DQE
Address:
One Oxford Centre
301 Grant Street
Pittsburgh, Pennsylvania 15279
U.S.A.
Telephone: (412) 393-6000
Fax: (412) 393-6065
Statistics:
Public Company
Incorporated: 1903 as Duquesne Light Company; 1989 as DQE, Inc.
Sales: $1.2 billion
Employees: 4,169
Stock Exchanges: New York Philadelphia-Boston Midwest Boston Cincinnati
Company History:
DQE is an energy services holding company that was created in 1989. Its chief subsidiary, Duquesne Light Company (DLC) has more than a century-long history in the electric utility industry. Serving nearly 600,000 customers in metropolitan Pittsburgh and the surrounding area, encompassing 800 square miles, Duquesne Light was the nation's first utility company to commercially utilize nuclear power to generate electricity, and, in the 1970s, the first power company to install scrubbers on two power plants to decrease air pollution from sulphur dioxide emissions. DLC also proved its resiliency by making a dramatic recovery after the recession of the early 1980s decimated Pittsburgh's steel industry, depriving the company of 60 percent of its industrial sales.
Duquesne Light Company's history can be traced back to 1880, when the Pittsburgh area's first electric company, Allegheny County Light Company (ACLC) was created. Commercial and street lighting came relatively early to Pittsburgh, since the city was a dynamic hub of trade. In the Civil War years the city manufactured heavy Union artillery and became, at war's end, the country's leading iron producer. Steel manufacturing came in the postwar years, when the city also became a magnet for masses of European immigrants. Population and business boomed, and in 1880 a group of far-sighted Pittsburgh businessmen took the initiative to found the ACLC with an initial investment of $90,000.
Only four years earlier the Centennial Exposition in Philadelphia had demonstrated to awestruck visitors the practical possibilities of electricity. In the next few years, Thomas Edison labored in his research laboratory in Menlo Park, New Jersey, to devise a practical electric light. Edison believed that a single fiber charged with an electric current could glow indefinitely in a vacuum. After experimenting with 6,000 different materials for the right fiber, he finally found one that would burn for 40 hours. In 1879 an even better fiber burned for 170 hours, long enough for the technology to be marketed for practical use that same year. In a matter of a few years electric lighting would supplant the gas light. Although gas light had been an improvement over kerosene, it posed certain safety risks: many people failed to turn off the gas source after blowing out the flames in such lights, thereby causing innumerable fires.
The Pittsburgh businessmen who founded the city's first electric light company may have heard of Edison's invention, but they were more interested in marketing the more familiar electric arc light--primitive compared to the up-and-coming Edison bulb, but a decided improvement over gas lighting. A major customer, the Pennsylvania Railroad, stood ready to buy large quantities of the new illumination. In the dark era before electric lighting, nighttime vandals of freight trains inflicted sizable losses on business, and officials of the Pennsylvania Railway hoped that nocturnal lighting would deter looters. The success of the electric arc lights exceeded expectations, and soon other businesses in the area became customers. Business grew, occasioning the need to construct a new power generator.
With sizable profits came increased competition and the need to outdo the competitor. Yet another group of progressive businessmen in Pittsburgh established the Electric Light and Power Company in 1882 after securing a patent for the Edison bulb and began tapping into the residential market. Hitherto the crude, cumbersome, and expensive arc lights were practical only for businesses. But the long burning, safe--and most importantly--simple electric light bulb spelled profits and prosperity for an electric company aggressive enough to market the new hardware. After some dispute with the great inventor over the right to manufacture the Edison bulb (differences between Mr. Westinghouse of the Electric Light and Power Company and Thomas Edison of Menlo Park were resolved by 1896), the era of the electric light bulb was on. Long before then, back in the 1880s, Pittsburgh had taken yet another progressive step by acquiring new electric street cars, inaugurating a revolution in public transportation.
Competition for customers was keen: by 1900 there existed in and around Pittsburgh over 150 private electric companies, many of which duplicated lines, service, and transportation routes, adding unnecessarily to the plethora of unsightly overhead wires in the city. Dog-eat-dog competition appeared to be working against progress rather than furthering it. A group of utility owners responded to the crisis in August of 1903, resolving to begin the consolidation of most of the electric utility companies in Pittsburgh into one single entity, the Duquesne Light Company. By December, prominent investment broker and Bell Telephone executive Robert C. Hall assumed the post of president, utilities investor Howard McSweeney became vice president, investment broker Shirley P. Austin took over as secretary, and R. H. Binns was named treasurer. In the next few years, more mergers occurred, and by 1918 DLC had expanded almost to its present day geographical range in and around Pittsburgh.
Early in the 20th century electric appliances such as irons, vacuum cleaners, and clothes washers were invented, followed after the First World War by electric stoves, refrigerators, toasters, and the soon-to-become-ubiquitous radio. Demand for electricity soared, and in 1927 DLC, by then a subsidiary of the Philadelphia Company (a utilities holding company), purchased the old Allegheny County Light Company. As early as 1915 DLC began construction on what was probably the world's first high tension (69,000 volt) electric ring around an urban area. At the same time, the company developed the first effective lighting arrestors, invented to protect the high tension wires.
