DTE Electric Co (Form: 10-Q, Received: 07/25/2014 11:15:13)

Large accelerated filer o

Accelerated filer o

Non-accelerated filer x

Smaller reporting company o

(Do not check if a smaller reporting company)

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 June 30, 2014

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 x 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 x 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.

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

Yes o No x

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 June 30, 2014

TABLE OF CONTENTS



	Page
Definitions	1
Forward-Looking Statements	2
Part I - FINANCIAL INFORMATION
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)	8
Item 2. Management's Narrative Analysis of Results of Operations	24
Item 4. Controls and Procedures	26
Part II - OTHER INFORMATION
Item 1. Legal Proceedings	27
Item 1A. Risk Factors	28
Item 6. Exhibits	28
SIGNATURE	29
EX-4-282
EX-4-283
EX-12-50
EX-31-91
EX-31-92
EX-32-91
EX-32-92
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



Company		DTE Electric Company and any subsidiary companies

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 Company) and subsidiary companies.

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

EPA		U.S. Environmental Protection Agency

FASB		Financial Accounting Standards Board

FERC		Federal Energy Regulatory Commission

FOV		Finding of Violation

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

MDEQ		Michigan Department of Environmental Quality

MISO		Midcontinent Independent System Operator, Inc.

MPSC		Michigan Public Service Commission

NOV		Notice of Violation

NRC		U.S. Nuclear Regulatory Commission

Production tax credits		Tax credits as authorized under Sections 45K and 45 of the Internal Revenue Code that are designed to stimulate investment in and development of alternate fuel sources. The amount of a production tax credit can vary each year as determined by the Internal Revenue Service.

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

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,” “aspiration” 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; including legislative amendments and Customer Choice programs;


•	economic conditions and population changes in our geographic area resulting in changes in demand, customer conservation and thefts of electricity;


•	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;


•	contract disputes, 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 June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(In millions)
Operating Revenues	$	1,281		$	1,265		$	2,691		$	2,484

Operating Expenses
Fuel and purchased power	400			435			898			807
Operation and maintenance	329			343			671			674
Depreciation and amortization	229			221			457			433
Taxes other than income	65			63			136			133
Asset (gains) losses and reserves, net	(1		)	1			(1		)	—
	1,022			1,063			2,161			2,047
Operating Income	259			202			530			437

Other (Income) and Deductions
Interest expense	61			68			124			134
Other income	(17		)	(9		)	(30		)	(24		)
Other expenses	8			6			15			12
	52			65			109			122
Income Before Income Taxes	207			137			421			315

Income Tax Expense	77			47			154			109

Net Income	$	130		$	90		$	267		$	206

See Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Consolidated Statements of Comprehensive Income (Unaudited)



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014			2013
	(In millions)
Net income	$	130	$	90	$	267		$	206
Other comprehensive income (loss), net of tax:
Benefit obligations, net of taxes of $1, $—, $— and $—, respectively	—		1		(1		)	1
Comprehensive income	$	130	$	91	$	266		$	207

See Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Consolidated Statements of Cash Flows (Unaudited)



	Six Months Ended June 30,
	2014			2013
	(In millions)
Operating Activities
Net income	$	267		$	206
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	457			433
Nuclear fuel amortization	19			17
Allowance for equity funds used during construction	(11		)	(6		)
Deferred income taxes	145			61
Changes in assets and liabilities:
Accounts receivable, net	(14		)	(84		)
Inventories	(28		)	43
Accounts payable	10			18
Accrued pension liability — affiliates	(83		)	(134		)
Accrued postretirement liability — affiliates	(28		)	(138		)
Regulatory assets and liabilities	(152		)	217
Other assets	(53		)	11
Other liabilities	(34		)	(27		)
Net cash from operating activities	495			617
Investing Activities
Plant and equipment expenditures	(832		)	(607		)
Restricted cash for debt redemption, principally Securitization	12			12
Notes receivable from affiliate	200			(1		)
Proceeds from sale of nuclear decommissioning trust fund assets	475			309
Investment in nuclear decommissioning trust funds	(483		)	(317		)
Other Investments	(15		)	(15		)
Net cash used for investing activities	(643		)	(619		)
Financing Activities
Issuance of long-term debt, net of issuance costs	248			371
Redemption of long-term debt	(281		)	(152		)
Short-term borrowings — other	275			(34		)
Short-term borrowings — affiliate	97			(20		)
Dividends on common stock	(185		)	(171		)
Other	(4		)	(2		)
Net cash from (used for) financing activities	150			(8		)
Net Increase (Decrease) in Cash and Cash Equivalents	2			(10		)
Cash and Cash Equivalents at Beginning of the Period	27			30
Cash and Cash Equivalents at End of the Period	$	29		$	20

Supplemental disclosure of non-cash investing and financing activities
Plant and equipment expenditures in accounts payable	$	152		$	130

See Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

Consolidated Statements of Financial Position (Unaudited)



	June 30,			December 31,
	2014			2013
	(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	29		$	27
Restricted cash, principally Securitization	88			100
Accounts receivable (less allowance for doubtful accounts of $27 and $28, respectively)
Customer	749			723
Affiliates	17			24
Other	39			24
Inventories
Fuel	210			188
Materials and supplies	221			215
Notes receivable
Affiliates	—			200
Other	12			2
Regulatory assets	52			13
Other	73			68
	1,490			1,584
Investments
Nuclear decommissioning trust funds	1,237			1,191
Other	167			160
	1,404			1,351
Property
Property, plant and equipment	19,276			18,730
Less accumulated depreciation and amortization	(7,085		)	(6,951		)
	12,191			11,779
Other Assets
Regulatory assets	2,175			2,275
Securitized regulatory assets	135			231
Intangible assets	40			41
Other	158			149
	2,508			2,696
Total Assets	$	17,593		$	17,410

See Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

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



	June 30,			December 31,
	2014			2013
	(In millions, except shares)
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Accounts payable
Affiliates	$	57		$	60
Other	359			424
Accrued interest	57			61
Current portion long-term debt, including capital leases	215			504
Regulatory liabilities	148			278
Deferred income taxes	103			91
Short-term borrowings
Affiliates	155			58
Other	275			—
Other	150			177
	1,519			1,653
Long-Term Debt (net of current portion)
Mortgage bonds, notes and other	4,905			4,540
Securitization bonds	—			105
Capital lease obligations	—			4
	4,905			4,649
Other Liabilities
Deferred income taxes	2,937			2,807
Regulatory liabilities	293			386
Asset retirement obligations	1,717			1,667
Unamortized investment tax credit	37			41
Nuclear decommissioning	180			178
Accrued pension liability — affiliates	622			705
Accrued postretirement liability — affiliates	341			369
Other	107			101
	6,234			6,254

Commitments and Contingencies (Notes 7 and 10)

Shareholder’s Equity
Common stock, $10 par value, 400,000,000 shares authorized, and 138,632,324 shares issued and outstanding	3,596			3,596
Retained earnings	1,356			1,274
Accumulated other comprehensive loss	(17		)	(16		)
	4,935			4,854
Total Liabilities and Shareholder’s Equity	$	17,593		$	17,410

See Notes to Consolidated Financial Statements (Unaudited)

DTE Electric Company

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



				Additional Paid-in Capital					Accumulated Other Comprehensive Loss
	Common Stock					Retained Earnings
	Shares	Amount				Retained Earnings						Total
	(Dollars in millions, shares in thousands)
Balance, December 31, 2013	138,632	$	1,386	$	2,210	$	1,274		$	(16	)	$	4,854
Net income	—	—		—		267			—			267
Dividends declared on common stock	—	—		—		(185		)	—			(185		)
Benefit obligations, net of tax	—	—		—		—			(1		)	(1		)
Balance, June 30, 2014	138,632	$	1,386	$	2,210	$	1,356		$	(17	)	$	4,935

See 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 2013 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 present 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 the fiscal year ending December 31, 2014.

Certain prior year balances were reclassified to match the current year's financial statement presentation. Such revisions included an increase in the Consolidated Statements of Cash Flows line items for (i) Proceeds from sale of nuclear decommissioning trust funds, and (ii) Investment in nuclear decommissioning trust funds by $282 million for the six months ended June 30, 2013. These revisions were needed to properly state the gross purchases and sales activity in the nuclear decommissioning trust fund for the six months ended June 30, 2013. The total of Net cash used in investing activities for the six months ended June 30, 2013 was unchanged by these revisions. The revisions noted above are not deemed material, individually or in the aggregate, to the prior period consolidated financial statements.

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. 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 plants. 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.

DTE Electric Company

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

The Company has variable interests in VIEs through certain of its long-term purchase contracts. As of June 30, 2014, 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 significant 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.

The following table summarizes the major balance sheet items as of June 30, 2014 and December 31, 2013 restricted for Securitization that are either (1) assets that can be used only to settle their obligations related to Securitization or (2) liabilities for which creditors do not have recourse to the general credit of the primary beneficiary.



