<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549



                                   FORM 10-Q



         [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended June 30, 2001
                                                 -------------

         [_]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                  For the Transition Period From ____________ to ____________


                            Commission File Number
                            ----------------------
                                     1-956


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


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

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

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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes  X   No
                     -----   _____

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:

DQE, Inc., is the holder of all shares of Duquesne Light Company common stock,
$1 par value, consisting of 10 shares as of July 31, 2001.
<PAGE>

PART I.       FINANCIAL INFORMATION

Item 1.       Financial Statements.

Duquesne Light Condensed Statement of Consolidated Income (Unaudited)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                          (Millions of Dollars)
                                                                    --------------------------------------------------------------
                                                                             Three Months                     Six Months
                                                                            Ended June 30,                  Ended June 30,
                                                                    --------------------------------------------------------------
                                                                          2001           2000            2001            2000
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                 <C>                <C>             <C>             <C>
Operating Revenues:
Sales of Electricity:
Customer revenues                                                       $  253.8       $  251.6        $  487.7        $  487.1
Utilities                                                                    2.9           10.1             7.1            21.9
----------------------------------------------------------------------------------------------------------------------------------
Total Sales of Electricity                                                 256.7          261.7           494.8           509.0
Other                                                                        6.6           11.2            14.0            21.9
----------------------------------------------------------------------------------------------------------------------------------
   Total Operating Revenues                                                263.3          272.9           508.8           530.9
----------------------------------------------------------------------------------------------------------------------------------

Operating Expenses:
Fuel and purchased power                                                   104.1           92.7           197.6           143.3
Other operating                                                             26.1           37.5            54.5            82.6
Maintenance                                                                  6.1           18.7            11.7            36.4
Depreciation and amortization                                               80.0           78.2           159.1           138.6
Taxes other than income taxes                                               13.8           19.0            27.2            40.7
Income taxes                                                                 5.6            7.5             7.9            12.7
----------------------------------------------------------------------------------------------------------------------------------
   Total Operating Expenses                                                235.7          253.6           458.0           454.3
----------------------------------------------------------------------------------------------------------------------------------
Operating Income                                                            27.6           19.3            50.8            76.6
Other Income and Deductions                                                  7.1            7.1            13.2            11.6
----------------------------------------------------------------------------------------------------------------------------------
Income Before Interest and Other Charges                                    34.7           26.4            64.0            88.2
----------------------------------------------------------------------------------------------------------------------------------
Interest Charges                                                            16.1           19.7            32.4            40.6
Monthly Income Preferred Securities Dividend Requirements                    3.1            3.1             6.3             6.3
----------------------------------------------------------------------------------------------------------------------------------
Income Before Cumulative Effect
of Change in Accounting Principle                                           15.5            3.6            25.3            41.3
----------------------------------------------------------------------------------------------------------------------------------
Cumulative Effect of Change in Accounting Principle - Net                     --             --              --            15.5
----------------------------------------------------------------------------------------------------------------------------------
Net Income                                                                  15.5            3.6            25.3            56.8
==================================================================================================================================
Dividends on Preferred and Preference Stock                                  0.9            0.9             1.7             1.7
   Earnings for Common Stock                                            $   14.6       $    2.7        $   23.6        $   55.1
==================================================================================================================================
</TABLE>

See notes to condensed consolidated financial statements.

                                       2
<PAGE>

Duquesne Light Condensed Consolidated Balance Sheet (Unaudited)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                   (Millions of Dollars)
                                                                                               -----------------------------
                                                                                                June 30,        December 31,
ASSETS                                                                                            2001               2000
----------------------------------------------------------------------------------------------------------------------------
<S>                                                                                            <C>                <C>
Property, Plant and Equipment:
   Gross property, plant and equipment                                                         $ 1,970.6          $ 1,965.1
   Less: Accumulated depreciation and amortization                                                (629.5)            (620.8)
----------------------------------------------------------------------------------------------------------------------------
     Total Property, Plant and Equipment - Net                                                   1,341.1            1,344.3
----------------------------------------------------------------------------------------------------------------------------
Long-Term Investments                                                                               35.1               49.6
----------------------------------------------------------------------------------------------------------------------------
Current Assets:
Cash and temporary cash investments                                                                177.7              173.5
Receivables                                                                                        437.7              424.7
Other current assets                                                                               110.5               53.1
----------------------------------------------------------------------------------------------------------------------------
     Total Current Assets                                                                          725.9              651.3
----------------------------------------------------------------------------------------------------------------------------
Other Non-Current Assets:
Transition costs                                                                                   266.9              396.4
Regulatory assets                                                                                  327.1              326.6
Other                                                                                                9.5                9.4
----------------------------------------------------------------------------------------------------------------------------
     Total Other Non-Current Assets                                                                603.5              732.4
----------------------------------------------------------------------------------------------------------------------------
     Total Assets                                                                              $ 2,705.6          $ 2,777.6
============================================================================================================================


