<Page>

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

                                    FORM 10-Q

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

         For the quarterly period ended September 30, 2001


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

         For the transition period from ______to______

                      Commission file number: 333-64842-01

                             DYNEGY ROSETON, L.L.C.
             (Exact name of registrant as specified in its charter)

                  DELAWARE                                  76-065670
         (State or other jurisdiction of                 (I.R.S. Employer
         incorporation or organization)                  Identification No.)


                                 992 RIVER ROAD
                               NEWBURGH, NY 12550
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (845) 565-2260
              (Registrant's telephone number, including area code)


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 [ ]

All of the outstanding equity interests in Dynegy Roseton, L.L.C. are held by
Hudson Power, L.L.C., an indirect wholly owned subsidiary of Dynegy Holdings
Inc.

<Page>


                               DYNEGY ROSETON, L.L.C.
                                 TABLE OF CONTENTS

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

<Table>
<Caption>
                                                                                                         Page
<S>                                                                                                      <C>
PART I.  FINANCIAL INFORMATION

      Item 1.  CONDENSED FINANCIAL STATEMENTS:

      Condensed Balance Sheets:
           September 30, 2001 and December 31, 2000.......................................................  3
      Condensed Statements of Operations:
           For the three months ended September 30, 2001 and from inception to September 30, 2000.........  4
      Condensed Statements of Operations:
           For the nine months ended September 30, 2001 and from inception to September 30, 2000..........  5
      Condensed  Statements of Cash Flows:
           For the nine months ended September 30, 2001 and from inception to September 30, 2000..........  6
      Notes to Condensed Financial Statements  ...........................................................  7

      Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS ....................................................... 12

      Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK................................. 16

PART II.   OTHER INFORMATION

      Item 1.  Legal Proceedings ......................................................................... 17

      Item 6.  Exhibits and Reports on Form 8-K........................................................... 17
</Table>

<Page>

<Table>
<Caption>

DYNEGY ROSETON, L.L.C.
CONDENSED BALANCE SHEETS
(UNAUDITED) (IN THOUSANDS)
====================================================================================================

                                                                     SEPTEMBER 30,    DECEMBER 31,
                                                                          2001             2000
                                                                     -------------    -------------
<S>                                                                  <C>              <C>
                                              ASSETS
CURRENT ASSETS
Cash and cash equivalents                                            $           3    $          --
Accounts receivable, net                                                       133               --
Inventory                                                                   25,745               --
Other current assets                                                         8,920               --
                                                                     -------------    -------------
        TOTAL CURRENT ASSETS                                                34,801               --
                                                                     -------------    -------------

PROPERTY, PLANT AND EQUIPMENT                                              695,578               --
Accumulated depreciation and amortization                                  (12,989)              --
                                                                     -------------    -------------
        PROPERTY, PLANT AND EQUIPMENT, NET                                 682,589               --
                                                                     -------------    -------------

Other long-term assets                                                       6,385               --
                                                                     -------------    -------------
        TOTAL ASSETS                                                 $     723,775    $          --
                                                                     =============    =============


                          LIABILITIES AND MEMBER'S EQUITY
CURRENT LIABILITIES
Accounts payable                                                     $         188        $      --
Accounts payable - affiliates (Note 5)                                     104,615               --
Accrued liabilities and other                                               24,980               --
Current maturities of long-term debt                                             7               --
                                                                     -------------    -------------
      TOTAL CURRENT LIABILITIES                                            129,790               --

Long-term debt - third party                                               619,993               --
Long-term debt - affiliate (Note 3)                                         25,238               --
                                                                     -------------    -------------
      Total Long-Term Debt                                                 645,231               --

Other long-term liabilities                                                 10,090               --
                                                                     -------------    -------------
      TOTAL LIABILITIES                                                    785,111               --
                                                                     -------------    -------------

COMMITMENTS AND CONTINGENCIES (NOTE 6)

MEMBER'S EQUITY
Membership interest                                                              1                1
Due from member                                                                 (1)              (1)
Accumulated other comprehensive income                                       2,795               --
Retained deficit                                                           (64,131)              --
                                                                     -------------    -------------
      TOTAL MEMBER'S EQUITY                                                (61,336)              --
                                                                     -------------    -------------
      TOTAL LIABILITIES AND MEMBER'S EQUITY                          $     723,775    $          --
                                                                     =============    =============
</Table>

                  See notes to condensed financial statements.

