DTE Electric Co (Form: 10-Q, Received: 04/26/2013 13:15:41)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended March 31, 2013

Commission file number 1-2198

The DTE Electric Company meets the conditions set forth in General Instruction H (1) (a) and (b) of Form 10-Q and is, therefore, filing this Form with the reduced disclosure format.

DTE ELECTRIC COMPANY

(Exact name of registrant as specified in its charter)



Michigan	38-0478650
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

One Energy Plaza, Detroit, Michigan	48226-1279
(Address of principal executive offices)	(Zip Code)

313-235-4000

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

All of the registrant's 138,632,324 outstanding shares of common stock are owned by DTE Energy Company.

DTE Electric Company

Quarterly Report on Form 10-Q

Quarter Ended March 31, 2013

Table of Contents



	Page
Definitions	1
Forward-Looking Statements	2
Part I - Financial Information	3
Items 1. Financial Statements	3
Consolidated Statements of Operations (Unaudited)	3
Consolidated Statements of Comprehensive Income (Unaudited)	4
Consolidated Statements of Cash Flows (Unaudited)	5
Consolidated Statements of Financial Position (Unaudited)	6
Consolidated Statements of Changes in Shareholder's Equity (Unaudited)	8
Notes to Consolidated Financial Statements (Unaudited)	9
Item 2. Management's Narrative Analysis of Results of Operations	22
Item 4. Controls and Procedures	24
Part II - Other Information	25
Item 1. Legal Proceedings	25
Item 1A. Risk Factors	25
Item 6. Exhibits	26
Signature	27
EX-4-280
EX-31-81
EX-31-82
EX-32-81
EX-32-82
EX-101.INS XBRL INSTANCE DOCUMENT
EX-101.SCH XBRL TAXONOMY EXTENSION SCHEMA
EX-101.CAL XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
EX-101.DEF XBRL TAXONOMY EXTENSION DEFINITION DATABASE
EX-101.LAB XBRL TAXONOMY EXTENSION LABEL LINKBASE
EX-101.PRE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

DEFINITIONS



ASC		Accounting Standards Codification

ASU		Accounting Standards Update

Customer Choice		Michigan legislation giving customers the option to choose alternative suppliers for electricity.

DTE Electric		DTE Electric Company (a direct wholly owned subsidiary of DTE Energy) and subsidiary companies. Formerly known as The Detroit Edison Company.

DTE Energy		DTE Energy Company, directly or indirectly the parent of DTE Electric, DTE Gas Company and numerous non-utility subsidiaries

EPA		United States Environmental Protection Agency

FASB		Financial Accounting Standards Board

FERC		Federal Energy Regulatory Commission

FTRs		Financial transmission rights are financial instruments that entitle the holder to receive payments related to costs incurred for congestion on the transmission grid.

MCIT		Michigan Corporate Income Tax

MDEQ		Michigan Department of Environmental Quality

MISO		Midwest Independent System Operator is an Independent System Operator and the Regional Transmission Organization serving the Midwest United States and Manitoba, Canada.

MPSC		Michigan Public Service Commission

NRC		United States Nuclear Regulatory Commission

PSCR		A Power Supply Cost Recovery mechanism authorized by the MPSC that allows DTE Electric to recover through rates its fuel, fuel-related and purchased power costs.

RDM		A Revenue Decoupling Mechanism authorized by the MPSC that is designed to minimize the impact on revenues of changes in average customer usage of electricity

Securitization		DTE Electric financed specific stranded costs at lower interest rates through the sale of rate reduction bonds by a wholly-owned special purpose entity, The Detroit Edison Securitization Funding LLC.

VIE		Variable Interest Entity



Units of Measurement

kWh		Kilowatthour of electricity

MW		Megawatt of electricity

MWh		Megawatthour of electricity

FORWARD-LOOKING STATEMENTS

Certain information presented herein includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and business of DTE Electric. Words such as "anticipate," "believe," "expect," "projected" and "goals" signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to numerous assumptions, risks and uncertainties that may cause actual future results to be materially different from those contemplated, projected, estimated or budgeted. Many factors may impact forward-looking statements including, but not limited to, the following:


•	impact of regulation by the FERC, MPSC, NRC and other applicable governmental proceedings and regulations, including any associated impact on rate structures;


•	the amount and timing of cost recovery allowed as a result of regulatory proceedings, related appeals or new legislation;


•	impact of electric utility restructuring in Michigan, including legislative amendments and Customer Choice programs;


•	economic conditions and population changes in our geographic area resulting in changes in demand, customer conservation, increased thefts of electricity and high levels of uncollectible accounts receivable;


•	environmental issues, laws, regulations, and the increasing costs of remediation and compliance, including actual and potential new federal and state requirements;


•	health, safety, financial, environmental and regulatory risks associated with ownership and operation of nuclear facilities;


•	changes in the cost and availability of coal and other raw materials and purchased power;


•	the potential for losses on investments, including nuclear decommissioning and benefit plan assets and the related increases in future expense and contributions;


•	access to capital markets and the results of other financing efforts which can be affected by credit agency ratings;


•	instability in capital markets which could impact availability of short and long-term financing;


•	the timing and extent of changes in interest rates;


•	the level of borrowings;


•	the potential for increased costs or delays in completion of significant construction projects;


•	changes in and application of federal, state and local tax laws and their interpretations, including the Internal Revenue Code, regulations, rulings, court proceedings and audits;


•	the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers;


•	unplanned outages;


•	the cost of protecting assets against, or damage due to, terrorism or cyber attacks;


•	employee relations and the impact of collective bargaining agreements;


•	the availability, cost, coverage and terms of insurance and stability of insurance providers;


•	cost reduction efforts and the maximization of plant and distribution system performance;


•	the effects of competition;


•	changes in and application of accounting standards and financial reporting regulations;


•	changes in federal or state laws and their interpretation with respect to regulation, energy policy and other business issues;


•	binding arbitration, litigation and related appeals; and


•	the risks discussed in our public filings with the Securities and Exchange Commission.

New factors emerge from time to time. We cannot predict what factors may arise or how such factors may cause our results to differ materially from those contained in any forward-looking statement. Any forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

Part I - Financial Information

Item 1. Financial Statements

DTE Electric Company

Consolidated Statements of Operations (Unaudited)



	Three Months Ended
	March 31
	2013			2012
	(In millions)
Operating Revenues	$	1,219		$	1,198
Operating Expenses
Fuel and purchased power	372			377
Operation and maintenance	331			355
Depreciation and amortization	212			185
Taxes other than income	70			68
Asset (gains) losses and reserves, net	(1		)	—
	984			985
Operating Income	235			213
Other (Income) and Deductions
Interest expense	66			69
Other income	(15		)	(16		)
Other expenses	6			6
	57			59
Income Before Income Taxes	178			154
Income Tax Expense	62			57
Net Income	$	116		$	97

See Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Consolidated Statements of Comprehensive Income (Unaudited)



	Three Months Ended March 31
	2013		2012
	(In millions)
Net income	$	116	$	97
Other comprehensive income:
Benefit obligations, net of taxes	—		1
Comprehensive income	$	116	$	98

See Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Consolidated Statements of Cash Flows (Unaudited)



	Three Months Ended
	March 31
	2013			2012
	(In millions)
Operating Activities
Net income	$	116		$	97
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	212			185
Deferred income taxes	27			23
Asset (gains) losses and reserves, net	(1		)	—
Changes in assets and liabilities, exclusive of changes shown separately (Note 11)	(113		)	48
Net cash from operating activities	241			353
Investing Activities
Plant and equipment expenditures	(255		)	(284		)
Restricted cash for debt redemption, principally Securitization	57			60
Notes receivable from affiliate	—			26
Proceeds from sale of nuclear decommissioning trust fund assets	12			11
Investment in nuclear decommissioning trust funds	(16		)	(15		)
Other Investments	(6		)	(13		)
Net cash used for investing activities	(208		)	(215		)
Financing Activities
Issuance of long-term debt	372			—
Redemption of long-term debt	(139		)	(84		)
Short-term borrowings - other	(130		)	22
Short-term borrowings - affiliate	(29		)	6
Dividends on common stock	(85		)	(76		)
Other	(3		)	(3		)
Net cash used for financing activities	(14		)	(135		)
Net Increase in Cash and Cash Equivalents	19			3
Cash and Cash Equivalents at Beginning of the Period	30			13
Cash and Cash Equivalents at End of the Period	$	49		$	16

See Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Consolidated Statements of Financial Position (Unaudited)



	March 31,			December 31,
	2013			2012
	(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	49		$	30
Restricted cash, principally Securitization	45			102
Accounts receivable (less allowance for doubtful accounts of $31 and $35, respectively)
Customer	726			697
Affiliates	1			5
Other	41			63
Inventories
Fuel	192			246
Materials and supplies	194			193
Notes receivable	2			2
Regulatory assets	155			162
Other	104			77
	1,509			1,577
Investments
Nuclear decommissioning trust funds	1,083			1,037
Other	140			133
	1,223			1,170
Property
Property, plant and equipment	17,857			17,689
Less accumulated depreciation and amortization	(6,811		)	(6,717		)
	11,046			10,972
Other Assets
Regulatory assets	3,024			3,348
Securitized regulatory assets	369			413
Intangible assets	32			30
Notes receivable	3			3
Other	143			138
	3,571			3,932
Total Assets	$	17,349		$	17,651

See Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Consolidated Statements of Financial Position (Unaudited) - (Continued)



	March 31,			December 31,
	2013			2012
	(In millions, except shares)
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Accounts payable
Affiliates	$	65		$	52
Other	282			350
Accrued interest	70			61
Current portion long-term debt, including capital leases	466			443
Regulatory liabilities	116			66
Short-term borrowings
Affiliates	51			80
Other	—			130
Other	162			166
	1,212			1,348
Long-Term Debt (net of current portion)
Mortgage bonds, notes and other	4,531			4,221
Securitization bonds	201			302
Capital lease obligations	1			1
	4,733			4,524
Other Liabilities
Deferred income taxes	2,781			2,761
Regulatory liabilities	455			483
Asset retirement obligations	1,581			1,557
Unamortized investment tax credit	47			49
Nuclear decommissioning	165			159
Accrued pension liability — affiliates	1,276			1,368
Accrued postretirement liability — affiliates	661			996
Other	104			103
	7,070			7,476

Commitments and Contingencies (Notes 6 and 9)

Shareholder’s Equity
Common stock, $10 par value, 400,000,000 shares authorized, and 138,632,324 shares issued and outstanding	3,196			3,196
Retained earnings	1,160			1,129
Accumulated other comprehensive income (loss)	(22		)	(22		)
	4,334			4,303
Total Liabilities and Shareholder’s Equity	$	17,349		$	17,651

See Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Consolidated Statements of Changes in Shareholder’s Equity (Unaudited)



				Additional					Accumulated Other
	Common Stock			Paid-in		Retained			Comprehensive
	Shares	Amount		Capital		Earnings			Loss			Total
	(Dollars in millions, shares in thousands)
Balance, December 31, 2012	138,632	$	1,386	$	1,810	$	1,129		$	(22	)	$	4,303
Net income	—	—		—		116			—			116
Dividends declared on common stock	—	—		—		(85		)	—			(85		)
Balance, March 31, 2013	138,632	$	1,386	$	1,810	$	1,160		$	(22	)	$	4,334

See Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Notes to Consolidated Financial Statements (Unaudited)

NOTE 1 — BASIS OF PRESENTATION

Corporate Structure

DTE Electric is an electric utility engaged in the generation, purchase, distribution and sale of electricity to approximately 2.1 million customers in southeastern Michigan. DTE Electric is regulated by the MPSC and the FERC. In addition, we are regulated by other federal and state regulatory agencies including the NRC, the EPA and the MDEQ.

References in this report to “we,” “us,” “our” or “Company” are to DTE Electric and its subsidiaries, collectively.

Basis of Presentation

These Consolidated Financial Statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the 2012 Annual Report on Form 10-K.

The accompanying Consolidated Financial Statements are prepared using accounting principles generally accepted in the United States of America. These accounting principles require management to use estimates and assumptions that impact reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from the Company’s estimates.

The Consolidated Financial Statements are unaudited, but in the Company's opinion include all adjustments necessary to a fair statement of the results for the interim periods. All adjustments are of a normal recurring nature, except as otherwise disclosed in these Consolidated Financial Statements and Notes to Consolidated Financial Statements. Financial results for this interim period are not necessarily indicative of results that may be expected for any other interim period or for fiscal year ended December 31, 2013.

Principles of Consolidation

The Company consolidates all majority-owned subsidiaries and investments in entities in which it has controlling influence. Non-majority owned investments are accounted for using the equity method when the Company is able to influence the operating policies of the investee. Non-majority owned investments include investments in limited liability companies, partnerships or joint ventures. When the Company does not influence the operating policies of an investee, the cost method is used. These consolidated financial statements also reflect the Company’s proportionate interests in certain jointly owned utility plant. The Company eliminates all intercompany balances and transactions.

The Company evaluates whether an entity is a VIE whenever reconsideration events occur. The Company consolidates VIEs for which it is the primary beneficiary. If the Company is not the primary beneficiary and an ownership interest is held, the VIE is accounted for under the equity method of accounting. When assessing the determination of the primary beneficiary, the Company considers all relevant facts and circumstances, including: the power, through voting or similar rights, to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb the expected losses and/or the right to receive the expected returns of the VIE. The Company performs ongoing reassessments of all VIEs to determine if the primary beneficiary status has changed.

The Company has variable interests in VIEs through certain of its long-term purchase contracts. As of March 31, 2013, the carrying amount of assets and liabilities in the Consolidated Statements of Financial Position that relate to its variable interests under long-term purchase contracts are predominately related to working capital accounts and generally represent the amounts owed by the Company for the deliveries associated with the current billing cycle under the contracts. The Company has not provided any form of financial support associated with these long-term contracts. There is no significant potential exposure to loss as a result of its variable interests through these long-term purchase contracts.