CAPITALIZATION AND LIABILITIES
----------------------------------------------------------------------------------------------------------------------------
Capitalization:
Common stock (authorized - 90,000,000 shares, issued and outstanding - 10 shares)              $      --          $      --
Capital surplus                                                                                    483.3              483.3
Retained earnings                                                                                   50.7               47.1
Accumulated other comprehensive income                                                               1.6                9.2
----------------------------------------------------------------------------------------------------------------------------
     Total Common Stockholder's Equity                                                             535.6              539.6
----------------------------------------------------------------------------------------------------------------------------
Preferred and Preference Stock                                                                     223.3              222.1
----------------------------------------------------------------------------------------------------------------------------
Long-term debt                                                                                   1,061.0            1,060.8
----------------------------------------------------------------------------------------------------------------------------
     Total Capitalization                                                                        1,819.9            1,822.5
----------------------------------------------------------------------------------------------------------------------------
Obligations Under Capital Leases                                                                     3.2               10.3
----------------------------------------------------------------------------------------------------------------------------
Current Liabilities:
Notes payable and current debt maturities                                                             --                0.8
Other current liabilities                                                                          139.7              187.3
----------------------------------------------------------------------------------------------------------------------------
     Total Current Liabilities                                                                     139.7              188.1
----------------------------------------------------------------------------------------------------------------------------
Non-Current Liabilities:
Deferred income taxes - net                                                                        563.3              568.7
Warwick mine liability                                                                              38.6               40.1
Other                                                                                              140.9              147.9
----------------------------------------------------------------------------------------------------------------------------
     Total Non-Current Liabilities                                                                 742.8              756.7
----------------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note D)
----------------------------------------------------------------------------------------------------------------------------
     Total Capitalization and Liabilities                                                      $ 2,705.6          $ 2,777.6
============================================================================================================================
</TABLE>

See notes to condensed consolidated financial statements.

                                       3
<PAGE>

Duquesne Light Condensed Statement of Consolidated Cash Flows (Unaudited)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                         (Millions of Dollars,
                                                                                        Except Per Share Amounts)
                                                                                       -----------------------------
                                                                                               Six Months
                                                                                              Ended June 30,
                                                                                       -----------------------------
                                                                                          2001               2000
--------------------------------------------------------------------------------------------------------------------
<S>                                                                                    <C>               <C>
Cash Flows From Operating Activities:
Operations                                                                             $   146.1         $    160.7
Prepaid taxes                                                                                 --             (300.0)
Changes in working capital other than cash                                                 (78.6)              44.7
Other                                                                                       (9.5)             (21.4)
--------------------------------------------------------------------------------------------------------------------
   Net Cash Provided By (Used In) Operating Activities                                      58.0             (116.0)
--------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
Capital expenditures                                                                       (26.3)             (38.2)
Divestiture costs                                                                             --              (89.6)
Acquisitions                                                                                  --              (32.0)
Sale of generation assets                                                                     --            1,705.0
Proceeds from sale of assets                                                                 3.9               21.1
Other                                                                                       (1.1)              (7.6)
--------------------------------------------------------------------------------------------------------------------
   Net Cash (Used In) Provided By Investing Activities                                     (23.5)           1,558.7
--------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
Dividends on capital stock                                                                 (21.7)            (257.7)
Reductions of long-term obligations - net                                                   (7.6)            (749.2)
Loan to affiliate                                                                             --             (250.0)
Issuance of commercial paper                                                                  --             (136.6)
Other                                                                                       (1.0)              (2.8)
--------------------------------------------------------------------------------------------------------------------
   Net Cash (Used In) Provided By Financing Activities                                     (30.3)          (1,396.3)
--------------------------------------------------------------------------------------------------------------------
Net increase in cash and temporary cash investments                                          4.2               46.4
Cash and temporary cash investments at beginning of period                                 173.5               16.1
--------------------------------------------------------------------------------------------------------------------
   Cash and Temporary Cash Investments at End of Period                                $   177.7         $     62.5
====================================================================================================================
</TABLE>

See notes to condensed consolidated financial statements.

                                       4
<PAGE>

Duquesne Light Condensed Statement of Consolidated Comprehensive Income
(Unaudited)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------
                                                                         (Millions of Dollars, Except Per Share Amounts)
                                                                      ------------------------------------------------------
                                                                              Three Months            Six Months
                                                                              Ended June 30,         Ended June 30,
                                                                      ------------------------------------------------------
                                                                           2001          2000      2001          2000
<S>                                                                      <C>            <C>        <C>          <C>
---------------------------------------------------------------------------------------------------------------------------
Net income                                                             $   15.5    $      3.6    $  25.3       $ 56.8
---------------------------------------------------------------------------------------------------------------------------
Other comprehensive income:
   Unrealized holding (losses) gains arising during the period,
     net of tax of $(3.5), $(3.3), $(5.4), and $1.2                        (4.9)         (4.6)      (7.6)         1.7
---------------------------------------------------------------------------------------------------------------------------
Comprehensive Income                                                   $   10.6    $     (1.0)   $  17.7       $ 58.5
===========================================================================================================================
</TABLE>

See notes to condensed consolidated financial statements.

Notes to Consolidated Financial Statements

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation
   Duquesne Light Company is a wholly owned subsidiary of DQE, Inc., a
multi-utility delivery and services company. We are engaged in the transmission
and distribution of electric energy. Our various subsidiaries are primarily
involved in operating our automated meter reading technology and providing
financing to certain affiliates.

   All material intercompany balances and transactions have been eliminated in
the preparation of the consolidated financial statements.

DQE's Strategic Review Process
   DQE has concluded its strategic review process, the goal of which was to
determine a long-term strategic direction in order to maximize value to
shareholders. DQE's strategic focus will be on its utility operations, including
Duquesne Light.

Basis of Accounting
   We are subject to the accounting and reporting requirements of the Securities
and Exchange Commission (SEC). Our electricity delivery business is also subject
to regulation by the Pennsylvania Public Utility Commission (PUC) and the
Federal Energy Regulatory Commission (FERC) with respect to rates for delivery
of electric power, accounting and other matters.

   In the opinion of management, the unaudited condensed consolidated financial
statements included in this report reflect all adjustments that are necessary
for a fair presentation of the results of interim periods and are normal,
recurring adjustments. Prior periods have been reclassified to conform with
current accounting presentations. In addition, the 2000 results of operations by
business segment have been revised to conform with our current accounting
presentations as a result of the PUC's final accounting order issued in January
2001 regarding the proceeds of our generation asset sale.

