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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
September 30, 2003

Commission file number 1-2198

The registrant
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.



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The Detroit Edison Company

(Exact name of registrant as specified in its
charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Michigan                                                           |  | 38-0478650                              
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)
|                                                                  
|2000 2nd Avenue, Detroit, Michigan                                 |  | 48226-1279                              
|(Address of principal executive
    offices)                       |  | (Zip Code)                              

313-235-4000

(Registrants telephone number, including
area code)


Indicate
by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 (Exchange Act) 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 is an accelerated filer as defined
in Rule 12b-2 of the Exchange Act.

Yes o          No þ



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TABLE OF CONTENTS



|                                                         |  |  |  |  |  |  |  | 
|-------------------------------------------------------- |  |  |  |  |  |  |  | 
|DEFINITIONS                                             
|FORWARD-LOOKING STATEMENTS                              
|MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
|CONTROLS AND PROCEDURES                                 
|FINANCIAL INFORMATION                                   
|CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)        
|INDEPENDENT ACCOUNTANTS REPORT                         
|OTHER INFORMATION                                       
|SIGNATURE                                               
|10-Q EXHIBIT INDEX                                      
|Insurance Agreement                                     
|Indenture Dated as of August 1, 2003                    
|Twelfth Supplemental Indenture                          
|Awareness Letter of Deloitte & Touche LLP               
|Chief Executive Officer Section 302 Certification       
|Chief Financial Officer Section 302 Certification       
|Chief Executive Officer Section 906 Certificaiton       
|Chief Financial Officer Section 906 Certification       
|364-Day Credit Agreement                                
|Three Year Credit Agreement                             



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THE DETROIT EDISON COMPANY

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED SEPTEMBER 30,
2003


TABLE OF CONTENTS

|                                   |  |                                                                                        |    |        |    | 
|---------------------------------- |  | -------------------------------------------------------------------------------------- | -- | ------ | -- | 
|                                   |  |                                                                                        |    | Page   |   
|                                   |  |                                                                                        |    | Number |   
|                                   |  |                                                                                        |    |        |   
|Definitions                        |  |                                                                                        | 2  |       
|Forward-Looking Statements         |  |                                                                                        | 3  |       
|PART I  FINANCIAL
    INFORMATION
|Item 1.                            |  | Financial Statements                                                                   |    |        |    | 
|                                   |  | Consolidated Statement of Operations                                                   |    |        | 11 | 
|                                   |  | Consolidated Statement of Financial Position                                           |    |        | 12 | 
|                                   |  | Consolidated Statement of Cash Flows                                                   |    |        | 14 | 
|                                   |  | Consolidated Statement of Changes in
    Shareholders Equity and Comprehensive Income |    |        | 15 | 
|                                   |  | Notes to Consolidated Financial Statements                                             |    |        | 16 | 
|                                   |  | Independent Accountants Report                                                        |    |        | 22 | 
|Item 2.                            |  | Managements Narrative Analysis of Results
    of Operations                           |    |        | 4  | 
|Item 4.                            |  | Controls and Procedures                                                                |    |        | 10 | 
|PART II  OTHER
    INFORMATION   
|Item 1.                            |  | Legal Proceedings                                                                      |    |        | 23 | 
|Item 6.                            |  | Exhibits and Reports on Form 8-K                                                       |    |        | 23 | 
|Signature                          |  |                                                                                        | 24 |       

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DEFINITIONS




|                |  |                                                                                                                                                                                                                                                                                                                                                        
|--------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Company         |  | Detroit Edison Company and subsidiary companies                                                                                                                                                                                                                                                                                                        
|               
|Customer Choice |  | Statewide initiatives giving customers in
    Michigan the option to choose alternative suppliers for
    electricity and gas.                                                                                                                                                                                                                         
|               
|Detroit Edison  |  | The Detroit Edison Company (a wholly owned
    subsidiary of DTE Energy Company) and subsidiary companies                                                                                                                                                                                                                                              
|               
|DTE Energy      |  | DTE Energy Company, the parent of Detroit Edison
    and Enterprises                                                                                                                                                                                                                                                                                   
|               
|Enterprises     |  | DTE Enterprises, Inc. (successor to MCN Energy)
    and subsidiaries                                                                                                                                                                                                                                                                                   
|               
|EPA             |  | United States Environmental Protection Agency                                                                                                                                                                                                                                                                                                          
|               
|FERC            |  | Federal Energy Regulatory Commission                                                                                                                                                                                                                                                                                                                   
|               
|MCN Energy      |  | MCN Energy Group Inc. and subsidiary companies
    that were merged into Enterprises                                                                                                                                                                                                                                                                   
|               
|MichCon         |  | Michigan Consolidated Gas Company and subsidiary
    companies                                                                                                                                                                                                                                                                                         
|               
|MPSC            |  | Michigan Public Service Commission                                                                                                                                                                                                                                                                                                                     
|               
|MWh             |  | Megawatthour                                                                                                                                                                                                                                                                                                                                           
|               
|PSCR            |  | A power supply cost recovery mechanism authorized
    by the MPSC that allowed Detroit Edison to recover through rates
    its fuel, fuel-related and purchased power electric expenses.
    The clause was suspended under Michigans restructuring
    legislation signed into law June 5, 2000, which lowered and
    froze electric customer rates.
|               
|SFAS            |  | Statement of Financial Accounting Standards                                                                                                                                                                                                                                                                                                            
|               
|Stranded Costs  |  | Costs incurred by utilities in order to serve
    customers in a regulated environment that are not expected to be
    recoverable if customers switch to alternative suppliers of
    electricity and gas.                                                                                                                                            

