PRICING SUPPLEMENT NO. 11,
DATED FEBRUARY 24, 1998 FILED UNDER RULE 424(B)(5)
(TO PROSPECTUS DATED NOVEMBER 19, 1992 REGISTRATION NO. 33-52782
AS SUPPLEMENTED BY A PROSPECTUS
SUPPLEMENT DATED NOVEMBER 19, 1992)
$400,000,000
DUQUESNE LIGHT COMPANY
SECURED MEDIUM-TERM NOTES, SERIES C (FIRST COLLATERAL TRUST BONDS,
SERIES C)
Principal Amount($): $40,000,000 Redemption:
Original Issue Date: FEBRUARY 27, 1998 The Offered Bonds cannot
Stated Maturity Date: FEBRUARY 27, 2008 be redeemed prior to
Interest Rate(%): 6.45% Stated Maturity: _____
Interest Payment Dates: MAY 15 The Offered Bonds may be
AND NOVEMBER 15 redeemed at the option
Regular Record Dates: APRIL 30 AND of the Company prior to
OCTOBER 31 Stated Maturity: YES
Issue Price(%): 100% -----
Agent's Discount or Initial Redemption
Commisson(%): .625% Date: N/A
Net Proceeds to Company(%): 99.375% Initial Redemption
OID: Yes No X Price: N/A
--- --- Reduction Percentage:
Form: Book-Entry X Certificated N/A
--- --- Redemption Limitation
Agents: CREDIT SUISSE FIRST Date: N/A
BOSTON ($10,000,000) SEE "OPTIONAL
GOLDMAN SACHS & CO. ($10,000,000) REDEMPTION" BELOW
MERRILL LYNCH & CO. ($10,000,000) UNDER "SUPPLEMENTAL
SALOMON SMITH BARNEY ($10,000,000) DESCRIPTION OF
OFFERED BONDS"
Agent acting in the capacity indicated: X Agent Principal
----- ----
If as Principal: N/A
_____ The Offered Bonds are being offered at varying prices
related to prevailing market prices at the time of
resale.
_____ The Offered Bonds are being offered at a fixed initial
public offering price of ____% of the Principal Amount.
Additional Items:
RECENT DEVELOPMENTS
RESULTS OF OPERATIONS
The Company's net income for common stock decreased to $137.8
million in 1997 compared to $145.8 million in 1996. This $8.0 million
decrease is the result of increased depreciation and amortization
related to the Company's continued mitigation of fixed generation costs.
Additionally, the milder 1997 temperatures impacted the weather-
sensitive residential and commercial customer kilowatt-hour sales which
decreased by 1.6 percent and 0.7 percent, respectively. Partially
offsetting these sales reductions was a 6.5 percent increase in sales to
industrial customers, the result of sales to a new customer and the
expansion of an existing large customer's manufacturing facilities.
Other net income reductions resulted from increased operating and
maintenance expenses, primarily as the result of approximately 21
percent more forced outage hours at nuclear generating stations than in
1996, and a full year's dividend requirement on the Monthly Income
Preferred Securities issued in May 1996. Decreases in net income were
offset by increased long-term investment income, reduced interest costs
and reduced income tax expense.
PROPOSED MERGER
On August 7, 1997, the shareholders of the Company's parent, DQE,
Inc. ("DQE") and Allegheny Energy, Inc. ("AYE") approved a proposed tax-
free, stock-for-stock merger. Upon consummation of the merger, DQE will
be a wholly owned subsidiary of AYE. Immediately following the merger,
the Company will remain a wholly owned subsidiary of DQE. The
transaction is intended to be accounted for as a pooling of interests.
Under the terms of the transaction, DQE's shareholders will receive 1.12
shares of AYE common stock for each share of DQE's common stock, and
AYE's dividend in effect at the time of the closing of the merger. The
transaction is expected to close in mid-1998, subject to approval of
applicable regulatory agencies. Further details about the proposed
merger are provided in DQE's report on Form 8-K, filed with the
Securities and Exchange Commission on April 10, 1997, and the Joint
Proxy Statement/Prospectus of DQE and AYE, dated June 25, 1997, which
was distributed to DQE's shareholders. On September 29, 1997, the City
of Pittsburgh filed a federal antitrust suit seeking to enjoin the
proposed merger of DQE and AYE and asking for monetary damages.
Although the United States District Court for the Western District of
Pennsylvania dismissed the suit in January 1998, the City has filed an
appeal and asked for expedited review. A hearing is currently scheduled
for late March 1998.
