[LOGO] DQE
The growth utility
Presentation to:
Chicago - November 9, 2000
Philadelphia - November 14, 2000
www.dqe.com
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Company Representatives
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Frosina C. Cordisco Vice President,
and Treasurer
Quynh T. McGuire Senior Manager,
Investor Relations
[LOGO] DQE
The growth utility
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The following presentation contains forward-looking statements regarding the
following: DQE's projected cost reductions through our Corporate Center
Excellence program, our plans to continue repurchasing our common stock, and our
projected comprehensive earnings growth; Duquesne Light's projected annual cost
reductions through its Best-in-Class initiative; the provider of last resort
filing with the PUC; the terms of the final auction filing with the PUC;
AquaSource's anticipated improvements in operating and cost efficiency, and its
rate filings; and DQE Enterprises' plans to invest in additional electronic
commerce and energy technology companies, and the possibilities of initial
public offerings or other market valuations of the companies in which we invest.
Actual results may materially differ from those implied by such statements due
to known and unknown risks and uncertainties, including but not limited to the
following: our ability to centralize and streamline administrative functions to
eliminate redundancies, as well as to retrain and redeploy administrative
employees, will affect the ultimate amount of cost reductions at both DQE and
its subsidiaries. Fluctuations in our common stock price could affect our
repurchasing plans. Projected DQE earnings will depend on our ability to sell
select, non-strategic assets, and on the effectiveness of our administrative
resource reduction. The ultimate outcome of Duquesne Light's provider of last
resort arrangement and the final cost assessment, CTC collection estimate and
remaining costs requested in the final auction filing will depend on the PUC's
determinations. Changing market conditions, weather conditions and demand for
water, propane and telecommunications utility services, and the availability of
appropriate investment opportunities in those industries, could affect revenue
levels at DQE's businesses. AquaSource will also be affected by the outcome of
its rate filings, which will depend on the determinations made by the
appropriate public utility commissions, as well as the effective use of its new
customer and financial systems. The availability of appropriate investment
opportunities could affect DQE Enterprises' plans for additional electronic
commerce and energy technology investments. The volatility of the stock markets,
as well as general business and economic conditions, could affect the potential
for initial public offerings or other market valuations being made at any time
with respect to the companies in which we invest. Overall performance by DQE and
its affiliates could be affected by economic, competitive, regulatory,
governmental and technological factors affecting operations, markets, products,
services and prices, as well as the factors discussed in our SEC filings.
[LOGO] DQE
The growth utility
Page 4
Business Descriptions
Duquesne Light Company: A leader in the transmission and distribution of
electric energy, offering technological innovation and superior customer service
and reliability to more than half a million direct customers throughout
southwestern Pennsylvania.
Senior Debt Rating: Moody's S&P Fitch
A3 BBB+ A-
DQE Enterprises: A recognized leader in the acquisition and development of
businesses that use technology to give customers greater value from essential
products, such as electricity, water, natural gas, communications and
information.
AquaSource: A fast-growing utility company formed to acquire, develop and
manage water and wastewater assets.
DQE Systems: A solutions company that provides growth, efficiency and value
through the delivery of propane and telecommunications, and through utility
contract operations.
DQE Energy Services: A diversified energy services company offering a wide
range of energy outsourcing solutions for industrial, manufacturing, airport and
institutional markets, including ownership, operation and maintenance of energy
facilities.
DQE Financial: An investment and portfolio management organization focusing its
financial expertise in structured finance and alternative energy markets.
Please direct any questions or comments to:
Quynh T. McGuire, Senior Manager, Investor Relations
(412) 393-1259
[LOGO] DQE
The growth utility
Page 5
Company Profile
. Listed on the New York, Philadelphia and
Chicago Stock Exchanges
- Recent Price $33 1/16
- Annualized Dividend $ 1.60
- Payout Ratio 58%
- Dividend Yield 4.8%
- Market Capitalization (billions) $ 1.8
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The growth utility
Page 6
Basic Earnings Per Share
[Bar chart showing DQE's basic earnings per share for the third quarter and 12
months ended September 30 in 1996, 1997, 1998, 1999 and 2000]
Third Quarter 12 Months Ended 9/30
1996 $0.74 $2.29
1997 $0.75 $2.47
1998 $0.80 $2.53(1)
1999 $0.64 $2.44
2000 $1.04 $2.76
(1) Excludes the $1.06 extraordinary Pennsylvania restructuring charge in June
1998.
