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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required] for the fiscal year ended December 31, 1993
or
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] for the transition period from
_______ to _______
Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification No.
- ----------- ----------------------------------- -----------------
1-956 DUQUESNE LIGHT COMPANY 25-0451600
(A Pennsylvania Corporation)
One Oxford Centre
301 Grant Street
Pittsburgh, Pennsylvania 15279
Telephone (412) 393-6000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
DQE is the holder of all shares of outstanding common stock ($1 par value) of
Duquesne Light Company consisting of 10 shares as of February 23, 1994.
[X] Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.
[CONFORMED]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required] for the fiscal year ended December 31, 1993
or
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] for the transition period from
_______ to _______
Commission Registrant; State of Incorporation; I.R.S. Employer
File Number Address; and Telephone Number Identification No.
- ----------- ---------------------------------- -----------------
1-956 DUQUESNE LIGHT COMPANY 25-0451600
(A Pennsylvania Corporation)
One Oxford Centre
301 Grant Street
Pittsburgh, Pennsylvania 15279
Telephone (412) 393-6000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
DQE is the holder of all shares of outstanding common stock ($1 par value) of
Duquesne Light Company consisting of 10 shares as of February 23, 1994.
[X] Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Registrant Title of each class on which registered
-------------- ---------------------------- ----------------------
Duquesne Light Preferred Stock (par value $50) New York Stock Exchange
Company
Involuntary
Series Liquidation Value
------ -----------------
4% $50 per share
3.75% $50 per share
4.15% $50 per share
4.20% $50 per share
4.10% $50 per share
$2.10 $50 per share
$7.20 $100 per share
Sinking Fund Debentures, due March 1, 2010 (5%) New York Stock Exchange
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K
Into Which Document
Description Is Incorporated
------------------------------------ -------------------
DQE Annual Report to Shareholders Parts I and II
for the year ended December 31, 1993
Proxy Statement for DQE Annual Part III
Meeting of Shareholders to be held on
April 20, 1994
TABLE OF CONTENTS
Page
----
PART I
ITEM 1. BUSINESS 1
General 1
Service Territory 1
Regulation 1
Seasonality 1
Results of Operations 2
Power Sales 2
Other Income and Deductions 4
Financial Condition 4
Financing 4
Short-Term Borrowings 5
Interest Charges 5
Sales of Accounts Receivable 5
Nuclear Fuel Leasing 6
ESOP 6
Transmission Access 6
Construction 6
Rate Matters 7
1987 Rate Case 7
Energy Cost Rate Adjustment Clause (ECR) 7
Deferred Rate Synchronization Costs 7
Demand Side Management 8
Joint Interests in Generating Units 8
Employees 9
Electric Operations 9
Fossil Fuel 9
Nuclear Fuel 10
Nuclear Decommissioning 11
Environmental Matters 11
Outlook 13
Competition 13
Property Held for Future Use 14
Retirement Plan Measurement Assumptions 15
Other 15
Executive Officers of the Registrant 16
ITEM 2. PROPERTIES 17
ITEM 3. LEGAL PROCEEDINGS 18
Westinghouse Lawsuit 18
General Electric Settlement 18
Rate-Related and Environmental Litigation 18
ITEM 4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS 19
PART II
ITEM 5. MARKET FOR REGISTRANT'S
COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 19
ITEM 6. SELECTED FINANCIAL DATA 19
ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 19
ITEM 8. CONSOLIDATED FINANCIAL
STATEMENTS AND SUPPLEMENTARY
DATA 19
ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL
DISCLOSURE 19
PART III
ITEM 10. DIRECTORS AND EXECUTIVE
OFFICERS OF THE REGISTRANT 19
ITEM 11. EXECUTIVE COMPENSATION 20
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND
MANAGEMENT 20
ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS 20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON
FORM 8-K 20
SCHEDULE V 34
SCHEDULE VI 37
SCHEDULE VIII 40
SCHEDULE X 41
SIGNATURES 42
INDEPENDENT AUDITORS' REPORT 43
FINANCIAL STATEMENTS 44 to 66
SELECTED FINANCIAL DATA 67
PART I
ITEM 1. BUSINESS.
General
- --------------------------------------------------------------------------------
Duquesne Light Company (Duquesne) is a wholly owned subsidiary of DQE, an
energy services holding company formed in 1989. Duquesne is engaged in the
production, transmission, distribution and sale of electric energy. Duquesne was
formed under the laws of Pennsylvania by the consolidation and merger in 1912 of
three constituent companies.
Service Territory
Duquesne provides electric service to customers in Allegheny County,
including the City of Pittsburgh, and Beaver County. This represents a service
territory of approximately 800 square miles. The population of the area served
by Duquesne, based on 1990 census data, is approximately 1,510,000, of whom
370,000 reside in the City of Pittsburgh. In addition to serving approximately
579,000 customers within this service area, Duquesne also sells electricity to
other utilities beyond its service territory.
Regulation
Duquesne's utility operations are subject to regulation by the Pennsylvania
Public Utility Commission (PUC). Duquesne is also subject to regulation by the
Federal Energy Regulatory Commission (FERC) under the Federal Power Act in
respect of rates for interstate sales, transmission of electric power,
accounting and other matters. This regulation is designed to provide for the
recovery of operating costs and investment and the opportunity to earn a fair
return on funds invested in the utility business. The regulatory process imposes
a time lag during which increases in operating expenses, capital costs or
construction costs may not be recovered. Duquesne is also subject to regulation
by the Nuclear Regulatory Commission (NRC) under the Atomic Energy Act of 1954,
as amended, with respect to the operation of its jointly owned nuclear power
plants, Beaver Valley Unit 1, Beaver Valley Unit 2 and Perry Unit 1.
Seasonality
Sales of electricity to ultimate customers by Duquesne tend to increase
during the warmer summer and cooler winter seasons because of greater customer
use of electricity for cooling and heating.
[GRAPH FOR QTRLY KWH SALES APPEARS HERE]
1
Results of Operations
- --------------------------------------------------------------------------------
[GRAPH FOR 1993 ENERGY SALES BY CLASS OF CUSTOMERS APPEARS HERE]
Power Sales
In 1993, sales to Duquesne's 20 largest customers accounted for 14.5
percent of customer revenues. Sales to USX Corporation, Duquesne's largest
customer, accounted for 3.7 percent of total 1993 customer revenues. Kilowatt-
hour (KWH) sales to ultimate customers in 1993 increased 2.4 percent in
comparison with KWH sales to ultimate customers in 1992. Above normal
temperatures in the summers of 1993 and 1991 were responsible for increased KWH
sales to residential and commercial customers in those years. Mild summer and
winter temperatures had the opposite effect on residential and commercial sales
in 1992.
Power sales to other utilities in 1993, 1992 and 1991 were 2,820,920 KWH,
4,059,989 KWH and 2,978,662 KWH, respectively. Sales to other utilities in 1993
declined from the record level in 1992 because higher system demand and more
planned and forced generating station outages in 1993 reduced Duquesne's
generating capacity available for off-system sales. The increase from 1991 to
1992 in these short-term sales to other utilities resulted from greater
availability of transmission and generating capacity, increased demand by other
utilities for energy and Duquesne's marketing efforts. The profits from these
sales were passed through the Energy Cost Rate Adjustment Clause (ECR) to
benefit Duquesne's customers. See discussion on page 7.
Customer operating revenues result from Duquesne's sales of electricity to
ultimate customers and are based on rates authorized by the PUC. These rates are
designed to recover Duquesne's operating expenses and investment in utility
assets and to provide a return on the investment. Current and deferred customer
revenues resulted from a $232 million rate increase granted in early 1988. The
PUC required Duquesne to phase in this increase during a six-year period. The
phase-in plan provided that, with no impact on total reported customer revenues,
rates would increase by approximately $85 million in April of each year from
1988 through 1991, remain constant in 1992 and 1993, and decrease by
approximately $85 million in April 1994. The phase-in plan also provided for
recovery of deferred revenues and carrying costs on such deferred revenues. The
rate increase has been recognized in operating revenues since March 1988. A
regulatory asset has been established for that portion of revenues yet to be
collected from customers, and carrying charges on this deferred asset have been
recognized as a component of other income in the Statement of Consolidated
Income. Duquesne expects the remaining deferred asset balance at December 31,
1993 of $28.6 million to be recovered by April 1994, the end of the phase-in
period.
Short-term sales to other utilities are made at market rates and are
recorded in other operating revenues in the Statement of Consolidated Income.
Revenues from sales to other utilities were $50.7 million, $72.4 million and
$58.9 million in 1993, 1992 and 1991, respectively. Factors influencing record
1992 revenues correspond to those affecting KWH power sales to other utilities
(above).
2
Yearly fluctuations in fuel and purchased power expense result from changes
in the cost of fuel, the mix between coal and nuclear generation, the total KWHs
generated and the effects of deferred energy costs. In 1993, the impact of the
ECR on deferred energy costs decreased fuel expense, in comparison to that for
1992. Also contributing to the 16.7 percent decline in fuel expense was a 6
percent decrease in generation that was primarily due to more scheduled and
forced generating plant outages in 1993. Fuel expense for 1992 was greater than
that for 1991 because of increased generation of electricity attributable to
record sales to other utilities. The greater fuel expense in 1992, however, was
partially offset by lower coal and nuclear fuel costs per KWH. In 1994, nuclear
fuel costs per KWH generated are expected to continue to decline, and coal costs
per KWH generated are expected to remain near the 1993 level.
Other operating expenses were 6.5 percent higher in 1993 than in 1992. In
1993, Duquesne finalized plans to sublease the majority of its office space at
corporate headquarters; relocation of its principal business offices is
anticipated in 1994. A charge of approximately $13 million was recorded as an
operating expense to reflect the shortfall in anticipated sublease revenues from
the rental payments related to space leased through January 2003, the date the
leasing arrangements expire. Included in 1991 operating expenses was an increase
of $11.9 million in the allowance for uncollectible accounts receivable caused
by the deterioration of Duquesne's past due customer accounts and increased
collection costs.
