DETROIT EDISON CO (Form: 10-Q, Received: 07/31/2009 17:00:38)

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, 2009

Commission file number 1-2198

The Detroit Edison 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.

THE DETROIT EDISON COMPANY

(Exact name of registrant as specified in its charter)


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

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

313-235-4000
(Registrant’s telephone number, including area code)

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

Yes þ No o

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

Yes o 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 (Check one):


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

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

Yes o No þ

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

The Detroit Edison Company
Quarterly Report on Form 10-Q
Quarter Ended June 30, 2009

Table Of Contents


	Page
Definitions		1

Forward-Looking Statements		2

Part I — Financial Information

Item 1. Financial Statements

Consolidated Statements of Financial Position (Unaudited)		8

Consolidated Statements of Operations (Unaudited)		10

Consolidated Statements of Cash Flows (Unaudited)		11

Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Income (Unaudited)		12

Notes to Consolidated Financial Statements (Unaudited)		13

Item 2. Management’s Narrative Analysis of Results of Operations		4

Item 4. Controls and Procedures		7

Part II — Other Information

Item 1. Legal Proceedings		28

Item 1A. Risk Factors		28

Item 6. Exhibits		29

Signature		30
EX-4.265
EX-4.266
EX-12.34
EX-31.49
EX-31.50
EX-32.49
EX-32.50

Definitions


Customer Choice		Statewide initiatives giving customers in Michigan the option to choose alternative suppliers for electricity.

Detroit Edison		The Detroit Edison Company (a direct wholly owned subsidiary of DTE Energy Company) and subsidiary companies

DTE Energy		DTE Energy Company, the parent of Detroit Edison and directly or indirectly the parent company of numerous non-utility subsidiaries

EPA		United States Environmental Protection Agency

FASB		Financial Accounting Standards Board

FERC		Federal Energy Regulatory Commission

FSP		FASB Staff Position

MDEQ		Michigan Department of Environmental Quality

MISO		Midwest Independent System Operator, a Regional Transmission Organization

MPSC		Michigan Public Service Commission

NRC		Nuclear Regulatory Commission

PSCR		A power supply cost recovery mechanism authorized by the MPSC that allows Detroit Edison to recover through rates its fuel, fuel-related and purchased power expenses.

Securitization		Detroit Edison 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.

SFAS		Statement of Financial Accounting Standards

Stranded Costs		Costs incurred by utilities in order to serve customers in a regulated environment that absent special regulatory approval would not otherwise be recoverable if customers switch to alternative energy suppliers.

Units of Measurement

kWh		Kilowatthour of electricity

MW		Megawatt of electricity

MWh		Megawatthour of electricity

Forward-Looking Statements

Certain information presented herein includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve certain risks and uncertainties that may cause actual future results to differ materially from those presently contemplated, projected, estimated or budgeted. Many factors may impact forward-looking statements including, but not limited to, the following:

	•		the length and severity of ongoing economic decline;

	•		changes in the economic and financial viability of our customers, suppliers, and trading counterparties, and the continued ability of such parties to perform their obligations to Detroit Edison;

	•		high levels of uncollectible accounts receivable;

	•		access to capital markets and capital market conditions 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;

	•		potential for continued loss on investments, including nuclear decommissioning and benefit plan assets;

	•		the timing and extent of changes in interest rates;

	•		the level of borrowings;

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

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

	•		economic climate and population growth or decline in the geographic areas where we do business;

	•		environmental issues, laws, regulations, and the increasing costs of remediation and compliance, including actual and potential new federal and state requirements that include or could include carbon and more stringent mercury emission controls, a renewable portfolio standard, energy efficiency mandates, and a carbon tax or cap and trade structure;

	•		nuclear regulations and operations associated with nuclear facilities;

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

	•		employee relations and the impact of collective bargaining agreements;

	•		unplanned outages;

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

	•		the effects of competition;

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

	•		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 ability to recover costs through rate increases;

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

	•		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; and

	•		binding arbitration, litigation and related appeals.

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 refer 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 — Item 2.

The Detroit Edison Company

Management’s Narrative Analysis of Results of Operations

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

Detroit Edison’s results for the three and six months ended June 30, 2009 as compared to the comparable periods in 2008 are discussed below:


	Three Months Ended						Six Months Ended
	June 30						June 30
(in Millions)	2009			2008			2009			2008
Operating Revenues	$	1,108		$	1,173		$	2,226		$	2,326
Fuel and Purchased Power		372			415			712			817

Gross Margin		736			758			1,514			1,509
Operation and Maintenance		306			369			622			727
Depreciation and Amortization		197			178			385			370
Taxes Other Than Income		44			60			104			122

Operating Income		189			151			403			290
Other (Income) and Deductions		61			71			145			145
Income Tax Provision		49			29			101			53

Net Income Attributable to DTE Energy Company	$	79		$	51		$	157		$	92


Operating Income as a Percentage of Operating Revenues		17	%		13	%		18	%		12	%

Gross margin decreased $22 million in the second quarter of 2009 and increased $5 million in the six-month period ended June 30, 2009. The following table details changes in various gross margin components relative to the comparable prior period:


(in Millions)	Three Months			Six Months
Weather	$	(20	)	$	(17	)
Economy		(66	)		(103	)
April 2008 expiration of show-cause rate decrease		6			23
December 2008 rate order		22			40
Securitization bond and tax surcharge rate increase		17			25
Other, net		19			37

Increase (decrease) in gross margin	$	(22	)	$	5

Electric Sales

Three Months Ended

Six Months Ended

June 30

(in Thousands of MWh)

2009

2008

2009

2008

Residential

3,147

3,428

6,885

7,360

Commercial

4,536

4,913

8,959

9,275

Industrial

2,385

3,231

5,022

6,747

Wholesale

695

700

1,399

1,423

Other

200

196

10,850

12,359

22,465

25,001

Interconnections sales (1)

1,189

1,183

2,224

2,009

Total Electric Sales

12,039

13,542

24,689

27,010

Electric Deliveries

Retail and Wholesale

10,850

12,359

22,465

25,001

Electric Customer Choice (2)

344

296

661

752

Total Electric Sales and Deliveries

11,194

12,655

23,126

25,753


(1)		Represents power that is not distributed by Detroit Edison.

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

Power Generated and Purchased


	Three Months Ended						Six Months Ended
	June 30						June 30
(in Thousands of MWh)	2009			2008			2009			2008
Power Plant Generation
Fossil		9,852			10,347			19,694			20,587
Nuclear		1,486			2,408			3,740			4,751

		11,338			12,755			23,434			25,338
Purchased Power		1,464			1,509			2,816			3,239

System Output		12,802			14,264			26,250			28,577
Less Line Loss and Internal Use		(763	)		(722	)		(1,561	)		(1,567	)

Net System Output		12,039			13,542			24,689			27,010


Average Unit Cost ($/MWh)
Generation (1)	$	18.97		$	17.98		$	18.10		$	17.30

Purchased Power	$	41.83		$	61.53		$	38.05		$	61.56

Overall Average Unit Cost	$	21.58		$	22.59		$	20.24		$	22.31


(1)		Represents fuel costs associated with power plants.

Operation and maintenance expense decreased $63 million in the second quarter of 2009 and $105 million in the six-month period ended June 30, 2009. The decrease for the second quarter is primarily due to $23 million from the timing of maintenance activities, $25 million from continuous improvement initiatives resulting in lower contract labor and outside services expense, information technology and other staff expenses, lower storm expenses of $14 million and $12 million from employee benefit-related changes, partially offset by higher pension and healthcare costs of $15 million. The decrease for the six-month period is primarily due to $37 million from the timing of maintenance activities, $59 million from continuous improvement initiatives resulting in lower contract labor and outside services expense, information technology and other staff expenses, $21 million from employee benefit-related changes and lower storm expenses of $14 million, partially offset by higher pension and healthcare costs of $31 million.

Taxes other than income were lower by $16 million in the 2009 second quarter and $18 million in the 2009 six-month period due primarily to a $13 million reduction in property tax expense due to refunds received in partial settlement of appeals of assessments for prior years.

Outlook — We will move forward in our efforts to continue to improve the operating performance and cash flow of Detroit Edison. We continue to resolve outstanding regulatory issues. Many of these issues have been addressed by the legislation signed by the Governor of Michigan in October 2008. Looking forward, additional issues, such as volatility in prices for coal and other commodities, investment returns and changes in discount rate assumptions in benefit plans, health care costs and higher levels of capital spending, will result in us continuing to pursue opportunities to improve productivity, remove waste and decrease our costs while improving customer satisfaction.

Unfavorable national and regional economic trends have resulted in reduced demand for electricity in our service territory and increases in our uncollectible accounts receivable. The magnitude of these trends will be driven by the impacts of the challenges in the domestic automotive industry and the timing and level of recovery in the national and regional economies. Direct and indirect effects of further automotive and other industrial plant closures could have a significant impact on the results of Detroit Edison. We continue to monitor developments in this sector. Due to the economy and credit market conditions, in the near term, we are reviewing our capital expenditure commitments for potential adjustments as appropriate.

In May 2009, Standard & Poor’s Rating Group (Standard & Poor’s) revised the outlook on Detroit Edison to negative from stable, and lowered our short-term corporate credit and commercial paper ratings to A-3 from A-2. The revision is primarily due to concerns over Michigan’s economic climate. Moody’s Investors Service (Moody’s) affirmed our existing short-term ratings of P-2. Short-term borrowings, principally in the form of commercial paper, provide us with the liquidity needed on a daily basis. Our commercial paper program is supported by our unsecured credit facilities. The resulting split (A-3/P-2) rating has weakened our ability to issue commercial paper, however, to date, we have met our short-term borrowing requirements in the commercial paper market without drawing on back-up credit facilities. Potential instability in the credit markets and the result of our lower rating may impact future access to the commercial paper markets, which may require us to draw on our back-up facilities. A downgrade below investment grade could potentially increase our borrowing costs and may limit access to the capital markets. The impact of a downgrade will not affect our ability to comply with our existing debt covenants. Our current credit ratings, as determined by three nationally recognized credit rating agencies, are considered investment grade.

