================================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)

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

For the quarter ended March 31, 2004
                                       OR

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

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

 0001261679       MSW Energy Holdings LLC          Delaware         14-1873119
 0001261680       MSW Energy Finance Co., Inc.     Delaware         20-0047886
Commission        (Exact name of each           (State or other   (I.R.S.
File Number       registrant as specified       jurisdiction of   Employer
                  in its charter)               incorporation or  Identification
                                                 organization)    Number)


                        c/o American Ref-Fuel Company LLC
                             155 Chestnut Ridge Road
                           Montvale , New Jersey 07645
                             Phone No. 800-727-3835

   (Address, including zip code, and telephone number, including area code, of
                 the registrants' principal executive offices)

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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act):

MSW Energy Holdings LLC:        yes  [  ]   no  [X]
MSW Energy Finance Co., Inc:     yes  [  ]   no  [X]

 Indicate the number of shares outstanding of each of the registrants' classes
of common stock, as of the latest practicable date.

MSW Energy Holdings LLC:     None
MSW Energy Finance Co., Inc:  100 shares of Common Stock

Documents Incorporated by Reference:  None

MSW Energy  Finance Co.,  Inc.  meets the  conditions  set forth in General
Instruction  H 1(a) and (b) of Form 10-Q and is therefore  filing this Form 10-Q
with the reduced disclosure format.


<PAGE>




===============================================================================

                                   DEFINITIONS

"Allied" refers to Allied Waste Industries, Inc.
"Acquisition" refers to the agreement by MSW Energy Holdings to acquire Duke's
 50% membership interest in Ref-Fuel Holdings.
"AIGGIG" refers to AIG Global Asset Management Holdings Corp.
"American Ref-Fuel" refers to American Ref-Fuel Company LLC.
"ARC" refers to American Ref-Fuel Company LLC.
"ARC operating companies" refers to the subsidiaries of ARC that operate the WTE
 facilities.
"BFI" refers to Browning Ferris Industries, Inc.
"CSFB Private Equity" refers to Credit Suisse First Boston Private Equity, Inc.
"Duke" refers to Duke Energy Corporation.
"Duke Capital" refers to Duke Capital LLC.
"Erie" refers to Duke Energy Erie, LLC.
"HENS" refers to Hempstead, Essex, Niagara and Seconn, a series of partnerships
 owned by Allied and Ref-Fuel Holdings.
"Highstar" refers to Highstar Renewable Fuels LLC.
"Highstar I" refers to Highstar Renewable Fuels I LLC.
"Highstar II" refers to Highstar Renewable Fuels II LLC.
"Hudson" refers to MSW Energy Hudson LLC.
"Investors" refers to Allied and Ref-Fuel Holdings as investors in the HENS.
"LLC Agreement" refers to the limited liability company agreement of MSW Energy
 Holdings, dated June 24, 2003.
"MSW Acquisition" refers to MSW Energy Acquisition LLC.
"MSW Energy Holdings II" refers to MSW Energy Holdings II LLC.
"MSW Energy Holdings" refers to MSW Energy Holdings LLC.
"MSW Energy Finance" refers to MSW Energy Finance Co., Inc.
"MSW Merger" refers to MSW Merger LLC.
"MSW Transactions" refers to the June 30, 2003 acquisition by MSW Energy
 Holdings of Duke's 49.8% interest in American Ref-Fuel Holdings and the
 December 12, 2003 merger of MSW Merger into UAE Holdings, resulting in the
 transfer of UAE's 50% interest in Ref-Fuel Holdings LLC being transferred to
 MSW Energy II.
"Recapitalization" refers to the recapitalization of the HENS.
"Redemption" refers to the redemption of Allied's interest in the HENS.
"Ref-Fuel Holdings" refers to Ref-Fuel Holdings LLC.
"Senior Notes" refers to the 8 1/2 % Senior Secured Notes due 2010 of
 MSW Energy Holdings.
"UAE" refers to United American Energy Corp.
"UAE Holdings" refers to United American Energy Holdings Corp.


<PAGE>



                                Table of Contents

<TABLE>
<CAPTION>



<S>                                                                                                                      <C>
Part I  FINANCIAL INFORMATION.............................................................................................4
-----------------------------
Item  1. Financial Statements.............................................................................................4
-----------------------------
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations...........................25
----------------------------------------------------------------------------------------------
Item 3.  Quantitative and Qualitative Disclosures about Market Risk......................................................46
-------------------------------------------------------------------
Item 4.  Controls and Procedures.........................................................................................46
--------------------------------
PART II  OTHER INFORMATION...............................................................................................46
--------------------------
Item 1.  Legal Proceedings...............................................................................................46
--------------------------
Item 2.  Changes in Securities, Use of Proceeds and Issuer Purchase of Equity Securities.................................46
-----------------------------------------------------------------------------------------
Item 3.  Defaults Upon Senior Securities.................................................................................47
-----------------------------------------
Item 4.  Submission of Matters to a Vote of Security Holders.............................................................47
-------------------------------------------------------------
Item 5.  Other Information...............................................................................................47
---------------------------
Item 6.  Exhibits and Reports on Form 8-K................................................................................48
-----------------------------------------

</TABLE>

SIGNATURES


SAFE HARBOR STATEMENT
This Form 10-Q contains "forward-looking statements" intended to qualify for
safe harbor from liability established by the Private Securities Litigation
Reform Act of 1995. Forward-looking statements should be read with the
cautionary statements and important factors included in this Form 10-Q at Part
I, Item 2- "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Risk Factors." Forward-looking statements are all
statements other than statements of historical fact, including without
limitation those that are identified by the use of the words "anticipates,"
"estimates," "expects," "intends," "plans," "predicts" and similar expressions.


<PAGE>


Part I  FINANCIAL INFORMATION

Item 1. Financial Statements

MSW Energy Holdings' sole source of operating cash flow relates to its indirect
49.8% membership interest in Ref-Fuel Holdings. As a 49.8% owner that has voting
control over the additional 0.2% interest, we do not have the ability to
unilaterally control Ref-Fuel Holdings, however, the financial information of
Ref-Fuel Holdings is included for informational purposes.



<PAGE>




                    MSW ENERGY HOLDINGS LLC AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                 (in thousands)

<TABLE>
<CAPTION>


                              Assets
                                                                            March 31, 2004            December 31, 2003
Current assets                                                               (unaudited)
<S>                                                                    <C>                           <C>
   Cash and cash equivalents                                           $          1,375              $          5,513
   Restricted cash                                                                  563                           564
   Other current assets                                                              38                            76
                                                                       --------------------------  --------------------------
     Total current assets                                                         1,976                         6,153
   Investment in Ref-Fuel Holdings                                              353,307                       372,672
   Deferred financing fees, net                                                   7,528                         7,821
   Restricted cash                                                                5,001                         5,001
                                                                       --------------------------  --------------------------
     Total assets                                                      $        367,812              $        391,647
                                                                       ==========================  ==========================

                  Liabilities and Members' Equity

Liabilities
   Accounts payable and accrued liabilities                            $            150              $            556
   Due to related party                                                             250                           480
   Accrued interest                                                               1,417                         5,667
   Current portion of other long-term liabilities                                   500                           500
                                                                       --------------------------  --------------------------
     Total current liabilities                                                    2,317                         7,203
   Senior notes                                                                 200,000                       200,000
   Other long-term liabilities                                                   24,845                        24,333
                                                                       --------------------------  --------------------------
     Total Liabilities                                                          227,162                       231,536
                                                                       --------------------------  --------------------------
Members' equity
     Total members' equity                                                      140,650                       160,111
                                                                       --------------------------  --------------------------
     Total liabilities and members' equity                             $        367,812              $        391,647
                                                                       ==========================  ==========================

The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>


                                       5
<PAGE>

                    MSW ENERGY HOLDINGS LLC AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS

                            (Unaudited, in thousands)




                                                          For the Three
                                                           Months Ended
                                                             March 31,
                                                               2004
                                                        ------------------
Revenues
    Equity in earnings of Ref-Fuel Holdings             $        4,539
    Interest income                                                 28
                                                        ------------------
                                                                 4,567
                                                        ------------------

Expenses
    Interest expense                                             4,250
    Accretion of Duke Agreement obligation                         512
    Amortization of deferred financing fees                        293
    Other expenses                                                 473
                                                        ------------------
Total expenses                                                   5,528
                                                        ------------------
Net loss                                                $        (961)
                                                        ------------------


The accompanying notes are an integral part of these consolidated financial
statements.



                                       6
<PAGE>


                    MSW ENERGY HOLDINGS LLC AND SUBSIDIARIES
                    CONSOLIDATED STATEMENT OF MEMBERS' EQUITY

                            (Unaudited, in thousands)







Balance, January 1, 2004             $            160,111
    Distribution to members                      (18,500)
    Net loss                                        (961)
                                     ---------------------
Balance, March 31, 2004              $            140,650
                                     =====================








The accompanying notes are an integral part of these consolidated financial
statements.



                                       7
<PAGE>





                    MSW ENERGY HOLDINGS LLC AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS

                            (Unaudited, in thousands)

<TABLE>
<CAPTION>
                                                                                           For the Three
                                                                                           Months Ended
                                                                                          March 31, 2004
                                                                                    ----------------------------

Cash flows from operating activities:
<S>                                                                                  <C>
   Net loss                                                                          $                    (961)
   Adjustments to reconcile net loss to net cash
     provided by operating activities:
      Equity in earnings of Ref-Fuel Holdings                                                           (4,539)
      Accretion of Duke Agreement obligation                                                                512
      Amortization of deferred financing fees                                                               293
      Distributions received from Ref-Fuel Holdings                                                      23,904
   Changes in operating assets and liabilities:
      Other current assets                                                                                   38
      Accounts payable and accrued liabilities                                                            (406)
      Due to related party                                                                                (230)
      Accrued interest on Senior Notes                                                                  (4,250)
      Other long-term liability
                                                                                    ----------------------------
         Net cash provided by operating activities                                                       14,361
                                                                                    ----------------------------
Cash flows from investing activities:
      Change in restricted cash                                                                               1
                                                                                    ----------------------------
         Net cash provided by investing activities
                                                                                                              1
                                                                                    ----------------------------
Cash flows from financing activities:
      Distribution to members                                                                          (18,500)
                                                                                    ----------------------------
         Net cash (used in) financing activities                                                       (18,500)
                                                                                    ----------------------------
Net decrease in cash and cash equivalents                                                               (4,138)
Cash and cash equivalents, beginning of period                                                            5,513
                                                                                    ----------------------------
      Cash and cash equivalents, end of period                                      $                     1,375
                                                                                    ============================
Supplemental cash flow disclosure
      Cash paid for interest                                                        $                     8,500
                                                                                    ============================

The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

                                       8
<PAGE>




MSW Energy Holdings LLC and Subsidiaries
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------


1.       Organization and Basis of Presentation

MSW Energy Holdings LLC (MSW Energy Holdings and collectively hereinafter with
its subsidiaries, referred to as the Company), a Delaware limited liability
company and its consolidated wholly owned subsidiaries, MSW Energy Finance Co.,
Inc. (MSW Finance), a Delaware corporation, and MSW Energy Hudson LLC (MSW
Hudson) a Delaware limited liability company, were organized in June 2003 for
the purpose of acquiring and holding a 50% interest in Ref-Fuel Holdings LLC
(Ref-Fuel Holdings) from Duke Energy Corp. (Duke). The initial acquisition of
Ref-Fuel Holdings (the initial closing) was completed on June 30, 2003. Prior to
that date MSW Energy Holdings had no operations. MSW Finance, a wholly-owned
subsidiary, was organized in June 2003, for the sole purpose of acting as
co-issuer with MSW Energy Holdings of $200.0 million aggregate principal amount
of 8 1/2% senior secured notes due September 1, 2010 (Senior Notes). Other than
serving as co-issuer, MSW Finance does not conduct operations of its own and has
no assets.

At the initial closing, MSW Energy Holdings acquired MSW Hudson, which holds a
49.8% membership interest in Ref-Fuel Holdings. MSW Energy Holdings has agreed
to acquire Duke Energy Erie, LLC (or Erie), a wholly-owned subsidiary of Duke,
that holds an additional 0.2% membership interest in Ref-Fuel Holdings, within
two years and six months after its purchase of MSW Hudson.

The Company was owned indirectly by affiliates of AIG Global Asset Management
Holdings Corp. (AIGGIG) and Credit Suisse First Boston Private Equity Inc. (CSFB
Private Equity). See Note 5.

Pursuant to a separate series of transactions (the UAE Transactions), which were
completed on December 12, 2003, MSW Energy Holdings II LLC (MSW Energy Holdings
II) acquired a direct and indirect 50% membership interest in Ref-Fuel Holdings.
At March 31, 2004, MSW Energy Holdings II was owned by UAE Ref-Fuel, which was
owned indirectly by several private equity funds associated with DLJ Merchant
Banking Partners III, L.P., each of which is managed by investment funds
affiliated with CSFB Private Equity. Accordingly, effective December 12, 2003,
Ref-Fuel Holdings became majority owned, directly and indirectly, and controlled
by AIGGIG and CSFB Private Equity (the Control Group). See Note 5.

The Company's sole source of operating cash flow relates to its indirect 49.8%
membership interest in Ref-Fuel Holdings. Ref-Fuel Holdings is a holding company
whose sole source of operating cash flow relates to its 100% membership interest
in American Ref-Fuel Company LLC (American Ref-Fuel or ARC). As a 49.8% owner
that has voting control over an additional 0.2% interest, the Company does not
have the ability to unilaterally control Ref-Fuel Holdings or American Ref-Fuel.

American Ref-Fuel owns partnerships that develop, own and operate
waste-to-energy facilities, which combust municipal solid waste and produce
energy in the form of electricity and steam. American Ref-Fuel owns or controls
and operates six waste-to-energy facilities located in the northeastern United
States, which we refer to as the ARC operating facilities. The subsidiaries of
American Ref-Fuel that operate the ARC operating facilities (the ARC operating
companies) derive revenues principally from disposal or tipping fees received
for accepting waste and from the sale of electricity and steam produced by those
facilities.


                                       9
<PAGE>

The accompanying condensed consolidated financial statements are unaudited. In
the opinion of management, such statements include all adjustments, including
normal recurring accruals and adjustments, necessary for a fair presentation of
the results for the period presented. The accounting policies followed during
interim periods reported are in conformity with accounting principles generally
accepted in the United States of America; however, certain information and
footnote disclosures normally included in financial statements have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. These consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2003. The
Company believes that the disclosures included are adequate and provide
sufficient information. The results of operations for the interim periods are
not necessarily indicative of the results that might be expected for future
interim periods or for a full year.


2.       Significant Accounting Policies

Equity Method Investment

Investments are accounted for using the equity method of accounting if the
investment gives the Company the ability to exercise significant influence, but
not control, over an investee. Significant influence is generally deemed to
exist if the Company has an ownership interest in the voting stock of the
investee of between 20% and 50%, although other factors, such as representation
on the investee's board of directors, are considered in determining whether the
equity method of accounting is appropriate.