In 2001, DTE Electric financed a regulatory asset related to Fermi 2 and certain other regulatory assets through the sale of rate reduction bonds by a wholly-owned special purpose entity, Securitization. DTE Electric performs servicing activities including billing and collecting surcharge revenue for Securitization. This entity is a VIE, and is consolidated by the Company. The maximum risk exposure related to Securitization is reflected on the Company’s Consolidated Statements of Financial Position.

DTE Electric Company

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The following table summarizes the major balance sheet items at March 31, 2013 and December 31, 2012 restricted for Securitization that are either (1) assets that can be used only to settle their obligations or (2) liabilities for which creditors do not have recourse to the general credit of the primary beneficiary.



	March 31,		December 31,
	2013		2012
	(In millions)
ASSETS
Restricted cash	$	45	$	102
Accounts receivable	35		34
Securitized regulatory assets	369		413
Other assets	7		7
	$	456	$	556

LIABILITIES
Accounts payable and accrued current liabilities	$	2	$	11
Current portion long-term debt, including capital leases	189		177
Current regulatory liabilities	46		50
Securitization bonds	201		302
Other long term liabilities	8		7
	$	446	$	547

As of March 31, 2013 and December 31, 2012, DTE Electric had $ 3 million in Notes receivable, related to non-consolidated VIEs, respectively.

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Comprehensive Income

Comprehensive income is the change in common shareholder’s equity during a period from transactions and events from non-owner sources, including net income. As shown in the following table, amounts recorded to accumulated other comprehensive loss for the three months ended March 31, 2013 reflected changes in benefit obligations (net of tax).



	Changes in Accumulated Other Comprehensive Loss by Component
	For The Three Months Ended March 31, 2013
	Benefit Obligations (a)			Total
	(In millions)
Beginning balance, January 1, 2013	$	(22	)	$	(22	)
Other comprehensive income before reclassifications	—			—
Amounts reclassified from accumulated other comprehensive income	—			—
Net current-period other comprehensive income	—			—
Ending balance, March 31, 2013	$	(22	)	$	(22	)

_______________________________________

(a) The amounts reclassified from accumulated other comprehensive income are included in the computation of the net periodic pension cost (see Retirement Benefits and Trusteed Assets Note 10).

Income Taxes

The Company had $3 million of unrecognized tax benefits at March 31, 2013, that, if recognized, would favorably impact its effective tax rate. The Company does not anticipate any material changes to the unrecognized tax benefits in the next twelve months.

Stock-Based Compensation

The Company received an allocation of costs from DTE Energy associated with stock-based compensation of $ 13 million and $ 9 million for the three months ended March 31, 2013 and March 31, 2012, respectively.

NOTE 3 — FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants use in pricing assets or liabilities. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company makes certain assumptions it believes that market participants would use in pricing assets or liabilities, including assumptions about risk, and the risks inherent in the inputs to valuation techniques. Credit risk of the Company and its counterparties is incorporated in the valuation of assets and liabilities through the use of credit reserves, the impact of which was immaterial at March 31, 2013 and December 31, 2012. The Company believes it uses valuation techniques that maximize the use of observable market-based inputs and minimize the use of unobservable inputs.

A fair value hierarchy has been established, that prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. All assets and liabilities are required to be classified in their entirety based on the lowest level of input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability, and may affect the valuation of the asset or liability and its placement within the fair value hierarchy. The Company classifies fair value balances based on the fair value hierarchy defined as follows:


•	Level 1 — Consists of unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date.


•	Level 2 — Consists of inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.


•	Level 3 — Consists of unobservable inputs for assets or liabilities whose fair value is estimated based on internally developed models or methodologies using inputs that are generally less readily observable and supported by little, if any, market activity at the measurement date. Unobservable inputs are developed based on the best available information and subject to cost-benefit constraints.

The following table presents assets measured and recorded at fair value on a recurring basis as of March 31, 2013 and December 31, 2012:



	March 31, 2013								December 31, 2012
	Level 1		Level 2		Level 3		Net Balance		Level 1		Level 2		Level 3		Net Balance
	(In millions)
Assets:
Cash equivalents (a)	$	—	$	59	$	—	$	59	$	—	$	116	$	—	$	116
Nuclear decommissioning trusts	743		340		—		1,083		694		343		—		1,037
Other investments (b)	68		48		—		116		64		44		—		108
Derivative assets — FTRs	—		—		1		1		—		—		1		1
Total	$	811	$	447	$	1	$	1,259	$	758	$	503	$	1	$	1,262

Assets:
Current	$	—	$	59	$	1	$	60	$	—	$	116	$	1	$	117
Noncurrent	811		388		—		1,199		758		387		—		1,145
Total Assets	$	811	$	447	$	1	$	1,259	$	758	$	503	$	1	$	1,262

_______________________________________

(a)

At March 31, 2013, available for sale securities of $ 59 million , included $ 45 million and $ 14 million of cash equivalents included in Restricted cash and Other investments on the Consolidated Statements of Financial Position, respectively. At December 31, 2012, available for sale securities of $ 116 million , included $ 102 million and $ 14 million of cash equivalents included in Restricted cash and Other investments on the Consolidated Statements of Financial Position, respectively.


(b)	Available for sale equity securities at March 31, 2013 and December 31, 2012 of $ 6 million and $ 5 million are included in Other investments on the Consolidated Statements of Financial Position, respectively.

DTE Electric Company

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The following table presents the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis for the three months ended March 31, 2013 and 2012:



	Three Months Ended March 31,
	2013			2012
	(In millions)
Net Assets as of January 1	$	1		1
Change in fair value recorded in regulatory assets/liabilities	1			1
Purchases, issuances and settlements:
Settlements	(1		)	(2		)
Net Assets as of March 31	$	1		$	—
The amount of total gains (losses) included in net income attributed to the change in unrealized gains (losses) related to assets and liabilities held at March 31, 2013 and March 31, 2012	$	1		$	—

No transfers between Levels 1, 2 or 3 occurred in the three months ended ended March 31, 2013 and March 31, 2012.

Cash Equivalents

Cash equivalents include investments with maturities of three months or less when purchased. The cash equivalents shown in the fair value table are comprised of short-term investments and money market funds. The fair values of the shares in these investments are based upon observable market prices for similar securities and, therefore, have been categorized as Level 2 in the fair value hierarchy.

Nuclear Decommissioning Trusts and Other Investments

The nuclear decommissioning trusts and other investments hold debt and equity securities directly and indirectly through institutional mutual funds. Exchange-traded debt and equity securities held directly are valued using quoted market prices in actively traded markets. The institutional mutual funds which hold exchange-traded equity or debt securities are valued based on the underlying securities, using quoted prices in actively traded markets. Non-exchange-traded fixed income securities are valued based upon quotations available from brokers or pricing services. A primary price source is identified by asset type, class or issue for each security. The trustees monitor prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustees determine that another price source is considered to be preferable. The Company has obtained an understanding of how these prices are derived, including the nature and observability of the inputs used in deriving such prices. Additionally, the Company selectively corroborates the fair values of securities by comparison of market-based price sources. Investment policies and procedures are determined by the Company's Trust Investments Department which reports to the Company's Vice President and Treasurer.

Derivative Assets and Liabilities

Derivative assets and liabilities are comprised of physical and financial derivative contracts, including futures, forwards, options and swaps that are both exchange-traded and over-the-counter traded contracts. Various inputs are used to value derivatives depending on the type of contract and availability of market data. Exchange-traded derivative contracts are valued using quoted prices in active markets. The Company considers the following criteria in determining whether a market is considered active: frequency in which pricing information is updated, variability in pricing between sources or over time and the availability of public information. Other derivative contracts are valued based upon a variety of inputs including commodity market prices, broker quotes, interest rates, credit ratings, default rates, market-based seasonality and basis differential factors. The Company monitors the prices that are supplied by brokers and pricing services and may use a supplemental price source or change the primary price source of an index if prices become unavailable or another price source is determined to be more representative of fair value. The Company has obtained an understanding of how these prices are derived. Additionally, the Company selectively corroborates the fair value of its transactions by comparison of market-based price sources. Mathematical valuation models are used for derivatives for which external market data is not readily observable, such as contracts which extend beyond the actively traded reporting period. The Company has established a Risk Management Committee whose responsibilities include directly or indirectly ensuring all valuation methods are applied in accordance with predefined policies. The development and maintenance of our forward price curves has been assigned to our Risk Management Department, which is separate and distinct from the trading functions of the Company.

DTE Electric Company

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Fair Value of Financial Instruments

The fair value of financial instruments included in the table below is determined by using quoted market prices when available. When quoted prices are not available, pricing services may be used to determine the fair value with reference to observable interest rate indexes. The Company has obtained an understanding of how the fair values are derived. The Company also selectively corroborates the fair value of its transactions by comparison of market-based price sources. Discounted cash flow analyses based upon estimated current borrowing rates are also used to determine fair value when quoted market prices are not available. The fair values of notes receivable, excluding capital leases, are estimated using discounted cash flow techniques that incorporate market interest rates as well as assumptions about the remaining life of the loans and credit risk. Depending on the information available, other valuation techniques may be used that rely on internal assumptions and models. Valuation policies and procedures are determined by the Company's Treasury Department which reports to the Company's Vice President and Treasurer.

The following table presents the carrying amount and fair value of financial instruments as of March 31, 2013 and December 31, 2012:



	March 31, 2013								December 31, 2012
	Carrying		Fair Value						Carrying		Fair Value
	Amount		Level 1		Level 2		Level 3		Amount		Level 1		Level 2		Level 3
	(In millions)
Notes receivable, excluding capital leases	$	5	$	—	$	—	$	5	$	5	$	—	$	—	$	5
Short-term borrowings — affiliates	51		—		—		51		80		—		—		80
Short-term borrowings — other	—		—		—		—		130		—		130		—
Long-term debt	5,197		—		5,111		711		4,963		—		5,021		620

Nuclear Decommissioning Trust Funds

DTE Electric has a legal obligation to decommission its nuclear power plants following the expiration of their operating licenses. This obligation is reflected as an asset retirement obligation on the Consolidated Statements of Financial Position. Rates approved by the MPSC provide for the recovery of decommissioning costs of Fermi 2 and the disposal of low-level radioactive waste. DTE Electric is continuing to fund FERC jurisdictional amounts for decommissioning even though explicit provisions are not included in FERC rates.

The following table summarizes the fair value of the nuclear decommissioning trust fund assets:



	March 31		December 31
	2013		2012
	(In millions)
Fermi 2	$	1,066	$	1,021
Fermi 1	3		3
Low level radioactive waste	14		13
Total	$	1,083	$	1,037

The debt securities at both March 31, 2013 and December 31, 2012 had an average maturity of approximately 6 years. Securities held in the nuclear decommissioning trust funds are classified as available-for-sale. As DTE Electric does not have the ability to hold impaired investments for a period of time sufficient to allow for the anticipated recovery of market value, all unrealized losses are considered to be other than temporary impairments.

The costs of securities sold are determined on the basis of specific identification. The following table sets forth the gains and losses and proceeds from the sale of securities by the nuclear decommissioning trust funds:



	Three Months Ended March 31,
	2013			2012
	(In millions)
Realized gains	$	8		$	6
Realized losses	$	(7	)	$	(4	)
Proceeds from sales of securities	$	12		$	11

DTE Electric Company

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Realized gains and losses from the sale of securities for the Fermi 2 and the low level radioactive waste funds are recorded to the Regulatory asset and Nuclear decommissioning liability. The following table sets forth the fair value and unrealized gains for the nuclear decommissioning trust funds:



	March 31, 2013				December 31, 2012
	Fair		Unrealized		Fair		Unrealized
	Value		Gains		Value		Gains
	(In millions)
Equity securities	$	674	$	158	$	631	$	122
Debt securities	400		24		399		27
Cash and cash equivalents	9		—		7		—
	$	1,083	$	182	$	1,037	$	149

Unrealized losses incurred by the Fermi 2 trust are recognized as a Regulatory asset. DTE Electric recognized $ 42 million and $ 44 million of unrealized losses as Regulatory assets at March 31, 2013 and December 31, 2012, respectively. Since the decommissioning of Fermi 1 is funded by DTE Electric rather than through a regulatory recovery mechanism, there is no corresponding regulatory asset treatment. Therefore, unrealized losses incurred by the Fermi 1 trust are recognized in earnings immediately. There were no unrealized losses recognized in the three months ended March 31, 2013 and March 31, 2012 for Fermi 1.

Available-for-sale Securities

At March 31, 2013 and December 31, 2012, these securities are comprised primarily of money-market and equity securities. During the quarter ended March 31, 2013 and the year ended December 31, 2012 no amounts of unrealized losses on available for sale securities were reclassified out of other comprehensive income into net income for the periods. Gains related to available-for-sale securities held at March 31, 2013 and March 31, 2012 were $ 7 million for each period.

NOTE 4 — FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS

The Company recognizes all derivatives at their fair value on the Consolidated Statements of Financial Position unless they qualify for certain scope exceptions, including the normal purchases and normal sales exception. Further, derivatives that qualify and are designated for hedge accounting are classified as either hedges of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge), or as hedges of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge). For cash flow hedges, the portion of the derivative gain or loss that is effective in offsetting the change in the value of the underlying exposure is deferred in Accumulated other comprehensive income and later reclassified into earnings when the underlying transaction occurs. For fair value hedges, changes in fair values for the derivative are recognized in earnings each period. Gains and losses from the ineffective portion of any hedge are recognized in earnings immediately. For derivatives that do not qualify or are not designated for hedge accounting, changes in fair value are recognized in earnings each period.

The Company's primary market risk exposure is associated with commodity prices, credit and interest rates. The Company has risk management policies to monitor and manage market risks. The Company uses derivative instruments to manage some of the exposure. DTE Electric generates, purchases, distributes and sells electricity. DTE Electric uses forward energy contracts to manage changes in the price of electricity and fuel. Substantially all of these contracts meet the normal purchases and sales exemption and are therefore accounted for under the accrual method. Other derivative contracts are recoverable through the PSCR mechanism when settled. This results in the deferral of unrealized gains and losses as Regulatory assets or liabilities, until realized.