The following variables, either individually or in combination, could impact our future results:

	•		Economic conditions within Michigan resulting in lower demand and increased thefts of electricity;

	•		Collectibility of accounts receivable;

	•		Instability in capital markets which could impact availability of short and long-term financing or the potential for loss on investments;

	•		Increases in future expense and contributions to pension and other postretirement plans due to declines in asset values resulting from market conditions;

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

	•		Our ability to reduce costs and maximize plant and distribution system performance;

	•		Weather;

	•		The level of customer participation in the electric Customer Choice program; and

	•		Environmental issues, laws, regulations, and the increasing costs of remediation and compliance, including actual and potential new federal and state requirements that could include carbon and more stringent mercury emission controls, a renewable portfolio standard, energy efficiency mandates, and a carbon tax or cap and trade structure.

Part I — 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 the Detroit Edison’s Chief Executive Officer and Chief Financial Officer, 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, 2009, which is the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that such 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 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, 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, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part I — Item 1.

The Detroit Edison Company

Consolidated Statements of Financial Position (Unaudited)


	June 30			December 31
(in Millions)	2009			2008
ASSETS
Current Assets
Cash and cash equivalents	$	25		$	30
Restricted cash		67			84
Accounts receivable (less allowance for doubtful accounts of $120 and $121, respectively)
Customer		679			709
Affiliates		2			5
Other		17			34
Inventories
Fuel		169			170
Materials and supplies		171			169
Notes receivable
Affiliates		110			41
Other		4			3
Other		82			95

		1,326			1,340


Investments
Nuclear decommissioning trust funds		716			685
Other		88			99

		804			784


Property
Property, plant and equipment		15,205			14,977
Accumulated depreciation		(5,926	)		(5,828	)

		9,279			9,149


Other Assets
Regulatory assets		3,336			3,456
Securitized regulatory assets		937			1,001
Intangible assets		9			19
Notes receivable
Affiliates		23			—
Other		1			3
Other		108			90

		4,414			4,569


Total Assets	$	15,823		$	15,842

See Notes to Consolidated Financial Statements (Unaudited)

The Detroit Edison Company
Consolidated Statements of Financial Position (Unaudited)


	June 30			December 31
(in Millions, Except Shares)	2009			2008
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Accounts payable — affiliates	$	56		$	103
Accounts payable — other		272			346
Accrued interest		84			80
Accrued vacation		51			58
Accrued power supply cost recovery revenue		89			27
Income taxes payable		47			39
Short-term borrowings — other		—			75
Current portion of long-term debt, including capital leases		157			153
Other		168			197

		924			1,078


Long-Term Debt (net of current portion)
Mortgage bonds, notes and other		4,079			4,091
Securitization bonds		861			932
Capital lease obligations		28			33

		4,968			5,056


Other Liabilities
Deferred income taxes		1,858			1,894
Regulatory liabilities		584			593
Asset retirement obligations		1,240			1,205
Unamortized investment tax credit		80			85
Nuclear decommissioning		119			114
Accrued pension liability — affiliates		924			978
Accrued postretirement liability — affiliates		1,091			1,075
Other		226			208

		6,122			6,152


Commitments and Contingencies (Notes 4 and 8)

Shareholder’s Equity
Common stock, $10 par value, 400,000,000 shares authorized, and 138,632,324 shares issued and outstanding		3,196			2,946
Retained earnings		626			622
Accumulated other comprehensive income		(13	)		(12	)

		3,809			3,556


Total Liabilities and Shareholder’s Equity	$	15,823		$	15,842

See Notes to Consolidated Financial Statements (Unaudited)

The Detroit Edison Company

Consolidated Statements of Operations (Unaudited)


	Three Months Ended						Six Months Ended
	June 30						June 30
(in Millions)	2009			2008			2009			2008
Operating Revenues	$	1,108		$	1,173		$	2,226		$	2,326


Operating Expenses
Fuel and purchased power		372			415			712			817
Operation and maintenance		306			369			622			727
Depreciation and amortization		197			178			385			370
Taxes other than income		44			60			104			122

		919			1,022			1,823			2,036


Operating Income		189			151			403			290


Other (Income) and Deductions
Interest expense		84			71			163			147
Interest income		(1	)		(1	)		(1	)		(2	)
Other income		(10	)		(11	)		(17	)		(23	)
Other expenses		(12	)		12			—			23

		61			71			145			145


Income Before Income Taxes		128			80			258			145

Income Tax Provision		49			29			101			53


Net Income	$	79		$	51		$	157		$	92

See Notes to Consolidated Financial Statements (Unaudited)

The Detroit Edison Company

Consolidated Statements of Cash Flows (Unaudited)


	Six Months Ended
	June 30
(in Millions)	2009			2008
Operating Activities
Net income	$	157		$	92
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		385			370
Deferred income taxes		(23	)		(19	)
Asset (gains) and reserves, net		—			(1	)
Changes in assets and liabilities, exclusive of changes shown separately		132			153

Net cash from operating activities		651			595


Investing Activities
Plant and equipment expenditures		(490	)		(414	)
Restricted cash for debt redemptions		18			51
Proceeds from sale of nuclear decommissioning trust fund assets		182			106
Investment in nuclear decommissioning trust funds		(190	)		(124	)
Other investments		(102	)		(23	)

Net cash used for investing activities		(582	)		(404	)


Financing Activities
Issuance of long-term debt		65			538
Redemption of long-term debt		(150	)		(74	)
Repurchase of long-term debt		—			(238	)
Short-term borrowings, net		(81	)		(351	)
Capital contribution by parent company		250			175
Dividends on common stock		(152	)		(152	)
Other		(6	)		(5	)

Net cash used for financing activities		(74	)		(107	)


Net Increase (Decrease) in Cash and Cash Equivalents		(5	)		84
Cash and Cash Equivalents at Beginning of Period		30			47

Cash and Cash Equivalents at End of Period	$	25		$	131

See Notes to Consolidated Financial Statements (Unaudited)

The Detroit Edison Company

Consolidated Statements of Changes in Shareholder’s Equity and Comprehensive Income
(U naudited )


										Accumulated
					Additional					Other
	Common Stock				Paid In		Retained			Comprehensive
(Dollars in Millions, shares in thousands)	Shares		Amount		Capital		Earnings			Income			Total

Balance, December 31, 2008		138,632	$	1,386	$	1,560	$	622		$	(12	)	$	3,556

Net income		—		—		—		157			—			157
Capital contribution by parent company		—		—		250		—			—			250
Dividends declared on common stock		—		—		—		(152	)		—			(152	)
Net change in unrealized gains on investments, net of tax		—		—		—		—			(1	)		(1	)
Other		—		—		—		(1	)		—			(1	)

Balance, June 30, 2009		138,632	$	1,386	$	1,810	$	626		$	(13	)	$	3,809

The following table displays other comprehensive income for the six-month periods ended June 30:


(in Millions)	2009			2008
Net income	$	157		$	92
Other comprehensive income, net of tax:
Net unrealized gains on investments:
Amounts reclassified to income, net of taxes		(1	)		1

Comprehensive income	$	156		$	93

See Notes to Consolidated Financial Statements (Unaudited)

The Detroit Edison Company

Notes to Consolidated Financial Statements (Unaudited)

NOTE 1 — GENERAL

These Consolidated Financial Statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the 2008 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 our opinion include all adjustments necessary for a fair presentation of such financial statements. 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, 2009.

Certain prior year amounts have been reclassified to reflect current year classifications.

Asset Retirement Obligations

The Company records asset retirement obligations in accordance with SFAS No. 143, Accounting for Asset Retirement Obligations and FASB Interpretation Number (FIN) 47, Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143 . The Company has a legal retirement obligation for the decommissioning costs for its Fermi 1 and Fermi 2 nuclear plants. The Company has conditional retirement obligations for disposal of asbestos at certain of its power plants. To a lesser extent, the Company has conditional retirement obligations at certain service centers, and disposal costs for PCB contained within transformers and circuit breakers. The Company recognizes such obligations as liabilities at fair market value when they are incurred, which generally is at the time the associated assets are placed in service. Fair value is measured using expected future cash outflows discounted at our credit-adjusted risk-free rate.

Timing differences arise in the expense recognition of legal asset retirement costs that the Company is currently recovering in rates. The Company defers such differences under SFAS No. 71, Accounting for the Effects of Certain Types of Regulation .

A reconciliation of the asset retirement obligations for the six months ended June 30, 2009 follows:


(in Millions)
Asset retirement obligations at January 1, 2009	$	1,226
Accretion		40
Liabilities settled		(3	)
Revision in estimated cash flows		(4	)

Asset retirement obligations at June 30, 2009		1,259
Less amount included in current liabilities		(19	)

	$	1,240

Approximately $1.2 billion of the asset retirement obligations represent nuclear decommissioning liabilities that are funded through a surcharge to electric customers over the life of the Fermi 2 nuclear power plant.

Retirement Benefits and Trusteed Assets

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


(in Millions)	Pension Benefits						Other Postretirement Benefits
Three Months Ended June 30	2009			2008			2009			2008
Service cost	$	11		$	11		$	10		$	12
Interest cost		39			37			25			24
Expected return on plan assets		(41	)		(41	)		(10	)		(15	)
Amortization of:
Net actuarial loss		9			6			14			7
Prior service cost		2			1			—			1
Net transition liability		—			—			1			—

Net periodic benefit cost	$	20		$	14		$	40		$	29


(in Millions)	Pension Benefits						Other Postretirement Benefits
Six Months Ended June 30	2009			2008			2009			2008
Service cost	$	21		$	23		$	23		$	24
Interest cost		79			74			51			47
Expected return on plan assets		(82	)		(82	)		(21	)		(29	)
Amortization of:
Net actuarial loss		19			13			26			14
Prior service cost		3			3			1			1
Net transition liability		—			—			1			1

Net periodic benefit cost	$	40		$	31		$	81		$	58

The Company expects to contribute $250 million to its pension plans during 2009. A $20 million contribution was made to the plans in the second quarter of 2009 and approximately $70 million of contributions were made to the plans for the six-month period ended June 30, 2009.