The Company has recorded its investment in Ref-Fuel Holdings as an equity-method
investment whereby the Company's ownership percentage of 49.8% of Ref-Fuel
Holdings is reflected on the accompanying consolidated balance sheets as
"Investment in Ref-Fuel Holdings." The Company records its share of Ref-Fuel
Holdings' earnings or losses as "Equity in earnings of Ref-Fuel Holdings" on the
accompanying consolidated statement of operations. Cash distributions received
from Ref-Fuel Holdings are included in the accompanying consolidated statement
of cash flows as "Distribution received from Ref-Fuel Holdings."

Push-down Accounting

Upon consummation of the UAE Transactions and taking into account the Company's
June 30, 2003 acquisition of membership interests in Ref-Fuel Holdings, the
Control Group owns, directly and indirectly, 99.8% of the membership interests
in Ref-Fuel Holdings (and exercise voting power with respect to the remaining
0.2% interest). Emerging Issues Task Force (EITF) Topic D-97, Push-Down
Accounting, requires that Ref-Fuel Holdings' financial statements reflect this
change in ownership. Accordingly, the aggregate excess of purchase price over
the net assets acquired by the Company on June 30, 2003 was pushed-down to
Ref-Fuel Holdings and its subsidiaries on December 12, 2003.

Prior to push-down on December 12, 2003, identifiable intangible assets were
included in "Investment in Ref-Fuel Holdings" on the Company's consolidated
balance sheet and were amortized on a straight-line basis over their estimated
useful lives. As a result of push-down accounting, the excess of the purchase
price paid by the Company over the Company's share of members' equity of
Ref-Fuel Holdings on the acquisition date has been allocated to the Company's
proportionate share of the fair value of the assets acquired and liabilities
assumed, based on an independent valuation of Ref-Fuel Holdings. See Note 4.


3.       Restricted Cash

                                       10
<PAGE>


Included in current and long-term restricted cash on the accompanying
consolidated balance sheets at March 31, 2004 are $0.1 million in letters of
credit support fees, $0.5 million relating to the Company's liability relating
to the Duke Agreement (as defined in Note 4) payment due June 30, 2004 and an
additional $5.0 million which is required to be funded into an escrow account on
behalf of Duke Capital LLC (Duke Capital) by June 30, 2004 and held for the term
of the obligation, subject to certain conditions, see Note 4.


4.       Acquisition of Membership Interests in Ref-Fuel Holdings

Pursuant to an equity purchase agreement between MSW Energy Holdings and Duke,
MSW Energy Holdings agreed to acquire Duke's 50% membership interest in Ref-Fuel
Holdings in two separate closings. At the initial closing on June 30, 2003, MSW
Energy Holdings acquired MSW Hudson (formerly Duke Energy Hudson, LLC), which
holds a 49.8% membership interest in Ref-Fuel Holdings. The Company has agreed
to acquire Duke Energy Erie, LLC (Erie), a wholly-owned subsidiary of Duke that
holds an additional 0.2% membership interest in Ref-Fuel Holdings, at a second
closing to occur at a future date within two years and six months after the
initial closing. At the initial closing, the Company entered into a voting
agreement with Erie, pursuant to which Erie granted the Company the right to
vote the 0.2% membership interest in Ref-Fuel Holdings held by Erie until such
time as the membership interest in Erie is transferred to MSW Energy Holdings.
As a result, MSW Energy Holdings has direct or indirect voting control of 50% of
the membership interests in Ref-Fuel Holdings after the initial closing.

The aggregate cash purchase price for both the initial and second closing was
$326.8 million, excluding acquisition related costs of $15 million and
obligations assumed of $23 million. The purchase price payment for the second
closing will be $1.3 million which has been recorded in other long-term
liabilities on the accompanying consolidated balance sheet. The purchase price
paid at the initial closing was financed with proceeds from the Company's
offering of Senior Notes, together with capital contributions made by the
Company's two members of $75.0 million each. The purchase price payable at the
second closing is expected to be financed by cash on hand or capital
contributions from the members.

The Company's share of members' equity of Ref-Fuel Holdings acquired as of June
30, 2003 was $144.9 million. As required by push-down accounting, the excess
purchase price of $218.6 million has been allocated to the Company's
proportionate share of the fair values of the assets acquired and liabilities
assumed based on an independent valuation of Ref-Fuel Holdings tangible assets,
property, plant and equipment, identifiable intangible assets and debt. The
amounts allocated to tangible and intangible assets are amortized using the
straight-line method over the estimated useful lives of the underlying assets or
obligations ranging from ten to twenty years. Debt is being amortized based on
the effective interest rate method over the life of the obligations.

A summary of the allocation of purchase price to the fair value of the assets
acquired by the Company and the Company's underlying investment in Ref-Fuel
Holdings' members' equity at June 30, 2003 is as follows (in thousands):
<TABLE>
<CAPTION>


<S>                                                                                  <C>
      Ref-Fuel Holdings' members' equity acquired                                    $   144,933
      Fixed assets and other adjustments                                                  76,363
      Identifiable intangible assets, net                                                154,068
      Goodwill                                                                           (12,050)
      Other long-term assets                                                              (2,892)
      Long-term debt                                                                     (22,405)
      Other long-term liabilities                                                         25,465
                                                                                   ---------------
</TABLE>

                                       11
<PAGE>
<TABLE>
<CAPTION>


<S>                                                                                 <C>
        Purchase price for acquisition of 49.8% of Ref-Fuel Holdings                 $   363,482
                                                                                   ===============

</TABLE>


In connection with the acquisition, the Company has entered into an agreement
(the Duke Agreement) with Duke Capital, an affiliate of Duke, under which the
Company agreed to pay Duke Capital certain future fees in exchange for Duke
Capital's agreement to remain obligated under an existing support agreement
related to Ref-Fuel Holdings. The fees payable under the Duke Agreement are
subordinate to the Company's Senior Notes. The fees payable under the Duke
Agreement escalate over time and a portion of such fees are to be deposited into
an escrow account for the benefit of Duke Capital. The Company is in compliance
with all of its obligations under this agreement.

Other long-term liabilities consist mainly of the present value of the
obligation under the Duke Agreement at March 31, 2004.

The following table summarizes the components of the Company's interest in
Ref-Fuel Holdings at March 31, 2004 (unaudited, in thousands):
<TABLE>
<CAPTION>

<S>                                                                                    <C>
Total investment in Ref-Fuel Holdings at January 1, 2004                               $      372,672
     Equity earnings of Ref-Fuel Holdings                                                       4,539
     Distributions received from Ref-Fuel Holdings                                            (23,904)
                                                                                      ---------------
        Total investment in Ref-Fuel Holdings at March 31, 2004                        $      353,307
                                                                                      ===============

</TABLE>

Pro Forma Information

Unaudited pro forma results showing the effects of the acquisition as if it had
occurred on January 1, 2003 are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                                               Pro Forma For
                                                                     Three Months                the Three
                                                                         Ended                  Months Ended
                                                                     March 31, 2004             March 31, 2003
                                                                  -----------------------  -----------------------
Revenue
<S>                                                               <C>                      <C>
   Equity in net earnings of Ref-Fuel Holdings                    $             4,539      $             2,086
   Interest income                                                                 28                        -
                                                                  -----------------------  -----------------------
Total revenue                                                                   4,567                    2,086
                                                                  -----------------------  -----------------------
Expenses
   Interest expense                                                             4,250                    4,250
   Accretion of Duke Agreement obligation                                         512                      491
   Amortization of deferred financing fees                                        293                      293
   Other expenses                                                                 473                      223
                                                                  -----------------------  -----------------------
Total expenses                                                                  5,528                    5,257
                                                                  -----------------------  -----------------------
Net loss                                                          $              (961)     $            (3,171)
                                                                  =======================  ========================

</TABLE>

These results are not necessarily indicative of the results of operations that
would have been acquired had the acquisition taken place at the beginning of
2003.


                                       12
<PAGE>

Ref-Fuel Holdings Information

Summarized condensed balance sheet information of Ref-Fuel Holdings, is as
follows (in thousands):
<TABLE>
<CAPTION>

                                            As of                           As of
                                       March 31, 2004                 December 31, 2003
                                     --------------------           -----------------------
                                          (unaudited)

<S>                                     <C>                            <C>
Current assets                          $       184,340                $       233,151
Noncurrent assets                             1,885,230                      1,894,757
Current liabilities                             148,570                        133,358
Noncurrent liabilities                        1,218,787                      1,253,250
Members' Equity                                 702,213                        741,300

</TABLE>

Summarized statement of operations information for Ref-Fuel Holdings is as
follows (unaudited, in thousands):

                                                 For the Three Months
                                                         Ended
                                                    March 31, 2004
                                                -----------------------

Revenues                                          $          102,105
Operating income                                              18,758
Net earnings                                                   8,802
Company's equity in net earnings                               4,539


5.       Subsequent Event

On April 30, 2004, MSW Acquisition LLC, MSW Energy Holdings' 50% parent as of
March 31, 2004, which is owned by ten investment funds indirectly controlled by
Credit Suisse First Boston Private Equity, Inc. (CSFB Private Equity), acquired
an additional 10% of the membership interests in MSW Energy Holdings from
Highstar Renewable Fuels LLC (Highstar). The source of consideration was capital
contributions from limited partners of the ten investment funds. Prior to this
transaction, there was no controlling person of MSW Energy Holdings, which was
owned 50% by MSW Acquisition and 50% by Highstar, an indirect subsidiary of
American International Group, Inc. (AIG).

Concurrently on April 30, 2004, Highstar sold to United American Energy Holdings
Corp. (UAE Holdings) 0.01% of the outstanding membership interests in MSW Energy
Holdings pursuant to a membership interests purchase agreement dated as of
January 26, 2004. On April 29, 2004, Highstar transferred 39.89% of the
outstanding membership interests in MSW Energy Holdings to Highstar Renewable
Fuels I LLC (Highstar I), an entity owned by Highstar and AIG Highstar Capital,
L.P., an investment fund managed by affiliates of Highstar. As a result of these
transactions, MSW Acquisition LLC owns 60%, Highstar and Highstar I collectively
own 39.99% and UAE Holdings owns 0.01% of the outstanding membership interests
in MSW Energy Holdings. UAE Holdings will be the managing member of MSW Energy
Holdings.


                                       13
<PAGE>


Concurrently on April 30, 2004, affiliates of CSFB Private Equity sold to
Highstar Renewable Fuels II LLC (Highstar II), a wholly-owned subsidiary of
Highstar (together with Highstar I and Highstar II, the Highstar Entities), 40%
of the outstanding shares of common stock of UAE Holdings and 40% of the
principal amount of certain promissory notes issued by UAE Holdings pursuant to
a securities purchase agreement dated January 26, 2004. As a result of this
transaction, the CSFB Private Equity affiliates collectively own 60% and
Highstar II owns 40% of the outstanding shares of common stock of UAE Holdings.

The parties entered into a stockholders' agreement and members' agreement that
provide for the governance of UAE Holdings, MSW Energy Holdings and their
subsidiaries.

Pursuant to the stockholders' agreement, the affiliates of CSFB Private Equity,
on the one hand, and the Highstar Entities, on the other hand, will have
representation on the boards of directors of UAE Holdings and its subsidiaries
that will be generally proportionate to their ownership in UAE Holdings.
Although affiliates of CSFB Private Equity will initially have the ability to
appoint a majority of the members of the boards of directors of these entities,
the terms of the stockholders' agreement provide that none of UAE Holdings, MSW
Energy Holdings (through UAE Holdings as its managing member) or in many cases
their subsidiaries will be able to take certain significant actions without the
consent of the affiliates of CSFB Private Equity and Highstar II, so long as
they continue to own a minimum percentage of the common stock of UAE Holdings.
The stockholders' agreement and members' agreement also provide for transfer
restrictions, a right of first offer, tag-along rights, drag-along rights and
participation rights with respect to UAE Holdings and MSW Energy Holdings,
respectively. The parties also entered into a registration rights agreement with
respect to the common stock of UAE Holdings.

In connection with the transactions in the membership interests purchase
agreement, the members of MSW Energy Holdings adopted the Second Amended and
Restated Limited Liability Company Agreement which provides that UAE Holdings is
the Managing Member. The agreement also provides that, solely for purposes of
(i) taking any action that requires the approval of the Board of Directors of
MSW Energy Holdings pursuant to the terms of, and as defined in, the indenture
for MSW Energy Holdings' 8-1/2% Senior Secured Notes due 2010, or pursuant to
any other the note document and (ii) the definition of Continuing Directors (as
defined in such indenture), the Board of Directors of the Managing Member is
deemed to constitute the Board of Directors of MSW Energy Holdings.

MSW Energy Holdings is currently assessing the transactions to determine if
there will be an impact to its accounting treatment of its investment in
Ref-Fuel Holdings on the financial statements.




                                       14
<PAGE>



Ref-Fuel Holdings LLC and Subsidiaries

Unaudited Consolidated Financial Statements
As of March 31, 2004 and December 31, 2003,
and for the Three Months Ended
March 31, 2004 and 2003



                                       15
<PAGE>


                     Ref-Fuel Holdings LLC and Subsidiaries
                          Consolidated Balance Sheets
                                 (In Thousands)
<TABLE>
<CAPTION>


                                                                       March 31, 2004             December 31, 2003
                                                                       --------------             -----------------
                              Assets                                     (unaudited)
Current assets
<S>                                                                 <C>                        <C>
    Cash and cash equivalents                                       $             53,337        $               96,511
    Restricted cash and short-term investments                                    46,298                        52,753
    Accounts receivable, net of allowance for doubtful
       accounts of  $1,747 and $1,955, respectively                               72,241                        73,989
    Prepaid expenses and other current assets                                     12,464                         9,898
                                                                    ----------------------     ------------------------
Total current assets                                                             184,340                       233,151
                                                                    ----------------------     ------------------------

Long-term assets
    Property, plant and equipment, net                                         1,222,083                     1,220,949
    Intangible assets, net                                                       566,826                       584,275
    Goodwill                                                                       2,175                         2,175
    Restricted cash and long-term investments                                     85,422                        84,709
    Other long-term assets                                                         8,724                         2,649
                                                                    ----------------------     ------------------------
Total long-term assets                                                         1,885,230                     1,894,757
                                                                    ----------------------     ------------------------


Total assets                                                        $          2,069,570        $            2,127,908
                                                                    ======================     ========================

                  Liabilities and Members' Equity
Current liabilities

    Accounts payable and other current liabilities                  $             45,311        $               39,610
    Current portion of long-term debt                                             82,876                        81,907
    Accrued interest payable                                                      20,383                        11,841
                                                                    ----------------------     ------------------------
Total current liabilities                                                        148,570                       133,358
                                                                    ----------------------     ------------------------

Long-term liabilities
    Long-term debt                                                             1,027,066                      1,060,780
    Other long-term liabilities                                                  191,721                        192,470
                                                                    ----------------------     ------------------------
Total long-term liabilities                                                    1,218,787                      1,253,250
                                                                    ----------------------     ------------------------
Total liabilities                                                              1,367,357                      1,386,608
                                                                    ----------------------     ------------------------

