Text

1992 Annual Rept for Dqe.
	ML20044D301
Person / Time
Site:	Beaver Valley
Issue date:	12/31/1992
From:	Von Schack W; DQE
To:	;
Shared Package
ML20044D300	List: ML20044D299; ML20044D301; ML20044D303; ML20044D304; ML20044D308; ML20044D318;
References
	NUDOCS 9305180473
	Download: ML20044D301 (56)
	v • d • e

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1 l SPEAKING OF VALUE i

l j , . . _ ,_ _ , N, "DQE is structured for the '90s." Elizabeth Moore, i >

Wall Street analyst. "The coln- )

r 4{

pant was true to its word." Charles Duritsa, enciron- 'k i

! mentalign/ator: "We're reducing costs and working cleaner electrically." ,

I Eli:abeth Lee, owner; Eastinont d' " Clea ners. "Ther l

l have been an extraordinarv fa _

partner in the new 1

! airport and in economic development possibilities for this s .:

region's future.' Tom Foerster; chair-l l ;

l man, Allegheny County Corniniuioners. "DQE is 1992 l

Utility of the Year." Electric Light & Power inagazine.

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%A l 1992 Annual Report i 9305180473 930506 PDR ADOCK 05000334 j H PDR

DOE FINANCIAL AND CPERATIN3 NB HLIOHTS Change Change l' rum Ennu 1992 1991 1101 11 9 ) 1490 l'eak Inad 2,308 51W -3.9'i 2.402 51W 1.0% 2.379 h1W Retail hates 11,569 51WII -2.5% 11.861 AlWII 1.4% 11.694 h!WII Operating Revemies (billiong $1.185 -1.2% $1.110 6.0% St.131 Nei Incume (millions) 5141.5 5.9% S133.6 9.89 5121.7 Shar es Outstanding (milliong 52.95 0.1% 52.90 -1.6% 53.76 Return on Ascrage Osmmon lijuity 12.4Ci 1.6% 12.2 % RO% 11.3 %

inng-Tenn Debt (billions) $1.113 46.6 % $1.421 -5.3% S t.501 Inter est -Inng-Tenn Debt (millions) $123.4 4i.29 S131.5 -6.0% $139.9 l'r efen nt and l'iclerenc c Dividends (million4 $9.4 -13.0% $10.8 -22.9% $14.0 Net Operating Cash flow (milliong $396.6 14.9% S345.3 23.9 % S278.6 Capital Expenditmes (milliond $ 112.4 -10.4 % $125.4 20.9 % 5103.7 MW - o megawatt is o measure cd electrec use of a point in tme.

MWH . o megowatt hour is o megawatt cd elecht usage ove,r o period of hours CONTENTS Chairman's hiessage 2 Weslev W. son Sc hack discusses how our forward-looking business strategies bas e positioned the company for inricasing competition.

Strategic Perspective 4 An overview of the 1992 National Energy Policy Act -its implications for DQE and the electric p<mer industry.

Speaking of Value 7 DQE people are creating many forrns of value for customers, shareholdeis, the conununities we sene and the soutimestern Pennssivania region as a w hole. In this section, a diverse gioup of people talk about the value they have reccised from DQE.

Glossary of Terms 16 Afanagement's Discussion 17 Report of Afanagement 25 Reports of Independent Accountants and Audit Committee 26 Hnancial Statements 27 Notes to Consolidated Financial Statements 31 Selected Financial and Operating Data 4S Board of Directors and Officers 50 Shareholder Reference Guide Irnide I! ark Gner

almost 578,000 ( ustomers in Allegheny D Qp is an eneigt L holding ( ompanysenic that es and licaser cotmiics, the company sells

supplies sale and icliable elecaicity. ein uitity to other utilities.

