UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
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RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

DQE, Inc.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Notes:

[LOGO OF DQE]

Notice of 1998 Annual Meeting and Proxy Statement
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October 9, 1998
To the Stockholders of DQE, Inc.:

The Annual Meeting of Stockholders of DQE, Inc. ("DQE" or the "Company")
will be held at the Manchester Craftsmen's Guild Auditorium, 1815 Metropolitan
Street, Pittsburgh, PA 15233 on Tuesday, November 24, 1998, at 11:00 a.m., for
the following purposes:

(1) To elect two directors to serve until the Annual Meeting in the year 2001;

(2) To ratify the appointment, by the Board of Directors, of Deloitte & Touche
LLP (D&T) as independent public accountants to audit the books of the
Company for the year ended December 31, 1998; and

(3) To consider and act upon other matters that may properly come before the
meeting.

Stockholders of record of DQE Common Stock and DQE Preferred Stock, Series
A, at the close of business on September 23, 1998, the record date, are entitled
to notice of the Annual Meeting and are entitled to vote at the meeting. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.

If you are a stockholder of record as of September 23, 1998, and wish to
attend the meeting, please fill in the form at the end of the Proxy Statement
and return it with your proxy card so that we can send you an admittance ticket.
If your shares are registered in the name of a brokerage firm or trustee and you
plan to attend the meeting, please obtain a letter or account statement of your
beneficial ownership from the brokerage firm or trustee. Only stockholders with
the proper credentials will be admitted to the meeting.

We hope you can join us. But whether or not you plan to attend the meeting
in person, your vote is important; please fill in, sign, date, and promptly
return the enclosed proxy card.

By Order of the Board of Directors
Diane S. Eismont, Corporate Secretary

TABLE OF CONTENTS

Voting Information.................................................................... 2

Proposals

Election of Directors............................................................ 4

Ratification of Deloitte & Touche LLP as Independent Accountants for 1998........ 24

Beneficial Ownership Table....................................................... 9

Board of Directors

Board Compensation............................................................... 7

Board Committees................................................................. 8

Compensation Committee Report......................................................... 12

Performance Graph..................................................................... 16

Summary Compensation Table............................................................ 17

Option Grant Table.................................................................... 19

Option Exercise and Year-End Value Tables............................................. 21

Retirement Plan....................................................................... 22

Other Matters......................................................................... 25

Ticket Request........................................................................ 27

Proxy Statement

For the Annual Meeting of Stockholders
to be Held November 24, 1998

We are sending this Proxy Statement to you in connection with the solicitation
of proxies by the Board of Directors of DQE for the Annual Meeting of
Stockholders to be held on Tuesday, November 24, 1998. These proxy materials
will be first mailed to stockholders on or about October 9, 1998.

The specific proposals to be considered and voted upon at the Annual Meeting
are summarized in the Notice of Annual Meeting of Stockholders on the preceding
page. Each proposal is described in more detail in this Proxy Statement
beginning on page 4.

Voting and Revocation of Proxies
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There were 77,766,137 shares of Common Stock outstanding and entitled to vote
at the close of business on September 23, 1998, the record date. Each Common
stockholder is entitled to one vote for each whole share held on all matters to
be voted upon at the Annual Meeting of Stockholders.

The holders of DQE Preferred Stock, Series A (Convertible), are entitled to
vote on all matters submitted to a vote of the holders of Common Stock, voting
together with the holders of Common Stock as one class. Each share of Preferred
Stock, Series A (Convertible), is currently entitled to three votes. As of the
close of business on September 23, 1998, the record date, there were 266,039
shares of Preferred Stock, Series A (Convertible), outstanding and entitled to
vote.

A majority of the outstanding shares, present or represented by proxy,
constitutes a quorum for transacting business at the Annual Meeting. Proxies
marked as abstaining (including proxies containing broker non-votes) on any
matter to be acted upon by shareholders will be treated as present at the Annual
Meeting for purposes of a quorum.

All stockholders have cumulative voting rights with respect to the election of
directors. Cumulative voting means each stockholder has the right to multiply
the number of votes to which he or she may be entitled (i.e., one vote per share
of Common Stock and three votes per share of Preferred Stock, Series A
(Convertible)) by the total number of directors to be elected. Each stockholder
may cast all of those votes for a single nominee or may distribute them among
the nominees as the stockholder sees fit. A stockholder's votes for the
election of directors by a proxy solicited on behalf of the Board of Directors
will be cumulated selectively (at the discretion of the holders of the proxy)
among those nominees for whom the stockholder has not withheld authority to
vote.

With respect to Proposal 1, the election of directors, the two persons
receiving the highest number of votes will be elected as directors of the
Company. Approval of Proposal 2 requires the affirmative vote of a majority of
the votes cast by all stockholders entitled to vote. Proxies marked as
abstaining (including proxies containing broker non-votes) will not be
considered as votes cast with respect to this proposal and will not have the
same legal effect as a vote "Against" the proposal. The shares represented by
the proxy will be voted as you instruct us on the proxy. If you sign and return
your proxy without voting instructions, it will be voted "FOR" approval of each
nominee for election as director named in this Proxy Statement and "FOR"
ratification of the appointment of Deloitte & Touche LLP (D&T) as independent
public accountants of the Company for 1998. In addition, if other matters come
before the Annual Meeting, the persons named in the accompanying form of proxy
will vote in accordance with their best judgment in respect to such matters.

You may revoke your proxy at any time before the polls close at the Annual
Meeting, but the revocation shall not be effective until written notice has been
given to the Corporate Secretary of the Company.

Confidentiality
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We keep proxies, ballots, and voting tabulations that identify individual
stockholders confidential, except in a contested proxy solicitation or as may be
necessary to meet applicable legal requirements. Proxies, ballots, and other
voting documents are available for examination only by the judges of election
and those associated with processing proxy cards and tabulating the vote, who
must agree in writing to comply with our policy of confidentiality.

Officer/Director Update
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In February of 1997, the Board elected David D. Marshall President and Chief
Executive Officer. Mr. Marshall had been serving as interim President and Chief
Executive Officer since August of 1996. In August of 1997, the Board re-
appointed Robert P. Bozzone and William H. Knoell to serve as Lead Directors.
The Lead Directors alternately chair Board meetings and perform other functions
of a Chairman not delegated to the President and Chief Executive Officer. A
Lead Director may also call for and chair meetings of the outside directors and
consult with and advise the President and Chief Executive Officer on matters of
Board and Corporate governance.

Effective September 30, 1997, Dr. Robert Mehrabian resigned from the Board in
order to devote more time to his new position as Senior Vice President of
Allegheny Teledyne and Segment Executive of its Aerospace and Electronics
Companies. We appreciate the leadership, wisdom, and dedication that Dr.
Mehrabian provided during his six years of distinguished service to the Company.