Members' equity
    Total members' equity                                                       702,213                        741,300
                                                                    ----------------------     ------------------------
Total liabilities and members' equity                               $         2,069,570        $             2,127,908
                                                                   ======================     ========================

The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

                                       16
<PAGE>





                     Ref-Fuel Holdings LLC and Subsidiaries

      Consolidated Statements of Operations and Other Comprehensive Income
                           (Unaudited, In Thousands)

<TABLE>
<CAPTION>
<S>                                                         <C>                         <C>
                                                       For the Three       |       For the Three
                                                       Months Ended        |        Months Ended
                                                      March 31, 2004       |       March 31, 2003
                                                    --------------------   |   -----------------------
Revenues                                                                   |
     Waste disposal and related services                    $    65,321    |            $      63,333
     Energy                                                      31,658    |                   40,786
     Other                                                        5,126    |                    1,912
                                                    --------------------   |   -----------------------
          Total net revenues                                    102,105    |                  106,031
                                                                           |
Expenses                                                                   |
     Operating                                                   54,621    |                   49,048
     Depreciation and amortization                               17,371    |                   15,415
     General and administrative                                  10,833    |                   11,660
     Loss on asset retirements                                      522    |                    1,734
                                                    --------------------   |   -----------------------
                                                                           |
                 Operating income                                18,758    |                   28,174
                                                                           |
Interest income                                                     740    |                      745
                                                                           |
Interest expense                                                (10,834)   |                  (14,858)
                                                                           |
Other income, net                                                   138    |                      146
                                                    --------------------   |   -----------------------
                                                                           |
Net income                                                        8,802    |                   14,207
                                                                           |
Other comprehensive income                                          111    |                        -
                                                    --------------------   |   -----------------------
                                                                           |
Total comprehensive income                                  $     8,913    |            $      14,207
                                                    ====================   |   =======================

The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>


                                       17
<PAGE>


                     Ref-Fuel Holdings LLC and Subsidiaries

                   Consolidated Statements of Members' Equity
                           (Unaudited, In Thousands)

<TABLE>
<CAPTION>


                                                      MSW Energy         MSW Energy              Other
                                         Duke          Holdings          Holdings II         Comprehensive
                                       Interests      Interests           Interests             Income             Total
                                      ------------ ----------------- -------------------- -------------------- -------------
<S>              <C>                       <C>          <C>                  <C>                   <C>         <C>
Balance, January 1, 2004                   $  666       $   371,365          $   368,752           $      517  $   741,300
     Comprehensive income for the
          period                               45             4,539                4,218                  111        8,913
     Distributions to members                  96            23,904               24,000                    -       48,000
                                      ------------ ----------------- -------------------- -------------------- -------------
     Balance, March 31, 2004               $  615       $   352,000          $   348,970           $      628  $   702,213
                                      ------------ ----------------- -------------------- -------------------- -------------

The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

                                       18
<PAGE>

                     Ref-Fuel Holdings LLC and Subsidiaries

                     Consolidated Statements of Cash Flows
                           (Unaudited, In Thousands)

<TABLE>
<CAPTION>
<S>                                                                           <C>                           <C>
                                                                        For the Three           |        For the Three
                                                                        Months Ended            |        Months Ended
                                                                        March 31, 2004          |        March 31, 2003
                                                                   --------------------------   |   ------------------------
Cash flows from operating activities                                                            |
   Net income                                                                 $      8,802      |           $       14,207
   Adjustments to reconcile net income to net cash                                              |
         provided by operating activities                                                       |
        Depreciation and amortization                                               25,414      |                   18,825
        Revenue contact levelization                                                 5,524      |                    3,284
        Interest on loss contracts                                                       -      |                      491
        Loss on asset retirements                                                      522      |                    1,734
   Changes in assets and liabilities                                                            |
         Accounts receivable, net                                                    1,748      |                    1,555
         Prepaid expenses and other current assets                                  (2,566)     |                   (2,630)
         Other long-term assets                                                     (6,075)     |                   (5,514)
         Accounts payable and other current liabilities                              4,367      |                    4,416
         Accrued interest payable                                                    8,542      |                    4,574
         Other long-term liabilities                                                  (712)     |                    2,120
                                                                   --------------------------   |   ------------------------
   Net cash provided by operating activities                                        45,566      |                   43,062
                                                                   --------------------------   |   ------------------------
                                                                                                |
Cash flows from investing activities                                                            |
   Change in restricted cash and investments, net                                    5,853      |                    4,724
   Additions of property, plant and equipment                                      (19,397)     |                  (16,147)
   Proceeds from sale of assets                                                        405      |                        -
                                                                   --------------------------   |   ------------------------
Net cash (used in) investing activities                                            (13,139)     |                  (11,423)
                                                                   --------------------------   |   ------------------------
                                                                                                |
Cash flows from financing activities                                                            |
   Repayments of long-term debt                                                    (27,601)     |                  (32,422)
   Payment of financing costs                                                            -      |                      (47)
   Distributions paid to members                                                   (48,000)     |                  (45,000)
                                                                   --------------------------   |   ------------------------
Net cash (used in) financing activities                                            (75,601)     |                  (77,469)
                                                                   --------------------------   |   ------------------------
                                                                                                |
Net decrease in cash and cash equivalents                                          (43,174)     |                  (45,830)
Cash and cash equivalents, beginning of period                                      96,511      |                   70,173
                                                                   --------------------------   |   ------------------------
Cash and cash equivalents, end of period                                      $     53,337      |            $      24,343
                                                                   ==========================   |   ========================

The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>

                                       19
<PAGE>


Ref-Fuel Holdings LLC and Subsidiaries

Notes to Consolidated Financial Statements
-------------------------------------------------------------------------------

(1)      Organization and Basis of Presentation

Ref-Fuel Holdings LLC (Ref-Fuel Holdings), which was formerly known as Duke/UAE
Ref-Fuel LLC, is a Delaware limited liability company formed in 1997. Ref-Fuel
Holdings was formed with the purpose of investing in American Ref-Fuel Company
and affiliated partnerships (ARC or American Ref-Fuel). American Ref-Fuel was
established with the primary objectives of (a) owning certain partnerships that
develop, own and operate waste-to-energy (WTE) facilities that combust municipal
solid waste and produce energy in the form of electricity and steam and (b)
procuring waste for such facilities.

Prior to June 30, 2003, Ref-Fuel Holdings was owned 50% by United American
Energy Corp. (UAE) and 50% by Duke Energy Corporation (Duke). Effective June 30,
2003, Duke sold membership interests representing 49.8% of Ref-Fuel Holdings to
MSW Energy Holdings LLC (MSW Energy Holdings), which was jointly owned by (a)
Highstar Renewable Fuels LLC (Highstar), which is affiliated with AIG Global
Asset Management Holdings Corp. (AIGGIG), a subsidiary of American International
Group, Inc.; and (b) MSW Acquisition LLC (MSW Acquisition) which is owned by
several funds affiliated with Credit Suisse First Boston Private Equity, Inc.
(CSFB Private Equity), the global private equity arm of Credit Suisse First
Boston.

On December 12, 2003, MSW Merger LLC, an affiliate of CSFB Private Equity,
merged with and into United American Energy Holdings Corp. (UAE Holdings), a
Delaware corporation, which continued as the surviving corporation in the
merger. UAE Holdings is the direct parent of UAE. As a result of this merger,
the UAE ownership in Ref-Fuel Holdings was transferred to MSW Energy Holdings II
LLC (MSW Energy Holdings II).

Upon consummation of the merger and taking into account the June 30, 2003
acquisition by MSW Energy Holdings of Duke's membership interest in Ref-Fuel
Holdings (the MSW Transactions), affiliates of CSFB Private Equity and AIGGIG
(collectively, the Control Group) own, directly and indirectly, 99.8% of the
membership interests in Ref-Fuel Holdings (and exercise voting rights with
respect to Duke's remaining 0.2% interest). As a result, and in accordance with
Emerging Issues Task Force (EITF) Topic D-97, "Push-Down Accounting," Ref-Fuel
Holdings' financial statements reflect the effects of its change in ownership
and the new owners' basis in the net assets and liabilities acquired.
Accordingly, the statement of operations and the statement of cash flows for the
three month period ended March 31, 2003, reflect the results prior to the change
in bases resulting from the application of push-down accounting. The statement
of operations and the statement of cash flows for the three month period ended
March 31, 2004 and the balance sheets as of March 31, 2004 and December 31, 2003
reflect the results subsequent to the push-down adjustments.

Prior to the MSW Transactions, profits and losses of Ref-Fuel Holdings were
allocated among its members based on ownership percentages. Subsequent to the
MSW Transactions, profits and losses are allocated based upon the members'
ownership percentages adjusted for the amortization of the respective members'
incremental bases in the assets and liabilities based on an independent
valuation of Ref-Fuel Holdings. All significant intercompany accounts and
transactions have been eliminated in consolidation.

The unaudited condensed consolidated interim financial statements presented
include: (a) American Ref-Fuel Company (Ref-Fuel Management); (b) TransRiver
Marketing Company, L.P. (TransRiver); (c) American Ref-Fuel Company of Hempstead
(Hempstead); (d) American Ref-Fuel Company of Essex County (Essex); (e) American


                                       20
<PAGE>

Ref-Fuel Company of Southeastern Connecticut (Seconn); (f) American Ref-Fuel
Company of Niagara, L.P. (Niagara); (g) American Ref-Fuel Company of Semass,
L.P. (Ref-Fuel Semass); (h) American Ref-Fuel Operations of Semass, L.P. (Semass
Operator); (i) American Ref-Fuel Company of Delaware Valley, L.P. (Delaware
Valley) (collectively referred to as the American Ref-Fuel Partnerships).

The accompanying condensed consolidated financial statements are unaudited. In
the opinion of management, such statements include all adjustments, including
normal recurring accruals and adjustments, necessary for a fair presentation of
the results for the period presented. The accounting policies followed during
interim periods reported are in conformity with accounting principles generally
accepted in the United States of America; however, certain information and
footnote disclosures normally included in financial statements have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. These consolidated financial statements should be read in
conjunction with the financial statements and notes for the year ended December
31, 2003. The Company believes that the disclosures included are adequate and
provide sufficient information. The results of operations for the interim
periods are not necessarily indicative of the results that might be expected for
future interim periods or for a full year.

(2)      Summary of Significant Accounting Policies

Reclassifications

Certain reclassifications have been made to the prior periods to conform to the
current period's presentation.

Estimates

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 (a) reported amounts of assets and
liabilities at the date of the financial statements; (b) disclosures of
contingent assets and liabilities at the date of the financial statements; and
(c) the reported amounts of revenues and expenses recognized during the
reporting period. Significant management estimates include the estimated lives
of long-lived assets, allowances for doubtful accounts receivable, estimated
useful lives and fair value adjustments of net tangible and intangible assets,
liabilities for self-insurance and certain landfill liabilities. Such estimates
are revised as necessary when additional information becomes available. Actual
results could differ from those estimates.

(3)      Business Combinations

The MSW Transactions

As described in Note 1, the MSW Transactions consisted of MSW Energy Holdings'
purchase of Duke's 49.8% indirect ownership of Ref-Fuel Holdings and MSW Energy
Holdings II's purchase of UAE's 50% indirect ownership of Ref-Fuel Holdings,
resulting in a change of control as of December 12, 2003. As a result, the
Ref-Fuel Holdings' assets were valued by independent appraisers in order to
assist management in the determination of the purchase price allocations
relating to the fair market value of the assets and liabilities acquired.

In recording the MSW Transactions in accordance with EITF Topic D-97, "Push-Down
Accounting," Ref-Fuel Holdings recorded incremental fair value of $407.7 million
as an addition to members' equity and applied the respective fair value of the
acquisitions in accordance with Financial Accounting Standards Board Statement


                                       21
<PAGE>

No. 141, "Business Combinations" (FAS 141). The assets acquired and liabilities
assumed were recorded at estimated fair values as determined by Ref-Fuel
Holdings' management, using a valuation prepared by the independent appraisers.

Pro Forma Information

The accompanying unaudited pro forma consolidated statements of operations for
the three months ended March 31, 2003 gives effect to the ownership changes (see
Note 1) as if it occurred on January 1, 2003. The pro forma financial
information is presented for informational purposes only and is not necessarily
indicative of the actual results of operations that would have been achieved had
the MSW Transactions taken place at the beginning of 2003 (unaudited, in
thousands):
<TABLE>
<CAPTION>

                                                                    For the three months
                                                                    Ended March 31, 2003
                                                             ------------------------------------
Revenues
<S>                                                                              <C>
   Waste disposal and related services                                           $        62,314
   Energy                                                                                 32,169
   Other                                                                                   1,912
                                                             ------------------------------------
          Total net revenues                                                              96,395
Expenses
   Operating                                                                              49,048
   Depreciation and amortization                                                          17,728
   General and administrative                                                             11,660
   Loss on asset retirements                                                               1,734
                                                             ------------------------------------
          Operating income                                                                16,225
Interest income                                                                              745
Interest expense                                                                        (13,282)
Other income, net                                                                            190
                                                             ------------------------------------
Net income                                                                       $         3,878
                                                             ====================================

</TABLE>

(4)      Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):

<TABLE>
<CAPTION>

                                              Useful Life           March 31, 2004              December 31, 2003
                                           ------------------    -----------------------     ----------------------------
                                                                      (unaudited)

<S>                                           <C>                <C>                                     <C>
Plant and equipment                           2-50 years         $            1,151,345         $              1,145,961
Land                                                                              3,814                            3,885
Leasehold improvements                      Up to 17 years                       39,078                           40,412
Landfill                                       13 years                          15,470                           15,470
Spare parts                                                                      12,253                           12,253
Construction in progress                                                         19,603                            6,359
                                                                 -----------------------     ----------------------------
Total property, plant and equipment                                           1,241,563                        1,224,340
Accumulated depreciation                                                        (19,480)                          (3,391)
                                                                 -----------------------     ----------------------------
Property, plant and equipment, net                               $            1,222,083         $              1,220,949
                                                                 =======================     ============================

</TABLE>


                                       22
<PAGE>


(5)      Intangible Assets

Intangible assets consist of the following (in thousands):

<TABLE>
<CAPTION>

                                          Useful Life             March 31, 2004                December 31, 2003
                                       ------------------    --------------------------    -----------------------------
                                                                    (unaudited)

<S>                                           <C>           <C>                           <C>
Energy contracts                              6-18 years    $                  522,430    $                     522,430
Waste contracts                                  6 years                        23,600                           23,600
Emissions credits                             Indefinite                        37,827                           37,827
Other intangibles                             Indefinite                         3,579                            3,579
                                                             --------------------------    -----------------------------
                                                                               587,436                          587,436
Accumulated amortization                                                       (20,610)                          (3,161)
                                                             --------------------------    -----------------------------
Intangible assets, net                                        $                566,826    $                     584,275
                                                             ==========================    =============================

</TABLE>


(6)      Supplemental Disclosure of Cash Flow Information

Depreciation and amortization expense included in the Statements of Cash Flows
consists of the following expenses (revenues) (unaudited, in thousands):

<TABLE>
<CAPTION>
                                                                            For the Three              For the Three
                                                                             Months Ended               Months Ended
    Asset / liability                 Statement of operations               March 31, 2004             March 31, 2003
---------------------------    ---------------------------------------    -------------------        ------------------
Property, plant and
<S>                                                          <C>                 <C>                 <C>
     equipment                 Depreciation and amortization (1)          $           17,371         $          15,415
Energy contracts               Energy revenues                                        16,263                     7,600
Long-term waste                Waste disposal and related                             (1,897)                   (2,282)
     contracts                      services
Lease                          Operating expenses (rent expense)                      (1,169)                   (1,320)
Debt                           Interest expense                                       (5,144)                     (475)
Deferred revenue               Waste disposal and related
                                    services and energy revenues                         (10)                     (113)
                                                                          -------------------        ------------------
Total                                                                     $           25,414         $          18,825
                                                                          ===================        ==================

Supplemental disclosures
Other comprehensive income                                                $              111         $               -
Cash paid interest                                                                     7,434                    10,270

</TABLE>

(1) Includes amortization of other intangible assets


(7)      Subsequent Events

On April 30, 2004, MSW Acquisition LLC, MSW Energy Holdings' 50% parent as of
March 31, 2004, which is owned by ten investment funds indirectly controlled by
Credit Suisse First Boston Private Equity, Inc. (CSFB Private Equity), acquired

                                       23
<PAGE>

an additional 10% of the membership interests in MSW Energy Holdings from
Highstar Renewable Fuels LLC (Highstar). The source of consideration was capital
contributions from limited partners of the ten investment funds. The amount of
consideration was $15.8 million. Prior to this transaction, there was no
controlling person of MSW Energy Holdings, which was owned 50% by MSW
Acquisition and 50% by Highstar, an indirect subsidiary of American
International Group, Inc. (AIG).

