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Third Supplemental Indenture

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Sectors: Services
Governing Law: Delaware, View Delaware State Laws
Effective Date: October 01, 2009
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Exhibit 10.2

THIRD SUPPLEMENTAL INDENTURE

THIRD SUPPLEMENTAL INDENTURE, dated as of October 1, 2009 (this " Supplemental Indenture" ), between ALLEGHENY ENERGY SUPPLY COMPANY, LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (the " Company" ), having its principal office at 800 Cabin Hill Drive, Greensburg, Pennsylvania, 15601, and WELLS FARGO BANK, N.A. (as successor to BANK ONE TRUST COMPANY, N.A.), a national banking association, as Trustee (the " Trustee" ), having its Corporate Trust Office at 625 Marquette Avenue South, MAC N9311-110, Minneapolis, Minnesota 55479.

RECITALS

WHEREAS , the Company and the Trustee executed and delivered an Indenture, dated as of April 8, 2002, (the " Indenture" ), to provide for the issuance from time to time of its unsecured debentures, notes or other evidences of indebtedness; WHEREAS , capitalized terms used herein and not otherwise defined have the meanings assigned to such terms in the Indenture;

WHEREAS , pursuant to Board Resolution, the Company has authorized the issuance of $250,000,000 of its 6.75% Notes due 2039 (the " Notes" );

WHEREAS , the Company desires to establish the terms of the Notes in accordance with Section 301 of the Indenture and to establish the form of the Notes in accordance with Section 201 of the Indenture;

WHEREAS , the Company and the Trustee have each duly authorized the execution and delivery of this Supplemental Indenture to provide for the issuance of the Notes as in this Supplemental Indenture provided;

WHEREAS , all things necessary to make this Supplemental Indenture a valid agreement of the Company and the Trustee, in accordance with its terms have been done;

NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH :

For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Notes, as follows:

SECTION 1. Terms of the Notes. The following terms relating to the Notes are hereby established:

(1) The Notes shall constitute a series of Securities having the title " 6.75% Notes due 2039"

(2) The aggregate principal amount of the Notes that may be authenticated and delivered under the Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 304, 305, 306, 906 or 1108 of the Indenture) shall initially be limited to $250,000,000. The Company may, without the consent of the Holders, create and issue additional Notes (the " Additional Notes" ) ranking equally with the Notes and otherwise similar in all respects so that the Additional Notes shall be consolidated and form a single series with the Notes. The Company may not issue Additional Notes if an Event of Default shall occur and be continuing with respect to the Notes. (3) Interest on any Note shall be payable only to the Person in whose name that Note (or one or more predecessor Notes thereof) is registered at the close of business on the Regular Record Date for such interest.

(4) The entire outstanding principal of the Notes shall be payable on October 15, 2039, which date shall be the Stated Maturity for the payment of principal on the Notes. (5) The rate at which the Notes shall bear interest shall be 6.75% per annum; the date from which interest shall accrue on the Notes shall be the date hereof; the Interest Payment Dates for the Notes on which interest shall be payable shall be April 15 and October 15 in each year, beginning April 15, 2010; the Regular Record Date for the interest payable on the Notes on any Interest Payment Date shall be the April 1 or October 1 preceding the applicable Interest Payment Date; and the basis upon which interest shall be calculated shall be that of a 360-day year consisting of twelve 30-day months.

(6) [Reserved] (7) The Notes may be redeemed at any time at the option of the Company, in whole or in part, at a redemption price (the " Redemption Price" ) equal to the greater of (a) 100% of the principal amount of the Notes to be redeemed, plus accrued interest to the Redemption Date, or (b) as determined by the Quotation Agent, the sum of the present values of the remaining scheduled payments of principal and interest on the Notes to be redeemed (not including any portion of payments of interest accrued as of the Redemption Date), discounted to the Redemption Date on a semi-annual basis at the Adjusted Treasury Rate plus 40 basis points, plus accrued and unpaid interest to the Redemption Date.

If notice has been given as provided in the Indenture and immediately available funds for the redemption of any Notes (or any portion thereof) called for redemption shall have been delivered to the Paying Agent not later than 11:00 A.M. New York Time on the Redemption Date referred to in such notice, such Notes (or any portion thereof) shall cease to bear interest on the date fixed for such redemption specified in such notice and the only right of the Holders of the Notes shall be to receive payment of the Redemption Price with respect to such Notes or portion thereof so redeemed.

