DQE announces sale of Kaanapali Water Corp.

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PITTSBURGH, Aug. 5, 2002 -- DQE recently announced the sale of Kaanapali Water Corporation, a water utility that is a part of AquaSource, Inc., to California Water Service Group for $7.7 million in cash.

This sale was contemplated as an option under DQE's agreement with Philadelphia Suburban Corporation, announced on July 30, 2002, and a purchase price adjustment will be applied for this sale. The Maui, Hawaii, water utility services 500 customers in Maui, Hawaii, including 10 resorts and eight condominium projects. The closing is expected to occur in the second half of 2003, contingent upon regulatory approval.

The sale of AquaSource is part of DQE's Back-to-Basics business strategy, which features a more concentrated focus on the company's electric utility operations and its complementary businesses. DQE expects to use the proceeds to enhance its financial flexibility in order to fund future growth opportunities identified as part of its Back-to-Basics plan.

DQE is evaluating proposals for some or all of AquaSource's remaining operations, and additional announcements will occur to the extent that definitive agreements are completed. Lehman Brothers is acting as an advisor to DQE and AquaSource.

AquaSource, a water and wastewater utility services company and a subsidiary of DQE, is the largest privately owned water and wastewater service provider in Texas and one of the 10 largest in the United States. AquaSource's investor-owned utilities account for approximately 130,000 customer accounts.

The vast majority of its utility customers are located in Texas, Indiana, Florida, Virginia, North Carolina, New Jersey and Missouri, with a smaller number of customers in five other states. Formed in 1997, AquaSource has acquired growth-oriented operations in targeted areas, with a strategy of developing economies of scale in both operations and management.

Headquartered in Pittsburgh, DQE delivers essential products and related services. Its principal subsidiary, Duquesne Light Company, is a leader in the transmission and distribution of electric energy, offering technological innovation and superior customer service and reliability to more than a half million direct customers throughout southwestern Pennsylvania.


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