DUQUESNE LIGHT CO
8-K, 2000-05-12
ELECTRIC SERVICES
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<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549



                                   FORM 8-K



                                CURRENT REPORT
                    PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

               Date of Report (Date of earliest event reported):
                                April 28, 2000



                            Duquesne Light Company
                            ----------------------
            (Exact name of registrant as specified in its charter)



         Pennsylvania                     1-956                  25-0451600
         ------------                     -----                  ----------
(State or other jurisdiction of   (Commission File Number)    (I.R.S. Employer
 incorporation or organization)                              Identification No.)



                               411 Seventh Avenue
                        Pittsburgh, Pennsylvania  15219
                        -------------------------------
              (Address of principal executive offices) (Zip Code)



      Registrant's telephone number, including area code:   (412) 393-6000



                                      N/A
         (Former name or former address, if changed since last report.)
<PAGE>

Item 1.  Not applicable.


Item 2.  Acquisition or Disposition of Assets

     On April 28, 2000, Duquesne Light Company announced the completion of its
sale of all of its power generation facilities to Orion Power MidWest, L.P., a
subsidiary of Orion Power Holdings, Inc. The sale was consummated pursuant to a
September 24, 1999 asset purchase agreement in which Duquesne Light agreed to
sell its seven power generating facilities to Orion for approximately $1.7
billion. A copy of the asset purchase agreement was included with a Current
Report on Form 8-K filed with the SEC on September 29, 1999. The generation
facilities total 2,614 megawatts of capacity. The facilities are located in
Pennsylvania and Ohio, and include 3 plants that Duquesne Light acquired from
FirstEnergy in the swap of generating assets that occurred in December 1999. In
the transaction, Orion also acquired the obligation to provide Duquesne Light
with electricity to serve customers who have not selected an alternative
generation supplier as part of Pennsylvania's retail choice program, pursuant to
the terms of a provider of last resort agreement. A copy of the provider of last
resort agreement was also included with the Current Report on Form 8-K filed
with the SEC on September 29, 1999.

Items 3-6.  Not applicable.


Item 7.  Exhibits.

     99.1  Pro Forma Financial Statements of Duquesne Light Company.


Items 8-9.  Not applicable



                                   SIGNATURE


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                            Duquesne Light Company
                                            ----------------------
                                                 (Registrant)



Date   May 12, 2000                         /s/Morgan K. O'Brien
       ------------                       ------------------------
                                                (Signature)
                                             Morgan K. O'Brien
                                          Vice President--Finance

                                       2

<PAGE>

                                                                    Exhibit 99.1

                  DUQUESNE LIGHT COMPANY UNAUDITED PRO FORMA
                  CONDENSED CONSOLIDATED FINANCIAL INFORMATION


The unaudited pro forma financial information presented on the following pages
is derived from the historical financial statements of Duquesne Light Company.
The unaudited pro forma condensed consolidated balance sheet information as of
December 31, 1999 gives pro forma effect to the generation asset divestiture
described in Item 2 as if such transaction had been consummated on December 31,
1999.  The unaudited pro forma condensed consolidated statement of income gives
pro forma effect to the generation asset divestiture described in Item 2 as if
the transaction had been consummated on January 1, 1999.

The pro forma adjustments do not reflect any operating efficiencies or cost
savings that may be achievable with respect to the divested assets.  The pro
forma adjustments do not include any adjustments to historical revenues and
expenses for any future price changes or any adjustments to operating expenses
for any future operation changes except for those items that are directly
related to the operation of the generation facilities.

The unaudited pro forma financial information is not necessarily indicative of
the financial position or operating results that would have occurred had the
generation assets divestiture been consummated on the dates for which such
transaction is being given effect.  The pro forma adjustments reflecting the
generation asset divestiture are based upon the assumptions set forth in the
notes to the unaudited pro forma condensed consolidated financial statements.

The unaudited pro forma condensed consolidated financial information presented
on the following pages should be read in conjunction with the audited historical
financial statements (including the notes thereto) of Duquesne Light Company,
which are contained in its Annual Report on Form 10-K.
<PAGE>


Duquesne Light Company
Pro Forma Condensed Consolidated Balance Sheet
December 31, 1999
Amounts in Thousands

<TABLE>
<CAPTION>

- ----------------------------------------------------------------------------------------------------------------
                                                                                Pro Forma
UNAUDITED                                                   As Reported        Adjustments        As Adjusted
- ----------------------------------------------------------------------------------------------------------------
<S>                                                        <C>               <C>                  <C>
ASSETS
- ----------------------------------------------------------------------------------------------------------------
Property, plant and equipment - net                        $ 1,458,517       $   (189,000)e       $ 1,269,517
- ----------------------------------------------------------------------------------------------------------------
Long-term investments                                           80,891                  -              80,891
- ----------------------------------------------------------------------------------------------------------------
Current assets:
Cash and temporary investments                                  16,068                 (0)             16,068
Receivables - net                                              131,647                  -             131,647
Other current assets                                           111,134            (33,057)             78,077
- ----------------------------------------------------------------------------------------------------------------
     Current assets                                            258,849            (33,057)            225,792
- ----------------------------------------------------------------------------------------------------------------
Other Non-Current Assets:
Transition costs                                             2,008,171         (1,300,559)e           707,612
Regulatory assets                                              224,002                  -             224,002
Divestiture costs                                              218,653           (218,653)e                 -
Other                                                           32,329                  -              32,329
- ----------------------------------------------------------------------------------------------------------------
     Non-current assets                                      2,483,155         (1,519,212)            963,943
- ----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS                                               $ 4,281,412       $ (1,741,269)        $ 2,540,143
================================================================================================================


