<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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Allegheny Power System, Inc.
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<PAGE>
[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. 9, June 30, 1997"]
Your opinion counts!
Cultural assessment questionnaires
due August 15
As reported in the last issue of "Merger Progress Report,"
you should receive your copy of the cultural assessment
questionnaire within the next several days. Please take the
time to complete and return your questionnaire by August 15.
The purpose of the cultural assessment is to assess the
current cultures of the two companies, identify the
perceptions each company has of the other, and develop
strategies to get from our current cultures to the desired
culture for Allegheny Energy. Your responses will be kept
confidential. A postage-paid reply envelope addressed to the
tabulating vendor will be provided for your convenience.
Neither Allegheny Power nor DQE will have access to the data
until it is grouped for analysis.
The assessment is an opportunity for you to share your
experiences and feelings. Your responses are important in
meeting the purpose of the cultural assessment. Please take
the time to complete the questionnaire.
If you do not receive your questionnaire shortly or if you
have any questions or concerns, please contact the Human
Resources Team at 605-6262 (DQE) or 8-402-6262 (Allegheny
Power). A member of the team will get back to you as soon
as possible.
Allegheny Energy values announced
We all live by a personal set of values--guiding principles
which help us to make many decisions in our lives--from how
we talk, to the organizations we support, to how we treat
others. And although we usually don't think about it,
businesses "live" by sets of values, too.
A great deal of work has been done to create the foundation
of Allegheny Energy's business practices by defining its
values. These values, along with our strategic objectives,
will guide our operations and enable us to achieve our
vision of becoming an energy services leader.
The key Allegheny Energy values are (in alphabetical order):
Bias for Action, Customer Focus, Integrity, and Shared
Commitment.
These values were selected to reflect the changing face of
the utility industry and to position us to compete
effectively in the marketplace. For example, the Bias for
Action value calls for a flexible, non-bureaucratic, and
responsive organization; one where timely decisions are made
with the best information available.
The values are defined briefly in the following chart. Look
for additional information on these values in the near
future from the Human Resources Team.
Allegheny Energy Values
Bias for Action
Seize opportunities; make reasoned decisions; and implement
solutions with a sense of urgency.
Customer Focus
Individuals and activities throughout all of Allegheny
Energy's businesses embody a market- and customer-driven
perspective.
Integrity
Demonstrate a high standard of ethical conduct and honesty.
Shared Commitment
Everyone contributes to each other's success. Allegheny
Energy is committed to the success of each individual, and
each individual is committed to the success of Allegheny
Energy, as well as their coworkers and team members.
[Banner across all columns at bottom of page "Timely
information on the merger of DEQ & Allegheny Power"]
<PAGE>
[First two columns at top of page-Illustration of two men
shaking hands with the words "The Exchange Corner" in white
superimposed over illustration]
Allegheny Power
Allegheny Power has long been proud of its environmental
stewardship, spending more than $1.5 billion at its
facilities to comply with state and federal regulations in
several compliance areas, including air, water, solid waste,
noise, and aesthetics.
The largest category, by far, is air, with expenditures of
more than $1.1 billion. The scrubbers at Harrison Power
Station, which were installed to meet Allegheny Power's
sulfur dioxide reduction requirements for Phase I of the
1990 Clean Air Act Amendments, accounted for $555 million of
this total.
But stewardship goes beyond compliance with regulations, so
Allegheny Power has sponsored a number of environmental
initiatives, both its own and in partnership with other
organizations, and encourages its employees to be leaders in
this area.
Examples of the Company's own endeavors include the
recycling of computer diskettes, laser printer toner
cartridges, waste paper, scrap metal and wiring, and waste
batteries and oil filters, and the conversion of coal
combustion by-products, whenever possible, into usable
substances, such as concrete and anti-skid material.
Nationally, Allegheny Power is a participant in the Global
Climate Challenge Program, and as such, is a member of the
Earth Comfort Program, which promotes geothermal heat pumps;
the Utility Forest Carbon Management Program, which
encourages tree planting and forest management; EV America,
which promotes the use of electric vehicles; and the
International Utility Efficiency Partnership, which supports
energy efficiency in international power projects.
Allegheny Power is also a partner in the Environmental
Protection Agency's Green Lights initiative, which involves
improving lighting efficiency in Company buildings and
encouraging customers to do the same; in Envirotech, an
electrotechnology and renewable energy investment pool which
helps to stimulate energy technology development and
promotes environmental responsibility; and the national Cool
Communities program, which is sponsored by American Forests
and encourages strategic planting and other energy
efficiency measures.
