##### Table of Contents



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
  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
  Yes þ No o
  Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   þ(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  Yes o No þ




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##### 



The Detroit Edison Company  Quarterly Report on Form 10-Q  Quarter Ended June 30, 2009
 Table Of Contents
 PageDefinitions
    
    
    1Forward-Looking Statements
    
    
    2Part I  Financial InformationItem 1. Financial StatementsConsolidated Statements of Financial Position (Unaudited)
    
    
    8Consolidated Statements of Operations (Unaudited)
    
    
    10Consolidated Statements of Cash Flows (Unaudited)
    
    
    11Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income
(Unaudited)
    
    
    12Notes to Consolidated Financial Statements (Unaudited)
    
    
    13Item 2. Managements Narrative Analysis of Results of Operations
    
    
    4Item 4. Controls and Procedures
    
    
    7Part II  Other InformationItem 1. Legal Proceedings
    
    
    28Item 1A. Risk Factors
    
    
    28Item 6. Exhibits
    
    
    29Signature
    
    
    30EX-4.265EX-4.266EX-12.34EX-31.49EX-31.50EX-32.49EX-32.50




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##### Table of Contents



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 companiesDTE Energy
    
    DTE Energy Company, the parent of Detroit Edison and directly or
indirectly the parent company of numerous non-utility subsidiariesEPA
    
    United States Environmental Protection AgencyFASB
    
    Financial Accounting Standards BoardFERC
    
    Federal Energy Regulatory CommissionFSP
    
    FASB Staff PositionMDEQ
    
    Michigan Department of Environmental QualityMISO
    
    Midwest Independent System Operator, a Regional Transmission OrganizationMPSC
    
    Michigan Public Service CommissionNRC
    
    Nuclear Regulatory CommissionPSCR
    
    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 StandardsStranded 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 MeasurementkWh
    
    Kilowatthour of electricityMW
    
    Megawatt of electricityMWh
    
    Megawatthour of electricity
 1




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Forward-Looking Statements
  
    
    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;
 2




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
    
    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.
  3




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Part I  Item 2.
 The Detroit Edison Company
 
 Managements Narrative Analysis of Results of Operations
   Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 30(in Millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Operating Revenues
    
    $
    1,108
    
    
    $
    1,173
    
    
    $
    2,226
    
    
    $
    2,326Fuel and Purchased Power
    
    
    372
    
    
    
    415
    
    
    
    712
    
    
    
    817Gross Margin
    
    
    736
    
    
    
    758
    
    
    
    1,514
    
    
    
    1,509Operation and Maintenance
    
    
    306
    
    
    
    369
    
    
    
    622
    
    
    
    727Depreciation and Amortization
    
    
    197
    
    
    
    178
    
    
    
    385
    
    
    
    370Taxes Other Than Income
    
    
    44
    
    
    
    60
    
    
    
    104
    
    
    
    122Operating Income
    
    
    189
    
    
    
    151
    
    
    
    403
    
    
    
    290Other (Income) and Deductions
    
    
    61
    
    
    
    71
    
    
    
    145
    
    
    
    145Income Tax Provision
    
    
    49
    
    
    
    29
    
    
    
    101
    
    
    
    53Net Income Attributable to DTE Energy Company
    
    $
    79
    
    
    $
    51
    
    
    $
    157
    
    
    $
    92Operating Income as a Percentage of Operating Revenues
    
    
    17
    %
    
    
    13
    %
    
    
    18
    %
    
    
    12
    %
 Gross margin
 (in Millions)
    
    Three Months
    
    
    Six MonthsWeather
    
    $
    (20
    )
    
    $
    (17
    )Economy
    
    
    (66
    )
    
    
    (103
    )April 2008 expiration of show-cause rate decrease
    
    
    6
    
    
    
    23December 2008 rate order
    
    
    22
    
    
    
    40Securitization bond and tax surcharge rate increase
    
    
    17
    
    
    
    25Other, net
    
    
    19
    
    
    