PROPOSAL NO. 1

Election of Directors

Two directors are to be elected by the stockholders at the 1998 Annual
Meeting. They will continue to serve until the Annual Meeting in the year 2001
and thereafter until their successors are chosen and qualified. We intend to
vote proxies solicited on behalf of the Board of Directors for the nominees
named below. If, because of events not presently known or anticipated, any
nominee is unable to serve or for good cause will not serve, the proxies voted
for the election of that director may be voted (in the discretion of the holders
of the proxies) for other nominees not named below. Unless otherwise indicated
in the biographies, the business positions have been held for the past five
years. Duquesne Light Company ("Duquesne Light") is the Company's major
subsidiary.

Nominees for Directors
Terms Expiring in the Year 2001:

Photo Doreen E. Boyce, Age 64, Director of DQE since 1989.
President of the Buhl Foundation (charitable institution
for educational and public purposes). Also a director of
Duquesne Light, Microbac Laboratories, Inc., Orbeco
Analytical Systems, Inc. and Dollar Bank, Federal Savings
Bank and a trustee of Franklin & Marshall College.

Photo David D. Marshall, Age 46, Director of DQE since 1995.
President and Chief Executive Officer of DQE and Duquesne
Light since August, 1996. Previously Executive Vice
President of DQE and President and Chief Operating Officer
of Duquesne Light since 1995. Vice President of DQE from
1989 to 1995, and Executive Vice President of Duquesne
Light from 1992 to 1995. Also a director of Duquesne Light
and the United Way of Allegheny County, and Trustee of
Penn's Southwest Association (economic development).

The Board of Directors unanimously recommends that stockholders approve
the election of the nominees for director.

Standing Directors

The other members of the Board of Directors currently serving terms expiring
as noted are as follows:

Terms Expiring in 1999:

Photo Sigo Falk, Age 63, Director of DQE since 1989. Management
of personal investments. Chairman of The Maurice Falk
Medical Fund and Leon Falk Family Trust and a director of
Duquesne Light. Also Chair of the Chatham College Board of
Trustees and a board member of the Historical Society of
Western Pennsylvania and the Allegheny Land Trust.

Photo Eric W. Springer, Age 69, Director of DQE since 1989.
Partner of Horty, Springer & Mattern, P.C. (attorneys-at-
law). Also a director of Duquesne Light, a Trustee of the
Maurice Falk Medical Fund, a Trustee Emeritus of
Presbyterian University Hospital and the University of
Pittsburgh Medical Center, and Past President of the
Allegheny County Bar Association.

Terms Expiring in 2000:

Photo Daniel Berg, Age 69, Director of DQE since 1989. Institute
Professor of Science and Technology and Acting Director,
Services Research and Education Center, of Rensselaer
Polytechnic Institute. Also a director of Duquesne Light,
Hy-Tech Machine, Inc. (manufacturer of specialty parts and
equipment), and Joachim Machinery Company, Inc.
(distributor of machine tools), and Chairman of the Board
of Crystek Crystal Corporation (manufacturer of high
reliability crystals for microprocessors and oscillators).

Photo Robert P. Bozzone, Age 65, Director of DQE since 1990. Re-
elected to be a Lead Director in August, 1997. Vice
Chairman of Allegheny Teledyne, Inc. (specialty metals
production) since its formation through the merger of
Allegheny Ludlum Corporation and Teledyne, Inc. in August
1996. Formerly Vice Chairman from 1994-1996 and President
and Chief Executive Officer from 1990-1994 of Allegheny
Ludlum. Also a director of Duquesne Light and Allegheny
Teledyne, Inc., a trustee of Rensselaer Polytechnic
Institute, a life member of ASM International (engineering
technical society), and a board member of the Greater
Pittsburgh Council-Boy Scouts of America, The Salvation
Army, and Catholic Charities. Also former Chairman of the
Pittsburgh Branch of the Federal Reserve Bank of Cleveland,
and a former member of the Advisory Board of the Electric
Power Research Institute (EPRI).

Photo William H. Knoell, Age 74, Director of DQE since 1989. Re-
elected to be a Lead Director in August, 1997. Retired
Chairman of the Board and Chief Executive Officer of
Cyclops Industries, Inc. (basic and specialty steels and
fabricated steel products, industrial and commercial
construction). Also a director of Duquesne Light, Cabot Oil
& Gas Corporation and St. Clair Memorial Hospital and a
life trustee of Carnegie Mellon University.

Photo Thomas J. Murrin, Age 69, Director of DQE since 1991. Dean
of the A. J. Palumbo School of Business Administration of
Duquesne University. Prior to that, Deputy Secretary of the
U.S. Department of Commerce and President of the Energy and
Advanced Technology Group of Westinghouse Electric
Corporation. Also a director of Duquesne Light and
Motorola, Inc. (manufacturer of electronic equipment and
components) and a member of the Executive Committee of the
U.S. Council on Competitiveness and Chairman of the
Pennsylvania Governor's Tech 21 Project; Chairman of the
Financial and Educational Program Assessment Panel of the
Pittsburgh Public School System, and Chairman of the
Pittsburgh Tissue Engineering Institute.

Directors' Fees and Plans

Directors who are not employees are compensated for their Board service by a
combination of DQE Common Stock and cash. They receive an annual Board retainer
of $15,000 in cash for service to the Company and its affiliates, payable in
twelve monthly installments, and 250 shares of DQE Common Stock. Each director
also receives a fee of $1,000 for each Board and Committee meeting attended.
Directors who are employees of the Company or any of its affiliates do not
receive fees for their services as directors.

In order to increase directors' stock-based compensation and thus strengthen
the link between directors' compensation and stockholder interests, the Board
adopted a new stock plan in 1996 under which new non-employee directors will
each receive up to 4,150 shares of restricted DQE Common Stock that will vest at
the rate of 50% after five years of service as a director plus an additional 10%
per year in years six through ten. Unvested shares are forfeited if the
recipient ceases to be a director.

Each director under the age of 72 who is not an employee may elect under a
directors' deferred compensation plan to defer receipt of a percentage of his or
her director's remuneration until after termination of service as a director.
Deferred compensation may be received in one to ten annual installments
commencing, with certain exceptions, on the 15th day of January of the year
designated by the director. Interest accrues quarterly on all deferred
compensation at a rate equal to a specified bank's prime lending rate. Dr. Berg
and Dr. Mehrabian elected to participate in the plan for 1997. Dr. Mehrabian
resigned from the Board effective September 30, 1997.