                                       3
<Page>

<Table>
<Caption>

DYNEGY ROSETON, L.L.C.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED) (IN THOUSANDS)
==============================================================================================

                                                             THREE MONTHS ENDED SEPTEMBER 30,
                                                             --------------------------------
                                                                  2001               2000
                                                             -------------      -------------
<S>                                                          <C>                <C>
Revenues - affiliate (Note 5)                                $      28,420      $          --

Cost of sales - third party                                         30,107                 --
Cost of sales - affiliate (Note 5)                                   5,579                 --
                                                             -------------      -------------
     Total cost of sales                                            35,686                 --
                                                             -------------      -------------

Operating margin                                                    (7,266)                --
Depreciation and amortization                                        4,894                 --
General and administrative expenses - affiliate (Note 5)               405                 --
                                                             -------------      -------------

Operating loss                                                     (12,565)                --
Interest expense - third party                                     (10,195)                --
Interest expense - affiliate (Note 3)                                 (208)                --
                                                             -------------      -------------
     Total interest expense                                        (10,403)                --
                                                             -------------      -------------
NET LOSS                                                     $     (22,968)     $          --
                                                             =============      =============
</Table>

                     See notes to condensed financial statements.

                                       4
<Page>

<Table>
<Caption>

DYNEGY ROSETON, L.L.C.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED) (IN THOUSANDS)
================================================================================================

                                                               NINE MONTHS ENDED SEPTEMBER 30,
                                                               -------------------------------
                                                                    2001              2000
                                                               ------------       ------------
<S>                                                            <C>                <C>
Revenues - affiliate (Note 5)                                  $     78,667       $         --

Cost of sales - third party                                          89,936                 --
Cost of sales - affiliate (Note 5)                                   10,552                 --
                                                               ------------       ------------
     Total cost of sales                                            100,488                 --
                                                               ------------       ------------

Operating margin                                                    (21,821)                --

Depreciation and amortization                                        12,989                 --
General and administrative expenses - affiliate (Note 5)              1,025                 --
                                                               ------------       ------------

Operating loss                                                      (35,835)                --
Interest expense - third party                                      (16,096)                --
Interest expense - affiliate (Note 3)                               (12,200)                --
                                                               ------------       ------------
     Total interest expense                                         (28,296)                --
                                                               ------------       ------------

NET LOSS                                                       $    (64,131)      $         --
                                                               ============       ============
</Table>

                    See notes to condensed financial statements.

                                       5
<Page>

<Table>
<Caption>

DYNEGY ROSETON, L.L.C.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED) (IN THOUSANDS)
============================================================================================================

                                                                             NINE MONTHS ENDED SEPTEMBER 30
                                                                             ------------------------------
                                                                                 2001              2000
                                                                             ------------      ------------
<S>                                                                          <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES

Net loss                                                                     $    (64,131)     $         --
Items not affecting cash flows from operating activities:
   Depreciation and amortization                                                   12,989                --
   Amortization of prepaid property taxes                                           9,384                --
   Other                                                                           16,726                --

Change in assets and liabilities resulting from operating activities:
   Accounts receivable                                                               (133)               --
   Accounts payable                                                                   188                --
   Accrued liabilities                                                             24,980                --
                                                                             ------------      ------------

Net cash provided by operating activities                                               3                --
                                                                             ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of generation assets                                                 (645,238)               --
                                                                             ------------      ------------

Net cash used in investing activities                                            (645,238)               --
                                                                             ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term borrowings - third party                                  620,000                --
Proceeds from long-term borrowings - affiliate                                    645,238                --
Repayments of long-term borrowings - affiliate                                   (620,000)               --
                                                                             ------------      ------------

Net cash provided by financing activities                                         645,238                --
                                                                             ------------      ------------

Net increase in cash and cash equivalents                                               3                --
Cash and cash equivalents, beginning of period                                         --                --
                                                                             ------------      ------------
Cash and cash equivalents, end of period                                     $          3      $         --
                                                                             ============      ============
</Table>

                   See notes to condensed financial statements.

                                       6
<Page>


                             DYNEGY ROSETON, L.L.C.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
            FOR THE INTERIM PERIODS ENDED SEPTEMBER 30, 2001 AND 2000


NOTE 1 -- ORGANIZATION AND OPERATIONS OF THE COMPANY

         Dynegy Roseton, L.L.C. ("Dynegy Roseton" or the "Company"), a wholly
owned subsidiary of Hudson Power, L.L.C., an indirect wholly owned subsidiary of
Dynegy Holdings Inc. ("DHI"), is a Delaware limited liability company that was
formed for the purpose of owning or leasing, making improvements to and
operating fossil-fuel electric generating facilities located in the state of New
York. The Company was originally formed on September 14, 2000, but did not
commence business operations until January 30, 2001, the date the Company
completed its acquisition of the Roseton power generation facility (the
"Generation Assets"). The accompanying financial statements reflect the
operations of the Company from its inception, which includes the operations of
the Generation Assets commencing from the date of acquisition.