   These statements should be read with the financial statements and notes
included in our Annual Report on Form 10-K for the year ended December 31, 2000
filed with the Securities and Exchange Commission. The results of operations for
the three and six months ended June 30, 2001, are not necessarily indicative of
the results that may be expected for the full year. The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities, at the date of the financial statements. The
reported amounts of revenues and expenses during the reporting period also may
be affected by the estimates and assumptions management is required to make.
Actual results could differ from those estimates.

Recent Accounting Pronouncements

   On July 20, 2001 the Financial Accounting Standards Board issued two new
accounting standards, Statement of Financial Accounting Standards (SFAS) No.
141, "Business Combinations," and SFAS No. 142, "Goodwill and Other
Intangibles."

   SFAS No. 141 eliminates the pooling-of-interests method of accounting for
business combinations with limited exceptions for combinations initiated prior
to July 1, 2001. We do not believe the adoption of this statement will have a
significant impact on our financial statements.

   SFAS No. 142, which becomes effective January 1, 2002, discontinues the
requirement for amortization of goodwill and indefinite-lived intangible assets,
and instead requires an annual review for the impairment of those assets.
Impairment is to be examined more frequently if certain indicators appear.
Intangible assets with a determinable life will continue to be amortized. We are
currently evaluating, but have yet to determine, the impact that the adoption of
this statement will have on our financial statements.

B. RATE MATTERS

Competition and the Customer Choice Act
   The Pennsylvania Electricity Generation Customer Choice and Competition Act
(Customer Choice Act) enables Pennsylvania's electric utility customers to
purchase electricity at market prices from a variety of electric generation
suppliers (customer choice). As of July 31, 2001, approximately 14 percent of
our customers had chosen alternative generation suppliers measured on both a
kilowatt-hour (KWH) basis and a non-coincident peak load basis. The remaining
customers are provided with electricity through our provider of last resort
service arrangement with Orion (discussed below). As alternative generation
suppliers enter and exit the retail supply business, the number of customers
participating in our provider of last resort service will fluctuate.

   Customers who select an alternative generation supplier pay for generation
charges set competitively by that supplier, and pay us for a competitive
transition charge (discussed below) and transmission and distribution

                                       5
<PAGE>

charges. Electricity delivery (including transmission, distribution and customer
service) remains regulated in substantially the same manner as under historical
regulation.

Regional Transmission Organization
   FERC Order No. 2000 calls on transmission-owning utilities such as Duquesne
Light to voluntarily join regional transmission organizations (RTOs). We are
committed to reducing customer costs while ensuring a stable, plentiful supply
of electricity for our customers. Toward that end we concluded, as part of DQE's
strategic review, that we will join the Pennsylvania-New Jersey-Maryland
interconnection to establish the PJM West RTO. Our inclusion in this RTO will
put the region's transmission facilities under common control to reduce long-
term energy costs and enhance reliability to customers.

Competitive Transition Charge
   In its final restructuring order issued in the second quarter of 1998, the
PUC determined that we should recover most of the above-market costs of our
generation assets, including plant and regulatory assets, through the collection
of the competitive transition charge (CTC) from electric utility customers. On
January 18, 2001, the PUC issued an order approving our final accounting for the
proceeds of our April 2000 generation asset sale, including the net recovery of
$276 million of sale-related transaction costs. Applying the net generation
asset sale proceeds to reduce transition costs, we now anticipate termination of
the CTC collection period in early 2002 for most major rate classes. Rates are
then expected to decrease 18 percent for an average residential customer who
continues to take provider of last resort service from us pursuant to the second
agreement with Orion discussed below. This rate decrease reflects the additional
cost of electric capacity required by RTO membership. (See "Regional
Transmission Organization" discussion above.) The transition costs, as reflected
on the consolidated balance sheet, are being amortized over the same period that
the CTC revenues are being recognized. For regulatory purposes, the unrecovered
balance of transition costs that remain following the generation asset sale was
approximately $277.2 million ($169.1 million net of tax) at June 30, 2001, on
which we are allowed to earn an 11 percent pre-tax return. A slightly lower
amount is shown on the balance sheet due to the accounting for unbilled revenues
adopted during 2000.

Provider of Last Resort
   Although no longer a generation supplier, as the provider of last resort for
all customers in our service territory, we must provide electricity for any
customer who does not choose an alternative generation supplier, or whose
supplier fails to deliver. As part of the generation asset sale, Orion agreed to
supply us with all of the electric energy necessary to satisfy our provider of
last resort obligations during the CTC collection period. On December 20, 2000,
the PUC approved a second agreement that extends Orion's provider of last resort
arrangement (and the PUC-approved rates for the supply of electricity) beyond
the final CTC collection through 2004 (POLR II). The agreement also allows us,
following the CTC collection, an average margin of 0.5 cents per KWH supplied
through this arrangement. Except for this margin, these agreements, in general,
effectively transfer to Orion the financial risks and rewards associated with
our provider of last resort obligations. While we retain the collection risk for
the electricity sales, a component of our regulated delivery rates is designed
to cover the cost of a normal level of uncollectible accounts.