As part of its overall program to promote charitable giving, the Company has a
Charitable Giving Program for all directors funded by Company-owned life
insurance policies on the directors. Upon the death of a director, the Company
will donate up to five hundred thousand dollars, payable in ten equal annual
installments, to one or more qualifying charitable organizations recommended by
the director and reviewed and approved by the Duquesne Light Company Employment
and Community Relations Committee. A director must have Board service of 60
months or more in order to qualify for the full donation amount, with service of
less than 60 months qualifying for an incremental donation. The program does
not result in any material cost to the Company.

The Company provides Business Travel Insurance to its non-employee directors
as part of its Business Travel Insurance Plan for Management Employees. In the
event of accidental death or dismemberment, benefits of up to $400,000 per
individual are provided. The program does not result in any material cost to
the Company.

Directors can participate in the Duquesne Light Company College Matching Gift
Program which provides a dollar-for-dollar match of a gift of cash or
securities, up to a maximum of $5,000

per donor during any one calendar year to an accredited, non profit, non
proprietary degree granting college, university, or junior college located
within the United States or one of its possessions which is recognized by the
Internal Revenue Service as eligible to receive tax-deductible contributions.
The program does not result in any material cost to the Company.

The Board and Its Committees

The DQE Board held twelve regular and four special meetings during 1997.
Attendance by the directors at Board and committee meetings in 1997 averaged
98.3%. No director failed to attend at least 90% of the Board and committee
meetings of the Company.

The Board has standing committees which meet periodically, including the
Audit, Compensation, and Nominating Committees described below and a Finance
Committee.

Actions taken by any Committee of the Board are reported to the full Board.

Audit Committee

The Audit Committee is composed of three directors who are not employees of
the Company. Members are Dr. Berg and Messrs. Bozzone and Springer. The
principal responsibilities of the Audit Committee include recommending the
independent public accountants which are appointed by the Board and ratified by
the stockholders. The Audit Committee also reviews the Company's financial
statements and the related report of the independent public accountants and the
results of the annual audit performed by the accountants. The Audit Committee
monitors the Company's system of internal accounting control, the adequacy of
the internal audit function, and oversees corporate compliance and ethics. The
Audit Committee meets quarterly and met four times during 1997.

Compensation Committee

The Compensation Committee, composed of three non-employee directors, makes
recommendations to the Board regarding compensation and benefits provided to
executive officers and members of the Board and the establishment or amendment
of various employee benefit plans. The members of the Committee in 1997 were
Dr. Boyce and Messrs. Bozzone and Falk. The Compensation Committee met four
times during 1997.

Nominating Committee

The Nominating Committee recommends to the Board candidates for election and
reelection to or to fill vacancies on the Board. The Committee considers
nominees recommended to it in writing by stockholders and sent to the Secretary
of the Company. The Nominating Committee also considers corporate governance
matters. Members of the Nominating Committee are Messrs. Falk, Knoell, and
Springer. The Committee met once during 1997.

Beneficial Ownership of Stock

The following table shows all equity securities of DQE beneficially owned,
directly or indirectly, as of September 23, 1998, by each director and by each
executive officer named in the Summary Compensation Table:

Total Shares of Shares of Common Stock/
Common Stock Nature of Ownership (1)
- ---------------------------------------------------------------------------------------------------------------------

Daniel Berg............................................ 7,189 5,539 VP, IP
1,650 Joint, SVP, SIP
Doreen E. Boyce........................................ 6,244 6,244 VP, IP
Robert P. Bozzone...................................... 19,195 (2) 10,658 VP, IP
7,000 VP, IP
1,537 VP
Sigo Falk.............................................. 8,145 (3) 6,645 VP, IP
1,500 SVP, SIP
William H. Knoell...................................... 7,787 (4) 6,752 VP, IP
1,035 SVP, SIP
David D. Marshall...................................... 88,294 (5,6) 5,000 VP
24,807 Joint, SVP, SIP
Thomas J. Murrin....................................... 6,329 (7) 3,668 VP, IP
1,911 VP
750 Joint, SVP, SIP
Eric W. Springer....................................... 8,754 (8) 7,804 VP, IP
Gary L. Schwass........................................ 59,917 (5) 24,600 VP, IP
Donald J. Clayton...................................... 8,795 (5,6) 2,000 VP
1,383 VP, IP
James D. Mitchell...................................... 35,415 (5) 6,023 Joint, SVP, SIP
Victor A. Roque........................................ 50,782 (5) 444 VP, IP
7,017 Joint, SVP, SIP
Directors, Nominees and Executive
Officers as a Group (14 persons).................... 317,653

None of the individuals named in the table above owned beneficially
more than one percent of the outstanding shares of DQE Common Stock. The
directors and executive officers as a group beneficially owned less than one
percent of the outstanding shares of DQE Common Stock as of September 23, 1998.

(1) The term "Joint" means owned jointly with the person's spouse. The
initials "VP" and "IP" mean sole voting power and sole investment power,
respectively, and the initials "SVP" and "SIP" mean shared voting power and
shared investment power, respectively.

(2) 7,000 of these shares are held by a foundation established for charitable
purposes, for which Mr. Bozzone is the trustee but not an income
beneficiary. 1,537 shares remain to vest over two years from a grant under
the DQE, Inc. 1996 Stock Plan for Non-Employee Directors.

(3) 1,500 of these shares are held by a trust in which Mr. Falk is an income
beneficiary but not a trustee.

(4) 1,035 of these shares are held by a trust in which Mr. Knoell is a trustee
and the income beneficiary.

(5) The amounts shown as owned by Messrs. Marshall, Schwass, Roque, Mitchell,
and Clayton include shares of Common Stock which they have the right to
acquire within 60 days of September 23, 1998 through the exercise of stock
options granted under the Long-Term Incentive Plan in the following
amounts: 58,487; 35,317; 43,321; 29,392; and 5,412, respectively, and all
executive officers as a group: 182,736 shares.

(6) The amounts shown as being owned by Messrs. Marshall and Clayton include a
grant of 5,000 and 2,000 shares, respectively, of restricted stock which
are subject to performance vesting for a three-year period, 1996-1999.

(7) 1,911 shares will vest in May of 1999 from a grant under the DQE, Inc. 1996
Stock Plan for Non-Employee Directors.

(8) 950 of these shares are held by Mr. Springer's wife. Mr. Springer
disclaims beneficial ownership of such shares.