    37Increase (decrease) in gross margin
    
    $
    (22
    )
    
    $
    5
 Electric Sales
 Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 30(in Thousands of MWh)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Residential
    
    
    3,147
    
    
    
    3,428
    
    
    
    6,885
    
    
    
    7,360Commercial
    
    
    4,536
    
    
    
    4,913
    
    
    
    8,959
    
    
    
    9,275Industrial
    
    
    2,385
    
    
    
    3,231
    
    
    
    5,022
    
    
    
    6,747Wholesale
    
    
    695
    
    
    
    700
    
    
    
    1,399
    
    
    
    1,423Other
    
    
    87
    
    
    
    87
    
    
    
    200
    
    
    
    19610,850
    
    
    
    12,359
    
    
    
    22,465
    
    
    
    25,001Interconnections sales (1)
    
    
    1,189
    
    
    
    1,183
    
    
    
    2,224
    
    
    
    2,009Total Electric Sales
    
    
    12,039
    
    
    
    13,542
    
    
    
    24,689
    
    
    
    27,010Electric DeliveriesRetail and Wholesale
    
    
    10,850
    
    
    
    12,359
    
    
    
    22,465
    
    
    
    25,001Electric Customer Choice (2)
    
    
    344
    
    
    
    296
    
    
    
    661
    
    
    
    752Total Electric Sales and Deliveries
    
    
    11,194
    
    
    
    12,655
    
    
    
    23,126
    
    
    
    25,753
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(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 EndedJune 30
    
    
    June 30(in Thousands of MWh)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Power Plant GenerationFossil
    
    
    9,852
    
    
    
    10,347
    
    
    
    19,694
    
    
    
    20,587Nuclear
    
    
    1,486
    
    
    
    2,408
    
    
    
    3,740
    
    
    
    4,75111,338
    
    
    
    12,755
    
    
    
    23,434
    
    
    
    25,338Purchased Power
    
    
    1,464
    
    
    
    1,509
    
    
    
    2,816
    
    
    
    3,239System Output
    
    
    12,802
    
    
    
    14,264
    
    
    
    26,250
    
    
    
    28,577Less Line Loss and Internal Use
    
    
    (763
    )
    
    
    (722
    )
    
    
    (1,561
    )
    
    
    (1,567
    )Net System Output
    
    
    12,039
    
    
    
    13,542
    
    
    
    24,689
    
    
    
    27,010Average Unit Cost ($/MWh)Generation (1)
    
    $
    18.97
    
    
    $
    17.98
    
    
    $
    18.10
    
    
    $
    17.30Purchased Power
    
    $
    41.83
    
    
    $
    61.53
    
    
    $
    38.05
    
    
    $
    61.56Overall Average Unit Cost
    
    $
    21.58
    
    
    $
    22.59
    
    
    $
    20.24
    
    
    $
    22.31
 
 (1)
    
    Represents fuel costs associated with power plants. Operation and maintenance
 Taxes other than income
 Outlook
  5




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
    
    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.
 6




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Part I  Item 4.
 
 CONTROLS AND PROCEDURES
 (a) Evaluation of disclosure controls and procedures
  (b) Changes in internal control over financial reporting
  7




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Part I  Item 1.
 The Detroit Edison Company
 
 Consolidated Statements of Financial Position (Unaudited)
 June 30
    
    
    December 31(in Millions)
    
    2009
    
    
    2008ASSETSCurrent AssetsCash and cash equivalents
    
    $
    25
    
    
    $
    30Restricted cash
    
    
    67
    
    
    
    84Accounts receivable (less
allowance for doubtful accounts of
$120 and $121, respectively)Customer
    
    
    679
    
    
    
    709Affiliates
    
    
    2
    
    
    
    5Other
    
    
    17
    
    
    
    34InventoriesFuel
    
    
    169
    
    
    
    170Materials and supplies
    
    
    171
    
    
    