	June 30,		December 31,
	2014		2013
	(In millions)
ASSETS
Restricted cash	$	88	$	100
Accounts receivable	39		34
Securitized regulatory assets	135		231
Other long-term assets	2		4
	$	264	$	369

LIABILITIES
Accounts payable and accrued current liabilities	$	5	$	7
Current portion long-term debt	201		196
Current regulatory liabilities	41		43
Securitization bonds	—		105
Other long-term liabilities	8		8
	$	255	$	359

DTE Electric Company

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

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Comprehensive Income (Loss)

Comprehensive income (loss) is the change in common shareholders' equity during a period from transactions and events from non-owner sources, including net income. As shown in the following tables, amounts recorded to accumulated other comprehensive loss for the three and six months ended June 30, 2014 include unrealized gains and losses on available-for-sale securities, and changes in benefit obligations, consisting of deferred actuarial losses, prior service costs and transition amounts related to pension and other postretirement benefit plans.



	Changes in Accumulated Other Comprehensive Loss by Component (a)
	Three Months Ended June 30, 2014
	Net Unrealized Gain/(Loss) on Investments		Benefit Obligations			Total
	(In millions)
Beginning balance, March 31, 2014	$	1	$	(18	)	$	(17	)
Other comprehensive income before reclassifications	—		—			—
Amounts reclassified from Accumulated other comprehensive income	—		—			—
Net current-period other comprehensive income	—		—			—
Ending balance, June 30, 2014	$	1	$	(18	)	$	(17	)



	Changes in Accumulated Other Comprehensive Loss by Component (a)
	Six Months Ended June 30, 2014
	Net Unrealized Gain/(Loss) on Investments		Benefit Obligations			Total
	(In millions)
Beginning balance, December 31, 2013	$	1	$	(17	)	$	(16	)
Other comprehensive income before reclassifications	—		(1		)	(1		)
Amounts reclassified from Accumulated other comprehensive income	—		—			—
Net current-period other comprehensive income	—		(1		)	(1		)
Ending balance, June 30, 2014	$	1	$	(18	)	$	(17	)

_______________________________________

(a) All amounts are net of tax.

Intangible Assets

The Company has certain intangible assets relating to emission allowances and renewable energy credits as shown below:



	June 30,		December 31,
	2014		2013
	(In millions)
Emission allowances	$	2	$	2
Renewable energy credits	51		51
	53		53
Less current intangible assets	13		12
	$	40	$	41

Emission allowances and renewable energy credits are charged to expense, using average cost, as the allowances and credits are consumed in the operation of the business.

DTE Electric Company

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

Income Taxes

The Company's effective tax rate for the three months ended June 30, 2014 was 37% as compared to 34% for the three months ended June 30, 2013. The Company's effective tax rate for the six months ended June 30, 2014 was 37% as compared to 35% for the six months ended June 30, 2013. The increases in the effective tax rates are due primarily to a reduction in the domestic production activities tax benefit.

DTE Electric had an income tax receivable of $16 million at June 30, 2014 and $23 million at December 31, 2013 due from DTE Energy.

The Company had $3 million of unrecognized tax benefits at June 30, 2014, 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 $ 10 million and $ 19 million for the three months ended June 30, 2014 and 2013, respectively while such allocation was $29 million and $33 million for the six months ended June 30, 2014 and 2013, respectively.

NOTE 3 — NEW ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. The objectives of this ASU are to improve upon revenue recognition requirements by providing a single comprehensive model to determine the measurement of revenue and timing of recognition. The core principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. This ASU also requires expanded qualitative and quantitative disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers. The revenue standard is effective for the first interim period within annual reporting periods beginning after December 15, 2016 and is to be applied retrospectively. Early adoption is not permitted. The Company is currently assessing the impact of this ASU on its consolidated financial statements.

NOTE 4 — 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 June 30, 2014 and December 31, 2013. 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.

DTE Electric Company

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


•	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 June 30, 2014 and December 31, 2013:



	June 30, 2014								December 31, 2013
	Level 1		Level 2		Level 3		Net Balance		Level 1		Level 2		Level 3		Net Balance
	(In millions)
Assets:
Cash equivalents (a)	$	5	$	96	$	—	$	101	$	2	$	114	$	—	$	116
Nuclear decommissioning trusts	798		439		—		1,237		779		412		—		1,191
Other investments (b)	92		50		—		142		91		44		—		135
Derivative assets — FTRs	—		—		7		7		—		—		3		3
Total	$	895	$	585	$	7	$	1,487	$	872	$	570	$	3	$	1,445

Assets:
Current	$	5	$	96	$	7	$	108	$	2	$	114	$	3	$	119
Noncurrent	890		489		—		1,379		870		456		—		1,326
Total Assets	$	895	$	585	$	7	$	1,487	$	872	$	570	$	3	$	1,445

_______________________________________

(a)

At June 30, 2014, available-for-sale securities of $ 101 million , included $ 88 million and $ 13 million of cash equivalents included in Restricted cash and Other investments, respectively, on the Consolidated Statements of Financial Position. At December 31, 2013, available-for-sale securities of $ 116 million , included $ 100 million and $ 16 million of cash equivalents included in Restricted cash and Other investments, respectively, on the Consolidated Statements of Financial Position.


(b)	Available-for-sale equity securities at both June 30, 2014 and December 31, 2013 of $ 7 million are included in Other investments on the Consolidated Statements of Financial Position.

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.

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 hold exchange-traded equity or debt securities and are valued based on stated net asset values (NAV). 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 trustee monitors prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustee determines 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 value 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.

DTE Electric Company

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

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 within the Company.

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 and six months ended June 30, 2014 and 2013:



	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(In millions)
Net Assets as of beginning of the period	$	1		$	1		$	3		$	1
Change in fair value recorded in regulatory assets/liabilities	7			3			11			4
Purchases, issuances and settlements:
Settlements	(1		)	(2		)	(7		)	(3		)
Net Assets as of June 30	$	7		$	2		$	7		$	2
The amount of total gains (losses) included in regulatory assets and liabilities attributed to the change in unrealized gains (losses) related to assets and liabilities held at June 30, 2014 and 2013	$	7		$	2		$	7		$	2

No transfers between Levels 1, 2 or 3 occurred in the three and six months ended June 30, 2014 and 2013.

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.

DTE Electric Company

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

The following table presents the carrying amount and fair value of financial instruments as of June 30, 2014 and December 31, 2013:



	June 30, 2014								December 31, 2013
	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	$	13	$	—	$	—	$	13	$	10	$	—	$	—	$	10
Notes receivable — affiliates	$	—	$	—	$	—	$	—	$	200	$	—	$	—	$	200
Short-term borrowings — affiliates	$	155	$	—	$	—	$	155	$	58	$	—	$	—	$	58
Short-term borrowings — other	$	275	$	—	$	275	$	—	—		$	—	$	—	$	—
Long-term debt, excluding capital leases	$	5,116	$	—	$	5,233	$	352	$	5,146	$	—	$	5,253	$	136

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:



	June 30,		December 31,
	2014		2013
	(In millions)
Fermi 2	$	1,214	$	1,172
Fermi 1	3		3
Low-level radioactive waste	20		16
Total	$	1,237	$	1,191

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 June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
	(In millions)
Realized gains	$	7		$	11		$	16		$	19
Realized losses	$	(4	)	$	(7	)	$	(11	)	$	(14	)
Proceeds from sales of securities	$	204		$	173		$	475		$	309

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:



	June 30, 2014				December 31, 2013
	Fair Value		Unrealized Gains		Fair Value		Unrealized Gains
	(In millions)
Equity securities	$	762	$	220	$	730	$	201
Debt securities	462		19		442		12
Cash and cash equivalents	13		—		19		—
	$	1,237	$	239	$	1,191	$	213

The debt securities at June 30, 2014 and December 31, 2013 had an average maturity of approximately 7 years , respectively. 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.

DTE Electric Company

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

Unrealized losses incurred by the Fermi 2 trust are recognized as a Regulatory asset. DTE Electric recognized $ 28 million and $ 31 million of unrealized losses as Regulatory assets at June 30, 2014 and December 31, 2013, 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 and six months ended June 30, 2014 and 2013 for Fermi 1.

Other Securities

At June 30, 2014 and December 31, 2013, the securities were comprised primarily of money market and equity securities. During the three and six months ended June 30, 2014 and 2013, no amounts of unrealized losses on available-for-sale securities were reclassified out of other comprehensive income and realized into net income for the periods. Gains related to trading securities held at June 30, 2014 and 2013 were $7 million and $ 8 million , respectively.