         On January 30, 2001, the Company completed its acquisition of the
Generation Assets (the "Acquisition") from Central Hudson Gas and Electric
Corporation ("Central Hudson"), Consolidated Edison Company of New York and
Niagara Mohawk Power Corporation. The acquisition was originally financed
through an intercompany demand note from DHI (see Note 3), a significant portion
of which was paid down with the proceeds of the sale-leaseback transaction
consummated in May 2001 (see Note 7).

         Separate financial statements for the Company's operations of the
Generation Assets are available only for the period subsequent to the
Acquisition. There are no separate financial statements available for the
operation of the Generation Assets prior to the Company taking ownership as the
pre-Acquisition operations were fully integrated with, and their results of
operations were consolidated into, the former owners' results. In addition,
prior to the Acquisition, the electric output of the Generation Assets was sold
based on rates set by regulatory authorities. As a result of these factors and
because electricity rates are now set under separate power purchase agreements
or by market forces, historical financial data with respect to the Generation
Assets are not available, not meaningful and not indicative of future results.
The Company's future results of operations will depend primarily on revenues
from the unregulated sale of energy, capacity and other ancillary services, and
the level of its operating expenses.

NOTE 2 -- ACCOUNTING POLICIES

         The accounting policies of the Company conform to generally accepted
accounting principles in the United States. The more significant of such
accounting policies are described below. The financial statements include all
material adjustments, which, in the opinion of management, are necessary for a
fair presentation of the results for the interim periods. Interim period results
are not necessarily indicative of the results for the full year. The preparation
of the condensed financial statements in conformity with generally accepted
accounting principles requires management to develop estimates and make
assumptions that affect reported financial position and results of operations
and that impact the nature and extent of disclosure, if any, of contingent
assets and liabilities. Actual results could differ materially from those
estimates. Certain reclassifications have been made to prior period amounts in
order to conform to the current period presentation.

         CASH. Cash and cash equivalents consist of all demand deposits and
funds invested in short-term investments with original maturities of three
months or less.

         INVENTORY. Inventory consists primarily of fossil fuel of $18.7 million
and materials and supplies of $7.0 million at September 30, 2001. Inventory is
carried at the lower of market or the weighted-average purchase cost.

         PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment are
recorded at cost. Expenditures for major replacements and renewals are
capitalized. The Company considers major maintenance to be expenditures incurred
on a cyclical basis in order to maintain the efficient operation of its assets.
Expenditures for major maintenance are capitalized and amortized over their
cyclical period. Expenditures for repairs and minor renewals to maintain assets
in operating condition are expensed. Depreciation is provided using the
straight-line method over the estimated economic service lives of the assets,
ranging from five to 35 years. The Company reviews the carrying value of its
long-lived assets in accordance with provisions of Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."

         As part of the Acquisition, the Company acquired air emissions
regulatory allowances that have already been issued to the Company and
allowances that the Company expects to be allocated during the remaining useful
life of the plant. Although the emission allowances received are freely
transferable, the Company intends to use a significant portion of the


                                       7
<Page>

                             DYNEGY ROSETON, L.L.C.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
            FOR THE INTERIM PERIODS ENDED SEPTEMBER 30, 2001 AND 2000


emission allowances in the normal course of business to generate electricity.
Accordingly, the Company has classified emission allowances expected to be
utilized to generate electricity as part of property, plant and equipment and
amortizes the amount over the estimated useful life of the plant on a
straight-line basis.

         ENVIRONMENTAL COSTS AND OTHER CONTINGENCIES. Environmental costs
relating to current operations are expensed or capitalized, as appropriate,
depending on whether such costs provide future economic benefit. Liabilities are
recorded when environmental assessment indicates that remedial efforts are
probable and the costs can be reasonably estimated. Measurement of liabilities
is based on currently enacted laws and regulations, existing technology and
site-specific costs. Such liabilities may be recognized on a discounted basis if
the amount and timing of anticipated expenditures for a site are fixed or
reliably determinable; otherwise, such liabilities are recognized on an
undiscounted basis. Environmental liabilities in connection with assets that are
sold or closed are realized upon such sale or closure, to the extent they are
probable, can be estimated and have not previously been reserved. In assessing
environmental liabilities, no offset is made for potential insurance recoveries.
Recognition of any joint and several liability is based upon the Company's best
estimate of its final pro rata share of such liability.

         Liabilities for other contingencies are recognized upon identification
of an exposure, which when analyzed indicates that it is both probable that an
asset has been impaired or that a liability has been incurred and that such loss
amount can be reasonably estimated. Costs to remedy such contingencies or other
exposures are charged to a reserve, if one exists, or otherwise to current
operations. When a range of probable loss exists, the Company accrues the lesser
end of the range.

