Fitch Comments on Duquesne Light Holdings following Acquisition Proposal.

NEW YORK -- Fitch Ratings plans no immediate rating action for Duquesne Light Holdings, Inc. (Holdings), and its subsidiary Duquesne Light Company (DLC) following the announcement of a definitive agreement to be acquired by Macquarie Infrastructure Partners and Diversified Utility and Energy Trusts (Macquarie). As presently proposed, the acquisition will add considerable leverage, but also a well funded ownership with the ability to invest substantial new capital. Additional clarity regarding dividend policy and/or other management fees and future on-going capital management practices will be critical elements in determining the ultimate impact on ratings. Fitch will also consider whether traditional leverage measures are appropriate in this type of ownership structure or whether additional leverage can be supported.

Macquarie has agreed to pay $1.59 billion for Holdings outstanding common stock ($20 per share) and will assume approximately $1.26 billion of consolidated debt and $148 million of DLC preferred and preference shares. Macquarie intends to fund the acquisition with $954 million of cash and a $638 million term loan. Transaction costs and premiums associated with plans to refinance certain existing debt will add additional leverage. Macquarie will also contribute an additional $141 million ($16 per share) in new equity to assist the financing of Holdings previously announced acquisition of minority interests in the Keystone and Conemaugh generating stations. The incremental equity contribution replaces a previously planned equity offering for later this year. The financing plan will result in a consolidated capital structure of approximately 60% debt and 40% equity. The credit metrics of DLC are unaffected by the transaction.

The transaction is subject to regulatory approval by the Pennsylvania Public Utility Commission and Federal Energy Regulatory Commission, among others. For further information please refer to Fitch Rating's Duquesne Light Holdings, Inc. and Duquesne Light Company credit reports dated May 11, 2006.

Fitch's ratings for the Holdings and DLC are as follows:

Duquesne Light Holdings (formerly known as DQE Inc.):

--Issuer Default Rating (IDR) 'BBB-';

--Senior unsecured 'BBB-'.

Duquesne Light Company

--IDR 'BBB-';

--Senior secured 'BBB+';

--Preferred stock 'BBB-';

--Short-term 'F2'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.