NOTE 5 — FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS

The Company recognizes all derivatives at their fair value as Derivative assets or liabilities 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. Gains or losses from the ineffective portion of cash flow hedges are recognized in earnings immediately. For fair value hedges, changes in fair values for the derivative and hedged item are recognized in earnings each period. 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 MTM and 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 table presents the fair value of derivative instruments as of June 30, 2014 and December 31, 2013:



	June 30,		December 31,
	2014		2013
	(In millions)
FTRs — Other current assets	$	7	$	3
Total derivatives not designated as hedging instrument	$	7	$	3

DTE Electric Company

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

NOTE 6 — ASSET RETIREMENT OBLIGATIONS

A reconciliation of the asset retirement obligations for the six months ended June 30, 2014 follows:



	(In millions)
Asset retirement obligations at December 31, 2013	$	1,667
Accretion	51
Liabilities incurred	7
Liabilities settled	(3		)
Revision in estimated cash flows	(5		)
Asset retirement obligations at June 30, 2014	$	1,717

NOTE 7 — REGULATORY MATTERS

Refundable Revenue Decoupling/ Deferred Gain Amortization

In September 2012, the MPSC approved DTE Electric's accounting application to defer for future amortization the gain resulting from the reversal of the Company's $127 million regulatory liability associated with the operation of the RDM. The approved application provided for the amortization of the regulatory liability to income, at a monthly rate of approximately $10.6 million , beginning January 2014. On April 1, 2014, the MPSC approved DTE Electric's accounting application to suspend the amortization of the RDM regulatory liability as of June 30, 2014 and to complete the amortization over the period January 2015 to June 2015. If DTE Electric's base rates are increased prior to July 1, 2015, the Company will cease amortization and refund to customers the remaining unamortized balance of the regulatory liability.

Transition of the City of Detroit's Public Lighting Department's (PLD) Customers to DTE Electric's Distribution System

Transitional Reconciliation Mechanism (TRM)

On July 19, 2013, DTE Electric filed its TRM application proposing a transitional tariff option for certain former PLD customers and a modified line extension provision. The application also proposed a recovery mechanism for the deferred net incremental revenue requirement associated with the transition. The net incremental revenue requirement includes costs to install meters and attach customers; system and customer facility upgrades and repairs; and the difference between DTE Electric's tariff rates and any transitional rates approved in the future. On May 13, 2014, the MPSC approved the TRM as requested and also ordered DTE Electric to include in the TRM the PLD transmission delivery service costs incurred while DTE Electric is temporarily relying upon PLD to operate and maintain PLD's system during the system conversion period. The meter installation phase of the transition was completed in June 2014. On July 1, 2014, former PLD customers became customers of DTE Electric.

PSCR 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 PSCR 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. The reconciliation includes purchased power costs related to the manual shutdown of our Fermi 2 nuclear power plant in June 2012 caused by the failure of one of the plant's two non-safety related feed-water pumps. The plant was restarted on July 30, 2012, which restored production to nominal 68% of full capacity. In September 2013, the repair to the plant was completed and production was returned to full capacity. DTE Electric was able to purchase sufficient power from MISO to continue to provide uninterrupted service to our customers. Certain intervenors in the reconciliation case have challenged the recovery of up to $32 million of the Fermi-related purchased power costs. Resolution of this matter is expected by late 2014 or early 2015.

DTE Electric Company

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

NOTE 8 — LONG-TERM DEBT

Debt Issuances

In 2014, the following debt was issued:



Month	Type	Interest Rate	Maturity	Amount
				(In millions)
June	Mortgage Bonds (a)	3.77%	2026	$	100
June	Mortgage Bonds (a)	4.60%	2044	150
				$	250

_______________________________________


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

In July 2014, DTE Electric issued $350 million of 3.375% mortgage bonds due 2025 and $350 million of 4.30% mortgage bonds due 2044 . Proceeds will be used for redemption of DTE Electric long-term debt, for the repayment of short-term borrowings and for general corporate purposes.

Debt Redemptions

In 2014, the following debt was redeemed:



Month	Type	Interest Rate	Maturity	Amount
				(In millions)
March	Mortgage Bonds	Various	2014	$	13
March	Securitization Bonds	6.62%	2014	100
April	Tax Exempt Revenue Bonds (a)	2.35%	2024	31
April	Tax Exempt Revenue Bonds (a)	4.65%	2028	32
June	Tax Exempt Revenue Bonds (a)	4.875%	2029	36
June	Tax Exempt Revenue Bonds (a)	6.00%	2036	69
				$	281

_______________________________________


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

In June 2014, DTE Electric called for redemption $200 million of 4.80% senior notes due in February 2015 to be redeemed in July 2014 and $60 million of 5.25% tax exempt revenue bonds due in August 2029 to be redeemed in August 2014.

NOTE 9 — SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

DTE Electric has a $300 million unsecured revolving credit agreement with a syndicate of 19 banks that can be used for general corporate borrowings, but is intended to provide liquidity support for the Company's commercial paper program. No one bank provides more than 8.7% of the commitment in the facility. Borrowings under the facility are available at prevailing short-term interest rates. The facility will expire in April 2018. At June 30, 2014, there was $275 million outstanding against the facility, while there were no amounts outstanding against the facility at December 31, 2013.

The agreement requires the Company to maintain a total funded debt to capitalization ratio of no more than 0.65 to 1. In the agreement, “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 June 30, 2014, the total funded debt to total capitalization ratio for DTE Electric was 0.52 to 1 and is in compliance with this financial covenant.

DTE Electric Company

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

NOTE 10 — 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 spent approximately $ 2 billion through 2013. The Company estimates DTE Electric will make capital expenditures of approximately $ 280 million in 2014 and up to approximately $ 1.2 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 other 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 (Court of Appeals) 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 of Appeals issued its decision, vacating CSAPR and leaving CAIR in place. The EPA's petition seeking a rehearing of the Court of Appeals' decision regarding the CSAPR was denied on January 24, 2013. On June 24, 2013, the U.S. Supreme Court granted EPA's petition for a review of the Court of Appeals' decision on CSAPR. On April 29, 2014, the U.S. Supreme Court issued its ruling reversing the Court of Appeals' stay decision and remanding the case for further proceedings. The EPA has since requested the Court of Appeals to lift the stay on CSAPR and proposed that phase one of the rule would start effective January 2015. Notwithstanding the U.S. Supreme Court remand decision and potential decision by the Court of Appeals to lift the stay, DTE Electric expects to meet its obligations under CSAPR beginning in 2015. Furthermore, the EPA and a number of states, including Michigan, have started working on the framework of revised CSAPR regulations which may still be proposed in the next few years to address other challenges to the existing CSAPR regulations. DTE Electric will continue to monitor these developments and adjust its compliance strategy accordingly.

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 April 2015, with a potential extension to April 2016. DTE Electric has requested and been granted compliance date extensions for all relevant units to April 2016. 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 continue operation in compliance with MATS.

In July 2009, DTE Energy received a 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.

DTE Electric Company

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

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 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. On March 28, 2013, the Court of Appeals remanded the case to the U.S. District Court for review of the procedural component of the New Source Review notification requirements. On September 3, 2013, the EPA caused to be filed a motion seeking leave to amend their complaint regarding the June 2010 NOV/FOV adding additional claims related to outage work performed at the Trenton Channel and Belle River power plants as well as additional claims related to work performed at the Monroe Power Plant. In addition, the Sierra Club caused to be filed a motion to add a claim regarding the River Rouge Power Plant. On March 3, 2014, the U.S. District Court judge granted again DTE Energy's motion for summary judgment dismissing the civil case related to Monroe Unit 2. On April 3, 2014, the U.S. District Court judge granted motions filed by the EPA and the Sierra Club to amend their New Source Review complaint adding additional claims for Monroe Units 1, 2 and 3, Belle River Units 1 and 2, Trenton Channel Unit 9 and River Rouge Unit 3. On June 30, 2014, the EPA filed a motion requesting certification for appeal of the March 3, 2014 summary judgment decision.

DTE Energy and DTE Electric believe that all the plants and generating units identified by the EPA and the Sierra Club 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.

In March 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 six -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. In December 2013, a U.S. District Court judge issued an order dismissing, without prejudice, the plaintiff's complaint allowing them to file an amended complaint by January 17, 2014. The order dismissing the complaint resulted from a considerable number of plaintiff's claims being time barred based on the statute of limitations. On January 17, 2014, the plaintiffs filed an amended complaint for the period January 13, 2008 - June 30, 2012, reducing the total number of six -minute periods from 1,499 to 1,139 . DTE Electric filed an answer to the amended complaint on March 11, 2014. The resolution of this matter is not expected to have a material effect on the Company's operations or financial statements.

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 final rule was issued on May 19, 2014. The final rule specifies a time period exceeding three years to complete studies to determine the type of technology needed to reduce impacts to fish. Final compliance for the installation of the required technology will be determined by each state on a case by case basis. We are currently evaluating the compliance options and working with the State of Michigan on evaluating whether any controls are needed. These evaluations/studies may require modifications to some existing intake structures. It is not possible to quantify the impact of this rulemaking at this time.

On April 19, 2013, the EPA proposed revised steam electric effluent guidelines regulating wastewater streams from coal-fired power plants including multiple possible options for compliance. The rules are expected to be finalized by September 2015. DTE Electric has provided comments to the EPA. However, it is not possible at this time to quantify the impacts of these developing requirements.

DTE Electric Company

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

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 MGP 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 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 June 30, 2014 and December 31, 2013, the Company had $ 8 million accrued for remediation, respectively. Any 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. The Company believes the likelihood of a material change to the accrued amount is remote based on current knowledge of the conditions at each site.