CAPITALIZATION and LIABILITIES

Capitalization:
Common stock                                               $         -       $          -         $         -
Capital surplus                                                746,051           (665,797)d            80,254
Retained earnings                                               39,931            (43,586)             (3,655)
Accumulated other comprehensive income                          12,692                  -              12,692
- ----------------------------------------------------------------------------------------------------------------
     Total common stockholders' equity                         798,674           (709,383)             89,291
- ----------------------------------------------------------------------------------------------------------------
Preferred and preference stock                                 229,512                  -             229,512
- ----------------------------------------------------------------------------------------------------------------
Long-term debt                                               1,410,754           (350,162)c         1,060,592
- ----------------------------------------------------------------------------------------------------------------
     Total capitalization                                    2,438,940         (1,059,545)          1,379,395
- ----------------------------------------------------------------------------------------------------------------
Current liabilities:
Notes payable and current maturities                           536,353           (435,668)c           100,685
Other current liabilities                                      225,333                  -             225,333
- ----------------------------------------------------------------------------------------------------------------
     Current liabilities                                       761,686           (435,668)            326,018
- ----------------------------------------------------------------------------------------------------------------
Non-current liabilities:
Deferred income taxes                                          760,677           (246,056)            514,621
Deferred income                                                 93,246                  -              93,246
Other non-current liabilities                                  226,863                  -             226,863
- ----------------------------------------------------------------------------------------------------------------
     Non-current liabilities                                 1,080,786           (246,056)            834,730
- ----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES and CAPITALIZATION                       $ 4,281,412       $ (1,741,269)        $ 2,540,143
================================================================================================================
</TABLE>

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
<PAGE>

                                                                    Exhibit 99.1

Duquesne Light Company
Pro Forma Condensed Consolidated Statement of Income
Year ended December 31, 1999
Amounts in thousands, except per share amounts

<TABLE>
<CAPTION>

- -------------------------------------------------------------------------------------------------------------------------------
                                                                                             Pro Forma
UNAUDITED                                                               As Reported         Adjustments           As Adjusted
- -------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                  <C>                  <C>
Operating Revenues:
Customer revenues                                                      $ 1,022,425           $       - a         $ 1,022,425
Utilities                                                                   76,303           $       -                76,303
Other                                                                       60,072                   -                60,072
- -------------------------------------------------------------------------------------------------------------------------------
     Total Operating Revenues                                            1,158,800                   -             1,158,800
- -------------------------------------------------------------------------------------------------------------------------------

Operating Expenses:
Fuel and purchased power                                                   225,182             196,956 a             422,138
Other operating                                                            253,252             (68,117)a             185,135
Maintenance                                                                 75,400             (48,133)a              27,267
Depreciation and amortization                                              172,424              84,559 b             256,983
Taxes other than income taxes                                               84,532             (45,670)a              38,862
Income taxes                                                                88,246             (30,920)f              57,326
- -------------------------------------------------------------------------------------------------------------------------------
     Total Operating Expenses                                              899,036              88,675               987,711
- -------------------------------------------------------------------------------------------------------------------------------

Operating Income                                                           259,764             (88,675)              171,089

Other Income and (Deductions)                                               22,490                   0                22,490

Income Before Interest and Other Charges                                   282,254             (88,675)              193,579

Interest Charges                                                          (118,672)             45,089 c             (73,583)

Monthly Income Preferred Securities Dividend Requirements                  (12,562)                  -               (12,562)
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Net Income                                                                 151,020             (43,586)              107,434
- -------------------------------------------------------------------------------------------------------------------------------
Dividends on Preferred and Preference Stock                                  3,998                   -                 3,998
- -------------------------------------------------------------------------------------------------------------------------------
Earnings Available for Common Stock                                    $   147,022           $ (43,586)          $   103,436
===============================================================================================================================
</TABLE>

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements


<PAGE>

                                                                    Exhibit 99.1

NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION

(a)  In conjunction with the generation station auction, Orion will supply
     energy to Duquesne Light to cover the Provider of Last Resort (POLR)
     obligation for customers who do not switch to another energy supplier.  No
     change would result to operating revenues as the amount of POLR revenues
     are unaffected.  Operating expenses related to coal and nuclear generation
     (fuel, operating and maintenance costs, and property taxes) have been
     eliminated.  In addition, purchased power and gross receipt taxes have been
     adjusted to reflect the impact of the provider of last resort agreement
     with Orion.  Under this agreement, the cost of the purchased power will be
     equal to the operating revenue received from customers who do not switch to
     another energy supplier.
(b)  Since Duquesne Light would have recovered approximately $1.1 billion of
     transition costs (net of deferred taxes) at the beginning of 1999 through
     the generation auction, the permitted return on the unrecovered balance of
     transition costs would have been substantially reduced. This reduced return
     is reflected as additional amortization expense. The increase in
     amortization expense is offset by a reduction in depreciation expense
     related to the generation facilities of $21,793.
(c)  Adjustment represents the impact of the elimination of the interest
     component on the Beaver Valley Unit 2 lease of $35,245 and the incremental
     debt and interest expense of $9,844 incurred from the issuance of
     commercial paper and other debt in anticipation of receiving generation
     auction proceeds.
(d)  Adjustment represents special dividend to DQE.
(e)  Adjustment represents the write-off of the net book value of the generation
     plant assets, materials and supplies inventory, the recovery on December
     31, 1999 of the transition assets (including the related deferred income
     taxes) and the recovery of the previously deferred divestiture expenses.
(f)  Adjustment represents the net income tax impact of all of the pro forma
     adjustments utilizing Duquesne Light's effective tax rate.


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