The following represents the fair value of derivative instruments as of March 31, 2013 and December 31, 2012:



	March 31		December 31
	2013		2012
	(In millions)
FTRs — Other current assets	$	1	$	1
Total derivatives not designated as hedging instrument	$	1	$	1

DTE Electric Company

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The effect of derivative instruments recoverable through the PSCR mechanism when realized on the Consolidated Statements of Financial Position were $ 1 million in gains related to FTRs recognized in Regulatory liabilities for the three months ended March 31, 2013 and 2012.

The following represents the cumulative gross volume of derivative contracts outstanding as of March 31, 2013:



Commodity	Number of Units
FTRs (MWh)	19,077

NOTE 5 — ASSET RETIREMENT OBLIGATIONS

A reconciliation of the asset retirement obligations for the three months ended March 31, 2013 follows:



	(In millions)
Asset retirement obligations at January 1, 2013	$	1,557
Accretion	24
Asset retirement obligations at March 31, 2013	$	1,581

NOTE 6 — REGULATORY MATTERS

DTE Electric Restoration Expense Tracking Mechanism (RETM) and Line Clearance Tracking (LCT) Reconciliation

In January 2012, DTE Electric filed an application with the MPSC for approval of the reconciliation of its 2011 RETM and LCT. The Company's 2011 restoration expenses were higher than the amount provided in rates. Accordingly, DTE Electric requested net recovery of approximately $ 44 million . On February 28, 2013, the MPSC approved a settlement agreement and authorized a $44 million net surcharge to recover the costs over a three -month period beginning April 1, 2013.

DTE Electric Uncollectible Expense True-Up Mechanism (UETM)

In February 2012, DTE Electric filed an application with the MPSC for approval of its UETM for 2011 requesting authority to refund approximately $ 9 million consisting of costs related to 2011 uncollectible expense. On February 28, 2013, the MPSC approved a settlement agreement and authorized a $9 million credit to refund the overrecovery over a one -month period beginning in April 1, 2013.

Power Supply Cost Recovery Proceedings

The PSCR process is designed to allow DTE Electric to recover all of its power supply costs if incurred under reasonable and prudent policies and practices. DTE Electric's power supply costs include fuel and related transportation costs, purchased and net interchange power costs, nitrogen oxide and sulfur dioxide emission allowances costs, urea costs, transmission costs and MISO costs. The MPSC reviews these costs, policies and practices for prudence in annual plan and reconciliation filings.

2012 Plan Year - In March 2013, DTE Electric filed the 2012 PSCR reconciliation calculating a net under-recovery of approximately $87 million that includes an under-recovery of approximately $148 million for the 2011 PSCR year.

NOTE 7 — LONG-TERM DEBT

Debt Issuance

In 2013, the Company issued the following long-term debt:



Month	Type	Interest Rate	Maturity	Amount
				(In millions)
March	Mortgage Bonds (a)	4.00%	2043	$	375
				$	375

_______________________________________


(a)	Proceeds were used for the early redemption of DTE Electric long-term debt, for the repayment of short-term borrowings, and for general corporate purposes.

DTE Electric Company

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Debt Redemptions

In 2013, the following debt was redeemed:



Month	Type	Interest Rate	Maturity	Amount
				(In millions)
March	Securitization Bonds	6.42%	2013	$	88
March	Tax Exempt Revenue Bonds (a)	5.30%	2030	51
				$	139

_____________________________


(a)	DTE Electric Tax Exempt Revenue Bonds are issued by a public body that loans the proceeds to DTE Electric on terms substantially mirroring the Revenue Bonds.

NOTE 8 — SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

At March 31, 2013, DTE Electric had a $ 300 million unsecured revolving credit agreement with a syndicate of 20 banks that could be used for general corporate borrowings, but was intended to provide liquidity support for the Company's commercial paper program. No one bank provided more than 8.5% of the commitment in the facility. Borrowings under the facility were available at prevailing short-term interest rates.

In April 2013, DTE Electric, entered into a second amended and restated five -year $300 million unsecured revolving credit agreement with a syndicate of 19 banks. No one bank provided more than 8.7% of the commitment in the facility. The amended and restated agreement extended the expiration of the credit facility from October 2016 to April 2018.

At March 31, 2013, there were no amounts outstanding against the facility, while there was $130 million outstanding against the facility at December 31, 2012.

The above agreements require the Company to maintain a total funded debt to capitalization ratio of no more than 0.65 to 1 . In the agreements, “total funded debt” means all indebtedness of the Company and its consolidated subsidiaries, including capital lease obligations, hedge agreements and guarantees of third parties' debt, but excluding contingent obligations and nonrecourse and junior subordinated debt. “Capitalization” means the sum of (a) total funded debt plus (b) “consolidated net worth,” which is equal to consolidated total stockholders' equity of the Company and its consolidated subsidiaries (excluding pension effects under certain FASB statements), as determined in accordance with accounting principles generally accepted in the United States of America. At March 31, 2013, the total funded debt to total capitalization ratio for DTE Electric was 0.53 to 1 and in compliance with this financial covenant.

NOTE 9 — COMMITMENTS AND CONTINGENCIES

Environmental

Air — DTE Electric is subject to the EPA ozone and fine particulate transport and acid rain regulations that limit power plant emissions of sulfur dioxide and nitrogen oxides. Since 2005, the EPA and the State of Michigan have issued additional emission reduction regulations relating to ozone, fine particulate, regional haze, mercury, and other air pollution. These rules have led to additional controls on fossil-fueled power plants to reduce nitrogen oxide, sulfur dioxide, mercury and other emissions. To comply with these requirements, DTE Electric has spent approximately $ 1.9 billion through 2012. The Company estimates DTE Electric will make capital expenditures of approximately $ 335 million in 2013 and up to approximately $ 1.8 billion of additional capital expenditures through 2021 based on current regulations. Further, additional rulemakings are expected over the next few years which could require additional controls for sulfur dioxide, nitrogen oxides and hazardous air pollutants. The Cross State Air Pollution Rule (CSAPR), finalized in July 2011, required further reductions of sulfur dioxide and nitrogen oxides emissions beginning in 2012. On December 30, 2011, the U.S. Court of Appeals for the District of Columbia (D.C.) Circuit granted the motions to stay the rule, leaving DTE Electric temporarily subject to the previously existing Clean Air Interstate Rule (CAIR). On August 21, 2012, the Court issued its decision, vacating CSAPR and leaving CAIR in place. The EPA's petition seeking a rehearing of the U.S. Court of Appeals' decision regarding the CSAPR was denied on January 24, 2013. In March 2013, several parties, including the EPA, appealed the D.C. Circuit's decision to vacate the CSAPR to the U.S. Supreme Court.

DTE Electric Company

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The Mercury and Air Toxics Standard (MATS) rule, formerly known as the Electric Generating Unit Maximum Achievable Control Technology (EGU MACT) Rule was finalized on December 16, 2011. The MATS rule requires reductions of mercury and other hazardous air pollutants beginning in 2015. DTE Electric has tested technologies to determine technological and economic feasibility as MATS compliance alternatives to Flue Gas Desulfurization (FGD) systems. Implementation of Dry Sorbent Injection (DSI) and Activated Carbon Injection (ACI) technologies will allow several units that would not have been economical for FGD installations to operate in compliance with MATS.

In July 2009, DTE Energy received a Notice of Violation/Finding of Violation (NOV/FOV) from the EPA alleging, among other things, that five DTE Electric power plants violated New Source Performance standards, Prevention of Significant Deterioration requirements, and operating permit requirements under the Clean Air Act. In June 2010, the EPA issued a NOV/FOV making similar allegations related to a project and outage at Unit 2 of the Monroe Power Plant. In March 2013, DTE Energy received a supplemental NOV from the EPA relating to the July 2009 NOV/FOV. The supplemental NOV alleged additional violations relating to the New Source Review provisions under the Clean Air Act, among other things.

In August 2010, the U.S. Department of Justice, at the request of the EPA, brought a civil suit in the U.S. District Court for the Eastern District of Michigan against DTE Energy and DTE Electric, related to the June 2010 NOV/FOV and the outage work performed at Unit 2 of the Monroe Power Plant, but not relating to the July 2009 NOV/FOV. Among other relief, the EPA requested the court to require DTE Electric to install and operate the best available control technology at Unit 2 of the Monroe Power Plant. Further, the EPA requested the court to issue a preliminary injunction to require DTE Electric to (i) begin the process of obtaining the necessary permits for the Monroe Unit 2 modification and (ii) offset the pollution from Monroe Unit 2 through emissions reductions from DTE Electric's fleet of coal-fired power plants until the new control equipment is operating. On August 23, 2011, the U.S. District judge granted DTE Energy's motion for summary judgment in the civil case, dismissing the case and entering judgment in favor of DTE Energy and DTE Electric. On October 20, 2011, the EPA caused to be filed a Notice of Appeal to the U.S. Court of Appeals for the Sixth Circuit. Oral arguments at the Court of Appeals were held on November 27, 2012. On March 28, 2013, the Court of Appeals remanded the case to the U.S. District Court on a single issue related to a procedural component of the New Source Review permitting program.

DTE Electric believes that the plants identified by the EPA, including Unit 2 of the Monroe Power Plant, have complied with all applicable federal environmental regulations. Depending upon the outcome of discussions with the EPA regarding the two NOVs/FOVs, DTE Electric could be required to install additional pollution control equipment at some or all of the power plants in question, implement early retirement of facilities where control equipment is not economical, engage in supplemental environmental programs, and/or pay fines. The Company cannot predict the financial impact or outcome of this matter, or the timing of its resolution.

On March 12, 2013, the Sierra Club filed suit against DTE Electric alleging violations of the Clean Air Act at four of DTE Electric's coal-fired power plants. The plaintiffs allege 1,499 6-minute periods of excess opacity of air emissions from 2007-2012 at those facilities. The suit asks that the court enjoin the Company from operating the power plants except in complete compliance with applicable laws and permit requirements, pay civil penalties, conduct beneficial environmental mitigation projects, pay attorney fees and require the installation of any necessary pollution controls or to convert and/or operate the plants' boilers on natural gas to avoid additional violations and to off-set historic unlawful emissions. DTE Electric cannot predict the financial impact or outcome of this matter, or timing of its resolution.

Water - In response to an EPA regulation, DTE Electric would be required to examine alternatives for reducing the environmental impacts of the cooling water intake structures at several of its facilities. Based on the results of completed studies and expected future studies, DTE Electric may be required to install technologies to reduce the impacts of the water intake structures. The initial rule published in 2004 was subsequently remanded and a proposed rule published in 2011. The proposed rule specified an eight year compliance timeline. In July 2012, the EPA announced that a notice of its final action on the rule will be issued in June 2013. On April 19, 2013, the EPA proposed revised steam electric effluent guidelines including multiple possible options. The rules are expected to be finalized by April 2014. It is not possible at this time to quantify the impacts of these developing requirements.

Contaminated and Other Sites - Prior to the construction of major interstate natural gas pipelines, gas for heating and other uses was manufactured locally from processes involving coal, coke or oil. The facilities, which produced gas, have been designated as manufactured gas plant (MGP) sites. DTE Electric conducted remedial investigations at contaminated sites, including three former MGP sites. The investigations have revealed contamination related to the by-products of gas manufacturing at each site. In addition to the MGP sites, the Company is also in the process of cleaning up other contaminated sites, including the area surrounding an ash landfill, electrical distribution substations, electric generating power plants, and

DTE Electric Company

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

underground and aboveground storage tank locations. The findings of these investigations indicated that the estimated cost to remediate these sites is expected to be incurred over the next several years. At March 31, 2013 and at December 31, 2012, the Company had $ 9 million accrued for remediation. Any significant change in assumptions, such as remediation techniques, nature and extent of contamination and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect the Company’s financial position and cash flows.

DTE Electric owns and operates a permitted engineered ash storage facility at the Monroe Power Plant to dispose of fly ash from the coal fired power plant. The EPA has published proposed rules to regulate coal ash under the authority of the Resources Conservation and Recovery Act (RCRA). The proposed rule published in June 2010 contains two primary regulatory options to regulate coal ash residue. The EPA is currently considering either designating coal ash as a “Hazardous Waste” as defined by RCRA or regulating coal ash as non-hazardous waste under RCRA. Agencies and legislatures have urged the EPA to regulate coal ash as a non-hazardous waste. If the EPA designates coal ash as a hazardous waste, the agency could apply some, or all, of the disposal and reuse standards that have been applied to other existing hazardous wastes to disposal and reuse of coal ash. Some of the regulatory actions currently being contemplated could have a significant impact on our operations and financial position and the rates we charge our customers. It is not possible to quantify the impact of those expected rulemakings at this time.

Other

In March 2011, the EPA finalized a new set of regulations regarding the identification of non-hazardous secondary materials that are considered solid waste, industrial boiler and process heater maximum achievable control technologies (IBMACT) for major and area sources, and commercial/industrial solid waste incinerator new source performance standard and emission guidelines (CISWI). The effective dates of the major source IBMACT and CISWI regulations were stayed and a re-proposal was issued by the EPA in December 2011. Final IBMACT and CISWI were issued by the EPA in December 2012. The Company is developing compliance plans to upgrade or convert existing industrial boilers to natural gas and to perform required energy assessments in compliance with the applicable new standards. Capital costs for the boiler conversions and the expenses for the one-time energy assessments are not expected to be material.

In 2010, the EPA finalized a new 1 -hour sulfur dioxide ambient air quality standard that requires states to submit plans for non-attainment areas to be in compliance by 2017. Michigan's proposed non-attainment area includes DTE Electric facilities in southwest Detroit and areas of Wayne County. Preliminary modeling runs by the MDEQ suggest that emission reductions may be required by significant sources of sulfur dioxide emissions in these areas, including DTE Electric power plants. The state implementation plan process is in the information gathering stage and any required emission reductions for DTE Electric sources to meet the standard cannot be estimated currently.

Nuclear Operations

Property Insurance

DTE Electric maintains property insurance policies specifically for the Fermi 2 plant. These policies cover such items as replacement power and property damage. The Nuclear Electric Insurance Limited (NEIL) is the primary supplier of the insurance policies.