Maintenance expense incurred for scheduled refueling outages at Duquesne's
nuclear units is deferred and amortized over the period between scheduled
outages. During 1993, amortization of deferred nuclear refueling outage expense
increased approximately $3.5 million over the 1992 level. Contributing further
to the increase in maintenance expense in 1993 was Duquesne's change, as of
January 1, 1993, in its method of accounting for maintenance costs during major
fossil station outages. Prior to 1993, maintenance costs incurred for scheduled
major outages at fossil stations were charged to expense as the costs were
incurred. Under the new accounting policy, Duquesne accrues, over the period
between outages, anticipated expenses for scheduled major fossil station
outages. (Maintenance costs incurred for non-major scheduled outages and for
forced outages continue to be charged to expense as the costs are incurred.)
This new method was adopted to match more accurately the maintenance costs with
the revenue produced during the periods between scheduled major fossil outages.
Depreciation and amortization expense increased in 1993 by comparison with
that for 1992 and 1991. The increase was primarily a result of an increase in
depreciable property.
Taxes other than income taxes decreased in 1993 primarily as a result of a
favorable resolution of property tax assessments retroactive to 1987. Also in
1993, Duquesne recorded, on the basis of this revised assessment, the expected
refunds of these overpayments in prior years. By comparison with those for 1991,
taxes other than income taxes decreased in 1992 as the result of favorable
resolution of capital stock tax, gross receipts tax and sales tax matters.
Income taxes increased in 1993 as a result of an increase in taxable income
and a 1 percent increase in the corporate federal income tax rate.
[GRAPH OF NET CASH FLOW FROM OPERATIONS APPEARS HERE]
* Graph excludes working capital and other-net changes.
3
Other Income and Deductions
Other income decreased in 1993, in comparison with that for 1992, as a
result of a decrease of approximately $13 million in carrying charges on
deferred revenues. During 1993, the deferred revenue balance upon which carrying
charges are earned declined in comparison with that for 1992 and since April
1993, Duquesne has not recorded additional carrying charges on deferred
revenues. (See the discussion of the phase-in plan under the section on Power
Sales on page 2.)
Income taxes related to other income decreased $15 million in 1993, in
comparison with those for 1992, because of a favorable settlement (related to
Duquesne's 1988 tax return and the consolidated 1989 tax return) with the United
States Internal Revenue Service. The remaining decrease in 1993 was caused by
lower non-operating income.
Other income for 1992 increased, in comparison with that for 1991,
primarily as the result of an increase of $3.5 million in interest income and a
decrease of $3.7 million in fees related to Duquesne's sale of receivables.
Other income for 1991 included a $5.3 million regulatory accounting
reclassification that decreased other income, reduced depreciation expense and
had no impact on net income.
Financial Condition
- --------------------------------------------------------------------------------
Financing
Duquesne plans to meet its current obligations and debt maturities through
1998 with funds generated from operations and through new financings. At
December 31, 1993, Duquesne was in compliance with all of its debt covenants.
Duquesne continues to reduce capital costs by refinancing, repurchasing and
retiring securities. Since the end of 1987, annual interest expense on long-term
debt has been reduced by $55.3 million through the repurchase and refinancing of
high cost debt. Preferred and preference dividend costs have been reduced $10.6
million through the repurchase or redemption of preferred and preference stock.
During 1993, Duquesne issued $695 million of first collateral trust bonds with
maturities ranging from the year 1996 through the year 2025 and with an average
interest rate of 6.58 percent. The proceeds of these sales, together with other
funds, were used to redeem $713.7 million of first mortgage bonds with an
average interest rate of 8.16 percent.
Specifically, on June 15, 1993, a shelf registration for the periodic sale
of up to $300 million of First Collateral Trust Bonds became effective. Duquesne
issued bonds totaling $200 million under this shelf registration and, in
conjunction with the issuance of $495 million of First Collateral Trust Bonds
under 1992 shelf registrations, redeemed the remaining balances of the following
first mortgage bonds outstanding: $99.0 million of 9.00% First Mortgage Bonds,
Series due February 1, 2017; $98.0 million of 9.50% First Mortgage Bonds, Series
due December 1, 2016; $96.4 million of 8.375% First Mortgage Bonds, Series due
April 1, 2007; $49.0 million of 9.50% First Mortgage Bonds, Series due March 1,
2005; $43.6 million of 8.625% First Mortgage Bonds, Series due April 1, 2004;
$35.0 million of 7.75% First Mortgage Bonds, Series due July 1, 2003; $32.7
million of 7.25% First Mortgage Bonds, Series due January 1, 2003; $28.5 million
of 7.50% First Mortgage Bonds, Series due June 1, 2002; $26.5 million of 7.50%
First Mortgage Bonds, Series due December 1, 2001; $34.7 million of 7.875% First
Mortgage Bonds, Series due March 1, 2001; $29.7 million of 8.75% First Mortgage
Bonds, Series due March 1, 2000; $28.6 million of 7.75% First Mortgage Bonds,
Series due July 1, 1999; $30.0 million of 7.00% First Mortgage Bonds, Series due
January 1, 1999; $34.6 million of 6.375% First Mortgage Bonds, Series due
February 1, 1998; $24.6 million of 5.25% First Mortgage Bonds, Series due
February 1, 1997; and $22.8 million of 5.125% First Mortgage Bonds, Series due
February 1, 1996.
In June 1993, Duquesne participated in the issuance of $25 million of
Beaver County Industrial Development Authority Pollution Control Revenue Bonds.
In August 1993, Duquesne participated in the issuance of $20.5 million of Ohio
Air Quality Development Authority Pollution Control Revenue Refunding Bonds to
refund a like amount of pollution control obligations.
4
On January 14, 1994, Duquesne redeemed all of its outstanding shares of
$2.10 preference stock and $7.50 preference stock for approximately $38 million.
Short-Term Borrowings
Duquesne has extendible revolving credit agreements with a group of banks
totaling $225 million. The current expiration date of this credit arrangement is
September 30, 1994. Interest rates can, in accordance with the option selected
at the time of each borrowing, be based on prime, federal funds, Eurodollar or
CD rates. Commitment fees are based on the unborrowed amount of the commitments.
There were no short-term borrowings during 1992. During 1993 and 1991, the
maximum short-term bank and commercial paper borrowings outstanding were $27
million and $66 million; the average daily short-term borrowings outstanding
were $1.6 million and $11.0 million; and the weighted average daily interest
rates applied to such borrowings were 3.42 percent and 6.36 percent,
respectively. At December 31, 1993, short-term borrowings were $11.0 million.
There were no short-term borrowing balances outstanding at December 31, 1992 or
1991.
Interest Charges
Duquesne achieved reductions in interest charges in 1993 and 1992 through
refinancing first mortgage bonds and through obtaining lower average short-term
rates on certain tax exempt pollution control notes. Duquesne also retired $24.2
million of preferred and preference stock during 1992. Interest expense and
dividends on preferred and preference stock declined to $121 million in 1993
from $135 million in 1992 and $145 million in 1991. Interest expense and
dividends on preferred and preference stock are expected to decline in 1994 by
approximately $9 million from the 1993 level.
[GRAPH OF INTEREST EXPENSE OF PREF. & PREF. DIVS. APPEARS HERE]
Sale of Accounts Receivable
In 1989, Duquesne and an unaffiliated corporation entered into an agreement
that entitled Duquesne to sell and the corporation to purchase, on an ongoing
basis, up to $100 million of accounts receivable. At December 31, 1993, Duquesne
had sold $9 million of receivables. The accounts receivable sales agreement,
which expires in June 1994, is one of many sources of funds available to
Duquesne. Duquesne is currently evaluating whether to seek an extension or a
replacement of the agreement.
5
Nuclear Fuel Leasing
Duquesne finances its acquisitions of nuclear fuel through a leasing
arrangement under which it may finance up to $75 million of nuclear fuel. As of
December 31, 1993, the amount of nuclear fuel financed by Duquesne under this
arrangement totaled approximately $65 million. Duquesne plans to continue
leasing nuclear fuel to fulfill its requirements at least through 1995, the
remaining term of the related leasing arrangement.
ESOP
As discussed in Notes C and I to Duquesne's consolidated financial
statements, effective January 1, 1992, Duquesne established an Employee Stock
Ownership Plan (ESOP) through which it will match up to $.50 (depending on
whether certain incentive targets are met) of every $1.00 an employee
contributes to the 401(k) Retirement Savings Plan for Management Employees up to
a maximum of six percent of their eligible salary. Duquesne's matching
contributions are invested in Duquesne Preference Stock which can be exchanged
for DQE Common Stock. Duquesne may purchase shares of DQE Common Stock from DQE
or on the open market to satisfy the exchange feature of the Preference Stock.
Transmission Access
- --------------------------------------------------------------------------------
During the fourth quarter of 1993, Duquesne recognized a charge to other
income of approximately $15.2 million for its investment in the abandoned
General Public Utilities (GPU) transmission line project. On December 8, 1993,
the New Jersey Board of Regulatory Commissioners (BRC) denied a request by GPU's
subsidiary Jersey Central Power and Light Company for approval of long-term
power purchase* and operating agreements that were originally signed in 1990 by
GPU and Duquesne and further amended in 1993. The BRC rejected an administrative
law judge's recommended decision that the project be approved and, within hours
of the BRC decision, GPU terminated its participation in the project. In view of
GPU's decision, Duquesne also terminated its participation in the project and
the Pennsylvania PUC transmission line siting proceeding.
In March of 1994, Duquesne submitted, pursuant to the Federal Power Act, a
"Good Faith" request for transmission service with the Allegheny Power System
(APS) and Pennsylvania-New Jersey-Maryland Interconnection Association (PJM).
The request is based on 20-year firm service with flexible delivery points for
300 megawatts of transfer capability over the transmission network that extends
from Western Pennsylvania to the East Coast. In this request Duquesne has
identified a $50 million investment that would enhance and stabilize this
transmission system. APS and PJM have sixty days from the receipt of this
request to formally respond.
* For discussion of Duquesne's investment in the cold-reserved units, see
Property Held for Future Use in Note J of Duquesne's consolidated financial
statements.
Construction
- --------------------------------------------------------------------------------
During 1993, Duquesne spent approximately $100 million for construction to
improve and expand its production, transmission and distribution systems.
Duquesne estimates that it will spend approximately $110 million for
construction in 1994. Construction expenditures are estimated to be $70 million
in 1995 and $80 million in 1996. These amounts exclude AFC, nuclear fuel and
expenditures for possible early replacement of steam generators at the Beaver
Valley Power Station. (See Note K to Duquesne's consolidated financial
statements.) Duquesne currently has no plans for construction of new base load
generating plants.
