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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 June 30, 2004

OR

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

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0001261679 MSW ENERGY HOLDINGS LLC DELAWARE 14-1873119
0001261680 MSW ENERGY FINANCE CO., INC. DELAWARE 20-0047886
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Commission File (Exact name of each (State or other (I.R.S. Employer
File Number registrant as specified jurisdiction of Identification
in its charter) incorporation or Number)
organization)


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.

1


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DEFINITIONS

"Acquisition" refers to the agreement by MSW Energy Holdings to acquire Duke's
50% membership interest in Ref-Fuel Holdings.

"AIGGIC" refers to AIG Global Investment 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
waste-to-energy (WTE) facilities. "CSFB Private Equity" refers
to Credit Suisse First Boston Private Equity, 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.

"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.

"Hudson" refers to MSW Energy Hudson LLC.

"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 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 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.

"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.



1





TABLE OF CONTENTS

PART I FINANCIAL INFORMATION.............................................................................................4
ITEM 1. FINANCIAL STATEMENTS..............................................................................................4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...........................23
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK......................................................37
ITEM 4. CONTROLS AND PROCEDURES.........................................................................................39
PART II OTHER INFORMATION................................................................................................39
ITEM 1. LEGAL PROCEEDINGS...............................................................................................39
ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASE OF EQUITY SECURITIES.................................40
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.................................................................................40
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................................................40
ITEM 5. OTHER INFORMATION...............................................................................................40
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................................................................41


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.


3



PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

4


MSW ENERGY HOLDINGS LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)




ASSETS

JUNE 30, 2004 DECEMBER 31, 2003
------------- -----------------
CURRENT ASSETS (unaudited)


Cash and cash equivalents $ 54,446 $ 3,633
Restricted cash and short-term investments 69,801 2,444
Accounts receivable, net of allowance for doubtful accounts of
$1,700 and $0, respectively 70,578 --
Prepaid expenses and other current assets 10,670 76
---------- ----------
Total current assets 205,495 6,153
---------- ----------
LONG-TERM ASSETS
Property, plant and equipment, net 1,215,423 --
Intangible assets, net 559,732 7,821
Goodwill 2,175 --
Investment in Ref-Fuel Holdings -- 372,672
Restricted cash and long-term investments 90,468 5,001
Other long-term assets 7,240 --
---------- ----------
Total long-term assets 1,875,038 385,494
---------- ----------
Total assets $2,080,533 $ 391,647
========== ==========
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES
Accounts payable and other current liabilities $ 44,119 $ 556
Accounts payable to related party -- 480
Current portion of long-term debt 83,165 --
Accrued interest payable 16,890 5,667
Other current liabilities 2,500 500
---------- ----------
Total current liabilities 146,674 7,203
---------- ----------
LONG-TERM LIABILITIES
Long-term debt 1,217,292 200,000
Other long-term liabilities 219,306 24,333
---------- ----------
Total long-term liabilities 1,436,598 224,333
---------- ----------
Total liabilities 1,583,272 231,536
---------- ----------

COMMITMENTS AND CONTINGENCIES (NOTE 11)

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY 351,996 --
---------- ----------
MEMBERS' EQUITY
Total members' equity 145,265 160,111
---------- ----------
Total liabilities and members' equity $2,080,533 $ 391,647
========== ==========



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


5



MSW ENERGY HOLDINGS LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED, IN THOUSANDS)





FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, JUNE 30,
2004 2004
-------- --------
REVENUES

Waste disposal and related services $ 49,120 $ 49,120
Energy 22,319 22,319
Other 2,013 2,013
-------- --------
Total net revenues 73,452 73,452

EXPENSES
Operating 30,709 30,709
Depreciation and amortization 11,173 11,173
General and administrative 7,282 7,755
Loss on asset retirements 836 836
-------- --------

Operating income 23,452 22,979

Interest income 501 529

Interest expense (13,237) (18,292)

Equity in net earnings of unconsolidated affiliate -
Ref-Fuel Holdings 2,006 6,545

Minority interests in net income of subsidiaries (7,996) (7,996)

Other income, net 102 102
-------- --------
Income before income taxes 4,828 3,867

Income taxes (213) (213)
-------- --------

Net income 4,615 3,654

Other comprehensive income (211) (211)
-------- --------
Comprehensive income $ 4,404 $ 3,443
======== ========


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


6



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

(UNAUDITED, IN THOUSANDS)





MEMBERS' OTHER COMPREHENSIVE
INTERESTS INCOME TOTAL
--------- --------- ---------



Balance, January 1, 2004 $ 160,111 -- $ 160,111

Distribution to members (18,500) (18,500)
Unrealized gain on investments
from the consolidation of
Ref-Fuel Holdings -- 211 211

Comprehensive income 3,654 (211) 3,443
--------- --------- ---------
Balance, June 30, 2004 $ 145,265 $ -- $ 145,265
========= ========= =========



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



7


MSW ENERGY HOLDINGS LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED, IN THOUSANDS)



FOR THE SIX
MONTHS ENDED
JUNE 30, 2004
-------------
CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 3,654
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 17,152
Revenue contract levelization 3,844
Equity earnings in unconsolidated affiliate - Ref-Fuel (6,545)
Holdings
Distributions from Ref-Fuel Holdings 31,374
Loss on asset retirements 836
Minority interest in consolidated subsidiaries 7,996
Changes in assets and liabilities:
Accounts receivable, net 736
Prepaid expenses and other current assets 1,003
Other long-term assets 1,796
Accounts payable and current liabilities 952
Accounts payable affiliates (480)
Accrued interest payable (10,366)
Other long-term liabilities 1,445
---------
Net cash provided by operating activities 53,397
---------

CASH FLOWS FROM INVESTING ACTIVITIES
Change in restricted cash and investments, net (13,682)
Additions of property, plant and equipment (4,943)
Proceeds from sale of assets 20
Cash from consolidation of unconsolidated subsidiary (Note 3) 40,238
---------
Net cash provided by investing activities 21,633
---------

CASH FLOWS FROM FINANCING ACTIVITIES
Payment of long-term debt (5,717)
Distributions paid to members (18,500)
---------
Net cash (used in) financing activities (24,217)
---------

Net increase in cash and cash equivalents 50,813
Cash and cash equivalents, beginning of period 3,633
---------
Cash and cash equivalents, end of period $ 54,446
=========




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



8


MSW ENERGY HOLDINGS LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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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 formed in March 2003 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 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 for the sole purpose of acting as co-issuer with MSW
Energy Holdings of $200 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), an indirect, 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.

On April 30, 2004, MSW Energy Holdings' owners entered into a series of
transactions (Equalization Transactions) which changed the ownership structure.
As a result of the Equalization Transactions and other internal transactions
completed on May 26, 2004 and June 30, 2004, the Company is owned (i) 60% by MSW
Acquisition LLC, an affiliate of Credit Suisse First Boston Private Equity,
Inc. (CSFB Private Equity), (ii) 39.99% by entities managed by AIG Global
Investment Corp. (AIGGIC), and (iii) 0.01% by UAE Holdings Corp., which was
named the Company's managing member.

The other 50% interest in Ref-Fuel Holdings is owned indirectly by UAE Holdings
Corp. through its 100% indirect ownership of MSW Energy Holdings II LLC (MSW
Energy Holdings II). Pursuant to a separate series of transactions (UAE
Transactions) completed on December 12, 2003, MSW Energy Holdings II acquired a
direct and indirect 50% membership interest in Ref-Fuel Holdings. As a result of
the Equalization Transactions, UAE Holdings is now owned 60% by affiliates of
CSFB Private Equity, and 40% by entities managed by AIGGIC.

