<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant X
Filed by a Party other than the Registrant __
Check the appropriate box:
__ Preliminary Proxy Statement __ Confidential, for Use of
the Commission Only (as
__ Definitive Proxy Statement permitted by Rule
14a-6(e)(2))
X Definitive Additional Materials
__ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Allegheny Power System, Inc.
_______________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
_______________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
_______________________________________________________________________________
Payment of Filing Fee (Check the appropriate box):
X No fee required.
__ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
_______________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated and
state how it was determined):
_______________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________________
(5) Total fee paid:
_______________________________________________________________________________
__ Fee paid previously with preliminary materials:
_______________________________________________________________________________
__ Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
_______________________________________________________________________________
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
_______________________________________________________________________________
(3) Filing Party:
_______________________________________________________________________________
(4) Date Filed
_______________________________________________________________________________
<PAGE>
<Page 1>
<Merger Progress Report masthead across three columns - consists of blue
Allegheny Power "A" logo at far left and yellow DQE sunburst logo to right of
blue A, plus the words "Merger" in yellow and "progress report" in blue. At top
right are the words "Vol. 1, No. 7, July 17, 1997" >
<First story as follows:>
<Headline in bold type>
Employee shareholders
urged to vote for merger
Now that you've had time to review the proxy material for our August 7
shareholder meeting, we're confident that you share our enthusiasm about the
merger. We urge you to vote "FOR" the merger. Approval by the majority of
the votes cast by each company's shareholders is required for this proposal
to be approved. We also urge Allegheny Power employees to vote "FOR" a second
proposal to change the name Allegheny Power to Allegheny Energy.
Following are several reminders why a "FOR" vote is the right vote.
<Letter X in a box as though on a ballot> A Strategic Combination
Allegheny Energy should provide more value to customers and shareholders than
either company could on a stand-alone basis. At the same time, the merger is
expected to lead to more opportunities for employees than if our companies
remain separate.
<Letter X in a box as though on a ballot> A Natural Fit
Allegheny Power is a winter-peaking operation with a suburban and rural customer
mix, while DQE is a summer-peaking operation with an urban customer base.
DQE's diverse mix of regulated and unregulated energy products and services
complements Allegheny Power's core businesses.
<Letter X in a box as though on a ballot> Strong Electric Sales
A combined 75.7 billion kilowatt-hours annually will make the new company the
10th largest investor-owned electric utility in the nation in terms of energy
sales.
<Top of second column>
<Letter X in a box as though on a ballot> Greater Financial Resources
Based on 1996 revenues, the combined company will feature $3.5 billion in annual
revenues and more than $11 billion in assets.
<Letter X in a box as though on a ballot> A Major Source of Generation
Allegheny Energy will be a major generator of electric energy, with 11,016
megawatts of generating capability.
<Letter X in a box as though on a ballot> A Strategic Location
With almost two million customers in 30,000 square miles within five states,
Allegheny Energy will be positioned as a major regional player in the
increasingly competitive electric power market. We will have a larger regional
platform from which to expand our customer base, and we will be able to offer a
wider range of energy-related products and services to our customers.
"The first step -- and one of the most critical ones in the approval process
for our merger -- is the shareholder vote," said Al Noia. "Employees represent
a significant voting block. You can send an important, very positive message
with your vote as well as with your verbal support when you discuss the merger
with co-workers, family, and friends who may be shareholders."
"The boards of directors of both companies enthusiastically endorse the merger,"
added David Marshall. "If you haven't already done so, please sign, date, and
return your proxy as soon as possible. Your vote most definitely does count."
<Top of third column - illustration of hand holding pen and box with X>
<Next story as follows, inside a black box>
<PAGE>
August key month
in merger-
approval process
August 7 will be an important day for the future of Allegheny Energy as
shareholders of Allegheny Power and DQE vote on the merger proposal. (See
related article.) August 1 also will be a busy day on the regulatory side of
the merger approval process. On that date, six filings will be made -- three
with the Pennsylvania Public Utility Commission (PUC) and one each with the
Federal Energy Regulatory Commission (FERC), the Nuclear Regulatory Commission
(NRC), and the Maryland Public Service Commission (PSC).