BEAVER VALLEY POWER STATION
BV Unit 1 went off-line on September 27, 1997, for a scheduled
refueling outage. BV Unit 2 went off-line on December 16, 1997, and BV
Unit 1's outage was extended on December 18, 1997, for the Company to
repair the emergency air supply system to BV Unit 2's control room,
modify several pipe supports in BV Unit 1, and correct original design
issues in the charging pumps within the reactor coolant system in both
units to eliminate gas buildup. The charging pump repairs have been
completed. The Company is one of many utilities faced with these
original design issues. At the Company's initiative, BVPS units remain
off-line for a revalidation of technical specification surveillance
testing requirements of various plant systems. Based on the current
status of the revalidation process, the Company currently anticipates
that BV Unit 2 will be on-line in early March 1998, and that BV Unit 1
will be on-line in mid- to late March 1998.
USE OF PROCEEDS
The Company currently intends to apply the net proceeds from the
sale of Offered Bonds to the redemption of higher cost securities of the
Company and for general corporate purposes.
SUPPLEMENTAL DESCRIPTION OF OFFERED BONDS
DISCHARGE OF 1947 MORTGAGE
On August 30, 1995 all Class "A" Bonds issued under the Company's
1947 Mortgage were surrendered for cancellation and the 1947 Mortgage
was discharged. As of such date the only bonds that had been
outstanding under the 1947 Mortgage were Class "A" Bonds held by the
Trustee as the basis of authentication and delivery of Mortgage
Securities, and no other Class "A" Mortgage existed. As a result of the
discharge of the 1947 Mortgage, the lien of the 1947 Mortgage on the
Company's property ceased to exist and the Mortgage became a first
mortgage lien on all property of the Company subject thereto, subject to
certain Permitted Liens as described under "Description of the
Bonds Security" in the accompanying Prospectus. The information set
forth under the headings "Description of the Bonds Security" and
"Description of the 1947 Mortgage" is accordingly hereby superseded as a
result of the discharge of the 1947 Mortgage. The Offered Bonds will be
issued on the basis of Property Additions as described under
"Description of the Bonds Issuance of Additional Mortgage Securities" in
the accompanying Prospectus. Certain capitalized terms used in this
paragraph are defined as set forth under "Description of the Bonds" in
the accompanying Prospectus.
OPTIONAL REDEMPTION
The information regarding redemption set forth in the accompanying
Prospectus Supplement in the first paragraph under "Description of the
Offered Bonds Redemption" is not applicable to the Offered Bonds.
The Offered Bonds will be redeemable, at the option of the Company
in whole, at any time or in part from time to time, at a redemption
price (a "Redemption Price") equal to the greater of (i) 100% of the
principal amount of the Offered Bonds and (ii) the sum of the present
values of the remaining scheduled payments of principal of and interest
on the Offered Bonds discounted to the date fixed for redemption (the
"Redemption Date") on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at a discount rate equal to the
Treasury Yield plus 20 basis points, plus, in each case, accrued
interest on the Offered Bonds to the Redemption Date.
"Comparable Treasury Issue" means the United States treasury
security selected by an Independent Investment Banker as having a
maturity comparable to the remaining term of the Offered Bonds to be
redeemed that would be utilized, at the time of 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 Offered Bonds.
"Comparable Treasury Price" means, with respect to any Redemption
Date, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) on the third Business Day preceding such Redemption Date, as set
forth in the daily statistical release (or any successor release)
published by the Federal Reserve Bank of New York and designated
"Composite 3:30 p.m. Quotations for US Government Securities" or (ii) if
such release (or any successor release) is not published or does not
contain such prices on such Business Day, the Reference Treasury Dealer
Quotation for such Redemption Date.
"Independent Investment Banker" means an independent investment
banking institution of national standing appointed by the Company.
"Reference Treasury Dealer" means a primary US government
securities dealer in New York City appointed by the Company.
"Reference Treasury Dealer Quotation" means, with respect to the
Reference Treasury Dealer and any Redemption Date, the average, as
determined by the Company, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount and quoted in writing to the Company by such Reference
Treasury Dealer at 5:00 p.m. on the third Business Day preceding such
Redemption Date).
"Treasury Yield" means, with respect to any Redemption Date, the
rate per annum equal to the semiannual 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 such Redemption Date.
THE TRUSTEE
On November 24, 1997, The Chase Manhattan Bank succeeded Mellon
Bank, N.A. as Trustee under the Mortgage.
LEGAL OPINIONS
Legal matters in connection with the Offered Bonds will be passed
upon for the Company by David R. High, Esq., employed by the Company as
its Assistant General Counsel, and by Reid & Priest LLP, special counsel
for the Company, and for the agents by Milbank, Tweed, Hadley & McCloy.
All legal matters pertaining to title and the lien of the Mortgage will
be passed upon only by Mr. High.
ADDITIONAL AGENT
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") has been appointed by the Company as an
Agent in connection with the offering of the Offered Bonds. For
purposes of the accompanying Prospectus Supplement, except where the
context otherwise requires, references to the Agents shall be deemed to
include Merrill Lynch.
CUSIP No. 26623FBF4