    169Notes receivableAffiliates
    
    
    110
    
    
    
    41Other
    
    
    4
    
    
    
    3Other
    
    
    82
    
    
    
    951,326
    
    
    
    1,340InvestmentsNuclear decommissioning trust funds
    
    
    716
    
    
    
    685Other
    
    
    88
    
    
    
    99804
    
    
    
    784PropertyProperty, plant and equipment
    
    
    15,205
    
    
    
    14,977Accumulated depreciation
    
    
    (5,926
    )
    
    
    (5,828
    )9,279
    
    
    
    9,149Other AssetsRegulatory assets
    
    
    3,336
    
    
    
    3,456Securitized regulatory assets
    
    
    937
    
    
    
    1,001Intangible assets
    
    
    9
    
    
    
    19Notes receivableAffiliates
    
    
    23
    
    
    
    Other
    
    
    1
    
    
    
    3Other
    
    
    108
    
    
    
    904,414
    
    
    
    4,569Total Assets
    
    $
    15,823
    
    
    $
    15,842
  8




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The Detroit Edison Company  Consolidated Statements of Financial Position (Unaudited)
 June 30
    
    
    December 31(in Millions, Except Shares)
    
    2009
    
    
    2008LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable  affiliates
    
    $
    56
    
    
    $
    103Accounts payable  other
    
    
    272
    
    
    
    346Accrued interest
    
    
    84
    
    
    
    80Accrued vacation
    
    
    51
    
    
    
    58Accrued power supply cost recovery revenue
    
    
    89
    
    
    
    27Income taxes payable
    
    
    47
    
    
    
    39Short-term borrowings  other
    
    
    
    
    
    
    75Current portion of long-term debt, including capital leases
    
    
    157
    
    
    
    153Other
    
    
    168
    
    
    
    197924
    
    
    
    1,078Long-Term Debt (net of current portion)Mortgage bonds, notes and other
    
    
    4,079
    
    
    
    4,091Securitization bonds
    
    
    861
    
    
    
    932Capital lease obligations
    
    
    28
    
    
    
    334,968
    
    
    
    5,056Other LiabilitiesDeferred income taxes
    
    
    1,858
    
    
    
    1,894Regulatory liabilities
    
    
    584
    
    
    
    593Asset retirement obligations
    
    
    1,240
    
    
    
    1,205Unamortized investment tax credit
    
    
    80
    
    
    
    85Nuclear decommissioning
    
    
    119
    
    
    
    114Accrued pension liability  affiliates
    
    
    924
    
    
    
    978Accrued postretirement liability  affiliates
    
    
    1,091
    
    
    
    1,075Other
    
    
    226
    
    
    
    2086,122
    
    
    
    6,152Commitments and Contingencies (Notes 4 and 8)Shareholders EquityCommon stock, $10 par value, 400,000,000 shares
authorized, and 138,632,324 shares issued and outstanding
    
    
    3,196
    
    
    
    2,946Retained earnings
    
    
    626
    
    
    
    622Accumulated other comprehensive income
    
    
    (13
    )
    
    
    (12
    )3,809
    
    
    
    3,556Total Liabilities and Shareholders Equity
    
    $
    15,823
    
    
    $
    15,842
  9




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The Detroit Edison Company
 
 Consolidated Statements of Operations (Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 30(in Millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Operating Revenues
    
    $
    1,108
    
    
    $
    1,173
    
    
    $
    2,226
    
    
    $
    2,326Operating ExpensesFuel and purchased power
    
    
    372
    
    
    
    415
    
    
    
    712
    
    
    
    817Operation and maintenance
    
    
    306
    
    
    
    369
    
    
    
    622
    
    
    
    727Depreciation and amortization
    
    
    197
    
    
    
    178
    
    
    
    385
    
    
    
    370Taxes other than income
    
    
    44
    
    
    
    60
    
    
    
    104
    
    
    
    122919
    
    
    
    1,022
    
    
    
    1,823
    
    
    