Duquesne anticipates that funds for planned capital expenditures in the
next several years will be provided primarily from cash becoming available from
operations and, to a lesser degree, from additional financings. Interim
financing has been and will continue to be provided through bank borrowings and
sales of commercial paper. Substantially all funds needed for 1994 capital
expenditures are expected to be generated internally.
6
See "Nuclear Fuel" on page 10 for a discussion of Duquesne's commitments
with respect to the cost of nuclear fuel as of December 31, 1993, and for each
of the years 1994 through 1998.
Rate Matters
- --------------------------------------------------------------------------------
Electric rates charged by Duquesne to its customers are regulated by the
PUC. Electric rates charged to the Borough of Pitcairn and to other electric
utilities are regulated by the FERC. These rates are designed to recover
Duquesne's operating expenses, investment in utility assets, and a return on
those investments. Sales to other utilities are made at market rates. See Note J
to Duquesne's consolidated financial statements for additional discussion of
rate-related matters.
1987 Rate Case
In March 1988, the PUC adopted a rate order that increased Duquesne's
annual revenues by $232 million phased-in from April 1988 through April 1994.
Deficiencies which resulted from the phase-in plan in current revenues from
customers have been included in the consolidated income statement as deferred
revenues. Deferred revenues have been recorded on the balance sheet as a
deferred asset for future recovery. As customers were billed for deficiencies
related to prior periods, this deferred asset was reduced. As designed, the
phase-in plan provided for carrying charges (at the after-tax AFC rate) on
revenues deferred for future recovery. Duquesne has not recorded additional
carrying charges on the deferred revenue balance since April 1993. Duquesne had
recovered previously deferred revenues and carrying charges of $285.9 million as
of December 31, 1993. Phase-in plan deferrals of $28.6 million remained
unrecovered as of that date. Duquesne expects to recover this remaining
unrecovered balance.
At this time, Duquesne has no pending base rate case and no immediate plans
to file a base rate case.
Energy Cost Rate Adjustment Clause (ECR)
Duquesne defers fuel and other energy costs for recovery in subsequent
years through the ECR. The deferrals reflect the difference between the amount
that Duquesne is currently collecting from customers and its actual fuel costs.
The PUC reviews Duquesne's fuel costs annually, for the fiscal year April
through March, against the previously projected fuel costs and adjusts the ECR
for over- or under-recoveries and for two PUC-established coal cost caps. The
ECR is based on projected unit costs, is recalculated each year, and is subject
to PUC review. The adjustment includes a credit to Duquesne's customers for
profits from short-term power sales to other utilities, as well as an adjustment
for any over- or under-collections from customers that may have occurred in
prior years. The 1993 ECR reduced customer costs from 1992 levels and has
continued to reduce revenues through the first quarter of 1994 by a greater
amount than in the prior year. From April 1994 through March 1995, the ECR is
expected to reduce revenues by a lesser amount than in the prior year. This ECR
treatment is intended to have no impact on net income.
Deferred Rate Synchronization Costs
In 1987, the PUC approved Duquesne's petition to defer initial operating
and other costs of Perry Unit 1 and Beaver Valley Unit 2. Duquesne deferred the
costs incurred from November 17, 1987, when the units went into commercial
operation, until March 25, 1988 when a rate order was issued. In its order, the
PUC postponed ruling on whether these costs would be recoverable from
ratepayers. At December 31, 1993, these costs totaled $51.1 million, net of
deferred fuel savings related to the two units. Duquesne is not earning a return
on the deferred costs. Duquesne believes that these costs are recoverable. In
1990, another Pennsylvania utility was permitted recovery, with no return on the
unamortized balance, of similar costs over a 10-year period.
7
Demand-Side Management
In March of 1994, Duquesne filed with the PUC an updated Demand-Side
Management Plan (DSM) designed to encourage customer energy conservation and
load management. Duquesne's proposed DSM programs include compact fluorescent
lighting, load management, cool storage systems, emergency generation networks
and long-term interruptible rates. The Pennsylvania Industrial Energy Coalition
filed an appeal in Commonwealth Court of Pennsylvania on December 31, 1993,
requesting reversal of the PUC order of December 13, 1993 which originated
electric utility DMS programs in Pennsylvania and allows utilities to recover
prudently incurred DSM program costs through rates. Implementation of Duquesne's
DSM plan awaits PUC approval and disposition of this appeal.
Joint Interests in Generating Units
- --------------------------------------------------------------------------------
Duquesne has various contracts with The Potomac Edison Company, Monongahela
Power Company, Ohio Edison Company, Pennsylvania Power Company, The Cleveland
Electric Illuminating Company (CEI) and The Toledo Edison Company including
provisions for coordinated maintenance responsibilities, limited and qualified
mutual back-up in the event of outages and certain capacity and energy
transactions.
Duquesne has an interest in the following nuclear plants jointly with the
following companies:
Beaver Valley
-------------------- Perry
Unit 1 Unit 2 (1) Unit 1
------ ------ ------
Duquesne * 47.50% * 13.74% 13.74%
Ohio Edison Company 35.00% 41.88% 30.00%
Pennsylvania Power Company 17.50% -0- 5.24%
Cleveland Electric Illuminating Company -0- 24.47% * 31.11%
Toledo Edison Company -0- 19.91% 19.91%
*Denotes Operator
(1) In 1987, Duquesne sold its 13.74 percent interest in Beaver Valley Unit 2;
the sale was exclusive of transmission and common facilities. The total sales
price of $537.9 million was the appraised value of Duquesne's interest in the
property. Duquesne subsequently leased back its interest in the unit for a term
of 29.5 years. The lease provides for semiannual payments and is accounted for
as an operating lease. Duquesne is responsible under the terms of the lease for
all costs of its interest in the unit. See Note E to Duquesne's consolidated
financial statements.
Duquesne owns the following fossil plants jointly with the following
companies:
Bruce Mansfield
Sammis ------------------------------ Eastlake Ft. Martin
Unit 7 Unit 1 Unit 2 Unit 3 Unit 5 Unit 1
------ ------ ------ ------ -------- ----------
Duquesne 31.20% 29.30% 8.00% 13.74% 31.20% 50.00%
Ohio Edison Company * 48.00% 60.00% 39.30% 35.60% -0- -0-
Pennsylvania Power Company 20.80% * 4.20% * 6.80% * 6.28% -0- -0-
Cleveland Electric Illuminating
Company -0- 6.50% 28.60% 24.47% * 68.80% -0-
Toledo Edison Company -0- -0- 17.30% 19.91% -0- -0-
Potomac Edison Company -0- -0- -0- -0- -0- 25.00%
Monongahela Power Company -0- -0- -0- -0- -0- * 25.00%
*Denotes Operator
8
Under the agreements governing the operation of these jointly owned
generating units, the day-to-day operating authority is assigned to a specific
company. CEI has such authority for Perry Unit 1 and Eastlake Unit 5, Ohio
Edison Company has authority for Sammis Unit 7, Pennsylvania Power Company has
authority for Bruce Mansfield Units 1, 2 and 3 and Monongahela Power Company
operates Ft. Martin Unit 1. Duquesne monitors activities in connection with all
of these units. Duquesne has day-to-day operating authority for Beaver Valley
Units 1 and 2. All the companies with a joint interest in these units are kept
fully informed of developments at these generating units.
Employees
- --------------------------------------------------------------------------------
At December 31, 1993, Duquesne had 4,042 employees, including 1,285
employees at the Duquesne-operated Beaver Valley Power Station. The
International Brotherhood of Electrical Workers represents 2,481 of Duquesne's
employees. The current contract runs through September 1994.
Electric Operations
- --------------------------------------------------------------------------------
Approximately 78% of the electric energy generated by Duquesne's system
during 1993 was produced by its coal-fired generating capacity and approximately
22% by its nuclear generating capacity. Duquesne normally experiences its peak
loads in the summer. The customer system peak for 1993 of 2,499 megawatts
occurred on August 31, 1993.
Duquesne's fossil plants operated at 83% availability in 1993 and 80% in
1992. Duquesne's nuclear plants operated at 63% availability in 1993 compared to
90% in 1992. The timing of scheduled maintenance and refueling outages, as well
as the duration of forced outages, affect availability of power plants.
In 1986, the PUC approved Duquesne's request to remove the Phillips and
most of the Brunot Island (BI) power stations from service and place them in
cold reserve. At that time, Duquesne's net investment in the cold-reserved
stations was $106 million. In connection with a proposed long-term power sale,
Duquesne invested in the cold-reserved plants an additional $24 million in
preservation, condition assessment and plant improvements. Duquesne's net
investment in the plants at December 31, 1993 is approximately $130 million. For
further discussion of Duquesne's investment in the cold-reserved units, see
Property Held for Future Use in "Outlook" and Note J of Duquesne's consolidated
financial statements.
The North American Electric Reliability Council, of which Duquesne is a
member, uses capacity margin to report generating capability as compared to
demand. Capacity margin is expressed as capacity less demand divided by
capacity. Although Duquesne also uses criteria other than capacity margin for
determining the need for installation of additional generating capability,
Duquesne's capacity margin in 1993 was 10.7% based on installed non-cold-
reserved generating capacity and internal peak load, including 93 megawatts of
interruptible load. Duquesne has ties with regional utilities which provide the
capability to import in excess of 4,000 megawatts of capacity to supplement
Duquesne's generation, as required. Peak generation on June 28, 1993 was 2,621
megawatts, which included 483 megawatts of off-system sales.
Additional information relating to Duquesne's electric operations is set
forth on page 42 of DQE's Annual Report to Shareholders for the year ended
December 31, 1993. The information is incorporated here by reference.
Fossil Fuel
- --------------------------------------------------------------------------------
Duquesne believes that sufficient coal for its coal-fired generating units
will be available from various sources to satisfy its requirements for the
foreseeable future. During 1993, approximately 2.4 million tons of coal were
consumed at Duquesne's two wholly owned coal-fired stations - Cheswick and
Elrama.