In its service territory, the Company sponsors such programs
as the Southwest Pennsylvania Ozone Action Partnership,
which seeks voluntary reductions of ozone-forming
pollutants, and the Ohio River Sweep, an annual riverbank
cleanup for the Ohio River and its tributaries.
The Company's newly adopted Environmental Policy not only
encourages employees to demonstrate environmental
stewardship, but also rewards their actions with
Environmental Stewardship Awards.
The awards program, which was implemented during this year's
Earth Week activities, is for employees who do volunteer
work with non-profit or civic organizations involved in
activities which enhance and improve the environment.
DQE
The environment has been very high on Duquesne Light's
corporate agenda for decades. The Company's policies and
practices reflect a concern that goes beyond the mandates of
compliance to include voluntary, responsible stewardship. In
fact, of the Edison Electric Institute's 200 member
companies, Duquesne Light is one of only 23 with documented
programs in place for achieving environmental excellence.
In this first of a two-part series, we'll share some of the
historical highlights of the Company's exemplary
environmental program.
Duquesne Light was the first utility in the nation to
install a full-scale, plant-wide scrubber system to control
air pollution. Scrubbers were installed at Elrama and
Phillips power stations, beginning in 1971.
Duquesne Light's Cheswick Power Station was the first major
power plant in the nation to implement a dual-burner (oil
and gas) system to start the boiler, which reduces emissions
and costs.
In the late 1980s, the company designated about three-
quarters of Brunot Island as a wildlife habitat. A power
station shares this 180-acre island in the Ohio River, about
two miles downstream from the skyscrapers of Pittsburgh,
with a variety of animals and plants. Brunot Island was
certified by the Wildlife Habitat Enhancement Council of
Washington, D.C., in 1990.
When a 1986 Pennsylvania law changed the status of fly ash
from a waste product to a resource, it opened the door for
one of the largest fly-ash structural fill demonstration
projects ever constructed in the United States. By the
spring of 1988, Duquesne Light had recycled 353,000 tons of
fly ash as fill for a portion of the East Street Valley
Expressway, saving customers about $1 million in avoided
disposal costs.
2
<PAGE>
In 1993, Duquesne Light formalized its long-standing
environmental commitment by developing an Environmental
Strategic Plan, adopting a Corporate Environmental Charter,
establishing an environmental stewardship program, and
developing key quantifiable measures to track and evaluate
environmental performance in all areas of operations.
An environmental-awareness training program was also
initiated that year which is believed to be unique in the
industry because it included all employees--not just those
involved in power production and distribution.
[In second column a box shaded gray with the words "Your
vote counts" to the left. To the right a white box with a
gray border and a gray "X" inside.]
Shareholder meetings to approve our merger will take place
August 7 in Hagerstown and Pittsburgh. A large number of
proxies already have been voted and returned. However, your
vote counts. Please sign, date, and return your proxy as
soon as possible. Shareholders are urged to vote FOR the
merger. Allegheny Power shareholders also are urged to vote
for the proposal to change the company name from Allegheny
Power System, Inc. to Allegheny Energy, Inc.
Allegheny Power employee
goes to work for DQE
Scott Sidle, an Allegheny Power forester, reported to work
last week at a new location--DQE's downtown Pittsburgh
office.
Sidle's new assignment will have him temporarily working as
a Duquesne Light forester, making him the first--but most
likely not the last--employee of either company to "share"
his expertise.
"Duquesne Light was looking for a person to fill a vacancy
on its forestry staff," Sidle said. "Through merger
discussions, this situation became known to Allegheny Power
management. Duquesne Light decided to see if Allegheny Power
personnel might be able to temporarily fill this position."
Those in forestry management at Allegheny Power considered
the request and decided they could spare an employee if
others in the department would pick up the additional
responsibilities. Several people were considered, including
Sidle, who "volunteered for the job because I thought it
would be a good opportunity for me to get some different
experiences in my field. Plus my new location is not really
any farther from my house than Greensburg, where I currently
work. It's just in the other direction, and I really enjoy
working in this area."
Sidle will most likely work from Duquesne Light's Penn Hills
location after a training period in the down-town offices
and other field locations, and his duties will include
supervising line clearance contracts, tree trimming
contractors, and other rights-of-way projects.
Even though he will work from a Duquesne Light location and
supervise Duquesne Light contractors and projects, Sidle
will remain an Allegheny employee. Duquesne Light, however,
will be responsible for the costs of his wages and benefits
during the time he works on its projects.
"If I'm talking to a customer or a tree trimming contractor,
I'm representing Duquesne Light," said Sidle. "But I'm
still an Allegheny Power employee. I'm just 'contracted' to
work for another utility."