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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
contemplated, projected, estimated or budgeted in such
forward-looking statements. There are many factors that may
impact forward-looking statements including, but not limited to,
the following:



| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | the effects of weather and other natural
    phenomena on operations and sales to customers;                                                   
|
| |  | economic climate and growth in the geographic
    areas where we do business;                                                                  
|
| |  | environmental issues, including changes in the
    climate, and regulations;                                                                   
|
| |  | nuclear regulations and risks associated with
    nuclear operations;                                                                          
|
| |  | implementation of electric Customer Choice
    programs;                                                                                       
|
| |  | implementation of electric restructuring in
    Michigan;                                                                                      
|
| |  | employee relations and the impact of collective
    bargaining agreements;                                                                     
|
| |  | unplanned outages;                                                                                                                             
|
| |  | capital market conditions and access to capital
    markets and other financing efforts that can be affected by
    credit agency ratings;     
|
| |  | the timing and extent of changes in interest
    rates;                                                                                        
|
| |  | the level of borrowings;                                                                                                                       
|
| |  | changes in the cost of fuel and purchased power;                                                                                               
|
| |  | effects of competition;                                                                                                                        
|
| |  | impact of FERC and MPSC proceedings and
    regulations;                                                                                       
|
| |  | changes in federal or state tax laws and their
    interpretations, including the code, regulations, rulings, court
    proceedings and audits;
|
| |  | ability to recover costs through rate increases;                                                                                               
|
| |  | property insurance;                                                                                                                            
|
| |  | the cost of protecting assets against or damage
    due to terrorism;                                                                          
|
| |  | changes in accounting standards and financial
    reporting regulations; and                                                                   
|
| |  | changes in federal or state laws and their
    interpretation with respect to regulation, energy policy and
    other related business issues. 

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 statement speaks
only as of the date on which such statement is 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.

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THE DETROIT EDISON COMPANY






MANAGEMENTS NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS


Results of Operations

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

We had income of $96 million in the 2003
third quarter compared to income of $105 million for the
2002 third quarter. For the nine-month period, our income was
$141 million compared to income of $272 million for
the comparable 2002 period. The comparability of earnings for
the nine-month period was also impacted by the adoption of a new
accounting rule in the 2003 first quarter. As required by
generally accepted accounting principles, on January 1,
2003, we adopted a new accounting rule for asset retirement
obligations as discussed in Note 2. The cumulative effect
of adopting this new accounting rule was to reduce the 2003
nine-month period earnings by $6 million. Results for the
nine-month period were also affected by a $14 million net
of tax loss on the sale of our steam heating business in January
2003.

Detroit Edison has the following two reportable
segments.

Energy Resources



| |                 
| | ----------------
| | Power Generation

The power generation plants of Detroit Edison
comprise our regulated power generation business. Detroit
Edisons numerous fossil plants, hydroelectric pumped
storage plant and its nuclear plant generate electricity that is
sold principally throughout Michigan and the Midwest to
residential, commercial, industrial and wholesale customers.

Power Generation earnings increased
$7 million during the 2003 third quarter and decreased
$43 million in the 2003 nine-month period compared to the
2002 periods. Results for both periods were affected by lower
gross margins, varying operation and maintenance expenses and
lower depreciation and amortization expense. The reduced gross
margins were driven by decreased cooling demand due to mild
weather, lost margins from customers choosing to purchase power
from alternative suppliers under the electric Customer Choice
program and lost margins from the August 2003 blackout. As a
result of the electric Customer Choice program, Detroit Edison
has lost 11% of retail sales during 2003 resulting in lost
margins of approximately $70 million. To partially offset
the impact of these lost margins, Detroit Edison recorded
regulatory assets totaling $8 million in the 2003 third
quarter and $30 million in the 2003 nine-month period
representing stranded costs that we believe are recoverable
under Michigan legislation. Gross margins benefited from lower
fuel unit costs reflecting the use of a more favorable power
supply mix. We increased the usage of lower-cost power from our
generating plants and reduced our usage of higher-cost purchased
power. Operation and maintenance expenses were affected by costs
associated with the August 2003 blackout (Note 4), higher
employee pension and health care benefit costs and expenses due
to the timing of planned reliability and maintenance work done
to improve the production and availability of the generation
fleet. Operation and maintenance expenses benefited from our
Company-wide initiative to reduce or defer costs and enhance
operating performance. The DTE Operating System involves the
rigorous disciplined application of tools and operating
practices which have resulted in improvements in plant
efficiency and technology systems, among other enhancements. The

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decrease in depreciation and amortization expense
is attributable to the income effect of recording regulatory
assets representing net stranded costs and the deferral of other
costs recoverable under Public Act 141.