    2,036Operating Income
    
    
    189
    
    
    
    151
    
    
    
    403
    
    
    
    290Other (Income) and DeductionsInterest expense
    
    
    84
    
    
    
    71
    
    
    
    163
    
    
    
    147Interest income
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )
    
    
    (2
    )Other income
    
    
    (10
    )
    
    
    (11
    )
    
    
    (17
    )
    
    
    (23
    )Other expenses
    
    
    (12
    )
    
    
    12
    
    
    
    
    
    
    
    2361
    
    
    
    71
    
    
    
    145
    
    
    
    145Income Before Income Taxes
    
    
    128
    
    
    
    80
    
    
    
    258
    
    
    
    145Income Tax Provision
    
    
    49
    
    
    
    29
    
    
    
    101
    
    
    
    53Net Income
    
    $
    79
    
    
    $
    51
    
    
    $
    157
    
    
    $
    92
  10




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The Detroit Edison Company
 
 Consolidated Statements of Cash Flows (Unaudited)
 Six Months EndedJune 30(in Millions)
    
    2009
    
    
    2008Operating ActivitiesNet income
    
    $
    157
    
    
    $
    92Adjustments to reconcile net income to net cash from operating activities:Depreciation and amortization
    
    
    385
    
    
    
    370Deferred income taxes
    
    
    (23
    )
    
    
    (19
    )Asset (gains) and reserves, net
    
    
    
    
    
    
    (1
    )Changes in assets and liabilities, exclusive of changes shown separately
    
    
    132
    
    
    
    153Net cash from operating activities
    
    
    651
    
    
    
    595Investing ActivitiesPlant and equipment expenditures
    
    
    (490
    )
    
    
    (414
    )Restricted cash for debt redemptions
    
    
    18
    
    
    
    51Proceeds from sale of nuclear decommissioning trust fund assets
    
    
    182
    
    
    
    106Investment in nuclear decommissioning trust funds
    
    
    (190
    )
    
    
    (124
    )Other investments
    
    
    (102
    )
    
    
    (23
    )Net cash used for investing activities
    
    
    (582
    )
    
    
    (404
    )Financing ActivitiesIssuance of long-term debt
    
    
    65
    
    
    
    538Redemption of long-term debt
    
    
    (150
    )
    
    
    (74
    )Repurchase of long-term debt
    
    
    
    
    
    
    (238
    )Short-term borrowings, net
    
    
    (81
    )
    
    
    (351
    )Capital contribution by parent company
    
    
    250
    
    
    
    175Dividends 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
    )
    
    
    84Cash and Cash Equivalents at Beginning of Period
    
    
    30
    
    
    
    47Cash and Cash Equivalents at End of Period
    
    $
    25
    
    
    $
    131
  11




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The Detroit Edison Company
 
 Consolidated
Statements of Changes in Shareholders Equity and Comprehensive Income  (U naudited )
 AccumulatedAdditional
    
    
    
    
    
    OtherCommon Stock
    
    Paid In
    
    Retained
    
    Comprehensive(Dollars in Millions, shares in thousands)
    
    Shares
    
    Amount
    
    Capital
    
    Earnings
    
    Income
    
    TotalBalance, December 31, 2008
    
    
    138,632
    
    
    $
    1,386
    
    
    $
    1,560
    
    
    $
    622
    
    
    $
    (12
    )
    
    $
    3,556Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    157
    
    
    
    
    
    
    
    157Capital contribution by parent company
    
    
    
    
    
    
    
    
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    250Dividends 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
  (in Millions)
    
    2009
    
    
    2008Net income
    
    $
    157
    
    
    $
    92Other comprehensive income, net of tax:Net unrealized gains on investments:Amounts reclassified to income, net of taxes
    
    
    (1
    )
    
    
    1Comprehensive income
    
    $
    156
    
    
    $
    93
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The Detroit Edison Company
 