Messrs. Marshall, Schwass, Clayton, Mitchell, and Roque also beneficially
own 861, 863, 526, 458, and 358 shares, respectively, of Duquesne Light Company
Preference Stock, Plan Series A as of June 30, 1998. The Preference shares are
held by the Duquesne Light Employee Stock Ownership Plan trustee for Duquesne
Light Company's 401(k) Plan on behalf of the Executive Officers, who have voting
but not investment power. The Preference shares are redeemable for DQE Common
Stock or cash on retirement, termination of employment, death, or disability.
There were 780,557 shares of Preference Stock, Plan Series A, outstanding as of
June 30, 1998. Mr. Roque is not vested in these Preference shares.

The directors and executive officers do not own any shares of Duquesne
Light Preferred Stock or DQE Preferred Stock, Series A (Convertible).

Principal Shareholders

The following tables set forth, to the knowledge of the Company, the
beneficial owners, as of June 30, 1998, of more than five percent of the
outstanding shares of:

1. DQE Common Stock
----------------

Common Stock Owned Beneficially
-----------------------------------------
Name Address Number of Shares Percent of Class
----- ------- ---------------- -----------------

Sanford C. Bernstein & Co., Inc. 767 Fifth Avenue 7,273,506 8.1%
New York, NY 10153

Sanford C. Bernstein & Co., Inc. has sole voting power over 4,384,501
shares, sole investment power over 7,264,501 shares, and shared voting power
over 655,136 shares.

2. DQE Preferred Stock, Series A (Convertible)
-------------------------------------------

Preferred Stock Owned Beneficially
-----------------------------------
Name Address Number of Shares Percent of Class
---- ------- ---------------- ----------------

Malcolm Bailey 9513 Bayou Brook 111,732 42.0
Houston, TX 77063

Doug Bailey 5568 Longmont 48,000 18.04
Houston, TX 77056

Otheil J. Erlund, Jr. & Route 1, Box 355 21,244 7.99
Rachel Erlund, jt. ten.* Comfort, TX 78031

* Includes 21,244 shares held jointly, as to which voting and investment
power is shared. Also includes 9,606 shares held solely by Mr. Erlund, as
to which he has sole voting power and shared investment power.

All principal shareholders of the DQE Preferred Stock, Series A
(Convertible) listed have sole voting and investment power except as noted.

Compensation Committee Report on Executive Compensation

Compensation for senior management is approved by the Compensation
Committee and ratified by the Board of Directors based on the recommendations of
the Compensation Committee, which is composed entirely of non-employee
directors.

On December 20, 1995, the Internal Revenue Service issued final regulations
under Code Section 162(m) limiting the deductibility of executive compensation
for officers of public companies. All compensation paid by DQE and its
subsidiaries in 1997 was fully tax deductible. It is the present intention of
the Committee to seek to ensure that all compensation that is otherwise tax
deductible will continue to be tax deductible. The amendments to the Long-Term
Incentive Plan, which were approved by the stockholders in 1996, were designed
to allow the Committee, in its discretion, to grant stock options that comply
with the final regulations. However, the Committee reserves the right to take
whatever action with respect to senior management compensation that it deems
appropriate and in the best interest of the Company and its stockholders.

The primary objective of the Compensation Committee is to ensure that the
Company's senior management compensation programs and strategies are designed
and administered to attract, retain, and motivate the necessary and important
talent required to achieve the Company's overall mission of creating and
enhancing value for its stockholders, customers, and employees, as well as for
the community in which it operates.

Throughout the development and administration of the Company's strategic
compensation plans, the Committee has adhered to a results-based approach by
linking a significant percentage of total compensation to performance. The
Committee has purposely placed an emphasis on the at-risk elements of
compensation for the Company's CEO and other senior officers. The Company's
awards under these incentive programs are tied to corporate and individual
performance. The accomplishment of goals and objectives is at the center of the
Committee's decision to make awards under these incentive programs and
strengthens the relationship between stockholder interests and ultimate total
compensation. The Committee exercises a degree of discretion in administering
these incentive plans which the Committee believes encourages continual focus on
building long-term stockholder value.

An independent outside consultant with industry expertise has determined
that a greater percentage of senior management's total compensation is
variable and placed at risk, when

benchmarked against a comparative panel of key service companies of similar
operating revenue size. All stock options are performance-based and are granted
under the Long-Term Incentive Plan, which was approved by the stockholders.

Annually, the Committee reviews and determines base salary levels, annual
incentive compensation, and long-term performance-based stock option vesting,
based on competitive pay levels, individual performance and potential, and
changes in duties and responsibilities.

Base Salaries
- -------------

Base salaries are competitively benchmarked with the averages of
comparative utility and general industry panels of companies of similar revenue
and operating characteristics, reflecting the diversification of the Company's
business operations. Some of the utility companies in the utility industry
panel are also included in the Standard & Poor's Electric Companies Index used
in the performance graph on page 16.

In addition to the panel comparisons, the Committee considered results in
the areas of customer service levels, cost-effective management, and operational
performance (including, for example, generating plant performance and system
reliability) in determining whether a base salary increase, as well as annual or
long-term awards, were granted in 1997. Messrs. Marshall, Roque, and Clayton
received increases in base salary in 1997.

Annual Performance Awards
- -------------------------

If a predetermined corporate financial performance threshold is met, there
is an opportunity to earn annual cash and stock option performance awards by
meeting short-term operating and financial goals. The threshold recommended by
the Compensation Committee and approved by the Board of Directors for 1997
related to the Company's earnings per share. The Company met this goal in 1997.
At the beginning of each year, individual objectives also are established for
each officer and approved by the Compensation Committee. The CEO's performance
is evaluated for annual and long-term awards on the basis of the overall
performance of the Company, the performance of the other members of his
management team and, as discussed in more detail below, his leadership in
developing and implementing operating and strategic plans to further the
Company's long-term corporate objectives. The Committee reviews individual
results and the corporate performance with the full Board of Directors. The
Board of Directors, upon the recommendation of the Compensation Committee,
approves the number of annual performance awards granted to each officer based
on the achievement of corporate and individual objectives.

Specific individual annual objectives considered by the Committee in
determining the annual performance compensation awards earned support one or
more of five major corporate objectives, including maximizing long-term
stockholder value; providing quality service and

superior customer satisfaction; managing assets cost effectively; maintaining
excellent operational performance; and providing leadership in the community.

In the aggregate, annual incentives ranged from fifteen to thirty-five
percent of base salary in 1997. The actual percentage of annual cash incentive
awards varies, depending upon the degree to which performance objectives are
met. See the Summary Compensation Table for the annual cash incentive
compensation awards earned.

Usually the number of performance stock options awarded from the prior
year's annual grants is determined by use of a cash incentive performance
multiplier based on the amount of increase in earnings per share of DQE Common
Stock. The annual performance options for 1997 granted by the Committee on
January 27, 1997 became immediately and fully exercisable on August 7, 1997
under the terms of the Long-Term Incentive Plan, upon the approval of the
Agreement and Plan of Merger with Allegheny Power System, Inc. by the Company's
stockholders. The number of options granted were 48,951 to Mr. Marshall, 30,770
to Mr. Schwass, 19,053 to Mr. Roque, 13,714 to Mr. Mitchell, and 9,161 to Mr.
Clayton.