|                                                        |  |               |     |   |              |   |     |      |  |   |       |   |  |   |       |  
|------------------------------------------------------- |  | ------------- | --- | - | ------------ | - | --- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                        |  |               |     |  
|                                                        |  | Three Months  |     |   | Nine Months  |  
|                                                        |  | Ended         |     |   | Ended        |  
|                                                        |  | September 30  |     |   | September 30 |  
|                                                        |  |               |     |   |              |  
|                                                        |  | 2003          |     |   | 2002         |   |     | 2003 |  |   | 2002  |  
|                                                        |  |               |     |   |              |   |     |      |  |   |       |  
|                                                        |  |              
|                                                        |  | (In millions) |    
|Operating Revenues                                      |  | $             | 669 |   |              | $ | 806 |      |  | $ | 1,874 |   |  | $ | 2,082 |  
|Fuel and Purchased Power                                |  |               | 284 |   |              |   | 381 |      |  |   | 749   |   |  |   | 824   |  
|                                                        |  |               |     |   |              |   |     |      |  |   |       |  
|Gross Margin                                            |  |               | 385 |   |              |   | 425 |      |  |   | 1,125 |   |  |   | 1,258 |  
|Operation and Maintenance                               |  |               | 147 |   |              |   | 158 |      |  |   | 487   |   |  |   | 469   |  
|Depreciation and Amortization                           |  |               | 65  |   |              |   | 102 |      |  |   | 199   |   |  |   | 263   |  
|Taxes other than Income                                 |  |               | 40  |   |              |   | 38  |      |  |   | 121   |   |  |   | 116   |  
|                                                        |  |               |     |   |              |   |     |      |  |   |       |  
|Operating Income                                        |  |               | 133 |   |              |   | 127 |      |  |   | 318   |   |  |   | 410   |  
|Other (Income) and Deductions                           |  |               | 39  |   |              |   | 45  |      |  |   | 115   |   |  |   | 145   |  
|Income Tax Provision                                    |  |               | 33  |   |              |   | 28  |      |  |   | 71    |   |  |   | 90    |  
|                                                        |  |               |     |   |              |   |     |      |  |   |       |  
|Net Income                                              |  | $             | 61  |   |              | $ | 54  |      |  | $ | 132   |   |  | $ | 175   |  
|                                                        |  |               |     |   |              |   |     |      |  |   |       |  
|Operating Income as a Percent of Operating
    Revenues |  |               | 20  | % |              |   | 16  | %    |  |   | 17    | % |  |   | 20    | %

System output and average fuel and purchased
power costs were as follows:

|                              |         |                       |        |        |              |   |        |        |  |   |        |        |  |   |        |        | 
|----------------------------- | ------- | --------------------- | ------ | ------ | ------------ | - | ------ | ------ |  | - | ------ | ------ |  | - | ------ | ------ | 
|                              |         |                       |        |       
|                              |         | Three Months          |        |        | Nine Months  |  
|                              |         | Ended                 |        |        | Ended        |  
|                              |         | September 30          |        |        | September 30 |  
|                              |         |                       |        |        |              |  
|                              |         | 2003                  |        |        | 2002         |   |        | 2003   |  |   | 2002   |       
|                              |         |                       |        |        |              |   |        |        |  |   |        |       
|                              |         |                      
|                              |         | (In thousands of MWh) |       
|Power generated and purchased |         |                       |        |        |              |   |        |        |  |   |        |        |  |   |        |       
|Power plant generation        |         |                       |        |        |              |   |        |        |  |   |        |        |  |   |        |       
|                              | Fossil  |                       |        | 10,308 |              |   |        | 11,183 |  |   |        | 28,649 |  |   |        | 29,813 | 
|                              | Nuclear |                       |        | 2,096  |              |   |        | 2,384  |  |   |        | 5,645  |  |   |        | 7,008  | 
|Purchased power               |         |                       | 1,868  |        |              |   | 3,439  |        |  |   | 5,599  |        |  |   | 7,257  |       
|                              |         |                       |        |        |              |   |        |        |  |   |        |       
|System output                 |         |                       | 14,272 |        |              |   | 17,006 |        |  |   | 39,893 |        |  |   | 44,078 |       
|                              |         |                       |        |        |              |   |        |        |  |   |        |       
|Average unit cost ($/ MWh)    |         |                       |        |        |              |   |        |        |  |   |        |        |  |   |        |       
|Generation(1)                 |         | $                     | 13.21  |        |              | $ | 12.98  |        |  | $ | 13.34  |        |  | $ | 12.62  |       
|                              |         |                       |        |        |              |   |        |        |  |   |        |       
|Purchased power(2)            |         | $                     | 55.38  |        |              | $ | 52.96  |        |  | $ | 43.79  |        |  | $ | 43.24  |       
|                              |         |                       |        |        |              |   |        |        |  |   |        |       
|Overall Average Unit Cost     |         | $                     | 18.73  |        |              | $ | 21.36  |        |  | $ | 17.62  |        |  | $ | 17.63  |       
|                              |         |                       |        |        |              |   |        |        |  |   |        |       



---



|    |                                                        
|--- | -------------------------------------------------------
|(1) | Represents fuel costs associated with power
    plants.
|   
|(2) | Includes hedging activities.                           

Outlook Detroit
Edison lost 6% of retail sales in 2002 and estimates losing up
to 13% of such sales in 2003 as a result of customers choosing
to purchase power from alternative suppliers under the electric
Customer Choice program. We estimate that we will lose between
$80 million and $100 million of margins in 2003 under
the Customer Choice program. Unrecovered generation-related
fixed costs due to electric Customer Choice are considered
stranded and are recoverable under Michigan legislation as
determined by the MPSC. We estimate that we will record
approximately $40 million of regulatory assets relating to
these stranded costs in 2003. There are a number of variables
and estimates that impact the level of recoverable stranded
costs, including weather, sales mix and wholesale prices. As a
result, our estimate of stranded costs

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could increase or decrease. The regulatory asset
will be subject to review by the MPSC in future regulatory
proceedings, and we cannot predict the outcome of this matter.
See Note 4  Regulatory Matters.


The June 2000 Michigan legislation imposed a rate
freeze for all classes of customers through 2003. In addition,
the MPSC determined that adjusting rates for changes in fuel and
purchased power through continuance of the Power Supply Cost
Recovery (PSCR) clause would be inconsistent with the rate
freeze, therefore the MPSC suspended the PSCR clause. It is
unclear at this time whether the PSCR clause will remain
suspended beyond 2003. Detroit Edison filed a rate case in June
2003 addressing this and other issues. We cannot predict the
outcome of this matter. See Note 4  Regulatory
Matters.