Rate Freeze
   An overall four-and-one-half-year rate cap from January 1, 1997, was
originally imposed on the transmission and distribution charges of Pennsylvania
electric utility companies under the Customer Choice Act. As part of a
settlement regarding recovery of deferred fuel costs, we agreed to extend this
rate cap for an additional six months through the end of 2001. Subsequently, in
connection with the POLR II agreement described above, we negotiated a rate
freeze for generation, transmission and distribution rates. The rate freeze
fixes new generation rates for retail customers who take electricity under the
extended provider of last resort arrangement, and continues the transmission and
distribution rates for all customers at current levels through at least 2003.
Under certain circumstances, affected interests may file a complaint alleging
that, under these frozen rates, we have exceeded reasonable earnings, in which
case the PUC could make adjustments to rectify such earnings.


C. RECEIVABLES

   The components of receivables for the periods indicated are as follows:

<TABLE>
<CAPTION>

                                 (Millions of Dollars)
                         -----------------------------------------
                            June 30,    June 30,    December 31,
                              2001        2000         2000
------------------------------------------------------------------
<S>                       <C>         <C>          <C>
Electric customers         $  94.9    $   101.8     $   87.0
Unbilled revenue
     accrual                  46.4         50.0         47.2
Other utility                 13.1         11.6         16.6
DQE loan                     250.0        250.0        250.0
Other                         42.7         30.0         33.7
   Less: (Allowance for
        uncollectible
        accounts)             (9.4)       (10.8)        (9.8)
------------------------------------------------------------
          Total            $ 437.7    $   432.6      $ 424.7
============================================================
</TABLE>

                                       6
<PAGE>

D. COMMITMENTS AND CONTINGENCIES

   We estimate that in 2001 we will spend, excluding the allowance for funds
used during construction, approximately $60 million for electric utility
construction.


E. BUSINESS SEGMENTS AND RELATED INFORMATION

   We report our results by the following three principal business segments,
determined by products, services and regulatory environment: (1) the
transmission and distribution of electricity (electricity delivery business
segment), (2) the supply of electricity (electricity supply business segment)
and (3) the collection of transition costs (CTC business segment). With the
completion of our generation asset sale in April 2000, the electricity supply
business segment is now comprised solely of provider of last resort service.

Business Segments for the Three Months Ended:
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                (Millions of Dollars)
                                             ---------------------------------------------------------
                                               Electricity   Electricity                   Consoli-
                                                 Delivery       Supply         CTC           dated
                                             ---------------------------------------------------------
June 30, 2001
------------------------------------------------------------------------------------------------------
<S>                                          <C>             <C>          <C>             <C>
Operating revenues                              $     80.6    $  108.8    $       73.9    $     263.3
Operating expenses                                    41.0       108.8             5.2          155.7
Depreciation and amortization expense                 14.8          --            65.2           80.0
------------------------------------------------------------------------------------------------------
   Operating income                                   24.8          --             3.5           27.6
Other income                                           6.4          --              --            7.1
Interest and other charges                            20.1          --              --           20.1
------------------------------------------------------------------------------------------------------
   Earnings for common stock                    $     11.1    $     --    $        3.5    $      14.6
======================================================================================================

Assets                                          $  2,438.7    $     --    $      266.9    $   2,705.6
======================================================================================================

Capital expenditures                            $     15.4    $     --    $         --    $      15.4
======================================================================================================
<CAPTION>
                                                                (Millions of Dollars)
                                             ---------------------------------------------------------
                                               Electricity   Electricity                   Consoli-
                                                 Delivery       Supply         CTC           dated
                                             ---------------------------------------------------------
June 30, 2000
------------------------------------------------------------------------------------------------------
<S>                                          <C>             <C>          <C>             <C>
Operating revenues                              $     75.5    $  114.3    $       83.1    $     272.9
Operating expenses                                    42.3       123.9             9.2          175.4
Depreciation and amortization expense                 14.1         0.5            63.6           78.2
------------------------------------------------------------------------------------------------------
   Operating income (loss)                            19.1       (10.1)           10.3           19.3
Other income                                           7.8        (0.7)             --            7.1
Interest and other charges                            18.5         5.2              --           23.7
------------------------------------------------------------------------------------------------------
   Earnings (loss) for common stock             $      8.4    $  (16.0)   $       10.3    $       2.7
======================================================================================================

Assets (1)                                      $  2,381.2    $     --    $      396.4    $   2,777.6
======================================================================================================

Capital expenditures                            $     22.1    $    4.7    $         --    $      26.8
======================================================================================================
</TABLE>

(1) Asset balance as of December 31, 2000.

                                       7
<PAGE>

Business Segments for the Six Months Ended:
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                (Millions of Dollars)
                                             ---------------------------------------------------------
                                               Electricity   Electricity                   Consoli-
                                                 Delivery       Supply         CTC           dated
                                             ---------------------------------------------------------
June 30, 2001
------------------------------------------------------------------------------------------------------
<S>                                          <C>             <C>          <C>             <C>
Operating revenues                              $    154.4    $  206.4    $      148.0    $     508.8
Operating expenses                                    80.7       206.4            10.8          297.9
Depreciation and amortization expense                 29.6          --           129.5          159.1
------------------------------------------------------------------------------------------------------
   Operating income                                   44.1          --             7.7           51.8
Other income                                          12.2          --              --           12.2
Interest and other charges                            40.4          --              --           40.4
------------------------------------------------------------------------------------------------------
   Earnings for common stock                    $     15.9    $     --    $        7.7    $      23.6
======================================================================================================

Assets                                          $  2,438.7    $     --    $      266.9    $   2,705.6
======================================================================================================