 Notes to Consolidated Financial Statements (Unaudited)
 NOTE 1  GENERAL
     Asset Retirement Obligations
 Accounting for
Asset Retirement Obligations Accounting for Conditional
Asset Retirement Obligations, an interpretation of FASB Statement No. 143
 Accounting for the Effects of Certain Types of Regulation
  (in Millions)Asset retirement obligations at January 1, 2009
    
    $
    1,226Accretion
    
    
    40Liabilities settled
    
    
    (3
    )Revision in estimated cash flows
    
    
    (4
    )Asset retirement obligations at June 30, 2009
    
    
    1,259Less amount included in current liabilities
    
    
    (19
    )$
    1,240
  13




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Retirement Benefits and Trusteed Assets
  (in Millions)
    
    Pension Benefits
    
    
    Other Postretirement BenefitsThree Months Ended June 30
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    11
    
    
    $
    11
    
    
    $
    10
    
    
    $
    12Interest cost
    
    
    39
    
    
    
    37
    
    
    
    25
    
    
    
    24Expected return on plan assets
    
    
    (41
    )
    
    
    (41
    )
    
    
    (10
    )
    
    
    (15
    )Amortization of:Net actuarial loss
    
    
    9
    
    
    
    6
    
    
    
    14
    
    
    
    7Prior service cost
    
    
    2
    
    
    
    1
    
    
    
    
    
    
    
    1Net transition liability
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Net periodic benefit cost
    
    $
    20
    
    
    $
    14
    
    
    $
    40
    
    
    $
    29
 (in Millions)
    
    Pension Benefits
    
    
    Other Postretirement BenefitsSix Months Ended June 30
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    21
    
    
    $
    23
    
    
    $
    23
    
    
    $
    24Interest cost
    
    
    79
    
    
    
    74
    
    
    
    51
    
    
    
    47Expected return on plan assets
    
    
    (82
    )
    
    
    (82
    )
    
    
    (21
    )
    
    
    (29
    )Amortization of:Net actuarial loss
    
    
    19
    
    
    
    13
    
    
    
    26
    
    
    
    14Prior service cost
    
    
    3
    
    
    
    3
    
    
    
    1
    
    
    
    1Net transition liability
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Net periodic benefit cost
    
    $
    40
    
    
    $
    31
    
    
    $
    81
    
    
    $
    58
   Income Taxes
  Stock-Based Compensation
 Share-Based Payment,
 14




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##### Table of Contents



Consolidated Statements of Cash Flows
  Six Months EndedJune 30(in Millions)
    
    2009
    
    
    2008Changes in Assets and Liabilities, Exclusive of Changes Shown SeparatelyAccounts receivable, net
    
    $
    45
    
    
    $
    11Inventories
    
    
    (2
    )
    
    
    (53
    )Accrued pension liability  affiliates
    
    
    (54
    )
    
    
    13Accounts payable
    
    
    (41
    )
    
    
    23Accrued PSCR refund
    
    
    82
    
    
    
    95Income taxes payable
    
    
    14
    
    
    
    32General taxes
    
    
    3
    
    
    
    (13
    )Postretirement obligation  affiliates
    
    
    16
    
    
    
    7Other assets
    
    
    97
    
    
    
    54Other liabilities
    
    
    (28
    )
    
    
    (16
    )$
    132
    
    
    $
    153
 Subsequent Events
  NOTE 2  NEW ACCOUNTING PRONOUNCEMENTS
 Fair Value Accounting
 Fair Value Measurements
  §
    
    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.
 15




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##### Table of Contents



§
    
    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.
  Noncontrolling Interests in Consolidated Financial Statements
 Noncontrolling Interests in Consolidated
Financial Statements  an Amendment of ARB No. 51.
 Disclosures about Derivative Instruments and Guarantees
 Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133
  Subsequent Events
 Subsequent Events
 Transfers of Financial Assets
 Accounting for Transfers of Financial Assets  an
amendment of FASB No. 140.
 16