         NEW ACCOUNTING PRONOUNCEMENTS. The Financial Accounting Standards Board
issued, and subsequently amended, Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities"
("Statement No. 133"), which became effective January 1, 2001. Provisions in
Statement No. 133, as amended, affect the accounting and disclosure of certain
contractual arrangements and operations of the Company. Under Statement No. 133,
as amended, all derivative instruments are recognized in the balance sheet at
their fair values and changes in fair value are recognized immediately in
earnings, unless the derivatives qualify as hedges of future cash flows or net
investments. For derivatives qualifying as hedges of future cash flows, the
effective portion of changes in fair value is recorded in equity unless the
related hedged items impact earnings. Any ineffective portion of a hedge is
reported in earnings immediately. The adoption of this pronouncement on January
1, 2001 did not have any impact on the Company's financial statements.

         The nature of the Company's business necessarily involves certain
market and financial risks. The Company may enter into financial instrument
contracts in an attempt to mitigate or eliminate these various risks. After
adoption of the pronouncement, the Company executed two interest rate swaps
during the first six months of 2001 that were designated as cash flow hedges of
the benchmark interest rate component of certain operating lease rentals.
Additionally, Dynegy Marketing and Trade ("DMT") entered into swaps through
December 2001, on behalf of the Company, to hedge a portion of its exposure
related to fluctuating fuel costs. Changes in accumulated other comprehensive
income related to these derivatives for the nine-month period ended September
30, 2001 were as follows (in thousands):

<Table>
         <S>                                                 <C>
         Transition adjustment as of January 1, 2001         $       ---
         Current period increases in fair value                    2,946
         Reclassifications to earnings                              (151)
                                                             -----------
         Balance at September 30, 2001                       $     2,795
                                                             ===========
</Table>


         The accumulated balance in Other Comprehensive Income at September 30,
2001 is expected to be reclassified to future earnings, contemporaneously with
the related recognition of interest expense and the purchase of fuel oil. Of
this amount, approximately $1.7 million is estimated to be reclassified into
earnings over the 12-month period ending September 30, 2002. The actual amounts
that will be reclassified to earnings over the next 12 months could vary
materially from this estimated amount as a result of changes in market
conditions.

         During the three and nine months ended September 30, 2001, there was no
material ineffectiveness from changes in fair value of hedge positions, and no
amounts were excluded from the assessment of hedge effectiveness related to the
hedge of future cash flows. Additionally, no amounts were reclassified to
earnings in connection with forecasted transactions that were no longer
considered probable of occurring.

         REVENUE RECOGNITION. Revenues include energy and ancillary services
sales. Revenue is recognized as electricity is generated and sold under energy
sales agreements or as services are provided.


                                       8
<Page>

                             DYNEGY ROSETON, L.L.C.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
            FOR THE INTERIM PERIODS ENDED SEPTEMBER 30, 2001 AND 2000


         INCOME TAXES. Dynegy Roseton is a limited liability company that is not
taxable for federal income tax purposes.

         CONCENTRATION OF CREDIT RISK. The Company sells all of the power its
facility generates at fixed prices to an affiliate. The receivables associated
with these sales are not collateralized and are expected to be collected.

NOTE 3 - NOTE PAYABLE TO AFFILIATE

         In connection with the Acquisition, the Company entered into an
approximately $629.6 million demand note payable to DHI, bearing interest at 7%
per annum. Subsequent to the Acquisition, the Company borrowed an additional
$15.6 million under the same terms of the original demand note. Both principal
and interest are due and payable upon demand by DHI and, in any event, no later
than January 29, 2006. The Company may, at its option (though it is not
obligated to do so), prepay principal or interest prior to January 29, 2006,
without penalty. Interest on all past due amounts, both principal and accrued
interest, shall accrue at a rate of 9% per annum. Failure to pay interest does
not constitute a default, unless such interest is due on January 29, 2006. DHI
has represented that it will not call for payment on this note before October 1,
2002. In addition, the note was substantially refinanced on a long-term basis in
connection with the sale-leaseback transaction consummated in May 2001 (see Note
7). As of September 30, 2001, the Company has repaid $620.0 million under the
demand note.

         In March 2001, as protection against the impact fluctuating interest
rates were expected to have on the anticipated sale-leaseback transaction (see
Note 7), DHI, on behalf of the Company, executed swaps to hedge its exposure.
Under these swaps, the Company pays interest at a fixed rate of 5.97% and
receives interest at a floating rate based on three-month LIBOR. The swap
agreements, with a combined notional amount allocable to the Company of
approximately $263.1 million, mature in 2016.

         On behalf of the Company, DHI entered into additional swap agreements
as a cash flow hedge in April 2001, paying 5.99% and receiving three-month LIBOR
on a notional amount allocable to the Company of approximately $168.5 million.
The Company received approximately $5.0 million when all interest rate swaps
were liquidated in May 2001. The payment received was recorded by the Company in
Other Comprehensive Income and will be reclassified into earnings over the term
of the hedged transaction (see Note 2).