The Equalization Transactions resulted in CSFB Private Equity affiliates
collectively owning a 59.88% indirect interest in Ref-Fuel Holdings and the
AIGGIC affiliates collectively owning a 39.92% indirect interest in Ref-Fuel
Holdings. The Equalization Transactions also resulted in UAE Holdings Corp.
assuming full control of the management and operations of the Company and
Ref-Fuel Holdings.

As a result of the Equalization Transactions, the Company has effective control
of Ref-Fuel Holdings, and is therefore consolidating its results of operations
and cash flows for two months and the balance sheet as of June 30, 2004.

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, ARC, or ARC LLC).

9


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. Through such partnerships, American
Ref-Fuel owns or controls 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. ARC subsidiaries 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 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 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

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include accounts of MSW
Energy Holdings, its wholly-owned subsidiaries and Ref-Fuel Holdings. Prior to
the Equalization Transactions, the Company's investment in Ref-Fuel Holdings was
accounted for using the equity method. As a result of the Equalization
Transactions, the Company has effective control of Ref-Fuel Holdings and as of
April 30, 2004 is consolidating its results. All significant intercompany
transactions and accounts have been eliminated.

RECLASSIFICATIONS

Certain reclassifications have been made to the prior years to conform to the
current year'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.

10


CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash balances and unrestricted short-term
investments with original maturities of three months or less.

RESTRICTED CASH AND INVESTMENTS

The Company is required to maintain cash and investment balances that are
restricted by provisions of its debt, operational or lease agreements. These
amounts are held by financial institutions in order to comply with contractual
provisions requiring such reserves.

Restricted cash and investments are invested in accounts earning market rates;
therefore, the carrying value approximates fair value. Restricted cash and
investments are excluded from cash and cash equivalents in the accompanying
financial statements, and changes in these assets are characterized as investing
activities in the consolidated statements of cash flows. Restricted cash and
investments include certain investments stated at amortized cost, which
approximates market, including debt securities that are classified as
''held-to-maturity'' because the Company has the intent and ability to hold the
securities to maturity. The Company accounts for marketable securities in
accordance with SFAS Statement No. 115, "ACCOUNTING FOR CERTAIN INVESTMENTS IN
DEBT AND EQUITY SECURITIES". Under the provisions of this statement, investments
that are classified as available-for-sale are marked to market with unrealized
gains and losses reported as a component of other comprehensive income.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. The Company provides for
depreciation of its assets using the straight-line method over the estimated
useful lives.

Routine repairs and maintenance are charged against current operations.
Expenditures that increase value, increase capacity or extend useful lives are
capitalized.

When property and equipment are retired, sold, or otherwise disposed of, the
cost, net of accumulated depreciation, is removed from the accounts and any
resulting gain or loss is included in operating income for the period.

The Company maintains a supply of various spare parts integral to its
operations. Certain spare parts that are not expected to be used within the
upcoming year have been classified as long-term spare parts inventory within
property, plant and equipment.

Landfill costs, including original acquisition cost and incurred construction
costs, are amortized over the estimated capacity of the landfill based on a
per-unit basis as landfill space is consumed.

In accordance with SFAS No. 144, "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF
LONG-LIVED ASSETS", management periodically reviews long-lived assets and
intangibles whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. If factors indicate that an
asset should be evaluated for possible impairment, management compares estimated
undiscounted future operating cash flows associated with the asset to its
carrying amount. If the carrying amount of the asset is greater than
undiscounted future operating cash flows, an impairment loss is calculated and
recognized. The effect of any impairment would be to expense the difference
between the fair value of such asset and its carrying value.

11


GOODWILL

Goodwill represents the total consideration paid in excess of the fair value of
the net tangible and identifiable intangible assets acquired and the liabilities
assumed. In accordance with the provisions of Financial Accounting Standard
(FAS) No. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS", the Company performs an
annual fair value test of its recorded goodwill for its reporting units using a
discounted cash flows approach.

INTANGIBLE ASSETS

Energy contract intangibles represent the amount by which the contract rates in
long-term energy sales contracts held by certain subsidiaries of the Company
exceeded fair value on the dates that these subsidiaries were acquired. These
contract related intangibles are amortized into income as a reduction of energy
revenues on a straight-line basis over the remaining terms of the applicable
contracts, which range from six to sixteen years.

Waste contract intangibles represent the amount by which the contract rates in
long-term waste sales contracts held by Hempstead exceeded fair value on the
dates that the partnership was acquired. These contract related intangibles are
being amortized into income as a reduction of waste revenues on a straight-line
basis through 2009, the term of the applicable contracts.

The Company has intangible assets relating to Nitrous Oxide (NOx) emission
allowances. These assets have indefinite lives and, as such, are not amortized.
Consistent with all the Company's intangible assets, these are reviewed under
the provisions of FAS 142 for potential impairment on an annual basis.

Deferred financing costs represent certain capitalizable costs incurred by the
Company to finance its long-term debt obligations. These costs are amortized to
interest expense over the life of the related debt.

EQUITY METHOD INVESTMENT

The Company's investment in Ref-Fuel Holdings was accounted for using the equity
method of accounting prior to the Equalization Transactions. As a result, the
accompanying consolidated results of operations include the Company's share of
net earnings in "Equity in net earnings of Ref-Fuel Holdings" for the period up
to April 30, 2004.

OTHER LIABILITIES

Other current and other long-term liabilities primarily consist of (a) fair
value adjustments related to certain operating leases and long-term waste
contracts acquired by the Company; (b) deferred revenue; (c) accruals for
certain long-term incentive plans; (d) energy contract levelization; and (e) the
Duke agreement liability (see Note 3).

The fair value adjustment related to the operating lease represents the amount
by which future rent payments on the Delaware Valley facility lease exceeded the
fair market value of that facility as of the acquisition dates. This amount is
being amortized as a decrease in facility rent expense on a straight-line basis
through 2019, the end of the associated lease.

12



The fair value adjustment related to the acquired long-term waste contracts
represents the amount by which costs of disposal and processing of waste
delivered pursuant to certain long-term waste contracts held by Semass
Partnership and Essex exceeded estimated contract revenues at their respective
acquisition dates. These costs are being amortized as an increase to waste
disposal revenues using the straight-line method over the term of the applicable
contracts.

Landfill closure and postclosure costs are also included in other long-term
liabilities. The Company accrues landfill closure and postclosure costs as the
remaining permitted space of the landfill is consumed over the expected life
cycle of the landfill.

The Company is accounting for the long-term power contracts at the Semass
Partnership in accordance with EITF Issues 91-6 "REVENUE RECOGNITION OF
LONG-TERM POWER SALES CONTRACTS" and EITF 96-17 "REVENUE RECOGNITION UNDER
LONG-TERM POWER SALES CONTRACTS THAT CONTAIN BOTH FIXED AND VARIABLE PRICING
TERMS", which require the Company to recognize power revenues under these
contracts as the lesser of (a) amounts billable under the respective contracts;
or (b) an amount determinable by the kilowatt hours made available during the
period multiplied by the estimated average revenue per kilowatt hour over the
term of the contract. The determination of the lesser amount is to be made
annually based on the cumulative amounts that would have been recognized had
each method been applied consistently from the beginning of the contract. The
difference between the amount billed and the amount recognized is included in
other long-term liabilities.

