receive salary and bonus severance equal to 300% of the sum of (A) the Tier 1 Employee’s Base Salary, plus (B) the Tier 1 Employee’s Target Bonus (with both Base Salary and Target Bonus being determined without regard to any decrease in such Base Salary or Target Bonus that would constitute a basis for a Good Reason Resignation).

               (ii) Tier 2 Employees shall receive salary and bonus severance equal to 200% of the sum of (A) the Tier 2 Employee’s Base Salary, plus (B) the Tier 2 Employee’s Target Bonus (with both Base Salary and Target Bonus being determined without regard to any decrease in such Base Salary or Target Bonus that would constitute a basis for a Good Reason Resignation);

               (iii) Both Tier 1 and Tier 2 Employees shall receive a pro-rata bonus amount for the fiscal year containing the Participant’s Termination Date equal to the product of (A) the annual incentive bonus that the Participant would have received under Allegheny’s Annual Incentive Plan (or any other such successor plan or arrangement) had the Participant continued to be employed through the end of the fiscal year containing the Participant’s Termination Date (such annual incentive bonus to be determined without regard to any decrease in the Participant’s Target Bonus resulting in a Good Reason Resignation), and (B) a fraction, the numerator of which is the number of days during which the Participant was employed by the AE Companies during the current fiscal year through and including the Participant’s Termination Date and the denominator of which is 365.

          (b) Benefit Coverage Premiums . Participants shall receive a lump sum payment equal to $60,000 for a Tier 1 Employee and $40,000 for a Tier 2 Employee to reimburse Participants for premiums to continue medical and dental coverage under the benefit plans of the AE Companies or, if coverage is unavailable under the benefit plans of the AE Companies, to purchase it from an