Duquesne Light — Northeast Seminar Boston (March 2004)
39 slides from Duquesne Light's conference presentation, Mar 23, 2004
Slide 1: Northeast Seminar Boston
Exhibit 99.1 Northeast Seminar Boston March 23, 2004
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements, the results of which may materially differ from those implied due to known and unknown risks and uncertainties, some of which are discussed below. Cash flow, earnings, earnings growth, capitalization and dividends (as well
Slide 3: Company Representatives
Company Representatives Steve Schott Sr. VP and Chief Financial Officer Jim Wilson Sr. VP and Chief Strategic Officer Bill Fields VP and Treasurer Quynh McGuire Sr. Manager, Investor Relations
Slide 4: Agenda
Agenda Strategic Overview Operational Update Earnings Outlook Financial Review POLR Opportunity Summary
Slide 5: Strategic Overview
STRATEGIC OVERVIEW
Slide 6: Meeting our Commitments… Building our Future
Meeting our Commitments… Building our Future Low risk; stable cash flow Supports dividend Sustainable and recurring earnings Solid traditional utility Building on successes at core electric utility
Slide 7: Results Achieved
Results Achieved Met financial goals in 2003 Removed uncertainty and volatility IRS settlement 3-year union contract AquaSource sale ProAm sale (2002) Energy-technology securities sale Strengthened balance sheet Retired $75M of MIPS in 2004 $468M debt retired during 2002-2003 No long-term debt matur
Slide 8: Investment Opportunity
Investment Opportunity Top tier total shareholder return investment Sustainable dividend with attractive yield Strong balance sheet Simple financials Focus on core utility business
Slide 9: Operational Update
OPERATIONAL UPDATE
Slide 10: Duquesne Light
DUQUESNE LIGHT
Slide 11: Electric Utility Operations
Electric Utility Operations Duquesne Light Service Territory Location: Southwestern Pennsylvania Electric Utility Customers: Approximately 588,000 Largest concentration of customers in Pennsylvania without generation fleet Service Territory: 800 square miles Transmission & Distribution Network: 592
Slide 12: Operational Excellence
Operational Excellence Delivering outstanding customer service Meeting or exceeding reliability expectations Customers Regulators Providing useful outage information More than 90% Managing costs aggressively
Slide 13: Overall Satisfaction
Overall Satisfaction Cumulative measure of customer service and reliability is Overall Customer Satisfaction Performance at all-time best zBenchmarks favorably to other electric utilities Overall Customer Satisfaction 5.85 5.2 2000 5.97 5.3 2001 6.03 5.4 2002 6.12 5.5 2003
Slide 14: Operational Goals
Operational Goals Continue improving customer service and operations Maintaining good regulatory relationships Reducing costs while improving customer satisfaction
Slide 15: Unregulated Businesses
UNREGULATED BUSINESSES DQE Energy Services DQE Communications DQE Financial
Slide 16: Unregulated Businesses: Key Accomplishments
Unregulated Businesses Key Accomplishments Exceeded income targets Increased margins Resolved Fresh Kills successfully IRS audit of synthetic fuel investment completed
Slide 17: Unregulated Businesses: 2004 Plan
Unregulated Businesses 2004 Plan Restructure businesses into one operating energy company Separate active from passive investments May monetize certain investments Assess future growth opportunities Section 29 tax credit period expires end of 2007 Earnings improvement from cost reductions and effici
Slide 18: Earnings Outlook
EARNINGS OUTLOOK
Slide 19: 2004 Earnings Outlook
2004 Earnings Outlook $ in Millions DLC T&D $ 43 — $ 46 DLC POLR (including Sunbury) $ 21 — $ 22 DQE Energy Services $ 23 — $ 24 DQE Financial $ 14 — $ 17 DQE Communications $ 1 — $ 2 Parent/CapCorp/Elims. ($ 22) — ($ 26) Total $ 80 — $ 85
Slide 20: Financial Review
FINANCIAL REVIEW