The Company expects to contribute $90 million to its postretirement medical and life insurance benefit plans during 2009. No contributions were made to the plans in the first six months of 2009.

Income Taxes

Unrecognized tax benefits at June 30, 2009 and at December 31, 2008, if recognized, would not materially impact our effective tax rate. We do not anticipate any significant changes in the unrecognized tax benefits during the next twelve months.

Stock-Based Compensation

Our parent company, DTE Energy, follows SFAS No. 123(R), Share-Based Payment, using the modified prospective transition method. The Company received an allocation of costs associated with stock compensation and the related impact of cumulative accounting adjustments. The allocation of stock-based compensation expense for the 2009 and 2008 second quarters was approximately $5 million and $7 million, respectively, while such allocation was $5 million and $10 million for the six months ended June 30, 2009 and 2008, respectively.

Consolidated Statements of Cash Flows

The following provides detail of the changes in assets and liabilities that are reported in the Consolidated Statements of Cash Flows, and supplementary cash information:


	Six Months Ended
	June 30
(in Millions)	2009			2008
Changes in Assets and Liabilities, Exclusive of Changes Shown Separately
Accounts receivable, net	$	45		$	11
Inventories		(2	)		(53	)
Accrued pension liability — affiliates		(54	)		13
Accounts payable		(41	)		23
Accrued PSCR refund		82			95
Income taxes payable		14			32
General taxes		3			(13	)
Postretirement obligation — affiliates		16			7
Other assets		97			54
Other liabilities		(28	)		(16	)

	$	132		$	153

Subsequent Events

The Company has evaluated subsequent events through July 31, 2009, the date that these financial statements were issued.

NOTE 2 — NEW ACCOUNTING PRONOUNCEMENTS

Fair Value Accounting

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements . SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. It emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Fair value measurement should be determined based on the assumptions that market participants would use in pricing an asset or liability. Effective January 1, 2008, the Company adopted SFAS No. 157. As permitted by FASB Staff Position FAS No. 157-2, the Company elected to defer the effective date of SFAS No. 157 as it pertains to measurement and disclosures about the fair value of non-financial assets and liabilities made on a nonrecurring basis. The Company has adopted the recognition provisions for non-financial assets and liabilities as of January 1, 2009. See Note 3 for further disclosures.

In April 2009, the FASB issued three FSPs intended to provide additional application guidance and enhance disclosures regarding fair value measurements and impairments of securities. The FSPs are effective for interim and annual periods ending after June 15, 2009.

	§		FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, expands the fair value disclosures required for all financial instruments within the scope of SFAS No. 107 to interim periods.

	§		FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly, which applies to all assets and liabilities, i.e., financial and nonfinancial, reemphasizes that the objective of fair value remains unchanged (i.e., an exit price notion). The FSP provides application guidance on measuring fair value when the volume and level of activity has significantly decreased and identifying transactions that are not orderly. The FSP also emphasizes that an entity cannot presume that an observable transaction price is not orderly even when there has been a significant decline in the volume and level of activity.

FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, is intended to bring greater consistency to the timing of impairment recognition, and provide greater clarity to investors about the credit and noncredit components of impaired debt securities that are not expected to be sold.

The Company adopted these FSPs in the second quarter of 2009. The adoption of these FSPs did not have a significant impact on Detroit Edison’s consolidated financial statements.

Noncontrolling Interests in Consolidated Financial Statements

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an Amendment of ARB No. 51. This Statement establishes accounting and reporting standards for the noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2008. This Statement shall be applied prospectively as of the beginning of the fiscal year in which this Statement is initially applied, except for the presentation and disclosure requirements which shall be applied retrospectively for all periods presented. The Company adopted SFAS No. 160 as of January 1, 2009. Adoption of SFAS No. 160 did not have a material effect on the Company’s consolidated financial statements.

Disclosures about Derivative Instruments and Guarantees

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133 . This statement requires enhanced disclosures about an entity’s derivative and hedging activities and thereby improves the transparency of financial reporting. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.

SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. Comparative disclosures for earlier periods at initial adoption are encouraged but not required. The Company adopted SFAS No. 161 effective January 1, 2009. See Note 3.

Subsequent Events

In May 2009, the FASB issued SFAS No. 165, Subsequent Events . This statement provides guidance on management’s assessment of subsequent events. The new standard clarifies that management must evaluate, as of each reporting period, events or transactions that occur after the balance sheet date “through the date that the financial statements are issued or are available to be issued.” Management must perform its assessment for both interim and annual financial reporting periods. SFAS No. 165 does not significantly change the Company’s practice for evaluating such events. SFAS No. 165 is effective prospectively for interim and annual periods ending after June 15, 2009 and requires disclosure of the date subsequent events are evaluated through. The Company adopted SFAS No. 165 during the quarter ended June 30, 2009. See Note 1.

Transfers of Financial Assets

In June 2009, the FASB issued SFAS No. 166, Accounting for Transfers of Financial Assets — an amendment of FASB No. 140. This statement amends the derecognition guidance in SFAS No. 140 and reflects the FASB’s response to issues entities have encountered when applying SFAS No. 140. In addition, SFAS No. 166 addresses concerns expressed by the SEC, members of Congress, and financial statement users about the accounting and disclosures required by SFAS No. 140 in the wake of the subprime mortgage crisis and the deterioration in the global credit markets. SFAS No. 166 is effective for financial asset transfers occurring after the beginning of an entity’s first fiscal year that begins after November 15, 2009. Early adoption is prohibited. SFAS No. 166 must be applied prospectively to transfers of financial assets occurring on or after its effective date. Accordingly, transferors

should not reevaluate historical transfers of financial assets under the derecognition criteria in SFAS No. 166. The adoption of SFAS No. 166 will not have a material impact on the Company’s consolidated financial statements.

Variable Interest Entities (VIE)

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R). This statement, amends the consolidation guidance that applies to VIEs and affects the overall consolidation analysis under Interpretation 46(R). The amendments to the consolidation guidance affect all entities and enterprises currently within the scope of Interpretation 46(R), as well as qualifying special purpose entities that are currently outside the scope of Interpretation 46(R). Accordingly, the Company will need to reconsider its previous Interpretation 46(R) conclusions, including (1) whether an entity is a VIE, (2) whether the enterprise is the VIE’s primary beneficiary, and (3) what type of financial statement disclosures are required. SFAS No. 167 is effective as of the beginning of the first fiscal year that begins after November 15, 2009. Early adoption is prohibited. The Company is currently assessing the impact of SFAS No. 167 on the Company’s consolidated financial statements.

FASB Accounting Standards Codification™ (Codification)

In June 2009, the FASB voted to approve that on July 1, 2009, the Codification will become the single source of authoritative nongovernmental U.S. GAAP. The Codification is a reorganization of current GAAP into a topical format that eliminates the current GAAP hierarchy and establishes two levels of guidance — authoritative and nonauthoritative. According to the FASB, all “non-grandfathered, non-SEC accounting literature” that is not included in the Codification would be considered nonauthoritative. The FASB has indicated that the Codification does not change current GAAP. Instead, the proposed changes aim to (1) reduce the time and effort it takes for users to research accounting questions and (2) improve the usability of current accounting standards. The Codification is effective for interim and annual periods ending after September 15, 2009.

NOTE 3 — FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS AND FAIR VALUE

Financial and Other Derivative Instruments

The Company complies with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities , as amended and interpreted. Under SFAS No. 133, all derivatives are recognized on the Consolidated Statement of Financial Position at their fair value unless they qualify for certain scope exceptions, including normal purchases and normal sales exception. Further, derivatives that qualify and are designated for hedge accounting are classified as either hedges of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge), or as hedges of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge). For cash flow hedges, the portion of the derivative gain or loss that is effective in offsetting the change in the value of the underlying exposure is deferred in Accumulated other comprehensive income and later reclassified into earnings when the underlying transaction occurs. For fair value hedges, changes in fair values for both the derivative and the underlying hedged exposure are recognized in earnings each period. Gains and losses from the ineffective portion of any hedge are recognized in earnings immediately. For derivatives that do not qualify or are not designated for hedge accounting, changes in the 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. Contracts the Company typically classifies as derivative instruments include power, certain coal forwards, futures, options and swaps.

Detroit Edison generates, purchases, distributes and sells electricity. Detroit Edison uses forward energy and capacity contracts to manage changes in the price of electricity and fuel. Substantially all of these contracts meet the normal purchases and sales exemption and are therefore accounted for under the accrual method. Other derivative contracts are recoverable through the PSCR mechanism when realized. This results in the deferral of unrealized gains and losses as Regulatory assets or liabilities, until realized.

Effective January 1, 2009, the Company adopted SFAS No. 161. This Statement requires enhanced disclosures about an entity’s derivative and hedging activities.