Pennsylvania PUC -- As required by Pennsylvania's Electric Generation Customer
Choice and Competition Act, a merger approval request will be filed, along with
restructuring plans for Allegheny Power and Duquesne Light.
FERC -- By evaluating the merger's potential competitive effect on wholesale
markets, the FERC will confirm that we are in compliance with the Federal Power
Act.
(Continued on Page 2)
<Across bottom of page all three columns - the words "Timely Information on
the merger of DQE & Allegheny Power" In white letters, surrounded by blue
box>
<Page 2>
<First story as follows - headline in bold type>
<Illustration of envelope> <Watermark>
A letter to employees
Dear Fellow Employee:
The last few months have been busy ones for all of us. Merger-related
activities are getting into full swing while we continue to provide quality
electric service to our customers. You, the employees of DQE and Allegheny
Power, have been doing a tremendous job.
As we become even more involved in the meetings, studies, hearings, and
regulatory filings that will continue to consume much of our time, it's
important to remember that we need the support of every employee to make this
process go as smoothly as possible. It is also vital to the success of the
merger - the top priority of both companies - that we keep our businesses
running at top performance and keep our customers satisfied.
We and the members of the Transition Steering Committee have had the pleasure of
meeting employees at various locations and look forward to many additional
meetings in the coming weeks and months. One of the most gratifying aspects of
these information-sharing sessions is the insightful comments and questions we
hear. It is clear that you are tuned into the merger process and the emergence
of competition.
There is no doubt that we have employees with the talent, flexibility, and drive
to make the new Allegheny Energy the premier energy and energy services provider
in the years to come. As we move forward with the goal of becoming one company,
we will need to draw on our most valuable resource - our employees - to identify
and solve the issues that will arise.
During this time of transition and change, we want to reinforce our commitments
to our employees. Any non-union workforce reductions prior to Jan. 1, 2001,
will result from attrition, reduced hiring, and targeted voluntary separation
programs. Both Allegheny Power and DQE will honor their existing collective
bargaining agreements.
Take advantage of the information provided to you through the "800" number, the
"Merger Progress Report," "Merger Bulletins," "Current Topics," videos, and
merger-related meetings. And share your ideas through these avenues, too.
<PAGE>
We have a great story to tell. We are two dynamic firms on the cutting edge of
change in our industry. We have our eyes on the future and have taken the
initiative to get out front and lead instead of following the pack.
If we combine our collective talents and continue to work together, we can have
an approved merger by next spring and be on our way to continuing to lead as
Allegheny Energy.
/s/ A. J. Noia /s/ David Marshall
<Bottom of page - first two columns>
<Continued story from page 1 inside black box>
August key month...
(Continued from page 1)
NRC -- This filing requests consent to transfer control of the Beaver Valley
Power Station and Perry Nuclear Power Plant from Duquesne Light to Allegheny
Energy, as required by the Atomic Energy Act.
Maryland PSC -- This filing requests approval to issue the necessary Allegheny
Power common shares in exchange for DQE shares.
Decisions Expected by May 1, 1998
Decisions on all of these regulatory filings are expected by May 1, 1998.
<Top of third column - next story as follows inside box shaded gray>
Statement on
merger-related
work force
reductions
Last December, Pennsylvania Gov. Tom Ridge signed into law the Electric
Generation Customer Choice and Competition Act. The Act, which became law
Jan. 1, 1997, requires utilities to submit a statement to the Pennsylvania
Public Utility Commission indicating the effect competition and restructuring
will have on the work force of the companies.
Here is the joint statement to be filed by Allegheny Power and DQE.