Long Term Performance Awards
- ----------------------------

Long-Term Incentive Plan performance-based stock options awarded in 1997
were granted under the provisions of a three-year plan approved and recommended
by the Compensation Committee and approved by the Board of Directors. Three-
year strategies were developed by each individual, and annual milestones
designed to enhance the general well-being of the Company were established by
the CEO and approved by the Compensation Committee. The long-term strategies
were designed to support the long-term corporate objectives of maximizing
stockholder value; providing quality service and superior customer satisfaction;
managing assets cost effectively; maintaining excellent operational performance;
and providing leadership in the community. Through a performance-based award
schedule, there is an opportunity to earn a percentage of the three-year grant
annually. The award opportunity is up to thirty percent in the first year, up
to sixty percent in the second year, and up to one hundred percent in the third
year. Each of Messrs. Marshall, Schwass, Roque, Mitchell and Clayton earned
the full amount of grant by the end of the third year.

Under the leadership of Mr. Marshall, the management team continued to
achieve excellent results with respect to the Company's long-term corporate
objectives. In 1997, DQE continued to demonstrate a solid track record of
financial and operational performance. Earnings per share increased over 10.8%.
In November, an increase of eight cents (6%) in the annual dividend was declared
beginning in January 1998. As shown by the performance graph on page 16, DQE's
Common Stock has had a total return which exceeded the S&P Electric Companies
over the same period. A full report on the Company's financial performance can
be found in the 1997 Annual Report to Stockholders. These results are
consistent with the objective to achieve measurable and meaningful increases in
the value of our stockholders' investment. Further

information on the Company's 1997 achievements is also included in the Annual
Report to Shareholders.

Robert P. Bozzone, Chairman
Doreen E. Boyce
Sigo Falk

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and any persons who beneficially own more than
ten percent of the Company's Common Stock, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock. Such persons are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.

To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1997, all such Section
16(a) filing requirements were met.

Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee are Dr. Boyce and Messrs. Bozzone
and Falk. No member of the Compensation Committee was at any time during 1997
or at any other time an officer or employee of the Company.

No executive officer of the Company served on the Board of Directors or
Compensation Committee of any entity which has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.

Performance Graph

The following graph represents a performance comparison of cumulative total
return on DQE Common Stock as compared to the S&P Electric Companies and the S&P
500 Index for the period of five fiscal years commencing December 31, 1992 and
ending on December 31, 1997.

[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
DQE, S&P ELECTRICS AND S&P 500 INDEX

Measurement period
(Fiscal year Covered) DQE S&P Electric S&P 500
- --------------------- -------- ------------ -------

Measurement PT -
12/31/92
$100 $100 $100
FYE 12/31/93 $112 $113 $110
FYE 12/31/94 $102 $ 98 $112
FYE 12/31/95 $166 $128 $153
FYE 12/31/96 $164 $128 $189
FYE 12/31/97 $208 $162 $252

Compensation

The following Summary Compensation Table sets forth certain information as
to cash and noncash compensation earned and either paid to, or accrued for the
benefit of, the President and Chief Executive Officer and the four other
highest-paid executive officers of DQE for services rendered in all capacities
to DQE and its subsidiaries during the years indicated.

SUMMARY COMPENSATION TABLE

Annual Compensation Long-Term Compensation
------------------------------------------ --------------------------------------------------
Awards Payouts
---------------------------- ---------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Other Securities
Annual Restricted Underlying LTIP All Other
Compen- Stock Performance Payouts Compen-
Name and Salary Bonus sation Award(s) Options/SARs ($) sation
Principal Position Year ($) ($)(1) ($)(2) ($)(3) (#)(4) ($)(2)
- ----------------------- ---- ------- ------- ------- ----------- ------------- -------- ----------

D. D. Marshall 1997 358,455 122,039 36,719 0 141,074 0 4,750
President and Chief 1996 289,486 101,367 71,190 141,250 (5) 56,645 0 4,469
Executive Officer 5,725 (6)
1995 233,333 86,750 27,918 0 63,555 0 4,291

G. L. Schwass 1997 250,000 87,500 64,508 0 114,548 0 4,746
Exec. Vice Pres. and 1996 250,000 87,500 124,191 0 68,964 0 4,458
Chief Financial 1995 216,667 78,750 60,638 0 61,539 0 4,448
Officer

V. A. Roque 1997 181,250 54,375 0 0 48,692 0 4,750
Vice President and 1996 175,000 52,500 2,906 5,540 (6) 17,391 0 4,482
General Counsel 1995 175,000 52,500 215,097 0 31,731 0 4,490

J. D. Mitchell 1997 130,008 39,000 52,912 0 46,973 0 3,510
Vice President 1996 130,000 39,000 2,906 5,650 (6) 17,883 0 3,096
1995 130,000 39,000 0 0 25,500 0 2,508

D. J. Clayton 1997 117,500 26,625 3,708 5,685 (6) 21,889 0 3,486
Vice President and 1996 104,837 40,485 0 56,125 (5) 0 0 3,116
Treasurer 1995 98,567 24,976 0 0 10,000 0 2,920

(1) The amount of any bonus compensation is determined annually based upon the
prior year's performance and either paid or deferred (via an eligible
participant's prior election) in the following year. The amounts shown for
each year are the awards earned in those years but established and paid or
deferred in the subsequent years.

(2) Amounts of Other Annual Compensation are connected to the funding of non-
qualified pension benefit accruals and/or compensatory tax payments on
restricted stock. Amounts of Other Annual Compensation for Mr. Roque
represent reimbursement for moving expenses, including sale of residence
and income taxes. Amounts of All Other Compensation shown are Company
matching contributions during 1995, 1996, and 1997 under the Duquesne Light
Company 401(k) Retirement Savings Plan for Management Employees.

(3) The awards listed are the only restricted stock holdings of the named
officers.

(4) Includes total number of stock options granted during the fiscal year, with
or without tandem SARs and stock-for-stock (reload) options on option
exercises, as applicable, whether vested or not. See table titled
Option/SAR Grants in Last Fiscal Year. The stock options are subject to
vesting (exercisability) based on Company and individual performance and
achievement of specified goals and objectives.