REVENUE RECOGNITION

The Company recognizes revenue from two major sources: waste disposal services
and energy production. Revenue from waste disposal services is recognized as
waste is received, and revenue from energy production is recognized as the
energy is delivered.

CONCENTRATION OF CREDIT RISK

The Company invests excess cash and funds held in trust in bank deposit
accounts, commercial paper, certificates of deposit and money market investments
with a limited number of financial institutions.

The Company has exposure to credit risk in accounts receivable as the Company
disposes of waste for and sells power to a limited number of customers. The
Company believes adequate reserves are maintained for potential credit losses.
Furthermore, these and other customers are primarily located in the northeastern
region of the United States of America.

UNAMORTIZED DEBT PREMIUM

Unamortized debt premium represents the increase in the fair value of the
Company's debt recorded as a result of the MSW Transactions. These costs are
amortized to interest expense over the life of the related debt using the
effective interest method.

INCOME TAXES

The Company's subsidiaries primarily consist of limited liability companies and
partnerships. Accordingly, income taxes are not levied at the Company level, but
rather on the individual members. Certain wholly-owned nonoperating subsidiaries
of the Company are taxable corporations.


13


FAIR VALUE OF FINANCIAL INSTRUMENTS

Unless disclosed otherwise, all other financial instruments of the Company are
stated at cost, which management believes approximates fair market value.

PUSH-DOWN ACCOUNTING

Upon consummation of the UAE Merger 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 exercises 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 3).

3. ACQUISITION OF MEMBERSHIP INTERESTS IN REF-FUEL HOLDINGS

Pursuant to an equity purchase agreement between MSW Energy Holdings and Duke,
the Company 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 was 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.



14


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):



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

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 amounts payable under the Duke Agreement are
subordinate to the Company's other long term debt obligations and escalate over
time. A portion of this balance is deposited into a restricted account for the
benefit of Duke Capital. The Company is in compliance with all of its
obligations under this agreement. This liability is included in other long-term
liabilities, and represents the present value of the obligation under the Duke
Agreement. At June 30, 2004 the balance was $21.6 million.

As described in Note 1, the Equalization Transactions consummated on April 30,
2004 resulted in the Company acquiring a controlling interest in Ref-Fuel
Holdings, which requires consolidation.


PRO FORMA INFORMATION

The following results represent the pro forma results as if MSW Energy Holdings'
acquisition of its interests in Ref-Fuel Holdings and the Equalization
Transactions had occurred on January 1, 2003. These results are presented for
informational purposes only, and are not necessarily indicative of the actual
results that would have resulted had the acquisition and the Equalization
Transactions actually occurred. (In thousands):




PRO FORMA FOR PRO FORMA FOR
THE SIX THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, 2004 JUNE 30, 2003
------------- -------------
REVENUES

Waste disposal and related services $ 138,616 $ 137,199
Energy 63,885 67,525
Other 8,488 5,487
------------ ------------
Total net revenues 210,989 210,211
------------ ------------
EXPENSES
Operating 104,031 99,235
Depreciation and amortization 34,016 34,357
General and administrative 22,252 23,420
Loss on asset retirements 1,178 1,838
------------ ------------
Operating income 49,512 51,361
Interest income 1,513 1,560
Interest expense (33,119) (38,013)
Loss on early extinguishment of debt -- (3,292)
Minority interests in net income of subsidiaries (14,203) (11,085)
Other income (expenses), net 6 (34)
------------ ------------
Net income $ 3,709 $ 497
============ ============




15



4. EQUITY INVESTMENT IN REF-FUEL HOLDINGS

Prior to the Equalization Transactions, the Company recorded its investment in
Ref-Fuel Holdings as an equity investment. Ref-Fuel Holdings condensed financial
information prior to April 30, 2004 is included for informational purposes.

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





AS OF AS OF
APRIL 30, 2004 DECEMBER 31, 2003
-------------- -----------------
(UNAUDITED)

Current assets $ 177,397 $ 233,151
Noncurrent assets 1,879,198 1,894,757
Current liabilities 147,068 133,358
Noncurrent liabilities 1,218,780 1,253,250
Members' Equity 690,747 741,300




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

FOR THE FOUR MONTHS
ENDED
APRIL 30, 2004
-------------------
(UNAUDITED)
Revenues $ 137,537
Operating income 26,534
Net earnings 12,753
Company's equity in net earnings 6,545



16





5. PROPERTY, PLANT AND EQUIPMENT

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



USEFUL LIFE JUNE 30, 2004 DECEMBER 31, 2003
------------------ ------------- -----------------
(unaudited)

Plant and equipment 2-50 years $1,156,585 $ -
Land 3,813 -
Leasehold improvements Up to 17 years 39,534 -
Landfill 13 years 15,470 -
Spare parts 12,253 -
Construction in progress 21,811 -
---------- ------------------
Total property, plant and equipment 1,249,466 -
Accumulated depreciation (34,043) -
---------- ------------------
Property, plant and equipment, net $1,215,423 $ -
========== ==================



6. INTANGIBLE ASSETS

Intangible assets consist of the following (in thousands):




USEFUL LIFE JUNE 30, 2004 DECEMBER 31, 2003
------------------ ------------- -----------------
(unaudited)

Energy contracts 6-16 years $ 522,430 $ -
Waste contracts 6 years 23,600 -
Financing costs 6 years 8,382 8,382
Emissions credits Indefinite 38,930 -
Other intangibles Indefinite 3,579 -
---------- -----------------
596,921 8,382
Accumulated amortization (37,189) (561)
---------- -----------------
Intangible assets, net $ 559,732 $ 7,821
========== =================



7. GOODWILL

Goodwill consists of the following (in thousands):




JUNE 30, DECEMBER 31,
2004 2003
-------------- --------------
(unaudited)

Beginning balance $ - $ -
Goodwill from the consolidation of Ref-Fuel Holdings 2,175 -
------------- --------------
Ending balance $ 2,175 $ -
============= ==============




17



8. ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES

Accounts payable and other current liabilities consist of the following (in
thousands):



JUNE 30, DECEMBER 31,
2004 2003
-------------- ---------------
(unaudited)

Accounts payable $ 30,306 $ 556
Incentive plan accruals 3,783 -
Compensation liabilities 5,500 -
Other 4,530 -
-------------- ----------------
$ 44,119 $ 556
============== ================



9. FINANCING ARRANGEMENTS

Long-term debt obligations of the Company consist of the following (in
thousands):




INTEREST RATE FINAL JUNE 30, DECEMBER 31,
(AVERAGE RATE) MATURITY 2004 2003
-------------- -------- --------- -----------
(UNAUDITED)

Senior Notes 8.5% 2010 $ 200,000 $ 200,000

Ref-Fuel Holdings debt
ARC Senior Notes 6.26% 2015 253,300 -
Niagara Series 2001 5.45 - 5.625% 2015 165,010 -
Seconn Corporate Credit Bonds 5.50%-6.45% 2022 43,500 -
Hempstead Corporate Credit Bonds 5.00% 2010 42,670 -
Hempstead project debt 4.40%-5.00% 2009 133,278 -
Essex project debt 5.32%-7.48% 2020 108,662 -
Seconn project debt 5.125%-5.50% 2015 53,499 -
Semass Series 2001A 5.50%-5.625% 2016 134,345 -
Semass Series 2001B 5.00%-5.50% 2010 104,385 -
---------- -----------
Subtotal 1,038,649 -
---------- -----------

Other obligations 308 -
---------- -----------
Total debt at par value 1,238,957 200,000
Unamortized debt premium, net 61,500 -
Current portion (83,165) -
---------- -----------
Total long-term debt obligations $1,217,292 $ 200,000
========== ===========



In June 2003, the Company issued $200.0 million aggregate principal amount
of 8 1/2 % senior secured notes due 2010 (Senior Notes). Interest on the Senior
Notes accrues at 8 1/2 % per annum, beginning from the date of issuance and is
payable on March 1st and September 1st of each year, commencing on September 1,
2003. Interest only is payable throughout the term of the Senior Notes with
principal and unpaid interest payable at maturity on September 1, 2010. Holders
of Senior Notes may require the Company to repurchase the Senior Notes upon a
change in control or if the Company receives any proceeds from certain
financings or asset sales by Ref-Fuel Holdings and its subsidiaries.