Concurrently on April 30, 2004, Highstar sold to United American Energy Holdings
Corp. (UAE Holdings) 0.01% of the outstanding membership interests in MSW Energy
Holdings pursuant to a membership interests purchase agreement dated as of
January 26, 2004. On April 29, 2004, Highstar transferred 39.89% of the
outstanding membership interests in MSW Energy Holdings to Highstar Renewable
Fuels I LLC (Highstar I), an entity owned by Highstar and AIG Highstar Capital,
L.P., an investment fund managed by affiliates of Highstar. As a result of these
transactions, MSW Acquisition LLC owns 60%, Highstar and Highstar I collectively
own 39.99% and UAE Holdings owns 0.01% of the outstanding membership interests
in MSW Energy Holdings. UAE Holdings will be the managing member of MSW Energy
Holdings.

Concurrently on April 30, 2004, affiliates of CSFB Private Equity sold to
Highstar Renewable Fuels II LLC (Highstar II), a wholly-owned subsidiary of
Highstar (together with Highstar I and Highstar II, the Highstar Entities), 40%
of the outstanding shares of common stock of UAE Holdings and 40% of the
principal amount of certain promissory notes issued by UAE Holdings pursuant to
a securities purchase agreement dated January 26, 2004. As a result of this
transaction, the CSFB Private Equity affiliates collectively own 60% and
Highstar II owns 40% of the outstanding shares of common stock of UAE Holdings.

The parties entered into a stockholders' agreement and members' agreement that
provide for the governance of UAE Holdings, MSW Energy Holdings and their
subsidiaries.

Pursuant to the stockholders' agreement, the affiliates of CSFB Private Equity,
on the one hand, and the Highstar Entities, on the other hand, will have
representation on the boards of directors of UAE Holdings and its subsidiaries
that will be generally proportionate to their ownership in UAE Holdings.
Although affiliates of CSFB Private Equity will initially have the ability to
appoint a majority of the members of the boards of directors of these entities,
the terms of the stockholders' agreement provide that none of UAE Holdings, MSW
Energy Holdings (through UAE Holdings as its managing member) or in many cases
their subsidiaries will be able to take certain significant actions without the
consent of the affiliates of CSFB Private Equity and Highstar II, so long as
they continue to own a minimum percentage of the common stock of UAE Holdings.
The stockholders' agreement and members' agreement also provide for transfer
restrictions, a right of first offer, tag-along rights, drag-along rights and
participation rights with respect to UAE Holdings and MSW Energy Holdings,
respectively. The parties also entered into a registration rights agreement with
respect to the common stock of UAE Holdings.

In connection with the transactions by the membership interests purchase
agreement, the members of MSW Energy Holdings adopted the Second Amended and
Restated Limited Liability Company Agreement which provides that UAE Holdings is
the Managing Member. The agreement also provides that, solely for purposes of
(i) taking any action that requires the approval of the Board of Directors of
MSW Energy Holdings pursuant to the terms of, and as defined in, the indenture
for MSW Energy Holdings' 8-1/2% Senior Secured Notes due 2010, or pursuant to
any other the note document and (ii) the definition of Continuing Directors (as
defined in such indenture), the Board of Directors of the Managing Member is
deemed to constitute the Board of Directors of MSW Energy Holdings.


                                       24
<PAGE>

Ref-Fuel Holdings is currently assessing the transactions to determine if there
will be an impact on its financial statements.


Item 2.  Management's Discussion and Analysis of Financial Condition and
Results of Operations

OVERVIEW

The following discussion contains forward-looking statements. These statements
are based on current plans and expectations and involve risks and uncertainties
that could cause actual future activities and results of operations to be
materially different from those set forth in the forward-looking statements.
Important factors that could cause actual results to differ include risks set
forth in "Risk Factors," below. The following should be read in conjunction with
the financial statements and related notes included elsewhere in this report. We
hold a 49.8% indirect membership interest in Ref-Fuel Holdings. The financial
statements and other financial information contained in this report relating to
Ref-Fuel Holdings are not directly comparable to our financial statements and
other financial information.

The following is a discussion of the financial condition and results of
operations for the three months ended March 31, 2004. This discussion should be
read in connection with our historical consolidated financial statements and
notes thereto included in the Annual Report on Form 10-K for the year ended
December 31, 2003, as well as the historical financial statements of Ref-Fuel
Holdings.


MSW ENERGY HOLDINGS LLC

General

We were formed and acquired our interest in Ref-Fuel Holdings in June 2003.
Because our sole source of operating cash flow relates to our 49.8% indirect
membership interest in Ref-Fuel Holdings, our performance and significant source
of future liquidity depends solely on cash distributions, if any, from Ref-Fuel
Holdings. Because we were not yet in existence, there are no financial results
for the first quarter of 2003 comparable to the data for the first quarter of
2004. Ref-Fuel Holdings, however, did have results for the two periods. The
information contained in "Management's Discussion and Analysis--MSW Energy
Holdings" should be read in conjunction with the discussion below under
"Supplemental Discussion and Analysis of Ref-Fuel Holdings". The information on
Ref-Fuel Holdings is not directly comparable to the results of MSW Energy
Holdings because MSW Energy Holdings owns only a 49.8% interest in Ref-Fuel
Holdings.

The following summarizes the historical financial information for MSW Energy
Holdings as of and for the three months ended March 31, 2004 (unaudited, in
thousands):


                                       25
<PAGE>


                                                     For the Three Months
                                                     Ended March 31, 2004
                                                    ----------------------

Statement of Operations Data:
Equity in net earnings of Ref-Fuel Holdings          $              4,539
Interest income                                                        28
Interest expense                                                   (4,250)
Accretion of Duke Agreement obligation                               (512)
Amortization of deferred financing fees                              (293)
Other expenses                                                       (473)
                                                    ----------------------
Net loss                                             $               (961)
                                                    ----------------------

Cash Flow Data:
Cash provided by operating activities                $             14,361
Cash provided by investing activities                                   1
Cash used in financing activities                                 (18,500)

Balance Sheet Data (at March 31, 2004):
Investment in Ref-Fuel Holdings                       $           353,307
Total assets                                                      367,812
Total debt                                                        200,000
Total members' equity                                             140,650


Results of Operations

For the Three Months Ended March 31, 2004

     Equity in earnings of Ref-Fuel Holdings. Equity in net earnings of Ref-Fuel
Holdings of $4.5 million for the three months ended March 31, 2004 represents
our share (49.8%) of the earnings of Ref-Fuel Holdings as adjusted by the bases
differential.

     Interest income. Interest income for the three months ended March 31, 2004
represents interest on cash and cash equivalents at rates ranging from 0.5% to
1.5%.

     Interest expense. Interest expense of $4.3 million for the three months
ended March 31, 2004 represents 8.5% annual interest on our Senior Notes.

     Accretion of Duke Agreement obligation. Accretion of Duke Agreement
obligation of $0.5 million for the three months ended March 31, 2004 represents
accretion of interest on the amounts due under the Duke Agreement (see
"Contractual Obligations and Commercial Commitments" below) using the effective
interest method.

     Amortization of deferred financing fees. Amortization of deferred financing
fees of $0.3 million for the three months ended March 31, 2004 represents
amortization of direct costs associated with the Senior Notes over the
seven-year life of the Senior Notes.

     Other expenses. Other operating expenses of $0.5 million for the three
months ended March 31, 2004 represent expenses incurred for a letter of credit
and our operations and administration.


                                       26
<PAGE>


Debt Covenant

The indenture under which our Senior Notes were issued requires, among other
things, but subject to certain exceptions, that we not permit any restricted
payment unless certain ratio covenants based on our proportionate ownership of
Ref-Fuel Holdings have been met. We are presenting proforma proportionate
adjusted data, including proportionate total cash and cash equivalents and
reserves, proportionate total debt, proportionate interest expense and
proportionate Adjusted EBITDA because these proforma twelve months results are
used in the calculation of the restrictive covenants contained in the indenture
governing our Senior Notes.

The unaudited summary pro forma condensed consolidated statements of operations
data, pro forma MSW Energy Holdings other data and pro forma proportionate other
data for the twelve months ended March 31, 2004, have been prepared as if the
MSW Transactions and issuance of the Senior Notes had occurred on April 1, 2003.
Accordingly, the following table includes the effects of push-down accounting on
Ref-Fuel Holdings as if the MSW Transactions had occurred on April 1, 2003.

The following table includes certain items that are not measures under generally
accepted accounting principles and are not intended to supplant the information
provided in accordance with generally accepted accounting principles.
Furthermore, these measures may not be comparable to those used by other
companies. The following tables should be read in conjunction with our
historical financial statements and related notes, the historical financial
statements and related notes of Ref-Fuel Holdings and the "Supplemental
Discussion and Analysis of Ref-Fuel Holdings" (unaudited, in thousands).
<TABLE>
<CAPTION>


                                                                                                     Pro Forma
                                                                                                Twelve Months Ended
                                                                                                     March 31,
                                                                                                        2004
                                                                                                ---------------------
Pro Forma MSW Energy Holdings other data

<S>                                                                                            <C>
Dividends received (1)                                                                          $             37,624
Cash flow available for debt service (2)                                                                      37,374
Ratio of cash flows available for debt service to interest                                                      2.2x

Pro Forma Proportionate other data

Proportionate total cash and cash equivalents and reserves (3)                                  $             99,097
Proportionate total debt (4)                                                                                 752,751
Proportionate Adjusted EBITDA (5)                                                                            134,717
Proportionate interest expense (6)                                                                            51,478
Proportionate net leverage ratio (7)                                                                            4.9x
Ratio of proportionate Adjusted EBITDA to proportionate
   interest expense (8)                                                                                         2.6x

(1)  Dividends received calculated as if we owned 49.8% of Ref-Fuel Holdings as of April 1, 2003:

</TABLE>


                                       27
<PAGE>



                                                          Pro Forma
                                                     Twelve Months Ended
                                                        March 31, 2004
                                                 ----------------------------

  Ref-Fuel Holdings dividends paid                            $        75,550
  MSW Energy Holdings ownership percentage                              49.8%
                                                              ---------------
  Pro Forma distributions received                            $        37,624
                                                              ---------------

(2)     Cash flow available for debt service is based on proforma distributions
        less letter of credit fees payable in connection with the equity
        contribution agreement.

(3)     Total Ref-Fuel Holdings and MSW Energy Holdings cash and cash
        equivalents and reserves include, in addition to cash and cash
        equivalents, both restricted cash and short-term investments and
        restricted cash and long-term investments.

Proportionate Total Cash and Cash Equivalents and Reserves is calculated as
follows (in thousands):
<TABLE>
<CAPTION>

                                                                                               March 31, 2004
                                                                                       -----------------------------
<S>                                                                                         <C>
Ref-Fuel Holdings cash and cash equivalents                                                 $               53,337
Ref-Fuel Holdings restricted cash and short-term investments                                                46,298
Ref-Fuel Holdings restricted cash and long-term investments                                                 85,422
                                                                                       -----------------------------
Total Ref-Fuel Holdings cash and cash equivalents and reserves                                             185,057
MSW Energy Holdings ownership percentage                                                                     49.8%
                                                                                       -----------------------------
Ref-Fuel Holdings proportionate total cash and cash equivalents and reserves                                92,158
MSW Energy Holdings total cash and cash equivalents                                                          6,939
                                                                                       -----------------------------
MSW Energy Holdings proportionate consolidated total cash and cash equivalents and
    reserves                                                                                $               99,097
                                                                                       -----------------------------

</TABLE>


(4)      MSW Energy Holdings Proportionate Total Debt is defined as 49.8% of
         the total debt for Ref-Fuel Holdings (excluding unamortized debt
         premium) plus our total debt.

Proportionate total debt is calculated as follows (in thousands):
<TABLE>
<CAPTION>


                                                                                               March 31, 2004
                                                                                       -----------------------------
<S>                                                                                    <C>
Ref-Fuel Holdings  current portion of long-term debt                                   $               82,876
Ref-Fuel Holdings  long-term debt (excluding net unamortized debt premium of
   $65.2 million)                                                                                   1,027,066
                                                                                       -----------------------------
Total Ref-Fuel Holdings debt (excluding net unamortized debt premium of $65.2
   million)                                                                                         1,109,942
MSW Energy Holdings ownership percentage                                                                49.8%
                                                                                       -----------------------------
Ref-Fuel Holdings  proportionate total debt                                                           552,751
MSW Energy Holdings total debt                                                                        200,000
                                                                                       -----------------------------
Proportionate total debt                                                               $              752,751
                                                                                       -----------------------------


</TABLE>


                                       28
<PAGE>



(5)      Proportionate Adjusted EBITDA is defined as 49.8% of the pro forma
         Adjusted EBITDA of Ref-Fuel Holdings. Adjusted EBITDA (as calculated
         below) is not a measurement of financial performance under generally
         accepted accounting principles and should not be considered as an
         alternative to cash flow from operating activities or as a measure of
         liquidity or an alternative to net income as indicators of our
         operating performance or any other measures of performance derived in
         accordance with generally accepted accounting principles.