(5) In 1996, Messrs. Marshall and Clayton were granted 5,000 and 2,000 shares,
respectively, of restricted stock subject to the achievement of performance
goals over a three-year period. In August of 1997, Messrs. Marshall and
Clayton were awarded 2,000 and 500 shares, respectively, out of that grant.
Final vesting will occur on June 30, 1999 if still employed by the Company
or an affiliate. The value of the 5,000 and 2,000 shares as of December
31, 1997 is $175,625 and $70,250, respectively. Dividends will be accrued
and paid after the end of the three-year period on the shares earned.

(6) Represents 200 shares, with a value of $7,025 as of December 31, 1997, of
DQE Common Stock awarded as part of the consideration for the signing of a
Non-Competition and Confidentiality Agreement.

Supplemental Tables

The following tables provide information with respect to options to purchase
DQE Common Stock and tandem stock appreciation rights in 1997 under the DQE,
Inc. Long-Term Incentive Plan.

Option grants are structured to align compensation with the creation of
value for Common stockholders. For example, should DQE stock rise 50% in value
over the ten-year option term (from $35.125 per share to $52.6875 per share),
stockholder value would increase an estimated $1,674,984,293, while the value of
the grants to the individuals listed below would increase an estimated five-
tenths of one percent ($8,429,901) of the total gain realized by all
stockholders.

OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants

(a) (b) (c) (d) (e) (f)
- --------------------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs Exercise Grant
Underlying Granted to or Base Date
Options/SARs Employees Price Expiration Present
Name Granted (#) in Fiscal Year ($/Sh)(4) Date Value ($)(5)*
- ----------------------- ------------------ -------------- --------- ----------- ------------

D. D. Marshall 47,952 (1) 6.6 28.4375 01/27/07 162,078
999 (1) .1 29.75 02/25/07 3,536
13,559 (2) 1.8 28.9375 08/30/04 44,338
8,109 (2) 1.1 31.5625 08/30/04 31,139
9,964 (2) 1.3 30.8125 08/30/04 32,283
7,991 (2) 1.1 31.0625 02/19/02 28,128
52,500 (3) 7.3 30.9375 07/22/07 189,000

G. L. Schwass 30,770 (1) 4.2 28.4375 01/27/07 104,003
5,626 (2) .7 28.5625 08/30/04 17,666
18,614 (2) 2.5 31.5625 08/30/04 71,478
1,613 (2) .2 31.5625 07/23/01 5,871
5,425 (2) .7 31.0625 08/30/04 17,848
52,500 (3) 7.3 30.9375 07/22/07 189,000

V. A. Roque 18,462 (1) 2.5 28.4375 01/27/07 62,402
591 (1) .1 31.7188 08/01/07 2,334
1,946 (2) .2 28.5625 11/01/04 6,208
5,193 (2) .7 31.0625 11/01/04 16,618
22,500 (3) 3.1 30.9375 07/22/07 81,000

J. D. Mitchell 13,714 (1) 1.9 28.4375 01/27/07 46,353
4,843 (2) .6 28.5625 08/30/04 15,546
2,954 (2) .4 30.7188 08/30/04 9,541
2,962 (2) .4 30.7188 03/28/05 9,212
22,500 (3) 3.1 30.9375 07/22/07 81,000

D. J. Clayton 8,088 (1) 1.1 28.4375 01/27/07 27,337
1,073 (1) .1 33.7813 10/01/07 4,635
228 (2) .0 31.875 08/29/05 939
10,000 (3) 1.3 30.9375 07/22/07 36,000
2,500 (3) .3 32.7813 09/22/07 9,750

* The actual value, if any, an executive may realize will depend on the
difference between the actual stock price and the exercise price on the
date the option is exercised. There is no assurance that the value
ultimately realized by an executive, if any, will be at or near the value
estimated.

(1) These grants represent performance stock options with tandem stock
appreciation rights and stock-for-stock (reload) options.

(2) These grants represent stock-for-stock (reload) options received upon
exercise of stock options by the applicable officer electing to
use previously owned DQE stock to exercise the options under
the terms of the Plan. These reload options include tandem stock
appreciation rights and dividend equivalent accounts and stock-for-stock
options.

(3) These grants represent performance stock options with dividend equivalents.
Awards are made over a three-year period and are determined on the basis of
individual achievement of strategic goals and objectives.

(4) The exercise price of the options is the fair market value of DQE Common
Stock on the date such options were granted. The exercise price may be
payable in cash or previously owned shares of DQE Common Stock held for at
least six months.

(5) The grant date present value shown in column (f) gives the theoretical
value of the options listed in column (b) on the grant dates using the
Black-Scholes option pricing model, modified to account for the payment of
dividends. The theoretical value of the option was calculated assuming an
option life equal to the time period between the grant date and expiration
date (i.e., from 3.93 to 10.00 years); a periodic risk-free rate of return
equal to the yield of the U.S. Treasury note having a similar maturity date
as the option expiration date, as reported by Bloomberg Financial Markets
on the grant date (i.e., from 5.75% to 6.67%); an initial quarterly
dividend immediately following the option grant date (i.e., from $0.34 to
$0.36), with an expected growth rate of 5.0% per year as estimated by
"Value Line Ratings and Reports", dated December 12, 1997; and an expected
monthly stock price volatility as reported by Bloomberg Financial Markets
over approximately the same length of time as the option life as of the
month of the grant, (i.e., from 12.40% to 15.60%). No adjustments to the
grant date present values have been made with respect to exercise
restrictions, forfeiture, or early exercise.

Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values

(a) (b) (c) (d) (e)
Number of Value of
Securities Unexercised
Underlying Unexercised in-the-Money
Number of Options/SARs at Options/SARs at
Securities Fiscal Year-End (#) Year-End ($)(7)
Underlying Value ----------------------- --------------------
Options/SARs Realized Exercisable/ Exercisable/
Name Exercised (#) ($)(5) Unexercisable (6) Unexercisable (6)
- ----------------- ------------- -------- ----------------------- --------------------

D. D. Marshall 67,971 (1) 295,403 75,120 / 78,564 447,599 / 324,165
44,783 (2) 398,162

G. L. Schwass 78,743 (1) 404,816 49,987 / 78,152 255,998 / 313,941
35,376 (2) 311,903

V. A. Roque 12,116 (1) 83,549 49,456 / 28,284 385,915 / 117,328
8,843 (2) 91,980

J. D. Mitchell 12,445 (2) 112,707 40,520 / 28,416 217,364 / 120,285
9,000 (3) 90,186

D. J. Clayton 8,088 (1) 27,802 2,234 / 13,801 24,853 / 49,917
266 (2) 2,094
7,500 (4) 59,062

(1) Stock appreciation rights exercised for stock and cash.

(2) Stock options exercised for stock by tendering shares of previously-owned
DQE Common Stock.

(3) Stock appreciation rights exercised for cash.