Future operating results are expected to vary as
a result of factors such as regulatory proceedings, weather,
changes in economic conditions and the level of customer
participation in the electric Customer Choice program.

Energy Distribution



| |                   
| | ------------------
| | Power Distribution

Power Distribution is comprised of the electric
distribution services of Detroit Edison. Power Distribution
distributes electricity generated by Energy Resources and
alternative electric suppliers to Detroit Edisons
2.1 million customers.

Power Distribution earnings decreased
$16 million during the 2003 third quarter and
$82 million in the 2003 nine-month period. Both periods
experienced reduced electric deliveries and operating revenues
due to milder weather and the impact of a slower economy on
manufacturing and commercial customers operations. Restoration
costs associated with an April 2003 catastrophic ice storm,
resulting in more than 400,000 customers losing power, and a
July 2003 windstorm, affecting over 190,000 customers, also
contributed to the decline in earnings in the 2003 nine-month
period. The operation and maintenance expense comparison in the
current quarter was also impacted by heat-related maintenance
costs incurred in the 2002 third quarter due to prolonged
periods of above normal temperatures and the related stress
placed on the distribution system. Operation and maintenance
expenses for both periods were also affected by higher employee
pension and health care benefit costs and costs associated with
customer service process improvements. Operation and maintenance
expenses benefited from our Company-wide initiative to reduce or
defer costs and enhance operating performance. The DTE Operating
System involves the rigorous disciplined application of tools
and operating practices which have resulted in inventory
reductions and improvements in technology systems,

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among other enhancements. Results for the 2003
nine-month period also reflect a net of tax loss of
$14 million on the sale of our unprofitable steam heating
business (Note 3).


|                                                        |  |               |     |   |              |   |     |      |  |   |      |   |  |   |       |  
|------------------------------------------------------- |  | ------------- | --- | - | ------------ | - | --- | ---- |  | - | ---- | - |  | - | ----- | -
|                                                        |  |               |     |  
|                                                        |  | Three Months  |     |   | Nine Months  |  
|                                                        |  | Ended         |     |   | Ended        |  
|                                                        |  | September 30  |     |   | September 30 |  
|                                                        |  |               |     |   |              |  
|                                                        |  | 2003          |     |   | 2002         |   |     | 2003 |  |   | 2002 |  
|                                                        |  |               |     |   |              |   |     |      |  |   |      |  
|                                                        |  |              
|                                                        |  | (In millions) |    
|Operating Revenues                                      |  | $             | 348 |   |              | $ | 394 |      |  | $ | 950  |   |  | $ | 1,010 |  
|Fuel and Purchased Power                                |  |               | 4   |   |              |   | 5   |      |  |   | 13   |   |  |   | 17    |  
|Operation and Maintenance                               |  |               | 169 |   |              |   | 183 |      |  |   | 538  |   |  |   | 468   |  
|Depreciation and Amortization                           |  |               | 62  |   |              |   | 62  |      |  |   | 187  |   |  |   | 186   |  
|Taxes other than Income                                 |  |               | 27  |   |              |   | 31  |      |  |   | 83   |   |  |   | 90    |  
|                                                        |  |               |     |   |              |   |     |      |  |   |      |  
|Operating Income                                        |  |               | 86  |   |              |   | 113 |      |  |   | 129  |   |  |   | 249   |  
|Other Deductions                                        |  |               | 33  |   |              |   | 36  |      |  |   | 107  |   |  |   | 104   |  
|Income Tax Provision                                    |  |               | 18  |   |              |   | 26  |      |  |   | 7    |   |  |   | 48    |  
|                                                        |  |               |     |   |              |   |     |      |  |   |      |  
|Net Income                                              |  | $             | 35  |   |              | $ | 51  |      |  | $ | 15   |   |  | $ | 97    |  
|                                                        |  |               |     |   |              |   |     |      |  |   |      |  
|Operating Income as a Percent of Operating
    Revenues |  |               | 25  | % |              |   | 29  | %    |  |   | 14   | % |  |   | 25    | %

|                                    |  |                       |        |  |              |  |        |      |  |  |        |  |  |  |        | 
|----------------------------------- |  | --------------------- | ------ |  | ------------ |  | ------ | ---- |  |  | ------ |  |  |  | ------ | 
|                                    |  |                       |        | 
|                                    |  | Three Months          |        |  | Nine Months  | 
|                                    |  | Ended                 |        |  | Ended        | 
|                                    |  | September 30          |        |  | September 30 | 
|                                    |  |                       |        |  |              | 
|Electric Deliveries                 |  | 2003                  |        |  | 2002         |  |        | 2003 |  |  | 2002   | 
|                                    |  |                       |        |  |              |  |        |      |  |  |        | 
|                                    |  |                      
|                                    |  | (In thousands of MWh) |       
|Residential                         |  |                       | 4,457  |  |              |  | 5,131  |      |  |  | 11,555 |  |  |  | 12,377 | 
|Commercial                          |  |                       | 4,162  |  |              |  | 5,076  |      |  |  | 12,251 |  |  |  | 14,135 | 
|Industrial                          |  |                       | 3,044  |  |              |  | 3,472  |      |  |  | 9,264  |  |  |  | 10,342 | 
|Wholesale                           |  |                       | 556    |  |              |  | 578    |      |  |  | 1,682  |  |  |  | 1,670  | 
|Other                               |  |                       | 97     |  |              |  | 100    |      |  |  | 294    |  |  |  | 298    | 
|                                    |  |                       |        |  |              |  |        |      |  |  |        | 
|                                    |  |                       | 12,316 |  |              |  | 14,357 |      |  |  | 35,046 |  |  |  | 38,822 | 
|Electric Choice                     |  |                       | 2,141  |  |              |  | 935    |      |  |  | 5,192  |  |  |  | 2,577  | 
|                                    |  |                       |        |  |              |  |        |      |  |  |        | 
|Total Electric Sales and Deliveries |  |                       | 14,457 |  |              |  | 15,292 |      |  |  | 40,238 |  |  |  | 41,399 | 
|                                    |  |                       |        |  |              |  |        |      |  |  |        | 