DTE Electric maintains a policy for extra expenses, including replacement power costs necessitated by Fermi 2's unavailability due to an insured event. This policy has a 12-week waiting period and provides an aggregate $ 490 million of coverage over a three -year period.

DTE Electric has $ 500 million in primary coverage and $ 2.25 billion of excess coverage for stabilization, decontamination, debris removal, repair and/or replacement of property and decommissioning. The combined coverage limit for total property damage is $ 2.75 billion , subject to a $ 1 million deductible. As of April 1, 2013, the total limit for property damage for non-nuclear events is $1.8 billion and an aggregate of $327 million of coverage for extra expenses over a two year period.

In 2007, the Terrorism Risk Insurance Extension Act of 2005 (TRIA) was extended through December 31, 2014. A major change in the extension is the inclusion of “domestic” acts of terrorism in the definition of covered or “certified” acts. For multiple terrorism losses caused by acts of terrorism not covered under the TRIA occurring within one year after the first loss

DTE Electric Company

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

from terrorism, the NEIL policies would make available to all insured entities up to $ 3.2 billion , plus any amounts recovered from reinsurance, government indemnity, or other sources to cover losses.

Under the NEIL policies, DTE Electric could be liable for maximum assessments of up to approximately $ 33 million per event if the loss associated with any one event at any insured nuclear plant should exceed the accumulated funds available to NEIL.

Public Liability Insurance

As required by federal law, DTE Electric maintains $ 375 million of public liability insurance for a nuclear incident. For liabilities arising from a terrorist act outside the scope of TRIA, the policy is subject to one industry aggregate limit of $ 300 million . Further, under the Price-Anderson Amendments Act of 2005, deferred premium charges up to $ 117.5 million could be levied against each licensed nuclear facility, but not more than $ 17.5 million per year per facility. Thus, deferred premium charges could be levied against all owners of licensed nuclear facilities in the event of a nuclear incident at any of these facilities.

Nuclear Fuel Disposal Costs

In accordance with the Federal Nuclear Waste Policy Act of 1982, DTE Electric has a contract with the U.S. Department of Energy (DOE) for the future storage and disposal of spent nuclear fuel from Fermi 2. DTE Electric is obligated to pay the DOE a fee of 1 mill per kWh of Fermi 2 electricity generated and sold. The fee is a component of nuclear fuel expense. The DOE's Yucca Mountain Nuclear Waste Repository program for the acceptance and disposal of spent nuclear fuel was terminated in 2011. DTE Electric currently employs a spent nuclear fuel storage strategy utilizing a fuel pool. The Company continues to develop its on-site dry cask storage facility and has postponed the initial offload from the spent fuel pool until 2014. The dry cask storage facility is expected to provide sufficient spent fuel storage capability for the life of the plant as defined by the original operating license.

DTE Electric is a party in the litigation against the DOE for both past and future costs associated with the DOE's failure to accept spent nuclear fuel under the timetable set forth in the Federal Nuclear Waste Policy Act of 1982. In July 2012, DTE Electric executed a settlement agreement with the federal government for costs associated with the DOE's delay in acceptance of spent nuclear fuel from Fermi 2 for permanent storage. The settlement provided for a payment of approximately $ 48 million , received in August 2012, for delay-related costs experienced by DTE Electric through 2010, and a claims process for submittal of delay-related costs from 2011 through 2013. The settlement proceeds reduced the cost of the dry cask storage facility assets. In February 2013, the U.S. Court of Appeals for the District of Columbia granted a motion to reopen the fee adequacy litigation to review the DOE's latest fee adequacy report which was released in January 2013. DTE Electric will continue to pay fees to the U.S. government's nuclear waste fund pending further action by the D.C. Circuit. The federal government continues to maintain its legal obligation to accept spent nuclear fuel from Fermi 2 for permanent storage. Issues relating to long-term waste disposal policy and to the disposition of funds contributed by DTE Electric ratepayers to the federal waste fund await future governmental action.

Guarantees

In certain limited circumstances, the Company enters into contractual guarantees. The Company may guarantee another entity’s obligation in the event it fails to perform. The Company may provide guarantees in certain indemnification agreements. Finally, the Company may provide indirect guarantees for the indebtedness of others.

Labor Contracts

Our contract with a bargaining unit for the majority of our represented employees was due to expire in June 2013. Early negotiations resulted in a new contract that became effective March 23, 2013. The new contract will expire in June 2017.

Purchase Commitments

As of March 31, 2013, the Company was party to numerous long-term purchase commitments relating to a variety of goods and services required for the Company’s business. These agreements primarily consist of fuel supply commitments. The Company estimates that these commitments will be approximately $ 0.8 billion from 2013 through 2028.

DTE Electric Company

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

The Company also estimates that 2013 capital expenditures will be approximately $ 1.6 billion . The Company has made certain commitments in connection with expected capital expenditures.

Bankruptcies

The Company purchases and sells electricity from and to governmental entities and numerous companies operating in the steel, automotive, energy, retail and other industries. Certain of its customers have filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. The Company regularly reviews contingent matters relating to these customers and its purchase and sale contracts and records provisions for amounts considered at risk of probable loss. The Company believes its accrued amounts are adequate for probable loss. The final resolution of these matters may have a material effect on its consolidated financial statements.

Other Contingencies

The Company is involved in certain other legal, regulatory, administrative and environmental proceedings before various courts, arbitration panels and governmental agencies concerning claims arising in the ordinary course of business. These proceedings include certain contract disputes, additional environmental reviews and investigations, audits, inquiries from various regulators, and pending judicial matters. The Company cannot predict the final disposition of such proceedings. The Company regularly reviews legal matters and records provisions for claims that it can estimate and are considered probable of loss. The resolution of these pending proceedings is not expected to have a material effect on the Company’s operations or financial statements in the periods they are resolved.

See Note 6 for a discussion of contingencies related to Regulatory Matters.

NOTE 10 — RETIREMENT BENEFITS AND TRUSTEED ASSETS

The following table details the components of net periodic benefit costs for pension benefits and other postretirement benefits:



	Pension Benefits						Other Postretirement Benefits
	2013			2012			2013			2012
Three Months Ended March 31	(In millions)
Service cost	$	19		$	16		$	12		$	13
Interest cost	36			39			18			23
Expected return on plan assets	(46		)	(41		)	(18		)	(15		)
Amortization of:
Net actuarial loss	36			30			12			14
Prior service cost (credit)	—			—			(17		)	(4		)
Net transition liability	—			—			—			1
Settlements	—			2			—			—
Net periodic benefit cost	$	45		$	46		$	7		$	32

Pension and Other Postretirement Contributions

In March 2013, the Company contributed $100 million to its pension plans, including a contribution of DTE Energy common stock of $50 million . At the discretion of management, and depending upon financial market conditions, the Company may make up to an additional $175 million contribution to its pension plans in 2013.

In January 2013, the Company contributed $120 million to its other postretirement benefit plans. At the discretion of management, the Company may make up to an additional $120 million contribution to its other postretirement benefit plans in 2013.

Re-Measurement of Other Postretirement Benefit Obligation

In March 2013, the Company reached an agreement on a new four-year labor contract with certain represented employees. As a term of the agreement, the Company replaced sponsored retiree medical, prescription drug and dental coverage for future

DTE Electric Company

Notes to Consolidated Financial Statements (Unaudited) — (Continued)

Medicare eligible retirees with a Retiree Health Care Allowance (RHCA) account of $3,250 per year. The modification in retiree health coverage will reduce future postretirement benefit costs.

Based on the impact of such benefit cost savings on the financial statements, the Company re-measured its retiree health plan as of March 31, 2013. In performing the re-measurement, the Company updated its significant actuarial assumptions, including an adjustment to the discount rate from 4.15% at December 31, 2012 to 4.30% at March 31, 2013. Plan assets were also updated to reflect fair value as of the re-measurement date. As a result of the re-measurement, the accumulated postretirement benefit obligation (APBO) was reduced by $192 million . The Company's Accrued postretirement liability - affiliates at March 31, 2013 was $661 million as compared to $996 million at December 31, 2012, a reduction of $335 million . The reduction reflects the impact of the re-measurement of the plan, January 2013 plan contributions and recognition of first quarter 2013 postretirement benefit costs and benefit payments.

Beginning April 2013, net postretirement benefit costs will be recorded based on the updated actuarial assumptions and benefit changes resulting from the new labor contracts. As a result of the re-measurement, fiscal year 2013 postretirement benefit costs are expected to decrease by approximately $51 million to an annual net benefit of $23 million .

NOTE 11 — SUPPLEMENTAL CASH FLOW INFORMATION

A detailed analysis of the changes in assets and liabilities that are reported in the Consolidated Statements of Cash Flows follows:



	Three Months Ended
	March 31,
	2013			2012
Changes in Assets and Liabilities, Exclusive of Changes Shown Separately	(In millions)
Accounts receivable, net	$	(3	)	$	30
Inventories	52			1
Accrued pension liability — affiliates	(92		)	13
Accounts payable	(17		)	(9		)
Income taxes payable/receivable	11			33
Accrued postretirement liability — affiliates	(125		)	(94		)
Other assets	59			106
Other liabilities	2			(32		)
	$	(113	)	$	48

Item 2. Management’s Narrative Analysis of Results of Operations

The Management’s Narrative Analysis of Results of Operations discussion for DTE Electric is presented in accordance with General Instruction H (2) (a) of Form 10-Q.

DTE Electric's results for the three months ended March 31, 2013 as compared to the comparable 2012 period are discussed below:



	Three Months Ended
	March 31
	2013			2012
	(In millions)
Operating revenues	$	1,219		$	1,198
Fuel and purchased power	372			377
Gross margin	847			821
Operation and maintenance	331			355
Depreciation and amortization	212			185
Taxes other than income	70			68
Asset (gains) losses and reserves, net	(1		)	—
Operating Income	235			213
Other (Income) and Deductions	57			59
Income Tax Expense	62			57
Net Income	$	116		$	97
Operating Income as a Percentage of Operating Revenues	19		%	18		%

Gross margin increased $26 million in the first quarter of 2013. Revenues associated with certain tracking mechanisms and surcharges are offset by related expenses elsewhere in the Consolidated Statement of Operations.

The following table details changes in various gross margin components relative to the comparable prior period:



	Three Months
	(In millions)
Weather	$	19
Securitization bond and tax surcharge	15
Renewable energy program	4
Low income energy assistance surcharge	(10		)
Regulatory mechanisms and other	(2		)
Increase in gross margin	$	26



	Three Months Ended
	March 31
	2013	2012
	(In thousands of MWh)
Electric Sales
Residential	3,854	3,700
Commercial	3,923	3,885
Industrial	2,436	2,374
Other	252	259
	10,465	10,218
Interconnection sales (a)	773	527
Total Electric Sales	11,238	10,745

Electric Deliveries
Retail and Wholesale	10,465	10,218
Electric Customer Choice, including self generators (b)	1,260	1,254
Total Electric Sales and Deliveries	11,725	11,472

_______________________________________

(a) Represents power that is not distributed by DTE Electric.

(b) Represents deliveries for self generators who have purchased power from alternative energy suppliers to supplement their power requirements.

Operation and maintenance expense decreased $24 million in the first quarter of 2013 due primarily to lower power plant generation expenses of $15 million, decreased low income energy assistance expenses of $10 million and lower employee benefit expenses of $9 million, partially offset by increased energy optimization and renewable energy expenses of $4 million and increased distribution operations expenses of $3 million.

Depreciation and amortization expense increased $27 million in the first quarter of 2013 due primarily to higher amortization of regulatory assets and increased depreciation expense due to a higher depreciable base.

Outlook — We continue to move forward in our efforts to achieve operational excellence, sustained strong cash flows and earn our authorized return on equity. We expect that our planned significant environmental and renewable expenditures will result in earnings growth. Looking forward, additional factors may impact earnings such as weather, the outcome of regulatory proceedings, benefit plan design changes, investment returns and changes in discount rate assumptions in benefit plans and health care costs, and uncertainty of legislative or regulatory actions regarding climate change and electric choice. We expect to continue our efforts to improve productivity and decrease our costs while improving customer satisfaction with consideration of customer rate affordability.

On June 25, 2012, our Fermi 2 nuclear power plant was manually shutdown after one of the plant's two non-safety related feed-water pumps failed. Supported by a detailed analysis, DTE Electric decided to operate the plant with one feed-water pump at a reduced power level until the second feed-water pump is returned to service. The plant was restarted on July 30, 2012 which restored production to nominal 68% of full capacity. We expect that a substantial portion of the property damage will be covered by existing insurance coverage, subject to deductibles. We are able to purchase sufficient power from MISO to continue to provide uninterrupted service to our customers. We are seeking recovery of the related incremental purchased power costs through the PSCR process. It is estimated that the repair to the plant will be complete by the third quarter of 2013.

Climate regulation and/or legislation has been proposed and discussed within the U.S. Congress and the EPA. The EPA is implementing regulatory actions under the Clean Air Act to address emissions of greenhouse gases (GHGs). EPA regulation of GHGs requires the best available control technology (BACT) for new major sources or modifications to existing major sources that cause significant increases in GHG emissions. In June 2012, the EPA proposed new source performance standards for carbon dioxide emissions from new fossil-fueled power plants. These new source performance standards are expected to be finalized in 2013 as well as a proposed performance standard for carbon dioxide emissions from existing plants. Pending or future legislation or other regulatory actions could have a material impact on our operations and financial position and the rates we charge our customers. Impacts include expenditures for environmental equipment beyond what is currently planned, financing costs related to additional capital expenditures, the purchase of emission offsets from market sources and the retirement of facilities where control equipment is not economical. We would seek to recover these incremental costs through increased rates charged to our utility customers. Increased costs for energy produced from traditional sources could also increase the economic viability of energy produced from renewable and/or nuclear sources and energy efficiency initiatives and the development of market-based trading of carbon offsets providing business opportunities for our utility and non-utility segments. It is not possible to quantify these impacts on DTE Electric or its customers at this time.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

Management of the Company carried out an evaluation, under the supervision and with the participation of DTE Electric's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2013, which is the end of the period covered by this report. Based on this evaluation, the Company's CEO and CFO have concluded that such disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) is accumulated and communicated to the Company's management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations in the effectiveness of any disclosure controls and procedures, management cannot provide absolute assurance that the objectives of its disclosure controls and procedures will be attained.