(4) Stock options exercised for stock by tendering cash.

(5) Represents the difference between the exercise price of the options or SARs
and the fair market value of DQE Common Stock on the New York Stock
Exchange on the date of exercise.

(6) The numbers set forth include options/SARs previously granted (including
those granted in 1997) but not yet earned. The number to be earned will be
based on individual performance and may be earned by the officer over
future periods from one to three years as established with each option
grant.

(7) Represents the difference between the exercise price of the options or SARs
and the fair market value of DQE Common Stock on the New York Stock
Exchange on December 31, 1997.

Retirement Plan

DQE and its subsidiaries maintain tax-qualified and non-qualified
defined benefit pension plans and arrangements that cover the named executive
officers, among others. The following table illustrates the estimated annual
straight-life annuity benefits payable at the normal retirement age of 65 to
management employees in the specified earnings classifications and years of
service shown:

PENSION PLAN TABLE

Highest
Consecutive Years of Service
Five-Year -------------------------------------------------------------------------------------------------------
Average
Compensation 5 10 15 20 25 30 35
- ----------------- ------- ------- -------- -------- -------- -------- --------

$100,000 $ 8,000 $16,000 $ 24,000 $ 32,000 $ 39,000 $ 46,000 $ 51,000
$125,000 $10,000 $20,000 $ 30,000 $ 41,000 $ 51,000 $ 59,000 $ 65,000
$150,000 $12,000 $25,000 $ 37,000 $ 50,000 $ 62,000 $ 71,000 $ 79,000
$175,000 $15,000 $29,000 $ 44,000 $ 59,000 $ 73,000 $ 84,000 $ 93,000
$200,000 $17,000 $34,000 $ 51,000 $ 68,000 $ 84,000 $ 97,000 $107,000
$300,000 $26,000 $52,000 $ 78,000 $104,000 $129,000 $149,000 $164,000
$400,000 $35,000 $70,000 $105,000 $140,000 $174,000 $200,000 $220,000
$500,000 $44,000 $88,000 $132,000 $176,000 $219,000 $252,000 $277,000

Compensation utilized for pension formula purposes includes salary and
bonus reported in columns (c) and (d) of the Summary Compensation Table and
stock option compensation prior to March 1, 1994. An employee who has at least
five years of service has a vested interest in the retirement plan. Benefits
are received by an employee upon retirement, which may be as early as age 55.
Benefits are reduced by reason of retirement if commenced prior to age 60 or
upon election of certain options under which benefits are payable to survivors
upon the death of the employee. Pension amounts set forth in the above table
reflect the integration with social security of the tax-qualified retirement
plans. Retirement benefits are also subject to offset by other retirement plans
under certain conditions.

The years of credited service for Mr. Schwass are 24. The current covered
compensation and current years of credited service for Messrs. Marshall,
Mitchell, and Clayton respectively, are $381,689 and 20; $149,513 and 18; and
$105,020 and 18. The average covered compensation and current years of credited
service for Mr. Roque are $211,181 and 6. Mr. Roque is not vested in the
Retirement Plan.

Severance and Employment Agreements

The Company entered into Severance Agreements with certain officers,
including those named in the Summary Compensation Table. The Severance
Agreements provide for payments if the officer's employment is terminated other
than for cause, death or disability, beginning on a date triggered by certain
events which constitute a change of control and ending 36 months after the
closing of the transactions constituting a change of control. Certain other
events which constitute "constructive discharge" may also trigger payment.

The officer is entitled to receive a lump sum severance payment equal to
three times the sum of the officer's current annual base pay and target bonus
opportunity, an amount intended to compensate the officer for the loss of
long-term benefits, the amount of forfeitures, if any, and expected
contributions for 36 months following termination under the Company's 401(k)
Plan together with certain other payments and benefits, including continuation
of employee benefits. The officer is also entitled to such payments and benefits
if he voluntarily terminates his employment in the thirteenth month following
the closing of the transaction, provided that the 36-month payment and benefit
period would be reduced to 24 months and further if necessary to avoid excise
taxes.

The Agreements also provide for reimbursement for any additional tax
liability incurred as a result of excise taxes imposed on payments deemed to be
attributable to the change of control, under certain circumstances, or for
reduction of the payments to avoid excise taxes.

If the employment of all the officers with Severance Agreements were
terminated upon a change of control, the aggregate cost would not exceed $20
million.

Messrs. Marshall and Schwass have prior Employment Agreements with the
Company (see below). When the Severance Agreements are in effect, the Employment
Agreements are not. When the Severance Agreements are not in effect, the
Employment Agreements are reinstated.

The Company has stand-alone non-competition agreements with Messrs.
Marshall, Roque, Mitchell and Clayton. These agreements, as well as the
Severance Agreements, provide for non-disclosure of confidential information,
non-competition in a specified geographic area, non-solicitation of customers
and suppliers, among other provisions, for specified periods of time following
termination of employment.

The termination provisions of the Severance Agreements are in lieu of, and
not in addition to, termination payments and benefits under the Company's other
termination plans or agreements.

Prior to the Severance Agreements, DQE and Duquesne Light Company entered
into three-year Employment Agreements with Messrs. Schwass and Marshall. Each
agreement is subject to automatic one-year renewals unless prior written notice
of termination is given by the executive or the Company.

The agreements provide, among other things, that each executive serve in
his present position at an annual base salary of at least $190,000, subject to
periodic review, and for the participation of each in executive compensation and
other employee benefit plans of the companies.

If either of the officers is discharged other than for cause or resigns for
good reason, then, in addition to any amounts earned but not paid as of the date
of termination, he would receive in a cash lump sum the balance of his base
salary for the remaining term of the agreement, a bonus amount for the remaining
term of the agreement calculated at a rate equivalent to his prior year's bonus
and the actuarial equivalent of the additional pension he would have accrued had
his service for pension purposes continued until the expiration of the
agreement. In addition, the officer would be entitled to immediate vesting (or
the redemption in cash) of all of his stock-based awards.

PROPOSAL NO. 2

Ratification of Appointment of Independent Public Accountants

Action is to be taken at the Annual Meeting of Stockholders to ratify the
appointment, by the Board of Directors, of independent certified public
accountants to audit the books of DQE and its subsidiaries for the year ended
December 31, 1998. The Board recommends the ratification of the appointment of
Deloitte & Touche LLP (D&T) as independent certified public accountants for
1998.

D&T provided a variety of professional services for DQE and its
subsidiaries during 1997. Included were the audit of the annual financial
statements of the Company; reviews of quarterly financial statements; services
related to filings with the Securities and Exchange Commission and the Federal
Energy Regulatory Commission; audits of certain employee benefit plans; and
consultations on matters related to accounting and financial reporting. Non-
audit services also were provided during 1997, including advice and technical
assistance relating to corporate tax matters.

