UPDATE 1-Allegheny says regulators approve power cost recovery

* Says reduces requested increase by $3.2 mln

* Says agreement in effect from Nov 1

Nov 11 (Reuters) - Power company Allegheny Energy Inc (AYE.N) said Virginia regulators approved its plan to recover purchase power costs for the year ending June 30, 2010.

Allegheny said it had entered into an agreement with the Virginia State Corporation Commission, under which the company agreed to reduce the requested increase by $3.2 million to reflect over-recovery of purchased power costs.

The company said provisions of the agreement took effect on Nov. 1 and the bill for a typical residential customer in Virginia using 1,000 kilowatt-hours decreased from about $96 to $94 a month.

Shares of Allegheny were trading down more than a percent at $22.76 Wednesday morning on the New York Stock Exchange.

For the alerts, double click [ID:nWNAB4436] (Reporting by Arup Roychoudhury in Bangalore; Editing by Maju Samuel)