"The objective of the Allegheny Power/DQE merger is to create a customer-focused
organization that is positioned strategically to compete in the new era of
customer choice. In accomplishing this objective, the effect on all
stakeholders -- customers, shareholders, employees, and communities -- will be
considered.
"The companies believe that creating a successful Allegheny Energy will require
the combined experience and expertise of our work force. However, a pre-merger
synergy study estimated that the combined company would require about 500 fewer
positions to do what each does separately. Any non-union reductions before
Jan. 1, 2001, will result from attrition, reduced hiring, and, if needed,
targeted voluntary reduction programs. Any union reductions will be governed by
the appropriate collective bargaining agreements."
<Page 3>
<First two columns at top of page -- Illustration of two men shaking hands with
the words "The Exchange Corner" in white superimposed over illustration>
<Column 1>
<PAGE>
Allegheny Power <Allegheny Power logo>
Allegheny Power's large, five-state service territory is served by seven
administrative regions, with each including three or more service centers. The
service centers are "home base" for meter readers, linemen, electricians, and
others who work primarily in the field with customers.
Central Region
The Central Region, with 174 employees, is headquartered in Jeannette, Pa.
Other service centers in the region are located in Uniontown, Connellsville,
and Latrobe, Pa.
Eastern Region
Winchester, Va., is home to the Eastern Region. In addition to its Winchester
location, the region's 284 employees work out of service centers in Luray and
Madison, Va., and Augusta, Elkins, Franklin, Marlinton, and Martinsburg, W.Va.
Metro Region
The Metro Region is headquartered in Hagerstown, Md. Its 201 employees work
from service centers in Frederick, Md., Waynesboro, Pa., and Williamsport, Md.
Northern Region
State College, Pa., is the headquarters of the Northern Region. Each of the
region's service centers is located in Pennsylvania, including Arnold, Butler,
Clarion, Kittanning, St. Marys, and the State College location. The region has
240 employees.
Southern Region
The Southern Region, with 243 employees, is based in Parkersburg, W.Va. In
<Column 2>
addition to Parkersburg, service centers are located in Clarksburg, Gassaway,
Sistersville, Spencer, Summersville, and Weston, W.Va. Allegheny Power's only
Ohio Service Center, located in Marietta, is also part of this region.
Tri-State Region
Located in Morgantown, W.Va., the Tri-State Region has 213 employees. Service
centers, in addition to the Morgantown location, are in Cumberland and Oakland,
Md.; McConnellsburg, Pa.; and Kingwood and White Hall, W.Va.
Western Region
The Western Region, headquartered in Washington, Pa., has 209 employees.
Service centers, in addition to the Washington location, are in Weirton, W.Va.,
and Lawrence, Monongahela, and Rices Landing, Pa.
DQE <DQE Logo>
Duquesne Light has a long history of investing in the community -- encouraging
economic development, promoting education, supporting health and human services,
endowing the arts and cultural activities, and fostering environmental
stewardship.
Funding allocations for community relations are set by a special committee of
the Board of Directors, and a company management group regularly meets to review
and approve specific grant requests. Day-to-day operations are managed by a
staff of four.
To get the maximum community benefit from its donations, Duquesne
<Column 3>
Light works to direct how the funds are used. For instance, over the past five
years, a gift to the Pittsburgh Symphony Orchestra (PSO) was targeted for a
series of community concerts so residents in a number of communities in and
around Pittsburgh would have the opportunity to enjoy a low-cost or no-cost PSO
concert right in their own hometown.
The majority of outreach efforts focus on three priority areas - education,
youth, and the elderly - as a way to address the most critical needs of today
and to build a legacy
<PAGE>
for the future.
In the area of education, the 12-year-old "Partners In Education" program
operates under the philosophy that by enhancing the physical and human resources
in area schools, the Company can help students increase their level of
achievement.
