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Allegheny wants Duquesne plants

September 03, 1998

Duquesne Light Co. plans to sell power plants

PITTSBURGH (AP) - Duquesne Light Co. wants to pull the plug on its 118-year history of generating electricity by selling its power plants and using the money to lower customers' rates, according to a filing with state utility regulators.

The Pittsburgh-based utility still plans to distribute power obtained from other sources to its 600,000 customers, primarily in Allegheny County. The plan was submitted to the Public Utility Commission Friday and reported in Wednesday's issue of the Tribune-Review of Pittsburgh.

Duquesne Light, founded in 1880, employs about 3,800 people and owns four power plants outright - on Brunot Island, Crescent Township, and Cheswick in Allegheny County and Elrama, Washington County. It partly owns five others, including a nuclear power plant in Shippingport, Beaver County.

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Ironically, one possible buyer for the plants is Allegheny Energy Inc., which is trying to force Duquesne Light's parent company, DQE Inc., to complete a proposed merger.

A reason DQE gave for trying to withdraw from the merger is the issue of stranded costs, or the companies' investments in power plants and other equipment that could not be recovered through rates paid in a deregulated market.

''We obviously have an interest in owning those plants,'' said Michael Morrell, chief financial officer of Hagerstown, Md.-based Allegheny Energy. He added: ''It's still our intent to acquire the plants via the merger.''

Under the merger, Allegheny Energy hoped to recover about $1.6 billion in stranded costs, but the PUC said it could only recoup $524 million. DQE had petitioned to recover $1.9 billion, and the PUC said it could recoup $1.3 billion.

When DQE announced its plan to withdraw from the merger, executives said they would rather absorb their own stranded costs than take on $1 billion more if they combined with Allegheny Energy.

Duquesne Light has not yet discussed the sale of its plants with any potential buyers, company spokeswoman Susan Fritschler said.

Allegheny Energy has said it will go to court if necessary to enforce the merger agreement with DQE.

If the proposed merger should fail, the city of Pittsburgh will lose $4 million earmarked for its development fund, an Allegheny Energy official said Tuesday.

The utility had promised to give the money to the city's development fund if Pittsburgh dropped its opposition to the merger.

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