In achlition, DQE pur sues related DQE's non-utility subsidiaries business opportunities that benefit include Ducluesne Enterprises and customer s, im estoi s and connnunities Montaut. Duquesne Enterprises owns

.cned. Recognized for excellence, Allegheny Desclojunent Corporation quality,integiits and value DQE was and Property Ventur es, l.td. These named "1992 Electric l'tilitt of the companies are involved in initiatives Yeat~ hv Electric Light & Power related to the core business. inchuling j magazine. prosiding energt senis es for the new Duquesne I ight Company, whose Pittsburgh International Airport and j origins date to 1880,is the piincipal investing in r eal estate. Montauk subsidiary of DQE. Duquesne l_ight is makes both shor t-and long-term j engaged in the [noduction, transmis- invesunents, and provides a sonr(c of i sion. disuihution and sale of electric capital for DQE alliliates.

energv. Its senic e territory is approxi- The company or its predecessor.

l mately 800 square miles in southwest- Duquesne 1.ight Company, has contin-l cin Pennssivania, with a population of unusiv paid dividends on (onunon l.5 million. In addition to sening stoc L since 19YL

COMMON STOCK TRENDS int w i

o ,mi. u,,a

, u.a, 1992 1 9'.31 lir.iG 19S9 1988 19S7 t.w thrnings l'er 5 hare $ 2.67 S 2.~en S 2.24 S 2.03 S 1.86 S 1.M3 7Ri ik ok Value at M ar-lun<l $22.12 S21.00 S20.07 S19.27 S 18.~il S17.3, a#7 i M.u Let l'ri( e l'ci 5h.u e 11igh 32 % 31 23% 23's 18 8 11% 17.Ei Inw 267 23% 20 % 17 % 114 10% 20.1' l-l M at-1 nd 32L Sn% 2n 23 + 18 % 11 % 22. I'i l

1 DOS ANNUAL DIVIDENDS PER SHARE l (Do5ars Per Shore) i i

t 'I.MJ .a n 7

I SI AMI O' ? $

" a / l NN M4 4() 41 42 l Common divodends have grown an overage of 6"< per year 1

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4 Nincicen ninety-two was a par ticu-larly satisiving > car for DQE. In De(em- .

ber Elatric Ligla & Pmwrmagazine named us the 1992 Electric Utility of the Year. El &Psaid. three successive years j of outstanding financial and operating T '

perfbrmance prmided superior results wesley w. von schock Ior customers, employees and share- l Imiders. The company end>odies what we most far-reac hing pieces of energy legis-look for in strong corporate citizenship." lation in our nation's history, became l This pr estigious honor was enthusi- law. A primary purpose of NEPA is to asticalh received bv our people. The increase competition in the generation ,

Iban d of Directors and I personally (on- of elecuicity by remming obstacles to ;

gratulate all of them fbr their indisidual competition among producers of whoh - l contributions to the outstanding team- sale electric power. Under NEPA, almost j wor k that earned this speciah ecognition. any owner of electric power generation i El.&Palso noted that continuing will be able to compete in the wholesale !

restructming seems to have positioned electric power man ket. }

it (DQE) ideally Ibr competition within Equally important, independent ;

a iestructured and incicasingly competi- power producers will find it easier to j tise industry." This comment captures gain access to utility companies' trans- ;

the objective - and essence - of the mission lines. The Federal Eneigv Regu- !

wor k to which our people base dedicated latorv Commission mar order utilities to ;

themselves for the past seven ycars. prmide such access as long as the relia- l We base made ucmendous progress. bility of transmission service is not im- l h can be measmed in the resu ucturing paired. In efk ct, this legislation codifies i of our organisation, a cultme of com- and increases the competition in the ;

l petitiseness and conunitment to cus- wholesale bulk power maiket to whic h l tomers that has emerged, and a stronger we base been responding for the past l balance sheet. Howeser, thejob is not five years. We intend to remain competi- ;

j finished. The marketplace fbr energy tive in this mar Let, whic h accounted fbr l grows more competitive. For midable 2M1 of our kilowatt-hour sales in 1992, !

' challenges and risks ahead should not The GPU-DQE transmission project, !

be underestimated. in whic h we are a partner with General The crisis of the mid-1980s, when we Public Utilities, will open bottlenecks in i lost abnost 2Mi of retail sales in the col- the Pennssivania transmission sT, stem ,

l lapse of the local steel industry, moti- that are costing consumcis hundreds of L vated us to ichuild and reshape the way millions of dollars. This project is funda- !