The indenture for the Senior Notes provides for certain restrictive covenants
including, among other things, restrictions on incurrence of indebtedness,
certain payments to related and unrelated parties, acquisitions and asset sales.


18



Certain of the debt agreements held by the Company contain restrictions on cash
distributions and new borrowings. Substantially all of the assets and revenues
of the facilities owned or controlled and operated by subsidiaries of the
Company are pledged to trustees under the terms of the debt agreements. In
addition, the terms of the documents governing these obligations limit the
business activities and the circumstances and timing of making partnership
distributions. In the event of any bankruptcy or liquidation the Ref-Fuel
Holdings debt would be repaid prior to the repayment of the Senior Notes.

10. OTHER LONG-TERM LIABILITIES

Other long-term liabilities consist of the following (in thousands):




AMORTIZATION
PERIOD
(YEARS) JUNE 30, 2004 DECEMBER 31, 2003
------------ ------------- -----------------

Long-term waste contracts acquired 9-17 $ 123,850 $ -
Operating lease acquired 14 42,094 -
Duke liability 22,870 24,333
Energy contract levelization 12 12,803 -
Landfill liabilities 13 10,455 -
Deferred revenue 8-20 3,071 -
Other 2,803 -
Long-term incentive plan accruals 1,360 -
----------- -----------------
$ 219,306 $ 24,333
=========== =================


See Note 14 for amortization of certain other long-term liabilities.


11. OPERATIONAL AND OTHER AGREEMENTS


The facilities at Hempstead, Essex, Seconn, Semass and Delaware Valley operate
under various long-term service agreements, the terms of which extend from 2009
through 2020. These service agreements require the projects to provide disposal
services for waste delivered by counterparties to these agreements at prices
determined by various formulas contained in such agreements.

Duke Energy Corporation (Duke) and Allied Waste Industries, Inc. (Allied) are
each obligated to fund one-half of certain cash shortfalls and other liabilities
of Essex arising out of operating the project, including certain environmental
claims. Essex and ARC LLC entered into agreements with Duke and Allied requiring
Essex and ARC LLC to reimburse, indemnify and defend Duke and Allied from any
liability in respect to these obligations.

With respect to the Delaware Valley facility, ARC LLC has guaranteed amounts
payable by Delaware Valley pursuant to certain agreements. ARC LLC has
guaranteed through 2006 for the benefit of the Delaware County Solid Waste
Authority amounts arising out of, or relating to any failure of Delaware Valley
under its service agreement. In conjunction with the acquisition of the
facility, ARC LLC also provided an indemnity to the sellers of the facility from
all environmental damages as a result of remedial action and releases or
threatened releases of hazardous substances at the facility.

In order to provide ARC LLC with an additional source of funds to meet calls on
its project support obligations, MSW Energy Holdings and UAE Holdings Corp.
entered into the Equity Contribution Agreement pursuant to which each of them
have agreed to provide up to $50 million in equity capital to ARC LLC.


19


12. COMMITMENTS AND CONTINGENCIES

ENVIRONMENTAL AND REGULATORY RISK

The Company operates in an environmentally sensitive industry and is subject to
extensive federal, state and local laws and regulations adopted for the
protection of the environment. The laws and regulations primarily applicable to
the Company are those related to discharge of emissions into the air and
management of solid waste but can also include those related to water use,
discharges to water, wetlands preservation and hazardous waste management.
Certain of these laws have extensive and complex requirements relating to
obtaining construction and operating permits, monitoring, record keeping and
reporting. While management believes that it is in substantial compliance with
permits and other applicable environmental laws relating to the Company, its
facilities, from time to time, may not be in full compliance with all such laws.

Noncompliance with environmental laws and regulations can result in the
imposition of civil or criminal fines or penalties. In some instances,
environmental laws also may impose clean-up or other remedial obligations in the
event of a release of pollutants or contaminants into the environment. The
Company incurs operating costs and capital expenditures related to various
environmental protection and monitoring programs. Such expenditures have not had
a material adverse effect on the Company's consolidated financial position or
results of operations. However, federal, state and local regulatory authorities
may consider proposals to restrict or tax certain emissions, which proposals, if
adopted, could impose additional costs on the operation of the Company.

LANDFILL AGREEMENTS

Semass Partnership, a subsidiary of Ref-Fuel Semass, has a waste management
agreement (the WMA) dated May 25, 1982, as amended, with the Carver, Marion,
Wareham Regional Refuse Disposal District (CMW). The WMA allows Semass
Partnership to utilize a portion of a landfill (the CMW Landfill), which CMW
leases from Wankinco River, Inc. (Wankinco).

Beginning in May 1997, Wankinco provided several notices purportedly terminating
the lease on the CMW Landfill based upon an allegation that the lease term
automatically expired due to alleged failures to strictly comply with the terms
of the lease. In June 1997, Semass Partnership and CMW filed suit against
Wankinco and A. D. Makepeace Company, Inc., Wankinco's parent company, seeking a
declaratory judgment that Semass Partnership and CMW may continue to operate the
CMW Landfill. Trial of the matter before the court was completed in 2001 and a
decision was received by the Company in December 2002, which decided virtually
all issues in favor of the Semass Partnership. The Semass Partnership avoided
both forfeiture of possession and any liability for damages due to landfill
operations. Wankinco appealed in January 2003, and the parties currently are
awaiting a decision from the appellate court. Apart from this decision, the
Semass Partnership and Wankinco continue litigating several other actions
involving regulatory issues at the landfill.

Management believes that the ultimate resolution of these matters will not have
a material adverse impact on the results of operations, future cash flows or
financial position of the Company.

In March 1990, the Semass Partnership, CMW and Wankinco entered into an
agreement related to the CMW Landfill, as amended (the Settlement Agreement),
which requires, among other things, the Semass Partnership to make annual
deposits into an environmental protection trust fund (the Fund) in lieu of
obtaining environmental impairment liability insurance for the CMW Landfill. The
Semass Partnership is required under the Settlement Agreement to deposit
$500,000 annually into the Fund, payable in equal quarterly installments.
Certain additional deposits are required subject to the availability of cash in
accordance with the Loan Agreement. The Semass Partnership's obligation to make
deposits into the Fund ceases when the Fund reaches a balance of $20.0 million.
Proceeds from the Fund are to be used primarily for remediation of the CMW
Landfill in the event of environmental damage. The Semass Partnership and
Wankinco are each entitled to receive one-half of the balance of the Fund upon
final closure of the CMW Landfill and receipt of required governmental
approvals. During the years ended December 31, 2003 and 2002, the Semass
Partnership made the required quarterly deposits into the Fund and charged
operations for one-half of the deposits into the Fund, representing one-half of
the balance of the Fund which will be disbursed to Wankinco upon final closure
of the CMW Landfill. Additional charges to operations may be required in future
years if any disbursements are required from the Fund to remediate any
environmental damages. To date, management is not aware of any such
environmental damages.