DTE Electric owns and operates three permitted engineered ash storage facilities to dispose of fly ash from the coal fired power plants. 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. The rules are expected to be finalized by December 2014. It is not possible to quantify the impact of those expected rulemakings at this time.

Other

In December 2012, 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). Capital costs for pollution controls and/or 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 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 DTE Electric is unable to estimate any required emissions reductions at this time.

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 $ 1.5 billion in primary coverage and $ 1.25 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. The total limit for property damage for non-nuclear events is $2 billion and an aggregate of $327 million of coverage for extra expenses over a two -year period.

DTE Electric Company

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

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 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 $ 35 million per event if the loss associated with any one event at any 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 $ 127.3 million could be levied against each licensed nuclear facility, but not more than $ 19 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 that required DTE Electric 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 scheduled the initial offload from the spent fuel pool in 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 agreement, including extensions, provides for a claims process and payment of delay-related costs experienced by DTE Electric through 2016. DTE Electric has begun the claims process and claims are being settled and paid on a timely basis. The settlement proceeds reduce the cost of the dry cask storage facility assets and provide reimbursement for related operating expenses. 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.

In February 2013, the U.S. Court of Appeals for the District of Columbia (COA) granted a motion to reopen the fee adequacy litigation to review the DOE's latest fee adequacy report which was released in January 2013. In November 2013, the COA issued a decision ordering the DOE to submit a proposal to Congress to reduce the nuclear waste fee to zero until the DOE enacts an alternative nuclear waste management plan. In January 2014, the DOE submitted such a proposal to Congress that was scheduled to take effect in 90 legislative calendar days, absent legislative action to the contrary. Simultaneously, the DOE filed a petition for rehearing of the November 2013 decision with the COA. In March 2014, the COA denied DOE's petition for rehearing. The 1 mill per kWh fee was reduced to zero effective May 16, 2014.

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.

DTE Electric Company

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

Labor Contracts

There are several bargaining units for the Company's approximately 2,600 represented employees. The majority of the represented employees are under contracts that expire in 2016 and 2017.

Purchase Commitments

As of June 30, 2014, 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, renewable energy contracts and energy trading contracts. The Company estimates that these commitments will be approximately $ 2.3 billion from 2014 through 2033.

The Company also estimates that 2014 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 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.

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 7 for a discussion of contingencies related to regulatory matters.

NOTE 11 — 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
	2014			2013			2014			2013
Three Months Ended June 30	(In millions)
Service cost	$	17		$	19		$	6		$	9
Interest cost	40			37			17			16
Expected return on plan assets	(49		)	(47		)	(21		)	(19		)
Amortization of:
Net actuarial loss	26			36			5			12
Prior service cost (credit)	1			—			(28		)	(28		)
Net periodic benefit cost (credit)	$	35		$	45		$	(21	)	$	(10	)

DTE Electric Company

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



	Pension Benefits						Other Postretirement Benefits
	2014			2013			2014			2013
Six Months Ended June 30	(In millions)
Service cost	$	34		$	38		$	13		$	21
Interest cost	80			73			34			34
Expected return on plan assets	(97		)	(93		)	(42		)	(37		)
Amortization of:
Net actuarial loss	53			72			8			24
Prior service cost (credit)	1			—			(55		)	(45		)
Net periodic benefit cost (credit)	$	71		$	90		$	(42	)	$	(3	)

Pension and Other Postretirement Contributions

During the first six months of 2014, the Company contributed $100 million to its pension plans. At the discretion of management, and depending upon financial market conditions, the Company may make up to an additional $45 million contribution to its pension plans in 2014.

At the discretion of management, the Company may make up to a $120 million contribution to its other postretirement benefit plans in 2014.

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 and six months ended June 30, 2014 as compared to the comparable 2013 period are discussed below:



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2014			2013			2014			2013
	(In millions)
Operating revenues	$	1,281		$	1,265		$	2,691		$	2,484
Fuel and purchased power	400			435			898			807
Gross margin	881			830			1,793			1,677
Operation and maintenance	329			343			671			674
Depreciation and amortization	229			221			457			433
Taxes other than income	65			63			136			133
Asset (gains) losses and reserves, net	(1		)	1			(1		)	—
Operating Income	259			202			530			437
Other (Income) and Deductions	52			65			109			122
Income Tax Expense	77			47			154			109
Net Income	$	130		$	90		$	267		$	206
Operating Income as a Percentage of Operating Revenues	20		%	16		%	20		%	18		%

Gross margin increased $51 million and $116 million in the three and six months ended June 30, 2014, respectively. Revenues associated with certain tracking mechanisms and surcharges are offset by related expenses elsewhere in the Consolidated Statements of Operations.

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



	Three Months			Six Months
	(In millions)
Amortization of refundable revenue decoupling/deferred gain	$	32		$	63
Base sales, inclusive of weather effect	10			26
Securitization bond and tax surcharge	—			8
Renewable energy program	6			11
Low income energy assistance surcharge	6			13
Regulatory mechanisms and other	(3		)	(5		)
Increase in gross margin	$	51		$	116



	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2014	2013	2014	2013
	(In thousands of MWh)
Electric Sales
Residential	3,452	3,345	7,430	7,199
Commercial	4,168	4,158	8,216	8,081
Industrial	2,554	2,675	5,055	5,111
Other	171	216	376	468
	10,345	10,394	21,077	20,859
Interconnection sales (a)	479	792	1,097	1,565
Total Electric Sales	10,824	11,186	22,174	22,424

Electric Deliveries
Retail and Wholesale	10,345	10,394	21,077	20,859
Electric Customer Choice, including self generators (b)	1,237	1,287	2,504	2,547
Total Electric Sales and Deliveries	11,582	11,681	23,581	23,406

_______________________________________

(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 $14 million and $3 million in the three and six months ended June 30, 2014, respectively. The decrease in the second quarter was due primarily to lower employee benefit expenses of $24 million and $12 million of reinvestment expenses in 2013, partially offset by higher storm restoration expenses of $9 million, increased low income energy assistance of $7 million and higher power plant generation expenses for planned outages of $5 million. The decrease in the six-month period was primarily due to lower employee benefit expenses of $46 million and $12 million of reinvestment expenses in 2013, partially offset by higher power plant generation expenses of $35 million, increased low income energy assistance of $13 million, higher storm restoration expenses of $4 million and higher energy optimization and renewable energy expenses of $4 million.

Depreciation and amortization expense increased $8 million and $24 million in the three and six months ended June 30, 2014, respectively. The increase in the second quarter was due to higher amortization of regulatory assets of $5 million, primarily related to Securitization, and $3 million of increased expense due to a higher depreciable base. The increase in the six-month period was due to higher amortization of regulatory assets of $16 million, primarily related to Securitization, and $8 million of increased expense due to a higher depreciable base.

Other (income) and deductions were lower by $13 million in each of the three and six months periods ended June 30, 2014. The decrease in the second quarter was due primarily to lower interest expense and higher investment earnings, while the decrease in the six-month period was due primarily to lower interest expense.

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 capital investments 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.

In May 2014, the Company filed an application with the NRC requesting a renewal of the license for its Fermi 2 nuclear power plant. The Company has requested a 20-year extension of its original license due to expire in 2025.

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 were re-proposed on September 20, 2013, under a presidential directive issued on June 25, 2013. Under the same presidential directive, the EPA proposed performance standards for carbon dioxide emissions from existing, reconstructed and modified plants on June 2, 2014 and plans to issue a final standard by July 2015. DTE Electric is an active participant in working with the EPA and other stakeholders to shape the final performance standards for new and existing power plants. The standards for new sources are not expected to have a material impact on the Company. It is not possible to determine the potential impact of future regulations on existing sources at this time. 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 credits 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 as authorized by the MPSC. Increased costs for energy produced from traditional coal-based sources could also increase the economic viability of energy produced from renewable and/or nuclear sources, from energy efficiency initiatives, and from the potential development of market-based trading of carbon offsets which could provide new business opportunities. A June 23, 2014 U.S. Supreme Court decision on the EPA’s authority to regulate greenhouse gas emissions under permitting programs of the Clean Air Act is expected to have little effect on DTE Electric since the Supreme Court's decision upholds the EPA’s authority to regulate GHGs at sources that are already subject to permitting due to emissions of conventional pollutants. In addition, the Supreme Court's ruling does not affect the EPA’s current proposed carbon performance standards at new or existing power plants. At the present time, it is not possible to quantify the financial impacts of these climate related legislative or regulatory initiatives on DTE Electric or its customers.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 3 of the Notes to Consolidated Financial Statements.

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 June 30, 2014, 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 June 30, 2014 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 March 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 DTE Energy and DTE Electric 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. In December 2013, a U.S. District Court judge issued an order dismissing, without prejudice, the plaintiff's complaint allowing them to file an amended complaint by January 17, 2014. The order dismissing the complaint resulted from a considerable number of plaintiff's claims being time barred based on the statute of limitations. On January 17, 2014, the plaintiffs filed an amended complaint for the period January 13, 2008 - June 30, 2012, reducing the total number of 6-minute periods from 1,499 to 1,139. DTE Energy and DTE Electric filed an answer to the amended complaint on March 11, 2014. The resolution of this matter is not expected to have a material effect on the Company's operations or financial statements.