Proportionate Adjusted EBITDA for the last twelve months ended March 31, 2004 is
calculated by subtracting the results for the three months ended March 31, 2003
from the twelve months ended December 31, 2003, and then adding the three months
ended March 31, 2004, as follows (in thousands):

<TABLE>
<CAPTION>
                                                                            Pro Forma      Actual Three    Pro Forma
                                                            Pro Forma       Three Months      Months     Twelve Months
                                                           Year Ended       Ended March     Ended March       Ended
                                                         December 31, 2003    31, 2003       31, 2004    March 31, 2004
                                                        ------------------ -------------   ------------ ---------------
Ref-Fuel Holdings:
<S>                                                              <C>            <C>            <C>            <C>
     Operating income                                   $         127,737  $     16,225    $    18,758  $      130,270
     Depreciation and amortization                                 68,094        17,728         17,371          67,737
     Loss on retirements                                            2,207         1,734            522             995
                                                        ------------------ -------------   ------------ ---------------
     EBITDA                                                       228,221        35,687         36,651         199,002
     Fair value adjustment amortization
       and revenue levelization adjustments                        69,608        16,805         18,711  $       71,514
                                                        ------------------ -------------   ------------ ---------------
     Adjusted EBITDA                                    $         267,646  $     52,492    $    55,362  $      270,516

MSW Energy Holdings ownership percentage                                                                          49.8%
                                                                                                        ---------------
MSW Energy Holdings Proportionate Adjusted EBITDA                                                       $      134,717

</TABLE>



(6)      Proportionate interest expense is defined as 49.8% of the pro forma
         interest expense for American Ref-Fuel plus 100% of our
         pro forma interest expense.

The following table reconciles MSW Energy Holdings Proportionate Interest
Expense (in thousands):

                                                               Pro Forma
                                                          Twelve Months Ended
                                                             March 31, 2004
                                                         ----------------------
Pro Forma Ref-Fuel Holdings interest expense                        $    69,233
MSW Energy Holdings ownership percentage                                  49.8%
                                                                    -----------
Ref-Fuel Holdings proportionate interest expense                         34,478
MSW Energy Holdings pro forma interest expense                           17,000
                                                                    -----------
MSW Energy Holdings proportionate interest expense                  $    51,478
                                                                    -----------


                              29
<PAGE>


(7)      Proportionate net leverage ratio is defined as the quotient of
         proportionate total debt less proportionate total cash divided by
         proportionate Adjusted EBITDA.

(8)      Proportionate Adjusted EBITDA to proportionate interest expense is
         defined as the quotient of proportionate Adjusted EBITDA divided by
         proportionate interest expense.

Operating Activities

Our net cash provided by operating activities of $14.4 million for the period
for the three months ended March 31, 2004 relates primarily to the distributions
received from Ref-Fuel Holdings of $23.9 million in 2004 offset by the payment
of $8.5 million of interest on our Senior Notes, $0.5 million reimbursed to
Ref-Fuel Holdings for costs paid on our behalf and payments for our operating
costs.

Investing Activities

Our net cash provided by investing activities for the three months ended March
31, 2004 relates to a change in our restricted cash balance.

Financing Activities

Our net cash used in financing activities of $18.5 million for the three months
ended March 31, 2004 relates entirely to our distribution to members on March
31, 2004.

Critical Accounting Policies

Our management is responsible for our financial statements and has evaluated the
accounting policies to be used in their preparation. Our management believes
these policies to be reasonable and appropriate. The following discussion
identifies those accounting policies that we believe will be critical in the
preparation of our financial statements, the judgments and uncertainties
affecting the application of those policies, and the possibility that materially
different amounts will be reported under different conditions or using different
assumptions.

Use of Estimates in Preparing Financial Statements. 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: (a) the reported amounts of assets and liabilities at the date of
the financial statements; (b) the disclosures of contingent assets and
liabilities at the date of the financial statements; and (c) the reported
amounts of revenues and expenses recognized during the reporting period. Such
estimates may be subsequently revised as necessary when additional information
becomes available. Actual results could differ from those estimates.

Equity Method Investment. Investments are accounted for using the equity method
of accounting if the investment gives us the ability to exercise significant
influence, but not control, over an investee. Significant influence is generally
deemed to exist if we have an ownership interest in the voting stock of the
investee of between 20% and 50%, although other factors, such as representation
on the investee's board of directors, are considered in determining whether the
equity method of accounting is appropriate. We have recorded our investment in
Ref-Fuel Holdings as an equity-method investment whereby our ownership
percentage of 49.8% of Ref-Fuel Holdings is reflected on our consolidated
balance sheet as "Investment in Ref-Fuel Holdings." We record our share of


                                       30
<PAGE>


Ref-Fuel Holdings' earnings or losses as "Equity in net earnings (loss) of
Ref-Fuel Holdings" on our consolidated statement of operations. Cash
distributions received from Ref-Fuel Holdings are included in the accompanying
consolidated statement of cash flows as "Distributions received from Ref-Fuel
Holdings."

Push-Down Accounting. Upon consummation of the UAE Merger between MSW Merger and
UAE Holdings on December 12, 2003 and taking into account the June 30, 2003
acquisition by MSW Energy Holdings LLC of Duke's membership interest in Ref-Fuel
Holdings, affiliates of Credit Suisse First Boston Private Equity, Inc. and AIG
Global Asset Management Holdings Corp. own, directly and indirectly, 99.8% of
the membership interests in Ref-Fuel Holdings (and will exercise voting power
with respect to the remaining 0.2% interest). Emerging Issues Task Force (EITF)
Topic D-97, "Push-Down Accounting," requires that Ref-Fuel Holdings financial
statements reflect this change in ownership. See Notes 2 and 4 to "MSW Energy
Holdings LLC and Subsidiary--Notes to Consolidated Financial Statements
(Unaudited)".

Effect of New Accounting Standard

In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest
Entities," and a revised interpretation of FIN 46 (FIN 46R) in December 2003
(collectively "FIN 46"). FIN 46 addresses consolidation of variable interest
entities. FIN 46 provides guidance for determining when a primary beneficiary
should consolidate a variable interest entity or equivalent structure that
functions to support the activities of the primary beneficiary. The provisions
of FIN 46 are effective immediately for all variable interest entities created
after January 31, 2003. It applies in the first year or interim period ending
after December 15, 2003 to variable interest entities in which an enterprise
holds a variable interest that it acquired before February 1, 2003. Management
has evaluated FIN 46 and its related guidance and determined that it does not
have any impact on our consolidated financial statements.

Contractual Obligations and Commercial Commitments

 The following table sets forth our contractual obligations outstanding as of
March 31, 2004 (in thousands):

<TABLE>
<CAPTION>

                                                                  Less than        1-3          3-5         More than
          Contractual Obligations                Total             1 Year         Years        Years         5 Years
          -----------------------                -----               ----         -----        -----           -----

<S>                                              <C>                    <C>          <C>          <C>         <C>
Long-Term Debt Obligations                    $   200,000        $         -     $      -     $      -     $   200,000

Unconditional Purchase Obligations                  1,307  (1)             -        1,307            -               -

Other Long-Term Obligations                        49,500  (2)           500        7,500        7,500          34,000
                                              ------------       ------------    ---------    ---------    ------------
                                       Total  $   250,807        $       500     $  8,807     $  7,500     $   234,000
                                              ============       ============    =========    =========    ============

</TABLE>


     (1) Represents unconditional purchase obligation associated with the
Acquisition of $1,307 due at the second closing.

     (2) Represents amounts due under the Duke Agreement. See Note 4 of MSW
Energy Holdings' financial statements included herein.


                                       31
<PAGE>


 Our ability to satisfy all of these obligations is entirely dependent on the
generation of cash distributions by Ref-Fuel Holdings. The business of Ref-Fuel
Holdings is subject to a variety of risks, many of which are outside the control
of Ref-Fuel Holdings. Any of these risks could affect Ref-Fuel Holding's ability
to generate cash flow. In addition, the ARC operating companies and American
Ref-Fuel must satisfy covenants imposed by their debt agreements as well as
other legal restrictions before making distributions to their owners, including
Ref-Fuel Holdings, and, ultimately, us. Finally, we do not unilaterally control
the board of directors of Ref-Fuel Holdings and cannot unilaterally determine
the amount of cash distributions.

Supplemental Discussion and Analysis of Ref-Fuel Holdings

General

Prior to June 30, 2003, Ref-Fuel Holdings was owned 50% by United American
Energy Corp. (UAE) and 50% by Duke Energy Corporation (Duke). Effective June 30,
2003, Duke sold its membership interests representing 49.8% of Ref-Fuel Holdings
to MSW Energy Holdings LLC (MSW Energy Holdings), which is jointly owned by (a)
Highstar Renewable Fuels LLC (Highstar) which is affiliated with AIG Global
Asset Management Holdings Corp. (AIGGIG), a subsidiary of American International
Group, Inc.; and (b) MSW Acquisition LLC (MSW Acquisition) which is owned by
several funds affiliated with Credit Suisse First Boston Private Equity, Inc.
(CSFB Private Equity), the global private equity arm of Credit Suisse First
Boston.

On December 12, 2003, MSW Merger, LLC (MSW Merger) an affiliate of CSFB Private
Equity, merged with and into United American Energy Holdings Corp. (UAE
Holdings) which continues as the surviving corporation in the merger. UAE
Holdings is the direct parent of UAE. As a result of this merger, UAE's 50%
ownership in Ref-Fuel Holdings was transferred to MSW Energy Holdings II LLC
(MSW Energy Holdings II), an affiliate of MSW Merger.

Upon consummation of the merger and taking into account the June 30, 2003
acquisition by MSW Energy Holdings of Duke's 49.8% membership interest in
Ref-Fuel Holdings (the MSW Transactions), affiliates of CSFB Private Equity and
AIGGIG (the Control Group) own, directly and indirectly, 99.8% of the membership
interests in Ref-Fuel Holdings (and will exercise voting power with respect to
Duke's remaining 0.2% interest). As a result, and in accordance with Emerging
Issues Task Force (EITF) Topic D-97, "Push-Down Accounting," Ref-Fuel Holdings'
financial statements will reflect the effects of its change in ownership and the
new owners' basis in the net assets and liabilities acquired. Accordingly, the
statement of operations and the statement of cash flows for the three month
period ended March 31, 2003, reflect the results prior to the change in bases
resulting from the application of push-down accounting. The statement of
operations and the statement of cash flows for the three month period ended
March 31, 2004 and the balance sheet as of March 31, 2004 and December 31, 2003
reflect the results subsequent to the push-down adjustments.

The following summarizes financial information for Ref-Fuel Holdings for the
three months ended March 31, 2004 and 2003 and as of March 31, 2004 and December
31, 2003. Certain items are included that are not measures under generally
accepted accounting principles and are not intended to supplant the information
provided in accordance with generally accepted accounting principles.
Furthermore, these measures may not be comparable to those used by other
companies. The following information should be read in conjunction with the
historical financial statements and related notes.


                                       32
<PAGE>

<TABLE>
<CAPTION>
<S>                                                <C>                       <C>
                                                  For the Three      |       For the Three
(In thousands)                                    Months Ended       |        Months Ended
                                                 March 31, 2004      |       March 31, 2003
                                              ---------------------  |  ------------------------
                                                   (unaudited)       |        (unaudited)
                                                                     |
Statement of Operations Data                                         |
Net revenues                                       $       102,105   |       $          106,031
Operating expenses                                         (54,621)  |                  (49,048)
Depreciation and amortization expense                      (17,371)  |                  (15,415)
General and administrative expenses                        (10,833)  |                  (11,660)
Loss on asset retirement                                      (522)  |                   (1,734)
Interest income                                                740   |                      745
Interest expense                                           (10,834)  |                  (14,858)
Other income, net                                              138   |                      146
                                              ---------------------  |  ------------------------
Net income                                         $         8,802   |       $           14,207
                                              ---------------------  |  ------------------------
                                                                     |
Cash Flow Data:                                                      |
Cash provided by operating activities              $        45,566   |       $           43,062
Cash used in investing activities                          (13,139)  |                  (11,423)
Cash used in financing activities                          (75,601)  |                  (77,469)
EBITDA (1)                                                  36,651   |                   45,323
Adjusted EBITDA (1)                                         55,362   |                   52,492

Balance Sheet Data (as of end of period)         March 31, 2004            December 31, 2003
                                              ---------------------     ------------------------
                                                   (unaudited)

Total cash and cash equivalents and reserves (2)   $       185,057           $          233,973
PP&E                                                     1,222,083                    1,220,949
Total assets                                             2,069,570                    2,127,908
Total debt                                               1,109,942                    1,142,687
Total liabilities                                        1,367,357                    1,386,608
Total members' equity                                      702,213                      741,300


</TABLE>

(1)      "EBITDA" means, for any period, the (a) operating income (or loss),
         plus (b) to the extent deducted in determining such income (or loss),
         depreciation and amortization, plus, (c) loss on retirements and
         relocation expenses. EBITDA is not a measurement of financial
         performance under generally accepted accounting principles and should
         not be considered as an alternative to cash flow from operating
         activities or as a measure of liquidity or an alternative to net income
         as indicators of our operating performance or any other measures of
         performance derived in accordance with generally accepted accounting
         principles.

         "Adjusted EBITDA" means, for any period, EBITDA plus fair value
         adjustment amortization and revenue levelization adjustments. Adjusted
         EBITDA is not a measurement of financial performance under generally
         accepted accounting principles and should not be considered as an
         alternative to cash flow from operating activities or as a measure of
         liquidity or an alternative to net income as indicators of our
         operating performance or any other measures of performance derived in
         accordance with generally accepted accounting principles.


                                       33
<PAGE>


(2)      Total cash and cash equivalents and reserves includes, in addition to
         cash and cash equivalents, both restricted cash and short-term
         investments and restricted cash and long-term investments. Ref-Fuel
         Holdings is required to maintain cash and investment balances that are
         restricted by provisions of its debt agreements and lease agreements.

     The presentation of these non GAAP measures is intended to enhance the
usefulness of financial information by providing measures which are indicators
of Ref-Fuel Holdings' performance. Ref-Fuel Holdings' management uses these non
GAAP measures internally to evaluate its business.