The following represents the fair value of derivative instruments as of June 30, 2009:

Derivatives not designated as hedging instruments under SFAS No. 133


	Balance Sheet	Fair
	Location	Value
Electricity	Other current assets	$	2
Emissions	Other current liabilities	$	(11	)

Total derivatives not designated as hedging instruments under SFAS No. 133		$	(9	)


Total derivatives:
Current		$	(9	)
Noncurrent			—

Total derivatives as reported		$	(9	)

The effect of derivative instruments recoverable through the PSCR mechanism when realized on the Consolidated Statement of Financial Position for the three and six months ended June 30, 2009 is as follows:


		Three Months
		Ended			Six Months Ended
	Location of Gain	Gain (Loss)			Gain (Loss)
	(Loss) Recognized	Recognized in			Recognized in
	in Regulatory	Regulatory Assets			Regulatory Assets
	Assets / Liabilities	/ Liabilities on			/ Liabilities on
	On Derivative	Derivative			Derivative
Electricity and Emissions	Regulatory Asset	$	(2	)	$	(11	)
Electricity and Emissions	Regulatory Liability		2			(2	)

Total		$	—		$	(13	)

The following represents the cumulative gross volume of derivative contracts outstanding as of June 30, 2009:


Commodity	Number of Units
Emissions (Tons)		6,436
Electricity (MWh)		52,098,048
Oil (bbl)		9,000

Fair Value

SFAS No. 157 defines fair value 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 is immaterial for the three and six months ended June 30, 2009. The Company believes it uses valuation techniques that maximize the use of observable market-based inputs and minimize the use of unobservable inputs.

SFAS No. 157 establishes a fair value hierarchy, which 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. SFAS No. 157 requires that assets and liabilities 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 by SFAS No. 157 as follows:

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

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

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

The following table presents assets and liabilities measured and recorded at fair value on a recurring basis as of June 30, 2009:


								Net Balance at
(in Millions)	Level 1		Level 2			Level 3		June 30, 2009
Assets:
Cash equivalents	$	2	$	—		$	—	$	2
Nuclear decommissioning trusts and other investments		494		304			—		798
Derivative assets		—		—			2		2

Total	$	496	$	304		$	2	$	802

Liabilities:
Derivative liabilities		—		(11	)		—		(11	)

Total	$	—	$	(11	)	$	—	$	(11	)


Net Assets at June 30, 2009	$	496	$	293		$	2	$	791

The following table presents the fair value reconciliation of Level 3 derivative assets and liabilities measured at fair value on a recurring basis for the three and six months ended June 30, 2009 and 2008:


	Three Months Ended				Six Months Ended
	June 30				June 30
(in Millions)	2009		2008		2009			2008
Asset balance as of beginning of period	$	1	$	1	$	4			4
Changes in fair value recorded in regulatory assets/liabilities		—		2		(2	)		2
Purchases, issuances and settlements		1		1		2			(2	)
Transfers in/out of Level 3		—		—		(2	)		—

Asset balance as of June 30	$	2	$	4	$	2		$	4

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, 2009 and 2008	$	1	$	4	$	2		$	4

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 investments in money market funds. The fair values of the shares of these funds are based on observable market prices and, therefore, have been categorized as Level 1 in the fair value hierarchy.

Nuclear Decommissioning Trusts and Other Investments

The nuclear decommissioning trust fund investments have been established to satisfy Detroit Edison’s nuclear decommissioning obligations. The nuclear decommissioning trusts and other fund investments hold debt and equity securities directly and indirectly through commingled funds and institutional mutual funds. Exchange-traded debt and equity securities held directly are valued using quoted market prices on actively traded markets. The commingled funds and institutional mutual funds which hold exchange-traded equity or debt securities are valued using quoted prices in actively traded markets. Non-exchange-traded fixed income securities are valued based upon quotations available from brokers or pricing services. For non-exchange traded fixed income securities, the trustees receive prices from pricing services. A primary price source is identified by asset type, class or issue for each security. The trustees monitor prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustees challenge an assigned price and determine that another price source is considered to be preferable. Detroit Edison has obtained an understanding of how these prices are derived, including the nature and observability of the inputs used in deriving such prices. Additionally, Detroit Edison selectively corroborates the fair values of securities by comparison of market-based price sources.

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. Other derivative contracts are valued based upon a variety of inputs including commodity market prices, interest rates, credit ratings, default rates, market-based seasonality and basis differential factors. Mathematical valuation models are used for derivatives for which external market data is not readily observable.

Fair Value of Financial Instruments

The fair value of financial instruments is determined by using various market data and other valuation techniques. The table below shows the fair value relative to the carrying value for long-term debt securities. Certain other financial instruments, such as notes payable, customer deposits and notes receivable are not shown as carrying value approximates fair value.

June 30, 2009

December 31, 2008

Fair Value

Carrying Value

Fair Value

Carrying Value

Long-Term Debt

$5.1 billion

$5.0 billion

$5.2 billion

Investments in Debt and Equity Securities

The Company generally classifies investments in debt and equity securities as either trading or available-for-sale and has recorded such investments at market value with unrealized gains or losses included in earnings or in other comprehensive income or loss, respectively. Changes in the fair value of Fermi 2 nuclear decommissioning investments are recorded as adjustments to regulatory assets or liabilities, due to a recovery mechanism from customers. The Company’s investments are reviewed for impairment each reporting period. If the assessment indicates that the impairment is other than temporary, a loss is recognized resulting in the investment being written down to its estimated fair value.

Decommissioning

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


	June 30		December 31
(in Millions)	2009		2008
Fermi 2	$	687	$	649
Fermi 1		3		3
Low level radioactive waste		26		33

Total	$	716	$	685

At June 30, 2009, investments in the external nuclear decommissioning trust funds consisted of approximately 48% in publicly traded equity securities, 51% in fixed debt instruments and 1% in cash equivalents. At December 31, 2008, investments in the external nuclear decommissioning trust funds consisted of approximately 42% in publicly traded equity securities, 57% in fixed income and 1% in cash equivalents. The debt securities at both June 30, 2009 and December 31, 2008 had an average maturity of approximately 5 years.

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						Six Months Ended
	June 30						June 30
(in Millions)	2009			2008			2009			2008
Realized gains	$	3		$	7		$	19		$	11
Realized losses	$	(7	)	$	(7	)	$	(34	)	$	(16	)
Proceeds from sales of securities	$	69		$	54		$	182		$	106

Realized gains and losses and proceeds from sales of securities for the Fermi 2 and the low level Radioactive Waste funds are recorded to the asset retirement obligation regulatory asset and nuclear decommissioning regulatory liability, respectively. The following table sets forth the fair value and unrealized gains for the nuclear decommissioning trust funds:


	Fair		Unrealized
(in Millions)	Value		Gains
As of June 30, 2009
Equity securities	$	341	$	80
Debt securities		366		15
Cash and cash equivalents		9		—

	$	716	$	95


As of December 31, 2008
Equity securities	$	288	$	65
Debt securities		388		17
Cash and cash equivalents		9		—

	$	685	$	82

Securities held in the nuclear decommissioning trust funds are classified as available-for-sale. As Detroit Edison 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.

Impairment charges for unrealized losses incurred by the Fermi 2 trust are recognized as a regulatory asset. Detroit Edison recognized $76 million and $42 million of unrealized losses as regulatory assets at June 30, 2009 and 2008, respectively. Since the decommissioning of Fermi 1 is funded by Detroit Edison rather than through a regulatory recovery mechanism, there is no corresponding regulatory asset treatment. Therefore, impairment charges for unrealized losses incurred by the Fermi 1 trust are recognized in earnings immediately. At June 30, 2008, Detroit Edison recognized impairment charges of $0.4 million, for unrealized losses incurred by the Fermi 1 trust.

Other

The following table summarizes the fair value of the Company’s debt and equity securities, excluding nuclear decommissioning trust fund assets:


	June 30, 2009				December 31, 2008
	Fair Value		Carrying value		Fair Value		Carrying Value
Cash equivalents	$	90	$	90	$	98	$	98
Equity securities	$	3	$	3	$	20	$	20

As of June 30, 2009, available-for-sale securities had unrealized losses of $1 million reflected in other comprehensive income. These securities are comprised primarily of money-market and equity instruments. During the six-month period ended June 30, 2009, $3 million of unrealized losses on available-for-sale securities were reclassified out of other comprehensive income into losses for the period. Additionally, gains related to trading securities held at June 30, 2009 were $1 million.

NOTE 4 — REGULATORY MATTERS

2009 Electric Rate Case Filing

Detroit Edison filed a general rate case on January 26, 2009 based on a twelve months ended June 2008 historical test year. The filing with the MPSC requested a $378 million, or 8.1 percent average increase in Detroit Edison’s annual revenues for the twelve months ended June 30, 2010 projected test year.

The requested $378 million increase in revenues is required to recover the increased costs associated with environmental compliance, operation and maintenance of the Company’s electric distribution system and generation plants, customer uncollectible accounts, inflation, the capital costs of plant additions and the reduction in territory sales.

In addition, Detroit Edison’s filing made, among other requests, the following proposals:

	•		Continued progress toward correcting the existing rate structure to more accurately reflect the actual cost of providing service to business customers;

	•		Continued application of an adjustment mechanism to enable the Company to address the costs associated with retail electric customers migrating to and from Detroit Edison’s full service retail electric tariff service;

	•		Application of an uncollectible expense true-up mechanism based on the $87 million expense level of uncollectible expenses that occurred during the 12 month period ended June 2008;

	•		Continued application of the storm restoration expense recovery mechanism and modification to the line clearance expense recovery mechanism; and

	•		Implementation of a revenue decoupling mechanism.

Pursuant to an MPSC order issued May 26, 2009, Detroit Edison filed proposed tariffs on June 26, 2009 to implement $280 million of its requested annual increase on July 26, 2009. On July 16, 2009, the MPSC issued an order requiring Detroit Edison to implement the increase by applying the rate design reflected in its January 26, 2009 application. Detroit Edison expects the impact of this self-implemented increase would be significantly offset by its plan to begin reducing its PSCR factor beginning August 1, 2009. This increase will remain in place until a final order is issued by the MPSC, which is expected in January 2010. If the final rate case order provides for lower rates than we have self-implemented, we must refund the difference with interest.