Outlook Operating results are expected to vary
as a result of external factors such as weather, changes in
economic conditions and the severity and frequency of storms.
Economic conditions and prior billing issues have resulted in an
increase in past due receivables. We believe our allowance for
doubtful accounts is based on reasonable estimates; however,
failure to make continued progress in collecting our past due
receivables would unfavorably affect operating results. As
previously mentioned, Detroit Edison filed a rate case in June
2003 to address future operating costs and other issues.

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Capital Resources and Liquidity

|                                          |                       |                                                                  |     |      |      |   |      |      |      |  
|----------------------------------------- | --------------------- | ---------------------------------------------------------------- | --- | ---- | ---- | - | ---- | ---- | ---- | -
|                                          |                       |                                                                 
|                                          |                       | Nine Months                                                      |    
|                                          |                       | Ended                                                            |    
|                                          |                       | September 30                                                     |    
|                                          |                       |                                                                  |    
|                                          |                       | 2003                                                             |     |      | 2002 |  
|                                          |                       |                                                                  |     |      |      |  
|                                          |                       |                                                                 
|                                          |                       | (In millions)                                                    |    
|Cash and Cash Equivalents                 |                       |                                                                  |     |      |      |   |      |     
|Cash Flow From (Used For)                 |                       |                                                                  |     |      |      |   |      |     
|                                          | Operating activities: |                                                                  |     |      |      |   |      |      |     
|                                          |                       | Net income, depreciation and amortization and
    deferred taxes |     | $    | 580  |   |      | $    | 736  |  
|                                          |                       | Pension contribution                                             |     |      | (222 | ) |      |      |     |  
|                                          |                       | Working capital and other                                        |     |      | (87  | ) |      |      | (180 | )
|                                          |                       |                                                                  |     |      |      |  
|                                          |                       |                                                                  | 271 |      |      |   | 556  |     
|                                          | Investing activities  |                                                                  |     | (359 | )    |   |      | (508 | )   
|                                          | Financing activities  |                                                                  |     | 71   |      |   |      | (236 | )   
|                                          |                       |                                                                  |     |      |      |  
|Net Decrease in Cash and Cash Equivalents |                       | $                                                                | (17 | )    |      | $ | (188 | )   
|                                          |                       |                                                                  |     |      |      |  

Operating Activities

Net cash from operating activities decreased
$285 million during the 2003 nine-month period as compared
to the same 2002 period. The decrease reflects a decline of
$156 million in net income, after adjusting for non-cash
items (depreciation and amortization and deferred taxes) and a
$129 million increase in working capital and other
requirements. The increase in working capital requirements is
primarily due to a decrease in accounts payable balances in
2003. We also contributed $222 million of cash to our
pension plan in 2003.

Economic conditions and prior billing issues have
resulted in an increase in past due receivables. We are focusing
our collection efforts; however, failure to make continued
progress in collecting our past due receivables would
unfavorably affect operating cash flows.

Investing Activities

Net cash relating to investing activities
improved $149 million in the 2003 nine-month period as
compared to the same 2002 period. The improvement is attributed
to decreases in cash contractually designated for debt service
and other investments and a decrease in plant and equipment
expenditures.

Financing Activities

Net cash from financing activities increased
$307 million during the 2003 nine-month period as compared
to the same 2002 period. The increase is primarily attributed to
higher notes payable to affiliates and a cash infusion from its
parent company, partially offset by an increase in redemptions
of long-term debt. In August 2003, Detroit Edison issued
$49 million of 5.5% tax-exempt bonds due in June 2030. The
proceeds were used to redeem $49 million of 6.55% tax-exempt
bonds due 2024.

Electric Customer Choice Program

The electric Customer Choice program as
originally structured in Michigan anticipated an eventual
transition to a totally competitive environment where customers
would be charged market-based rates for their electricity.
Various developments in the energy industry have caused the
deregulation of electric generation to proceed at a much slower
rate. As a result, Detroit Edisons rates continue to be
regulated by the MPSC. This continued regulation has hindered
Detroit Edisons ability to retain customers that are
choosing alternative suppliers under the electric Customer
Choice program. Detroit Edisons results have been
unfavorably impacted by the lack of recovery of lost margins and
other costs associated with the electric Customer Choice

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program. To date, the MPSC has not fully
implemented various provisions of Michigans restructuring
legislation. Specifically, the MPSC:




| |   |                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------
| |  | has not finalized all the components for
    calculating net stranded costs;                                                              
|
| |  | has created a process whereby net stranded costs
    would be recovered two years after the net stranded costs were
    actually incurred;
|
| |  | has not authorized Detroit Edison to recover any
    Customer Choice program implementation costs; and,                                   
|
| |  | has created incentives to encourage participation
    in electric Customer Choice.                                                        

In addition, the MPSC has historically maintained
regulated rates for certain groups of customers that exceed
those customers cost of service. This has resulted in high
levels of participation by these customers in the Customer
Choice program. As a result of these factors, retail choice
penetration continues to rise beyond original estimates.