20




By letter dated February 10, 2004, Wankinco alleged a default under the
Settlement Agreement and the lease on the CMW Landfill, related to an alleged
failure by Semass Operator to properly fund a $125,000 quarterly deposit.
Management believes that the deposit was properly made, that no default exists
under the Settlement Agreement or lease, and that the ultimate resolution of
this matter will not have a material adverse impact on the results of operation,
future cash flows or financial position of the Semass Partnership or the
Company.

FUTURE MINIMUM PAYMENTS UNDER OPERATING LEASES

Delaware Valley leases the Delaware Valley Project pursuant to an operating
lease that expires in July 2019. In certain default circumstances under such
lease, Delaware Valley (and ARC LLC by virtue of a guaranty) become obligated to
pay a contractually specified "stipulated loss" value that declines over time
and which was approximately $177.4 million as of June 30, 2004.

The Company also leases office space for its Montvale, New Jersey headquarters
pursuant to an operating lease expiring in August 2007.

OTHER MATTERS

The Company is involved in various claims or litigation in the ordinary course
of business. Management believes that the ultimate resolution of these matters,
either individually or in the aggregate, will not have a material adverse impact
on the future results of operations, cash flows or financial position of the
Company.

The Company is required to provide financial assurance to government agencies
under applicable environmental and procurement regulations relating to the
landfill operations and waste disposal contract.


21



13. RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Company's subsidiaries hold insurance
policies with affiliates of AIGGIC, for which the AIGGIC affiliated insurance
companies receive customary annual premiums.

14. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Depreciation and amortization expense included in the Statements of Cash Flows
for the six months ended June 30, 2004 consists of the following expenses
(revenues) (in thousands):




ASSET / LIABILITY STATEMENT OF OPERATIONS JUNE 30, 2004
- ------------------------------------ ----------------------------------------- -------------

Property, plant and equipment Depreciation and amortization (1) $ 11,173
Energy contracts Energy revenues 9,603
Long-term waste contracts Waste disposal and related services (2,271)
Lease Operating expenses (rent expense) 549
Debt Interest expense (1,896)
Deferred revenue Waste disposal and related services and
energy revenues (6)
------------
Total $ 17,152
============
(1) Includes amortization of intangible assets

Noncash investing and financing activities:
Cash from the consolidation of Ref-Fuel Holdings at April 30, 2004 $ 40, 238








22





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. As
of April 30, 2004 we hold a 49.8% indirect controlling membership interest in
Ref-Fuel Holdings and the results of operations have been consolidated from that
period.

The following is a discussion of the financial condition and results of
operations for the three and six months ended June 30, 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 and the supplemental pro forma information that follows.

GENERAL

We were formed and acquired our interest in Ref-Fuel Holdings in June 2003.
Because we were not yet in existence, there are no financial results for the
second quarter of 2003 comparable to the data for the second quarter of 2004.


23



The following summarizes the historical financial information for MSW Energy
Holdings as of and for the three and six months ended June 30, 2004 (unaudited,
in thousands):




FOR THE THREE FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, 2004 JUNE 30 ,2004
------------- -------------
STATEMENT OF OPERATIONS DATA:

Net revenues $ 73,452 $ 73,452
Equity in net earnings of Ref-Fuel Holdings 2,006 6,545
Operating expenses (30,709) (30,709)
Depreciation and amortization expense (11,173) (11,173)
Administrative and general expense (7,282) (7,755)
Loss on asset retirement (836) (836)
Interest income 501 529
Interest expense (13,237) (18,292)
Minority interest in net income of subsidiaries (7,996) (7,996)
Other income, net 102 102
Taxes (213) (213)
----------- -----------
Net income $ 4,615 $ 3,654
----------- -----------
CASH FLOW DATA:
Cash provided by operating activities $ 53,397
Cash provided by investing activities 21,633
Cash used in financing activities (24,217)

BALANCE SHEET DATA (AT JUNE 30, 2004):

Total assets $ 2,080,533
Total debt 1,300,457
Minority interest in consolidated subsidiaries 351,996
Total members' equity 145,265





RESULTS OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 30, 2004

NET REVENUES. Net revenues of $73.5 million for the three months ended June
30, 2004 represent the consolidated results of operations of Ref-Fuel Holdings
for the two month period ended June 30, 2004. As indicated above, as a result of
the Equalization Transactions, Ref-Fuel Holdings' results of operations are
consolidated as of April 30, 2004. These revenues represent $49.1 million of
waste disposal and related services revenue, $22.4 million of energy revenue and
$2.0 million of other revenue.

EQUITY IN EARNINGS OF REF-FUEL HOLDINGS. Equity in net earnings of
Ref-Fuel Holdings represents our share in the net earnings of Ref-Fuel Holdings
for the month of April 2004, of $2 million. Prior to the Equalization
Transactions, which were consummated on April 30, 2004, we accounted for our
investment under the equity method of accounting. As a result of these
transactions, we are consolidating these results after April 30, 2004.

OPERATING EXPENSES. As indicated above, as a result of the Equalization
Transactions, Ref-Fuel Holdings' results of operations are consolidated as of
April 30, 2004. Therefore, the operating expenses of $30.7 million for the three
months ended June 30, 2004 represents Ref-Fuel Holdings' operational expenses
for the two months ended June 30, 2004.


24



DEPRECIATION AND AMORTIZATION EXPENSE. As indicated above, as a result of
the Equalization Transactions, Ref-Fuel Holdings' results of operations are
consolidated as of April 30, 2004. Therefore, the depreciation and amortization
expense of $11.2 million for the three months ended June 30, 2004 represents
Ref-Fuel Holdings' depreciation and amortization expenses for the two months
ended June 30, 2004. .

ADMINISTRATIVE AND GENERAL EXPENSE. As indicated above, as a result of the
Equalization Transactions, Ref-Fuel Holdings' results of operations are
consolidated as of April 30, 2004. Therefore, the administrative and general
expense of $7.3 million for the three months ended June 30, 2004 represents
Ref-Fuel Holdings' general and administrative expenses of $6.9 million for the
two months ended June 30, 2004, and $0.4 million attributable to MSW Energy
Holdings' other activities.

LOSS ON ASSET RETIREMENT. As indicated above, as a result of the
Equalization Transactions, Ref-Fuel Holdings' results of operations are
consolidated as of April 30, 2004. Therefore, the loss on asset retirement of
$0.8 million for the three months ended June 30, 2004 represents Ref-Fuel
Holdings' loss for the two months ended June 30, 2004.

INTEREST INCOME. As indicated above, as a result of the Equalization
Transactions, Ref-Fuel Holdings' results of operations are consolidated as of
April 30, 2004. Therefore, the majority of the interest income of $0.5 million
for the three months ended June 30, 2004 represents Ref-Fuel Holdings' interest
income for the two months ended June 30, 2004.

INTEREST EXPENSE. As indicated above, as a result of the Equalization
Transactions, Ref-Fuel Holdings' results of operations are consolidated as of
April 30, 2004. Therefore, the interest expense of $13.2 million for the three
months ended June 30, 2004 represents Ref-Fuel Holdings' interest expense in the
amount of $8.1 million for the two months ended June 30, 2004, and the interest
expense for the three months ended June 30, 2004 of $5.1 million, which
represents the interest on our 8.5% Senior Notes due 2010 ($4.3 million), the
accretion of our Duke liability ($0.5 million) and amortization of deferred
financing costs ($0.3 million).