Under this special relationship with five area school districts in Allegheny and
Beaver counties, Duquesne Light provides grants, job-shadowing experiences with
company employees, field trips to company facilities, supplies and equipment,
cultural experiences, and teacher development.
Employee volunteerism is an equal partner with corporate giving in the Company's
total community outreach program. An internal organization, the Employee
Community Action Committee (ECAC), coordinates volunteer activities, offering
employees a variety of ways to contribute their time and talents. Among the
annual projects ECAC sponsors are: Scouting for Food, Juvenile Diabetes Walk for
the Cure, and United Way Day of Caring.
Some 40 employees also volunteer their time, expertise, and enthusiasm as
members of the Duquesne Light Speakers Team. Each year, they make nearly 200
presentations to school, community, senior citizen, and professional groups on
topics related to the environment and electric safety, usage, efficiency, and
reliability. The newest presentation, "Electrifying Customer Choice," presents
a view of what customers might expect from the coming competition in the
industry.
<Gray bar across bottom of pages 2 and 3 with white page numbers on each
page>
<Page 4>
<First story as follows across three columns; headline in bold type>
Cultural assessment coming soon;
your response needed
You can help shape the culture of the new Allegheny Energy.
How?
Just watch for the Allegheny Energy Cultural Assessment Survey that will be sent
to you within the next few weeks. The survey is important because your input
and the input of all employees will help form the basis of developing the
culture of our new company.
As explained in the last issue of the "Merger Progress Report," a cultural
assessment is important in helping to define the present cultures of Allegheny
Power and DQE and in helping to determine the culture we want to have for a
successful Allegheny Energy.
To analyze our cultures, the Human Resources Support Team (HRST) will be
assisted by Development Dimensions International (DDI), an international firm
specializing in cultural assessments.
"Based on their experiences, we believe DDI can provide the kind of service
necessary to help us assess the two different cultures of Allegheny Power and
DQE, but more importantly, to address our needs as Allegheny Energy," said HRST
Leader Ron Magnuson.
The HRST and DDI will develop the survey based on values identified by senior
management. The survey will consist of questions about key corporate values,
communications, Company strengths and weaknesses, performance management, etc.
All survey results will be kept confidential; in fact, responses will be
returned directly to DDI. Neither Allegheny Power nor DQE will have access to
data until it's grouped for analysis.
"We will distribute a survey to each employee at both companies at the same
time," said Diane Liska, HRST member. "Employees will be asked to complete and
return
<PAGE>
the survey in an enclosed, self-addressed, stamped envelope.
"Once we receive all the surveys, we'll analyze the data," added Liska. "Then
we'll conduct a 'gap' analysis to determine the cultural differences between
where we are today and where we need to be as Allegheny Energy. We also will
conduct focus groups to get more feedback and verify the results of the survey."
After the surveys are returned and the data analyzed, the HRST will communicate
the results to employees. The analysis will then be used to help develop the
strategies necessary to achieve the desired culture of Allegheny Energy and as a
basis for benchmarking such important cultural values as customer satisfaction,
continuous improvement, teamwork, and diversity.
<Bottom of page, first column on left - next story as follows; headline in bold
type, story in box shaded gray>
Teams make the move
to Forest Hills
The Transition Project Managers and the three Transition Support Teams recently
began working from the Forest Hills facility located between Pittsburgh and
Greensburg. In addition, the soon-to-be-named Transition Process Teams also will
be working there.
As noted in the June 4 edition of "Merger Progress Report," this office space,
located at 1500 Ardmore Boulevard, was leased for one year to serve as a base
for all of the merger integration teams.
<Columns 2 and 3 at bottom of page -- Coupon enclosed in dotted box>
Use this space for your questions or
comments about the merger or call the
Merger Hotline at 1-800-764-7435.
<Seven blank lines in which to write a question>
Return to: Allegheny Power Corporate Communications, Greensburg
Corporate Center or DQE Public Affairs, 16-031