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The growth utility
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3rd Quarter 2000
Basic EPS
. 3rd quarter EPS were $1.04
. 63% increase from 1999
. Gain of $.85 per share from sale of alternative-
. fuel facilities, partially offset by
. Higher stranded cost amortization at Duquesne
. Integration costs at AquaSource
. Lower average outstanding shares
. $2.76 EPS for 12-months ended 9/30/00
. Increase of $.32 or 13% from 1999
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The growth utility
Page 8
Comprehensive EPS
[Bar chart showing DQE's comprehensive earnings per share for the third
quarter of 1999 and 2000]
1999 $0.68
2000 $1.45
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The growth utility
Page 9
Third Quarter 2000
Comprehensive EPS
. Comprehensive EPS were $1.45 for the
quarter
. 113% increase from 3rd quarter 1999
. Comprehensive result for the quarter
reflects:
. Increased basic earnings per share
. $.41 EPS of appreciation related to
investment in SatCon Technology and
HPower
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The growth utility
Page 10
Dividends Declared Per Share
[Bar chart showing dividends declared per share for the third quarter and 12
months ended September 30 in 1996, 1997, 1998, 1999 and 2000]
Third Quarter 12 Months Ended 9/30
1996 $0.32 $1.28
1997 $0.34 $1.36
1998 $0.36 $1.44
1999 $0.38 $1.52
2000 $0.40 $1.60
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The growth utility
Page 11
Share Repurchase Update
. Current year through September 2000,
repurchased $591 million of DQE shares
. An additional $54 million was repurchased
in October
. Total 16 million shares repurchased, for
approximately $645 million in 2000
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The growth utility
Page 12
Growth Strategy
. Consolidation of administrative resources --
approximately $40 million annual savings
. 5 to 8 % annual growth in comprehensive
earnings for 2000 and beyond
. Traditional earnings from delivery businesses
. Market valuations of investments
. Selective asset sales
. Invest free cash into growth businesses and stock buyback
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The growth utility
Page 13
Business Overview
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Duquesne Light AquaSource
Wires Utility Water/Wastewater Utility
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ProAm DQE Communications
Propane Delivery Fiber Optic Gateway
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DQE Financial DQE Energy Services
Landfill Gas Energy Projects
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DQE Enterprises
E-Commerce and
Energy Technology
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The growth utility
Page 14
Review of Accomplishments
. Generation exchange ends nuclear involvement
. Generating plant sale to Orion
. DQE prevails in merger litigation
. Growing delivery businesses and expanding e-
commerce & energy technology investments
. Detroit airport energy facility breaks ground
. Pittsburgh metro fiber optic network completed
. Filing to extend Provider of Last Resort (POLR) service
. Final auction accounting filing on generation sale
. Initial public offering of H Power
. S-1 filing for Beacon Power
. Sale of alternative fuel facilities
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The growth utility
Page 15
Regulatory Filings
. Provider of Last Resort (POLR)
. Final Auction Accounting
. Approximately $290 million, net of tax, remaining
transition cost balance at September 30
. Regional Transmission Organization (RTO)
[LOGO] Duquesne Light
A DQE Company
Page 16
Transmission & Distribution
. Best-in-Class initiatives expected to result in
approximately $30 million annual savings
. Growing line of innovative services for
customers
. Offering services through e-commerce channels
[LOGO] Duquesne Light
A DQE Company
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Water & Wastewater Systems
. Implementation of information systems
. Financial information
. Human resources
. Customer information
. Customer call center
. Integrate operating companies and achieve
optimal efficiencies
. New acquisitions postponed until expected
cost savings are realized
[LOGO] Aqua Source
A DQE Company
Page 18
Regulatory Update
. Texas rate case filing
. Average increase of 40% after a 12-month
phase-in
. Estimated revenue increase of $7 million
annually
. Return on rate base assumed at 8.88%
. Texas Commission scheduled hearing on
November 29
. Expect decision by year-end 2001
[LOGO] AquaSource
A DQE Company
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Propane and
Telecommunication Systems
. Provide growth, efficiency and value through
delivery of propane and telecommunications
. Achieve cost reductions through the
aggregation of propane systems
. Strong demand for leased fiber on
telecommunications network
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Financial Services
. Contributes to profitability through
disciplined investment strategy
. Continues to grow landfill gas and
alternative energy niche businesses
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Energy Services
. Completed heating plant for Detroit
Airport Midfield Terminal
. Commercial operation by year-end 2001
. Awarded contract for energy facility of a
U.S. Big 3 auto maker
. Build, operate and maintain facility
. Expect to complete by mid-2001
. Awarded 7-year operations contract for
several of the alternative-fuel facilities
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Enterprises Businesses
. Continued success in developing
businesses
. Capitalize on opportunities related to
deregulation
. Enhance value of essential delivered
services
[LOGO] DQE Enterprises
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Enterprises Businesses
. HPower
. Initial public offering on August 9 at the
price of $16 per share
. Beacon Power
. Filed S-1 registration on August 9
. Roadshow commenced late October
[LOGO] DQE Enterprises
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Enterprises Businesses
. Enermetrix
. Continues to sign new licensees
. Growing revenues and customer base
. HomeAccess
. Recently merged with Quentra Networks
. Portland General deployment of first-
stage network
[LOGO] DQE Enterprises
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Competitive Advantages
. Transition to multi-utility delivery and
services business
. Growth opportunities in delivery businesses
. Successful strategy of early stage investing
. Selective asset sales
. Market valuations
. 5 to 8 % annual growth in comprehensive
earnings for 2000 and beyond
[LOGO] DQE
The growth utility