! we do business. That crisis forced us to nental to achicsing the competitive aims

! take steps that might have been avoided of our national encryy policy in the Mid-

! under easier circumstances but, because Atlantic states.

we took them caily, now enable us to it is extremely disappointing that i deal more effectively with a changing attaining these national goals is ham- !

business enviromnent. pered by the unnecessary regulatory l

! delays that our project has encountered l l Xcw Energy Act in the inm m of obtaining state l l

In October 1992, the National approval. Many independent power pro-

) Energv Policy Act (NEPA), one of the ducers nationwide are ready to dGher i i 2

1 :

im>re competithelv priced energv to impunement. We will o mtinue to consumer s as s<nm as there is a way to benchmar L as many pictes of our busi-get it to market. That is wby groups such ness as we can in the years ahead. In the as the National Independent Encigt final analysis, however, customer satisfac-Pnnluccis strongly endorse the need ibr tion and the value to customers of ahe cf ficient and timely regulatory approval senire we deliver remain our two leading to exparut transmission netwo:Ls that indicators of competitive per fbrmance.

currently h.nc major bottlenecks. These As I'se said in presions letters to groups set ognize that consumers can- you, we face a futute filled with change, not realiec the benefits associated with with no plac e ihr -business as usual.'

f ully (ompetith e w holesale ma:Lets The new Clinton administration's without aderlaate transmission capacity. implementation plan for N1 PA remains At this point it is not clear how the to lx seen. Ilowesci, we think that the Pennss h;mia Public Utility Commission legislation's ( ompetitive thrust will be (PUC) will respond to NEPA. If con- just as significant as it would have been smucis are to benefit from more com- under the pievious administration.

petition, the iesponsiveness of the PUC We also expert further expansion of ,

is Crucial We want to woiL with the gmermnental interest - and interven-PUC. and hope ther will woil with us. tion -in issues afTecting the emiron-ment. Sound public policy in this area Comfictition. Change, and Our Future will asoid fads aad issues drhen solely by 15ccoming a low rosi producer is a politirs. Government needs to ex;unine niajor part of what competition is all what coinpetent scientists say alumt the about - and it will be a basic determi- seriousness of particular issues. Decision ,

nant of success. This incans that we inust makers shouhl set policy not onlv on the I constantiv look for wap to cfTectively basis of what thev want donc, but also l take expenses out of our operations. on how much they are willing to have l

()ne of our Ley ( hallenges is to our nation pay for their decisions. I decide w hat we should not do. Whv do Our nation needs a policy that does something more cf firiently that should not plac e environmental protection in not be done at all'" Another alca of con- (ouflict with competititeness andjob (entration is to better inanage our creation. We are pioud of oui emiron-pn g esses-in other words, howwe get mental rec ord and we intend to ron-things done. tinue to be a leader with the highest As important, the ( hallenge of standards in this area of public conce n.

managing in a competithe environment Ninricen ninety-three promises to a ccluiics us to inate continuous improw- be another demanding y car. In this ments in our operations and to strhe to annual icpor t. you will icad how our be the best in our industry. The status team is wor king to delhcr value to our (luo cannot satisfy us. shareholder s, customers and the com-Several ycars ago, we set out to raise munities we senc.

Om standalds of per for main e through- On behalf of the lloard of Ditco- ;

out the company. We have adopted the tors. I thank von for sour continued test of compaiing ounches to the best c onfidence. '

pei formances inside and outside our m

. dusu y in a very ssstematic manner.

This is called -bent lunas Ling" and it is isohy ir. m sha,*

all cIfectiW way to make Continuous Chaintun of dw & unl and Cldel lhuse UWm I rbn ury 1 **. MG 7

STRATECIC PERSPECTIVE The wide-ranging 1992 National g gw ,

Energy Policy Act (NEl%) opens the J generation side of our business o new ' PeIIcy Act wlIl Intensify competitors, increases transmission access, encourages energy efficiency, esempetitive fosses elser turve pmmotes research on emimnmental Iseon aa in ear < .

issues, and streamh.nes nuclear h.eens-ing. Following is our company's perspec- g ,,

tive on key aspects of the new law.

O.. Why is the new legislation so and seliability of their transmission sys-significant? tems are preserved.

A . It will intensify competiti e forces k. What role will state public utility that hate been building in our industry cominissions play?

for sescral 3cars.