Capital expenditures                            $     26.3    $     --    $         --    $      26.3
======================================================================================================
<CAPTION>
                                                                (Millions of Dollars)
                                             ---------------------------------------------------------
                                               Electricity   Electricity                   Consoli-
                                                 Delivery       Supply         CTC           dated
                                             ---------------------------------------------------------
June 30, 2000
------------------------------------------------------------------------------------------------------
<S>                                          <C>             <C>          <C>             <C>
Operating revenues                              $    151.5    $  209.9    $      169.5    $     530.9
Operating expenses                                    92.1       197.4            26.2          315.7
Depreciation and amortization expense                 28.0         2.1           108.5          138.6
------------------------------------------------------------------------------------------------------
   Operating income                                   31.4        10.4            34.8           76.6
Other income                                           8.8         2.8              --           11.6
Interest and other charges                            27.4        21.2              --           48.6
------------------------------------------------------------------------------------------------------
   Income (loss) before cumulative effect             12.8        (8.0)           34.8           39.6
   Cumulative effect - net                             7.3         8.2              --           15.5
------------------------------------------------------------------------------------------------------
   Earnings for common stock                    $     20.1    $    0.2    $       34.8    $      55.1
======================================================================================================

Assets (1)                                      $  2,381.2    $     --    $      396.4    $   2,777.6
======================================================================================================

Capital expenditures                            $     33.5    $    4.7    $         --    $      38.2
======================================================================================================
</TABLE>

(1) Asset balance as of December 31, 2000.

                                       8
<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   RESULTS OF OPERATIONS

   Part I, Item 2 of this Quarterly Report on Form 10-Q should be read in
conjunction with our Annual Report on Form 10-K for the year ended December 31,
2000 filed with the Securities and Exchange Commission (SEC) and our condensed
consolidated financial statements, which are set forth on pages 2 through 8 of
this Report.

   Duquesne Light Company is a wholly owned subsidiary of DQE, Inc., a
multi-utility delivery and services company. We are engaged in the transmission
and distribution of electric energy. Our various subsidiaries are primarily
involved in operating our automated meter reading technology and providing
financing to certain affiliates.

DQE's Strategic Review Process
   DQE has concluded its strategic review process, the goal of which was to
determine a long-term strategic direction in order to maximize value to
shareholders. DQE's strategic focus will be on its utility operations, including
Duquesne Light.

Service Area
   We provide service to approximately 580,000 direct customers in southwestern
Pennsylvania (including in the City of Pittsburgh), a territory of approximately
800 square miles. Before completing the generation asset sale, we historically
sold electricity to other utilities. (See "Competitive Transition Charge"
discussion on page 12.)

Regulation
   We are subject to the accounting and reporting requirements of the Securities
and Exchange Commission (SEC). Our electricity delivery business is also subject
to regulation by the Pennsylvania Public Utility Commission (PUC) and the
Federal Energy Regulatory Commission (FERC) with respect to rates for delivery
of electric power, accounting and other matters.


RESULTS OF OPERATIONS

Overall Performance
   Comparison of Three Months Ended June 30, 2001 and June 30, 2000. Our
earnings available for common stock were $14.6 million in the second quarter of
2001, compared to $2.7 million in the second quarter of 2000. The $11.9 million
increase is primarily due to a $16.0 million loss from the electricity supply
segment due to the sale of our generation assets in the second quarter of 2000.

   Comparison of Six Months Ended June 30, 2001 and June 30, 2000. Our earnings
available for common stock were $23.6 million in 2001, compared to $55.1 million
in the first six months of 2000, which included the one-time $15.5 million
cumulative effect of accounting change for adopting the accrual of unbilled
revenues. Absent this one-time effect in 2000, our earnings available for common
stock decreased $16.0 million or 40 percent. The decrease is primarily due to a
$27.1 million reduction in earnings in conjunction with decreased average CTC
balance subsequent to the generation asset sale.

Results of Operations by Business Segment
   We report our results by the following three principal business segments,
determined by products, services and regulatory environment: (1) the
transmission and distribution of electricity (electricity delivery business
segment), (2) the supply of electricity (electricity supply business segment),
and (3) the collection of transition costs (CTC business segment). With the
completion of our generation asset sale on April 28, 2000, the electricity
supply business segment is now comprised solely of provider of last resort
service. (See Note E, "Business Segments and Related Information," in the Notes
to the Consolidated Financial Statements on page 7.)

  Electricity Delivery Business Segment.
   Comparison of Three Months Ended June 30, 2001 and June 30, 2000. The
electricity delivery business segment contributed $10.7 million to earnings
available for common stock in the second quarter of 2001 compared to $8.4
million in the second quarter of 2000, an increase of $2.3 million or 27.4
percent. The increase is primarily the result of higher revenues from electric
utility customers and increased operating efficiencies during the second quarter
of 2001.
   Operating revenues for this business segment are primarily derived from the
delivery of electricity. Sales to residential and commercial customers are
influenced by weather conditions. Warmer summer and colder winter seasons lead
to increased customer use of electricity for cooling and heating. Commercial
sales also are affected by regional development. Sales to industrial customers
are influenced primarily by national and global economic conditions.
   Operating revenues increased by $5.1 million or 6.8 percent compared to the
second quarter of 2000. Although overall sales to electric utility customers
decreased 1.8 percent, the increase is due to the favorable sales mix between
residential, commercial, and industrial customers. Industrial customers are
charged a lower rate for the delivery of electricity. The following table sets
forth kilowatt-hours (KWH) delivered to electric utility customers.