OTHER INCOME. Other income of $0.1 million for the three months ended June
30, 2004 represents the realized gain from the sale of an investment held for
sale $0.09 million and an insurance refund $0.02 million associated with
Ref-Fuel Holdings

FOR THE SIX MONTHS ENDED JUNE 30, 2004

NET REVENUES. Net revenues of $73.5 million for the six months ended June
30, 2004 represent the consolidated results of operations of Ref-Fuel Holdings
for the two-month period ended June 30, 2004. As indicated above, as a result of
the Equalization Transactions, Ref-Fuel Holdings' results of operations are
consolidated as of April 30, 2004. These revenues represent $49.1 million of
waste disposal and related services revenue, $22.4 million of energy revenue and
$2.0 million of other revenue.

EQUITY IN EARNINGS OF REF-FUEL HOLDINGS. Equity in net earnings of Ref-Fuel
Holdings represents our share in the net earnings of Ref-Fuel Holdings for the
four months ended April 30, 2004, of $6.5 million. Prior to the Equalization
Transaction, which were consummated on April 30, 2004, we accounted for our
investment under the equity method of accounting. As a result of these
transactions, we are consolidating these results after April 30, 2004.

OPERATING EXPENSES. As indicated above, as a result of the Equalization
Transactions, Ref-Fuel Holdings' results of operations are consolidated as of
April 30, 2004. Therefore, the operating expenses of $30.7 million for the six
months ended June 30, 2004 represents Ref-Fuel Holdings' operational expenses
for the two months ended June 30, 2004.


25



DEPRECIATION AND AMORTIZATION EXPENSE. As indicated above, as a result of
the Equalization Transactions, Ref-Fuel Holdings' results of operations are
consolidated as of April 30, 2004. Therefore, the depreciation and amortization
expense of $11.2 million for the six months ended June 30, 2004 represents
Ref-Fuel Holdings' depreciation and amortization expenses for the two months
ended June 30, 2004. .

ADMINISTRATIVE AND GENERAL EXPENSE. As indicated above, as a result of the
Equalization Transactions, Ref-Fuel Holdings' results of operations are
consolidated as of April 30, 2004. Therefore, the administrative and general
expense of $7.8 million for the six months ended June 30, 2004 represents
Ref-Fuel Holdings' general and administrative expenses of $6.9 million for the
two months ended June 30, 2004, and $0.9 million attributable to MSW Energy
Holdings other activities.

LOSS ON ASSET RETIREMENT. As indicated above, as a result of the
Equalization Transactions, Ref-Fuel Holdings' results of operations are
consolidated as of April 30, 2004. Therefore, the loss on asset retirement of
$0.8 million for the six months ended June 30, 2004 represents Ref-Fuel
Holdings' loss for the two months ended June 30, 2004.

INTEREST INCOME. As indicated above, as a result of the Equalization
Transactions, Ref-Fuel Holdings' results of operations are consolidated as of
April 30, 2004. Therefore, the majority of the interest income of $0.5 million
for the six months ended June 30, 2004 represents Ref-Fuel Holdings' interest
income for the two months ended June 30, 2004.

INTEREST EXPENSE. As indicated above, as a result of the Equalization
Transactions, Ref-Fuel Holdings' results of operations are consolidated as of
April 30, 2004. Therefore, the interest expense of $18.3 million for the six
months ended June 30, 2004 represents Ref-Fuel Holdings' interest expense in the
amount of $8.1 million for the two months ended June 30, 2004, and the interest
expense for the six months ended June 30, 2004 attributable to MSW Energy
Holdings of $10.2 million, which represents the interest on our 8.5% Senior
Notes due 2010 ($8.5 million), the accretion of our Duke liability ($1.0
million) and amortization of deferred financing costs ($0.6 million).

OTHER INCOME. Other income of $0.1 million for the six months ended June
30, 2004 represent the realized gain from the sale of an investment held for
sale $0.09 million and an insurance refund $0.02 million associated with
Ref-Fuel Holdings.



26




SUPPLEMENTAL PRO FORMA INFORMATION




The following results represent the pro forma results as if MSW Energy Holdings'
acquisition of its interests in Ref-Fuel Holdings and the Equalization
Transactions had occurred on January 1, 2003. These results are presented for
informational purposes only, and are not necessarily indicative of the actual
results that would have resulted had the acquisition and the Equalization
Transactions actually occurred. (In thousands):




PRO FORMA FOR PRO FORMA FOR
THE SIX THE SIX
MONTHS ENDED MONTHS ENDED
2004 2003
---------- ----------
REVENUES

Waste disposal and related services $ 138,616 $ 137,199
Energy 63,885 67,525
Other 8,488 5,487
--------- ---------
Total net revenues 210,989 210,211
--------- ---------
EXPENSES
Operating 104,031 99,235
Depreciation and amortization 34,016 34,357
General and administrative 22,252 23,420
Loss on asset retirements 1,178 1,838
--------- ---------
Operating income 49,512 51,361
Interest income 1,513 1,560
Interest expense (33,119) (38,013)
Loss on early extinguishment of debt -- (3,292)
Other income (expenses), net 6 (34)
--------- ---------
Income before minority interest 17,912 11,582
Minority interests in net income of subsidiaries (14,203) (11,085)
--------- ---------
Net income $ 3,709 $ 497
========= =========



COMPARISON OF THE PRO FORMA SIX MONTHS ENDED JUNE 30, 2004 AND 2003

TOTAL NET REVENUES. Total pro forma net revenues were $211.0 million for the
six months ended June 30, 2004, an increase of $0.8 million, or 0%, from the
same pro forma period for the prior year. Increases in net revenues of $3.4
million which are attributable to waste volumes were a result of increased
hauling, landfill and transfer station operations, while waste pricing decreases
due to changes in market mix caused a $1.9 million decrease in revenue. One of
the Ref-Fuel Holdings facilities performed a planned major turbine overhaul in
the second quarter of 2004, which contributed to the decrease in power revenues
of $1.4 million. Steam sales increased by $1.9 million for the pro forma period
ended June 30, 2004, as compared to the pro forma prior period. Energy revenues
were also decreased by an additional $3.9 million of energy contract
levelization. Metals pricing increased over the prior year, resulting in an
increase of $3.8 million, offset by the end of an ash reuse marketing
arrangement, which decreased revenues by $1.2 million, as compared to the pro
forma prior year period.

EXPENSES. Operating expenses were $104.0 million for the pro forma six months
ended June 30, 2004, an increase of $4.8 million, or 5% from the pro forma prior
year period. The most significant increase, approximately $4.2 million, was
attributable to increased facility maintenance expenses performed during
scheduled outages.



27


DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses remained
consistent at $34.0 million for the pro forma six months ended June 30, 2004, as
compared with the pro forma six months ended June 30, 2003 balance of $34.4
million.

GENERAL AND ADMINISTRATIVE. General and administrative expenses were $22.3
million for the pro forma six months ended June 30, 2004, a decrease of $1.2
million, or 5%, from the prior year's period. Higher developmental spending
activities were offset by lower costs associated with an incentive plan at
Ref-Fuel Holdings, which was terminated in 2003.

INTEREST EXPENSE. Interest expense was $33.1 million for the pro forma six
months ended June 30, 2004, a decrease of $4.9 million, or 13%, from the prior
year's pro forma period. The decrease was due to scheduled repayments of
principal during 2003.