(b) Changes in internal control over financial reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II - Other Information

Item 1. Legal Proceedings

In July 2009, DTE Energy received a Notice of Violation (NOV)/Finding of Violation (FOV) from the EPA alleging, among other things, that five of DTE Electric's power plants violated New Source Performance standards, Prevention of Significant Deterioration requirements, and operating permit requirements under the Clean Air Act. In June 2010, the EPA issued a NOV/FOV making similar allegations related to a recent project and outage at Unit 2 of the Monroe Power Plant. In March 2013, DTE Energy received a supplemental NOV from the EPA relating to the July 2009 NOV/FOV. The supplemental NOV alleged additional violations relating to the New Source Review provisions under the Clean Air Act, among other things.

In August 2010, the United States Department of Justice, at the request of EPA, brought a civil suit in the U.S. District Court for the Eastern District of Michigan against DTE Energy and DTE Electric, related to the June 2010 NOV/FOV and the outage work performed at Unit 2 of the Monroe Power Plant, but not relating to the July 2009 NOV/FOV. Among other relief, the EPA requested the court to require DTE Electric to install and operate the best available control technology at Unit 2 of the Monroe Power Plant. Further, the EPA requested the court to issue a preliminary injunction to require DTE Electric to (i) begin the process of obtaining the necessary permits for the Monroe Unit 2 modification and (ii) offset the pollution from Monroe Unit 2 through emissions reductions from DTE Electric's fleet of coal-fired power plants until the new control equipment is operating. On August 23, 2011, the U.S. District Court judge granted DTE Energy's motion for summary judgment in the civil case, dismissing the case and entering judgment in favor of DTE Energy and DTE Electric. On October 20, 2011, the EPA caused to be filed a Notice of Appeal to the U.S. Court of Appeals for the Sixth Circuit. Oral arguments at the Court of Appeals were held on November 27, 2012. On March 28, 2013, the Court of Appeals remanded the case to the U.S. District Court on a single issue related to procedural component of the New Source Review permitting program.

DTE Energy and DTE Electric believe that the plants identified by the EPA, including Unit 2 of the Monroe Power Plant, have complied with all applicable federal environmental regulations. Depending upon the outcome of discussions with the EPA regarding the two NOVs/FOVs, DTE Electric could be required to install additional pollution control equipment at some or all of the power plants in question, implement early retirement of facilities where control equipment is not economical, engage in supplemental environmental programs, and/or pay fines. DTE Energy and DTE Electric cannot predict the financial impact of this issue, or the timing of its resolution.

On March 13, 2013, The Sierra Club filed suit against DTE Energy and DTE Electric alleging violations of the Clean Air Act at four of DTE Electric's coal-fired power plants. The plaintiffs allege 1,499 6-minute periods of excess opacity of air emissions from 2007-2012 at those facilities. The suit asks that the court enjoin the Company from operating the power plants except in complete compliance with applicable laws and permit requirements, pay civil penalties, conduct beneficial environmental mitigation projects, pay attorney fees and require the installation of any necessary pollution controls or to convert and/or operate the plants' boilers on natural gas to avoid additional violations and to off-set historic unlawful emissions. DTE Energy and DTE Electric cannot predict the financial impact or outcome of this matter, or the timing of its resolution.

Item 1A. Risk Factors

There are various risks associated with the operations of DTE Electric. To provide a framework to understand the operating environment of DTE Electric, we provided a brief explanation of the more significant risks associated with our businesses in Part 1, Item 1A. Risk Factors in the Company's 2012 Form 10-K. Although we have tried to identify and discuss key risk factors, others could emerge in the future. In addition to the risk factors set forth in our 10-K, the following updated risk could affect our performance.

A work interruption may adversely affect us. Unions represent approximately 2,700 of our employees. The labor contract that covers the majority of our represented employees was due to expire in June 2013. Early negotiations resulted in a new contract that became effective March 23, 2012. The new contract will expire in June 2017. A union choosing to strike would have an impact on our business. We are unable to predict the effect a work stoppage would have on our costs of operation and financial performance.

Item 6. Exhibits

(i) Exhibits filed herewith:



4-280		Supplemental Indenture, dated as of March 15, 2013, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between DTE Electric Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (2013 Series A)

31-81		Chief Executive Officer Section 302 Form 10-Q Certification of Periodic Report

31-82		Chief Financial Officer Section 302 Form 10-Q Certification of Periodic Report

(ii) Exhibits incorporated herein by reference:



10-1		Form of Second Amended and Restated DTE Electric Company Five-Year Credit Agreement, dated as of October 21, 2011 and amended and restated as of April 5, 2013, by and among DTE Electric Company, the lenders party thereto, Barclays Bank PLC, as Administrative Agent, and Citibank, N.A., JPMorgan Chase Bank, N.A. and The Royal Bank of Scotland plc as Co-Syndication Agents (Exhibit 10.01 to DTE Electric Company's Form 8-K filed on April 9, 2013 ).

(iii) Exhibits furnished herewith:



32-81		Chief Executive Officer Section 906 Form 10-Q Certification

32-82		Chief Financial Officer Section 906 Form 10-Q Certification

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Database

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

Signature

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



		DTE ELECTRIC COMPANY (Registrant)
Date:	April 26, 2013	By	/s/ DONNA M. ENGLAND
			Donna M. England
			Chief Accounting Officer
			(Principal Accounting Officer)



	PAGE
PARTIES	3
RECITALS	3
Original Indenture and Supplemental Indentures	3
Issue of Bonds Under Indenture	4
Bonds Heretofore Issued	4
Reason for Creation of New Series	11
Bonds to be 2013 Series A	11
Further Assurance	11
Authorization of Supplemental Indenture	11
Consideration for Supplemental Indenture	11
PART I. CREATION OF THREE HUNDRED SIXTY-NINTH SERIES OF BONDS, GENERAL AND REFUNDING MORTGAGE BONDS, 2013 SERIES A	12
Sec. 1. Terms of Bonds of 2013 Series A	12
Sec. 2. Redemption of Bonds of 2013 Series A	14
Sec. 3. Exchange and Transfer	15
Sec. 4. Form of Bonds of 2013 Series A	16
Form of Trustee’s Certificate	20
PART III. RECORDING AND FILING DATA	20
Recording and Filing of Original Indenture	20
Recording and Filing of Supplemental Indentures	21
Recording and Filing of Supplemental Indenture Dated as of June 20, 2012	26
Recording of Affidavit of Facts Affecting Real Property	26
Recording of Certificates of Provision for Payment	26
PART IV. THE TRUSTEE	27
Terms and Conditions of Acceptance of Trust by Trustee	27
PART V. MISCELLANEOUS	27
Confirmation of Section 318(c) of Trust Indenture Act	27
Execution in Counterparts	27
EXECUTION	27
Testimonium	27
Execution by Company	28
Acknowledgment of Execution by Company	29
Execution by Trustee	30
Acknowledgment of Execution by Trustee	31
Affidavit as to Consideration and Good Faith	32



PARTIES.			SUPPLEMENTAL INDENTURE, dated as of the 15th day of March, in the year 2013, between DTE ELECTRIC COMPANY, formerly known as The Detroit Edison Company, a corporation organized and existing under the laws of the State of Michigan and a public utility (hereinafter called the “Company”), party of the first part, and The Bank of New York Mellon Trust Company, N.A., a trust company organized and existing under the laws of the United States, having a corporate trust agency office at 719 Griswold Street, Suite 930, Detroit, Michigan 48226, as successor Trustee under the Mortgage and Deed of Trust hereinafter mentioned (hereinafter called the “Trustee”), party of the second part.

ORIGINAL INDENTURE AND SUPPLEMENTAL INDENTURES.			WHEREAS, the Company has heretofore executed and delivered its Mortgage and Deed of Trust (hereinafter referred to as the “Original Indenture”), dated as of October 1, 1924, to the Trustee, for the security of all bonds of the Company outstanding thereunder, and pursuant to the terms and provisions of the Original Indenture, indentures dated as of, respectively, June 1, 1925, August 1, 1927, February 1, 1931, June 1, 1931, October 1, 1932, September 25, 1935, September 1, 1936, November 1, 1936, February 1, 1940, December 1, 1940, September 1, 1947, March 1, 1950, November 15, 1951, January 15, 1953, May 1, 1953, March 15, 1954, May 15, 1955, August 15, 1957, June 1, 1959, December 1, 1966, October 1, 1968, December 1, 1969, July 1, 1970, December 15, 1970, June 15, 1971, November 15, 1971, January 15, 1973, May 1, 1974, October 1, 1974, January 15, 1975, November 1, 1975, December 15, 1975, February 1, 1976, June 15, 1976, July 15, 1976, February 15, 1977, March 1, 1977, June 15, 1977, July 1, 1977, October 1, 1977, June 1, 1978, October 15, 1978, March 15, 1979, July 1, 1979, September 1, 1979, September 15, 1979, January 1, 1980, April 1, 1980, August 15, 1980, August 1, 1981, November 1, 1981, June 30, 1982, August 15, 1982, June 1, 1983, October 1, 1984, May 1, 1985, May 15, 1985, October 15, 1985, April 1, 1986, August 15, 1986, November 30, 1986, January 31, 1987, April 1, 1987, August 15, 1987, November 30, 1987, June 15, 1989, July 15, 1989, December 1, 1989, February 15, 1990, November 1, 1990, April 1, 1991, May 1, 1991, May 15, 1991, September 1, 1991, November 1, 1991, January 15, 1992, February 29, 1992, April 15, 1992, July 15, 1992, July 31, 1992, November 30, 1992, December 15, 1992, January 1, 1993, March 1, 1993, March 15, 1993, April 1, 1993, April 26, 1993, May 31, 1993, June 30, 1993, June 30, 1993, September 15, 1993, March 1, 1994, June 15, 1994, August 15, 1994, December 1, 1994, August 1, 1995, August 1, 1999, August 15, 1999, January 1, 2000, April 15, 2000, August 1, 2000, March 15, 2001, May 1, 2001, August 15, 2001, September 15, 2001, September 17, 2002, October 15, 2002, December 1, 2002, August 1, 2003, March 15, 2004, July 1, 2004, February 1, 2005, April 1, 2005, August 1, 2005, September 15, 2005, September 30, 2005, May 15, 2006, December 1, 2006, December 1, 2007, April 1, 2008, May 1, 2008, June 1, 2008, July 1, 2008, October 1, 2008, December 1, 2008, March 15, 2009, November 1, 2009, August 1, 2010, September 1, 2010, December 1, 2010, March 1, 2011, May 15, 2011, August 1, 2011, August 15, 2011, September 1, 2011 and June 20, 2012 supplemental to the Original Indenture, have heretofore been entered into between the Company and the Trustee (the Original Indenture and all indentures supplemental thereto together being hereinafter sometimes referred to as the “Indenture”); and



ISSUE OF BONDS UNDER INDENTURE.	WHEREAS, the Indenture provides that said bonds shall be issuable in one or more series, and makes provision that the rates of interest and dates for the payment thereof, the date of maturity or dates of maturity, if of serial maturity, the terms and rates of optional redemption (if redeemable), the forms of registered bonds without coupons of any series and any other provisions and agreements in respect thereof, in the Indenture provided and permitted, as the Board of Directors may determine, may be expressed in a supplemental indenture to be made by the Company to the Trustee thereunder; and

BONDS HERETOFORE ISSUED.	WHEREAS, bonds in the principal amount of Fifteen billion, two hundred sixty-three million, fifty-seven thousand dollars ($15,263,057,000) have heretofore been issued under the indenture as follows, viz:



(1)	Bonds of Series A	--Principal Amount $26,016,000,

(2)	Bonds of Series B	--Principal Amount $23,000,000,

(3)	Bonds of Series C	--Principal Amount $20,000,000,

(4)	Bonds of Series D	--Principal Amount $50,000,000,

(5)	Bonds of Series E	--Principal Amount $15,000,000,

(6)	Bonds of Series F	--Principal Amount $49,000,C13

(7)	Bonds of Series G	--Principal Amount $35,000,000,

(8)	Bonds of Series H	--Principal Amount $50.000,000,

(9)	Bonds of Series I	--Principal Amount $60,000,000,

(10)	Bonds of Series J	--Principal Amount $35,000,000,

(11)	Bonds of Series K	--Principal Amount $40,000,000,

(12)	Bonds of Series L	--Principal Amount $24,000,000,

(13)	Bonds of Series M	--Principal Amount $40,000,000,

(14)	Bonds of Series N	--Principal Amount $40,000,000,

(15)	Bonds of Series O	--Principal Amount $60,000,000,

(16)	Bonds of Series P	--Principal Amount $70,000,000,

(17)	Bonds of Series Q	--Principal Amount $40,000,000,

(18)	Bonds of Series W	--Principal Amount $50,000,000,

(19)	Bonds of Series AA	--Principal Amount $100,000,000,

(20)	Bonds of Series BB	--Principal Amount $50,000,000,



(21)	Bonds of Series CC	-- Principal Amount $50,000,000,

(22)	Bonds of Series UU	-- Principal Amount $100,000,000,

(23-31)	Bonds of Series DDP Nos. 1-9	-- Principal Amount $14,305,000,

(32-45)	Bonds of Series FFR Nos. 1-14	-- Principal Amount $45.600.000,

(46-67)	Bonds of Series GGP Nos. 1-22	-- Principal Amount $42,300,000,

(68)	Bonds of Series HH	-- Principal Amount $50,000,000

(69-90)	Bonds of Series IIP Nos. 1-22	-- Principal Amount $3,750,000,

(91-98)	Bonds of Series JJP Nos. 1-8	-- Principal Amount $6,850,000,

(99-107)	Bonds of Series KKP Nos. 1-9	-- Principal Amount $34,890,000,

(108-122)	Bonds of Series LLP Nos. 1-15	-- Principal Amount $8,850,000

(123-143)	Bonds of Series NNP Nos. 1-21	-- Principal Amount $47,950,000,

(144-161)	Bonds of Series OOP Nos. 1-18	-- Principal Amount $18,880,000,

(162-180)	Bonds of Series QQP Nos. 1-19	-- Principal Amount $13,650,000,

(181-195)	Bonds of Series TTP Nos. 1-15	-- Principal Amount $3,800,000,

(196)	Bonds of 1980 Series A	-- Principal Amount $50,000,000,

(197-221)	Bonds of 1980 Series CP Nos. 1-25	-- Principal Amount $35,000,000,

(222-232)	Bonds of 1980 Series DP Nos. 1-11	-- Principal Amount $10,750,000,

(233-248)	Bonds of 1981 Series AP Nos. 1-16	-- Principal Amount $124,000,000,

(249)	Bonds of 1985 Series A	-- Principal Amount $35,000,000,

(250)	Bonds of 1985 Series B	-- Principal Amount $50,000,000,

(251)	Bonds of Series PP	-- Principal Amount $70,000,000,

(252)	Bonds of Series RR	-- Principal Amount $70,000,000,

(253)	Bonds of Series EE	-- Principal Amount $50,000,000,

(254-255)	Bonds of Series MMP and MMP No. 2	-- Principal Amount $5,430,000,


*	This Table of Contents shall not have any bearing upon the interpretation of any of the terms or provisions of this Indenture.