Non-utility produc ers already have A . Power purchaw apeements made strong inroads on the power gen- between EWOGs and utilines will con-eration side of the business. Irgislation tinue to be reviewed and approved by adopted in 1978 encouraged develop- state commissions. Among other ment of cogeneration facilities that things, conunissions will evaluate the could sell electric power to regulated reliability and financial viability of utilities. These non-utility generators EWOGs.

icpresent nearlv 50G of the new capacity biought on line in 1990 and 1991. k. Will this new arr:mgement NEPA increases competition by creat- require increased cooperation between ing a new class of non-utility producers state and federal regulators?

called exempt wholesale generators (EWOGs). Any companyinterested in A . The National Association of supphing electricity to utilities. munici- Regulatory Utility Commissioners pally owned elecnic systems, and rural ah cady has proposed discussions with eleciric cooperathes can enter the FERC to increase cooperation and w holesale market, hee of previous c ollaboration.

r equiicments concerning location and type of genemtion. The only requirement k. Is the existing national iransmis-is that the EWOG must register with the sion netwoil adequate to handle new Federal Energv Regulatory Commission sources of generation?

(FERC). NEPA lets the marLet decide wheie a generator will be located and A . It is adequate in many parts of the what kind of technology it will use. country. Iloweser, there is a bottleneck in Pennsylvania that limits the flow of

k. Ilow will EWOGs get their power needed power to the cast.

to market? The GPU-1)QE transmission pioject !

can create opponunities for EWOGs by A . NEin requires utilities to provide climinating that bottleneck. It also j access to their transmission grids at rea- could serve as a test case for setting ;

sonable prices, as long as the integrity some of the rules gmerning transmis- I sion access and pricing. l 4

k. The current legislation fi>cuses d . As discussed in the " Speaking of on the wholesale market. Can direct Value" section that fi>llows, we ar e link-sales to large retail customers he far ing customers with electric technolo-hehind? gies that incicase elficiency and icduce their impact oli the emironment.

A. Although SEPA orohibits EWOGs Our transmission prqject also suppwts from hypassing io(al utilities and sell- NEPNs energv efficiency goals. Restart ing electricity directly to large retail of the Phillips and Brunot Island power customers, we anticipate that customer stations to provide power to eastern demand and other marLet forces esen- markets is a prime example of how our tually will make " retail w heeling" a industry can maximi /c the use of exist-realitv. ing resomres. Both plants already meet Direct sales to 1 -ciil customers in the all Clean Air Act acquirements fi>r sulfur natural gas industry have been actively dioxide emissions.

encouraged by FERC since the mid-1980s. In 1991, such transactions k. The emironment is another key an ounted for about 3% of natural gas issue for the utility industry and its cus-sales. tomers. Are any emironmental piovi-sions of NEPA of special interest; A . The Icgislation expands research in a number of area , including global g ,

l warming, clean coal technologies, and electric and magnetic fields (EMFs).

{} . How are sou preparing for the NEPA also promotes use of electric s chicles.

esentuah.ty of < hanges like retail

! w heeling? rneanh has special significance to us in connection with the GPU-DQE i

""'"f ssion project. Independent A . We must continne to focus on cus-tomer needs. to def mc and deh.ver the scientific panels that have resiewed the broad range of studies conducted over energy senices they want at a competi- -

tive price. At the same tune, we must the last 20) cars have stated that there is c ontinue to look at all facets of.our no scientific en.dence to conclude that there is any adverse health eficct caused business to keep our expenses down.

Flexihilitt will be a Ley. DQE was py npoque to une o e u nd-fi>rmed in 1989 to provide a holding nuon uctal to date haw miwd quev company organization and the finana.al tions that r equire follow-up investigation, flex.bih.ty i to take advantage of.c hange, Duquesne 1.ight wd. l continue actively to support such research.

and to position our company to meet the < ompetition. Our unregulated sul>- Our transmission >roject has sub. anes - all c losely related to our c or e addressed the EMF issue in a number of utility business- were fi>rmed to pur- 5"* ' " "' "" '" "si"N "*ii"E n nw> way and awaiWng lu asily popu-sue the same strategv.

lated at cas as muc h as possible, we will 5() . hnprosing the riatiori s energt ef cotistruct I>ower line towers with a i- f.

" delta" configuration that icducer EMF oenn is another NEPA cornerstone.

What are your strategies in tln.s egard;. levels by more than a third, compared to standa d towcrs.