Cost-Based Tariffs for Schools

In January 2009, Detroit Edison filed a required application that included two new cost-based tariffs for schools, universities and community colleges. The filing is in compliance with Public Act 286 which required utilities to file tariffs that ensure that eligible educational institutions are charged retail electric rates that reflect the actual cost of providing service to those customers. In February 2009, an MPSC order consolidated this proceeding with the January 26, 2009 electric rate case filing.

Renewable Energy Plan

In March 2009, Detroit Edison filed its Renewable Energy Plan with the MPSC as required under 2008 PA 295. The Renewable Energy Plan application requests authority to recover approximately $35 million of additional revenue in 2009. The proposed revenue increase is necessary in order to properly implement Detroit Edison’s 20-year renewable energy plan to achieve compliance with 2008 PA 295, to deliver new, cleaner, renewable electric generation demanded by customers, to further diversify Detroit Edison’s and the State of Michigan’s sources of electric supply, and to strive toward achieving state and national goals of increasing energy independence. An MPSC order was issued June 2, 2009 approving the renewable energy plan and customer surcharges beginning in September 2009.

Energy Optimization Plan

In March 2009, Detroit Edison filed an Energy Optimization Plan with the MPSC as required under 2008 PA 295. The Energy Optimization Plan application is designed to help each customer class reduce their electric usage by: (1) building customer awareness of energy efficiency options and (2) offering a diverse set of programs and participation options that result in energy savings for each customer class. Detroit Edison’s Energy Optimization Plan application proposes energy optimization expenditures for the period 2009-2011 of $134 million and further requests approval of surcharges that are designed to recover these costs. An MPSC order was issued June 2, 2009 approving an Energy Optimization Plan of $117 million. The surcharge to recover these costs was implemented effective June 3, 2009.

Power Supply Cost Recovery Proceedings

2008 Plan Year — In September 2007, Detroit Edison filed its 2008 PSCR plan case seeking approval of a levelized PSCR factor of 9.23 mills/kWh above the amount included in base rates for all PSCR customers. Also included in the filing was a request for approval of the Company’s emission compliance strategy which included pre-purchases of emission allowances as well as a request for pre-approval of a contract for capacity and energy associated with a renewable (wind) energy project. On January 31, 2008, Detroit Edison filed a revised PSCR plan case seeking approval of a levelized PSCR factor of 11.22 mills/kWh above the amount included in base rates for all PSCR customers. The revised filing supports a 2008 power supply expense forecast of $1.4 billion and includes $43 million for the recovery of a projected 2007 PSCR under-collection. On July 29, 2008, the MPSC issued a temporary order approving Detroit Edison’s request to increase the PSCR factor to 11.22 mills/kWh. In January 2009, the MPSC approved the Company’s 2008 PSCR plan and authorized the Company to charge a maximum PSCR factor of 11.22 mills/kWh for 2008. The Company filed its 2008 PSCR reconciliation case in March 2009. The filing requests recovery of a $19 million PSCR under-collection. In addition, the filing requests authorization to refund its total 2005 PSCR under-collection surcharge at year-end 2008 of $10 million, including interest, to all commercial and industrial customers. Included in the 2008 PSCR reconciliation filing was the Company’s 2008 pension expense mechanism reconciliation that reflects a $50 million over-collection. The Company expects an order in this proceeding in the second quarter of 2010.

2009 Plan Year — In September 2008, Detroit Edison filed its 2009 PSCR plan case seeking approval of a levelized PSCR factor of 17.67 mills/kWh above the amount included in base rates for residential customers and a levelized PSCR factor of 17.29 mills/kWh above the amount included in base rates for commercial and industrial customers. The Company is supporting a total power supply expense forecast of $1.73 billion. The plan also includes approximately $69 million for the recovery of its projected 2008 PSCR under-collection from all customers and approximately $12 million for the refund of its 2005 PSCR reconciliation surcharge over-collection to commercial and industrial customers only. Also included in the filing is a request for approval of the Company’s expense

associated with the use of urea in the selective catalytic reduction units at Monroe power plant as well as a request for approval of a contract for capacity and energy associated with a renewable (wind) energy project. The Company’s PSCR Plan will allow the Company to recover its reasonably and prudently incurred power supply expense including, fuel costs, purchased and net interchange power costs, nitrogen oxide and sulfur dioxide emission allowance costs, transmission costs and MISO costs. The Company self-implemented a PSCR factor of 11.64 mills/kWh above the amount included in base rates for residential customers and a PSCR factor of 11.22 mills/kWh above the amount included in base rates for commercial and industrial customers on bills rendered in January 2009. Subsequently, as a result of the December 23, 2008 MPSC order in the 2007 Detroit Edison rate case, the Company implemented a PSCR factor of 3.18 mills/kWh below the amount included in base rates for residential customers and a PSCR factor of 3.60 mills/kWh below the amount included in base rates for commercial and industrial customers for service rendered effective January 14, 2009. The Company will self-implement a PSCR factor of 10.18 mills/kWh below the amount included in base rates for residential customers and a PSCR factor of 10.46 mills/kWh below the amount included in base rates for commercial and industrial customers for bills rendered effective August 1, 2009.

Other

In July 2007, the State of Michigan Court of Appeals published its decision with respect to an appeal by Detroit Edison and others of certain provisions of a November 2004 MPSC order, including reversing the MPSC’s denial of recovery of merger control premium costs. In its published decision, the Court of Appeals held that Detroit Edison is entitled to recover its allocated share of the merger control premium and remanded this matter to the MPSC for further proceedings to establish the precise amount and timing of this recovery. Other parties filed requests for leave to appeal to the Michigan Supreme Court from the Court of Appeals decision and in September 2008, the Michigan Supreme Court granted the requests to address the merger control premium as well as the recovery of transmission costs through the PSCR. On May 1, 2009, the Michigan Supreme Court issued an order reversing the Court of Appeals decision with respect to recovery of the merger control premium, and reinstated the MPSC’s decision excluding the control premium costs from Detroit Edison’s general rates. The Court affirmed the lower court’s decision upholding the right of Detroit Edison to recover electric transmission costs through the Company’s PSCR clause. The Company requested rehearing of the Supreme Court order on the merger premium and the Michigan Attorney General requested rehearing of the transmission portion of the order. On June 26, 2009, the Michigan Supreme Court denied both requests for rehearing.

The Company is unable to predict the outcome of the unresolved regulatory matters discussed herein. Resolution of these matters is dependent upon future MPSC orders and appeals, which may materially impact the financial position, results of operations and cash flows of the Company.

NOTE 5 — SHAREHOLDER’S EQUITY

In March 2009, DTE Energy made a capital contribution of $250 million to the Company.

NOTE 6 — LONG-TERM DEBT

Debt Issuances

In 2009, the Company has issued or remarketed the following long-term debt:

(in Millions)


Month Issued	Type	Interest Rate			Maturity		Amount

April	Tax-Exempt Revenue Bonds (1)(2)		6.00	%		2036	$	69
June	Tax-Exempt Revenue Bonds (1)(3)		5.625	%		2020		32
June	Tax-Exempt Revenue Bonds (1)(4)		5.25	%		2029		60
June	Tax-Exempt Revenue Bonds (1)(5)		5.50	%		2029		59

							$	220


(1)		Detroit Edison Tax-Exempt Revenue Bonds are issued by a public body that loans the proceeds to Detroit Edison on terms substantially mirroring the Revenue Bonds.

(2)		Proceeds were used to refund existing Tax-Exempt Revenue Bonds.

(3)		These Tax-Exempt Revenue Bonds were converted from a variable rate mode and remarketed in a fixed rate mode to maturity.

(4)		These Tax-Exempt Revenue Bonds were converted from a variable rate mode and remarketed in a fixed rate mode to maturity with a five-year mandatory put.

(5)		These Tax-Exempt Revenue Bonds were converted from a variable rate mode and remarketed in a fixed rate mode to maturity with a seven-year mandatory put.

Debt Retirements and Redemptions

In 2009, the following debt has been retired through optional redemption:

(in Millions)

Month Retired

Type

Interest Rate

Maturity

Amount

April

Tax- Exempt Revenue Bonds (1)

Variable

2036


(1)		These Tax-Exempt Revenue Bonds were redeemed with the proceeds from the issuance of new Detroit Edison Tax-Exempt Revenue Bonds.

NOTE 7 — SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

Detroit Edison has a $69 million, five-year unsecured revolving credit agreement expiring in October 2010 and a $212 million, two-year unsecured revolving credit agreement expiring in April 2011. The five-year and two-year revolving credit facilities are with a syndicate of banks and may be utilized for general corporate borrowings, but are intended to provide liquidity support for our commercial paper program. Borrowings under the facilities are available at prevailing short-term interest rates. The agreements require us to maintain a debt to total capitalization ratio of no more than 0.65 to 1. Should we have delinquent obligations of at least $50 million to any creditor, such delinquency will be considered a default under our credit agreements. Detroit Edison is currently in compliance with its covenants.

NOTE 8 — COMMITMENTS AND CONTINGENCIES

Environmental

Air — Detroit Edison is subject to EPA ozone transport and acid rain regulations that limit power plant emissions of sulfur dioxide and nitrogen oxides. Since 2005, EPA and the State of Michigan issued additional emission reduction regulations relating to ozone, fine particulate, regional haze and mercury air pollution. The new rules will lead to additional controls on fossil-fueled power plants to reduce nitrogen oxide, sulfur dioxide and mercury emissions. To comply with these requirements, Detroit Edison has spent approximately $1.4 billion through 2008. The Company estimates future undiscounted capital expenditures at up to approximately $100 million in 2009 and up to approximately $2.3 billion of additional capital expenditures through 2019 based on current regulations.

