Allegheny Energy Receives Merger-Related Approval From Maryland PSC

Business Wire, March 27, 1998

HAGERSTOWN, Md.--(BUSINESS WIRE)--March 27, 1998--Allegheny Energy, Inc. (NYSE: AYE) received approval this week from the Maryland Public Service Commission (PSC) on a settlement agreement which will allow Allegheny Energy to issue stock as required for its proposed merger with DQE, Inc. (NYSE: DQE).

According to Allegheny Energy Chairman, President, and Chief Executive Officer Alan J. Noia, the Maryland Commission's March 25 decision is a significant milestone in the merger approval process.

"The Public Service Commission's decision is an important step forward for Allegheny Energy and our merger partner, DQE, as well as for our customers, employees, and shareholders," said Noia. "We are extremely pleased the Commission has approved the settlement agreement and has found the issuance of common stock for our merger to be in the public interest. We are committed to making our merger a model of cooperation, and the Commission's decision helps keep us moving forward toward our goal of completing our merger by the end of June."

In the settlement agreement filed with the PSC on March 6 resolving the Commission's investigation of the effect of the merger on Maryland customers, Allegheny Energy agreed to share synergy savings produced by the merger between shareholders and customers, resulting in a $4.4 million rate reduction for the Company's Maryland electric customers upon merger consummation. Allegheny Energy reached the settlement agreement with the Staff of the PSC, the Office of People's Counsel, the Maryland Energy Administration, the Department of Natural Resources, and Westvaco Corporation.

In August 1997, the Company filed a request with the PSC that it indicate its approval of the issuance of stock to consummate the merger. Since then, the Commission reviewed the effects of the proposed merger on the Maryland customers and operations of The Potomac Edison Company (doing business as Allegheny Power), Allegheny Energy's electric utility subsidiary that provides service to about 420,000 Marylanders. Allegheny Power offers customers the lowest electric rates of Maryland's investor-owned utilities.

"Our merger will create a strong, well-positioned company that will be the nation's tenth largest investor-owned utility based on kilowatt-hour sales," Noia explained. "Customers of the new company will enjoy affordable, reliable electric service and a wide range of new products and services. We will offer employees an innovative, exciting work environment. And shareholders will benefit from the Company's increased opportunities for earnings and dividend growth."

The required regulatory filings for the merger have been made with the Federal Energy Regulatory Commission, the Securities and Exchange Commission, the Pennsylvania Public Utility Commission, the Department of Justice/Federal Trade Commission, and the Nuclear Regulatory Commission. Shareholders of both companies overwhelmingly approved the merger last August.

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.

Headquartered near Hagerstown, Md., Allegheny Energy, with operating subsidiaries doing business as Allegheny Power, provides electric service to 1.4 million customers in parts of Maryland, Ohio, Pennsylvania, Virginia, and West Virginia.

DQE, an electric utility holding company based in Pittsburgh, Pa., has subsidiaries engaged in the production, transmission, and sale of electric energy. Duquesne Light Company, DQE's principal subsidiary, serves more than 580,000 customers in the Pittsburgh area.

For additional background information, visit our Internet sites at www.alleghenypower.com or www.dqe.com or call Cyndi Shoop at 301-665-2718.

CONTACT: Allegheny Energy Inc., Hagerstown

Cynthia A. Shoop, 301/665-2718

E-Mail: cshoop@alleghenypower.com