Duquesne Light Co. of Pittsburgh, a DQE subsidiary, filed withthe Pennsylvania Public Utility Commission (PUC) to transfer itsgeneration fleet to Baltimore-based Orion Power Holdings Inc., thewinning bidder in a previous generation auction. Orion will payDuquesne Light $1.705 billion for seven wholly owned fossil-firedgeneration stations, certain transmission facilities, and the rightand obligation to supply wholesale power to serve Duquesne’sprovider of last resort customers. As a result, Duquesne will endstranded cost collection in 2001 for most major customer rateclasses, reducing rates by more than 25%, assuming market pricesfor electricity remain at or below the commission-approved shoppingcredits.

In conjunction with the accounting for the reduction in itsstranded cost recovery, the company will adjust fourth-quarterearnings by about $15 million, after-tax. The earnings increasemainly relates to synchronizing the beginning of the stranded costrecovery period with the functional unbundling of customer billsand the application of specific customer rates to the collection ofstranded costs.

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