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##### Table of Contents



Variable Interest Entities (VIE)
 Amendments to FASB Interpretation No. 46(R).
 FASB Accounting Standards Codification (Codification)
  NOTE 3  FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS AND FAIR VALUE
 Financial and Other Derivative Instruments
 Accounting for Derivative Instruments and Hedging
Activities
   17




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##### Table of Contents



Derivatives not designated as hedging instruments under SFAS No. 133
 Balance Sheet
    
    
    FairLocation
    
    
    ValueElectricity
    
    Other current assets
    
    $
    2Emissions
    
    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
    )
  Three MonthsEnded
    
    
    Six Months EndedLocation of Gain
    
    Gain (Loss)
    
    
    Gain (Loss)(Loss) Recognized
    
    Recognized in
    
    
    Recognized inin Regulatory
    
    Regulatory Assets
    
    
    Regulatory AssetsAssets / Liabilities
    
    / Liabilities on
    
    
    / Liabilities onOn Derivative
    
    Derivative
    
    
    DerivativeElectricity and Emissions
    
    Regulatory Asset
    
    $
    (2
    )
    
    $
    (11
    )Electricity and Emissions
    
    Regulatory Liability
    
    
    2
    
    
    
    (2
    )Total
    
    
    
    $
    
    
    
    $
    (13
    )
  Commodity
    
    Number of UnitsEmissions (Tons)
    
    
    6,436Electricity (MWh)
    
    
    52,098,048Oil (bbl)
    
    
    9,000
 Fair Value
   18




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##### Table of Contents




    
    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.
  Net Balance at(in Millions)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    June 30, 2009Assets:Cash equivalents
    
    $
    2
    
    
    $
    
    
    
    $
    
    
    
    $
    2Nuclear decommissioning trusts and other investments
    
    
    494
    
    
    
    304
    
    
    
    
    
    
    
    798Derivative assets
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Total
    
    $
    496
    
    
    $
    304
    
    
    $
    2
    
    
    $
    802Liabilities:Derivative liabilities
    
    
    
    
    
    
    (11
    )
    
    
    
    
    
    
    (11
    )Total
    
    $
    
    
    
    $
    (11
    )
    
    $
    
    
    
    $
    (11
    )Net Assets at June 30, 2009
    
    $
    496
    
    
    $
    293
    
    
    $
    2
    
    
    $
    791
  Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 30(in Millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Asset balance as of beginning of period
    
    $
    1
    
    
    $
    1
    
    
    $
    4
    
    
    
    4Changes in fair value recorded in regulatory assets/liabilities
    
    
    
    
    
    
    2
    
    
    
    (2
    )
    
    
    2Purchases, issuances and settlements
    
    
    1
    
    
    
    1
    
    
    
    2
    
    
    
    (2
    )Transfers in/out of Level 3
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    Asset balance as of June 30
    
    $
    2
    
    
    $
    4
    
    
    $
    2
    
    
    $
    4The 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
  19




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Nuclear Decommissioning Trusts and Other Investments
  Derivative Assets and Liabilities
  Fair Value of Financial Instruments
  June 30, 2009
    
    December 31, 2008Fair Value
    
    Carrying Value
    
    Fair Value
    
    Carrying ValueLong-Term Debt
    
    $5.1 billion
    
    $5.1 billion
    
    $5.0 billion
    
    $5.2 billion
 Investments in Debt and Equity Securities
  20




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##### Table of Contents



Decommissioning
  June 30
    
    
    December 31(in Millions)
    
    2009
    
    
    2008Fermi 2
    
    $
    687
    
    
    $
    649Fermi 1
    
    
    3
    
    
    
    3Low level radioactive waste
    
    
    26
    
    
    
    33Total
    
    $
    716
    
    
    $
    685
   Three Months Ended
    
    Six Months EndedJune 30
    
    June 30(in Millions)
    
    2009
    
    2008
    
    2009
    
    2008Realized gains
    
    $
    3
    
    
    $
    7
    
    
    $
    19
    
    
    $
    11Realized losses
    
    $
    (7
    )
    