Representatives of D&T will be present at the meeting and have the
opportunity to make a statement if they desire and will also be available to
respond to appropriate questions from stockholders in attendance.

DQE is submitting the appointment of independent public accountants for
ratification by the stockholders, although ratification is not required. If
ratification is not obtained, the Board of Directors will reconsider its
appointment of D&T.

The Board of Directors unanimously recommends that stockholders
ratify the appointment of D&T as independent accountants.

OTHER MATTERS

The Board of Directors does not intend to present any matters at the
meeting other than those referred to and at this date is unaware of anything
that will be presented by other parties. Other matters that properly come
before the meeting will be voted on by the persons named in the enclosed form of
proxy in accordance with their best judgment.

Stockholder Proposals
- ---------------------

Any proposal which a stockholder intends to present at the 1999 Annual
Meeting of Stockholders, presently expected to be held on April 27, 1999, and
which the stockholder requests to be included in the Company's proxy statement
and form of proxy for the 1999 Annual Meeting of Stockholders, must be received
by the Company by November 9, 1998. Requests must be in writing and directed to
the Corporate Secretary of DQE, Box 68, Pittsburgh, PA 15230-0068. Notice of
any proposal a stockholder intends to raise at the meeting pursuant to an
independent solicitation is required by January 22, 1999.

10-K
- ----

If you hold or are a beneficial holder of DQE Common Stock on the record
date for the stockholder's meeting, we will send you, free upon request, a copy
of DQE's Annual Report on Form 10-K as filed with the Securities and Exchange
Commission for 1997.

Requests must be made in writing to the Corporate Secretary of DQE, Box 68,
Pittsburgh, PA 15230-0068.

The Audited Financial Statements and the Notes to the Audited Financial
Statements from the Company's 10-K are embodied in the Company's 1997 Annual
Report, which was mailed to all stockholders prior to, or at the same time as,
this proxy solicitation.

Proxy Solicitation
- ------------------

This solicitation of proxies is made on behalf of the Board and the cost
will be borne by DQE. In addition to the solicitation of proxies by mail,
officers, directors and regular employees may solicit proxies by telephone,
telegraph or personal interview. The Company has engaged Beacon Hill Partners,
90 Broad Street, New York, NY 10004, to assist through similar means in the
solicitation of brokers, nominees and other institutions. The anticipated cost
is approximately $3,500 plus reimbursement of related expenses. The Company
will also request brokerage firms and other nominees or fiduciaries to forward
copies of its proxy material to beneficial owners of stock held in their names.
The Company may reimburse them for reasonable out-of-pocket expenses.

By Order of the Board of Directors

Diane S. Eismont
October 9, 1998 Corporate Secretary

DO NOT RETURN THIS FORM UNLESS YOU PLAN TO
ATTEND THE ANNUAL MEETING.

TICKET REQUEST

I (We) will attend the Annual Meeting of Stockholders on November 24, 1998
at 11:00 a.m. at the Manchester Craftsmen's Guild Auditorium, 1815 Metropolitan
Street, Pittsburgh, PA 15233.

NOTE: If you are not a stockholder of record or 401(K) participant, please
send proof of ownership if requesting a ticket.

PLEASE PRINT

ACCOUNT NO.:
------------------------------------------------------------
NAME:
------------------------------------------------------------
ADDRESS:
------------------------------------------------------------

------------------------------------------------------------

PHONE: ( )
------------------------------------------

An admittance ticket will be sent to a stockholder whose request is
received by November 13, 1998. Stockholders without tickets will need to
register at the meeting. RETURN WITH FORM OF PROXY OR MAIL TO:

Diane S. Eismont, Corporate Secretary
DQE
Box 68
Pittsburgh, PA 15230-0068

LOGO of DQE

ANNUAL MEETING OF STOCKHOLDERS - November 24, 1998

DQE's Annual Meeting of Stockholders will be held on Tuesday, November 24, 1998
at the Manchester Craftsmen's Guild Auditorium, 1815 Metropolitan Street,
Pittsburgh, Pennsylvania, 15233 at 11:00 a.m.

The lower portion of this form is your PROXY CARD. EACH PROPOSAL IS FULLY
EXPLAINED IN THE "NOTICE OF 1998 ANNUAL MEETING AND PROXY STATEMENT". To vote
your proxy, please MARK, SIGN and DATE the proxy card. Then please DETACH and
RETURN the completed proxy card promptly in the enclosed envelope.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" BOTH PROPOSALS.

If you will attend the Annual Meeting, please complete the form found at the end
of the proxy statement and return it with your proxy card. An admittance ticket
will be sent to you. As in past years, a ticket will be needed for admittance to
the meeting.

-- DETACH HERE --

DIRECTORS RECOMMEND A VOTE Logo of
"FOR" BOTH PROPOSALS. PROXY DQE
__________________________ Box 68
Pittsburgh, PA 15230-0068

1. ELECTION OF DIRECTORS: (To withhold authority
to vote for any individual nominee, strike a line
through the nominee's name listed below.)

[ ] FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY
(except those crossed out) (all nominees)

Doreen E. Boyce

David D. Marshall

2. RATIFICATION OF AUDITORS:
Deloitte & Touche LLP

[ ] FOR [ ] AGAINST [ ] ABSTAIN

________________________________ __________________________________
SIGNATURE SIGNATURE

Stockholder(s) signature(s) should correspond to the
___________________ name(s) appearing on this proxy. Please give full title
DATE if signing in a representative capacity.

-- DETACH HERE --

VOTE THIS PROXY CARD TODAY
-----
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS.

Logo of
DQE PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - NOVEMBER 24, 1998

David D. Marshall, Victor A. Roque and Diane S. Eismont, or any of them,
are hereby appointed Proxy or Proxies, with full power of substitution, to vote
the shares of the stockholder(s) named on the reverse side hereof at the Annual
Meeting of Stockholders of DQE to be held on November 24, 1998 and at any
adjournments or postponements thereof as directed on the reverse side hereof and
in his, her or their discretion to act upon any other matters that may properly
come before the meeting or any adjournments or postponements thereof.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and, when
properly executed and delivered, will be voted as you specify. If not specified,
this proxy will be voted FOR Proposals 1 and 2. A vote FOR Proposal 1 includes
discretionary authority to cumulate votes selectively among the nominees as to
whom authority to vote has not been withheld and to vote for a substitute
nominee if any nominee is unable to serve or for good cause will not serve.

Please mark, sign and date this proxy on the reverse side and
return the completed proxy promptly in the enclosed envelope.