We expect that this merger will bring about greater
opportunities for our customers, our shareholders, and our
employees, and Scott Sidle is a specific example of one of
those opportunities.
Other employee meetings held
In addition to last Thursday's information exchange with Al
Noia and David Marshall at Allegheny Power's Hagerstown
Corporate Center, other members of Allegheny Power's and
DQE's leadership have met or will be meeting with groups of
employees whenever possible. Getting the word out about our
merger progress and answering employee questions are the
goals of these meetings.
In mid-June, two members of the Transition Steering
Committee (TSC), Pete Skrgic and Gary Brandenberger, had a
meeting with employees at Duquesne Light's Woods Run
facility. On June 27, Bill DeLeo, a TSC member, met with
employees from Duquesne Light's 411 7th Avenue location.
Skrgic and Rich Gagliardi, another TSC member, met with
employees at Allegheny Power's Frederick Service Center on
July 9, while TSC member Jay Pifer held two informational
meetings July 15 at Allegheny Power's Bower Avenue facility
in Hagerstown.
On July 18, Pifer and Brandenberger held five meetings at
three DQE locations, and Allegheny Power's Jim Haney spoke
to employees at the Hagerstown Corporate Center. The next
week, Pifer and fellow TSC member Gary Schwass met with
employees at the Boyce Service Center, and Allegheny Power's
Mike Morrell met with members of the Company's Generation
Business Unit.
During the last week of July, Pifer and Brandenberger
visited Allegheny Power's Washington and Pleasant Valley
service centers, as well as the Greensburg Corporate Center.
And August kicks off with Noia and Gagliardi meeting with
employees at Allegheny Power's Winchester and Martinsburg
service centers.
Other meetings that will take place throughout the rest of
the summer are now in the planning stages. Look for more
information in future issues of "Merger Progress Report."
3
<PAGE>
Transition Team Members Named
The Transition Steering Committee (TSC) has finalized the
merger transition teams.
The 14 teams and their members are:
Corporate Support
Vern Estel
Estella Smith
Pat Thompson
Bob Vogler
Customer Services
Roger Heasley
Jerry Holtzer
Tom Larkin
Bob Mattiuz
Don McGettigan
Steve Piotrowski
Delivery Services
Joe Belechak
Jim Griffin
Bob Henry
Ken Kallis
John Lapina
Rod Phillips
Don Weaver
Ron Webb
Finance and Accounting (Process)
Laura Dikun
Ralph Duckworth
Denny Herron
Rick Kinder
Pat Koos
Debbie Luttner
JoAnn O'Hara
Pat Tarcy
Finance and Accounting (Support)
Mark Daday
Quynh McGuire
Rick McLeary
Tony Pekny
Vinit Sachdev
Cathy Tokar
Terry Walker
Fossil-Fuel Management
Chuck Campagnon
Mike Hess
Joan Jenkins
Rich LiConti
Bob Kasnevich
Chuck Miller
Human Resources
Pat Casasanta
Jim Fornof
Lori Gallagher
Stephanie Hickman
Bruce Klueber
Diane Liska
Dave Lutz
Ron Magnuson
Karri Rogers
Sally Wade
Dick Waltz
Information Technology
Gary Edwards
Joan Flinko
Mary Jo Greenly
Tom Hubbell
Rich Hutchinson
Marvin McNair
James Moser
Chuck Nevins
Mike O'Donnell
Bob Ressler
Marcia Turkovich
Sharon Wise
Dave Wolfe
Bob Yates
Produce Power
Rubin Carter
Tony Hallo
Scott Huber
Loye Hull
Mark Karl
Harold McKinney
Ralph Nelson
Ron Rodgers
Retail Marketing and Sales
Kathy Brahan
Mike Eckard
Frank Hoffmann
Jim Pool
Dan Ridder
Brian Riordan
Ken Welsh
Supply Chain
Ken Bard
Sue Capo
Jim Crace
Fred Eichenmiller
Ray Grove
Jim Kauffman
Bill Machuga
Pat Roberts
Support Services
Ed Bobyak
Wolfe Huber
John Laudenslager
Dave Weber
Trading and Wholesale Services
Joe Cavello
Dale Flaherty
Robin Libbos
Jim Nixon
Transmission Operating Services
John Ahr
Dave Benson
Bob Kissner
John Rosser
Dave Wasel
Use this space for your questions or comments about the
merger or call the Merger Hotline at 1-800-764-7435
[8 blank lines for comments]
Return to: Allegheny Power Corporate Communications,
Greensburg Corporate Center or DQE Public Affairs, 16-031