Slide 21: Liquidity
Liquidity Cash balance of $34M at Dec. 31, 2003 $290M of revolving credit facilities with term-out option $180M at Duquesne Light $110M at Duquesne Light Holdings No ratings triggers zRenewal September 2004 Oversubscribed in 2003 No debt maturities until 2008
Slide 22: Debt Maturity Schedule
Debt Maturity Schedule ($ in millions) DLC FMB DLC Tax-Exempt DLC MIPS Holdings Debt
Slide 23: Year End Capitalization
Year End Capitalization (In Accordance with GAAP) Historical 2002 2003 Debt 60.9% 60.2% Preferred 13.7% 4.4% Common 25.4% 35.4%
Slide 24: 2004 Financing Plan
2004 Financing Plan Realign debt and equity with MIPS retirement Fresh Kills resolution eliminated $22M of debt Continue dividend reinvestment plan Adds $14M of equity annually Consider other opportunities including refinancing of 8.38% PINES
Slide 25: Projected Sources & Uses of Cash
Projected Sources & Uses of Cash ($ in millions) Beginning Cash $34 Cash Sources Projected Earnings 82 Deprec. & Amort. 87 Debt Issuance 165 Pfd Stock Issuance (MIPS) 75 IRS Refund 32 DRIP 14 Total Sources $455 Cash Uses IRS Payment ($48) Dividends (76) Capital Expenditures (83) 8.375% MIPS Retireme
Slide 26: POLR Opportunity
POLR OPPORTUNITY
Slide 27: POLR II Customer Retention History
POLR II Customer Retention History Time
Slide 28: POLR III Proposal
POLR III Proposal Six-year fixed prices for small customers 2005 through 2010 Annual market-based prices for large customers Join PJM effective Jan. 1, 2005
Slide 29: POLR III Proposal: Residential Average Monthly Costs
POLR III Proposal Residential Customer Average Monthly Costs 3/02 1/1/05 1/1/08 Start of 10% Competition 15% 20% 12/31/2010 Generation Increase 12% Overall Increase 7% Generation Increase 9% Overall Increase 5.9%
Slide 30: POLR III Proposal: Average Small Customer Rates
POLR III Proposal Average Small Customer Rates $MWh ‘04 ‘05-’07 ‘08-’10 Residential $ 54.50 $ 61.70 $ 67.90 Small Commercial $ 58.20 $ 63.80 $ 69.00
Slide 31: POLR III Proposal: Supply Portfolio Concept
POLR III Proposal Supply Portfolio Concept Peaking Load Shape 5X16 7X24 Sunbury Plant
Slide 32: POLR III Proposal: Large Customer Options
POLR III Proposal Large Customer Options Two POLR options Fluctuating hourly price service 17-month fixed price service On-peak vs. Off-peak $5/MWh adder Recover costs Compensate for risks Encourage retail competition
Slide 33: POLR III Proposal: Competitive Auction Process
POLR III Proposal Competitive Auction Process Suppliers bid for slice of POLR requirement Descending clock auction for capacity charge for hourly service Second auction for wholesale energy price Translated to retail on-peak and off-peak
Slide 34: Total 2003 Customer Load
Total 2003 Customer Load Small customer load (100%) 7,060 MWh Large customer load (100%) 6,303 MWh Note: Duquesne Light’s overall customer retention (i.e., POLR) level was 72% at December 31, 2003.
Slide 35: POLR III Proposal: Intervenor Groups
POLR III Proposal Intervenor Groups Customer advocates Office of Consumer Advocate Office of Small Business Advocate Duquesne Industrial Intervenors Retail energy marketers z Wholesale energy suppliers z Regional utilities z PJM
Slide 36: POLR III Proposal: Petition Schedule
POLR III Proposal Petition Schedule Intervenor Direct Testimony February 25 Rebuttal Testimony for All Parties March 17 Last Date to Serve Discovery March 19 Last Date to Answer Discovery March 25 Surrebuttal Outline for All Parties March 26 Hearings (Pittsburgh) March 29 – April 1 Main Briefs April
Slide 37: Summary
SUMMARY
Slide 38: Meeting our Commitments… Building our Future
Meeting our Commitments… Building our Future Low risk; stable cash flow Supports dividend Sustainable and recurring earnings zSolid traditional utility Building on successes at core electric utility
Slide 39: Q&A
Q&A
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