NOTE 4 -- PROPERTY, PLANT AND EQUIPMENT

         At September 30, 2001, property, plant and equipment consisted of the
following (in thousands):

<Table>
         <S>                                               <C>
         Fossil-fired Generating Facility                  $   681,630
         Land                                                   10,240
         Other                                                   3,708
                                                           -----------
                                                               695,578
         Less: Accumulated Depreciation                        (12,989)
                                                           -----------
         Property, Plant and Equipment, net                $   682,589
                                                           ===========
</Table>

NOTE 5 -- RELATED PARTY TRANSACTIONS

         Transactions with affiliates result from various purchase and sale
agreements with other subsidiaries of DHI. In addition to the demand note
payable described in Note 3, the Company entered into the following transactions
with affiliates during the nine-month period ended September 30, 2001:

o        Gas Purchase and Sales Agreement between the Company and DMT pursuant
         to which the Company purchases at prevailing market rates and receives
         from DMT all of the gas used by the Company to generate electricity.
         Total gas purchases with affiliates for the nine-month period ended
         September 30, 2001 were approximately $2.9 million. There were no such
         purchases in 2000.


                                       9
<Page>


                             DYNEGY ROSETON, L.L.C.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
            FOR THE INTERIM PERIODS ENDED SEPTEMBER 30, 2001 AND 2000


o        Fuel Oil Agency Agreement between the Company and DMT pursuant to which
         DMT negotiates all purchases and deliveries of fuel oil used by the
         Company in the generation of electricity. A management fee of $0.08 per
         barrel delivered is assessed as compensation for this service. Total
         management fees paid to DMT for this service during the nine-month
         period ended September 30, 2001 were approximately $234,383. There were
         no fuel oil deliveries in 2000.

         Additionally, DMT entered into swaps through December 2001, on behalf
         of the Company, to hedge a portion of its exposure related to
         fluctuating fuel costs. As of September 30, 2001, the fair value of
         these cash flow hedges was a liability of approximately $2.1 million.
         The offset of this liability is recorded in Other Comprehensive Income
         and will be reclassified to future expense, contemporaneously with the
         related purchase of fuel. During the nine-month period ended September
         30, 2001, the Company recognized losses of approximately $1.9 million
         associated with the settlement of these hedges.

o        Power Purchase and Sale Agreement between the Company and Dynegy Power
         Marketing, Inc. ("DYPM") pursuant to which DYPM purchases electric
         energy and related products from the Company. Electrical energy is
         purchased from the Company at contractually stipulated fixed prices
         until termination of the contract by either party, while related
         products are purchased at market rates. Sales to DYPM during the
         nine-month period ended September 30, 2001 were approximately $78.7
         million. There were no such sales in 2000.

         As part of the Acquisition, the Company was required to enter into a
         Transition Power Agreement with Central Hudson. The terms of the
         agreement require that the Company supply power and ancillary services
         to Central Hudson at prices significantly below market levels. Since
         the contract was below market and the impairment was both estimable and
         reasonably probable, the Company recorded an accrued liability for the
         agreement. Subsequently, the agreement was assigned to DYPM, and an
         affiliated payable of approximately $70 million was established by the
         Company to compensate DYPM for assuming the rights and duties under the
         agreement. This obligation can be called by DYPM at any time and is
         therefore classified as current in the accompanying financial
         statements. However, the Company has obtained representation from DHI
         that, through September 30, 2002, payments to affiliates will not be
         required beyond the Company's currently available funds.

o        Certain administrative services such as payroll, employee benefits
         programs, insurance, accounting and information technology are shared
         among the affiliates of DHI, and the costs of these corporate support
         services are allocated to all affiliates. The total costs allocated to
         the Company for the nine-month period ended September 30, 2001 were
         approximately $1.0 million, which is reflected in the "General and
         Administrative" caption on the income statement. There were no such
         costs allocated in 2000.

o        As the Company does not have employees, Dynegy Northeast Generation,
         Inc. ("DNE") administers the operation of the Company's facilities.
         Costs incurred by DNE are charged to the Company at cost. These costs
         include on-site technical, supervisory, engineering and clerical
         support necessary for the day-to-day operations of a power generation
         facility. The costs incurred by the Company during the nine-month
         period ended September 30, 2001 were approximately $5.5 million. There
         were no such costs incurred in 2000.

NOTE 6 -- COMMITMENTS AND CONTINGENCIES

         The Company is subject to various legal proceedings and claims that
arise in the normal course of business. In the opinion of management, the amount
of ultimate liability with respect to these actions will not have a material
adverse effect on the financial position or results of operations of the
Company. However, no assurance can be given that the actual amount of any such
liability will not differ materially from the amount estimated.