(256)	Bonds of Series T	-- Principal Amount $75.000,000,

(257)	Bonds of Series U	-- Principal Amount $75,000,000,

(258)	Bonds of 1986 Series B	-- Principal Amount $100,000,000,

(259)	Bonds of 1987 Series D	-- Principal Amount $250,000,000,

(260)	Bonds of 1987 Series E	-- Principal Amount $150,000,000,

(261)	Bonds of 1987 Series C	-- Principal Amount $225,000,000,

(262)	Bonds of Series V	-- Principal Amount $100,000,000,

(263)	Bonds of Series SS	-- Principal Amount $150,000,000,

(264)	Bonds of 1980 Series B	-- Principal Amount $100,000,000,

(265)	Bonds of 1986 Series C	-- Principal Amount $200,000,000,

(266)	Bonds of 1986 Series A	-- Principal Amount $200,000,000,

(267)	Bonds of 1987 Series B	-- Principal Amount $175,000,000,

(268)	Bonds of Series X	-- Principal Amount $100,000,000,

(269)	Bonds of 1987 Series F	-- Principal Amount $200,000,000,

(270)	Bonds of 1987 Series A	-- Principal Amount $300,000,000,

(271)	Bonds of Series Y	-- Principal Amount $60,000,000,

(272)	Bonds of Series Z	-- Principal Amount $100,000,000,

(273)	Bonds of 1989 Series A	-- Principal Amount $300,000,000,

(274)	Bonds of 1984 Series AP	-- Principal Amount $2,400,000,

(275)	Bonds of 1984 Series BP	-- Principal Amount $7,750,000,

(276)	Bonds of Series R	-- Principal Amount $100,000,000,

(277)	Bonds of Series S	-- Principal Amount $150,000,000,

(278)	Bonds of 1993 Series D	-- Principal Amount $100,000,000,

(279)	Bonds of 1992 Series E	-- Principal Amount $50,000,000,

(280)	Bonds of 1993 Series B	-- Principal Amount $50,000,000,

(281)	Bonds of 1989 Series BP	-- Principal Amount $66,565,000,



(282)	Bonds of 1990 Series A	-- Principal Amount $149,649,000,

(283)	Bonds of 1990 Series D	-- Principal Amount $0,

(284)	Bonds of 1993 Series G	-- Principal Amount $225,000,000,

(285)	Bonds of 1993 Series K	-- Principal Amount $160,000,000,

(286)	Bonds of 1991 Series EP	-- Principal Amount $41,480,000,

(287)	Bonds of 1993 Series H	-- Principal Amount $50,000,000,

(288)	Bonds of 1999 Series D	-- Principal Amount $40,000,000,

(289)	Bonds of 1991 Series FP	-- Principal Amount $98,375,000,

(290)	Bonds of 1992 Series BP	-- Principal Amount $20,975,000,

(291)	Bonds of 1992 Series D	-- Principal Amount $300,000,000,

(292)	Bonds of 1992 Series CP	-- Principal Amount $35,000,000,

(293)	Bonds of 1993 Series C	-- Principal Amount $225,000,000,

(294)	Bonds of 1993 Series E	-- Principal Amount $400,000,000,

(295)	Bonds of 1993 Series J	-- Principal Amount $300,000,000,

(296-301)	Bonds of Series KKP Nos. 10-15	-- Principal Amount $179,590,000,

(302)	Bonds of 1989 Series BP No. 2	-- Principal Amount $36,000,000,

(303)	Bonds of 1993 Series FP	-- Principal Amount $5,685,000,

(304)	Bonds of 1993 Series IP	-- Principal Amount $5,825,000,

(305)	Bonds of 1994 Series AP	-- Principal Amount $7,535,000,

(306)	Bonds of 1994 Series BP	-- Principal Amount $12,935,000,

(307)	Bonds of 1994 Series DP	-- Principal Amount $23,700,000,

(308)	Bonds of 1994 Series C	-- Principal Amount $200,000,000,

(309)	Bonds of 2000 Series A	-- Principal Amount $2200,000,000,

(310)	Bonds of 2005 Series A	-- Principal Amount $200,000,000,

(311)	Bonds of 1995 Series AP	-- Principal Amount $97,000,000,

(312)	Bonds of 1995 Series BP	-- Principal Amount $22,175,000,



(313)	Bonds of 2001 Series D	— Principal Amount $200,000,000,

(314)	Bonds of 2005 Series B	— Principal Amount $200,000,000,

(315)	Bonds of 2006 Series CT	— Principal Amount $68,500,000,

(316)	Bonds of 2005 Series DT	— Principal Amount $119,175,000,

(317)	Bonds of 1991 Series AP	— Principal Amount $32,375,000,

(318)	Bonds of 2008 Series DT	— Principal Amount $68,500,000,

(319)	Bonds of 1993 Series AP	— Principal Amount $65,000,000,

(320)	Bonds of 2001 Series E	— Principal Amount $500,000,000,

(321)	Bonds of 2001 Series AP	— Principal Amount $31,000,000,

(322)	Bonds of 1991 Series BP	— Principal Amount $25,910,000,

(323)	Bonds of 2001 Series BP	— Principal Amount $82,350,000,

(324)	Bonds of 1999 Series AP	— Principal Amount $118,360,000,

(325)	Bonds of 1999 Series CP	— Principal Amount $66,565,000,

(326)	Bonds of 1999 Series BP	— Principal Amount $39,745,000,

(327)	Bonds of 2001 Series CP	— Principal Amount $139,855,000,

(328)	Bonds of 2000 Series B	— Principal Amount $50,745,000,

(329)	Bonds of 2002 Series A	— Principal Amount $225,000,000,

(330)	Bonds of 2002 Series C	— Principal Amount $64,300,000,

(331)	Bonds of 2002 Series D	— Principal Amount $55,975,000, and

(332)	Bonds of 2009 Series CT	— Principal Amount $65,000,000,

	all of which have either been retired and cancelled, or no longer represent obligations of the Company, having matured or having been called for redemption and funds necessary to effect the payment, redemption and retirement thereof having been deposited with the Trustee as a special trust fund to be applied for such purpose;

(333)	Bonds of 1990 Series B in the principal amount of Two hundred fifty-six million nine hundred thirty-two thousand dollars ($256,932,000) of which Two hundred eighteen million eight hundred sixty-eight thousand dollars ($218,868,000) principal amount have heretofore been retired;

(334)	Bonds of 1990 Series C in the principal amount of Eighty-five million four hundred seventy-five thousand dollars ($85,475,000) of which Seventy-eight million six hundred thirty-seven thousand dollars ($78,637,000) principal amount have heretofore been retired;



	(335)		INTENTIONALLY RESERVED FOR 1990 SERIES E;

	(336)		INTENTIONALLY RESERVED FOR 1990 SERIES F;

	(337)		Bonds of 1991 Series CP in the principal amount of Thirty-two million eight hundred thousand dollars ($32,800,000), all of which are outstanding at the date hereof;
	(338)		Bonds of 1991 Series DP in the principal amount of Thirty-seven million six hundred thousand dollars ($37,600,000), all of which are outstanding at the date hereof;

	(339)		Bonds of 1992 Series AP in the principal amount of Sixty-six million dollars ($66,000,000), all of which are outstanding at the date hereof;

	(340)		Bonds of 2002 Series B in the principal amount of Two hundred twenty-five million dollars ($225,000,000), all of which are outstanding at the date hereof;

	(341)		Bonds of 2003 Series A in the principal amount of Forty-nine million dollars ($49,000,000), all of which are outstanding at the date hereof;

	(342)		Bonds of 2004 Series A in the principal amount of Thirty-six million dollars ($36,000,000), all of which are outstanding at the date hereof;

	(343)		Bonds of 2004 Series B in the principal amount of Thirty-one million nine hundred eighty thousand dollars ($31,980,000), all of which are outstanding at the date hereof;

	(344)		Bonds of 2004 Series D in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof;

	(345)		Bonds of 2005 Series AR in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof;

	(346)		Bonds of 2005 Series BR in the principal amount of Two hundred million dollars ($200,000,000), all of which are outstanding at the date hereof;

	(347)		Bonds of 2005 Series C in the principal amount of One hundred million dollars ($100,000,000), all of which are outstanding at the date hereof;

	(348)		Bonds of 2005 Series E in the principal amount of Two hundred fifty million dollars ($250,000,000), all of which are outstanding at the date hereof;

	(349)		Bonds of 2006 Series A in the principal amount of Two hundred fifty million dollars ($250,000,000), all of which are outstanding at the date hereof;

	(350)		Bonds of 2007 Series A in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof;

	(351)		Bonds of 2008 Series ET in the principal amount of One hundred nineteen million one hundred seventy-five thousand dollars ($119,175,000), all of which are outstanding at the date hereof;

	(352)		Bonds of 2008 Series G in the principal amount of Three hundred million dollars ($300,000,000), all of which are outstanding at the date hereof;



	(353)		Bonds of 2008 Series KT in the principal amount of Thirty-two million three hundred seventy-five thousand dollars ($32,375,000), all of which are outstanding at the date hereof;

	(354)		Bonds of 2008 Series J in the principal amount of Two hundred fifty million dollars ($250,000,000), all of which are outstanding at the date hereof;

	(355)		Bonds of 2008 Series LT in the principal amount of Fifty million dollars ($50,000,000), all of which are outstanding at the date hereof;

	(356)		Bonds of 2009 Series BT in the principal amount of Sixty-eight million five hundred thousand dollars ($68,500,000), all of which are outstanding at the date hereof;

	(357)		Bonds of 2010 Series B in the principal amount of Three hundred million dollars ($300,000,000), all of which are outstanding at the date hereof;

	(358)		Bonds of 2010 Series A in the principal amount of Three hundred million dollars ($300,000,000), all of which are outstanding at the date hereof;



	(359)		Bonds of 2010 Series CT in the principal amount of Nineteen million eight hundred fifty-five thousand dollars ($19,855,000), all of which are outstanding at the date hereof;

	(360)		Bonds of 2011 Series AT in the principal amount of Thirty-one million dollars ($31,000,000), all of which are outstanding at the date hereof;

	(361)		Bonds of 2011 Series B in the principal amount of Two hundred fifty million dollars ($250,000,000), all of which are outstanding at the date hereof;

	(362)		Bonds of 2011 Series GT in the principal amount of Eight-two million three hundred fifty thousand dollars ($82,350,000), all of which are outstanding at the date hereof;

	(363)		Bonds of 2011 Series D in the principal amount of One hundred two million dollars ($102,000,000), all of which are outstanding at the date hereof;

	(364)		Bonds of 2011 Series E in the principal amount of Seventy-seven million dollars ($77,000,000), all of which are outstanding at the date hereof;

	(365)		Bonds of 2011 Series F in the principal amount of Forty-six million dollars ($46,000,000), all of which are outstanding at the date hereof;

	(366)		Bonds of 2011 Series H in the principal amount of One hundred forty million dollars ($140,000,000), all of which are outstanding at the date hereof;
	(367)		Bonds of 2012 Series A in the principal amount of Two hundred fifty million dollars ($250,000,000), all of which are outstanding at the date hereof; and
	(368)		Bonds of 2012 Series B in the principal amount of Two hundred fifty million dollars ($250,000,000), all of which are outstanding at the date hereof;



	accordingly, the Company has issued and has presently outstanding Four billion, four hundred forty-one million, five hundred thirty-seven thousand dollars ($4,441,537,000) aggregate principal amount of its General and Refunding Mortgage Bonds (the “Bonds”) at the date hereof.
REASON FOR CREATION OF NEW SERIES.	WHEREAS, the Company desires to issue a new series of bonds pursuant to the Indenture; and

BONDS TO BE 2013 SERIES A.	WHEREAS, the Company desires by this Supplemental Indenture to create a new series of bonds, to be designated “General and Refunding Mortgage Bonds, 2013 Series A,” in the aggregate principal amount of Three hundred and seventy-five million dollars ($375,000,000), to be authenticated and delivered pursuant to Section 8 of Article III of the Indenture; and

FURTHER ASSURANCE.	WHEREAS, the Original Indenture, by its terms, includes in the property subject to the lien thereof all of the estates and properties, real, personal and mixed, rights, privileges and franchises of every nature and kind and wheresoever situate, then or thereafter owned or possessed by or belonging to the Company or to which it was then or at any time thereafter might be entitled in law or in equity (saving and excepting, however, the property therein specifically excepted or released from the lien thereof), and the Company therein covenanted that it would, upon reasonable request, execute and deliver such further instruments as may be necessary or proper for the better assuring and confirming unto the Trustee all or any part of the trust estate, whether then or thereafter owned or acquired by the Company (saving and excepting, however, property specifically excepted or released from the lien thereof); and