In December 2002, the MPSC initiated a
collaborative process to address the issue of stranded costs.
Detroit Edison actively participated in the collaborative
process. However, this process failed to produce any agreement
regarding net stranded cost recovery.

Detroit Edison addressed the issue of stranded
costs in its June 2003 rate filing and is also pursuing a
legislative solution to address this issue. The continued delay
in the timely and full recovery of stranded costs unfavorably
impacts operating results. See Note 4 for a further discussion
of the electric Customer Choice program.

Blackout Costs

On August 14, 2003, failures in the regional
power transmission grid caused nine of Detroit Edisons
power plants to trip offline, which left virtually all of its
2.1 million customers without power. On October 24,
2003, Detroit Edison filed an application with the MPSC
requesting approval to defer the blackout costs until ratemaking
treatment of the costs can be determined. See Note 4 for
further discussion of the blackout costs filing.

Environmental Matters

The Environmental Protection Agency
(EPA) ozone transport regulations and final new air quality
standards relating to ozone and particulate air pollution will
continue to impact us. Detroit Edison spent approximately
$512 million through September 2003 and estimates that it
will incur approximately $300 to $400 million of future capital
expenditures over the next five to eight years to comply with
the existing air quality standards. Recovery of costs to be
incurred through December 2004 is included in our June 2003
electric rate case. In addition, we maintain the option to
securitize these costs after the completion of this rate case.

The EPA has initiated enforcement actions against
several major electric utilities citing violations of the Clean
Air Act, asserting that older, coal-fired power plants have been
modified in ways that would then require them to comply with the
more restrictive new source provisions of the Clean
Air Act. Detroit Edison received and responded to information
requests from the EPA on this subject. The EPA has not initiated
proceedings against Detroit Edison. The United States District
Court for the Southern District of Ohio Eastern Division issued
a decision in August 2003 finding Ohio Edison in violation of
the new source provisions of the Clean Air Act. If the
Courts decision is upheld, the electric utility industry
could be required to invest substantial amounts in pollution
control equipment. During the same month, however, a district
court in a different division rendered a conflicting decision on
the matter. On August 27, 2003, the EPA released new rules,
effective December 26, 2003, allowing repair, replacement
or upgrade of production equipment without triggering source
requirement controls if the cost of the parts and repairs do not
exceed 20% of the replacement value of the equipment being
upgraded. Such repairs will be considered routine maintenance,

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however any changes in emissions would be subject
to existing pollution permit limits and other state and federal
programs for pollutants.


We cannot predict the future impact of this issue
upon Detroit Edison.

New Accounting Pronouncements

See Note 2  New Accounting
Pronouncements for discussion of new accounting pronouncements.






CONTROLS AND PROCEDURES


(a)     Evaluation of
disclosure controls and procedures

The Companys Chief Executive Officer and
Chief Financial Officer have evaluated the effectiveness of the
Companys disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) as of
September 30, 2003, which is the end of the period covered
by this report, and have concluded that such controls and
procedures are effectively designed to ensure that required
information disclosed by the Company in reports that it files or
submits under the Act is recorded, processed, summarized and
reported within the time periods specified in the
Commissions rules and forms.

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THE DETROIT EDISON COMPANY

CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)

|                                                    |                               |               |       |     |              |   |       |      |   |   |       |       |   |   |       |     |  
|--------------------------------------------------- | ----------------------------- | ------------- | ----- | --- | ------------ | - | ----- | ---- | - | - | ----- | ----- | - | - | ----- | --- | -
|                                                    |                               |               |       |    
|                                                    |                               | Three Months  |       |     | Nine Months  |  
|                                                    |                               | Ended         |       |     | Ended        |  
|                                                    |                               | September 30  |       |     | September 30 |  
|                                                    |                               |               |       |     |              |  
|                                                    |                               | 2003          |       |     | 2002         |   |       | 2003 |   |   | 2002  |      
|                                                    |                               |               |       |     |              |   |       |      |   |   |       |      
|                                                    |                               |              
|                                                    |                               | (In millions) |      
|Operating Revenues                                  |                               | $             | 1,017 |     |              | $ | 1,200 |      |   | $ | 2,824 |       |   | $ | 3,092 |    
|                                                    |                               |               |       |     |              |   |       |      |   |   |       |      
|Operating Expenses                                  |                               |               |       |     |              |   |       |      |   |   |       |       |   |   |       |    
|                                                    | Fuel and purchased power      |               |       | 288 |              |   |       | 386  |   |   |       | 762   |   |   |       | 841 |  
|                                                    | Operation and maintenance     |               |       | 316 |              |   |       | 341  |   |   |       | 1,025 |   |   |       | 937 |  
|                                                    | Depreciation and amortization |               |       | 127 |              |   |       | 164  |   |   |       | 386   |   |   |       | 449 |  
|                                                    | Taxes other than income       |               |       | 67  |              |   |       | 69   |   |   |       | 204   |   |   |       | 206 |  
|                                                    |                               |               |       |     |              |   |       |      |   |   |       |      
|                                                    |                               |               | 798   |     |              |   | 960   |      |   |   | 2,377 |       |   |   | 2,433 |    
|                                                    |                               |               |       |     |              |   |       |      |   |   |       |      
|Operating Income                                    |                               |               | 219   |     |              |   | 240   |      |   |   | 447   |       |   |   | 659   |    
|                                                    |                               |               |       |     |              |   |       |      |   |   |       |      
|Other (Income) and Deductions                       |                               |               |       |     |              |   |       |      |   |   |       |       |   |   |       |    
|                                                    | Interest expense              |               |       | 71  |              |   |       | 76   |   |   |       | 217   |   |   |       | 232 |  
|                                                    | Interest income               |               |       |    |              |   |       |     |   |   |       |      |   |   |       | (1  | )
|                                                    | Other income                  |               |       | (29 | )            |   |       | (5   | ) |   |       | (62   | ) |   |       | (16 | )
|                                                    | Other expenses                |               |       | 30  |              |   |       | 10   |   |   |       | 67    |   |   |       | 34  |  
|                                                    |                               |               |       |     |              |   |       |      |   |   |       |      
|                                                    |                               |               | 72    |     |              |   | 81    |      |   |   | 222   |       |   |   | 249   |    
|                                                    |                               |               |       |     |              |   |       |      |   |   |       |      
|Income Before Income Taxes                          |                               |               | 147   |     |              |   | 159   |      |   |   | 225   |       |   |   | 410   |    
|Income Tax Provision                                |                               |               | 51    |     |              |   | 54    |      |   |   | 78    |       |   |   | 138   |    
|                                                    |                               |               |       |     |              |   |       |      |   |   |       |      
|Income Before Accounting Change                     |                               |               | 96    |     |              |   | 105   |      |   |   | 147   |       |   |   | 272   |    
|Cumulative Effect of Accounting Change
    (Note 2) |                               |               |      |     |              |   |      |      |   |   | (6    | )     |   |   |      |    
|                                                    |                               |               |       |     |              |   |       |      |   |   |       |      
|Net Income                                          |                               | $             | 96    |     |              | $ | 105   |      |   | $ | 141   |       |   | $ | 272   |    
|                                                    |                               |               |       |     |              |   |       |      |   |   |       |      