In July 2009, DTE Energy received a Notice of Violation/Finding of Violation (NOV/FOV) from the EPA alleging, among other things, that five Detroit Edison power plants violated New Source Review standards, Prevention of Significant Deterioration requirements, and Title V operating permit requirements under the Clean Air Act. We are in the process of preparing our response to the NOV/FOV, but we believe that the plants identified by the EPA have complied with applicable regulations. Depending upon the outcome of our discussions with the EPA regarding the NOV/FOV, the EPA could bring legal action against Detroit Edison. We could also be required to install additional pollution control equipment at some or all of the power plants in question, engage in Supplemental Environmental Programs, and/or pay fines. We cannot predict the financial impact or outcome of this matter, or the timing of its resolution.

Global Climate Change — Proposals for voluntary initiatives and mandatory controls are being discussed in the United States to reduce greenhouse gases such as carbon dioxide, a by-product of burning fossil fuels. On June 26, 2009, the U.S. House of Representatives passed the American Clean Energy and Security Act (ACESA). The bill has yet to be taken up by the U.S. Senate. The ACESA includes a cap and trade program that would start in 2012 and provides for costs for emissions of greenhouse gases (e.g. carbon dioxide). Meanwhile, the EPA is beginning to implement regulatory action under the Clean Air Act to address climate change. There may be further legislative and or regulatory action to address the issue of changes in climate that may result from the build-up of greenhouse gases in the atmosphere. If passed, legislative or regulatory actions as currently being discussed could have a material impact on our operations and financial position and the rates we charge our customers.

Water — In response to an EPA regulation, Detroit Edison is 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 the studies to be conducted over the next several years, Detroit Edison may be required to install additional control technologies to reduce the impacts of the water intakes. Initially, it was estimated that Detroit Edison could incur up to approximately $55 million over the four to six years subsequent to 2008 in additional capital expenditures to comply with these requirements. However, a January 2007 circuit court decision remanded back to the EPA several provisions of the federal regulation that may result in a delay in compliance dates. The decision also raised the possibility that Detroit Edison may have to install cooling towers at some facilities at a cost substantially greater than was initially estimated for other mitigative technologies. In 2008, the Supreme Court agreed to review the remanded cost-benefit analysis provision of the rule. In April 2009, the Supreme Court ruled that a cost-benefit analysis is a permissible provision of the rule. Concurrently, the EPA continues to develop a revised rule, which is expected to be published later in 2009.

Contaminated Sites — Detroit Edison conducted remedial investigations at contaminated sites, including three former manufactured gas plant (MGP) sites, the area surrounding an ash landfill and several 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, 2009 and December 31, 2008, the Company had $11 million and $12 million, respectively, accrued for remediation.

Guarantees

In January 2003, the Company sold the steam heating business of Detroit Edison to Thermal Ventures II, LP. Under the terms of sale, Detroit Edison guaranteed bank loans of $13 million that Thermal Ventures II, LP used for capital improvements to the steam heating system. At June 30, 2009, the Company had reserves of $13 million related to the bank loan guarantee.

Labor Contracts

There are several bargaining units for the Company’s union employees. The majority of our union employees are under contracts that expire in June 2010 and August 2012.

Purchase Commitments

Detroit Edison has an Energy Purchase Agreement to purchase electricity from the Greater Detroit Resource Recovery Authority (GDRRA). The term of the Energy Purchase Agreement for the purchase of electricity runs through June 2024. The Company estimates electric purchase commitments from 2009 through 2024 will not exceed $300 million in the aggregate.

As of June 30, 2009, 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 and energy trading contracts. The Company estimates that these commitments will be approximately $1.2 billion from 2009 through 2024. The Company also estimates that 2009 capital expenditures will be approximately $800 million. The Company has made certain commitments in connection with expected capital expenditures.

Bankruptcies

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

The Company provides services to the domestic automotive industry, including General Motors Corporation (GM), Ford Motor Company (Ford) and Chrysler LLC (Chrysler) and many of their vendors and suppliers. Chrysler filed for bankruptcy protection on April 30, 2009. We have reserved approximately $7 million of pre-petition accounts receivable related to Chrysler as of June 30, 2009. GM filed for bankruptcy protection on June 1, 2009. We have no reserves related to GM as of June 30, 2009.

Other Contingencies

The Company is involved in certain 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 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 Notes 3 and 4 for a discussion of contingencies related to derivatives and regulatory matters.

Part II

Item 1. — Legal Proceedings

Item 1A. — Risk Factors

In addition to the other information set forth in this report, the risk factors discussed in Part 1, Item 1A. Risk Factors in the Company’s 2008 Form 10-K, which could materially affect the Company’s businesses, financial condition, future operating results and/ or cash flows should be carefully considered. Additional risks and uncertainties not currently known to the Company, or that are currently deemed to be immaterial, also may materially adversely affect the Company’s business, financial condition, and/ or future operating results.

We may be required to refund amounts we collect under self-implemented rates. Recent Michigan legislation allows us to self-implement rate changes six months after a rate filing, subject to certain limitations. However, if the final rate case order provides for lower rates than we have self-implemented, we must refund the difference, with interest. Our financial performance may be negatively affected if the MPSC sets lower rates than those we have self-implemented, thereby forcing us to issue refunds. We cannot predict what rates the MPSC order will adopt.

Adverse changes in our credit ratings may negatively affect us. Regional and national economic conditions, increased scrutiny of the energy industry and regulatory changes, as well as changes in our economic performance, could result in credit agencies reexamining our credit rating. While credit ratings reflect the opinions of the credit agencies issuing such ratings and may not necessarily reflect actual performance, a downgrade in our credit rating could restrict or discontinue our ability to access capital markets, including commercial paper markets, and could result in an increase in our borrowing costs, a reduced level of capital expenditures and could impact future earnings and cash flows. In addition, a reduction in credit rating may require us to post collateral related to various physical or financially settled contracts for the purchase of energy-related commodities, products and services, which would impact our liquidity.

Item 6. — Exhibits


Exhibit
Number		Description

Exhibits filed herewith:

4-265		Amendment, dated June 1, 2009 to the Twenty-Fourth Supplemental Indenture, dated as of May 1, 2008 to the Collateral Trust Indenture dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Melon Trust Company, N.A., as trustee (2008 Series ET Variable Rate Senior Notes due 2029).

4-266		Amendment, dated June 1, 2009 to the Twenty-Sixth Supplemental Indenture, dated as of July 1, 2008 to the Collateral Trust Indenture dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Melon Trust Company, N.A., as trustee (2008 Series KT Variable Rate Senior Notes due 2020).

12-34		Computation of Ratio of Earnings to Fixed Charges

31-49		Chief Executive Officer Section 302 Form 10-Q Certification

31-50		Chief Financial Officer Section 302 Form 10-Q Certification

Exhibits furnished herewith:

32-49		Chief Executive Officer Section 906 Form 10-Q Certification

32-50		Chief Financial Officer Section 906 Form 10-Q Certification

SIGNATURE

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


	THE DETROIT EDISON COMPANY (Registrant)
Date: July 31, 2009	/s/ PETER B. OLEKSIAK
	Peter B. Oleksiak
	Vice President and Controller and Chief Accounting Officer

Exhibit 4-265

AMENDMENT, DATED JUNE 1, 2009, TO

TWENTY-FOURTH SUPPLEMENTAL INDENTURE

DATED AS OF MAY 1, 2008

BETWEEN

THE DETROIT EDISON COMPANY
AND
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
TRUSTEE

SUPPLEMENTING THE COLLATERAL TRUST INDENTURE
DATED AS OF JUNE 30, 1993
PROVIDING FOR

2008 SERIES ET VARIABLE RATE SENIOR NOTES DUE 2029

THIS AMENDMENT, dated as of June 1, 2009, is being entered into between THE DETROIT EDISON COMPANY (the “Company”), a Michigan corporation, and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, acting through its corporate trust office in Detroit, Michigan, as Trustee (the “Trustee”).

Premises

WHEREAS, the Company and the Trustee have executed and delivered a Twenty-Fourth Supplemental Indenture, dated as of May 1, 2008 (the “Supplemental Indenture”), supplementing the Collateral Trust Indenture dated as of June 30, 1993, to provide for the issuance by the Company of its 2008 Series ET Variable Rate Senior Notes due 2029 in connection with its obligations to the Michigan Strategic Fund under the Loan Agreement dated as of May 1, 2008 relating to the Michigan Strategic Fund Variable Rate Limited Obligation Refunding Revenue Bonds (The Detroit Edison Company Exempt Facilities Project), Series 2008ET (the “2008ET Bonds”); and

WHEREAS, the Company has elected to convert the Rate Period applicable to the 2008ET Bonds from the Weekly Interest Rate Period to the Term Interest Rate Period; and

WHEREAS, the Company and the Trustee desire to amend the Supplemental Indenture by execution of this Amendment in connection with the conversion of the 2008ET Bonds to the Term Interest Rate Period, and to hereby add to the covenants of the Company for the benefit of the holders of the 2008ET Bonds;

NOW, THEREFORE, for and in consideration of these premises and the mutual covenants herein contained, the Company covenants with the Trustee as follows:

Article I

Definitions

All terms defined in the recitals hereto shall have the meanings therein defined. All terms used in this Amendment, including the recitals, which are defined in the Supplemental Indenture shall have the meanings as defined in the Supplemental Indenture, unless expressly given a different meaning herein or unless the context or use indicates another or different meaning or intent.

Article II

Amendments to Supplemental Indenture

Section 2.01 Amendment to Section 2.05 of the Supplemental Indenture

Section 2.05 of the Supplemental Indenture is hereby amended and restated in its entirety as follows:

SECTION 2.05 Form of Note. Attached hereto as Exhibit A is the form of the definitive Note. On and after the Release Date, the terms of the Notes shall be amended to make appropriate reference to the Substitute Mortgage and the Substitute Mortgage Bonds; provided, that the consent of Holders shall not be required in connection with such amendment.

Section 2.02 Amendment to Article III of the Supplemental Indenture

All sections of Article III of the Supplemental Indenture are hereby deleted in their entirety and Article III is hereby designated “RESERVED.”