For additional discussion on legal matters, see Notes 7 and 10 of the Notes to Consolidated Financial Statements.

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 have provided a brief explanation of the more significant risks associated with our businesses in Part 1, Item 1A. Risk Factors in the Company's 2013 Form 10-K. Although we have tried to identify and discuss key risk factors, others could emerge in the future.

Item 6. Exhibits



		(i) Exhibits filed herewith:

4-282		Supplemental Indenture, dated as of June 1, 2014, to the Mortgage and Deed of Trust dated as of October 1, 1924, between DTE Electric Company and The Bank of New York Mellon, N.A., as successor trustee. (2014 Series A and B)

4-283		Supplemental Indenture, dated as of July 1, 2014, to the Mortgage and Deed of Trust dated as of October 1, 1924, between DTE Electric Company and The Bank of New York Mellon, N.A., as successor trustee. (2014 Series D and E)

12-50		Computation of Ratio of Earnings to Fixed Charges

31-91		Chief Executive Officer Section 302 Form 10-Q Certification of Periodic Report

31-92		Chief Financial Officer Section 302 Form 10-Q Certification of Periodic Report

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



		(ii) Exhibits furnished herewith:

32-91		Chief Executive Officer Section 906 Form 10-Q Certification of Periodic Report

32-92		Chief Financial Officer Section 906 Form 10-Q Certification of Periodic Report

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: July 25, 2014	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 2014 Series A and 2014 Series B	11
Further Assurance	11
Authorization of Supplemental Indenture	11
Consideration for Supplemental Indenture	11
PART I. CREATION OF THREE HUNDRED SEVENTY FIRST SERIES OF BONDS, GENERAL AND REFUNDING MORTGAGE BONDS, 2014 SERIES A	12
Sec. 1. Terms of Bonds of 2014 Series A	12
Sec. 2. Redemption of Bonds of 2014 Series A	13
Sec. 3. Exchange and Transfer	16
Sec. 4. Form of Bonds of 2014 Series A	17
Form of Trustee’s Certificate	22
PART II. CREATION OF THREE HUNDRED SEVENTY SECOND SERIES OF BONDS, GENERAL AND REFUNDING MORTGAGE BONDS, 2014 SERIES B	23
Sec. 1. Terms of Bonds of 2014 Series B	23
Sec. 2. Redemption of Bonds of 2014 Series B	25
Sec. 3. Exchange and Transfer	27
Sec. 4. Form of Bonds of 2014 Series B	28
Form of Trustee’s Certificate	33
PART III. RECORDING AND FILING DATA	34
Recording and Filing of Original Indenture	34
Recording and Filing of Supplemental Indentures	34
Recording and Filing of Supplemental Indenture Dated as of August 1, 2013	38
Recording of Certificates of Provision for Payment	39
PART IV. THE TRUSTEE	39
Terms and Conditions of Acceptance of Trust by Trustee	40
PART V. MISCELLANEOUS	40
Confirmation of Section 318(c) of Trust Indenture Act	40
Execution in Counterparts	40
EXECUTION	40
Testimonium	40
Execution by Company	41
Acknowledgment of Execution by Company	42
Execution by Trustee	43
Acknowledgment of Execution by Trustee	44
Affidavit as to Consideration and Good Faith	45



PARTIES.			SUPPLEMENTAL INDENTURE, dated as of the 1st day of June, in the year 2014, 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, June 20, 2012, March 15, 2013 and August 1, 2013 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 Sixteen billion, thirty-eight million, fifty-seven thousand dollars ($16,038,057,000) 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 $49,000,000,

	(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,



(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,


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



(282)	Bonds of 1990 Series A	— Principal Amount $194,649,000,

(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 $220,000,000,

(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,

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

(333)	Bonds of 2003 Series A	— Principal Amount $49,000,000,

(334)	Bonds of 2008 Series J	— Principal Amount $250,000,000,

(335)	Bonds of 2008 Series LT	— Principal Amount $50,000,000

(336)	Bonds of 1990 Series C	— Principal Amount $85,475,000,

(337)	Bonds of 2011 Series AT	— Principal Amount $31,000,000,

(338)	Bonds of 2004 Series B	— Principal Amount $31,980,000,

(339)	Bonds of 2004 Aeries A	— Principal Amount $36,000,000, and

(340)	Bonds of 2009 Series BT	— Principal Amount $68,5000,000

	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;

(341)	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 Two hundred thirty-seven million nine hundred thousand dollars ($237,900,000) which principal amount have heretofore been retired;

(342)	Intentionally reserved for 1990 Series E

(343)	Intentionally reserved for 1990 Series F

(344)	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;

(345)	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;



(346)	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;

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

(348)	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;

(349)	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;

(350)	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;

(351)	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;

(352)	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;

(353)	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;

(354)	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;

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

(356)	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

(357)	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

(358)	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

(359)	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

(360)	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

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

(362)	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

(363)	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

(364)	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

(365)	Bonds of 2011 Series G in the principal amount of Eighty two million three hundred fifty thousand dollars ($82,350,000) 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



(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

(369)	Bonds of 2013 Series A in the principal amount of Three hundred seventy five million dollars ($375,000,000) all of which are outstanding at the date hereof

(370)	Bonds of 2013 Series B in the principal amount of Four hundred million dollars ($400,000,000) all of which are outstanding at the date hereof




		accordingly, the Company has issued and has presently outstanding Four billion, six hundred seventy four million, one hundred eighty-seven thousand dollars ($4,674,187,000) 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 two new series of bonds pursuant to the Indenture; and

BONDS TO BE 2014 SERIES A AND 2014 SERIES B.		WHEREAS, the Company desires by this Supplemental Indenture to create two new series of bonds, to be designated “General and Refunding Mortgage Bonds, 2014 Series A,” in the aggregate principal amount of One hundred million dollars ($100,000,000), and “General and Refunding Mortgage Bonds, 2014 Series B,” in the aggregate principal amount of One hundred fifty million dollars ($150,000,000), 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 SEVENTY FIRST SERIES OF BONDS, GENERAL AND REFUNDING MORTGAGE BONDS, 2014 SERIES A
TERMS OF BONDS OF 2014 SERIES A.	SECTION 1. The Company hereby creates the three hundred seventy first 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, 2014 Series A” (elsewhere herein referred to as the “bonds of 2014 Series A”). The aggregate principal amount of bonds of 2014 Series A shall be limited to One hundred million dollars ($100,000,000), except as provided in Sections 7 and 13 of Article II of the Original Indenture with respect to exchanges and replacements of bonds.

	The bonds of 2014 Series A shall be issued as registered bonds without coupons in denominations of a multiple of $1,000. The bonds of 2014 Series A shall be issued in the aggregate principal amount of $100,000,000, shall mature on June 1, 2026 (subject to earlier redemption or release) and shall bear interest, payable semi-annually on June 1 and December 1 of each year (commencing December 1, 2014), at the rate of three and seventy-seven hundredths percent (3.77%) per annum until the principal thereof shall have become due and payable and thereafter on any overdue principal, interest and Make-Whole Amount (as defined below) until the Company’s obligations with respect to the payment of said amounts shall have been discharged as provided in the Indenture. In addition to the payment of principal and interest as provided herein, the Company shall also pay any Make-Whole Amount (as defined below) required to be paid by the Company on the bonds of 2014 Series A in the amounts and on the dates required for the payment of any such amounts hereunder.

	The bonds of 2014 Series A shall be payable, as to principal, Make-Whole Amount (as defined below), 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. Notwithstanding the foregoing, so long as any bond of 2014 Series A is held by an Institutional Investor, payment on such bond of 2014 Series A held by such holder shall be made in the manner specified in the Bond Purchase Agreement dated as of May 22, 2014 between the Company and the Purchasers listed in Schedule A thereto. “Institutional Investor” has the meaning set forth in Schedule B to the aforementioned Bond Purchase Agreement.

	Except as provided herein, each bond of 2014 Series A shall be dated the date of its authentication and interest shall be payable on the principal represented thereby from the June 1 or December 1 next preceding the date to which interest has been paid on bonds of 2014 Series A, unless the bond is authenticated on a date prior to December 1, 2014, in which case interest shall be payable from June 4, 2014.

	The bonds of 2014 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 2014 Series A). Until bonds of 2014 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 2014 Series A in temporary form, as provided in Section 10 of Article II of the Indenture. Temporary bonds of 2014 Series A, if any, may be printed and may be issued in authorized denominations in substantially the form of definitive bonds of 2014 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 2014 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 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 2014 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 2014 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 2014 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 2014 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 2014 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 2014 Series A would otherwise be a day that is not a business day, payment of principal and/or interest or Make-Whole Amount, if any, with respect to the bonds of 2014 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 2014 SERIES A.	SECTION 2. At any time prior to March 1, 2026, Bonds of 2014 Series A will be redeemable at the option of the Company, in whole at any time or in part from time to time at a redemption price equal to 100% of the principal amount of the bonds of 2014 Series A to be redeemed together with the Make-Whole Amount (defined below), if any, plus, in each case, accrued and unpaid interest thereon to the redemption date.

