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                                                                    Exhibit 10.1
 
                                            August 2, 1996



Mr. Wesley W. von Schack
404 Beaver Road
Sewickley, PA  15143

Dear Mr. von Schack:

          This letter sets forth the terms and conditions of your resignation as
Chairman of the Board, President and Chief Executive Officer of DQE, Inc.
("DQE") and Duquesne Light Company ("Duquesne Light" and together with DQE
sometimes hereinafter called the "Companies") effective August 9, 1996 (the
"Effective Date").

          Section A below describes your resignation and certain benefits you
will be entitled to receive from the Companies in connection therewith.  Section
B sets forth certain covenants by you to the Companies.  Section C contains
general terms and conditions.

          If you find the terms and conditions set forth in this letter
agreement to be acceptable, please sign and date both this original letter and
the enclosed duplicate copy hereof in the space provided on the last page and
return the duplicate copy to the Company.

Section A.  Resignation
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            1.  DQE and Duquesne Light accept and acknowledge your resignation
as Chairman of the Board, President and Chief Executive Officer, and as a member
of the Board of Directors, of DQE, and your resignation as Chairman of the
Board, President and Chief Executive Officer, and as a member of the Board of
Directors, of Duquesne Light as of the Effective Date. As soon as practicable
following the Effective Date, you shall receive from the Companies, subject to
tax withholding as set forth in Subsection 5 Section C hereof, a lump sum
payment accrued but previously unpaid salary and a payment of $120,428,
representing pro rata portion of your target bonus for fiscal year 1996. For a
period of one month after the Effective Date, the Companies shall, at their
expense but subject to the customary employee premium contribution, continue
your coverage under their medical benefits program.

            2.  Your resignation is accepted with the consent of the Companies
for purposes of the DQE, Inc., Long-Term Incentive Plan (the "LTIP"). It is
agreed that all of your stock options granted to and currently held by you are
fully awarded, vested and exercisable as of the Effective Date. Except as
provided in this paragraph, the applicable terms of the LTIP and your stock
option agreements with the Companies shall remain in full force and effect.

            3.  Your benefits under all qualified and non-qualified retirement
and 401(k) plans of the Companies in which you currently participate, including
without limitation the Retirement Plan for Employees of Duquesne Light Company,
the Supplemental Retirement Plan for Non-Represented Employees of Duquesne Light
Company, the Duquesne Light Company 401(k) Retirement Savings Plan for
Management Employees and the Duquesne Light Company Pension Service Supplement
Plan, are fully vested and nonforfeitable and shall be distributed in accordance
with the terms of those plans.

            4.  Except as expressly provided herein, the Companies shall have no
obligations to you of any nature whatsoever following the Effective Date.

Section B.  Certain Covenants
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            1.  You acknowledge that all Confidential Information shall at all
times remain the property of the Companies and their affiliates (i.e., another
company the majority interest of which is owned by DQE or a direct or
indirect subsidiary of DQE).  "Confidential Information" means all information
disclosed to you or known by you as a consequence of or through your employment,
which is not generally known in the industry in which the Companies or any
affiliate is or may become engaged, about the Companies' or an affiliate's
business, products, processes, and services, including but not limited to
information relating to research, development, inventions, computer program
designs, flow charts, source and object codes, products and services under
development, pricing and pricing strategies, marketing and selling strategies,
power generating, servicing, purchasing, accounting, engineering, costs and
costing strategies, sources of supply, customer lists, customer requirements,
business methods or practices, training and training programs, and the
documentation thereof.  It includes, but is not limited to, proprietary
information and trade secrets of the Companies and their affiliates.  It will be
presumed that information supplied to any of the Companies or their affiliates
from outside sources is Confidential Information unless and until it is
designated otherwise.  You will not at any time directly or indirectly use,
divulge, disseminate, disclose, lecture upon, or publish any Confidential
Information without having first obtained written permission from the Companies
to do so.

            2.  You covenant and agree that for a period of one (1) year
following the Effective Date, you shall not engage, directly or indirectly,
whether as principal or as agent, officer, director, employee, consultant,
shareholder, or otherwise, alone or in association with any other person,
corporation or other entity, in any Competing Business located within a 150 mile
radius of the principal place of business of the Companies located in
Pittsburgh, Pennsylvania or in the states of Ohio or West Virginia. For purposes
of this letter agreement, the term "Competing Business" shall mean any person,
corporation or other entity which develops, produces, markets, sells or services
(1) any energy product or service, including but not limited to gas or electric
products or services, and/or (2) any product or service which is the same as or
similar to products or services which the Companies or their affiliates
developed, produced, marketed, or sold, including but not limited to energy
products and services, within the last year prior to the Effective Date. You
recognize that the Companies conduct or intend to conduct business within the
geographic area set forth herein, and therefore you agree that this restriction
is reasonable and necessary to protect the business of the Companies.

            3.  You agree that for a period of two (2) years following the
Effective Date, you shall not, directly or indirectly, solicit the business of,
or do business with any customer, supplier, or prospective customer or supplier
of the companies or an affiliate of the Companies with whom you had direct or
indirect contact or about whom you may have acquired any knowledge while
employed by the Companies.