AUTHORIZATION OF SUPPLEMENTAL INDENTURE.	WHEREAS, the Company in the exercise of the powers and authority conferred upon and reserved to it under and by virtue of the provisions of the Indenture, and pursuant to resolutions of its Board of Directors, has duly resolved and determined to make, execute and deliver to the Trustee a supplemental indenture in the form hereof for the purposes herein provided; and

	WHEREAS, all conditions and requirements necessary to make this Supplemental Indenture a valid and legally binding instrument in accordance with its terms have been done, performed and fulfilled, and the execution and delivery hereof have been in all respects duly authorized;

CONSIDERATION FOR SUPPLEMENTAL INDENTURE.	NOW, THEREFORE, THIS INDENTURE WITNESSETH: That DTE Electric Company, in consideration of the premises and of the covenants contained in the Indenture and of the sum of One Dollar ($1.00) and other good and valuable consideration to it duly paid by the Trustee at or before the ensealing and delivery of these presents, the receipt whereof is hereby acknowledged, hereby covenants and agrees to and with the Trustee and its successors in the trusts under the Original Indenture and in said indentures supplemental thereto as follows:



	PART I. CREATION OF THREE HUNDRED SIXTY-NINTH SERIES OF BONDS, GENERAL AND REFUNDING MORTGAGE BONDS, 2013 SERIES A
TERMS OF BONDS OF 2013 SERIES A.	SECTION 1. The Company hereby creates the three hundred sixty-ninth series of bonds to be issued under and secured by the Original Indenture as amended to date and as further amended by this Supplemental Indenture, to be designated, and to be distinguished from the bonds of all other series, by the title “General and Refunding Mortgage Bonds, 2013 Series A” (elsewhere herein referred to as the “bonds of 2013 Series A”). The aggregate principal amount of bonds of 2013 Series A shall be limited to Three hundred and seventy-five million dollars ($375,000,000), except as provided in Sections 7 and 13 of Article II of the Original Indenture with respect to exchanges and replacements of bonds, and except further that the Company may, without the consent of any holder of the bonds of 2013 Series A, “reopen” the bonds of 2013 Series A, so long as any additional bonds of 2013 Series A have the same tenor and terms as the bonds of 2013 Series A established hereby.

	The bonds of 2013 Series A shall be issued as registered bonds without coupons in denominations of a multiple of $1,000. The bonds of 2013 Series A shall be issued in the aggregate principal amount of $375,000,000, shall mature on April 1, 2043 (subject to earlier redemption or release) and shall bear interest, payable semi-annually on April 1 and October 1 of each year (commencing October 1, 2013), at the rate of four percent (4.00%) per annum until the principal thereof shall have become due and payable and thereafter until the Company's obligation with respect to the payment of said principal shall have been discharged as provided in the Indenture. The bonds of 2013 Series A will be issued in book-entry form through the facilities of The Depository Trust Company. Except as otherwise specifically provided in this Supplemental Indenture, the bonds of 2013 Series A shall be payable, as to principal, premium, if any, and interest, at the office or agency of the Company in the Borough of Manhattan, the City and State of New York, in any coin or currency of the United States of America which at the time of payment is legal tender for public and private debts.

	Except as provided herein, each bond of 2013 Series A shall be dated the date of its authentication and interest shall be payable on the principal represented thereby from the April 1 or October 1 next preceding the date to which interest has been paid on bonds of 2013 Series A, unless the bond is authenticated on a date prior to October 1, 2013, in which case interest shall be payable from March 27, 2013.



	The bonds of 2013 Series A in definitive form shall be, at the election of the Company, fully engraved or shall be lithographed or printed in authorized denominations as aforesaid and numbered R-1 and upwards (with such further designation as may be appropriate and desirable to indicate by such designation the form, series and denomination of bonds of 2013 Series A). Until bonds of 2013 Series A in definitive form are ready for delivery, the Company may execute, and upon its request in writing the Trustee shall authenticate and deliver in lieu thereof, bonds of 2013 Series A in temporary form, as provided in Section 10 of Article II of the Indenture. Temporary bonds of 2013 Series A if any, may be printed and may be issued in authorized denominations in substantially the form of definitive bonds of 2013 Series A, but without a recital of redemption prices and with such omissions, insertions and variations as may be appropriate for temporary bonds, all as may be determined by the Company.

	Interest on any bond of 2013 Series A that is payable on any interest payment date and is punctually paid or duly provided for shall be paid to the person in whose name that bond, or any previous bond to the extent evidencing the same debt as that evidenced by that bond, is registered at the close of business on the regular record date for such interest, which regular record date shall be the fifteenth calendar day (whether or not such day is a business day) immediately preceding the applicable interest payment date. If the Company shall default in the payment of the interest due on any interest payment date on the principal represented by any bond of 2013 Series A, such defaulted interest shall forthwith cease to be payable to the registered holder of that bond on the relevant regular record date by virtue of his having been such holder, and such defaulted interest may be paid to the registered holder of that bond (or any bond or bonds of 2013 Series A issued upon transfer or exchange thereof) on the date of payment of such defaulted interest or, at the election of the Company, to the person in whose name that bond (or any bond or bonds of 2013 Series A issued upon transfer or exchange thereof) is registered on a subsequent record date established by notice given by mail by or on behalf of the Company to the holders of bonds of 2013 Series A not less than ten (10) days preceding such subsequent record date, which subsequent record date shall be at least five (5) days prior to the payment date of such defaulted interest. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

	Bonds of 2013 Series A, in definitive and temporary form, may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto.

	If any interest payment date, date of redemption or the stated maturity for the bonds of 2013 Series A would otherwise be a day that is not a business day, payment of principal and/or interest or premium, if any, with respect to the bonds of 2013 Series A will be paid on the next succeeding business day with the same force and effect as if made on such date and no interest on such payment will accrue from and after such date.

	“Business day” means any day other than a day on which banking institutions in The State of New York or the State of Michigan are authorized or obligated pursuant to law or executive order to close.



REDEMPTION OF BONDS OF 2013 SERIES A.	SECTION 2. Bonds of 2013 Series A will be redeemable at the option of the Company, in whole at any time or in part from time to time at the redemption prices set forth below.

	At any time prior to October 1, 2042, the optional redemption price will be equal to the greater of (i) 100% of the principal amount of the bonds of 2013 Series A to be redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest of the bonds of 2013 Series A to be redeemed (not including any portion of any payments of interest accrued to the redemption date) until stated maturity, in each case discounted from their respective scheduled payment dates to such redemption date on a semiannual basis (assuming a 360-day year consisting of 30-day months) at the Adjusted Treasury Rate (as defined below) plus 15 basis points, as determined by the Reference Treasury Dealer (as defined below), plus, in each case, accrued and unpaid interest thereon to the redemption date.

	At any time on or after October 1, 2042, the optional redemption price will be equal to 100% of the principal amount of the bonds of 2013 Series A to be redeemed plus accrued and unpaid interest thereon to the redemption date.

	Notwithstanding the foregoing, installments of interest on the bonds of 2013 Series A that are due and payable on interest payment dates falling on or prior to a redemption date will be payable on the interest payment date to the registered holders as of the close of business on the relevant record date.

	“Adjusted Treasury Rate” means, with respect to any optional redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue (as defined below), calculated on the third Business Day preceding such redemption date assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

	“Comparable Treasury Issue” means the United States Treasury security selected by the Reference Treasury Dealer as having a maturity comparable to the remaining term of the bonds of 2013 Series A that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the bonds of 2013 Series A.

	“Comparable Treasury Price” means, with respect to any optional redemption date, (i) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such quotations, or (iii) if only one Reference Treasury Dealer Quotation is received, such quotation.

	“Reference Treasury Dealer” means (i) each of Barclays Capital Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and RBS Securities Inc. and (or their respective affiliates which are Primary Treasury Dealers), and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. government securities dealer in the United States (a “Primary Treasury Dealer”), we will substitute therefor another Primary Treasury Dealer, and (ii) any other Primary Treasury Dealer(s) selected by the mortgage trustee after consultation with us.



	“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any optional redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such redemption date.

	The bonds of 2013 Series A shall be redeemable as aforesaid upon giving notice of such redemption by first class mail, postage prepaid, by or on behalf of the Company at least thirty (30) days, but not more than sixty (60) days, prior to the date fixed for redemption to the registered holders of bonds of 2013 Series A so called for redemption at their last respective addresses appearing on the register thereof, but failure to mail such notice to the registered holders of any bonds of 2013 Series A designated for redemption shall not affect the validity of any such redemption of any other bonds of such series. Interest shall cease to accrue on any bonds of 2013 Series A (or any portion thereof) so called for redemption from and after the date fixed for redemption if payment sufficient to redeem the bonds of 2013 Series A (or such portion) designated for redemption has been duly provided for. Bonds of 2013 Series A redeemed in part only shall be in amounts of $1,000 or any multiple thereof.

	If the giving of the notice of redemption shall have been completed, or if provision satisfactory to the Trustee for the giving of such notice shall have been made, and if the Company shall have deposited with the Trustee in trust funds (which shall have become available for payment to the holders of the bonds of 2013 Series A so to be redeemed) sufficient to redeem bonds of 2013 Series A in whole or in part, on the date fixed for redemption, then all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and interest due or to become due thereon shall cease and be discharged and the holders of such bonds of 2013 Series A (or portions thereof) shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or in respect of such bonds (or portions thereof) and interest.

	The bonds of 2013 Series A shall not be entitled to or subject to any sinking fund and shall not be redeemable other than as provided in Section 2 hereof.

EXCHANGE AND TRANSFER.	SECTION 3. At the option of the registered holder, any bonds of 2013 Series A, upon surrender thereof for cancellation at the office or agency of the Company in the Borough of Manhattan, the City and State of New York, together with a written instrument of transfer (if so required by the Company or by the Trustee) in form approved by the Company duly executed by the holder or by its duly authorized attorney, shall be exchangeable for a like aggregate principal amount of bonds of 2013 Series A upon the terms and conditions specified herein and in Section 7 of Article II of the Indenture. The Company waives its rights under Section 7 of Article II of the Indenture not to make exchanges or transfers of bonds of 2013 Series A during any period of ten (10) days next preceding any redemption date for such bonds.

	Bonds of 2013 Series A, in definitive and temporary form, may bear such legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto.



FORM OF BONDS OF 2013 SERIES A.	SECTION 4. The bonds of 2013 Series A and the form of Trustee's Certificate to be endorsed on such bonds shall be substantially in the following forms, respectively:

	DTE ELECTRIC COMPANY GENERAL AND REFUNDING MORTGAGE BOND 2013 SERIES A

	[This bond is a global security within the meaning of the indenture hereinafter referred to and is registered in the name of a depository or a nominee of a depository. Unless and until it is exchanged in whole or in part for bonds in certificated form, this bond may not be transferred except as a whole by the Depository Trust Company (“DTC”) to a nominee of DTC or by DTC or any such nominee to a successor of DTC or any such nominee to a successor of DTC or a nominee of such successor. Unless this bond is presented by an authorized representative of DTC to the issuer or its agent for registration of transfer, exchange or payment, and any bond issued is registered in the name of Cede & Co. or in such other name as requested by an authorized representative of DTC (and any payment hereon is made to Cede & Co., or to such other entity as is requested by an authorized representative of DTC) any transfer, pledge or other use hereof for value or otherwise by a person is wrongful, inasmuch as the registered owner hereof, Cede & Co., has an interest herein.]

	CUSIP
	$______________No. R-___

	DTE ELECTRIC COMPANY (hereinafter called the “Company”), a corporation of the State of Michigan, for value received, hereby promises to pay to [Cede & Co.], or registered assigns, at the Company's office or agency in the Borough of Manhattan, the City and State of New York, the principal sum of ________________________Dollars ($___________) in lawful money of the United States of America on April 1, 2043 (subject to earlier redemption or release) and interest thereon at the rate of 4.00% per annum, in like lawful money, from March 27, 2013, and after the first payment of interest on bonds of this Series has been made or otherwise provided for, from the most recent date to which interest has been paid or otherwise provided for, semi-annually on April 1 and October 1 of each year (commencing October 1, 2013), until the Company's obligation with respect to payment of said principal shall have been discharged, all as provided, to the extent and in the manner specified in the Indenture hereinafter mentioned and in the supplemental indenture pursuant to which this bond has been issued.

	This bond is one of an authorized issue of bonds of the Company, unlimited as to amount except as provided in the Indenture hereinafter mentioned or any indentures supplemental thereto, and is one of a series of General and Refunding Mortgage Bonds known as 2013 Series A, limited to an aggregate principal amount of $375,000,000, except as otherwise provided in the Indenture hereinafter mentioned. This bond and all other bonds of said series are issued and to be issued under, and are all equally and ratably secured (except insofar as any sinking, amortization, improvement or analogous fund, established in accordance with the provisions of the Indenture hereinafter mentioned, may afford additional security for the bonds of any particular series and except as provided in Section 3 of Article VI of said Indenture) by an Indenture, dated as of October 1, 1924, duly executed by the Company to The



	preceding such redemption date assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

	“Comparable Treasury Issue” means the United States Treasury security selected by the Reference Treasury Dealer as having a maturity comparable to the remaining term of this bond that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of this bond.

	“Comparable Treasury Price” means, with respect to any optional redemption date, (i) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such quotations, or (iii) if only one Reference Treasury Dealer Quotation is received, such quotation.

	“Reference Treasury Dealer” means (i) each of Barclays Capital Inc., Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, and RBS Securities Inc. (or their respective affiliates which are Primary Treasury Dealers), and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. government securities dealer in the United States (a “Primary Treasury Dealer”), we will substitute therefor another Primary Treasury Dealer, and (ii) any other Primary Treasury Dealer(s) selected by the mortgage trustee after consultation with us.

	“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any optional redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such redemption date.