The prosperity of the post-World War I years put DLC on sound footing, which helped it weather the depression years. Growth slowed but the company continued to turn a profit. On Brunot Island, two miles from downtown, Duquesne Light began to operate the new Reed power station, while in 1931 company engineers pioneered the invention of the mechanical key, a protective device for utility repairmen. By 1936, with the depression still far from over, DLC embarked on one of its most expensive and ambitious projects: a $16 million expansion and modernization program. Barely five years later the United States entered World War II, turning Pittsburgh into one of the country's leading steelmaking and shipbuilding centers. The demand for energy to operate steel mills increased during these years, with mills running 24 hours per day to provide for the war effort. The expansion project of 1936 had stood the company in good stead as it weathered the huge strains of unparalleled demand for electricity.
Far from signaling a decrease in production, the end of the Second World War merely accelerated the demand for electrical appliances unobtainable during the war. In 1948 DLC embarked on yet another expansion and modernization plan--with the announcement that it would build a $28 million power plant at Elrama as part of a $300 million postwar construction program.
In 1954 DLC became a pioneer in the development of atomic power reactors for civilian needs. Owned by the federal government but operated by DLC, the new Shippingport atomic reactor--the first of its kind in the world--went into operation in 1958 at a cost of $5 million, with President Eisenhower turning on the initial switch. Nuclear power appeared to be the solution for spiraling energy demands brought on by the advent of television and other home appliances, the increase in the commercial use of air conditioning, and burgeoning industrial expansion.
The era of the 1960s marked the beginning of growing concern for the environment. When Allegheny County adopted the first truly stringent anti-pollution code, with more codes and state laws sure to follow, Duquesne Light embarked on a major environmental program. Three power stations were closed down in favor of the construction of one modern facility, Cheswick Station, near Pittsburgh. In the 1970s DLC became the first utility company in the nation to install scrubbers on power generators to reduce sulphur dioxide emissions, making the company a model in pollution control.
With the growing need for new generating capacity in the 1960s, the Central Area Power Coordination Group (CAPCO), a regional cooperative uniting Pennsylvania and Ohio utilities, was formed in 1967. CAPCO companies support five coal-powered plants and three nuclear plants and share the costs of construction of new facilities.
Two of the nuclear power plants are operated by DLC: Beaver Valley Power Station unit one, which became operational in 1976, and unit two, which went on line in 1987.
With the decline of the steel industry in the 1980s, industrial sales plummeted a drastic 60 percent. The company responded with the Duquesne Plan, a combination of financial restructuring, cost cutting, and economic development initiatives designed to rebuild the company's strength. Part of the plan called for investigating opportunities in related industries. This led to the establishment in 1989 of a new organizational setup, the creation of the holding company DQE for the sake of greater flexibility.
One of the company's most important assets as it faces the future is the presence in southwest Pennsylvania of abundant electrical fuel sources, especially coal. In 1990 General Public Utilities Corporation (GPU) and DCL reached an agreement in which DCL would sell 500 megawatts of energy to GPU and cooperate in the joint construction of a 268-mile bulk-power transmission line from Pittsburgh to Harrisburg.
Flexibility and diversification, rather than dependence on industrial customers for the bulk of its sales, have become keys for DQE's future growth and profit. In the early 1990s, it established an investment management company called Montauk and also formed Duquesne Enterprises. Allegheny Development Corporation, a subsidiary of Duquesne Enterprises, won the competitive bid to provide energy to Pittsburgh's new international airport, which opened in October, 1992.
DLC's recovery and resurgence from the troubled 1980s have enabled company executives to help in city efforts to attract new business to Pittsburgh, which by 1990 was characterized by Fortune magazine as the third best city for business in the country because of its new diversity. Perhaps because of the harsh lessons of the recession of the 1980s, DLC seemed better poised than most utility companies to face the recession of the 1990s.
The health of DQE, Inc., is reflected in the sizable 11.6 percent increase in DLC's earnings per share in 1991. DQE has invested in joint research and development with local universities and utility companies to discover new means to conserve or recycle energy and waste products. Such environmental-mindedness is indispensable in the face of increasingly stringent and costly environmental regulations. Long a leader in environmental matters, DLC operated plants already meeting the sulfur dioxide standards for Phase I of the Clean Air Act amendments and was well ahead of the other utilities in the region in terms of meeting Phase II requirements.
Principal Subsidiaries: Duquesne Light Company; Duquesne Enterprises; Montauk.
Further Reading:
Lubove, Roy, Twentieth Century Pittsburgh, John Wiley & Sons, 1969.
The First Century of Electricity, Duquesne Light Company, 1979.
Hyman, Leonard S., America's Electric Utilities: Past, Present, and Future, Arlington: Public Utilities Reports, Inc., 1985.
Hays, Samuel P., editor, City at the Point, Essays on the Social History of Pittsburgh, University of Pittsburgh Press, 1989.
'Two Utilities Agree to Venture,' New York Times, April 20, 1990.
Annual Report: DQE, 1990.
Annual Report: DQE, 1991.
'Five Operating Utilities Are Suing GE Over a Nuclear Plant Near Cleveland,' Wall Street Journal, August 22, 1991.
Hovis, G. F., 'DQE, Inc.--Company Report,' Argus Research Corporation, January 13, 1992.
Source: International Directory of Company Histories, Vol. 6. St. James Press, 1992.