Duquesne owns Warwick Mine, an underground mine located on the Monongahela
River approximately 83 river miles from Pittsburgh. Warwick Mine has been
excluded from rate base since 1981. Duquesne temporarily idled the mine in June
1988 due to excess coal inventories. In 1990, Duquesne restarted the mine by an
agreement under which an unaffiliated company operates the mine until March 2000
and
9
sells the coal produced. Production began in late 1990. The mine reached a full
production rate in early 1991. Warwick Mine coal reserves include both high and
low sulfur coal; the sulfur content averages in the mid-range at 1.7 percent -
1.9 percent. More than 90 percent of the coal mined at Warwick Mine currently is
used by Duquesne, although Duquesne is not precluded from selling this coal on
the open market. Duquesne receives a royalty on sales of coal to the open
market. The Warwick Mine currently supplies less than one-fifth of the coal used
in the production of electricity at the plants owned or jointly owned by
Duquesne. Duquesne estimates that, at December 31, 1993, its economically
recoverable coal reserves at Warwick Mine were 11.5 million tons. Costs at
Warwick Mine and Duquesne's investment in the mine are expected to be recovered
through the cost of coal in the ECR. Recovery is subject to the system-wide coal
cost standard. Duquesne also has an opportunity to earn a return on its
investment in the mine through the cost of coal during the period of the system-
wide coal cost standard, including extensions. At December 31, 1993, Duquesne's
net investment in the mine was $24.5 million. The estimated current liability,
including final site reclamation, mine water treatment and certain labor
liabilities for mine closing is $33.0 million and Duquesne has collected
approximately $8.9 million toward these costs. For further discussion of
Duquesne's investment in Warwick Mine costs, see Note J of Duquesne's
consolidated financial statements.
During 1993, 65% of Duquesne's coal supplies were provided by contracts,
with the remainder satisfied through purchases on the spot market. Duquesne had
four long-term contracts in effect at December 31, 1993, which, in combination
with spot market purchases, are expected to furnish an adequate future coal
supply. Duquesne does not anticipate any difficulty in replacing or renewing
these contracts as they expire in future years ranging from 1995 through 2002.
At December 31, 1993, Duquesne's wholly owned and jointly owned generating units
had on hand an average coal supply of 45 days.
The PUC has established two market price coal cost standards. One applies
only to coal delivered at the Mansfield plant. The other, the system-wide coal
cost standard, applies to coal delivered to the remainder of Duquesne's system.
Both standards are updated monthly to reflect prevailing market prices of
similar coalduring the month. The PUC has directed Duquesne to defer recovery of
the delivered cost of coal over generally prevailing market prices for similar
coal. Through the ECR, however, the PUC does allow deferred amounts to be
recovered from customers when the delivered costs of coal fall below prevailing
market prices. The unrecovered cost of Mansfield coal was $7.4 million and the
unrecovered cost of the remainder of the system-wide coal was $8.8 million at
December 31, 1993. Duquesne estimates that all deferred coal costs will be
recovered. Duquesne's average cost per ton of coal consumed during the past
three years at generating units which it operates or in which it has an
ownership interest was as follows: 1993-$40.08; 1992-$40.44; and 1991-$42.49.
See Note J to Duquesne's consolidated financial statements for a discussion of
the coal cost standards. The cost of coal, which falls within the market price
limitations discussed in Note J of Duquesne's consolidated financial statements,
is recovered from Duquesne's customers through the ECR discussed previously in
"Rate Matters" on page 7.
Nuclear Fuel
- --------------------------------------------------------------------------------
The cycle of production and utilization of nuclear fuel consists of (1)
mining and milling of uranium ore and processing the ore into uranium
concentrates, (2) conversion of uranium concentrates to uranium hexafluoride,
(3) enrichment of the uranium hexafluoride, (4) fabrication of fuel assemblies,
(5) utilization of the nuclear fuel in the generating station reactor and (6)
storing and reprocessing or disposal of spent fuel.
Adequate supplies of uranium and conversion services are under contract for
Duquesne's requirements for its jointly owned nuclear units through 1997.
Enrichment services are supplied under a 1984 United States Enrichment
Corporation Utility Services Contract entered into for a period of 30 years by
the companies for their joint interests in Perry Unit 1 and Beaver Valley Units
1 and 2. Under the terms of this contract Duquesne is committed to 100% of its
enrichment needs through 1998. Fuel fabrication contracts are in place to supply
reload requirements for the next three cycles for Beaver Valley Unit 1, the next
three cycles for Beaver Valley Unit 2 and the next twenty-one cycles of Perry
Unit 1. Duquesne will be required to make arrangements for uranium supply and
related services as existing commitments expire.
For joint interests in generating units (See page 8.), each company is
responsible for financing its proportionate share of the costs of nuclear fuel
for each nuclear unit in which it has an ownership interest. Duquesne has
entered into a lease arrangement for the acquisition of nuclear fuel pursuant to
which
10
Duquesne is permitted to finance up to $75 million. As of December 31, 1993, the
cost of Duquesne's nuclear fuel financed was $65 million. Duquesne's nuclear
fuel costs, which are amortized to reflect fuel consumed, are charged to fuel
expense and are recovered through rates. Duquesne estimates that, over the next
three years, the amortization of nuclear fuel consumed will exceed the
expenditures for new fuel by approximately $18 million. The actual nuclear fuel
costs to be financed and amortized during the period 1994 through 1996 will be
influenced by such factors as changes in interest rates, lengths of the
respective fuel cycles and changes in nuclear material cost and services, the
prices and availability of which are not known at this time. Such costs may also
be influenced by other events not presently foreseen.
Duquesne's nuclear fuel costs related to Beaver Valley Unit 1, Beaver
Valley Unit 2 and Perry Unit 1 under the lease arrangement are charged to fuel
expense based on the quantity of energy generated. Nuclear fuel costs for these
units averaged .918 cents per KWH in 1993, inclusive of charges associated with
spent fuel. Duquesne is recovering from its customers the costs associated with
the ultimate disposal of spent fuel. All three units presently operate on an
18-month refueling cycle with the scheduled refueling dates established as
follows: Beaver Valley Unit 1, October 1994; Beaver Valley Unit 2, March 1995
and Perry Unit 1, February 1994.
Nuclear Decommissioning
- --------------------------------------------------------------------------------
The PUC ruled that recovery of the decommissioning costs for Beaver Valley
Unit 1 could begin December 24, 1977 and that recovery for Beaver Valley Unit 2
and Perry Unit 1 could begin March 25, 1988. Duquesne expects to decommission
each nuclear plant at the end of its life, a date that currently coincides with
the expiration of each plant's operating license. (See Note L to Duquesne's
consolidated financial statements.) The total estimated decommissioning costs,
including removal and decontamination costs, being recovered in rates are $70
million for Beaver Valley Unit 1, $20 million for Beaver Valley Unit 2, and $38
million for Perry Unit 1. These amounts were based upon the most recent studies
available at the time of Duquesne's last rate case.
Since the time of Duquesne's last rate case, site specific studies have
been performed to update the estimated decommissioning costs, in current
dollars, for each of its nuclear generating units. In 1992, Duquesne's share of
the estimated decommissioning costs for Beaver Valley Unit 2 was revised to $35
million. Duquesne's share of decommissioning costs, which is based on
preliminary site specific studies to be finalized early in 1994, is estimated to
increase to $134 million for Beaver Valley Unit 1 and to $71 million for Perry.
(See Note L to Duquesne's consolidated financial statements for additional NRC
licensing information.)
During 1994, it is Duquesne's intention to increase the annual contribution
to its decommissioning trusts by $2 million to bring the total annual funding to
approximately $4 million per year. Duquesne plans to continue making periodic
reevaluations of estimated decommissioning costs, to provide additional funding
from time to time, and to seek regulatory approval for recognition of these
increased funding levels.
Duquesne records decommissioning costs under the category of depreciation
expense and accrues a liability, equal to that amount, for nuclear
decommissioning expense. Such nuclear decommissioning funds are deposited in
external, segregated trust accounts. Trust fund earnings increase the fund
balance and the recorded liability. The aggregate trust fund balances at the end
of 1993 totaled $18.1 million. On the Company's consolidated balance sheet, the
decommissioning trusts have been reflected in other property and investments,
and the related liability has been recorded as other deferred credits.
Environmental Matters
- --------------------------------------------------------------------------------
The Comprehensive Environmental Response, Compensation and Liability Act of
1980 (Superfund) and the Superfund Amendments and Reauthorization Act of 1986
established a variety of informational and environmental action programs. The
Environmental Protection Agency (EPA) has informed Duquesne of its involvement
or potential involvement in three hazardous waste sites. If Duquesne is
ultimately determined to be a responsible party with respect to these sites, it
could be liable for all or a portion of the cleanup costs. However, in each
case, other solvent, potentially responsible parties that may bear all or part
of any liability are also
11
involved. In addition, Duquesne believes that available defenses, along with
other factors (including overall limited involvement and low estimated
remediation costs for one site) will limit any potential liability that Duquesne
may have for cleanup costs. Duquesne believes that it is adequately reserved for
all known liabilities and costs and, accordingly, that these matters will not
have a materially adverse effect on its financial position or results of
operations.
In 1990, Congress approved amendments to the Clean Air Act. Among other
innovations, this legislation established the Emission Allowance Trading System.
An "emission allowance" permits fuel emission of one ton of sulphur dioxide
(SO\\2\\) for one year. These allowances are issued by the EPA to fossil-fired
stations with generating capability of more than 25 megawatts that were in
existence as of the passage of the 1990 amendments. Allowances are part of a
market-based approach to SO\\2\\ reduction. Emission allowances can also be
obtained through purchases on the open market or directly from other sources.
Excess allowances may be banked for future use or sold on the open market to
other parties for their use in offsetting emissions.
The legislation requires significant reductions of SO\\2\\ and oxides of
nitrogen (NO\\X\\) by 1995 and additional reductions by the year 2000. Duquesne
continues to work with the operators of its jointly owned stations to
implement cost-effective compliance strategies to meet these requirements.
