Allegheny Power Shareholders Approve Merger With DQE, Inc.

HAGERSTOWN, Md.--(BUSINESS WIRE)--Aug. 7, 1997--Shareholders of Allegheny Power System, Inc. (NYSE: AYP) at a special meeting today overwhelmingly approved the issuance of additional shares of common stock to effect the merger of Allegheny Power and DQE, Inc. In addition, Allegheny Power shareholders overwhelmingly approved changing the name of the Company to Allegheny Energy, Inc. -- a name that more closely exemplifies its future as a total energy services supplier. The Company's regulated electric operations, however, will continue to operate as Allegheny Power until the merger is finalized.

Earlier today, shareholders of DQE also overwhelmingly voted in favor of the merger at a meeting held in Pittsburgh, Pa. The merger will create a new company, which will use the name Allegheny Energy. The new company will be the 10th largest investor-owned utility based on total electric sales.

"The vote today is a critical milestone in creating a new company that will be large enough to be a strong competitor in the emerging energy marketplace, yet agile enough to seize the many opportunities that our changing environment will bring," according to Alan J. Noia, Allegheny Power Chairman, President, and Chief Executive Officer. "We are excited about our new company-to-be and what we will be able to accomplish. We intend to make our new company -- Allegheny Energy -- America's Best Energy Value."

The proposed merger is expected to produce synergy savings of more than $1 billion that Allegheny Energy will share with customers and shareholders. During the shareholders meeting, Noia, who will become Chairman and Chief Executive Officer of the combined company, explained that Allegheny Power and DQE's "customers, employees, and shareholders will be better off" as a result of the merger.

Noia said that the companies have set May 1, 1998, as the target for obtaining all regulatory approvals necessary for the completion of the merger. He added that Allegheny Power and DQE are on track for obtaining the necessary merger-related approvals from various federal and state regulatory agencies.

Last week, the companies took a major step in the approval process by filing with several regulatory agencies seeking approvals for the proposed merger. On August 1, Allegheny Power and DQE filed with the Federal Energy Regulatory Commission for merger approval. On the same day, they filed individual restructuring plans with the Pennsylvania Public Utility Commission and a joint restructuring plan, which included their merger application. Allegheny Power, a Maryland corporation, also filed with the Maryland Public Service Commission for approval to issue stock to exchange for DQE stock. Also, a filing was made with the Nuclear Regulatory Commission.

Additional filings concerning the merger will be made later this year with the Securities and Exchange Commission, Department of Justice, and the Federal Trade Commission. Filings related to affiliated transaction approvals will be made with the Virginia State Corporation Commission and the Public Service Commission of West Virginia.

"We have approached the regulatory approval process with one overriding thought in mind: We want to make our approval applications a model of cooperation," said Noia. "We intend to work with all of our regulators to ensure a thorough and prompt review of our merger proposals. Our employees are actively identifying and addressing concerns of all parties who have an interest in the merger. We are working hard to make the merger a reality by May 1 of next year."

The proposed merger between Allegheny Power and DQE is a natural fit since the operations of the two companies are complementary. Duquesne Light is an urban and summer peaking utility, while Allegheny Power is suburban and winter peaking. The new company will benefit from a diversified customer mix and earnings base.

When the merger is complete, Allegheny Energy will serve a population of more than 4.5 million, with 2 million customers in a 30,000-square-mile service area across five states. The new company will be strategically positioned as a major regional competitor in the increasingly competitive energy marketplace. It will have a large regional platform from which to expand its customer base and to offer a wider range of energy-related products and services to customers. -0- For additional background information, visit our Internet site at www.alleghenypower.com or call Cyndi Shoop at 301-665-2718.

CONTACT: Allegheny Power System Inc.

Cyndi Shoop, 301/665-2718