    $
    (7
    )
    
    $
    (34
    )
    
    $
    (16
    )Proceeds from sales of securities
    
    $
    69
    
    
    $
    54
    
    
    $
    182
    
    
    $
    106
  Fair
    
    
    Unrealized(in Millions)
    
    Value
    
    
    GainsAs of June 30, 2009Equity securities
    
    $
    341
    
    
    $
    80Debt securities
    
    
    366
    
    
    
    15Cash and cash equivalents
    
    
    9
    
    
    
    $
    716
    
    
    $
    95As of December 31, 2008Equity securities
    
    $
    288
    
    
    $
    65Debt securities
    
    
    388
    
    
    
    17Cash and cash equivalents
    
    
    9
    
    
    
    $
    685
    
    
    $
    82
   21




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##### Table of Contents



Other
  June 30, 2009
    
    December 31, 2008Fair Value
    
    Carrying value
    
    Fair Value
    
    Carrying ValueCash equivalents
    
    $
    90
    
    
    $
    90
    
    
    $
    98
    
    
    $
    98Equity securities
    
    $
    3
    
    
    $
    3
    
    
    $
    20
    
    
    $
    20
  NOTE 4  REGULATORY MATTERS
 2009 Electric Rate Case Filing
    
    
    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.
  22




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##### Table of Contents



Cost-Based Tariffs for Schools
  Renewable Energy Plan
  Energy Optimization Plan
  Power Supply Cost Recovery Proceedings
 2008 Plan Year 
 2009 Plan Year
 23




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##### Table of Contents



Other
   NOTE 5  SHAREHOLDERS EQUITY
  24




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##### Table of Contents



NOTE 6  LONG-TERM DEBT
 Debt Issuances
   Month Issued
    
    
    Type
    
    Interest Rate
    
    
    Maturity
    
    
    AmountApril
    
    Tax-Exempt Revenue Bonds (1)(2)
    
    
    6.00
    %
    
    
    2036
    
    
    $
    69June
    
    Tax-Exempt Revenue Bonds (1)(3)
    
    
    5.625
    %
    
    
    2020
    
    
    
    32June
    
    Tax-Exempt Revenue Bonds (1)(4)
    
    
    5.25
    %
    
    
    2029
    
    
    
    60June
    
    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
   Month Retired
    
    Type
    
    Interest Rate
    
    
    Maturity
    
    
    AmountApril
    
    Tax- Exempt Revenue Bonds (1)
    
    Variable
    
    
    2036
    
    
    $
    69$
    69
 
 (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
  25




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##### Table of Contents



NOTE 8  COMMITMENTS AND CONTINGENCIES
 Environmental
 Air 
  Global Climate Change 
 Water 
 Contaminated Sites 
 26




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##### Table of Contents



Guarantees
  Labor Contracts
  Purchase Commitments
   Bankruptcies
   Other Contingencies
   27




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##### Table of Contents



Part II
 
 Item 1.   Legal Proceedings
  
 Item 1A.   Risk Factors
  We may be required to refund amounts we collect under self-implemented rates.
 Adverse changes in our credit ratings may negatively affect us.
 28




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##### Table of Contents



Item 6.   Exhibits
 ExhibitNumber
    
    DescriptionExhibits 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 Charges31-49
    
    Chief Executive Officer Section 302 Form 10-Q Certification31-50
    
    Chief Financial Officer Section 302 Form 10-Q CertificationExhibits furnished herewith:32-49
    
    Chief Executive Officer Section 906 Form 10-Q Certification32-50
    
    Chief Financial Officer Section 906 Form 10-Q Certification
 29




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##### Table of Contents



SIGNATURE
  THE DETROIT EDISON COMPANY
(Registrant)Date: July 31, 2009
    /s/ PETER B. OLEKSIAKPeter B. OleksiakVice President and Controller and
Chief Accounting Officer 30