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 pro forma proportionate
adjusted data, including proportionate total cash and cash equivalents and
reserves, proportionate total debt, proportionate interest expense and
proportionate adjusted earnings before interest, taxes, depreciation and
amortization (Adjusted EBITDA) because these pro forma 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 June 30, 2004, have been prepared as if the UAE
Merger had occurred on July 1, 2003. Accordingly, the following table includes
the effects of push-down accounting on Ref-Fuel Holdings as if the UAE Merger
had occurred on July 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.

Additionally, as required under the indenture agreement, the activity of
Ref-Fuel Holdings is separate from MSW Energy Holdings incremental activity in
the following calculations (in thousands).

28






PRO FORMA
TWELVE MONTHS ENDED
JUNE 30,
2004
-------------------
PRO FORMA MSW ENERGY HOLDINGS OTHER DATA

Dividends received (1) $ 45,094
Cash flow available for debt service (2) 44,844
Ratio of cash flows available for debt service to interest 2.6x

PRO FORMA PROPORTIONATE OTHER DATA

Proportionate total cash and cash equivalents and reserves (3) $ 113,474
Proportionate total debt (4) 717,401
Proportionate Adjusted EBITDA (5) 132,336
Proportionate interest expense (6) 42,493
Proportionate net leverage ratio (7) 4.6x
Ratio of proportionate Adjusted EBITDA to proportionate
interest expense (8) 3.1x


(1) Dividends received calculated as follows:

TWELVE MONTHS ENDED
-------------------
JUNE 30, 2004

Ref-Fuel Holdings dividends paid $ 90,550
MSW Energy Holdings ownership percentage 49.8%
-------------------

Pro Forma distributions received $ 45,094
===================


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


29



(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):



JUNE 30, 2004
-------------

Ref-Fuel Holdings cash and cash equivalents $ 53,113
Ref-Fuel Holdings restricted cash and short-term investments 63,112
Ref-Fuel Holdings restricted cash and long-term investments 85,451
-----------
Total Ref-Fuel Holdings cash and cash equivalents and reserves 201,676
MSW Energy Holdings ownership percentage 49.8%
-----------
MSW Energy Holdings proportionate total cash and cash equivalents and reserves 100,435
MSW Energy Holdings total cash and cash equivalents 214,715
Less cash and cash equivalents attributable to Ref-Fuel Holdings (201,676)
-----------
MSW Energy Holdings proportionate consolidated total cash and cash equivalents and
reserves $ 113,474
===========


(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): JUNE 30, 2004
-------------


Ref-Fuel Holdings current portion of long-term debt $ 83,165
Ref-Fuel Holdings long-term debt (excluding net unamortized debt premium
of $61.5 million) 955,792
-----------
Total Ref-Fuel Holdings debt (excluding net unamortized debt premium of $61.5 1,038,957
million)
MSW Energy Holdings ownership percentage 49.8%
-----------
517,401
Senior Notes 8.5% due 2010 200,000
-----------
MSW Energy Holdings proportionate total debt $ 717,401
===========




(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 June 30, 2004 is
calculated by subtracting the results for the six months ended June 30, 2003
from the twelve months ended December 31, 2003, and then adding the six months
ended June 30, 2004, as follows (in thousands):


30




ACTUAL SIX PRO FORMA
PRO FORMA PRO FORMA SIX MONTHS TWELVE MONTHS
YEAR ENDED MONTHS ENDED ENDED JUNE ENDED
DECEMBER 31, JUNE 30, JUNE 3O, JUNE 3O,
2003 2003 2004 2004
----------- ---------- ----------- -----------
Ref-Fuel Holdings:

Operating income $ 127,737 $ 52,265 $ 50,417 $ 125,889
Depreciation and amortization 68,094 34,357 34,016 67,753
Loss on retirements 2,207 1,838 1,178 1,547
----------- ---------- ----------- ----------
EBITDA 198,038 88,460 85,611 195,189
Fair value adjustment amortization
and revenue levelization adjustments 69,608 31,980 36,548 74,176
----------- ---------- ----------- ----------
Adjusted EBITDA $ 267,646 $ 120,440 $ 122,159 $ 269,365
=========== ========== ===========
MSW Energy Holdings ownership
percentage 49.8%
-----------
134,144


Less MSW Energy Holdings incremental expenses (1,808)
-----------


MSW Energy Holdings Proportionate
Adjusted EBITDA $ 132,336
===========



(6) Proportionate interest expense is defined as 49.8% of the pro forma
interest expense for Ref-Fuel Holdings 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
JUNE 30, 2004
------------------
Pro Forma Ref-Fuel Holdings interest expense $ 51,190
MSW Energy Holdings ownership percentage 49.8%
-----------------
Ref-Fuel Holdings proportionate interest expense 25,493
MSW Energy Holdings pro forma interest expense 68,190
Less interest attributable to Ref-Fuel Holdings (51,190)
-----------------
MSW Energy Holdings proportionate interest expense $ 42,493
=================

(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.

CASH FLOW ACTIVITIES

As a result of the Equalization Transactions, the Company has effective control
of Ref-Fuel Holdings, and is therefore consolidating its results of operations
and cash flows for two months and the balance sheet as of June 30, 2004.


31


We were formed and acquired our interest in Ref-Fuel Holdings in June 2003.
Because we were not yet in existence, there are no financial results for the
second quarter of 2003 comparable to the data for the second quarter of 2004.

OPERATING ACTIVITIES

Our net cash provided by operating activities of $53.4 million for the period
for the six months ended June 30, 2004 relates primarily to cash earnings, the
distributions received from Ref-Fuel Holdings of $31.4 million in 2004, offset
by the payment of $8.5 million of interest on our Senior Notes.

INVESTING ACTIVITIES

Our net cash provided by investing activities of $21.6 million for the six
months ended June 30, 2004 relates to cash from consolidation of Ref-Fuel
Holdings which represented its April 30, 2004 balance of $40.2 million offset by
the change in our restricted cash balance of $13.7 million and capital additions
of $4.9 million.

FINANCING ACTIVITIES

Our net cash used in financing activities of $24.2 million for the six months
ended June 30, 2004 relates to distributions paid to members of $18.5 million
and payments on long-term debt of $5.7 million.

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.

PRINCIPLES OF CONSOLIDATION. The accompanying consolidated financial statements
include accounts of MSW Energy Holdings II, its wholly-owned subsidiaries and
Ref-Fuel Holdings. Prior to the Equalization Transactions, the Company's
investment in Ref-Fuel Holdings was accounted for using the equity method. As a
result of the Equalization Transactions, the Company has effective control of
Ref-Fuel Holdings and as of April 30, 2004 is consolidating its results. All
significant intercompany transactions and accounts have been eliminated.

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.


32



GOODWILL. Goodwill represents the total consideration paid in excess of the fair
value of the net tangible and identifiable intangible assets acquired and the
liabilities assumed. In accordance with the provisions of Financial Accounting
Standard (FAS) No. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS", the Company
performs an annual fair value test of its recorded goodwill for its reporting
units using a discounted cash flows approach.

INTANGIBLE ASSETS. Energy contract intangibles represent the amount by which the
contract rates in long-term energy sales contracts held by certain subsidiaries
of the Company exceeded fair value on the dates that these subsidiaries were
acquired. These contract related intangibles are amortized into income as a
reduction of energy revenues on a straight-line basis over the remaining terms
of the applicable contracts, which range from eight to twenty years.

Waste contract intangibles represent the amount by which the contract rates in
long-term waste sales contracts held by Hempstead exceeded fair value on the
dates that the partnership was acquired. These contract related intangibles are
being amortized into income as a reduction of waste revenues on a straight-line
basis through 2009, the term of the applicable contracts.