                                       9
<PAGE>

---------------------------------------------------------------------
                                               KWH Delivered
                                     --------------------------------
                                               (In Millions)
                                     --------------------------------
Second Quarter                          2001        2000     Change
---------------------------------------------------------------------
Residential                              817         816       0.1 %
Commercial                             1,568       1,545       1.5 %
Industrial                               822         903      (9.0)%
--------------------------------------------------------------
   Sales to Electric
     Utility Customers                 3,207       3,264      (1.8)%
=====================================================================

   Operating expenses for the electricity delivery business segment primarily
are made up of costs to operate and maintain the transmission and distribution
system; automated meter reading and billing costs; customer service; collection;
administrative expenses; income taxes; and non-income taxes, such as gross
receipts, property and payroll taxes. Operating expenses decreased $1.3 million
or 3.1 percent compared to 2000, primarily due to $5.6 million of cost savings
realized from our Best-in-Class initiatives begun in late 2000, offset by a
higher effective tax rate in 2001.
   Depreciation and amortization expense increased $0.7 million or 4.9 percent
in the second quarter of 2001 compared to the second quarter of 2000. This
increase can be primarily attributed to depreciation expense on capital
additions.
   Other income decreased $1.4 million compared to the second quarter of 2000,
due to the dividend of an operating subsidiary to DQE, partially offset by
interest income. In addition, all other income is being allocated to the
electricity delivery business segment in 2001.
   Interest and other charges include interest on long-term debt, other interest
and preferred stock dividends. Interest expense on long-term debt in the second
quarter of 2001 was $16.1 million, an 18.3 percent decrease from the second
quarter of 2000. This decrease reflects the results of our recapitalization
program. Total interest and other charges increased $1.6 million or 8.7 percent
compared to the second quarter of 2000. Although we retired debt with generation
asset sale proceeds, thus reducing our overall level of interest expense, all
remaining interest costs after recapitalization are borne by the electricity
delivery business segment.
   Comparison of Six Months Ended June 30, 2001 and June 30, 2000. The
electricity delivery business segment contributed $15.9 million to earnings
available for common stock in the first six months of 2001 compared to $20.1
million in the first six months of 2000, a decrease of $4.2 million or 20.9
percent. This decrease is primarily due to the $7.3 million non-recurring
cumulative effect of a change in accounting principle for unbilled revenues.
   Operating revenues for this business segment are primarily derived from the
delivery of electricity. Sales to residential and commercial customers are
influenced by weather conditions. Warmer summer and colder winter seasons lead
to increased customer use of electricity for cooling and heating. Commercial
sales also are affected by regional development. Sales to industrial customers
are influenced primarily by national and global economic conditions.
   Operating revenues increased by $2.9 million or 1.9 percent compared to the
first six months of 2000. Although overall sales to electric utility customers
decreased 1.8 percent, the increase is due to the favorable sales mix between
residential, commercial, and industrial customers. Industrial customers are
charged a lower rate for the delivery of electricity. The following table sets
forth KWH delivered to electric utility customers.

---------------------------------------------------------------------
                                               KWH Delivered
                                     --------------------------------
                                               (In Millions)
                                     --------------------------------
First Six Months                        2001        2000     Change
---------------------------------------------------------------------
Residential                            1,718       1,688       1.8 %
Commercial                             3,054       3,025       1.0 %
Industrial                             1,659       1,833      (9.5)%
--------------------------------------------------------------
   Sales to Electric
     Utility Customers                 6,431       6,546      (1.8)%
=====================================================================

   Operating expenses for the electricity delivery business segment primarily
are made up of costs to operate and maintain the transmission and distribution
system; automated meter reading and billing costs; customer service; collection;
administrative expenses; income taxes; and non-income taxes, such as gross
receipts, property and payroll taxes. Operating expenses decreased $11.4 million
or 12.4 percent compared to 2000, primarily due to $7.0 million of cost savings
realized from our Best-in-Class initiatives begun in late 2000, and the dividend
of an operating subsidiary to DQE in 2000.
   Depreciation and amortization expense increased $1.6 million or 5.7 percent
in the first six months of 2001 compared to 2000. This increase can be primarily
attributed to depreciation expense on capital additions.
   Other income increased $3.4 million compared to the first six months of 2000,
due to increased earnings on a higher level of temporary cash investments and
interest income related to the $250 million loan to DQE made in the second
quarter of 2000. In addition, all other income is being allocated to the
electricity delivery business segment in 2001.
   Interest and other charges include interest on long-term debt, other interest
and preferred stock dividends. Interest expense on long-term debt in the first
six months of 2001 was $32.4 million, a 20.2 percent decrease from 2000. This
decrease reflects the results of our recapitalization program. During the first
six months

                                       10
<PAGE>

of 2001, there was $13.0 million more of total interest and other charges
allocated to the electricity delivery business segment compared to 2000.
Although we retired debt with generation asset sale proceeds, thus reducing our
overall level of interest expense, all remaining interest costs after
recapitalization are borne by the electricity delivery business segment.

   Electricity Supply Business Segment.
   Subsequent to the April 2000 generation asset sale and until the POLR II
period begins, the electricity supply business segment is designed to break even
in accordance with PUC-approved accounting treatment. This segment consists
solely of our provider of last resort obligation to customers who cannot or do
not choose to shop for an alternative generation supplier. During the POLR II
period, we will be allowed to earn an average margin of 0.5 cents per KWH
supplied to customers not shopping.

   By comparison, the electricity supply business segment recorded a net loss of
$16.0 million in the second quarter of 2000 and $0.2 million of net income for
the first six months of 2000. Included in the results for the first six months
of 2000 is $8.2 million related to the non-recurring cumulative effect of a
change in accounting principle for unbilled revenues. Absent this cumulative
effect, the electricity supply segment had an $8.0 million net loss during that
period.

   CTC Business Segment.
   We earn an 11 percent pre-tax return on our net unrecovered transition cost
balance. With the successful completion of the generation asset sale in April
2000, we recovered approximately $1.0 billion of our PUC-approved transition
costs. As a result, our average after-tax transition cost balance decreased from
approximately $577 million in the second quarter of 2000 to approximately $196
million in the second quarter of 2001, resulting in a $6.8 million decrease in
earnings for this segment.