See Notes to Consolidated Financial Statements
(Unaudited)

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THE DETROIT EDISON COMPANY

CONSOLIDATED STATEMENT OF FINANCIAL
POSITION

|               |                                           |                                                                                  |        |        |             |   |        |        |     | 
|-------------- | ----------------------------------------- | -------------------------------------------------------------------------------- | ------ | ------ | ----------- | - | ------ | ------ | --- | 
|               |                                           | (Unaudited)                                                                      |        |        |            
|               |                                           | September 30                                                                     |        |        | December 31 |  
|               |                                           | 2003                                                                             |        |        | 2002        |  
|               |                                           |                                                                                  |        |        |             |  
|               |                                           |                                                                                 
|               |                                           | (In millions)                                                                    |       
|ASSETS        
|Current Assets |                                           |                                                                                  |        |        |             |   |        |       
|               | Cash and cash equivalents                 |                                                                                  | $      | 19     |             |   | $      | 36     |    
|               | Restricted cash                           |                                                                                  |        | 38     |             |   |        | 131    |    
|               | Accounts receivable                       |                                                                                  |        |        |             |   |        |        |    
|               |                                           | Customer (less allowance for doubtful accounts of
    $50 and $48, respectively) |        |        | 348         |   |        |        | 325 | 
|               |                                           | Accrued unbilled revenues                                                        |        |        | 157         |   |        |        | 177 | 
|               |                                           | Other                                                                            |        |        | 175         |   |        |        | 142 | 
|               | Inventories                               |                                                                                  |        |        |             |   |        |        |    
|               |                                           | Fuel                                                                             |        |        | 110         |   |        |        | 126 | 
|               |                                           | Materials and supplies                                                           |        |        | 127         |   |        |        | 130 | 
|               | Property taxes assessed to future periods |                                                                                  |        | 38     |             |   |        |       |    
|               | Other                                     |                                                                                  |        | 20     |             |   |        | 14     |    
|               |                                           |                                                                                  |        |        |             |  
|               |                                           |                                                                                  | 1,032  |        |             |   | 1,081  |       
|               |                                           |                                                                                  |        |        |             |  
|Investments    |                                           |                                                                                  |        |        |             |   |        |       
|               | Nuclear decommissioning trust funds       |                                                                                  |        | 484    |             |   |        | 417    |    
|               | Other                                     |                                                                                  |        | 55     |             |   |        | 82     |    
|               |                                           |                                                                                  |        |        |             |  
|               |                                           |                                                                                  | 539    |        |             |   | 499    |       
|               |                                           |                                                                                  |        |        |             |  
|Property       |                                           |                                                                                  |        |        |             |   |        |       
|               | Property, plant and equipment             |                                                                                  |        | 12,597 |             |   |        | 12,121 |    
|               | Less accumulated depreciation             |                                                                                  |        | (5,527 | )           |   |        | (5,324 | )  
|               |                                           |                                                                                  |        |        |             |  
|               |                                           |                                                                                  | 7,070  |        |             |   | 6,797  |       
|               |                                           |                                                                                  |        |        |             |  
|Other Assets   |                                           |                                                                                  |        |        |             |   |        |       
|               | Regulatory assets (Notes 2 and 4)         |                                                                                  |        | 2,025  |             |   |        | 1,143  |    
|               | Securitized regulatory assets             |                                                                                  |        | 1,550  |             |   |        | 1,613  |    
|               | Other                                     |                                                                                  |        | 130    |             |   |        | 128    |    
|               |                                           |                                                                                  |        |        |             |  
|               |                                           |                                                                                  | 3,705  |        |             |   | 2,884  |       
|               |                                           |                                                                                  |        |        |             |  
|Total Assets   |                                           | $                                                                                | 12,346 |        |             | $ | 11,261 |       
|               |                                           |                                                                                  |        |        |             |  