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SPEAKING k -i OF -

VALUE J

1. ink financial analyst. A county coniniissioner. Four members of a unique coalition. An environmental official. The owner of a drv clemaing business. A 33g g g ," .

mixed group, yet with a connuon bond -value delivered hv DQE.

This report f catures people who have inillion tluough financial icstrurturing.

gained value in a varicts of wars f rorn We will continue to seek beneficial our coinp'mv. Also pictured ar e a few of irlinancing opportunitics. Ihmever, we the inoic than 1,000 inen and woinen will intensift our cf forts to w ho are creating that nilue. cicate shar ehohler value bs incicasing the cGi-A Dip Performer in Rotal Return ciency of our operations y and hv (outrolling cost .. .

1)QE corninon stoc L provided one All of our peopic aie :

of the best total scun ns of ant electric innohed in this proc ess, in utilin in the l'nited States for the fisc large was s and in small.

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1 sc.u s ended 1992, icilecting our wcov- We aic icorgani/ing wo: L e erv horn the depressed lescis of the piocedines, extending the mid-19N >s. life of equipment tinough Retail sales dec reased 2..W in 1992, la!geh due to unusually (oo! **ummer incicased presentatisc

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Inaintenance, and using wcather-in sharp ( outrast to unusu- new tr( hnology to alh warm weather in 1991. Ilowever, impios e cf ficiency.

( ontinued financial Iestru( tut ing and Sortir exar!!ples of out cf fe( tive cost ( ontrol resulted in a ti.X9 Iesults in 1992 include:

inctca e in car nings per sharc. h om

initialing a joint We are improving cash flow through 52.~iO in 1991 to 52.1i7. incter-Icadirtg pilot pro- use of hand-held computers by field Taking adumtage of fasorable capi- gram with a local natural service repres.entatrves like Makolm tal Inar Lets, we f urther reduced interest gas utility Bynum to record meter information (osts in 1992 hv appioxiinatelv $8 mil-

using increased plan- when a customer tenninotes service, lion. In addition, in 1)c( cmber we par- ning to sedm e the length Finot bills - more than 100,000 a year ticipated in the tefinancing of $119 of srheduled power station - now con be processed ovemight, inillion of debt as ociated with the 19Se tuaintenatu e and acfuri- This is five days foster than the fonner sale and leaseba(L of out share of ing outages pope reponing system.

licasci Valk v Power Station l' nit 2. This e subleasing 20% of _ . .

transaction will fur ther redu( c operat- our (orporate of fit e spa ( c ing expenses in 1991 Sim e 1988, we

icducing delinquent ( ustomes base icdu(cd our capital (osts by $10 an ounts.

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New Airport Incirases pending in southwestern Pennsylumia.

Economic Dierrsity It is an initiative that can benefit the entire region, as well as our company.

Retail sales ihr our senice territory The potential value ofourjoint plan are In ojected to incicase approximately with General Public Utilities Corp. to 23 annually fbr the next decade. These build a 268-mile transmission line across projections assmne modest econornic Penns3h unia has been well documented:

growth and normal weather patterns.

a $500 million investment to Because of the economic diversity of improve the st;ne's infrastructme southwestern Pennsylvania, Duquesne

more than 11,000 constructionjobs 1.ight's servic c territory withstood the

more than 1,500 permanentjobs accession better than some sections of in power pr oduction, coal mining and the countn. Our cronomic des elop- support senices ment professionals have added value to

abnost 51 billion returned to the economy by being Ley participants Duquesne Light customers over the next in the seshaping of our economic base. 20 years to help keep electric rates down Since 1987, they have helped add or

climination of the retain more than 15,500 jobs. Advan- bottleneck in the transmis-tages of the Pittsburgh region include sion giid to the east. -

its location in the middle of major retail The major loss of elec- -

and indusuial markets, its abundant tric demand from steel-l supply of natural t esom ces and energy, related customers in the I

and its strengths in education, health 1980s resuhed in a surplus ? ,10 mr care and afhndahle housing. of energv. Our solution -

Those advantages were enhanced by to mas Let that power to 'q) the October 1992 start-up of the new energshort regions to the Pittsburgh International Airport. This cast - will boost the % g 5780 million " airport of the funne' pa- icgional economy, and ,

sents an impor tant, ongoing opportu-can help create a new. .