	At any time on or after March 1, 2026, Bonds of 2014 Series A will be redeemable at the option of the Company, in whole at any time or in part from time to time at a redemption price equal to 100% of the principal amount of the bonds of 2014 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 2014 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.

	“Make-Whole Amount” means, with respect to any bond, a premium in an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such bond over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

	“Called Principal” means, with respect to a bond, the principal of the bond that is to be redeemed on an optional redemption date or has become or is declared to be immediately due and payable pursuant to Section 2 of Article VI of the Indenture, as the context requires.



	“Discounted Value” means, with respect to the Called Principal of a bond, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the bond is payable) equal to the Reinvestment Yield with respect to such Called Principal.

	“Reinvestment Yield” means, with respect to the Called Principal of a bond, 0.5% (50 basis points) plus the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “PX-1” (or such other display as may replace Page PX-1), on Bloomberg Financial Markets for the most recently issued, actively traded on-the-run, benchmark U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly on a straight line basis between (1) the most recently issued, actively traded on-the-run benchmark U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life and (2) the most recently issued, actively traded on-the-run benchmark U.S. Treasury security with the maturity closest to and less than the Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable bond.

	“Remaining Average Life” means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years, computed on the basis of a 360-day year composed of twelve 30-day months and calculated to two decimal places, that will elapse between the Settlement Date with respect to such Called Principal and the Stated Maturity of such Remaining Scheduled Payment.

	“Remaining Scheduled Payments” means, with respect to the Called Principal of a bond, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its Stated Maturity, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the bond, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date.

	“Settlement Date” means, with respect to the Called Principal of a bond, the date on which such Called Principal is to be redeemed or has become or is declared to be immediately due and payable pursuant to Section 2 of Article VI of the Indenture as the context requires.



	The bonds of 2014 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 2014 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 2014 Series A designated for redemption shall not affect the validity of any such redemption of any other bonds of such series. Each such notice shall specify such redemption date, the aggregate principal amount of the bonds of 2014 Series A to be redeemed on such date, the principal amount of each bond of 2014 Series A held by such holder to be redeemed, and the interest to be paid on the redemption date with respect to such principal amount being redeemed, and shall be accompanied by a certificate of a senior financial officer of the Company as to the estimated Make-Whole Amount due in connection with such redemption (calculated as if the date of such notice were the date of the redemption), setting forth the details of such computation. The Make-Whole Amount shall be determined by the Company two Business Days prior to the applicable redemption date and the Company shall deliver to holders of the bonds of 2014 Series A and to the Trustee a certificate of a senior financial officer specifying the calculation of such Make-Whole Amount as of the redemption date. Interest shall cease to accrue on any bonds of 2014 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 2014 Series A (or such portion) designated for redemption has been duly provided for. Bonds of 2014 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 2014 Series A so to be redeemed) sufficient to redeem bonds of 2014 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 2014 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.

	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. Upon any such declaration, the Company shall also pay to the holders of the bonds of 2014 Series A the Make-Whole Amount on such bonds, if any, determined as of the date such bonds shall have been declared due and payable and such amount shall be payable out of the trust estate or proceeds thereof or otherwise prior to any payment of surplus of the foregoing to the Company as provided in Clause Third of Article VI, Section 11, of the Indenture.

	The bonds of 2014 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 2014 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, shall be exchangeable for a like aggregate principal amount of bonds of 2014 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 2014 Series A during any period of ten (10) days next preceding any redemption date for such bonds.



	Any bonds of 2014 Series A surrendered for exchange or transfer shall be accompanied by (A) 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; (B) the following additional information and documents, as applicable: (x) if such bonds of 2014 Series A are being delivered to the Company by a holder for registration in the name of such holder, without transfer, a certification from such holder to that effect (in the form set forth on the reverse side of the bond); or (y) if such bonds of 2014 Series A are being transferred to the Company, a certification to that effect (in the form set forth on the reverse side of the bond); or (C) if such bonds of 2014 Series A are being transferred pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or in reliance upon another exemption from the registration requirements of the Securities Act, (i) a certification to that effect (in the form set forth on the reverse side of the bond) and (ii) if the Company so requests, other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth below.

	Bonds of 2014 Series A, in definitive and temporary form, shall bear a legend stating that such bond has not been registered under the United States Securities Act of 1933, as amended and that as a consequence such bond may not be offered, sold or otherwise transferred, whether or not for consideration, unless pursuant to an exemption from such registration applicable to such offer, sale or other transfer, and may bear such other legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto.

FORM OF BONDS OF 2014 SERIES A.	SECTION 4. The bonds of 2014 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 2014 SERIES A

	THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

	PPN:
	$______________ No. R-___


	DTE ELECTRIC COMPANY (hereinafter called the “Company”), a corporation of the State of Michigan, for value received, hereby promises to pay to ________, 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 June 1, 2026 (subject to earlier redemption) and interest thereon at the rate of 3.77%, in like lawful money, from June 4, 2014, 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 June 1 and December 1 of each year (commencing December 1, 2014), until the Company’s obligation with respect to payment of said principal shall have been discharged, and to pay interest on any overdue installment of interest or any overdue Make-Whole Amount (as defined below) at said rate until the Company’s obligations with respect to payment of such amounts 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. In addition to the payment of principal and interest as provided herein, the Company shall also pay any Make-Whole Amount (as defined below) required to be paid by the Company on the bonds of 2014 Series A in the amounts and on the dates required for the payment of any such amounts hereunder. So long as any bond of 2014 Series A is held by an Institutional Investor, payment on such bond of 2014 Series A held by such holder shall be made in the manner specified in the Bond Purchase Agreement dated as of May 22, 2014 between the Company and the Purchasers listed in Schedule A thereto. “Institutional Investor” has the meaning set forth in Schedule B to the aforementioned Bond Purchase Agreement.



	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 2014 Series A, limited to an aggregate principal amount of $100,000,000, 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 Bank of New York Mellon Trust Company, N.A., as successor Trustee, to which Indenture and all indentures supplemental thereto (including the Supplemental Indenture dated as of June 1, 2014) reference is hereby made for a description of the properties and franchises mortgaged and conveyed, the nature and extent of the security, the terms and conditions upon which the bonds are issued and under which additional bonds may be issued, and the rights of the holders of the bonds and of the Trustee in respect of such security (which Indenture and all indentures supplemental thereto, including the Supplemental Indenture dated as of June 1, 2014, are hereinafter collectively called the “Indenture”). As provided in the Indenture, said bonds may be for various principal sums and are issuable in series, which may mature at different times, may bear interest at different rates and may otherwise vary as in said Indenture provided. With the consent of the Company and to the extent permitted by and as provided in the Indenture, the rights and obligations of the Company and of the holders of the bonds and the terms and provisions of the Indenture, or of any indenture supplemental thereto, may be modified or altered in certain respects by affirmative vote of at least eighty-five percent (85%) in amount of the bonds then outstanding, and, if the rights of one or more, but less than all, series of bonds then outstanding are to be affected by the action proposed to be taken, then also by affirmative vote of at least eighty-five percent (85%) in amount of the series of bonds so to be affected (excluding in every instance bonds disqualified from voting by reason of the Company’s interest therein as specified in the Indenture); provided, however, that, without the consent of the holder hereof, no such modification or alteration shall, among other things, affect the terms of payment of the principal of or the interest on this bond, which in those respects is unconditional.

	This bond is not subject to repayment at the option of the holder hereof. Except as provided below, this bond is not redeemable by the Company prior to maturity and is not subject to any sinking fund.

	At any time prior to March 1, 2026, this bond will be redeemable at the option of the Company, in whole at any time or in part from time to time at a redemption price equal to 100% of the principal amount of this bond to be redeemed together with the Make-Whole Amount (as defined below) plus, in each case, accrued and unpaid interest thereon to the redemption date.

	At any time on or after March 1, 2026, this bond will be redeemable at the option of the Company, in whole at any time or in part from time to time at a redemption price equal to 100% of the principal amount of this bond plus accrued and unpaid interest thereon to the redemption date.

	Notwithstanding the foregoing, installments of interest on this bond 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.

	“Make-Whole Amount” means, with respect to any bond, a premium in an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such bond over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

	“Called Principal” means, with respect to a bond, the principal of the bond that is to be redeemed on an optional redemption date or has become or is declared to be immediately due and payable pursuant to Section 2 of Article VI of the Indenture, as the context requires.