	Notice of any optional redemption will be mailed at least 30 days but not more than 60 days before the optional redemption date to the holder hereof at its registered address. If notice has been provided in accordance with the Indenture and funds for the redemption of this bond called for redemption have been made available on the redemption date, this bond will cease to bear interest on the date fixed for redemption. Thereafter, the only right of the holder hereof will be to receive payment of the redemption price.

	Under the Indenture, funds may be deposited with the Trustee (which shall have become available for payment), in advance of the redemption date of any of the bonds of 2013 Series A (or portions thereof), in trust for the redemption of such bonds (or portions thereof) and the interest due or to become due thereon, and thereupon all obligations of the Company in respect of such bonds (or portions thereof) so to be redeemed and such interest shall cease and be discharged, and the holders thereof shall thereafter be restricted exclusively to such funds for any and all claims of whatsoever nature on their part under the Indenture or with respect to such bonds (or portions thereof) and interest.



	In case an event of default, as defined in the Indenture, shall occur, the principal of all the bonds issued thereunder may become or be declared due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture.

	The bonds of this series are issuable only in fully registered form without coupons in denominations of $1,000 and any integral multiple thereof. This Global Security is exchangeable for bonds in definitive form only under certain limited circumstances set forth in the Indenture. As provided in the Indenture and subject to certain limitations therein set forth, bonds of this series are exchangeable for a like aggregate principal amount of bonds of this series of a different authorized denomination, as requested by the registered holder surrendering the same.

	This bond is transferable by the registered holder hereof, in person or by his attorney duly authorized in writing, on the books of the Company kept at its office or agency in the Borough of Manhattan, the City and State of New York, upon surrender and cancellation of this bond, and thereupon, a new registered bond of the same series of authorized denominations for a like aggregate principal amount will be issued to the transferee in exchange therefor, and this bond with others in like form may in like manner be exchanged for one or more new bonds of the same series of other authorized denominations, but of the same aggregate principal amount, all as provided and upon the terms and conditions set forth in the Indenture, and upon payment, in any event, of the charges prescribed in the Indenture.

	No recourse shall be had for the payment of the principal of or the interest on this bond, or for any claim based hereon or otherwise in respect hereof or of the Indenture, or of any indenture supplemental thereto, against any incorporator, or against any past, present or future stockholder, director or officer, as such, of the Company, or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether for amounts unpaid on stock subscriptions or by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise howsoever; all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released by every holder or owner hereof, as more fully provided in the Indenture.

	This bond shall not be valid or become obligatory for any purpose until The Bank of New York Mellon Trust Company, N.A., the Trustee under the Indenture, or its successor thereunder, shall have signed the form of certificate endorsed hereon.



	IN WITNESS WHEREOF, DTE ELECTRIC COMPANY has caused this instrument to be executed by an authorized officer, with his or her manual or facsimile signatures, and its corporate seal, or a facsimile thereof, to be impressed or imprinted hereon and the same to be attested by its Corporate Secretary or Assistant Corporate Secretary by manual or facsimile signature.

	Dated: _____________ DTE ELECTRIC COMPANY

	By: Name: Title:

	[Corporate Seal]

	Attest: By: Name: Title:

	[FORM OF TRUSTEE'S CERTIFICATE]

FORM OF TRUSTEE'S CERTIFICATE.	This bond is one of the bonds, of the series designated therein, described in the within-mentioned Indenture.
	THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
	By: Authorized Representative



	PART III.

	RECORDING AND FILING DATA

RECORDING AND FILING OF ORIGINAL INDENTURE.	The Original Indenture and indentures supplemental thereto have been recorded and/or filed and Certificates of Provision for Payment have been recorded as hereinafter set forth.
	The Original Indenture has been recorded as a real estate mortgage and filed as a chattel Mortgage in the offices of the respective Registers of Deeds of certain counties in the State of Michigan as set forth in the Supplemental Indenture dated as of September 1, 1947, has been recorded as a real estate mortgage in the office of the Register of Deeds of Mason County, Michigan as set forth in the Supplemental Indenture dated as of June 15, 1971, has been recorded as a real estate mortgage in the office of the Register of Deeds of Genesee County, Michigan as set forth in the Supplemental Indenture dated as of May 1, 1974, has been recorded as a real estate mortgage in the office of the Register of Deeds of Gratiot County, Michigan on June 18, 2012 at Liber 923 Page 772,



	has been recorded as a real estate mortgage in the office of the Register of Deeds of Midland County, Michigan on June 18, 2012 at Liber 1555 Page 504, has been filed in the Office of the Secretary of State of Michigan on November 16, 1951 and has been filed and recorded in the office of the Interstate Commerce Commission on December 8, 1969.
RECORDING AND FILING OF SUPPLEMENTAL INDENTURES.	Pursuant to the terms and provisions of the Original Indenture, indentures supplemental thereto heretofore entered into have been Recorded as a real estate mortgage and/or filed as a chattel mortgage or as a financing statement in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, the Office of the Secretary of State of Michigan and the Office of the Interstate Commerce Commission or the Surface Transportation Board, as set forth in supplemental indentures as follows:



Supplemental Indenture Dated as of	Purpose of Supplemental Indenture	Recorded and/or Filed as Set Forth in Supplemental Indenture Dated as of
June 1, 1925(a)(b)	Series B Bonds	February 1, 1940
August 1, 1927(a)(b)	Series C Bonds	February 1, 1940
February 1, 1931(a)(b)	Series D Bonds	February 1, 1940
June 1, 1931(a)(b)	Subject Properties	February 1, 1940
October 1, 1932(a)(b)	Series E Bonds	February 1, 1940
September 25, 1935(a)(b)	Series F Bonds	February 1, 1940
September 1, 1936(a)(b)	Series G Bonds	February 1, 1940
November 1, 1936(a)(b)	Subject Properties	February 1, 1940
February 1, 1940(a)(b)	Subject Properties	September 1, 1947
December 1, 1940(a)(b)	Series H Bonds and Additional Provisions	September 1, 1947
September 1, 1947(a)(b)(c)	Series I Bonds, Subject Properties and Additional Provisions	November 15, 1951
March 1, 1950(a)(b)(c)	Series J Bonds and Additional Provisions	November 15, 1951
November 15, 1951(a)(b)(c)	Series K Bonds, Additional Provisions and Subject Properties	January 15, 1953
January 15, 1953(a)(b)	Series L Bonds	May 1, 1953
May 1, 1953(a)	Series M Bonds and Subject Properties	March 15, 1954
March 15, 1954(a)(c)	Series N Bonds and Subject Properties	May 15, 1955
May 15, 1955(a)(c)	Series O Bonds and Subject Properties	August 15, 1957
August 15, 1957(a)(c)	Series P Bonds, Additional Provisions and Subject Properties	June 1, 1959
June 1, 1959(a)(c)	Series Q Bonds and Subject Properties	December 1, 1966
December 1, 1966(a)(c)	Series R Bonds, Additional Provisions and Subject Properties	October 1, 1968
October 1, 1968(a)(c)	Series S Bonds and Subject Properties	December 1, 1969
December 1, 1969(a)(c)	Series T Bonds and Subject Properties	July 1, 1970



RECORDING AND FILING OF SUPPLEMENTAL INDENTURE DATED AS OF JUNE 20, 2012.	Further, pursuant to the terms and provisions of the Original Indenture, a Supplemental Indenture dated as of June 20, 2012 providing for the terms of bonds to be issued thereunder of 2012 Series A and Series B has heretofore been entered into between the Company and the Trustee and has been filed in the Office of the Secretary of State of Michigan as a financing statement on June 22, 2012 (Filing No. 2012090798-4), has been filed and recorded in the Office of the Surface Transportation Board on June 22, 2012 (Recordation No. 5485666666), and has been recorded as a real estate mortgage in the offices of the respective Register of Deeds of certain counties in the State of Michigan, as follows:



County	Recorded	Liber/ Instrument no.	Page
Genesee	6/29/2012	201,206,290,056,549	N/A
Gratiot	6/22/2012	924	60
Huron	6/22/2012	1,404	779
Ingham	6/22/2012	2012-027489	N/A
Lapeer	6/22/2012	2,570	301
Lenawee	6/22/2012	2,447	676
Livingston	6/22/2012	2012R-021593	N/A
Macomb	7/9/2012	21,420	302
Mason	6/22/2012	2012R04189	N/A
Midland	6/22/2012	1,555	794
Monroe	6/22/2012	2012R14147	N/A
Oakland	7/12/2012	44,404	187
St. Clair	6/22/2012	4,269	1
Sanilac	6/22/2012	1,169	883
Tuscola	6/22/2012	1,253	355
Washtenaw	6/25/2012	4,913	331
Wayne	6/22/2012	49,949	1,323



RECORDING OF AFFIDAVIT OF FACTS AFFECTING REAL PROPERTY.	An Affidavit of Facts Affecting Real Property dated February 11, 2013 (the “Affidavit”) has been recorded in the offices of the respective Registers of Deeds of certain counties in the State of Michigan. The Affidavit, signed by the Company's President and Chief Operating Officer, was given pursuant to MCL 565.451a to give notice of the fact that pursuant to a joint resolution of the Company's sole shareholder and its board of directors, the Company amended its articles of incorporation effective January 1, 2013 to change its name from THE DETROIT EDISON COMPANY to DTE ELECTRIC COMPANY.
RECORDING OF CERTIFICATES OF PROVISION FOR PAYMENT.	Certificates of Provision for Payment have been recorded in the offices of the respective Registers of Deeds of certain counties in the State of Michigan, with respect to all bonds of Series A, B, C, D, E, F, G, H, K, L, M, O, W, BB, CC, DDP Nos. 1 and 2, FFR Nos. 1-3, GGP Nos. 1 and 2, IIP No. 1, JJP No. 1, KKP No. 1, LLP No. 1 and GGP No. 8.



	PART IV.

	THE TRUSTEE.

TERMS AND CONDITIONS OF ACCEPTANCE OF TRUST BY TRUSTEE.	The Trustee hereby accepts the trust hereby declared and provided, and agrees to perform the same upon the terms and conditions in the Original Indenture, as amended to date and as supplemented by this Supplemental Indenture, and in this Supplemental Indenture set forth, and upon the following terms and conditions:

	The Trustee shall not be responsible in any manner whatsoever for and in respect of the validity or sufficiency of this Supplemental Indenture or the due execution hereof by the Company or for or in respect of the recitals contained herein, all of which recitals are made by the Company solely.



	PART V.

	MISCELLANEOUS.

CONFIRMATION OF SECTION 318(c) OF TRUST INDENTURE ACT.	Except to the extent specifically provided therein, no provision of this Supplemental Indenture or any future supplemental indenture is intended to modify, and the parties do hereby adopt and confirm, the provisions of Section 318(c) of the Trust Indenture Act which amend and supersede provisions of the Indenture in effect prior to November 15, 1990.
EXECUTION IN COUNTERPARTS.	THIS SUPPLEMENTAL INDENTURE MAY BE SIMULTANEOUSLY EXECUTED IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED SHALL BE DEEMED TO BE AN ORIGINAL; BUT SUCH COUNTERPARTS SHALL TOGETHER CONSTITUTE BUT ONE AND THE SAME INSTRUMENT.

TESTIMONIUM.	IN WITNESS WHEREOF, DTE ELECTRIC COMPANY AND THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. HAVE CAUSED THESE PRESENTS TO BE SIGNED IN THEIR RESPECTIVE CORPORATE NAMES BY THEIR RESPECTIVE CHAIRMEN OF THE BOARD, PRESIDENTS, VICE PRESIDENTS, ASSISTANT VICE PRESIDENTS, TREASURERS OR ASSISTANT TREASURERS AND IMPRESSED WITH THEIR RESPECTIVE CORPORATE SEALS, ATTESTED BY THEIR RESPECTIVE SECRETARIES OR ASSISTANT SECRETARIES, ALL AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.



ACKNOWLEDG-MENT OF EXECUTION BY COMPANY.		On this 25th day of March, 2013, before me, the subscriber, a Notary Public within and for the County of Wayne, in the State of Michigan, acting in the County of Wayne, personally appeared Donald J. Goshorn, to me personally known, who, being by me duly sworn, did say that he does business at One Energy Plaza, Detroit, Michigan 48226 and is the Assistant Treasurer of DTE ELECTRIC COMPANY, one of the corporations described in and which executed the foregoing instrument; that he knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that he subscribed his name thereto by like authority; and said Donald J. Goshorn acknowledged said instrument to be the free act and deed of said corporation.
(Notarial Seal)		/s/ Jennifer Evans Jennifer Evans Notary Public, Wayne County, MI Acting in Wayne My Commission Expires: December 28, 2016



ACKNOWLEDG-MENT OF EXECUTION BY TRUSTEE.		On this 26th day of March, 2013, before me, the subscriber, a Notary Public within and for the County of Wayne, in the State of Michigan, acting in the County of Wayne, personally appeared Nancy L. Packard, to me personally known, who, being by me duly sworn, did say that her business office is located at 719 Griswold Street, Suite 930, Detroit, Michigan 48226, and she is an Authorized Officer of THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., one of the corporations described in and which executed the foregoing instrument; that she knows the corporate seal of the said corporation and that the seal affixed to said instrument is the corporate seal of said corporation; and that said instrument was signed and sealed in behalf of said corporation by authority of its Board of Directors and that she subscribed her name thereto by like authority; and said Nancy L. Packard acknowledged said instrument to be the free act and deed of said corporation.
(Notarial Seal)		/s/ Jennifer Evans Jennifer Evans Notary Public, Wayne County, MI Acting in Wayne My Commission Expires: December 28, 2016



AFFIDAVIT AS TO CONSIDERATION AND GOOD FAITH.		Donald J. Goshorn, being duly sworn, says: that he is the Vice President and Treasurer of DTE ELECTRIC COMPANY, the Mortgagor named in the foregoing instrument, and that he has knowledge of the facts in regard to the making of said instrument and of the consideration therefor; that the consideration for said instrument was and is actual and adequate, and that the same was given in good faith for the purposes in such instrument set forth.


1.	I have reviewed this Quarterly Report on Form 10-Q of DTE Electric Company;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;