         ENVIRONMENTAL. Dynegy's operations are subject to extensive federal,
state and local statutes, rules and regulations governing the discharge of
materials into the environment or otherwise relating to environmental
protection. Compliance with these statutes, rules and regulations requires
capital and operating expenditures including those related to monitoring,
pollution control equipment, emission fees and permitting at various operating
facilities and remediation obligations. Failure to comply with these statutes,
rules and regulations may result in the assessment of civil and even criminal
penalties. The Company's environmental expenditures are anticipated to increase
in the future with the trend toward stricter standards, greater regulation, more
extensive permitting requirements and an increase in the number and types of
assets subject to


                                      10
<Page>

                             DYNEGY ROSETON, L.L.C.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
            FOR THE INTERIM PERIODS ENDED SEPTEMBER 30, 2001 AND 2000


environmental regulation operated by the Company. No assurance can be given
that future compliance with these environmental statutes, rules and
regulations will not have a material adverse effect on the Company's
operations or its financial condition.

NOTE 7 -- SALE-LEASEBACK TRANSACTION

         On May 8, 2001, Dynegy Roseton completed a sale-leaseback transaction
to provide the term financing for the Acquisition. Under the terms of the
sale-leaseback transaction, the Company sold certain plant and equipment and
agreed to lease it back for 33.75 years with renewal options. Proceeds of $620.0
million were used to repay a significant portion of the demand note payable to
DHI. The Company will make semi-annual debt and interest payments each May 8 and
November 8 through 2029.

         The terms of the sale-leaseback transaction required DHI to provide a
guarantee of the Company's obligations. The guarantee by DHI of the Company's
obligations is a form of continuing involvement that precludes the application
of sale-leaseback accounting in the Company's financial statements, but not in
DHI's consolidated financial statements. As such, the Company will account for
the obligations as a financing transaction. This will require the Company to
continue to record its property, plant and equipment within its financial
statements, and establish a note payable for the $620.0 million in proceeds
obtained to finance the transaction. Income will therefore be impacted in future
periods through continued depreciation of the generation assets and additional
interest expense associated with the note.


                                      11
<Page>


                             DYNEGY ROSETON, L.L.C.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
            FOR THE INTERIM PERIODS ENDED SEPTEMBER 30, 2001 AND 2000


         The following discussion and analysis should be read in conjunction
with the unaudited condensed financial statements of Dynegy Roseton, L.L.C.
("Dynegy Roseton" or the "Company") included elsewhere herein.

                                     GENERAL

         COMPANY PROFILE. Dynegy Roseton was formed as an indirect wholly owned
subsidiary of Dynegy Holdings Inc. ("DHI") on September 14, 2000 for the purpose
of owning or leasing, making improvements to and operating the Roseton facility.
Dynegy Roseton acquired the Roseton facility from Central Hudson Gas and
Electric Corporation, Consolidated Edison Company of New York and Niagara Mohawk
Power Corporation on January 30, 2001. The Roseton facility was purchased for
approximately $645.0 million, including adjustments for inventories and
pro-rations related to specific items such as taxes, rents and fees.

         Prior to the acquisition of the Roseton facility, Dynegy Roseton had no
operations. As a result of the acquisition, Dynegy Roseton currently owns or
leases approximately 1,200 megawatts ("MW") of generation capacity, which is
made up of two 600 MW steam generating units.

         BUSINESS SEGMENTS.  Dynegy Roseton's operations are reported in one
segment.

                         LIQUIDITY AND CAPITAL RESOURCES

         Dynegy Roseton relies on operating cash flow and borrowings from DHI
and third parties for its liquidity and capital resource requirements.

         In January 2001, Dynegy Roseton completed the acquisition of the
Roseton facility for approximately $645.0 million. In order to finance the
acquisition, Dynegy Roseton entered into a subordinated loan agreement with DHI.
As of September 30, 2001, the loan from DHI was substantially repaid with
proceeds from the third-party financing described below.

         On May 8, 2001, Dynegy Roseton completed a sale-leaseback transaction
to provide the term financing for the acquisition of the Roseton generating
assets. Under the terms of the sale-leaseback transaction, Dynegy Roseton sold
certain plant and equipment and agreed to lease it back for 33.75 years with
renewal options. Proceeds of $620.0 million were used to repay a significant
portion of the demand note payable to DHI. Dynegy Roseton will make semi-annual
debt and interest payments each May 8 and November 8 through 2029.

                                  OTHER MATTERS

         COMMITMENTS AND CONTINGENCIES. See Part I, Item 1, Condensed Financial
Statements, Note 6, which is incorporated herein by reference, for a discussion
of the Company's Commitments and Contingencies.