EBITDA and Adjusted EBITDA are calculated and reconciled to cash provided by
operating activities as follows (unaudited, in thousands):
<TABLE>
<CAPTION>
<S>                                                                              <C>                     <C>
                                                                              For the Three Months |   For the Three Months
                                                                                 Ended March 31,   |     Ended March 31,
                                                                                      2004         |          2003
                                                                             --------------------- | -------------------
Operating income                                                                 $         18,758  |     $       28,174
  Depreciation and amortization                                                            17,371  |             15,415
  Loss on asset retirements                                                                   522  |              1,734
                                                                             --------------------- | -------------------
EBITDA                                                                                     36,651  |             45,323
  Amortization of long term waste contracts                                                (1,897) |             (2,282)
  Amortization of deferred revenue                                                            (10) |               (113)
  Amortization of energy contracts                                                         16,263  |              7,600
  Energy contract levelization                                                              5,524  |              3,284
  Amortization of lease                                                                    (1,169) |             (1,320)
                                                                             --------------------- | -------------------
  Total fair value adjustment amortization and revenue levelization                                |
   adjustments                                                                             18,711  |              7,169
                                                                             --------------------- | -------------------
Adjusted EBITDA                                                                  $         55,362  |     $       52,492
                                                                             ===================== | ===================
                                                                                                   |
Reconciliation of  Adjusted EBITDA to cash provided by operating activities                        |
  Adjusted EBITDA                                                                $         55,362  |     $       52,492
  Plus other income, net                                                                      138  |                146
  Amortization of debt                                                                     (5,144) |               (475)
  Interest expense                                                                        (10,834) |            (14,858)
  Interest income                                                                             740  |                745
  Interest on loss contract                                                                     -  |                491
  Changes in assets and liabilities                                                                |
     Accounts receivable, net                                                               1,748  |              1,555
     Prepaid expenses and other current                                                            |
     assets                                                                                (2,566) |             (2,630)
     Other long-term assets                                                                (6,075) |             (5,514)
     Accounts payable and other                                                                    |
      current liabilities                                                                   4,367  |              4,416
     Accrued interest payable                                                               8,542  |              4,574
     Other long-term liabilities                                                             (712) |              2,120
                                                                             --------------------- | -------------------
Cash provided by operating activities                                            $         45,566  |     $       43,062
                                                                             ===================== | ===================

</TABLE>


                                       34
<PAGE>


Results of Operations

Comparison of the Three Months ended March 31, 2004 and 2003

 Total Net Revenues. Total net revenues were $102.1 million for the three months
ended March 31, 2004, a decrease of $3.9 million, or 4%, over the same period in
2003. Net revenues decreased $11.3 million due to an increased amortizations of
waste and energy contract intangible assets ($9.1 million) resulting from
push-down accounting and energy contract levelization ($2.2 million). This
decrease was partially off set by increases in waste revenue of $2.5 million,
resulting from increased volumes and pricing; power revenue increases of $1.9
million due to increased volumes sold; metals revenue increases of $1.9 million,
resulting from an increase in the pricing, and other revenue increases of $1.1
million, primarily attributable to ash disposal fees. Waste volume increases
were due to increased boiler availability, and metals pricing was attributable
primarily to increases in demand for metals.

Expenses. Operating expenses were $54.6 million for the three months ended March
31, 2004, an increase of $5.6 million, or 11% from the prior year. The most
significant increase, approximately $4.2 million, was primarily attributable to
increased facility maintenance expenses resulting from increased outage scope.
In addition, transportation, ash and waste disposal costs also increased ($1.0
million) due to higher volumes at the plant level.

Depreciation and amortization. Depreciation and amortization expenses was $17.4
million for the three months ended March 31, 2004, an increased of $2.0 million,
or 13%, over the prior year's period mainly as a result of the purchase
accounting adjustments effect in 2004 as a result of the revaluation of Ref-Fuel
Holdings assets in connection with the MSW Transactions.

General and administrative. General and administrative expenses were $10.8
million for the three months ended March 31, 2004, a decrease of $0.8 million,
or 7%, from the prior year's period. Higher developmental spending activities
were offset by lower costs associated with Ref-Fuel Holdings' terminated
incentive plan.

Interest Expense. Interest expense was $10.8 million for the three months ended
March 31, 2004, a decrease of $4.0 million, or 27%, from the prior year's
period. The decrease was due to the amortization of debt as a result of purchase
accounting ($4.7 million), offset by higher rates associated with the
refinancing of short-term to long-term debt in May 2003.

Liquidity and Capital Resources

Ref-Fuel Holdings has historically generated funds from its operations for its
working capital requirements, capital spending, debt repayments and dividend
payouts.

On May 9, 2003, American Ref-Fuel completed the sale of $275 million aggregate
principal amount of 6.26% senior notes due 2015. The proceeds of the financing
were used to repay $242.6 million under the outstanding credit facility, fund
debt service reserve accounts and for general corporate purposes. As part of
this refinancing, American Ref-Fuel entered into an amended and restated secured
revolving credit facility for up to $75 million, including $45 million of which
could be used for letters of credit. Under the terms of the credit facility and
indenture governing the senior notes, American Ref-Fuel is subject to certain
quarterly financial covenants, as defined in the credit facility and indenture
governing the senior notes, with respect to leverage and adjusted cash flow
coverage ratios. American Ref-Fuel is currently in compliance with respect to

                                       35
<PAGE>

the financial covenants. As of March 31, 2004, there were no borrowings and $7.0
million in letters of credit outstanding.

Cash Flows

Operating Activities

Ref-Fuel Holdings' net cash flows provided by operating activities totaled $45.6
million for the three months ended March 31, 2004, compared with $43.0 million
for the three months ended March 31, 2003. The increase in cash flow from
operating activities of $2.6 million is attributable to an increase of
approximately $1.7 million due to increased waste volumes and metal pricing. In
addition, there was an increase in interest payable as a result of the
refinancing which occurred in 2003. During this refinancing, American Ref-Fuel
issued debt with semi-annual payments, in June and December, replacing the old
debt which had quarterly payments. This resulted in a significant change in the
accrued interest payable. This increase from 2003 was partially off-set by other
timing differences in working capital.

Investing Activities

Cash flows utilized in investing activities are typically related to capital
additions and restricted cash changes. Ref-Fuel Holdings is required to maintain
cash and investment balances that are restricted by provisions of its debt
agreements and lease agreements. Ref-Fuel Holdings' capital additions consist
primarily of expenditures to maintain the operating facilities, including
expenditures for replacement and refurbishment of equipment and environmental
compliance that increase value, change capacities or extend useful lives.

Cash flow utilized in investing activities totaled $13.1 million for the three
months ended March 31, 2004, compared with $11.4 million for the three months
ended March 31, 2003. The increase in cash used of $1.7 million is primarily due
to an increase in capital expenditures of $3.3 million, slightly reduced by the
increase in restricted cash balances of $1.1 million. The increase in capital
expenditures was attributable to additional repairs.

Financing Activities

Cash flows utilized in financing activities are related to borrowings of
long-term debt, principal payments of long-term debt and distributions to
members.

Cash flows utilized in financing activities totaled $75.6 million for the three
months ended March 31, 2004, as compared with $77.5 million for prior year's
period. The reduction of cash used of $1.9 million resulted from a reduction of
long-term debt payments in the amount of $4.8 million the majority of which was
as a result of the refinancing which occurred in 2003, offset by an increase in
distributions of $3.0 million.

Capital Structure and Resources

As of March 31, 2004, Ref-Fuel Holdings had an aggregate of $1.1 billion in debt
outstanding, with maturities ranging from 2004 to 2026. Certain operating
companies are obligated to restrict funds on a monthly basis for payment of
project debt and certain operating companies are required to maintain debt
service reserve funds. Ref-Fuel Holdings' management believes that all debt
service reserve funds requirements have been satisfied.

In order to provide Ref-Fuel Holdings with an additional source of funds to meet
its support obligations, each of Ref-Fuel Holdings' Members has entered into the

                                       36
<PAGE>

Equity Contribution Agreement pursuant to which each Member has agreed to
provide up to $50 million in equity capital to Ref-Fuel Holdings. Each Member's
obligation to make equity contributions under the Equity Contribution Agreement
is conditioned upon the other making an equal contribution and is limited to
each making no more than $50 million of aggregate equity contributions. If a
Member is not rated at least BBB by S&P, such party is required to provide a
letter of credit from a commercial bank that is rated at least A- by S&P to
secure its obligations under the Equity Contribution Agreement.

Effect of Inflation

Ref-Fuel Holdings' management believes that its results of operations have not
been materially impacted by inflation over the past three years.

Effect of New Accounting Standards

In January 2003, the FASB issued Interpretation (FIN) No. 46, "Consolidation of
Variable Interest Entities." FIN 46 requires that unconsolidated variable
interest entities be consolidated by their primary beneficiaries. A primary
beneficiary is the party that absorbs a majority of the entity's expected losses
or residual benefits. FIN 46 applies immediately to variable interest entities
created after January 31, 2003 and to existing variable interest entities in the
periods beginning after June 15, 2003. Ref-Fuel Holdings has evaluated FIN 46
and its related guidance and determined that it does not have any impact on its
consolidated financial statements.

Contractual Obligations and Commercial Commitments

The following table sets forth Ref-Fuel Holdings contractual obligations
outstanding as of March 31, 2004 (in thousands):
<TABLE>
<CAPTION>

                                            Less than 1                             More than 5
   Contractual Obligation        Total         Year       1-3 Years     3-5 Years      Years
------------------------------------------- -----------  ------------ ------------ ------------
<S>                            <C>          <C>          <C>          <C>          <C>
Long Term Debt Obligations     $ 1,109,942  $    82,876  $   154,978  $   189,443  $   682,645
Operating Lease Obligations        152,055       14,318       27,968       29,216       80,553
Other Long-Term Obligations         17,468        6,955          496            -       10,017
                               ------------ ------------ ------------ ------------ ------------
Total                          $ 1,279,465  $   104,149  $   183,442  $   218,659  $   773,215
                               ============ ============ ============ ============ ============
</TABLE>


Litigation

Ref-Fuel Holdings and the ARC operating companies are not currently involved in
any legal proceedings the outcome of which, if determined against Ref-Fuel
Holdings or the ARC operating Companies, would have a material adverse effect on
Ref-Fuel Holdings' financial condition or results of operations.


                                       37
<PAGE>


RISK FACTORS

Any of the following risks could materially adversely affect our business,
financial condition or results of operations.

Our substantial indebtedness and the substantial indebtedness of Ref-Fuel
Holdings could adversely affect our financial condition.

We have a substantial amount of indebtedness. As of March 31, 2004, our total
indebtedness was $200 million, which represented approximately 58.7% of our
total capitalization. As of March 31, 2004, Ref-Fuel Holdings' total
indebtedness was approximately $1.1 billion, which represented approximately
61.2% of Ref-Fuel Holdings' total capitalization.

This substantial indebtedness could have important consequences. For example, it
could

o    make it more  difficult for us to satisfy our  obligations  with respect to
     our outstanding debt, including our repurchase obligations;

o    increase our vulnerability to general economic and industry conditions;

o    limit our  flexibility  in planning  for, or  reacting  to,  changes in the
     business and industry in which Ref-Fuel Holdings operates;

o    place us and Ref-Fuel  Holdings at a competitive  disadvantage  compared to
     competitors of Ref-Fuel Holdings that have less debt; and

o    limit our  ability  to  borrow  additional  funds in order to make  capital
     contributions to fund the ARC operating facilities.

Our indenture imposes significant operating and financial restrictions on us.

The indenture governing our outstanding debt contains restrictive covenants that
limit our ability to engage in activities that may be in our long-term best
interests. These restrictions limit our ability and the ability of any
restricted subsidiaries to do the following, among other things:

o        incur additional indebtedness;

o        create liens;

o        pay dividends or make other equity distributions;

o        purchase or redeem capital stock;

o        make investments;

o        sell assets or consolidate or merge with or into other companies; and

o        engage in transactions with affiliates.


                                       38
<PAGE>

Our failure to comply with those covenants could result in an event of default
which, if not cured or waived, could result in the acceleration of all of our
debt. Moreover, it is possible that in the future the owners of MSW Energy
Holdings and MSW Energy Holdings II could determine to merge those companies
with each other or into Ref-Fuel Holdings. While such a merger would be required
to comply with the terms of the indenture, a result would be an increase in the
amount of indebtedness of the successor.

Our sole source of cash flow relates to our investment in Ref-Fuel Holdings,
whose sole source of cash flow, in turn, relates to its 100% interest in
American Ref-Fuel and, accordingly, our performance will depend solely on cash
distributions from Ref-Fuel Holdings and American Ref-Fuel.

We will need to receive sufficient ongoing cash distributions from Ref-Fuel
Holdings in order to pay principal and interest on our outstanding debt.
Accordingly, our ability to service our debt is subject to a number of risks,
including the following:

o        We depend on the ability of American Ref-Fuel and its subsidiaries to
         generate sufficient cash flow to service American Ref-Fuel's
         significant debt and to make distributions to Ref-Fuel Holdings. The
         business of American Ref-Fuel is subject to a variety of risks, many of
         which, as described below, are outside the control of American
         Ref-Fuel. Any of these risks could affect American Ref-Fuel's ability
         to generate cash flow. In the event that American Ref-Fuel fails to
         generate cash flow sufficient to make distributions to Ref-Fuel
         Holdings, we will not be able to pay interest and principal on our
         outstanding debt.

o        American Ref-Fuel and the ARC operating companies have a significant
         amount of indebtedness outstanding. The ARC operating companies must
         satisfy restrictions imposed by their debt agreements on distributions
         to American Ref-Fuel, and American Ref-Fuel must satisfy restrictions
         imposed by its debt agreements on distributions to Ref-Fuel Holdings.
         The ARC operating companies must also satisfy any applicable legal
         restrictions on distributions to equity holders before making cash
         distributions to American Ref-Fuel, and American Ref-Fuel must also
         satisfy any applicable legal restrictions on distributions to equity
         holders before making cash distributions to Ref-Fuel Holdings.

We own an indirect 49.8% membership interest in American Ref-Fuel and have
voting control over an additional 0.2% interest, and our lack of unilateral
control over American Ref-Fuel could adversely affect our financial condition.

We own an indirect 49.8% membership interest and have voting control over an
additional 0.2% interest in Ref-Fuel Holdings, which owns 100% of American
Ref-Fuel. Voting by the board of directors of Ref-Fuel Holdings is done in
accordance with ownership percentage. The other 50% membership interest in
Ref-Fuel Holdings is currently owned directly and directly by MSW Energy
Holdings II.

Additionally, MSW Energy Holdings II has its own outstanding indebtedness, which
is secured by, among other things, its interest in Ref-Fuel Holdings. Our
inability to unilaterally control decisions made by the board of directors of
Ref-Fuel Holdings could impair our ability to service our outstanding debt. We
may not have the ability to raise the funds necessary to finance any change of
control offer required by the indenture governing certain of our outstanding
debt or to pay principal on our outstanding debt.


                                       39
<PAGE>

We may not have the ability to raise funds necessary to finance any change of
control offer required by the indenture governing certain of our outstanding
debt or to pay principal on our outstanding debt.

If we undergo a change of control, as defined in the indenture, we may need to
refinance large amounts of our debt. If a change of control occurs, we must
offer to buy back our Senior Notes for a price equal to 101% of the principal
amount, plus any accrued and unpaid interest, and liquidated damages, if any. We
may not have sufficient funds available for us to make any required repurchases
under the indenture. If we fail to make the required repurchases, we will go
into default under the indenture. A default under the indenture may cause all of
the indebtedness under the indenture to become due and payable. It is unlikely
that we would be able to repay or refinance all of that indebtedness in those
circumstances. Any future debt that we incur may contain restrictions on
repayment upon a change of control. If any change of control occurs, we may not
have sufficient funds to satisfy all of our debt obligations. The purchase offer
requirements could also delay or make it more difficult for others to effect a
change of control. Further, the definition of change of control includes a
phrase relating to "all or substantially all." Although there is a limited body
of case law interpreting the phrase "substantially all," there is no precise
established definition of the phrase under applicable law. Accordingly, the
ability of a holder of our Senior Notes to require us to repurchase its notes as
a result of a sale, lease, transfer, conveyance or other disposition of less
than all of our assets may be uncertain.