nity Ibr emnomic growth. It is a major competitive energv expoi t .

addition to the regionalinfrastructure industry. ..

and is expected to generate 59 billion in The transmission proj-economic benefits and thous;mds of ect can enable us to sell Denny Pietrone and Lorrie Deobner jobs by the 3 car 2005, southwestern Pennsylvania represent more than 100 company DQE < ompanies were inajor con- coal "by wir e"- that is, people from io departments who built tributors to the suc(ess of this pn! ject. oser the proposed trane more than 40 miles of electrical trans-We are investing more than 570 million mission line. Further, like mission facilities in uncompromising in facilitics and infrastructure to help the new national energy terroin and odverse weather conditions meet airport-tclated growth. Allegheny legislation, the pn! ject to support the new airport. Inter-Desclopment Corporation built and plomotes incicased c om- departmental cc,c,f,s a,n, new work now operates the airport's statc<>f-the- petition in the energv mar- procedures and systems, and oggres-at i energy facility. ketplat e. The power line sive ottention to scheduling and costs will be able to carry 1,000 brought the project in on time and Benefits Tvilow hansmission Line megawatts of power capac- under budget.

ity bemnd Ihe 500 mega-With the airport completed. the pnr watts of power we plan to sell to GPU.

posed GPU-DQE transmission line is the That energs could come fiom a unicty largest economic revitalization project of local soun es including cogeneration 9

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and 'on independent powei po nhu ris icfiicling ontage. l'oit 2 set a new using < oal .md waste < oal, natural ainl station in on1 h >r unuimious opera-industrial gases. and 1.uidfill methane. tions of mi9 d.n s. ~1 he relucling outage Expanding the tange of'lurl soon es is also was a nun d scrici - our shortest wt anothc1 objecthe of'the new crer - and was c ompleted under btul-national encigs legislation. get. l' nit 2's 1992 availability was KUi"i .

The mam a<hantages of ihe tran+ l~ nit I openited omtismoush for :11 6 miwinn line - quality jobs inwstment dass before going off-line in October. Its in inf rastrurt m c. rate stabili/ation, rie- 1992 availabilits was 9:Uiri .

ation of a new encigs industn - have Aggiewhc cost reduction jnognuns attracted (onsiderable suppor t. A < oali- at our companmperated fowil stations tion ol'moic than 210 Pennssivania haw redu(cd opemtion and maintenance businesses and labor or ganizations haw expenses bs 17"i owr the last four pledged their support. Moic than ycar s. We are using < omp.uisons with 20.000 individuals haw signed petitions other c ompanic~ also known as secting approval of the project. bem hmar Ling - as wcll in April 1992, the Pennsylvania Pub- as r escaich and develop-f_m,M lir i . .h.u ty Conunission tuianimoush .

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appuned an mder romluding that the powei sale is in the publir interest. Ilow-high plant availabilit3 as b- .

cwr. we ar e inu criain when the PlL we drive down rosts.

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wil! < omplete its iniew of the siting application b n the traiisilliwion line.

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1 the benclits of this projn i foi the rus-In addition. diagnostic test "[,

tomcis and shatcholden of GPl' and l equipment. pun based as a y DQE. as well as the state as a w hole. icsult of hem lun;u king, is j ,

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Addine Ialue to Our Operations nunce t usts An ongoing irscan h i As disc ussed in the Suategic Pei- puiject is improving pri- -

spu the. the National Energt Polin Art foiin;un e at one of om m initially wih haw the most imp;u t on the plants bs enabling oper# communication has been a major focus encigs generation side of oui business. ton to at hirw an opti- of our transmission project since its in 1992, we at hiewd an all-tiinc mum heat rate iluough inception in April 1990. We formed ic< oni !or sales to other utilitics - I bil- moie pier isc bleinling of odvisory groups to develop siting crite-lion kilowatt-honis That icpicscnts oal supplies Other stud- rio, conducted 10 information work-26'i of om total siles and tuniciscows ies icsuhed in design shops along the route of the proposed Ihe impoi tatu e of 1he w holesale powcr < hanges Ih.o impiowd line, and opened four field offices. "We man Let and our abilits to pniride it with opci.ttions at om ma lear seek out opportunities to correct misin-(ompetithcit prh ed powcr. We ale able planis We will 4 outinur to formation people may have about the to make these sales because of the evahute new tu huologies project," said Sreervpo Mitro of the

< ontinued strong pc1 formaru e of Ihe and wor L lno< cues that Zelienople office. "We are listening to people who operate om generating mm ghe us a < ompetithc people's concerns, and oddressing stations edge. For exampic. we ar e them individually."