   Our average after-tax transition cost balance decreased from approximately
$973 million in the first six months of 2000 to approximately $216 million in
2001, resulting in a $27.1 million decrease in earnings for this segment.


LIQUIDITY AND CAPITAL RESOURCES

Capital Expenditures
   We estimate that during 2001 we will spend, excluding the allowance for funds
used during construction, approximately $60 million for electric utility
construction. During the first six months of 2001, we have spent approximately
$26.3 million on capital expenditures related to the electricity delivery
business.

Acquisitions and Dispositions
   During the first six months of 2001, we did not make any acquisitions, but we
received approximately $3.9 million of proceeds for the disposition of an
affordable housing fund and other non-strategic assets.

   During the first six months of 2000, we purchased from Itron, Inc. the
Customer Advanced Reliability System, the automated electronic meter reading
system developed by Itron for use with our electric utility customers. We had
previously leased these assets.

   On April 28, 2000, we completed the sale of our generation assets to Orion
for approximately $1.7 billion.

Financing
   At June 30, 2001, we had no commercial paper borrowings outstanding or
current debt maturities. We did not engage in any short-term borrowing activity
in the second quarter as our cash balance of $173.5 million at the beginning of
the year was sufficient to support our operating requirements.

Future Capital Requirements and Availability
   We maintain a $225 million revolving credit agreement expiring in September
2001. We have the option to extend or convert the revolver into a term loan
facility for a period of two years for any amounts then outstanding upon
expiration of the revolving credit period. Interest rates can, in accordance
with the option selected at the time of the borrowing, be based on one of
several indicators, including prime, Eurodollar, or certificate of deposit
rates. Facility fees are based on the unborrowed amount of the commitment. At
June 30, 2001, no borrowings were outstanding.

   With customer choice fully in effect, and our generation asset divestiture
complete, all of our electric utility customers are now buying their generation
directly from alternative suppliers or indirectly from Orion through the
provider of last resort service arrangement. Customer revenues on the income
statement include revenues from provider of last resort customers. Although we
collect these revenues, we pass them on (net of gross receipts tax) to Orion. In
addition, rates for an average residential customer who takes provider of last
resort service from us are expected to drop by 18 percent with the final CTC
collection. This rate decrease reflects the additional cost of electric capacity
required by regional transmission organization (RTO) membership. We also agreed
to freeze generation rates through 2004 and transmission and distribution rates
through 2003. However, we expect to realize incremental margin through our
extended provider of last resort arrangement. (See "Regional Transmission
Organization," "Provider of Last Resort" and "Rate Freeze" discussions on page
12.)

                                       11
<PAGE>

RATE MATTERS

Competition and the Customer Choice Act
   The Customer Choice Act enables Pennsylvania's electric utility customers to
purchase electricity at market prices from a variety of electric generation
suppliers (customer choice). As of July 31, 2001, approximately 14 percent of
our customers had chosen alternative generation suppliers measured on both a KWH
basis and a non-coincident peak load basis. The remaining customers are provided
with electricity through our provider of last resort service arrangement with
Orion (discussed below). As alternative generation suppliers enter and exit the
retail supply business, the number of customers participating in our provider of
last resort service will fluctuate.

   Customers who select an alternative generation supplier pay for generation
charges set competitively by that supplier, and pay us a competitive transition
charge (discussed below) and transmission and distribution charges. Electricity
delivery (including transmission, distribution and customer service) remains
regulated in substantially the same manner as under historical regulation.

Regional Transmission Organization
   FERC Order No. 2000 calls on transmission-owning utilities such as Duquesne
Light to voluntarily join RTOs. We are committed to reducing customer costs
while ensuring a stable, plentiful supply of electricity for our customers.
Toward that end we concluded, as part of DQE's strategic review, that we will
join the Pennsylvania-New Jersey-Maryland interconnection to establish the PJM
West RTO. Our inclusion in this RTO will put the region's transmission
facilities under common control to reduce long-term energy costs and enhance
reliability to customers.

Competitive Transition Charge
   In its final restructuring order issued in the second quarter of 1998, the
PUC determined that we should recover most of the above-market costs of our
generation assets, including plant and regulatory assets, through the collection
of the competitive transition charge (CTC) from electric utility customers. On
January 18, 2001, the PUC issued an order approving our final accounting for the
proceeds of our April 2000 generation asset sale, including the net recovery of
$276 million of sale-related transaction costs. Applying the net generation
asset sale proceeds to reduce transition costs, we now anticipate termination of
the CTC collection period in early 2002 for most major rate classes. Rates are
then expected to decrease 18 percent for an average residential customer who
continues to take provider of last resort service from us pursuant to the second
agreement with Orion discussed below. This rate decrease reflects the additional
cost of electric capacity required by RTO membership. (See "Regional
Transmission Organization" discussion above.) The transition costs, as reflected
on the consolidated balance sheet, are being amortized over the same period that
the CTC revenues are being recognized. For regulatory purposes, the unrecovered-
balance of transition costs that remain following the generation asset sale was
approximately $277.2 million ($169.1 million net of tax) at June 30, 2001, on
which we are allowed to earn an 11 percent pre-tax return. A slightly lower
amount is shown on the balance sheet due to the accounting for unbilled revenues
adopted during 2000.