Despite current indebtedness levels, Ref-Fuel Holdings and its subsidiaries may
incur significant additional indebtedness, which would further increase the
risks associated with our substantial indebtedness and the substantial
indebtedness of Ref-Fuel Holdings and its subsidiaries.

Our subsidiaries may be able to incur substantial additional indebtedness in the
future because the terms of the indebtedness do not prohibit our subsidiaries
from doing so. If new debt is added to our subsidiaries' current debt levels,
the related risks that we and they face would be increased. In addition, the
indenture does not prevent us from incurring obligations that do not constitute
indebtedness. Furthermore, Ref-Fuel Holdings and its subsidiaries may be able to
incur substantial additional indebtedness in the future.

We are controlled by AIGGIG and CSFB Private Equity or their respective
affiliates, whose interests in our business may be different than holders of our
outstanding debt.

Affiliates of AIGGIG and CSFB Private Equity own all of our equity and are able
to control our affairs in all cases. With the exception of one independent
director, who is entitled to vote only with respect to certain bankruptcy
matters, our entire board has been designated by affiliates of AIGGIG and CSFB
Private Equity and is associated with AIGGIG and CSFB Private Equity. In
addition, affiliates of AIGGIG and CSFB Private Equity control the appointment
of management, the entering into of mergers, sales of substantially all of our
assets and other extraordinary transactions.

For example, if we encounter financial difficulties or are unable to pay our
debts as they mature, the interests of AIGGIG and CSFB Private Equity as equity
holders might conflict with the interests of the holders of our debt. Affiliates
of AIGGIG and CSFB Private Equity may also have an interest in pursuing, or
having American Ref-Fuel pursue, acquisitions, divestitures, financings or other
transactions that, in their judgment, could enhance their equity investments,
even though those transactions might involve risks to the holders of our debt.
In addition, AIGGIG and CSFB Private Equity or their affiliates may, in the
future, own businesses that directly compete with ours.


                                       40
<PAGE>

If American Ref-Fuel or the ARC operating companies were to become bankrupt, the
creditors of American Ref-Fuel would be paid in full before any distributions
are made to Ref-Fuel Holdings.

In the event of any bankruptcy, liquidation or reorganization of American
Ref-Fuel or the ARC operating companies, creditors of American Ref-Fuel or the
ARC operating companies, as applicable, would have to be paid in full before
American Ref-Fuel could make any distributions to Ref-Fuel Holdings.
Distributions, if any, from Ref-Fuel Holdings to us may be insufficient for us
to pay interest and principal on our outstanding debt or to meet our financial
and other obligations.

Risk Relating to Ref-Fuel Holdings' and American Ref-Fuel's Business

American Ref-Fuel's revenues depend on the operation of the ARC operating
facilities.

American Ref-Fuel's receipt of distributions from the ARC operating companies
and TransRiver are dependent on the successful operation of the ARC operating
facilities. The operation of the ARC operating facilities involves many risks,
including:

o    the breakdown or failure of equipment or processes;

o    the  difficulty  or  inability  to  find  suitable  replacement  parts  for
     equipment;

o    the  performance of the ARC operating  facilities  below expected levels of
     waste throughput, electric or steam generation or efficiency;

o    the unavailability of sufficient quantities of waste;

o    decreases in the fees for solid waste disposal;

o    decreases  in the  demand  or  market  prices  for  recovered  ferrous  and
     nonferrous metal;

o    disruption in the transmission of electricity generated;

o    labor disputes;

o    operator error;

o    catastrophic  events such as  hurricanes,  earthquakes,  floods and acts of
     terrorism  that damage or destroy the  facilities  or the area in which the
     facilities are located;

o    changes  in  law  or   application   of  law   (including   any  applicable
     environmental laws or permit requirements); and

o    the exercise of the power of eminent domain.

While American Ref-Fuel will maintain insurance to protect against certain of
these risks, the insurance may not cover all of these risks and the proceeds of
the insurance may not fully compensate for damages to the ARC operating
facilities and the ARC operating facilities' lost revenues or increased
expenses. A decrease or elimination of revenues generated by the ARC operating
facilities or an increase in the costs of operating the ARC operating facilities
could decrease or eliminate funds available to American Ref-Fuel to make
distributions to Ref-Fuel Holdings which, in turn would decrease or eliminate
the funds available to Ref-Fuel Holdings to make distributions to us, which
would adversely affect our financial condition.


                                       41
<PAGE>

Our Essex  Facility  derives a  significant  amount of revenue from a waste
disposal agreement with the City of New York.

Our Essex Facility is dependent on the revenues generated by a waste disposal
agreement with the City of New York. While the agreement does not expire until
October 2007 (with two additional one year renewal options at NYC's discretion),
New York City can terminate the agreement at any time for no reason. If New York
City terminated the agreement, the Essex Facility business would suffer unless
we secured an alternative waste disposal volume in a timely and efficient
fashion. We may not be able to do so on terms that are as favorable as the
current contract.

American Ref-Fuel depends on performance by third parties under contractual
arrangements.

American Ref-Fuel depends on third parties to, among other things, purchase the
electric and steam energy produced by the ARC operating facilities, and supply
and deliver the waste and other goods and services necessary for the operation
of the ARC operating facilities. The viability of the ARC operating facilities
and the ability of American Ref-Fuel to make distributions to Ref-Fuel Holdings
depend significantly upon the performance by third parties in accordance with
the long-term contracts entered into by the ARC operating companies and the
third parties in connection with the ARC operating facilities.

If the third parties to those contracts do not perform their obligations, or are
excused from performing their obligations because of nonperformance by the ARC
operating companies or other parties to the documents, or due to force majeure
events or changes in laws or regulations, the ARC operating companies may not be
able to secure alternate arrangements on substantially the same terms, if at
all, for the services provided under the contracts. Furthermore, the ability of
the ARC operating companies and TransRiver to make distributions to American
Ref-Fuel may be adversely affected, which may adversely affect our financial
condition. In addition, the bankruptcy or insolvency of a participant or third
party in the ARC operating facilities could result in nonpayment or
nonperformance of that party's obligations to the ARC operating companies and
could adversely affect the ability of American Ref-Fuel to make distributions to
Ref-Fuel Holdings which, in turn would decrease or eliminate the funds available
to Ref-Fuel Holdings to make distributions to us, which would decrease or
eliminate the funds available to us.

American Ref-Fuel is obligated to provide financial support to the ARC operating
companies.

American Ref-Fuel guarantees or provides financial support for each of the ARC
operating companies, in one or more of the following forms (the amounts set
forth below are as of March 31, 2004):

o        guarantees of certain debt (Hempstead facility, approximately $42.7
         million; Seconn facility, approximately; $43.5 million; Niagara
         facility, approximately $165.0 million; Semass facility, approximately
         $5.0 million);

o        support agreements in connection with service or operating
         agreement-related obligations for each of the Hempstead facility
         (approximately, $149.3 million), the Semass facility (approximately,
         $12.0 million), the Seconn facility (approximately $90.1 million), the
         Essex facility (approximately $100.0 million), the Niagara facility
         (approximately $24.6 million) and the Delaware Valley facility
         (approximately $185.4 million);

o        the obligation to pay each lease payment installment in connection with
         the Hempstead facility and the Seconn facility to the extent required
         for the Hempstead partnership and the Seconn partnership to fulfill
         their obligations under their respective lease agreements;

o        contingent credit support for damages from performance failures;

o        environmental indemnities; and

o        contingent capital and credit support to finance costs, in most cases
         in connection with a corresponding increase in service fees, relating
         to uncontrollable circumstances.


                                       42
<PAGE>

Many of these contingent obligations cannot readily be quantified but they may
be material to American Ref-Fuel's cash flow and financial condition. If
American Ref-Fuel were required to provide this support, it could materially and
adversely affect its ability to make payments with respect to the outstanding
principal of, premium, if any, and interest on the indebtedness of American
Ref-Fuel, and, accordingly, affect American Ref-Fuel's ability to make
distributions to Ref-Fuel Holdings and, in turn, affect Ref-Fuel Holdings'
ability to make distributions to us.

American Ref-Fuel's operations are concentrated in one region, and its revenue
is highly dependent on two facilities.

All of the ARC operating facilities are located in the northeastern United
States. The entrance of new competitors into the market or the expansion of
existing competitors could have a material adverse effect on distributions
available to American Ref-Fuel from the ARC operating companies and, ultimately,
on our financial condition.

American Ref-Fuel's Hempstead facility and its Semass facility accounted for
approximately 42% of American Ref-Fuel's net revenues in the first quarter of
2004, and are expected to continue to account for a significant percentage of
its net revenues for the foreseeable future. Moreover, the existing waste supply
contract and power purchase agreement for the Hempstead facility will expire in
2009. The power purchase agreement for the Hempstead facility with the Long
Island Power Authority provided for approximately 5% of American Ref-Fuel's
total net revenues in the first quarter of 2004. American Ref-Fuel may not be
able to secure alternate arrangements on substantially the same terms, if at
all, to replace the Hempstead facility's existing waste supply contract or power
purchase agreement. If American Ref-Fuel is unable to secure these arrangements,
our ability to service our outstanding debt could be negatively impacted.

The power purchase agreement for the Hempstead facility provides for payments in
an amount equal to Long Island Power Authority's avoided costs per kilowatt hour
(which include certain fixed capacity costs), subject to stated floor and
ceiling levels which generally increase over time. The Hempstead Partnership and
the Long Island Power Authority entered into a first supplement to the power
purchase agreement in January 2003. The first supplement establishes a new
generation threshold for the Hempstead facility of 573,000 MWH (subject to
adjustment but in no event less than 566,000 MWH) per calendar year. The rate
payable by Long Island Power Authority for the entire net electrical output of
the facility up to the threshold of 573,000 MWH (subject to adjustment as set
forth above) will remain the same and will increase for output above the
threshold to a fixed rate of $60.00 per MWH. The Long Island Power Authority may
terminate the contract if a material default by the ARC operating company under
the contract is not cured within 90 days.

The waste supply contract with the town of Hempstead may be terminated by the
town if the ARC operating company is in default under the contract. In the event
of a termination by the town, the ARC operating company would be required to
prepay the project debt and the town would have the option of purchasing the
facility at a price equal to 75% of the fair market value. Upon a termination of
the contract by the ARC operating company because of a default by the town, the
town would be obligated to pay liquidated damages in an amount sufficient to pay
the project debt plus certain other amounts.

In the event these agreements are terminated American Ref-Fuel may not be able
to secure alternate arrangements on substantially the same terms, if at all, to
replace them. If American Ref-Fuel is unable to secure these alternate
arrangements, our ability to service our outstanding debt could be negatively
impacted.


                                       43
<PAGE>

American Ref-Fuel depends on a significant supply of solid waste.

If the ARC operating facilities do not obtain a supply of solid waste at prices
and quantities that are sufficient to operate the ARC operating facilities at
their expected operating levels, it will adversely affect the operations of
American Ref-Fuel and its ability to make distributions to Ref-Fuel Holdings,
which would adversely affect our financial condition. One or more of the
following factors could impact the price and supply of waste:

o        defaults by waste suppliers under their contracts;

o        a decline in solid waste supply due to increased recycling;

o        composting of municipal solid waste;

o        legal prohibitions against disposal of certain types of solid waste
         in WTE facilities; or

o        increased competition from landfills, recycling facilities and
         transfer stations.

In addition, state and local governments mandate recycling and waste reduction
at the source and the scope of these recycling and waste reduction mandates may
be enlarged in the future. The ARC operating companies may not be successful in
obtaining sufficient quantities of waste at adequate prices for the successful
operation of the ARC operating facilities. Failure to obtain sufficient waste
could have a material adverse effect on distributions available to American
Ref-Fuel from the ARC operating companies and, ultimately, on our financial
condition.

Failure to comply with environmental permitting and governmental regulations
would adversely affect American Ref-Fuel's operations.

The ARC operating facilities are subject to extensive federal, state and local
laws and regulations related to the environment, health and safety and
associated compliance and permitting obligations (including those related to the
use, storage, handling, discharge, emission and disposal of municipal solid
waste and other waste, pollutants or hazardous substances or wastes, or
discharges and air and other emissions) as well as land use and development.
Environmental laws also impose obligations to clean up contaminated properties
or to pay for the cost of such remediation, often upon parties that did not
actually cause the contamination. While we believe that we, Ref-Fuel Holdings
and ARC are currently incompliance with applicable environmental laws in all
material respects, it is possible that such conditions impacting the ARC
operating facilities could be discovered in the future or that such conditions
could be created by future spills or releases. Compliance with these laws,
regulations and obligations could require substantial capital expenditures.
Failure to comply could result in the imposition of penalties, fines or
restrictions on operations and/or remedial liabilities. The costs and
liabilities of any of these results could adversely affect the operations of one
or more of the ARC operating facilities. Environmental laws and regulations may
also limit American Ref-Fuel's ability to operate the ARC operating facilities
at maximum capacity or at all. These laws, regulations and obligations could
change with the promulgation of new laws and regulations or a change in the
interpretation of existing laws and regulations, which could result in
substantially similar risks. Stricter environmental regulations could materially
affect American Ref-Fuel's cash flow and its ability to make distributions to
Ref-Fuel Holdings, which would have an adverse effect on our financial
condition.

The costs of addressing future environmental requirements at the ARC operating
facilities or at disposal facilities where ARC operating facilities have
disposed of waste are difficult to estimate. Although American Ref-Fuel reports

                                       44
<PAGE>

that it believes that all of its operations are compliant in all material
respects with the requirements of environmental laws and regulations, the ARC
operating facilities may not at all times be in compliance with all applicable
environmental laws and regulations and steps to bring American Ref-Fuel's
facilities into compliance may limit American Ref-Fuel's ability to make
distributions to Ref-Fuel Holdings.

Certain environmental permits for the ARC operating facilities are subject to
periodic renewal or reissuance. Regulatory authorities may not renew or reissue
the permits. In addition, any renewed or reissued environmental permit may
contain new, more stringent requirements resulting in the need for additional
capital and operating expenditures due to additions to or modifications of the
ARC operating facilities in order to bring the ARC operating facilities into
compliance with the renewed or reissued permits' terms. Certain environmental
permits contain terms that can result in periodic adjustment of operating
limits, which can result in reduced revenue. Any of the following events could
adversely affect the amount of distributions available to American Ref-Fuel and
the ability of American Ref-Fuel to make distributions to Ref-Fuel Holdings:

o        loss of environmental permits;

o        reduction in allowed operations;

o        failure or delay in the renewal or reissuance of environmental permits;

o        any increase in operating costs resulting from any renewed or reissued
         environmental permit; and

o        any expenditures, penalties, restrictions and/or liabilities resulting
        from any other non-compliance.

Changes in electricity regulation could have an adverse impact on American
Ref-Fuel.