	This bond 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 holder hereof at its last addresses appearing on the register. Such notice shall specify such redemption date, the aggregate principal amount of the bonds of 2014 Series A to be redeemed on such date, the principal amount of each bond of 2014 Series A held by such holder to be redeemed, and the interest to be paid on the redemption date with respect to such principal amount being redeemed, and shall be accompanied by a certificate of a senior financial officer of the Company as to the estimated Make-Whole Amount due in connection with such redemption (calculated as if the date of such notice were the date of the redemption), setting forth the details of such computation. The Make-Whole Amount shall be determined by the Company two Business Days prior to the applicable redemption date and the Company shall deliver to holders of the bonds of 2014 Series A and to the Trustee a certificate of a senior financial officer specifying the calculation of such Make-Whole Amount as of the redemption date. Interest shall cease to accrue on any bonds of 2014 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 2014 Series A (or such portion) designated for redemption has been duly provided for. Bonds of 2014 Series A redeemed in part only shall be in amounts of $1,000 or any multiple thereof.

	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 2014 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. Upon any such declaration, the Company shall also pay to the holders of the bonds of 2014 Series A the Make-Whole Amount on such bonds, if any, determined as of the date such bonds shall have been declared due and payable and such amount shall be payable out of the trust estate or proceeds thereof or otherwise prior to any payment of surplus of the foregoing to the Company as provided in Clause Third of Article VI, Section 11, of 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. 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 reference herein to the Indenture and no provision of this bond or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, Make-Whole Amount, if any, and interest on this bond at the time and place and at the rate and in the coin or currency herein prescribed.

	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 II. CREATION OF THREE HUNDRED SEVENTY SECOND SERIES OF BONDS, GENERAL AND REFUNDING MORTGAGE BONDS, 2014 SERIES B
TERMS OF BONDS OF 2014 SERIES B.	SECTION 1. The Company hereby creates the three hundred seventy second 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, 2014 Series B” (elsewhere herein referred to as the “bonds of 2014 Series B”). The aggregate principal amount of bonds of 2014 Series B shall be limited to One hundred fifty million dollars ($150,000,000), except as provided in Sections 7 and 13 of Article II of the Original Indenture with respect to exchanges and replacements of bonds.

	The bonds of 2014 Series B shall be issued as registered bonds without coupons in denominations of a multiple of $1,000. The bonds of 2014 Series B shall be issued in the aggregate principal amount of $150,000,000, shall mature on June 1, 2044 (subject to earlier redemption or release) and shall bear interest, payable semi-annually on June 1 and December 1 of each year (commencing December 1, 2014), at the rate of four and sixty hundredths percent (4.60%) per annum until the principal thereof shall have become due and payable and thereafter on any overdue principal, interest and Make-Whole Amount (as defined below) until the Company’s obligations with respect to the payment of said amounts shall have been discharged as provided in the Indenture. In addition to the payment of principal and interest as provided herein, the Company shall also pay any Make-Whole Amount (as defined below) required to be paid by the Company on the bonds of 2014 Series B in the amounts and on the dates required for the payment of any such amounts hereunder.

	The bonds of 2014 Series B shall be payable, as to principal, Make-Whole Amount (as defined below), 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. Notwithstanding the foregoing, so long as any bond of 2014 Series B is held by an Institutional Investor, payment on such bond of 2014 Series B held by such holder shall be made in the manner specified in the Bond Purchase Agreement dated as of May 22, 2014 between the Company and the Purchasers listed in Schedule A thereto. “Institutional Investor” has the meaning set forth in Schedule B to the aforementioned Bond Purchase Agreement.



	Except as provided herein, each bond of 2014 Series B shall be dated the date of its authentication and interest shall be payable on the principal represented thereby from the June 1 or December 1 next preceding the date to which interest has been paid on bonds of 2014 Series B, unless the bond is authenticated on a date prior to December 1, 2014, in which case interest shall be payable from June 4, 2014.

	The bonds of 2014 Series B 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 2014 Series B). Until bonds of 2014 Series B 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 2014 Series B in temporary form, as provided in Section 10 of Article II of the Indenture. Temporary bonds of 2014 Series B, if any, may be printed and may be issued in authorized denominations in substantially the form of definitive bonds of 2014 Series B, 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 2014 Series B 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 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 2014 Series B, 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 2014 Series B 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 2014 Series B 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 2014 Series B 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 2014 Series B, 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 2014 Series B would otherwise be a day that is not a business day, payment of principal and/or interest or Make-Whole Amount, if any, with respect to the bonds of 2014 Series B 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 2014 SERIES B.	SECTION 2. At any time prior to December 1, 2043, Bonds of 2014 Series B will be redeemable at the option of the Company, in whole at any time or in part from time to time at a redemption price equal to 100% of the principal amount of the bonds of 2014 Series B to be redeemed together with the Make-Whole Amount (defined below), if any, plus, in each case, accrued and unpaid interest thereon to the redemption date.



	At any time on or after December 1, 2043, Bonds of 2014 Series B will be redeemable at the option of the Company, in whole at any time or in part from time to time at a redemption price equal to 100% of the principal amount of the bonds of 2014 Series B to be redeemed plus accrued and unpaid interest thereon to the redemption date.

	Notwithstanding the foregoing, installments of interest on the bonds of 2014 Series B 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.

	“Make-Whole Amount” means, with respect to any bond, a premium in an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such bond over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

	“Called Principal” means, with respect to a bond, the principal of the bond that is to be redeemed on an optional redemption date or has become or is declared to be immediately due and payable pursuant to Section 2 of Article VI of the Indenture, as the context requires.

	“Discounted Value” means, with respect to the Called Principal of a bond, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the bond is payable) equal to the Reinvestment Yield with respect to such Called Principal.

	“Reinvestment Yield” means, with respect to the Called Principal of a bond, 0.5% (50 basis points) plus the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “PX-1” (or such other display as may replace Page PX-1), on Bloomberg Financial Markets for the most recently issued, actively traded on-the-run, benchmark U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly on a straight line basis between (1) the most recently issued, actively traded on-the-run benchmark U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life and (2) the most recently issued, actively traded on-the-run benchmark U.S. Treasury security with the maturity closest to and less than the Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable bond.

	“Remaining Average Life” means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into (ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (b) the number of years, computed on the basis of a 360-day year composed of twelve 30-day months and calculated to two decimal places, that will elapse between the Settlement Date with respect to such Called Principal and the Stated Maturity of such Remaining Scheduled Payment.



	“Remaining Scheduled Payments” means, with respect to the Called Principal of a bond, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its Stated Maturity, provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the bond, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date.

	“Settlement Date” means, with respect to the Called Principal of a bond, the date on which such Called Principal is to be redeemed or has become or is declared to be immediately due and payable pursuant to Section 2 of Article VI of the Indenture as the context requires.

	The bonds of 2014 Series B 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 2014 Series B 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 2014 Series B designated for redemption shall not affect the validity of any such redemption of any other bonds of such series. Each such notice shall specify such redemption date, the aggregate principal amount of the bonds of 2014 Series B to be redeemed on such date, the principal amount of each bond of 2014 Series B held by such holder to be redeemed, and the interest to be paid on the redemption date with respect to such principal amount being redeemed, and shall be accompanied by a certificate of a senior financial officer of the Company as to the estimated Make-Whole Amount due in connection with such redemption (calculated as if the date of such notice were the date of the redemption), setting forth the details of such computation. The Make-Whole Amount shall be determined by the Company two Business Days prior to the applicable redemption date and the Company shall deliver to holders of the bonds of 2014 Series B and to the Trustee a certificate of a senior financial officer specifying the calculation of such Make-Whole Amount as of the redemption date. Interest shall cease to accrue on any bonds of 2014 Series B (or any portion thereof) so called for redemption from and after the date fixed for redemption if payment sufficient to redeem the bonds of 2014 Series B (or such portion) designated for redemption has been duly provided for. Bonds of 2014 Series B 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 2014 Series B so to be redeemed) sufficient to redeem bonds of 2014 Series B 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 2014 Series B (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.

	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. Upon any such declaration, the Company shall also pay to the holders of the bonds of 2014 Series B the Make-Whole Amount on such bonds, if any, determined as of the date such bonds shall have been declared due and payable and such amount shall be payable out of the trust estate or proceeds thereof or otherwise prior to any payment of surplus of the foregoing to the Company as provided in Clause Third of Article VI, Section 11, of the Indenture.

	The bonds of 2014 Series B 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 2014 Series B, 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, shall be exchangeable for a like aggregate principal amount of bonds of 2014 Series B 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 2014 Series B during any period of ten (10) days next preceding any redemption date for such bonds.

	Any bonds of 2014 Series B surrendered for exchange or transfer shall be accompanied by (A) 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; (B) the following additional information and documents, as applicable: (x) if such bonds of 2014 Series B are being delivered to the Company by a holder for registration in the name of such holder, without transfer, a certification from such holder to that effect (in the form set forth on the reverse side of the bond); or (y) if such bonds of 2014 Series B are being transferred to the Company, a certification to that effect (in the form set forth on the reverse side of the bond); or (C) if such bonds of 2014 Series B are being transferred pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or in reliance upon another exemption from the registration requirements of the Securities Act, (i) a certification to that effect (in the form set forth on the reverse side of the bond) and (ii) if the Company so requests, other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the legend set forth below.