Provider of Last Resort
   Although no longer a generation supplier, as the provider of last resort for
all customers in our service territory, we must provide electricity for any
customer who does not choose an alternative generation supplier, or whose
supplier fails to deliver. As part of the generation asset sale, Orion agreed to
supply us with all of the electric energy necessary to satisfy our provider of
last resort obligations during the CTC collection period. On December 20, 2000,
the PUC approved a second agreement that extends Orion's provider of last resort
arrangement (and the PUC-approved rates for the supply of electricity) beyond
the final CTC collection through 2004 (POLR II). The agreement also permits us,
following CTC collection, an average margin of 0.5 cents per KWH supplied
through this arrangement. Except for this margin, these agreements, in general,
effectively transfer to Orion the financial risks and rewards associated with
our provider of last resort obligations. While we retain the collection risk for
the electricity sales, a component of our regulated delivery rates is designed
to cover the cost of a normal level of uncollectible accounts.

Rate Freeze
   An overall four-and-one-half-year rate cap from January 1, 1997, was
originally imposed on the transmission and distribution charges of Pennsylvania
electric utility companies under the Customer Choice Act. As part of a
settlement regarding recovery of deferred fuel costs, we agreed to extend this
rate cap for an additional six months through the end of 2001. Subsequently, in
connection with the POLR II agreement described above, we negotiated a rate
freeze for generation, transmission and distribution rates. The rate freeze
fixes new generation rates for retail customers who take electricity under the
extended provider of last resort arrangement, and continues the transmission and
distribution rates for all customers at current levels through at least 2003.
Under certain circumstances, affected interests may file a complaint alleging
that, under these frozen rates, we have exceeded reasonable earnings, in which
case the PUC could make adjustments to rectify such earnings.

                                       12
<PAGE>

Outlook
   Having completed one of the quickest transitions to competitive markets in
the country, we will expand our opportunities created by our position as an
industry leader in Pennsylvania's emerging deregulated marketplace.

   We are committed to reducing customer costs while ensuring a stable,
plentiful supply of electricity for our customers. Toward that end, we will join
the PJM interconnection to establish the PJM West RTO.

   Our restructuring related to implementation of the Customer Choice Act will
have a major beneficial impact on customers early next year. As a result of the
success of our generation sale, we anticipate recovering our competitive
transition costs in early 2002 for most major classes of customers -- seven
years earlier than any other major Pennsylvania utility. At that time, our
customers would have been subject to market prices for the supply of
electricity. However, we will continue to provide capped prices for electricity
to our provider of last resort customers through 2004 as part of POLR II. The
rates capped under this plan will not only provide price certainty for our
customers, but when combined with the impact of eliminating the CTC, the new
rates will reduce the total charge for electricity to an average residential
customer by 18 percent. That rate decrease also reflects the additional cost of
electric capacity required by PJM membership.

   With this plan in place, we are focusing our attention on additional
opportunities beyond the 2004 period. Given current volatile electricity market
conditions, support exists for us to further extend our capped rate plan. We are
currently evaluating various energy supply alternatives to meet this
opportunity. We anticipate finalizing our specific plan to provide these
valuable services to our customers by year-end.

   This "Outlook" section contains forward-looking statements, the results of
which may materially differ from those implied due to known and unknown risks
and uncertainties. These statements, and certain of the risks and uncertainties
that may affect the results, are discussed below. Demand for electric utility
services, as well as changing market and weather conditions, will affect cash
flow, returns on investment and earnings levels. Energy prices will affect the
number of customers using our provider of last resort service, which in turn
will affect earnings from POLR II margins. Overall performance will also be
affected by economic, competitive, regulatory, governmental and technological
factors affecting operations, markets, products, services and prices, as well as
the factors discussed in our SEC filings made to date.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

   Market risk represents the risk of financial loss that may impact our
consolidated financial position, results of operations or cash flows due to
adverse changes in market prices and rates.

   We manage our interest rate risk by balancing our exposure between fixed and
variable rates while attempting to minimize our interest costs. Currently, our
variable interest rate debt is approximately $418 million or 40 percent of
long-term borrowings. Most of this variable rate debt is low-cost, tax-exempt
debt. We also manage our interest rate risk by retiring and issuing debt from
time to time and by maintaining a balance of short-term, medium-term and
long-term debt. A 10 percent increase in interest rates would have affected our
variable rate debt obligations by increasing interest expense by approximately
$0.6 million for the six months ended June 30, 2001 and $0.8 million for the six
months ended June 30, 2000. A 10 percent reduction in interest rates would have
increased the market value of our fixed rate debt by approximately $41.1 million
and $11.8 million as of June 30, 2001 and June 30, 2000. Such changes would not
have had a significant near-term effect on our future earnings or cash flows.


   Except for historical information contained herein, the matters discussed in
this annual report are forward-looking statements that involve risks and
uncertainties including, but not limited to: economic, competitive, governmental
and technological factors affecting operations, markets, products, services and
prices; and other risks discussed in "Outlook" and our filings with the
Securities and Exchange Commission.

PART II. OTHER INFORMATION.

Item 6. Exhibits and Reports on Form 8-K

a. Exhibits:

   EXHIBIT  12.1 - Calculation of Ratio of Earnings to Fixed Charges and
                   Preferred and Preference Stock Dividend Requirements.

b. We filed no reports on Form 8-K during the quarter ended June
30, 2001.

             -----------------------------

                                       13
<PAGE>

                                  SIGNATURES

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


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





Date August 14, 2001               /s/ Frosina C. Cordisco
--------------------               ------------------------
                                          (Signature)
                                      Frosina C. Cordisco
                                           Treasurer
                                  (Principal Financial Officer)





Date August 14, 2001               /s/ James E. Wilson
--------------------               -------------------
                                        (Signature)
                                     James E. Wilson
                         Vice President and Chief Accounting Officer
                                (Principal Accounting Officer)

                                       14