Section 2.03 Amendment to Section 4.02 of the Supplemental Indenture

Section 4.02 of the Supplemental Indenture is hereby amended and restated in its entirety as follows:

SECTION 4.02. Release. Until the Release Date and subject to Article Four of the Original Indenture, the Bonds of the related series issued and delivered to the Trustee shall serve as security for any and all obligations of the Company under all Notes from time to time Outstanding, including, but not limited to (1) the full and prompt payment of the principal and premium, if any, on the Notes when and as the same shall become due and payable in accordance with the terms and provisions of the Indenture or the Notes, either at the Stated Maturity thereof, upon acceleration of the maturity thereof, upon redemption, or otherwise, and (2) the full and prompt payment of any interest on the Notes when and as the same shall become due and payable in accordance with the terms and provisions of this Indenture or the Notes including, if and to the extent provided for in the Notes, interest on overdue installments of principal and (to the extent permitted by law) interest on overdue installments of interest.

Each supplemental indenture to the Mortgage pursuant to which any Bonds are issued shall contain a provision to the effect that any payment by the Company hereunder of principal of or premium or interest on Notes which shall have been authenticated and delivered in connection with the issuance and delivery to the Trustee of such Bonds (other than by the application of the proceeds of a payment in respect of such Bonds) shall to the extent thereof, be deemed to satisfy and discharge the obligation of the Company, if any, to make a payment of principal, premium or interest, as the case may be, in respect of such Bonds which is then due.

Notwithstanding anything in the Original Indenture to the contrary, from and after the Release Date, the obligation of the Company to make payment with respect to the principal of and premium, if any, and interest on the Bonds shall be deemed satisfied and discharged as provided in the supplemental indenture or indentures to the Mortgage creating such Bonds and the Bonds shall cease to secure in any manner Notes theretofore or subsequently issued; the Trustee shall thereupon surrender the Bonds to the Mortgage Trustee for cancellation and execute and deliver such proper instruments of release as may be required. From and after the Release Date, all Notes, whether theretofore or subsequently issued, shall be secured by Substitute Mortgage Bonds pursuant to Section 4.03 below, and any conditions to the issuance of Notes that refer or relate to Bonds or the Mortgage shall be inapplicable (except as such conditions shall be deemed

to refer to Substitute Mortgage Bonds or a Substitute Mortgage pursuant to Section 4.03 below). From and after the Release Date, the Company shall not issue any additional Mortgage Bonds, including Pledged Bonds, under the Mortgage. Notice of the occurrence of the Release Date shall be given by the Trustee to the Holders of the Notes in the manner provided for in the Original Indenture not later than 30 days after the Company notifies the Trustee of the occurrence of the Release Date.

In connection with the establishment of the occurrence of the Release Date, the Trustee shall be entitled to receive, may presume the correctness of, and shall be fully protected in relying upon, an Officers’ Certificate designating the Release Date and stating that the conditions to the occurrence of the Release Date have been satisfied.

When the obligation of the Company to make payments with respect to the principal of, and premium, if any, and interest on all or any part of the Bonds shall be satisfied or deemed satisfied pursuant to the Original Indenture or pursuant to this Twenty-Fourth Supplemental Indenture, the Trustee shall, upon written request of the Company, deliver to the Company without charge therefor all of the Bonds so satisfied or deemed satisfied, together with such appropriate instruments of transfer or release as may be reasonably requested by the Company. All Bonds delivered to the Company in accordance with this Section shall be delivered by the Company to the Mortgage Trustee for cancellation.

Section 2.04 Amendment to Section 4.03 of the Supplemental Indenture

Section 4.03 of the Supplemental Indenture is hereby amended and restated in its entirety as follows:

SECTION 4.03. Substitute Mortgage Bonds.

(a) The Company shall notify the Trustee not less than 90 days prior to the Release Date (or such shorter period as the Company and the Trustee may agree) that the Company will deliver to the Trustee on the Release Date Substitute Mortgage Bonds in an aggregate principal amount equal to the aggregate principal amount of Notes and any other Securities subject to the release provisions Outstanding on the Release Date, in trust for the benefit of the Holders from time to time of the Notes and any other Securities subject to the release provisions issued under the Original Indenture, as supplemented, as security for any and all obligations of the Company under the Notes and any other Securities subject to the release provisions, including but not limited to, (1) the full and prompt payment of the principal of and premium, if any, on the Notes and any other Securities subject to the release provisions when and as the same shall become due and payable in accordance with the terms and provisions of the Original Indenture, as supplemented, or the Notes or such other Securities subject to the release provisions, either at the stated maturity thereof, upon acceleration of the maturity thereof or upon redemption, and (2) the full and prompt payment of any interest on the Notes and any other Securities subject to the release provisions when and as the same shall become due and payable in accordance with the terms and provisions of the Original Indenture, as supplemented, or the Notes or such other Securities subject to the release provisions.

(b) The Company shall deliver such Substitute Mortgage Bonds described in Section 4.03(a) in separate series and issues corresponding to the series and issues of Notes and other Securities subject to the release provisions Outstanding on or prior to the Release Date, each series or issue of Substitute Mortgage Bonds having the same stated rate or rates of interest (or interest calculated in the same manner), Interest Payment Dates, stated maturity date and redemption provisions, and in the same aggregate principal amount, as the related series or issue of Notes or other Securities subject to the release provisions outstanding on the Release Date; it being expressly understood that each such series of Substitute Mortgage Bonds shall be held by the Trustee for the benefit of the Holders of the corresponding series of Securities from time to time Outstanding subject to such terms and conditions relating to surrender to the Company, transfer restrictions, voting, application of payments of principal and interest and other matters as shall be set forth in an indenture supplemental hereto specifically providing for the delivery to the Trustee of such Substitute Mortgage Bonds. Such Substitute Mortgage Bonds shall be issued under and secured by a Substitute Mortgage (A) on which the Company shall be the obligor; and (B) which shall be qualified, or shall meet the requirements for qualification, under the Trust Indenture Act for the issuance of Substitute Mortgage Bonds.

(A) a supplemental indenture to the Original Indenture that provides among other things, that on the delivery of the Substitute Mortgage Bonds described in Section 4.03(b), the Company shall deliver to the Trustee in trust for the benefit of the Holders as described in Section 4.03(a) hereof, and the Trustee shall accept therefor, related series of Substitute Mortgage Bonds registered in the name of the Trustee and conforming to the requirements herein and therein specified;

(B) an Officer’s Certificate (1) stating that, to the knowledge of the signer, (a) no Event of Default has occurred and is continuing and (b) no event has occurred and is continuing which entitles the secured party under the Substitute Mortgage to accelerate the maturity of the indebtedness outstanding thereunder and (2) stating the aggregate principal amount of indebtedness issuable, and then proposed to be issued, under and secured by the lien of the Substitute Mortgage; and

(C) an Opinion of Counsel to the effect that such Substitute Mortgage Bonds have been duly issued under such Substitute Mortgage and constitute valid obligations, entitled to the benefit of the lien of the Substitute Mortgage equally and ratably with all other indebtedness then outstanding secured by such lien.

(d) On or prior to the Release Date the Company shall provide an Officer’s Certificate stating that the Company has been advised in writing, within not more than 30 days prior to such substitution of the Substitute Mortgage Bonds for the Mortgage Bonds, by at least two credit rating agencies qualifying as “nationally recognized statistical rating organizations” (as defined by the Securities Exchange Act of 1934, as amended) then maintaining a securities rating on the 2008ET Bonds that the substitution of such Substitute Mortgage Bonds for the Mortgage Bonds will not result in a reduction of the securities rating assigned to the 2008ET Bonds by that credit

rating agency immediately prior to the substitution or the suspension or withdrawal of its rating and the Company shall have provided the Trustee with written evidence of such advice.

(e) In the event that the Company cannot obtain assurance of at least two credit rating agencies as described in Section 4.03(d) above, the Company will take such actions as are necessary to cause the Release Date not to occur.

(f) Article Four and related provisions of the Original Indenture (except for any provisions relating to discharge of Bonds or amounts owing on Bonds on or after the Release Date) shall apply to Substitute Mortgage Bonds pledged to the Trustee hereunder and the provisions thereof shall be deemed to refer to the Substitute Mortgage and the Substitute Mortgage Bonds. Article Four and related provisions may be amended by the Company to have the Notes secured by Substitute Mortgage Bonds on and after the Release Date and make appropriate reference to the Substitute Mortgage and the Substitute Mortgage Bonds; provided, that the consent of Holders shall not be required in connection with such amendment.

Section 2.05 Amendment to Section 4.04 of the Supplemental Indenture

Section 4.04 of the Supplemental Indenture is hereby amended and restated in its entirety as follows:

SECTION 4.04. Events of Default.

(a) On and after the Release Date, Section 601(8) of the Original Indenture shall no longer apply to the Notes.

For purposes of the Notes, Section 601(8) of the Original Indenture shall read, “the occurrence of an “event of default” as such term is defined in the Mortgage; or”.

(b) On and after the Release Date, the occurrence of a “default” (as defined in the Substitute Mortgage) shall constitute an Event of Default under Section 601 of the Original Indenture with respect to the Notes and the references in Section 601(4) of the Original Indenture and related provisions to “Mortgage Bonds” shall be deemed to refer to “Substitute Mortgage Bonds.”

(c) In addition, failure by the Company to deliver Substitute Mortgage Bonds in accordance with the provisions of Section 4.03 of this Supplemental Indenture on or prior to the Release Date shall be an “Event of Default” with respect to the Notes as contemplated by Section 601(9) of the Original Indenture.

Article III

Miscellaneous

Section 3.01 . Amendment Construed with Supplemental Indenture . All of the provisions of this Amendment shall be deemed and construed as part of the Supplemental Indenture to the same extent as if fully set forth therein.