         NEW YORK ELECTRIC GENERATION MARKET. The New York Independent System
Operator, Inc. ("NYISO"), the FERC-approved operator of electric transmission
facilities and centralized electric markets in New York, filed an "Automated
Mitigation Procedure" ("AMP") proposal with the FERC. The AMP caps bid prices
based on the cost characteristics of generating facilities in New York, such as
those owned or operated by the Company. In an order issued on June 28, 2001, the
FERC accepted the AMP proposal for this past summer. As of September 28, 2001,
the NYISO has filed an application at the FERC to extend the AMP until October
31, 2002. Management cannot predict the outcome of this proceeding. If such
extension was to be granted, there can be no assurance that the AMP would
not have a material adverse effect on the results of operations or financial
condition of Dynegy Roseton.

         CONCLUSION. The Company believes it will meet all foreseeable cash
requirements, including working capital, capital expenditures and debt service,
from operating cash flow, supplemented as necessary by borrowings.


                                      12
<Page>


                             DYNEGY ROSETON, L.L.C.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
            FOR THE INTERIM PERIODS ENDED SEPTEMBER 30, 2001 AND 2000


                              RESULTS OF OPERATIONS

         Provided below is a narrative presentation of certain operating and
financial data for the Company's business for the three- and nine-month periods
ended September 30, 2001, respectively. For purposes of the following
discussion, the nine-month period includes the period from the date of the
facility acquisition (January 30, 2001) to September 30, 2001. Prior to January
30, 2001, Dynegy Roseton had no operations. Separate financial statements
related to the Roseton facility's operations are available only for the period
since Dynegy Roseton's acquisition of the facility. There are no separate
financial statements available with regard to the operations of the Roseton
facility prior to Dynegy Roseton taking ownership because the facility's
operations were fully integrated with, and the results of operations were
consolidated into, its former owners' results. In addition, the electric output
of the facility was sold based on rates set by regulatory authorities. As a
result of these factors and because electricity rates are now set under
separate power purchase agreements or by market forces, historical financial
data with respect to the Roseton facility is not meaningful or indicative of
future result. Dynegy Roseton's future results of operations will depend
primarily on revenues from the unregulated sale of energy, capacity and other
ancillary services and the level of the facility's operating expenses.

THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2001

         Revenues for the three months ended September 30, 2001 were
approximately $28.4 million. The revenues were derived from sales to an
affiliate.

         Operating costs for the three months ended September 30, 2001 were
approximately $35.7 million. Operating costs consist mainly of expenses for
fuel, plant operations and maintenance and property taxes.

         Depreciation and amortization expense for the three months ended
September 30, 2001 of approximately $4.9 million primarily relates to the
Roseton facility, which is being depreciated over periods ranging from five to
35 years.

         General and administrative costs for the three-month period ended
September 30, 2001 were approximately $405 thousand, which relate to support
services provided by affiliates for operations and maintenance management,
construction management and technical services, environmental health and safety,
computer services and other related support activities.

         Interest expense for the three-month period ended September 30, 2001
was approximately $10.4 million. Interest expense primarily relates to
borrowings from a third party beginning in early May 2001.

NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2001

         Revenues for the nine months ended September 30, 2001 were
approximately $78.7 million. The revenues were derived from sales to an
affiliate.

         Operating costs for the nine months ended September 30, 2001 were
approximately $100.5 million. Operating costs consist mainly of expenses for
fuel, plant operations and maintenance and property taxes.

         Depreciation and amortization expense for the nine months ended
September 30, 2001 of approximately $13.0 million primarily relates to the
Roseton facility.

         General and administrative costs for the nine-month period ended
September 30, 2001 were approximately $1.0 million, which relate to the same
items described in the three-month period.

         Interest expense for the nine-month period ended September 30, 2001 was
approximately $28.3 million. Interest expense primarily relates to borrowings
from DHI under the subordinated loan agreements and to the term financing
obtained in May 2001.


                                      13
<Page>


                             DYNEGY ROSETON, L.L.C.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
            FOR THE INTERIM PERIODS ENDED SEPTEMBER 30, 2001 AND 2000


CASH FLOW DISCLOSURES

         OPERATING CASH FLOW. Cash flow from operating activities totaled a
source of cash of approximately $3 thousand for the nine-month period ended
September 30, 2001. Operating cash flow reflects the net loss, offset by
non-cash adjustments and changes in working capital. Other non-cash adjustments
relate to expenses charged by affiliates, partially offset by revenues charged
to an affiliate. Fluctuations in accounts receivable, accounts payable and
accrued liabilities reflect changes in the timing of payments or recognition of
liabilities and are not directly impacted by seasonal factors.

         CAPITAL EXPENDITURES AND INVESTING ACTIVITIES. Cash used in investing
activities includes the acquisition of the Roseton facility. The Company had
additional capital expenditures of approximately $4.5 million in the nine-month
period ended September 30, 2001, but such transactions were funded by an
affiliate, and thus are not reflected on the statement of cash flows.