Duquesne's plans for meeting the 1995 SO\\2\\ compliance requirements include
increasing the use of scrubbed capacity, switching to fuel with a lower sulfur
content and purchasing emission allowances. NO\\X\\ reductions under Title IV
are required by 1995 at only the Cheswick station; work to achieve the
reductions was completed in 1993. The ozone attainment provisions of Title I
of the Clean Air Act Amendments will require NO\\X\\ reductions by 1995 at
Duquesne's Elrama plant and at the jointly owned Mansfield plant. Duquesne
plans to achieve such reductions with low NO\\X\\ burner technology. Duquesne
has currently 1,187 megawatts of scrubbed capacity, including 300 megawatts at
the currently cold-reserved Phillips plant, as well as 570 megawatts of
capacity that meets the 1995 standards of the Clean Air Act amendments through
the use of low sulfur coal. The estimated capital costs to achieve 1995
compliance standards are approximately $30 million, of which approximately $15
million has already been spent. Through the year 2000, Duquesne is planning a
combination of compliance methods that include fuel switching; increased use
of, and improvements in, scrubbed capacity; flue gas conditioning; low NO\\X\\
burner technology; and the purchase of emission allowances. Duquesne currently
estimates that additional capital costs to comply with environmental
requirements from 1995 through the year 2000 will be approximately $20
million. This estimate is subject to the finalization of federal and state
regulations.
Duquesne is closely monitoring other potential air quality programs and air
emission control requirements that could be imposed in the future. These areas
include additional NO\\X\\ control requirements that could be imposed on
fossil fuel plants by the Ozone Transport Commission, more stringent ambient
air quality and emission standards for SO\\2\\ and particulates, or carbon
dioxide (CO\\2\\) control measures. As these potential programs are in various
stages of discussion and consideration, it is impossible to make reasonable
estimates of the potential costs and impacts of these programs at this time.
In July 1992, the Pennsylvania Department of Environmental Resources (DER)
issued Residual Waste Management Regulations governing the generation and
management of non-hazardous waste. Duquesne is currently conducting tests and
developing compliance strategies. Capital compliance costs are estimated, on the
basis of information currently available, at $10 million through 1995. The
expected additional capital cost of compliance from 1995 through 2000 is
approximately $25 million; this estimate is subject to the results of ground
water assessments and DER final approval of compliance plans.
Duquesne operates the scrubbed Elrama plant and converts the scrubber
slurry to a fixated pozolonic material. This material is placed at an off-site
disposal area having approximately six years of remaining capacity.
Additionally, Duquesne owns 17 percent of the scrubbed Mansfield plant, which is
operated by Pennsylvania Power. This plant pumps a similar slurry to an off-site
impoundment where the slurry is treated by using a Calcilox fixation process.
The site has at least 14 years of remaining capacity. Both plants have limited
temporary on-site storage for flue gas desulfurization material and no permanent
on-site disposal capacity. While there is no imminent shortage of disposal
capacity, Duquesne continues to monitor this situation and to plan for future
disposal. The siting of future disposal facilities will be facilitated by the
1993 EPA determination that coal combustion waste products are not hazardous
waste and are therefore exempt from the Hazardous Waste Regulations. The second
phase of EPA's determination will consider the co-management of coal combustion
wastes with other low volume fossil fuel combustion waste streams.
12
Under the Nuclear Waste Policy Act of 1982, which establishes a policy for
handling and disposing of spent nuclear fuel and requires the establishment of a
final repository to accept spent fuel, contracts for jointly owned nuclear
plants have been entered into with the Department of Energy (DOE) for permanent
disposal of spent nuclear fuel and high-level radioactive waste. The DOE has
indicated that the repository will not be available for acceptance of spent fuel
before 2010. Existing on-site spent fuel storage capacities at Beaver Valley 1,
Beaver Valley 2 and Perry Unit 1 are expected to be sufficient until 1996, 2010,
and 2009, respectively. Duquesne is currently increasing the storage capacity at
Beaver Valley 1 by equipping the spent fuel pool with high density fuel storage
racks. Duquesne anticipates that such action will increase the spent fuel
storage capacity at Beaver Valley 1 to provide for sufficient storage through
2014.
In October 1992, the President signed into law the National Energy Policy
Act of 1992 (energy act). The energy act addresses a wide range of energy
issues, including several matters affecting bulk power competition in the
electric utility industry. See discussion in "Outlook" below. The energy act
requires utilities (including Duquesne) that have purchased uranium enrichment
services from the DOE to collectively contribute as much as $150 million
annually (adjusted for inflation) up to a total of $2.25 billion for
decommissioning and decontamination of DOE enrichment facilities. Assessments
are based on the amount of uranium a utility had processed for enrichment prior
to enactment of the energy act and are to be paid by such utilities over a
15-year period. The energy act states that the assessments shall be deemed a
necessary and reasonable current cost of fuel and shall be fully recoverable in
rates in all jurisdictions in the same manner as the utility's other fuel costs.
Duquesne believes these assessments will be fully recoverable through rates.
Duquesne's total estimated liability for contributions is $12.5 million.
The Low-Level Waste Policy Act of 1980 (LLWPA) mandated that the
responsibility for the disposal of low-level radioactive waste rests with the
individual states. Most states, including Pennsylvania and Ohio, have formed
regional compacts to comply with the LLWPA by providing permanent disposal sites
for radioactive waste generated within each compact. However, plans for these
disposal sites have not progressed as anticipated in the LLWPA and it is not
certain when the regional sites will be available for disposal of waste.
Radioactive waste from Duquesne's jointly owned nuclear plants is currently
shipped to a disposal facility in South Carolina. This facility has announced
that it will not accept any additional waste from outside the Southeast Compact
after June 30, 1994. The co-owners have constructed on-site waste storage
facilities at the Beaver Valley Power Station and the Perry Power Plant for
interim storage of the plants' low-level radioactive waste. The Beaver Valley
on-site facility is expected to be sufficient to meet site storage requirements
until regional disposal facilities become available. The Perry on-site facility
is expected to be sufficient to meet site storage requirements for a period of
five years.
The Company believes that it is adequately reserved for all known
environmental liabilities and costs. Accordingly, the Company believes that the
ultimate outcome of these environmental matters will not have a material adverse
effect on its financial position or the results of its operations.
Outlook
- --------------------------------------------------------------------------------
Competition
Regulatory developments in the industry are placing increasing competitive
pressures on electric public utilities. Duquesne, like the industry in general,
is continuing to assess the impact of these competitive forces on its future
operations.
The National Energy Policy Act of 1992 (energy act) was designed, among
other things, to foster competition. Among other provisions, the energy act
amends the Public Utility Holding Company Act of 1935 (1935 act) and the Federal
Power Act. Amendments to the 1935 act create a new class of independent power
producers known as Exempt Wholesale Generators (EWGs), which are exempt from the
corporate structure regulations of the 1935 act. EWGs, which may include
independent power producers as well as affiliates of electric utilities, do not
require Securities and Exchange Commission approval or regulation. At the
current time, Duquesne has not made, and has no plans to make, any investment in
EWGs.
13
Amendments to the Federal Power Act create the potential for utilities and
other power producers to gain increased access to transmission systems of other
utilities to facilitate sales to other utilities. The amendments would permit
the FERC to order utilities to transmit power over their lines for use by other
suppliers and to enlarge or construct additional transmission capacity to
provide these services. The FERC may not, however, issue any order that would
unreasonably impair the continuing reliability of affected electric systems.
Finally, the legislation allows brokers and marketers, without owning or
operating any generation or transmission facilities, to enter into the business
of buying and selling electric capacity and energy.
The energy efficiency title of the energy act requires states to consider
adopting integrated resource planning, which allows utility investments in
conservation and other demand-side management techniques to be at least as
profitable as supply investments. The energy act also establishes new efficiency
standards in industrial and commercial equipment and lighting and requires
states to establish commercial and residential building codes with energy
efficiency standards. Additionally, the energy act requires utilities to
consider energy efficiency programs in their integrated resource planning. The
effects on Duquesne of these standards and requirements cannot be determined at
this time.
The energy act encourages increased use of alternative transportation fuels
by federal, state, city and power provider fleets. The energy act also provides
funding for development of electric vehicles and associated infrastructures. The
effects on Duquesne cannot be determined at this time.
The nuclear-related provisions of the energy act generally encourage
further development of the nuclear power industry through a variety of measures,
including the consolidation of construction and operating license steps into one
proceeding. The impact of these provisions on Duquesne is not expected to be
material.
These new regulations also permit industrial and large commercial customers
to own and operate facilities to generate their own electric energy requirements
and, if such facilities are qualifying facilities, to require the displaced
electric utility to purchase the output of such facilities. Customers may also
have the option of substituting fuels, such as the use of natural gas, oil or
wood for heating and/or cooling purposes rather than electric energy or of
relocating their facilities to a lower cost environment.
In addition, increased competition may also result from the 1990 Amendments
to the Clean Air Act. Such amendments exempt from SO2 and NOX control
requirements existing units with less than 25 megawatts of generating capacity
and new or existing co-generation units supplying less than one-third of their
electric output and less than 25 megawatts for commercial sale.
Property Held for Future Use
In 1986, the PUC approved Duquesne's request to remove the Phillips and
most of the Brunot Island power stations from service and place them in cold
reserve. Duquesne's capitalized costs and net investment in the plants at
December 31, 1993 totaled $130 million. (See Note L to Duquesne's consolidated
financial statements.)
Duquesne expects to recover its net investment in these plants through
future sales. Phillips and BI represent licensed, certified, clean sources of
electricity that will be necessary to meet expanding opportunities in the power
markets. Duquesne believes that anticipated growth in peak load demand for
electricity within its service territory will require additional peaking
generation. Duquesne looks to BI to meet this need. The Phillips Power Plant is
an important component in meeting market opportunities to supply long-term bulk
power. Recent legislation may permit wider transmission access to these long-
term bulk power markets. In summary, Duquesne believes its investment in these
cold-reserved plants will be necessary in order to meet future business needs.
If business opportunities do not develop as expected, Duquesne will consider the
sale of these assets. In the event that market demand, transmission access or
rate recovery do not support the utilization or sale of the plants, Duquesne may
have to write off part or all of their costs.
14
Retirement Plan Measurement Assumptions
Duquesne reduced the discount rate used to determine the projected benefit
obligation on Duquesne's retirement plans at December 31, 1993 to 7 percent. The
assumed change in future compensation levels was also decreased by 0.5 percent
to reflect current market and economic conditions.
The effect of these changes on Duquesne's retirement plan obligations is
reflected in the amounts shown in Note I to Duquesne's consolidated financial
statements. The resulting increase in related expenses for subsequent years is
not expected to be material.
Other
Duquesne's utility operations are subject to regulation by the PUC and the
FERC. This regulation is designed to provide for the recovery of operating costs
and investment and the opportunity to earn a fair return on funds invested in
the utility business. The regulatory process imposes a time lag during which
increases in operating expenses, capital costs or construction costs may not be
recovered.