Section 3.02. Effectiveness and Effect of Amendment . This Amendment shall be and become effective on and as of the date of execution and delivery by the parties hereto. Except as amended and supplemented hereby, the Supplemental Indenture shall be and remain in full force and effect.

Section 3.03. Severability . If any one or more sections, clauses or provisions of this Amendment shall be determined by a court of competent jurisdiction to be invalid or ineffective for any reason, such determination shall in no way affect the validity and effectiveness of the remaining sections, clauses and provisions of this Amendment.

Section 3.04. Headings . Any headings shall be solely for convenience of reference and shall not constitute a part of this Amendment, nor shall they affect its meaning, construction or effect.

Section 3.05. Counterparts . This Amendment may be executed in several counterparts, each of which shall be an original and all of which shall constitute one instrument.

Section 3.06. Governing Law . This Amendment shall be governed by and construed in accordance with the laws of the State of New York.

[remainder of page intentionally blank]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by persons thereunto duly authorized, as of June 1, 2009.


THE DETROIT EDISON COMPANY
By:	/s/ Edward Solomon
	Name:	Edward Solomon
	Title:	Assistant Treasurer


ATTEST:
By:	/s/ Sandra Kay Ennis
	Name:	Sandra Kay Ennis
	Title:	Corporate Secretary


THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
By:	/s/Alexis M. Johnson
	Name:	Alexis M. Johnson
	Title:	Assistant Vice President


ATTEST:
By:	/s/ J. Michael Banas
	Name:	J. Michael Banas
	Title:	Vice President

EXHIBIT 4-266

AMENDMENT, DATED JUNE 1, 2009, TO

TWENTY-SIXTH SUPPLEMENTAL INDENTURE

DATED AS OF JULY 1, 2008

BETWEEN

THE DETROIT EDISON COMPANY
AND
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
TRUSTEE

SUPPLEMENTING THE COLLATERAL TRUST INDENTURE
DATED AS OF JUNE 30, 1993
PROVIDING FOR

2008 SERIES KT VARIABLE RATE SENIOR NOTES DUE 2020

Premises

WHEREAS, the Company and the Trustee have executed and delivered a Twenty-Sixth Supplemental Indenture, dated as of July 1, 2008 (the “Supplemental Indenture”), supplementing the Collateral Trust Indenture dated as of June 30, 1993, to provide for the issuance by the Company of its 2008 Series KT Variable Rate Senior Notes due 2020 in connection with its obligations to the Michigan Strategic Fund under the Loan Agreement dated as of July 1, 2008 relating to the Michigan Strategic Fund Variable Rate Limited Obligation Refunding Revenue Bonds (The Detroit Edison Company Exempt Facilities Project), Series 2008KT (the “2008KT Bonds”); and

WHEREAS, the Company has elected to convert the Rate Period applicable to the 2008KT Bonds from the Weekly Interest Rate Period to the Term Interest Rate Period; and

WHEREAS, the Company and the Trustee desire to amend the Supplemental Indenture by execution of this Amendment in connection with the conversion of the 2008KT Bonds to the Term Interest Rate Period, and to hereby add to the covenants of the Company for the benefit of the holders of the 2008KT Bonds;

NOW, THEREFORE, for and in consideration of these premises and the mutual covenants herein contained, the Company covenants with the Trustee as follows:

Article I

Definitions

Article II

Amendments to Supplemental Indenture

Section 2.01 Amendment to Section 2.05 of the Supplemental Indenture

Section 2.05 of the Supplemental Indenture is hereby amended and restated in its entirety as follows:

Section 2.02 Amendment to Article III of the Supplemental Indenture

All sections of Article III of the Supplemental Indenture are hereby deleted in their entirety and Article III is hereby designated “RESERVED.”

Section 2.03 Amendment to Section 4.02 of the Supplemental Indenture

Section 4.02 of the Supplemental Indenture is hereby amended and restated in its entirety as follows:

When the obligation of the Company to make payments with respect to the principal of, and premium, if any, and interest on all or any part of the Bonds shall be satisfied or deemed satisfied pursuant to the Original Indenture or pursuant to this Twenty-Sixth Supplemental Indenture, the Trustee shall, upon written request of the Company, deliver to the Company without charge therefor all of the Bonds so satisfied or deemed satisfied, together with such appropriate instruments of transfer or release as may be reasonably requested by the Company. All Bonds delivered to the Company in accordance with this Section shall be delivered by the Company to the Mortgage Trustee for cancellation.

Section 2.04 Amendment to Section 4.03 of the Supplemental Indenture

Section 4.03 of the Supplemental Indenture is hereby amended and restated in its entirety as follows:

SECTION 4.03. Substitute Mortgage Bonds.

(d) On or prior to the Release Date the Company shall provide an Officer’s Certificate stating that the Company has been advised in writing, within not more than 30 days prior to such substitution of the Substitute Mortgage Bonds for the Mortgage Bonds, by at least two credit rating agencies qualifying as “nationally recognized statistical rating organizations” (as defined by the Securities Exchange Act of 1934, as amended) then maintaining a securities rating on the 2008KT Bonds that the substitution of such Substitute Mortgage Bonds for the Mortgage Bonds will not result in a reduction of the securities rating assigned to the 2008KT Bonds by that credit

rating agency immediately prior to the substitution or the suspension or withdrawal of its rating and the Company shall have provided the Trustee with written evidence of such advice.

Section 2.05 Amendment to Section 4.04 of the Supplemental Indenture

Section 4.04 of the Supplemental Indenture is hereby amended and restated in its entirety as follows:

SECTION 4.04. Events of Default.

(a) On and after the Release Date, Section 601(8) of the Original Indenture shall no longer apply to the Notes.

For purposes of the Notes, Section 601(8) of the Original Indenture shall read, “the occurrence of an “event of default” as such term is defined in the Mortgage; or”.

Article III

Miscellaneous

Section 3.01. Amendment Construed with Supplemental Indenture . All of the provisions of this Amendment shall be deemed and construed as part of the Supplemental Indenture to the same extent as if fully set forth therein.

Section 3.02 . Effectiveness and Effect of Amendment . This Amendment shall be and become effective on and as of the date of execution and delivery by the parties hereto. Except as amended and supplemented hereby, the Supplemental Indenture shall be and remain in full force and effect.

Section 3.03 . Severability . If any one or more sections, clauses or provisions of this Amendment shall be determined by a court of competent jurisdiction to be invalid or ineffective for any reason, such determination shall in no way affect the validity and effectiveness of the remaining sections, clauses and provisions of this Amendment.

Section 3.04 . Headings . Any headings shall be solely for convenience of reference and shall not constitute a part of this Amendment, nor shall they affect its meaning, construction or effect.

Section 3.05 . Counterparts . This Amendment may be executed in several counterparts, each of which shall be an original and all of which shall constitute one instrument.

Section 3.06 . Governing Law . This Amendment shall be governed by and construed in accordance with the laws of the State of New York.

[remainder of page intentionally blank]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by persons thereunto duly authorized, as of June 1, 2009.


THE DETROIT EDISON COMPANY
By:	/s/ Edward Solomon
	Name:	Edward Solomon
	Title:	Assistant Treasurer


ATTEST:
By:	/s/Sandra Kay Ennis
	Name:	Sandra Kay Ennis
	Title:	Corporate Secretary


THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee
By:	/s/Alexis M. Johnson
	Name:	Alexis M. Johnson
	Title:	Assistant Vice President


ATTEST:
By:	/s/ J. Michael Banas
	Name:	J. Michael Banas
	Title:	Vice President

Exhibit 12-34

THE DETROIT EDISON COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES


	Six Months Ended
	June 30, 2009		Twelve Months Ended December 31
			2008		2007		2006		2005		2004
(Millions of Dollars)
Earnings:
Pretax earnings	$	258	$	517	$	466	$	482	$	426	$	214
Fixed charges		172		324		319		299		280		294

Net earnings		430	$	841	$	785	$	781	$	706	$	508


Fixed charges:
Interest expense	$	163	$	293	$	294	$	278	$	267	$	280
Adjustments		9		31		25		21		13		14

Fixed charges	$	172	$	324	$	319	$	299	$	280	$	294


Ratio of earnings to fixed charges		2.50		2.60		2.46		2.61		2.52		1.73

Exhibit 31-49

FORM 10-Q CERTIFICATION

I, Anthony F. Earley, Jr., certify that:

1.		I have reviewed this quarterly report on Form 10-Q of The Detroit Edison Company;

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

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

4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a.		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b.		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c.		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d.		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a.		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b.		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


/S/ ANTHONY F. EARLEY, JR.		Date: July 31, 2009
Anthony F. Earley, Jr.
Chairman of the Board and Chief Executive
Officer of The Detroit Edison Company

Exhibit 31-50

FORM 10-Q CERTIFICATION

I, David E. Meador, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of The Detroit Edison Company;

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

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

4.		The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15 (f)) for the registrant and have:

	a.		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b.		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c.		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d.		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a.		All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b.		Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


/S/ DAVID E. MEADOR		Date: July 31, 2009
David E. Meador
Executive Vice President and
Chief Financial Officer of The Detroit Edison Company

Exhibit 32-49

CERTIFICATION PURSUANT TO
18 U. S. C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of The Detroit Edison Company (the “Company”) for the quarter ended June 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony F. Earley, Jr., certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

(1)		the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)		the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: July 31, 2009	/S/ ANTHONY F. EARLEY, JR.
	Anthony F. Earley, Jr. Chairman of the Board and Chief Executive Officer of The Detroit Edison Company

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32-50

CERTIFICATION PURSUANT TO
18 U. S. C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of The Detroit Edison Company (the “Company”) for the quarter ended June 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David E. Meador, certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge and belief:

(1)		the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)		the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: July 31, 2009	/S/ DAVID E. MEADOR
	David E. Meador Executive Vice President and Chief Financial Officer of The Detroit Edison Company

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