The Company has intangible assets relating to Nitrous Oxide (NOx) emission
allowances. These assets have indefinite lives and, as such, are not amortized.
Consistent with all the Company's intangible assets, these are reviewed under
the provisions of FAS 142 for potential impairment on an annual basis.

Deferred financing costs represent certain capitalizable costs incurred by the
Company to finance its long-term debt obligations. These costs are amortized to
interest expense over the life of the related debt.

EQUITY METHOD INVESTMENT. The Company's investment in Ref-Fuel Holdings was
accounted for using the equity method of accounting prior to the Equalization
Transactions. As a result, the accompanying consolidated results of operations
include the Company's share of net earnings in "Equity in net earnings of
Ref-Fuel Holdings" for the period up to April 30, 2004.

OTHER LIABILITIES. Other current and other long-term liabilities primarily
consist of (a) fair value adjustments related to certain operating leases and
long-term waste contracts acquired by the Company; (b) deferred revenue; (c)
accruals for certain long-term incentive plans; and (d) energy contract
levelization .

The fair value adjustment related to the operating lease represents the amount
by which future rent payments on the Delaware Valley facility lease exceeded the
fair market value of that facility as of the acquisition dates. This amount is
being amortized as a decrease in facility rent expense on a straight-line basis
through 2019, the end of the associated lease.

The fair value adjustment related to the acquired long-term waste contracts
represents the amount by which costs of disposal and processing of waste
delivered pursuant to certain long-term waste contracts held by Semass
Partnership and Essex exceeded estimated contract revenues at their respective
acquisition dates. These costs are being amortized as an increase to waste
disposal revenues using the straight-line method over the term of the applicable
contracts.

Landfill closure and postclosure costs are also included in other long-term
liabilities. The Company accrues landfill closure and postclosure costs as the
remaining permitted space of the landfill is consumed over the expected life
cycle of the landfill.

33


The Company is accounting for the long-term power contracts at the Semass
Partnership in accordance with EITF Issues 91-6 "REVENUE RECOGNITION OF
LONG-TERM POWER SALES CONTRACTS" and EITF 96-17 "REVENUE RECOGNITION UNDER
LONG-TERM POWER SALES CONTRACTS THAT CONTAIN BOTH FIXED AND VARIABLE PRICING
TERMS", which require the Company to recognize power revenues under these
contracts as the lesser of (a) amounts billable under the respective contracts;
or (b) an amount determinable by the kilowatt hours made available during the
period multiplied by the estimated average revenue per kilowatt hour over the
term of the contract. The determination of the lesser amount is to be made
annually based on the cumulative amounts that would have been recognized had
each method been applied consistently from the beginning of the contract. The
difference between the amount billed and the amount recognized is included in
other long-term liabilities.

REVENUE RECOGNITION. The Company recognizes revenue from two major sources:
waste disposal services and energy production. Revenue from waste disposal
services is recognized as waste is received, and revenue from energy production
is recognized as the energy is delivered.

CONCENTRATION OF CREDIT RISK. The Company invests excess cash and funds held in
trust in bank deposit accounts, commercial paper, certificates of deposit and
money market investments with a limited number of financial institutions.

The Company has exposure to credit risk in accounts receivable as the Company
disposes of waste for and sells power to a limited number of customers. The
Company believes adequate reserves are maintained for potential credit losses.
Furthermore, these and other customers are primarily located in the northeastern
region of the United States of America.

UNAMORTIZED DEBT PREMIUM. Unamortized debt premium represents the increase in
the fair value of the Company's debt recorded as a result of the UAE Merger.
These costs are amortized to interest expense over the life of the related debt
using the effective interest method.

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 Subsidiaries--Notes to Consolidated Financial Statements
(Unaudited)" included herein.

34


CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

The following table sets forth our contractual obligations outstanding as of
June 30, 2004 (in thousands):



MORE
LESS THAN 1 THAN 5
CONTRACTUAL OBLIGATIONS TOTAL 1 YEAR 1-3 YEARS 3-5 YEARS YEARS
----------------------- ----------- ------------ ---------- -------- --------

Long-Term Debt Obligations $1,300,457 $ 83,165 $ 157,060 $185,244 $874,988
Operating Lease Obligations 151,828 14,318 27,968 28,989 80,553
Unconditional Purchase Obligations 1,307(1) -- 1,307 - -
Other Long-Term Obligations 67,543 9,228 8,860 7,500 41,955
----------- ------------ ---------- -------- --------
TOTAL $1,521,135 $ 106,711 $ 195,195 $221,733 $997,496
=========== ============ ========== ======== ========



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

RISK FACTORS

ANY OF THE FOLLOWING RISKS COULD MATERIALLY ADVERSELY AFFECT OUR BUSINESS,
FINANCIAL CONDITION OR RESULTS OF OPERATIONS.

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.

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.


35




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.

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.


36



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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

AMERICAN REF-FUEL'S OPERATIONS ARE CONCENTRATED IN ONE REGION.

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 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.


37


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 in compliance 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
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.


38


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.

ITEM 4. CONTROLS AND PROCEDURES

MSW ENERGY HOLDINGS

As of June 30, 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 June 30, 2004.

MSW ENERGY FINANCE

As of June 30, 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 June 30, 2004.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Neither MSW Energy Holdings nor MSW Energy Finance is currently involved in any
litigation. The Company is not involved in any legal proceedings other than
ordinary routine litigation incidental to the business, the outcome of which, if
determined against the Company, would not have a material adverse effect on the
financial condition or results of operations of the company.

39


ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASE OF EQUITY
SECURITIES.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

ITEM 5. OTHER INFORMATION.

Effective July 31, 2004, each of Ari Benacerraf and Michael Ranger resigned from
their respective Director positions on the Board of Directors of the following
entities: MSW Energy Holdings, MSW Energy Holdings II, UAE Holdings, Ref-Fuel
Holdings and ARC. Their Director resignations followed their resignations of
employment with CSFB Private Equity, announced earlier in the month. Successor
Directors are Thompson Dean and Steven Webster.


40



ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


(A) EXHIBITS

3.1 Certificate of Formation of MSW Energy Holdings LLC.*


3.2 Second 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 81/2% 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.*


41


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.*

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

May 10, 2004 Current Report on Form 8-K in which Item 1 on such Form was
reported.

May 17, 2004 Current Report on Form 8-K in which Item 12 on such Form was
reported.

42


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: AUGUST 12, 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:



SIGNATURE TITLE DATE
- ------------------------------ ---------------------------------- ---------------

/s/ John T. Miller Chief Executive Officer (Principal August 12, 2004
- ------------------------------ Executive Officer)
John T. Miller

/s/ Michael J. Gruppuso
- ------------------------------ Chief Financial Officer (Principal August 12, 2004
Michael J. Gruppuso Financial and Accounting Officer)




43


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: AUGUST 12, 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:





SIGNATURE TITLE DATE
- ------------------------------ -------------------------------------- ---------------

/s/ John T. Miller President and Chief Executive August 12, 2004
John T. Miller Officer (Principal Executive Officer)


/s/ Michael J. Gruppuso Chief Financial Officer (Principal August 12, 2004
Michael J. Gruppuso Financial and Accounting Officer)




44



EXHIBIT INDEX
3.1 Certificate of Formation of MSW Energy Holdings LLC.*


3.2 Second 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 81/2% 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.*


45


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.*

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.


46