Faced with low generating costs that made it a potential target for a takeover and legislation that may soon force every electric company to compete for a every customer, Allegheny Power opted to take on a partner, DQE, Inc. to help it through the challenging times ahead. Financial analysts who cover the power industry say the creation of Allegheny Energy is a bold move, and one that will result in a stronger utility that should be able to deliver lower rates to an estimated 2 million customers in five states.
Those same analysts say the merger is good fit for two reasons. One is that neither firm, by itself, was big enough to handle the challenges that will come with full competition.
The second is that because Allegheny serves primarily rural customers and Duquesne has mostly urban accounts, the utilities will be able to complement each other, since Allegheny's peak demand is in winter, while Duquesne's is in the summer. By combining forces, the two can share generating capacity instead of building new plants, a move that, with other economies, could save the new company $1 billion in the next 10 years.