---------------------------
15
Information relating to the business of Duquesne and additional information
relating to Duquesne is set forth on pages 9 to 44 of DQE's Annual Report to
Shareholders for the year ended December 31, 1993. The information is
incorporated here by reference.
Executive Officers of the Registrant
- --------------------------------------------------------------------------------
Set forth below are the names, ages as of March 1, 1994, positions and
brief accounts of the business experience during the past five years of the
executive officers of Duquesne.
Name Age Office
- ---------------------- --- -------------------------------------------------
Wesley W. von Schack 49 Chairman of the Board since September 1987 and
President and Chief Executive Officer since
January 1986.
David D. Marshall (a) 41 Executive Vice President since February 1992.
Gary L. Schwass (b) 48 Chief Financial Officer since July 1989 and Vice
President - Finance since May 1988.
Roger D. Beck 57 Vice President - Marketing and Customer Services
since August 1986.
Gary R. Brandenberger 56 Vice President - Power Supply since August 1986.
William J. DeLeo (c) 43 Vice President - Corporate Performance and
Information Services since January 1991.
Dianna L. Green (d) 47 Vice President - Administrative Services since
August 1988.
John D. Sieber (e) 54 Vice President - Nuclear since March 1988.
James D. Mitchell (f) 42 Treasurer since July 1989.
Raymond H. Panza (g) 43 Controller and Principal Accounting Officer since
July 1990.
(a) Mr. Marshall was Assistant to the President from October 1990 to January
1992 and Vice President - Corporate Development from August 1987 to January
1992.
(b) Mr. Schwass was Vice President and Treasurer from September 1987 to April
1988.
(c) Mr. DeLeo was Vice President - Corporate Planning and Management Information
Services from April 1989 to December 1990. He also served as General Manager,
Planning, Budgeting and Business Development from November 1987 to March 1989.
(d) Ms. Green was General Manager, Human Resources Unit from May 1988 to August
1988. She served Xerox Corporation as Vice President - Personnel of the
Information Products Division from May 1985 to April 1988.
(e) Mr. Sieber was Vice President - Nuclear Operations from August 1986 to March
1988.
(f) Mr. Mitchell was Assistant Treasurer from October 1988 to June 1989. He
served US West Information Systems, Inc. as Executive Director from August 1985
to September 1988.
(g) Mr. Panza served as Assistant Controller of Squibb Corporation from May 1989
to July 1990. He served RKO General, a GenCorp company, from May 1985 to May
1989 in various positions including Vice President - Controller and Assistant
Controller.
16
ITEM 2. PROPERTIES.
Duquesne's properties consist of electric generating stations, transmission
and distribution facilities and supplemental properties and appurtenances,
comprising as a whole an integrated electric utility system, located
substantially in Allegheny and Beaver counties in southwestern Pennsylvania.
Duquesne owns all or a portion of the following generating units except
Beaver Valley 2, which is leased.
Duquesne's
Share of Net
Demonstrated Net Plant Output
Capability Year Ended
December 31, 1993 December 31, 1993
Name and Location Type (Megawatts) (Megawatt-hours)
----------------- ---- ------------------ -----------------
Cheswick Coal 570 3,238,308
Springdale, Pa.
Fort Martin No. 1 (1) Coal 276 1,834,484
Maidsville, W.Va.
Elrama Coal 487 2,531,720
Elrama, Pa.
Sammis No. 7 (1) Coal 187 1,175,234
Stratton, Ohio
Eastlake No. 5 (1) Coal 186 1,043,863
Eastlake, Ohio
Beaver Valley No. 1 (1) Nuclear 385 2,077,722
Shippingport, Pa.
Beaver Valley No. 2 (1) Nuclear 113 730,789
Shippingport, Pa.
Perry No. 1 (1) Nuclear 164 547,375
North Perry, Ohio
Bruce Mansfield No. 1 (1) Coal 228 1,075,002
Shippingport, Pa.
Bruce Mansfield No. 2 (1) Coal 62 230,670
Shippingport, Pa.
Bruce Mansfield No. 3 (1) Coal 110 465,116
Shippingport, Pa.
Brunot Island Oil 66 (5,812)
Brunot Island, Pa. ----- ----------
Total 2,834 14,944,471
==========
Cold-reserved units:
Brunot Island Oil 240
Phillips Coal 300
-----
Total 3,374
=====
(1) Amounts represent Duquesne's share of the unit which is owned by Duquesne in
common with one or more other electric utilities (or, in the case of Beaver
Valley Unit 2, leased by Duquesne).
Duquesne owns 24 transmission substations (including interests in common in
the step-up transformers at Fort Martin No. 1; Sammis No. 7; Eastlake No. 5;
Bruce Mansfield No. 1; Beaver Valley Unit 1; Beaver Valley Unit 2; Perry Unit 1;
Bruce Mansfield No. 2; and Bruce Mansfield No. 3) and 563 distribution
substations. Duquesne has 714 circuit-miles of transmission lines, comprised of
345,000, 138,000 and 69,000 volt lines. Street lighting and distribution
circuits of 23,000 volts and less include approximately 50,000 miles of lines
and cable.
17
Duquesne owns the Warwick Mine, including 4,849 acres owned in fee of
unmined coal lands and mining rights, located on the Monongahela River in Greene
County, Pennsylvania, approximately 83 river miles from Pittsburgh. See Item 1.
"Fossil Fuel" on page 10.
Substantially all of Duquesne's properties are subject to a first mortgage
lien of the Trust Indenture dated as of August 1, 1947 securing Duquesne's first
mortgage bonds. In May 1992, Duquesne began issuing secured debt under a new
First Collateral Trust Indenture. This new indenture will ultimately replace
Duquesne's First Mortgage Bond Indenture.
ITEM 3. LEGAL PROCEEDINGS.
Westinghouse Lawsuit
- --------------------------------------------------------------------------------
Beaver Valley Units 1 and 2 are jointly owned/leased generating units (See
Item 1. Business.). In 1991, the co-owners of Beaver Valley Units 1 and 2 filed
suit against Westinghouse Electric Corporation (Westinghouse) in the United
States District Court for the Western District of Pennsylvania. The suit alleges
that six steam generators supplied by Westinghouse for the two units contain
serious defects -- in particular defects causing tube corrosion and cracking.
Duquesne is seeking monetary and corrective relief. Steam generator maintenance
costs have increased as a result of these defects and are likely to continue
increasing. The condition of the steam generators is being monitored closely. If
the corrosion and cracking continue, replacement of the steam generators could
be required prior to the ends of their 40-year design lives. Duquesne is
continuing to conduct a corrective maintenance program and to explore longer
term options, including replacement of the steam generators. While Duquesne has
no current plans to replace the steam generators and has not yet completed a
detailed, site-specific study, replacement cost per unit is estimated to be
between $100 million and $150 million. (Other utilities with similar units have
replaced steam generators at costs in this range.) Duquesne cannot predict the
outcome of this matter; however, Duquesne does not believe that resolution will
have a materially adverse effect on Duquesne's financial position or results of
operations. Duquesne's percentage interests (ownership and leasehold) in Beaver
Valley Unit 1 and in Beaver Valley Unit 2 are 47.5 percent and 13.74 percent,
respectively. The remainder of Beaver Valley Unit 1 is owned by Ohio Edison
Company and by Pennsylvania Power Company. The remaining interest in
Beaver Valley Unit 2 is held by Ohio Edison Company, The Cleveland Electric
Illuminating Company and The Toledo Edison Company. Duquesne operates both units
on behalf of the joint owners.
General Electric Settlement
- --------------------------------------------------------------------------------
In January 1994, Duquesne Light Company, The Cleveland Electric
Illuminating Company, Ohio Edison Company, Pennsylvania Power Company and The
Toledo Edison Company reached a settlement in connection with a 1991 lawsuit
filed in the United States District Court in Cleveland against General Electric
Company (GE) regarding the Perry Plant. These co-owners jointly constructed
Perry Unit 1, a nuclear power plant on the southern shore of Lake Erie in Ohio
for which GE supplied the nuclear steam supply systems and other goods and
services. The out-of-court settlement disposed of a complaint filed by the co-
owners of Perry Unit 1 which included claims of breach of contract, warranty,
and duties of good faith and fair dealing, as well as constructive fraud,
negligence, misrepresentation and various RICO violations in connection with
delays and cost increases relating to the construction of Perry Unit 1. The
settlement provides for cash payments to the Perry owners and discounts on their
future purchases from GE. This settlement will not materially affect Duquesne's
results of operations in future years.
Rate-Related and Environmental Litigation
- --------------------------------------------------------------------------------
Proceedings involving Duquesne's rates are reported in Item 1. "Rate
Matters". Proceedings involving environmental matters are reported in Item 1.
"Environmental Matters".
18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
Effective July 7, 1989, Duquesne Light Company became a wholly owned
subsidiary of DQE, the holding company formed as part of a shareholder-approved
restructuring. As a result of the restructuring, DQE common stock replaced all
outstanding shares of Duquesne Light Company common stock, except for ten shares
which DQE holds. As such, this item is not applicable to Duquesne Light Company
because all its common equity is held solely by DQE. During 1993, Duquesne
declared quarterly dividends on its common stock totaling $144 million for the
year.
ITEM 6. SELECTED FINANCIAL DATA.
Selected financial data for Duquesne Light Company for each year of the
six-year period ended December 31, 1993 are set forth on page 67. The financial
data is incorporated here by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Management's discussion and analysis of financial condition and results of
operations are set forth in Item 1. BUSINESS and on pages 10 through 17 of the
DQE Annual Report to Shareholders for the year ended December 31, 1993. The
discussion and analysis are incorporated here by reference.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Balance Sheet of Duquesne Light Company and its Subsidiary
as of December 31, 1993 and 1992, and the related Statements of Consolidated
Income, Retained Earnings and Cash Flows for each of the three years in the
period ended December 31, 1993 together with the Independent Auditors' Report
dated January 25, 1994 are set forth here on pages 43 to 66. The financial
statements and report are incorporated here by reference. Quarterly financial
information is included on page 66 in Note M to Duquesne's consolidated
financial statements and is incorporated here by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information relating to the Directors of Duquesne Light Company is set
forth under the captions "Proposal No. 1 - Election of Directors", "Nominees for
Director" and "Standing Directors" in the DQE definitive Proxy Statement, filed
with the Securities and Exchange Commission in connection with its annual
meeting of shareholders to be held on April 20, 1994. The Proxy Statement is
incorporated here by reference. All Directors of DQE are also Directors of
Duquesne Light Company. Information relating to the executive officers of the
Registrant is set forth in Part I of this Report under the caption "Executive
Officers of the Registrant".