Notice of any optional redemption of any Notes (or any portion thereof) shall be given to Holders at their addresses, as shown in the security register for the Notes, not more than 60 nor less than 30 days prior to the date fixed for redemption. The notice of redemption shall specify, among other items, which Notes shall be redeemed, the Redemption Date, the Redemption Price, and the principal amount of the Notes held by such Holder to be redeemed.

The Company shall notify the Trustee at least 30 days prior to giving notice of redemption (or such shorter period as is satisfactory to the Trustee) of the aggregate principal amount of the Notes to be redeemed and their Redemption Date. If less than all the Notes of a series are to be redeemed, the Trustee shall select, in such manner as it shall deem fair and appropriate, the Notes to be redeemed in whole or in part. In the event of redemption of the outstanding principal amount of the Notes of a series in part only, a new Note (or Notes) for the amount of the unredeemed portion thereof shall be issued in the name of the Holder(s) thereto, upon cancellation thereof.

The following definitions shall apply to the Notes:

" Adjusted Treasury Rate" means, with respect to any Redemption Date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for that Redemption Date.

" Business Day" means any day that is not a day on which banking institutions in New York City or place of payment are authorized or required by law or regulation to close. " Comparable Treasury Issue" means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the Notes that would be used, at the time of the selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.

" Comparable Treasury Price" means, with respect to any Redemption Date: (a) the average of the Reference Treasury Dealer Quotations for the Redemption Date, after excluding the highest and lowest of the Reference Treasury Dealer Quotations, or (b) if the Trustee obtains fewer than three Reference Treasury Dealer Quotations, the average of all Reference Treasury Dealer Quotations so received.

" Quotation Agent" means the Reference Treasury Dealer appointed by the Company.

" Rating Agencies" means Standard & Poor' s Rating Services, Moody' s Investors Service Inc. and Fitch Ratings Ltd.

" Reference Treasury Dealer" means (i) each of Credit Suisse Securities (USA) LLC, BNP Paribas Securities Corp., Deutsche Bank Securities Inc., Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated and their respective successors, unless any of them ceases to be a primary U.S. Government securities dealer in New York City (a " Primary Treasury Dealer" ), in which case the Company shall substitute another Primary Treasury Dealer; and (ii) any other Primary Treasury Dealer selected by the Company.

" Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by that Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding that Redemption Date.

" Subsidiary" means any corporation or other entity of which sufficient voting stock or other ownership or economic interests having ordinary voting power to elect a majority of the board of directors (or equivalent body) are at the time directly or indirectly held by the Company.

(8) The Notes shall not be redeemable at the option of any Holder thereof under any circumstances. The Notes shall not have the benefit of any sinking fund.

(9) The Notes shall be issuable in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

(10) The Notes shall be payable on the Stated Maturity in an amount equal to the principal amount thereof plus any unpaid interest accrued to such Stated Maturity. (11) The Notes shall be denominated in U.S. Dollars and payments of the principal of and interest on the Notes shall be made in U.S. Dollars.

(12) The Notes shall be issued at 99.409% of their stated principal amount. The entire outstanding principal amount of the Notes payable hereunder in connection therewith shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 502 of the Indenture. (13) The principal amount of the Notes, payable at the Stated Maturity, will at all times be determinable. (14) The Notes established hereunder shall be defeasible pursuant to Article Twelve of the Indenture at the election of the Company.

(15) The Notes shall be offered and sold (A) to Qualified Institutional Buyers (" QIBs" ) in reliance on Rule 144A under the Securities Act and (B) outside the United States in a transaction meeting the requirements of Regulation S under the Securities Act, and shall be issuable in whole or in part as Global Notes in fully registered form (without coupons) in the form attached as Exhibit A hereto. Holders of definitive Notes and

beneficial owners of interests in the Global Notes may exchange such interests for Notes of like tenor or any authorized form and denomination only in the manner provided in this Supplemental Indenture and in Section 305 of the Indenture. The Depository Trust Company shall be the Depositary with respect to the Global Notes.