         FINANCING ACTIVITIES. In January 2001, Dynegy Roseton completed the
acquisition of the Roseton facility for approximately $645.0 million. In order
to finance the acquisition, Dynegy Roseton entered into a subordinated loan
agreement with DHI. As of September 30, 2001, the loan from DHI was
substantially repaid with proceeds from the third-party financing described
below.

         On May 8, 2001, Dynegy Roseton completed a sale-leaseback transaction
to provide the term financing for the acquisition of the Roseton generating
facilities. Under the terms of the sale-leaseback transaction, Dynegy Roseton
sold certain plant and equipment and agreed to lease it back for 33.75 years
with renewal options. Proceeds of $620.0 million were used to repay a
significant portion of the demand note payable to DHI. Dynegy Roseton will make
semi-annual debt and interest payments each May 8 and November 8 through 2029.


                                      14
<Page>


                             DYNEGY ROSETON, L.L.C.
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
            FOR THE INTERIM PERIODS ENDED SEPTEMBER 30, 2001 AND 2000


            UNCERTAINTY OF FORWARD-LOOKING STATEMENTS AND INFORMATION

            Dynegy Roseton's reports, filings and other public announcements
often include statements reflecting assumptions, expectations, projections,
intentions or beliefs about future events. These statements are intended as
"forward-looking statements" under the Private Securities Litigation Reform Act
of 1995. You can identify these statements by the fact that they do not relate
strictly to historical or current facts. They use words such as "anticipate,"
"estimate," "project," "forecast," "may," "will," "should," "expect" and other
words of similar meaning.

            Any or all of Dynegy Roseton's forward-looking statements may turn
out to be wrong. They can be affected by inaccurate assumptions or by known or
unknown risks and uncertainties, including the following:

o        The timing and extent of changes in commodity prices for energy,
         particularly fuel oil and electricity;
o        Demand for electric capacity, energy and ancillary services in the
         markets served by Dynegy Roseton's generation facility;
o        Competition from other power plants, including new plants that may be
         developed in the future;
o        The condition of the capital markets generally, which will be affected
         by interest rates and general economic conditions;
o        Operational factors affecting the commercial operations of Dynegy
         Roseton's power generation facility, including catastrophic weather
         related damage, unscheduled outages or repairs, unanticipated changes
         in fuel costs or availability of fuel or emission credits, the
         unavailability of gas transportation, the unavailability of electric
         transmission service or workforce issues;
o        Cost and other effects of legal and administrative proceedings,
         settlements, investigations and claims, including environmental
         liabilities, that may not be covered by indemnity or insurance; and
o        Other U.S. or New York regulatory or legislative developments that
         affect Dynegy Roseton's electricity markets or the demand for energy
         generally, increase the environmental compliance cost for Dynegy
         Roseton's power generation facility or impose liabilities on the owners
         of such facility.

         Many of these factors will be important in determining Dynegy Roseton's
actual future results. Consequently, no forward-looking statement can be
guaranteed. Dynegy Roseton's actual future results may vary materially from
those expressed or implied in any forward-looking statements.

         All of Dynegy Roseton's forward-looking statements, whether written or
oral, are expressly qualified by these cautionary statements and any other
cautionary statements that may accompany such forward-looking statements. In
addition, Dynegy Roseton disclaims any obligation to update any forward-looking
statements to reflect events or circumstances after the date of this report.


                                      15
<Page>


                              DYNEGY ROSETON, L.L.C.
           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            FOR THE INTERIM PERIODS ENDED SEPTEMBER 30, 2001 AND 2000


         The Company is exposed to certain market risks indigenous to its
industry or inherent in transactions entered into during the normal course of
business. In executing risk-management strategies intended to mitigate these
market risks, the Company may utilize various types of financial instruments.
Some of the risks that management may want to mitigate include changes in
interest rates and commodity prices related to fuel oil to operate the
generating facility. To manage or reduce these market risks, the Company may
enter into interest rate swaps, commodity futures and price swap contracts.






                                      16
<Page>


                             DYNEGY ROSETON, L.L.C.

                           PART II. OTHER INFORMATION


ITEM 1 - LEGAL PROCEEDINGS

See Part I, Item 1, Condensed Consolidated Financial Statements, Note 6, which
is incorporated herein by reference.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)      There are no documents required to be included as exhibits to this
         Form 10-Q.

(b)      During the quarter ended September 30, 2001, the Company filed a
         Current Report on Form 8-K dated September 14, 2001. Item 5 was
         reported and no financial statements were filed.


                                      17
<Page>


                                   SIGNATURES


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


                                           DYNEGY ROSETON, L.L.C.



Date:  November 14, 2001                   By:   /s/ Michael R. Mott
     ----------------------                    ------------------------------
                                                 Michael R. Mott,
                                                 Senior Vice President and
                                                 Controller (Duly Authorized
                                                 Officer and Principal
                                                 Accounting Officer)