The ARC operating companies derive a significant amount of revenue from the sale
of electric power. The electric power generation business is subject to
substantial regulation and the ARC operating companies are required to comply
with numerous laws and regulations in order to sell the power generated from the
ARC operating facilities. These laws and regulations could be revised and new
laws and regulations could be adopted. The power purchase agreements with
respect to each ARC operating facility could be adversely affected if amendments
to, or a repeal of, existing regulations with respect to the production of
energy were enacted that reduce the benefits currently afforded under the power
purchase agreements. A reduction in benefits could adversely affect the amount
of distributions available to American Ref-Fuel and its ability to make payment
of the principal of and premium, if any, and interest on its debt and to make
cash distributions to Ref-Fuel Holdings. American Ref-Fuel's business could be
materially and adversely affected by statutory or regulatory changes or
administrative or judicial interpretations of existing statutes, regulations or
licenses that impose more comprehensive or stricter energy regulation on
American Ref-Fuel.

American Ref-Fuel's insurance may be inadequate and impact its ability to
service its debt and make distributions to its equity holders.

American Ref-Fuel maintains comprehensive insurance with respect to the ARC
operating facilities, including general liability, boiler and machinery
coverage, all risk fire and casualty insurance (with business interruption
coverage) covering, among other things, damage caused by fire, floods or
earthquake. American Ref-Fuel's insurance coverage may not be available in the
future on commercially reasonable terms or at commercially reasonable rates or


                                       45
<PAGE>

that the amounts for which each ARC operating facility is insured will cover all
unanticipated losses. If there is a total or partial loss of one or more ARC
operating facilities, the insurance proceeds received by American Ref-Fuel in
respect thereof may not be sufficient to satisfy the indebtedness with respect
to the affected ARC operating facility. A total or partial loss of one or more
ARC operating facilities could impact the ability of American Ref-Fuel to make
payments with respect to its debt and to make cash distributions to Ref-Fuel
Holdings.

 Item 3.  Quantitative and Qualitative Disclosures about Market Risk

None.

Item 4.  Controls and Procedures

MSW Energy Holdings

As of March 31, 2004, the Chief Executive Officer and Chief Financial Officer of
MSW Energy Holdings evaluated the effectiveness of its disclosure controls and
procedures pursuant to applicable Exchange Act Rules. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer have each
concluded that these disclosure controls and procedures are effective in timely
alerting them to material information relating to the company (including its
consolidated subsidiaries) that is required to be included in MSW Energy
Holdings' periodic SEC filings.

There were no significant changes in internal controls or in other factors that
could significantly affect these controls for the quarter ended March 31, 2004.

MSW Energy Finance

As of March 31, 2004, the Chief Executive Officer and Chief Financial Officer of
MSW Energy Finance evaluated the effectiveness of its disclosure controls and
procedures pursuant to applicable Exchange Act Rules. Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer have each
concluded that these disclosure controls and procedures are effective in timely
alerting them to material information relating to the company (including its
consolidated subsidiaries) that is required to be included in MSW Energy
Finance's periodic SEC filings.

There were no significant changes in internal controls or in other factors that
could significantly affect these controls for the quarter ended March 31, 2004.



 PART II  OTHER INFORMATION

Item 1.  Legal Proceedings

Neither MSW Energy Holdings nor MSW Energy Finance is currently involved in any
litigation.

Item 2.  Changes in Securities, Use of Proceeds and Issuer Purchase of
Equity Securities.

None.


                                       46
<PAGE>

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 5.  Other Information.

None.


                                       47
<PAGE>


Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits
<TABLE>
<CAPTION>

<S>     <C>
        3.1         Certificate of Formation of MSW Energy Holdings LLC.*
        3.2         Amended and Restated Limited Liability Company Agreement of
                    MSW Energy Holdings LLC, dated as of April 30, 2004, by and
                    among Highstar Renewable Fuels LLC, MSW Acquisition LLC and
                    United American Energy Holdings Corp.
        3.3         Amended and Restated Certificate of Incorporation of MSW Energy Finance Co., Inc.*
        3.4         Bylaws of MSW Energy Finance Co., Inc.*
        3.5         Certificate of Amendment to the Certificate of Formation of MSW Energy Hudson LLC.*
        3.6         Second Amended and Restated Limited Liability Company Agreement of MSW Energy Hudson LLC, dated
                    as of June 30, 2003, by MSW Energy Holdings LLC.
        4.1         Indenture dated June 25, 2003, by and among MSW Energy Holdings LLC, MSW Energy Finance Co.,
                    Inc. and Wells Fargo Bank Minnesota, National Association as Trustee.*
        4.2         Supplemental Indenture dated July 11, 2003, by and among MSW Energy Holdings LLC, MSW Energy
                    Finance Co., Inc., MSW Energy Hudson LLC and Wells Fargo Bank Minnesota, National Association
                    as Trustee.*
        4.3         Form of 8 1/2% Senior Secured Note Due 2010 (included in Exhibit 4.1).*
        4.4         Registration Rights Agreement dated as of June 25, 2003, by and among MSW Energy Holdings LLC,
                    MSW Energy Finance Co. Inc., MSW Energy Hudson LLC and Credit Suisse First Boston LLC.*
        4.5         Pledge and Security Agreement dated as of June 25, 2003, by and among MSW Energy Holdings LLC,
                    MSW Energy Finance Co., Inc. and Wells Fargo Bank Minnesota, National Association as Collateral
                    Agent.*
        4.6         Pledge Supplement dated as of June 30, 2003 by MSW Energy Hudson LLC.*
        4.7         Deposit Agreement, dated as of June 25, 2003, by and among MSW Energy Holdings LLC, MSW Energy
                    Finance Co., Inc. and Wells Fargo Bank Minnesota, National Association as Collateral Agent and
                    Depositary Agent, as amended.*
        4.8         Purchase Agreement, dated as of June 11, 2003, by and among MSW Energy Holdings LLC, MSW Energy
                    Finance Co., Inc., MSW Energy Hudson LLC and Credit Suisse First Boston LLC.*
        10.1        Amended and Restated Capital Contribution Agreement, dated
                    as of June 24, 2003, by and between Highstar Renewable Fuels
                    LLC and MSW Acquisition LLC.*

</TABLE>


<PAGE>

<TABLE>


<S>     <C>                                     <C> <C>
        10.2        Agreement, dated as of June 30, 2003, by and between MSW Energy Holdings LLC and Duke Capital
                    Corporation.*
        10.3        Escrow Agreement, dated as of June 30, 2003, by and among MSW Energy Holdings LLC, Duke Capital
                    Corporation and Wachovia Bank, National Association.*
        10.4        Amended and Restated Limited Liability Company Agreement of Ref-Fuel Holdings LLC, dated as of
                    April 30, 2001, by and between Duke Energy Global Asset Development, Inc. and UAE Ref-Fuel LLC,
                    as amended.*
        10.5        Equity Contribution Agreement, dated as of April 30, 2001, by and among Duke Capital
                    Corporation, United American Energy Corp., Ref-Fuel Holdings LLC (formerly known as Duke/UAE
                    Ref-Fuel LLC) and American Ref-Fuel Company LLC.*
        10.6        Substitution, Assumption, Amendment and Release Agreement, dated as of June 30, 2003, by and
                    among Duke Capital Corporation, United American Energy Corp., Ref-Fuel Holdings LLC (formerly
                    known as Duke/UAE Ref-Fuel LLC), American Ref-Fuel Company LLC, and MSW Energy Holdings LLC.*
        10.7        Equity Purchase Agreement, dated as of March 19, 2003, by and between MSW Energy Holdings LLC
                    and Duke Energy Global Markets, Inc.*
        12          Statement re Computation of Ratio of Earnings to Fixed Charges
        31(a)       15d-14(a) Certification of John T. Miller for MSW Energy Holdings LLC.
        31(b)       15d-14(a) Certification of Michael J. Gruppuso for MSW Energy Holdings LLC.
        31(c)       15d-14(a) Certification of John T. Miller for MSW Energy Finance Co., Inc.
        31(d)       15d-14(a) Certification of Michael J. Gruppuso for MSW Energy Finance Co., Inc.
        32(a)       Section 1350 Certification of John T. Miller and Michael J. Gruppuso for MSW Energy Holdings
                    LLC.
        32(b)       Section 1350 Certification of John T. Miller and Michael J.
                    Gruppuso for MSW Energy Finance Co., Inc.

*    Incorporated by Reference to Registration  Statement No. 333-109049.

     (b)  Reports on Form 8-K

     Current Report on Form 8-K dated April 30, 2004.

</TABLE>


                                       49
<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, MSW Energy Holdings LLC has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                            MSW ENERGY HOLDINGS LLC


                            By: /s/ John T. Miller
                            ----------------------------------------------------
                             John T. Miller
                             Chief Executive Officer

                             Date:  May 14, 2004
                            ----------------------------------------------------

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in the capacities and on the
dates indicated:

<TABLE>

               Signature                                 Title                                  Date

<S>                                                                                 <C> <C>
                                         Chief Executive Officer (Principal     May 14, 2004
/s/ John T. Miller                       Executive Officer)
---------------------------------
            John T. Miller

                                         Chief Financial Officer (Principal     May 14, 2004
/s/ Michael J. Gruppuso                  Financial and Accounting Officer)
---------------------------------
            Michael J. Gruppuso


</TABLE>


                                       50
<PAGE>




                                   SIGNATURES

Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, as amended,  MSW Energy  Finance Co., Inc. has duly caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                          MSW ENERGY FINANCE CO., INC.

                      By: /s/ John T. Miller
                          -----------------------------------------------------
                          John T. Miller
                          President and Chief Executive Officer

                      Date:  May 14, 2004
                          ----------------------------------------------------

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in the capacities and on the
dates indicated:

<TABLE>


               Signature                                 Title                                  Date

<S>                                                                                 <C> <C>
                                         President and Chief Executive          May 14, 2004
/s/ John T. Miller                       Officer (Principal Executive Officer)
---------------------------------
            John T. Miller

                                         Chief Financial Officer (Principal     May 14, 2004
/s/ Michael J. Gruppuso                  Financial and Accounting Officer)
---------------------------------
          Michael J. Gruppuso

</TABLE>


<PAGE>


<TABLE>

                                  EXHIBIT INDEX

<S>     <C>
        3.1         Certificate of Formation of MSW Energy Holdings LLC.*
        3.2         Amended and Restated Limited Liability Company Agreement of
                    MSW Energy Holdings LLC, dated as of April 30, 2004, by and
                    among Highstar Renewable Fuels LLC, MSW Acquisition LLC and
                    United American Energy Holdings Corp.
        3.3         Amended and Restated Certificate of Incorporation of MSW Energy Finance Co., Inc.*
        3.4         Bylaws of MSW Energy Finance Co., Inc.*
        3.5         Certificate of Amendment to the Certificate of Formation of MSW Energy Hudson LLC.*
        3.6         Second Amended and Restated Limited Liability Company Agreement of MSW Energy Hudson LLC, dated
                    as of June 30, 2003, by MSW Energy Holdings LLC.*
        4.1         Indenture dated June 25, 2003, by and among MSW Energy Holdings LLC, MSW Energy Finance Co.,
                    Inc. and Wells Fargo Bank Minnesota, National Association as Trustee.*
        4.2         Supplemental Indenture dated July 11, 2003, by and among MSW Energy Holdings LLC, MSW Energy
                    Finance Co., Inc., MSW Energy Hudson LLC and Wells Fargo Bank Minnesota, National Association
                    as Trustee.*
        4.3         Form of 8 1/2% Senior Secured Note Due 2010 (included in Exhibit 4.1).*
        4.4         Registration Rights Agreement dated as of June 25, 2003, by and among MSW Energy Holdings LLC,
                    MSW Energy Finance Co. Inc., MSW Energy Hudson LLC and Credit Suisse First Boston LLC.*
        4.5         Pledge and Security Agreement dated as of June 25, 2003, by and among MSW Energy Holdings LLC,
                    MSW Energy Finance Co., Inc. and Wells Fargo Bank Minnesota, National Association as Collateral
                    Agent.*
        4.6         Pledge Supplement dated as of June 30, 2003 by MSW Energy Hudson LLC.*
        4.7         Deposit Agreement, dated as of June 25, 2003, by and among MSW Energy Holdings LLC, MSW Energy
                    Finance Co., Inc. and Wells Fargo Bank Minnesota, National Association as Collateral Agent and
                    Depositary Agent, as amended.*
        4.8         Purchase Agreement, dated as of June 11, 2003, by and among MSW Energy Holdings LLC, MSW Energy
                    Finance Co., Inc., MSW Energy Hudson LLC and Credit Suisse First Boston LLC.*
        10.1        Amended and Restated Capital Contribution Agreement, dated
                    as of June 24, 2003, by and between Highstar Renewable Fuels
                    LLC and MSW Acquisition LLC.*
        10.2        Agreement, dated as of June 30, 2003, by and between MSW Energy Holdings LLC and Duke Capital
                    Corporation.*

</TABLE>



<PAGE>

<TABLE>
<CAPTION>

<S>     <C>                                            <C> <C>
        10.3        Escrow Agreement, dated as of June 30, 2003, by and among MSW Energy Holdings LLC, Duke Capital
                    Corporation and Wachovia Bank, National Association.*
        10.4        Amended and Restated Limited Liability Company Agreement of Ref-Fuel Holdings LLC, dated as of
                    April 30, 2001, by and between Duke Energy Global Asset Development, Inc. and UAE Ref-Fuel LLC,
                    as amended.*
        10.5        Equity Contribution Agreement, dated as of April 30, 2001, by and among Duke Capital Corporation,
                    United American Energy Corp., Ref-Fuel Holdings LLC (formerly known as Duke/UAE Ref-Fuel LLC)
                    and American Ref-Fuel Company LLC.*
        10.6        Substitution, Assumption, Amendment and Release Agreement, dated as of June 30, 2003, by and
                    among Duke Capital Corporation, United American Energy Corp., Ref-Fuel Holdings LLC (formerly
                    known as Duke/UAE Ref-Fuel LLC), American Ref-Fuel Company LLC, and MSW Energy Holdings LLC.*
        10.7        Equity Purchase Agreement, dated as of March 19, 2003, by and between MSW Energy Holdings LLC
                    and Duke Energy Global Markets, Inc.*
        12          Statement re Computation of Ratio of Earnings to Fixed Charges
        31(a)       15d-14(a) Certification of John T. Miller for MSW Energy Holdings LLC.
        31(b)       15d-14(a) Certification of Michael J. Gruppuso for MSW Energy Holdings LLC.
        31(c)       15d-14(a) Certification of John T. Miller for MSW Energy Finance Co., Inc.
        31(d)       15d-14(a) Certification of Michael J. Gruppuso for MSW Energy Finance Co., Inc.
        32(a)       Section 1350 Certification of John T. Miller and Michael J. Gruppuso for MSW Energy Holdings
                    LLC.
        32(b)       Section 1350 Certification of John T. Miller and Michael J.
                    Gruppuso for MSW Energy Finance Co., Inc.

*        Incorporated by Reference to Registration  Statement No. 333-109049.

</TABLE>

                                       53
<PAGE>