(16) As it applies to the Notes, Section 704 of the Indenture shall be amended by adding the following clauses: " (c) If and for so long as any Securities are Outstanding, the Company will make available to the Holders of the Securities the Company' s audited annual and unaudited quarterly financial statements within 90 days after the end of the period covered by such financial statements either by posting such financial statements on a website (which may be a private website) or by delivery of electronic or paper copies of such financial statements to the Trustee or other entity that will make such financial statements available to the Holders of the Securities at the Company' s expense. The Company will notify the Trustee in writing when the financial statements for each period are available and how copies of such financial statements may be obtained by Holders of the Securities, and the Trustee will forward such notice to the Holders of the Securities by mail or electronic message at the Company' s expense; provided, however, that the failure to notify the Trustee pursuant to this provision will not constitute an Event of Default (as defined in the Indenture). For the avoidance of doubt, " financial statements" as used in the Indenture, will include only a balance sheet, a statement of operations and a statement of cash flows, each prepared in accordance with generally accepted accounting principles (United States or international, which may be changed), and such financial statements need not satisfy the requirements of Regulation S-X under the Securities Act.

(d) If and for so long as any Securities remain outstanding, the Company will furnish to the Holders of the Securities and to prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act."

(17) The Notes shall be unsecured obligations of the Company and shall rank equally with all of the Company' s other unsecured and unsubordinated Indebtedness.

(18) (A) The Trustee shall also be the Security Registrar and Paying Agent with respect to the Notes.

(B) The Holders of the Notes shall have no special rights in addition to those provided in the Indenture upon the occurrence of any particular events. (C) The Notes will initially be offered and sold to Credit Suisse Securities (USA) LLC , BNP Paribas Securities Corp., Deutsche Bank Securities Inc., Goldman, Sachs & Co., Morgan Stanley & Co. Incorporated, Calyon Securities (USA) Inc., Commerzbank Capital Markets Corp., The Huntington Investment Company, KeyBanc Capital Markets Inc. and Mitsubishi UFJ Securities (USA), Inc. (the " Initial

Purchasers" ) pursuant to a Purchase Agreement, dated as of September 22, 2009, and will be resold by such Initial Purchasers only to (i) persons an Initial Purchaser reasonably believes are " qualified institutional buyers" within the meaning of Rule 144A under the Securities Act or (ii) outside the United States in a transaction meeting the requirements of Regulation S under the Securities Act. The Notes shall initially be deemed " Restricted Notes" and shall bear on their face, and be subject to the restrictions set forth in, the following legend (provided that the term " Restricted Notes" shall not include Notes as to which restrictions have been terminated in accordance with clause (18)(D) below):

[If Restricted Securities, then insert THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE " SECURITIES ACT" ), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER (" RULE 144A" ). THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF ALLEGHENY ENERGY SUPPLY COMPANY, LLC (THE " COMPANY" ) THAT (A) PRIOR TO THE RESALE RESTRICTION TERMINATION DATE (AS DEFINED IN THE NEXT PARAGRAPH) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN ACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (IV) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (V) TO THE COMPANY OR ONE OF ITS AFFILIATES OR (VI) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THE SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN CLAUSE (A) ABOVE.

THE RESALE RESTRICTION TERMINATION DATE WILL BE THE DATE: (1) THAT IS AT LEAST ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF; AND (2) WHICH THE COMPANY INSTRUCTS THE TRUSTEE

THAT THE LEGEND IN THE IMMEDIATELY PRECEDING PARAGRAPH SHALL BE DEEMED REMOVED FROM THIS SECURITY, IN ACCORDANCE WITH THE PROCEDURES DESCRIBED IN THE INDENTURE RELATING TO THIS SECURITY.]

[If Regulation S Securities, then insert THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE " SECURITIES ACT" ), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION UNDER SUCH LAWS.] (D) Every Restricted Note issued hereunder, including any Note issued upon transfer or exchange thereof, shall be subject to the restrictions on transfer provided in the legend required to be set forth on the face of such Restricted Note pursuant to clause (18)(C) above unless such restrictions of transfer shall be waived by the Company in writing, and the Holder of each Restricted Note, by such Holder' s acceptance thereof, agrees to be bound by such restrictions on tr
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