The mu lear-f ueled licaw Valin testing inethods to Power $tation set the pa< c for plant innpiow the cf firiencv of opcations in 1992. lichoe its Mas emission i onnols at oui < oal plants 11

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Initiatises like these prmide salue underscores our commitment to de iln ough increased efficiency and cost emitonmental value. At its core is a sasings. charter that conveys the guiding p L plcs for the compann management of l'aluc Grows fnnu emironmental matters: sound resource Encinnmental Incestment management, full compliance uith existing regulations, protection of the The public's growing emironmental health of our employees and the public, interest is being tramlated into new laws and the fostering of emironmental and regulations for all indusuies. Com- awareness.

panics that meet and exc eed emiron- Our current emironmental actisi-mental obligations add mlue in the long ties range from clean-coal technologv run to their shareholders. customers research. to employee can and paper and communities. iccscling, to maintaining a wildlifi-Our company's long history of emi- habitat around one of our generating ronmen tal performan( c, im estment stations.

and leadership has put us in a good In 1992, our llrunot position to meet the 1997, and 2000 Island Wildlife liabitat iequirements of the Clean Air Act Enhancement Project was Amendments of 1990. Our Pennsvivania g one of the fir st sites to be coal-fired plants are among the (leanest

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selected for certification in y in the nation. These facilities reduce an international r egistry of our sulfin dioxide emissions to a rate the non-profit Wildlife ";

507 less than the 1995 Phase I standard. llahitat Enhancement -

We will use a variety of methods to Council.

comply with Phase I iequirements, including increased use of our cleanest Delicering facilities, additional use oflow sulfitr coal, Customer l'a lue and the installation of equipment that r edm es nitrogen oxide emissions. .\ lect- Delisering customer ing Phase I stand.u ds will cost us about value is at the heart of S35 million, far less than many other escrything we do. As com-utilities. That's a direct result of the more petition increases, we nuist "we use a lot of water in producing tilan bOOO million we've imested in understand better what electricity,~ said Jim cool, senior com-eilvif onirleillal 00:11:01 equipmeilt while service 5 ollr ctistoiners ptionce assurance engineer. "And operating ll!) der local enlission stalldar ds valtle and deliver thCin at we're very proud of our water quality that are annong the toughest in the the lowest possible cost. comptionce record. The tremendous colmtry. We aie exploring a coinbination Reliability and avail- improvement in pittsburgh's three of (omplian(c inethods to nlect the ability of power are impor- rivers over the post 20 years is testi-Phase Il stand.u ds, includillg (lean coal timt to our customers. mony to the success of water treatment te(hnology. To the extent possibic, we Electricity's role will con- programs adopted by ouquesne Light plan to liinit long-term capital and op"r- tinue to grow in impm- and many other local corporations."

ating corninitments so we can take tance with inricased advantage of expected impr ovemeilts in national einphasis on encip efficiency emission control technologies. and envir onmental stewar dship. Elec-Our company's emironmental com- tricity has been the nation's economic mitment exceeds what is icquired. We engine for the past two decades. As cler-have deseloped a strategic plan that tricity assumed a larger shar e of total il

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eneigt use, the country achieved nmst likeh to benefit liom specific girater economic output with greater tecimologies, energy cf ficiencv. Sim e 1973, the l'.S. One program begun in 1992 is help-Gross National Pr oduct has increased by ing the 300 di v cleaning establishments 514 while energy consmnption per dol- in Duquesne 1.ight's senice territory lar of GNP has declined by 2Mi . That is meet increasingly suict emironmental due largelv to advances in electric tech- regulations while reducing costs and nologies. During the next 20 years, increasing quality. L' sing a state grant giowth in demand for electricity is In ogr2un for a ccvcling and a targeted expe(ted to account for approximatelv information campaign, we have helped 359 to 50'7 of'the growth in total dry deaners install new equipment that energs consumption. r educes their total costs even though We are using new electric te( huol- constunption of cIcctricity incicases.