            4.  You agree that, for a period of two (2) years following the
Effective Date, you shall not, directly or indirectly, solicit or induce, or
attempt to solicit or induce, any employee of the Companies or an affiliate of
the Companies to leave the Companies or an affiliate for any reason whatsoever,
or hire or solicit the services of any employee of the Companies or an
affiliate.

            5.  You acknowledge that the legal remedy available to the Companies
and their affiliates for any breach of covenants by you will be inadequate, and,
therefore, in the event of any threatened or actual breach of this letter
agreement, the Companies or an affiliate shall be entitled to specific
enforcement of this letter agreement through injunctive or other equitable
relief in a court with appropriate jurisdiction.  The existence of any claim or
cause of action by you or another against the Companies or an affiliate, whether
predicated on this letter agreement
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or otherwise, shall not constitute a defense to enforcement by the Companies or
an affiliate of this letter agreement.

            6.  On or as soon as practicable after the Effective Date, you will
deliver to the Companies the originals and all copies of notes, sketches,
drawings, specifications, memoranda, correspondence, documents, records,
notebooks, computer disks and computer tapes and other repositories of
Confidential Information and Inventions then in your possession or under your
control, whether prepared by you or by others.  Upon request by the Companies,
you will deliver to the Companies the originals and all copies of Works then in
your possession or under your control.

Section C.  General Terms
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            1.  You irrevocably and unconditionally release, remit, acquit and
discharge the Companies, their respective officers, directors, agents,
employees, successors and assigns (separately and collectively "releasees"),
jointly and individually, from any and all claims, known or unknown, which you,
your heirs, successors or assigns have or may have against releasees arising
from and during employment, in connection with the execution and delivery of
this letter agreement or as a result of termination of your employment, whether
those claims are past or present, whether they arise from common law or statute,
whether they arise from labor laws or discrimination laws, or any other law,
rule or regulation.  You specifically acknowledge that this release is
applicable to any claim under the AGE DISCRIMINATION IN EMPLOYMENT ACT and the
CIVIL RIGHTS ACT OF 1964.  This release is for any relief, no matter what such
relief is called and no matter what form it takes, including but not limited to
wages, back pay, front pay, compensatory damages, punitive damages or damages
for pain or suffering, or attorney fees.

            2.  You acknowledge that you have carefully read this letter
agreement and have been advised prior to execution hereof to seek the advice of
an attorney, and that this letter agreement so advises you, that you had the
opportunity to have an attorney explain to you the terms of the foregoing, that
you know and understand the contents of the foregoing, that you execute this
document knowingly and voluntarily as your own free act and deed, and that this
document was freely negotiated and entered into without fraud, duress or
coercion.

            3.  You acknowledge that you were given adequate time in which to
consider whether to execute this letter agreement before being required to make
a decision.

            4.  You will, in all communications, discussions and actions, not
express unfavorable views with regard to the Companies, their subsidiaries and
other affiliates, and their respective stockholders, directors, officers,
employees and agents, past and present.  Likewise, the directors and officers of
the Companies will not express unfavorable views with regard to you.  You and
the Companies will keep confidential the terms of this letter agreement except
as may be required by law.

            5.  The parties acknowledge that certain amounts payable pursuant to
this letter agreement will be subject to income tax, social security tax and
other federal, state and local tax withholdings.  The Companies will be entitled
to withhold from any payment hereunder the amount of any federal, state and
local withholding taxes applicable to the compensation and benefits provided to
you under this letter agreement.

            6.  Any notice or other communication required or permitted under
this letter agreement will be effective only if it is in writing and delivered
personally or sent by registered or certified mail, postage prepaid, addressed,
if to the Company, to 411 Seventh
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Avenue, P. O. Box 1930, Pittsburgh, PA 15230, or if to you, to 404 Beaver Road,
Sewickley, PA 15143, or to such other address as either party may designate by
notice to the other, and will be deemed to be given upon receipt.

            7.  If any provision of this letter agreement is determined to be
invalid or unenforceable, the balance of this letter agreement will remain in
effect, and if any provision is inapplicable to any person or circumstance, it
will nevertheless remain applicable to all other persons and circumstances.

            8.  This letter agreement constitutes the entire understanding of
the parties with respect to its subject matter, supersedes all prior agreements
and understandings with respect to such subject matter, and may be terminated or
amended only by a writing signed by the parties hereto. Without limiting the
generality of the foregoing, you and the Companies hereby acknowledge the
cancellation and termination in its entirety, effective immediately, of the
Employment Agreement, dated as of December 15, 1992, between you and Companies,
as amended.

            9.  The provisions of this letter agreement will be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania other
than the conflict of law provisions of such laws.

            10. You agree, upon demand of the Company, to do all acts and
execute, deliver and perform all additional documents, instruments and
agreements which may be required by the Company to implement the provisions and
purposes of this letter agreement.



                                            Very truly yours,



                                            DQE, Inc.

                                            By:  /s/ V. A. Roque
                                            Vice President and General Counsel


                                            DUQUESNE LIGHT COMPANY

                                            By:  /s/ V. A. Roque
                                            Vice President and General Counsel

Received and accepted by, and intending to be legally bound hereby:

/s/ Wesley W. von Schack                    8/5/96
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    Wesley W. von Schack                     Date