19
ITEM 11. EXECUTIVE COMPENSATION.
The information relating to executive compensation is set forth in Exhibit
28.1, filed as part of this Report. The information is incorporated here by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
DQE is the beneficial owner and holder of all shares of outstanding Common
Stock, $1 par value, of Duquesne Light, consisting of 10 shares as of February
23, 1994. Information relating to the ownership of equity securities of DQE and
Duquesne Light by directors and executive officers of Duquesne Light is set
forth in Exhibit 28.1, filed as part of this Report. The information is
incorporated here by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) The following financial statements are included on pages 43 to 66.
Independent Auditors' Report.
Statement of Consolidated Income for the Three Years Ended December
31, 1993.
Consolidated Balance Sheet, December 31, 1993 and 1992.
Statement of Consolidated Cash Flows for the Three Years Ended
December 31, 1993.
Statement of Consolidated Retained Earnings for the Three Years
Ended December 31, 1993.
Notes to Consolidated Financial Statements.
(a)(2) The following financial statement schedules and the related
Independent Auditors' Report (See page 43.) are filed here as a part of this
Report:
Schedules for the Three Years Ended December 31, 1993:
V - Property, Plant and Equipment.
VI - Accumulated Depreciation, Depletion and Amortization of Property,
Plant and Equipment.
VIII - Valuation and Qualifying Accounts.
X - Supplementary Income Statement Information.
The remaining schedules are omitted because of the absence of the
conditions under which they are required or because the information called for
is shown in the financial statements or notes to the financial statements.
20
(a)(3) Exhibits relating to Duquesne Light Company filed as a part of this
Report are set forth in the Duquesne Light Company Exhibit List on pages 22 to
33, incorporated here by reference. Documents other than those designated as
being filed here are incorporated here by reference. Documents incorporated by
reference to a DQE Annual Report on Form 10-K, a Quarterly Report on Form 10-Q
or a Current Report on Form 8-K are at Securities and Exchange Commission File
No. 1-956.
(b) On December 8, 1993 a Form 8-K was filed with respect to Duquesne Light
Company regarding a long-term power sales contract with General Public
Utilities.
(c) Executive Compensation Plans and Arrangements
Deferred Compensation Plan for the Directors Exhibit 10.1 to the Form 10-K
of Duquesne Light Company, as amended to date. Annual Report of DQE for the
year ended December 31, 1992.
Incentive Compensation Program for Certain Exhibit 10.2 to the Form 10-K
Executive Officers of Duquesne Light Company, Annual Report of DQE for the
as amended to date. year ended December 31, 1992.
Description of Duquesne Light Company Pension Exhibit 10.3 to the Form 10-K
Service Supplement Program. Annual Report of DQE for the
year ended December 31, 1992.
Duquesne Light Company Outside Directors' Exhibit 10.59 to the Form 10-K
Retirement Plan, as amended to date. Annual Report of Duquesne
Light Company for the year
ended December 31, 1990.
Employment Agreement dated as of December 15, Exhibit 10.5 to the Form 10-K
1992 between DQE, Duquesne Light Company and Annual Report of DQE for the
Wesley W. von Schack. year ended December 31, 1992.
Duquesne Light/DQE Charitable Giving Program. Exhibit 10.6 to the Form 10-K
Annual Report of DQE for the
year ended December 31, 1992.
DUQUESNE LIGHT COMPANY EXHIBITS
Exhibit Method of
No. Description Filing
- ------- ----------------------------------------------- ----------------------------
3.1 Restated Articles of Duquesne Light Company, as Exhibit 3.1 to the Form 10-K
amended through December 19, 1991 and as currently Annual Report of Duquesne
in effect. Light Company for the year
ended December 31, 1991.
3.2 By-Laws of Duquesne Light Company, as amended Exhibit 3.2 to the Form 10-K
through December 19, 1991 and as currently in effect. Annual Report of Duquesne
Light Company for the year
ended December 31, 1991.
4.1 Trust Indenture dated as of August 1, 1947, securing Exhibit 4.3 to Registration
Duquesne Light Company's First Mortgage Bonds. Statement (Form S-1)
No. 2-11326.
4.2 Supplemental Trust Indentures supplementing the
Trust Indenture -
21
Exhibit Method of
No. Description Filing
- ------- ----------------------------------------------- ----------------------------
First through Tenth and an amendment to the Fifth. Exhibits 4.4 through 4.13 to
Registration Statement (Form
S-1) No. 2-11326.
Eleventh. Exhibit 4.3 to Registration
Statement (Form S-1)
No. 2-12309.
Twelfth. Exhibit 2.2 to Registration
Statement (Form S-7)
No. 2-63467.
Thirteenth. Exhibit 4.5 to Registration
Statement (Form S-1)
No. 2-13360.
Fourteenth and Fifteenth. Exhibits 4.6 and 4.7 to Registration
Statement (Form S-1) No. 2-13596.
Sixteenth. Exhibit 4.8 to Registration
Statement (Form S-1)
No. 2-14704.
Seventeenth and Eighteenth. Exhibits 4.4 and 4.5 to Registration
Statement (Form S-1) No. 2-16033.
Nineteenth through Twenty-Third. Exhibit 2.2 to Registration
Statement (Form S-7)
No. 2-63467.
Twenty-Fourth. Exhibit 2.2 to Registration
Statement (Form S-9)
No. 2-24412.
Twenty-Fifth. Exhibit 2.2 to Registration
Statement (Form S-7)
No. 2-63467.
Twenty-Sixth. Exhibit 2.2 to Registration
Statement (Form S-9)
No. 2-25887.
Twenty-Seventh. Exhibit 2.2 to Registration
Statement (Form S-7)
No. 2-63467.
Twenty-Eighth. Exhibit 2.2 to Registration
Statement (Form S-9)
No. 2-28042.
Twenty-Ninth. Exhibit 2.2 to Registration
Statement (Form S-7)
No. 2-63467.
22
Exhibit Method of
No. Description Filing
- ------- ----------------------------------------------- ----------------------------
Thirtieth. Exhibit 2.2 to Registration
Statement (Form S-9)
No. 2-30927.
Thirty-First and Thirty-Second. Exhibit 2.2 to Registration
Statement (Form S-7)
No. 2-63467.
Thirty-Third. Exhibit 2.4 to Registration
Statement (Form S-7)
No. 2-36333.
Thirty-Fourth and Thirty-Fifth. Exhibit 2.2 to Registration
Statement (Form S-7)
No. 2-63467.
Thirty-Sixth. Exhibit 2.4 to Registration
Statement (Form S-7)
No. 2-39375.
Thirty-Seventh. Exhibit 2.2 to Registration
Statement (Form S-7)
No. 2-63467.
Thirty-Eighth. Exhibit 2.4 to Registration
Statement (Form S-7)
No. 2-42154.
Thirty-Ninth through Forty-Fifth. Exhibit 2.2 to Registration
Statement (Form S-7)
No. 2-63467.
Forty-Sixth. Exhibit 2.3 to Registration
Statement (Form S-7)
No. 2-52874.
Forty-Seventh through Forty-Ninth. Exhibit 2.2 to Registration
Statement (Form S-7)
No. 2-63467.
Fiftieth. Exhibit 2.3 to Registration
Statement (Form S-7)
No. 2-58483.
Fifty-First through Fifty-Third. Exhibit 2.2 to Registration
Statement (Form S-7)
No. 2-63467.
Fifty-Fourth and Fifty-Fifth. Exhibit 2.2 to Registration
Statement (Form S-16)
No. 2-66258.
Fifty-Sixth. Exhibit 2.2 to Registration
Statement (Form S-16)
No. 2-68959.
23
Exhibit Method of
No. Description Filing
- ------- ----------------------------------------------- ----------------------------
Fifty-Seventh. Exhibit 4.1 to Registration
Statement (Form S-16)
No. 2-72522.
Fifty-Eighth and Fifty-Ninth. Exhibit 4.1 to Registration
Statement (Form S-16)
No. 2-76768.
Sixtieth and Sixty-First. Exhibit 4.1 to Registration
Statement (Form S-3)
No. 2-82139.
Sixty-Second and Sixty-Third. Exhibit 4.1 to Registration
Statement (Form S-3)
No. 2-87452.
Sixty-Fourth. Exhibit 4.1 to Registration
Statement (Form S-3)
No. 2-89719.
Sixty-Fifth through Sixty-Ninth. Exhibit 4.1 to Registration
Statement (Form S-3)
No. 33-1509.
Seventieth through Seventy-Seventh. Exhibit 4.1 to Registration
Statement (Form S-3)
No. 33-32026.
Seventy-Eighth through Eightieth. Exhibit 4.1 to Registration
Statement (Form S-3)
No. 33-46990.
Eighty-First. Exhibit 4.2 to Registration
Statement (Form S-3)
No. 33-46990.
Eighty-Second. Exhibit 4.1 to Registration
Statement (Form S-3)
No. 33-52782.
Eighty-Third and Eighty-Fourth. Exhibit 4.1 to Registration
Statement (Form S-3)
No. 33-63602.
Eighty-Fifth through Eighty-Eighth. Filed here.
4.3 Indenture dated March 1, 1960, relating to Duquesne Exhibit 4.3 to the Form 10-K
Light Company's 5% Sinking Fund Debentures. Annual Report of DQE for the
year ended December 31, 1989.
4.4 Indenture dated as of November 1, 1989 relating to the Exhibit 4.4 to the Form 10-K
issuance of Duquesne Light Company's unsecured Annual Report of DQE for the
notes. year ended December 31, 1989.
24
Exhibit Method of
No. Description Filing
- ------- ----------------------------------------------- ----------------------------
4.5 Indenture of Mortgage and Deed of Trust dated as of Exhibit 4.3 to Registration
April 1, 1992, securing Duquesne Light Company's Statement (Form S-3)
First Collateral Trust Bonds. No. 33-52782.