ogies to add value to our customers' This " win-win' man Leting approach servi ( c. increases the vahic of our jn oduct Our abilitt to remotely switch cu+ because we are selling solutions to cus-tomers' electric service to other (ircuits tomei s. not just electric ity. ,, .

dining storm-iciated outages was Offering flexibility and 4 enhanced bv a new computer installed in 1992. L'nder most conditions, more choic e in rate plans iuul in energy end-uses is a key to h

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1 typical 23,000 Lilmoh distribution cir- faction - and to incicased cuit can be restoicd to senice within sales. We will be carrying 3 . .

th e minutes. This te( hnologt improves this theme further. In ',

circuit icliabilitt, icduc es outage time, 1993, we will of h r addi- #

decicases operati ng msts and limits the tional options - f r om '

number of cia uits required. incicased power quality to A ( ompr ehensis c customer infor ma- alternathe wass of heating tion and hilling etem begins full oper- and air-conditioning large ation in 1993. This (omputeri/cd system commercial buildings. .

will ( entrali/c important information We'!c also cicating .

abisul ca( h of otar custorncis and the In oadel value f or our + - -

sei vit es we ale pr oviding them. With cusnamers thiough Because they interoct daily with our dir cri au ew to Inote relesant inforina- our innohemerit in their customers, Customer Service people tion than eset, our people can lespond ( omn umities. like Deb Brown and Pot Borkowski mole qilickh and ( ompichensiselv to We'ic par ticulaily play a vital rote in ochieving our custome inquiries and senic e Iequests. ploud of'our PaiIncis in related goals of improving both cus-liducation prog!;un. tomer satisfaction and operating effi-Licing and IGr/ zing Through financial sup- ciencies. Eoch year they and their co-l!ctler Electrically poi t, per soiial im oh e- workers receive opproximately inent, student Iotit s, 600,000 customer telephone calls.

Ther e is a binad range of elet tro- teac her seminar s, and in-tet hnologies, ranging fiom heating to seni( c prograins. we lighting to new industrial processes, that icward academic at hicsement and can add value to our customeis' busi- cancer des clopment u hile discouraging nesses and homes. We ar e diicctly studeros f rom dropping out.

addrewing those customer s w ho ar e 15

^ DOE V

GLOSSARY OF TERMS q ' ollowing are explanations of certain financial and operating terms used in our report, some of which are unique to our business.

Allowance for funds Federal Energy Used During Construction (AFC) Regulatory Commission (FERC)

An amotml teondcd on the books of a utility An independent five-member onmnission dming the peri

Ohio

Pennsylvania

5'"""W"'"" h""I iib ern, plant and equipment.

Pennsylvania

IC'Df7 A55

DOE

Pennsylvania

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ECR

Duquesne's fossil stations undergo planned maintenaru e outages on a periodir j _

L DOE

DOE

3lI

Operating Income 253,044 266.906 266.916 ;

DOE

Total 4,356.540 4,268,398 1rss accumulated depreciation and amortization (1,340,846) (1.233.283) 1%perty, f*lant and Equipment - Net 3.015.694 3,035,115 l

Cash and temporary cash imesunents ,

l'namorti/cd loss on rcauguited debt (Note E) 70.324 55.270

I)ciened debits 157.141 127.401 Total Other Assets 593.8(i3 592.862 Total Assets 53.875,944 $3.933.788 i

DOE

STATEMENT OF CONSOLIDATED CASH FLOWS l

Activilles See Notes to Gm wlidated1: nanaal Atatements.

1 DOE j V

O 1 re orei er in 19s4. the Centrai Area Power Cooraination croup (CAPCo) companies agreed Property loss to minimize construction wmk and cash expenditures on Perry Unit 2 pending consideration of several af ternatives, including resumption of construction or can-cellation of *he unit. In 1986, Duquesne abandoned its interest in the unit.

DOE

applied to such borrowings was 6.36 percent and 8.34 percent, respectisely.

d-DOE

F

DOE

194is-91

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]"jff f linhlI oundation huppoit of ediuational Robert Mehrabian. 51 2 t oml<nwton, and c onununin pu rgramu. Diin toi ships Icrm expires 1993 (l. 5). Picsident.

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