	Bonds of 2014 Series B, in definitive and temporary form, shall bear a legend stating that such bond has not been registered under the United States Securities Act of 1933, as amended and that as a consequence such bond may not be offered, sold or otherwise transferred, whether or not for consideration, unless pursuant to an exemption from such registration applicable to such offer, sale or other transfer, and may bear such other legends as may be necessary to comply with any law or with any rules or regulations made pursuant thereto.

FORM OF BONDS OF 2014 SERIES B.	SECTION 4. The bonds of 2014 Series B 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 2014 SERIES B

	THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES. IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

	PPN:
	$______________ No. R-___



	This bond is not subject to repayment at the option of the holder hereof. Except as provided below, this bond is not redeemable by the Company prior to maturity and is not subject to any sinking fund.

	At any time prior to December 1, 2043, this bond will be redeemable at the option of the Company, in whole at any time or in part from time to time at a redemption price equal to 100% of the principal amount of this bond to be redeemed together with the Make-Whole Amount (as defined below) plus, in each case, accrued and unpaid interest thereon to the redemption date.

	At any time on or after December 1, 2043, this bond will be redeemable at the option of the Company, in whole at any time or in part from time to time at a redemption price equal to 100% of the principal amount of this bond plus accrued and unpaid interest thereon to the redemption date.

	Notwithstanding the foregoing, installments of interest on this bond 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.

	“Make-Whole Amount” means, with respect to any bond, a premium in an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such bond over the amount of such Called Principal, provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

	“Called Principal” means, with respect to a bond, the principal of the bond that is to be redeemed on an optional redemption date or has become or is declared to be immediately due and payable pursuant to Section 2 of Article VI of the Indenture, as the context requires.

	“Discounted Value” means, with respect to the Called Principal of a bond, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the bond is payable) equal to the Reinvestment Yield with respect to such Called Principal.

	“Reinvestment Yield” means, with respect to the Called Principal of a bond, 0.5% (50 basis points) plus the yield to maturity implied by (i) the yields reported, as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as “PX-1” (or such other display as may replace Page PX-1), on Bloomberg Financial Markets for the most recently issued, actively traded on-the-run, benchmark U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly on a straight line basis between (1) the most recently issued, actively traded on-the-run benchmark U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life and (2) the most recently issued, actively traded on-the-run benchmark U.S. Treasury security with the maturity closest to and less than the Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable bond.



	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



April 1, 1991	1991 Series AP Bonds	May 1, 1991
May 1, 1991	1991 Series BP Bonds and 1991 Series CP Bonds	May 15, 1991
May 15, 1991	1991 Series DP Bonds	September 1, 1991
September 1, 1991	1991 Series EP Bonds	November 1, 1991
November 1, 1991	1991 Series FP Bonds	January 15, 1992
January 15, 1992	1992 Series BP Bonds	February 29, 1992 and April 15, 1992
February 29, 1992	1992 Series AP Bonds	April 15, 1992
April 15, 1992	Series KKP No. 13 Bonds	July 15, 1992
July 15, 1992	1992 Series CP Bonds	November 30, 1992
July 31, 1992	1992 Series D Bonds	November 30, 1992
November 30, 1992	1992 Series E Bonds and 1993 Series B Bonds	March 15, 1993
December 15, 1992	Series KKP No. 14 Bonds and 1989 Series BP No. 2 Bonds	March 15, 1993
January 1, 1993	1993 Series C Bonds	April 1, 1993
March 1, 1993	1993 Series E Bonds	June 30, 1993
March 15, 1993	1993 Series D Bonds	September 15, 1993
April 1, 1993	1993 Series FP Bonds and 1993 Series IP Bonds	September 15, 1993
April 26, 1993	1993 Series G Bonds and Amendment of Article II, Section 5	September 15, 1993
May 31, 1993	1993 Series J Bonds	September 15, 1993
June 30, 1993	1993 Series AP Bonds	(d)
June 30, 1993	1993 Series H Bonds	(d)
September 15, 1993	1993 Series K Bonds	March 1, 1994
March 1, 1994	1994 Series AP Bonds	June 15, 1994
June 15, 1994	1994 Series BP Bonds	December 1, 1994
August 15, 1994	1994 Series C Bonds	December 1, 1994
December 1, 1994	Series KKP No. 15 Bonds and 1994 Series DP Bonds	August 1, 1995
August 1, 1995	1995 Series AP Bonds and 1995 Series BP Bonds	August 1, 1999
August 1, 1999	1999 Series AP Bonds, 1999 Series BP Bonds and 1999 Series CP Bonds	(d)
August 15, 1999	1999 Series D Bonds	(d)
January 1, 2000	2000 Series A Bonds	(d)
April 15, 2000	Appointment of Successor Trustee	(d)
August 1, 2000	2000 Series BP Bonds	(d)
March 15, 2001	2001 Series AP Bonds	(d)
May 1, 2001	2001 Series BP Bonds	(d)
August 15, 2001	2001 Series CP Bonds	(d)
September 15, 2001	2001 Series D Bonds and 2001 Series E Bonds	(d)
September 17, 2002	Amendment of Article XIII, Section 3 and Appointment of Successor Trustee	(d)
October 15, 2002	2002 Series A Bonds and 2002 Series B Bonds	(d)



December 1, 2002	2002 Series C Bonds and 2002 Series D Bonds	(d)
August 1, 2003	2003 Series A Bonds	(d)
March 15, 2004	2004 Series A Bonds and 2004 Series B Bonds	(d)
July 1, 2004	2004 Series D Bonds	(d)
February 1, 2005	2005 Series A Bonds and 2005 Series B Bonds	May 15, 2006
April 1, 2005	2005 Series AR Bonds and 2005 Series BR Bonds	May 15, 2006
August 1, 2005	2005 Series DT Bonds	May 15, 2006
September 15, 2005	2005 Series C Bonds	May 15, 2006
September 30, 2005	2005 Series E Bonds	May 15, 2006
May 15, 2006	2006 Series A Bonds	December 1, 2006
December 1, 2006	2006 Series CT Bonds	December 1, 2007
December 1, 2007	2007 Series A Bonds	April 1, 2008
April 1, 2008	2008 Series DT Bonds	May 1, 2008
May 1, 2008	2008 Series ET Bonds	July 1, 2008
June 1, 2008	2008 Series G Bonds	October 1, 2008
July 1, 2008	2008 Series KT Bonds	October 1, 2008
October 1, 2008	2008 Series J Bonds	December 1, 2008
December 1, 2008	2008 Series LT Bonds	March 15, 2009
March 15, 2009	2009 Series BT Bonds	November 1, 2009
November 1, 2009	2009 Series CT Bonds	August 1, 2010
August 1, 2010	2010 Series B Bonds	December 1, 2010
September 1, 2010	2010 Series A Bonds	December 1, 2010
December 1, 2010	2010 Series CT Bonds	March 1, 2011
March 1, 2011	2011 Series AT Bonds	May 15, 2011
May 15, 2011	2011 Series B Bonds	August 1, 2011
August 1, 2011	2011 Series GT Bonds	June 20, 2012
August 15, 2012	2011 Series D, 2011 Series E and 2011 Series F Bonds	June 20, 2012
September 1, 2012	2011 Series H Bonds	June 20, 2012
June 20, 2012	2012 Series A and B Bonds	March 15, 2013
March 15, 2013	2013 Series A Bonds	August 1, 2013



	(a) See Supplemental Indenture dated as of July 1, 1970 for Interstate Commerce Commission filing and recordation information.
	(b) See Supplemental Indenture dated as of May 1, 1953 for Secretary of State of Michigan filing information.
	(c) See Supplemental Indenture dated as of May 1, 1974 for County of Genesee, Michigan recording and filing information.
	(d) Recording and filing information for this Supplemental Indenture has not been set forth in a subsequent Supplemental Indenture.

RECORDING AND FILING OF SUPPLEMENTAL INDENTURE DATED AS OF August 1, 2013.		Further, pursuant to the terms and provisions of the Original Indenture, a Supplemental Indenture dated as of August 1, 2013 providing for the terms of bonds to be issued thereunder of 2013 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 August 27, 2013 (Filing No. 2013125129-1), has been filed and recorded in the Office of the Surface Transportation Board on August 27, 2013 (Recordation No. 5485-IIIIII), 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 County Michigan	9/13/13	201309130102127
Gratiot County Michigan	8/27/13	946	1393
Huron County Michigan	8/27/13	1463	667
Ingham County Michigan	8/28/13	2013-041365
Lapeer County Michigan	8/27/13	2666	442
Lenawee County Michigan	8/27/13	2474	667
Livingston County Michigan	8/27/13	2013R-034116
Macomb County Michigan	9/26/13	22429	680
Mason County Michigan	8/27/13	2013R05205
Midland County Michigan	8/27/13	1569	1396
Monroe County Michigan	8/27/13	2013R21848
Oakland County Michigan	8/27/13	46292	384
St. Clair County Michigan	8/27/13	4435	555
Sanilac County Michigan	8/27/13	1216	367
Tuscola County Michigan	8/27/13	1290	1210
Washtenaw County Michigan	9/5/13	4998	555
Wayne County Michigan	8/27/13	51029	238



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.