4.6 Supplemental Indentures supplementing the said
Indenture of Mortgage and Deed of Trust -
Supplemental Indenture No. 1. Exhibit 4.4 to Registration
Statement (Form S-3)
No. 33-52782.
Supplemental Indenture No. 2 through Supplemental Exhibit 4.4 to Registration
Indenture No. 4. Statement (Form S-3)
No. 33-63602.
Supplemental Indenture No. 5 through Supplemental Filed here.
Indenture No. 7.
Agreements relating to the Jointly Owned Generating Units:
10.1 Administration Agreement dated as of September 14, Exhibit 5.8 to Registration
1967. Statement (Form S-7)
No. 2-43106.
10.2 Transmission Facilities Agreement dated as of September Exhibit 5.9 to Registration
14, 1967. Statement (Form S-7)
No. 2-43106.
10.3 Operating Agreement dated as of September 21, 1972 Exhibit 5.1 to Registration
for Eastlake Unit No. 5. Statement (Form S-7)
No. 2-48164.
10.4 Memorandum of Agreement dated as of July 1, 1982 re Exhibit 10.14 to the Form 10-K
reallocation of rights and liabilities of the companies Annual Report of Duquesne
under uranium supply contracts. Light Company for the year
ended December 31, 1987.
10.5 Operating Agreement dated August 5, 1982 as of Exhibit 10.17 to the Form 10-K
September 1, 1971 for Sammis Unit No. 7. Annual Report of Duquesne
Light Company for the year ended
December 31, 1988.
10.6 Memorandum of Understanding dated as of March 31, Exhibit 10.19 to the Form 10-K
1985 re implementation of company-by-company Annual Report of DQE for the
management of uranium inventory and delivery. year ended December 31, 1989.
10.7 Restated Operating Agreement for Beaver Valley Unit Exhibit 10.23 to the Form 10-K
Nos. 1 and 2 dated September 15, 1987. Annual Report of Duquesne
Light Company for the year
ended December 31, 1987.
25
Exhibit Method of
No. Description Filing
- ------- ----------------------------------------------- ----------------------------
10.8 Operating Agreement for Perry Unit No. 1 dated Exhibit 10.24 to the Form 10-K
March 10, 1987. Annual Report of Duquesne
Light Company for the year
ended December 31, 1987.
10.9 Operating Agreement for Bruce Mansfield Units Nos. 1, Exhibit 10.25 to the Form 10-K
2 and 3 dated September 15, 1987 as of June 1, 1976. Annual Report of Duquesne
Light Company for the year
ended December 31, 1987.
10.10 Basic Operating Agreement, as amended January 1, Filed here.
1993.
10.11 Amendment No. 1 dated December 23, 1993 to Filed here.
Transmission Facilities Agreement (as of January 1,
1993).
10.12 Microwave Sharing Agreement (as amended Filed here.
January 1, 1993) dated December 23, 1993.
10.13 Agreement (as of September 1, 1980) dated Filed here.
December 23, 1993 for termination or construction
of certain agreements.
10.14 Fort Martin Construction and Operating Agreement Filed here.
dated April 30, 1965.
10.15 Fort Martin Transmission Agreement dated Filed here.
March 15, 1967.
10.16 Amendment of January 1, 1988 to Fort Martin Filed here.
Transmission Agreement.
Agreements relating to the Sale and Leaseback
of Beaver Valley Unit No. 2:
10.17 Order of the Pennsylvania Public Utility Commission Exhibit 28.2 to the Form 10-Q
dated September 25, 1987 regarding the application Quarterly Report of Duquesne
of the Duquesne Light Company under Section 1102(a)(3) Light Company for the quarter
of the Public Utility Code for approval in connection ended September 30, 1987.
with the sale and leaseback of its interest in Beaver
Valley Unit No. 2.
10.18 Order of the Pennsylvania Public Utility Commission Exhibit 10.28 to the Form 10-K
dated October 15, 1992 regarding the Securities Annual Report of Duquesne
Certificate of Duquesne Light Company for the Light Company for the year
assumption of contingent obligations under ended December 31, 1992.
financing agreements in connection with the
refunding of Collateralized Lease Bonds.
26
Exhibit Method of
No. Description Filing
- ------- ----------------------------------------------- ----------------------------
x10.19 Facility Lease dated as of September 15, 1987 between Exhibit (4)(c) to Registration
The First National Bank of Boston, as Owner Trustee Statement (Form S-3)
under a Trust Agreement dated as of September 15, 1987 No. 33-18144.
with the limited partnership Owner Participant named
therein, Lessor, and Duquesne Light Company, Lessee.
y10.20 Facility Lease dated as of September 15, 1987 between Exhibit (4)(d) to Registration
The First National Bank of Boston, as Owner Trustee Statement (Form S-3)
under a Trust Agreement dated as of September 15, No. 33-18144.
1987, with the corporate Owner Participant named
therein, Lessor, and Duquesne Light Company, Lessee.
x10.21 Amendment No. 1 dated as of December 1, 1987 to Exhibit 10.30 to the Form 10-K
Facility Lease dated as of September 15, 1987 between Annual Report of Duquesne
The First National Bank of Boston, as Owner Trustee Light Company for the year
under a Trust Agreement dated as of September 15, ended December 31, 1987.
1987 with the limited partnership Owner Participant
named therein, Lessor, and Duquesne Light Company,
Lessee.
y10.22 Amendment No. 1 dated as of December 1, 1987 to Exhibit 10.31 to the Form 10-K
Facility Lease dated as of September 15, 1987 between Annual Report of Duquesne
The First National Bank of Boston, as Owner Trustee Light Company for the year
under a Trust Agreement dated as of September 15, ended December 31, 1987.
1987 with the corporate Owner Participant named
therein, Lessor, and Duquesne Light Company, Lessee.
x10.23 Amendment No. 2 dated as of November 15, 1992 to Exhibit 10.33 to the Form 10-K
Facility Lease dated as of September 15, 1987 between Annual Report of Duquesne
The First National Bank of Boston, as Owner Trustee Light Company for the year
under a Trust Agreement dated as of September 15, ended December 31, 1992.
1987 with the limited partnership Owner Participant
named therein, Lessor, and Duquesne Light Company,
Lessee.
y10.24 Amendment No. 2 dated as of November 15, 1992 to Exhibit 10.34 to the Form 10-K
Facility Lease dated as of September 15, 1987 between Annual Report of Duquesne
The First National Bank of Boston, as Owner Trustee Light Company for the year
under a Trust Agreement dated as of September 15, ended December 31, 1992.
1987 with the corporate Owner Participant named
therein, Lessor, and Duquesne Light Company, Lessee.
x10.25 Participation Agreement dated as of September 15, Exhibit (28)(a) to Registration
1987 among the limited partnership Owner Statement (Form S-3)
Participant named therein, the Original Loan No. 33-18144.
Participants listed in Schedule 1 thereto, as Original
Loan Participants, DQU Funding Corporation, as Funding
Corporation, The First National Bank of Boston, as Owner
Trustee, Irving Trust Company, as Indenture Trustee and
Duquesne Light Company, as Lessee.
27
Exhibit Method of
No. Description Filing
- ------- ----------------------------------------------- ----------------------------
y10.26 Participation Agreement dated as of September 15, Exhibit (28)(b) to Registration
1987 among the corporate Owner Participant named Statement (Form S-3)
therein, the Original Loan Participants listed in No. 33-18144.
Schedule 1 thereto, as Original Loan Participants, DQU
Funding Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee, Irving
Trust Company, as Indenture Trustee and Duquesne
Light Company, as Lessee.
x10.27 Amendment No. 1 dated as of December 1, 1987 to Exhibit 10.34 to the Form 10-K
Participation Agreement dated as of September 15, Annual Report of Duquesne
1987 among the limited partnership Owner Participant Light Company for the year
named therein, the Original Loan Participants listed ended December 31, 1987.
therein, as Original Loan Participants, DQU
Funding Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee, Irving
Trust Company, as Indenture Trustee and Duquesne
Light Company, as Lessee.
y10.28 Amendment No. 1 dated as of December 1, 1987 to Exhibit 10.35 to the Form 10-K
Participation Agreement dated as of September 15, Annual Report of Duquesne
1987 among the corporate Owner Participant named Light Company for the year
therein, the Original Loan Participants listed therein, ended December 31, 1987.
as Original Loan Participants, DQU Funding
Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee, Irving
Trust Company, as Indenture Trustee and Duquesne
Light Company, as Lessee.
x10.29 Amendment No. 2 dated as of March 1, 1988 to Exhibit (28)(c)(3) to
Participation Agreement dated as of September 15, Registration Statement
1987 among the limited partnership Owner Participant (Form S-3) No. 33-54648.
named therein, the Original Loan Participants listed
therein, as Original Loan Participants, DQU
Funding Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee, Irving
Trust Company, as Indenture Trustee and Duquesne
Light Company, as Lessee.
y10.30 Amendment No. 2 dated as of March 1, 1988 to Exhibit (28)(c)(4) to
Participation Agreement dated as of September 15, Registration Statement
1987 among the corporate Owner Participant named (Form S-3) No. 33-54648.
therein, the Original Loan Participants listed therein,
as Original Loan Participants, DQU Funding
Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee, Irving
Trust Company, as Indenture Trustee and Duquesne
Light Company, as Lessee.
28
Exhibit Method of
No. Description Filing
- ------- ----------------------------------------------- ----------------------------
x10.31 Amendment No. 3 dated as of November 15, 1992 to Exhibit 10.41 to the Form 10-K
Participation Agreement dated as of September 15, Annual Report of Duquesne
1987 among the limited partnership Owner Participant Light Company for the year
named therein, the Original Loan Participants listed ended December 31, 1992.
therein, as Original Loan Participants, DQU Funding
Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee, The Bank
of New York, as Indenture Trustee and Duquesne Light
Company, as Lessee.
y10.32 Amendment No. 3 dated as of November 15, 1992 to Exhibit 10.42 to the Form 10-K
Participation Agreement dated as of September 15, Annual Report of Duquesne
1987 among the corporate Owner Participant named Light Company for the year
therein, the Original Loan Participants listed therein, ended December 31, 1992.
as Original Loan Participants, DQU Funding
Corporation, as Funding Corporation, The First
National Bank of Boston, as Owner Trustee, The Bank
of New York, as Indenture Trustee and Duquesne Light
Company, as Lessee.
z10.33 Ground Lease and Eas