See Notes to Consolidated Financial Statements
(Unaudited)

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THE DETROIT EDISON COMPANY

CONSOLIDATED STATEMENT OF FINANCIAL
POSITION

|                                               |                                                                                                               |                              |        |       |             |   |        |       |  
|---------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | ---------------------------- | ------ | ----- | ----------- | - | ------ | ----- | -
|                                               |                                                                                                               | (Unaudited)                  |        |       |            
|                                               |                                                                                                               | September 30                 |        |       | December 31 |  
|                                               |                                                                                                               | 2003                         |        |       | 2002        |  
|                                               |                                                                                                               |                              |        |       |             |  
|                                               |                                                                                                               |                             
|                                               |                                                                                                               | (In millions, except shares) |       
|LIABILITIES AND SHAREHOLDERS
    EQUITY      
|Current Liabilities                            |                                                                                                               |                              |        |       |             |   |        |      
|                                               | Accounts payable                                                                                              |                              | $      | 181   |             |   | $      | 238   |  
|                                               | Accrued interest                                                                                              |                              |        | 54    |             |   |        | 83    |  
|                                               | Dividends payable                                                                                             |                              |        | 74    |             |   |        | 74    |  
|                                               | Accrued payroll                                                                                               |                              |        | 15    |             |   |        | 24    |  
|                                               | Short-term borrowings                                                                                         |                              |        | 203   |             |   |        |      |  
|                                               | Notes payable to affiliates                                                                                   |                              |        | 378   |             |   |        |      |  
|                                               | Income taxes                                                                                                  |                              |        | 27    |             |   |        | 30    |  
|                                               | Current portion long-term debt, including capital
    leases                                                  |                              |        | 122   |             |   |        | 319   |  
|                                               | Other                                                                                                         |                              |        | 263   |             |   |        | 328   |  
|                                               |                                                                                                               |                              |        |       |             |  
|                                               |                                                                                                               |                              | 1,317  |       |             |   | 1,096  |      
|                                               |                                                                                                               |                              |        |       |             |  
|Other Liabilities                              |                                                                                                               |                              |        |       |             |   |        |      
|                                               | Deferred income taxes                                                                                         |                              |        | 1,776 |             |   |        | 1,501 |  
|                                               | Asset retirement obligations (Note 2)                                                                         |                              |        | 808   |             |   |        |      |  
|                                               | Unamortized investment tax credit                                                                             |                              |        | 138   |             |   |        | 146   |  
|                                               | Nuclear decommissioning (Note 2)                                                                              |                              |        | 61    |             |   |        | 416   |  
|                                               | Accrued pension liability                                                                                     |                              |        | 378   |             |   |        | 561   |  
|                                               | Other                                                                                                         |                              |        | 563   |             |   |        | 484   |  
|                                               |                                                                                                               |                              |        |       |             |  
|                                               |                                                                                                               |                              | 3,724  |       |             |   | 3,108  |      
|                                               |                                                                                                               |                              |        |       |             |  
|Long-Term Debt                                 |                                                                                                               |                              |        |       |             |   |        |      
|                                               | Mortgage bonds, notes and other                                                                               |                              |        | 3,102 |             |   |        | 3,270 |  
|                                               | Securitization bonds                                                                                          |                              |        | 1,496 |             |   |        | 1,585 |  
|                                               | Capital lease obligations                                                                                     |                              |        | 77    |             |   |        | 80    |  
|                                               |                                                                                                               |                              |        |       |             |  
|                                               |                                                                                                               |                              | 4,675  |       |             |   | 4,935  |      
|                                               |                                                                                                               |                              |        |       |             |  
|Contingencies (Notes 4 and 7)                  |                                                                                                               |                              |        |       |             |   |        |      
|                                              
|Shareholders Equity                           |                                                                                                               |                              |        |       |             |   |        |      
|                                               | Common stock, $10 par value, 400,000,000 shares
    authorized, and 134,287,832 shares issued and outstanding |                              |        | 1,343 |             |   |        | 1,343 |  
|                                               | Premium on common stock                                                                                       |                              |        | 677   |             |   |        | 507   |  
|                                               | Common stock expense                                                                                          |                              |        | (44   | )           |   |        | (44   | )
|                                               | Retained earnings                                                                                             |                              |        | 654   |             |   |        | 735   |  
|                                               | Accumulated other comprehensive loss                                                                          |                              |        |      |             |   |        | (419  | )
|                                               |                                                                                                               |                              |        |       |             |  
|                                               |                                                                                                               |                              | 2,630  |       |             |   | 2,122  |      
|                                               |                                                                                                               |                              |        |       |             |  
|Total Liabilities and Shareholders
    Equity |                                                                                                               | $                            | 12,346 |       |             | $ | 11,261 |      
|                                               |                                                                                                               |                              |        |       |             |  

See Notes to Consolidated Financial Statements
(Unaudited)

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THE DETROIT EDISON COMPANY






CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)


|                                                         |                                                                                |                                                                                       |     |      |      |   |      |      |      |  
|-------------------------------------------------------- | ------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------- | --- | ---- | ---- | - | ---- | ---- | ---- | -
|                                                         |                                                                                |                                                                                      
|                                                         |                                                                                | Nine Months                                                                           |    
|                                                         |                                                                                | Ended                                                                                 |    
|                                                         |                                                                                | September 30                                                                          |    
|                                                         |                                                                                |                                                                                       |    
|                                                         |                                                                                | 2003                                                                                  |     |      | 2002 |  
|                                                         |                                                                                |                                                                                       |     |      |      |  
|                                                         |                                                                                |                                                                                      
|                                                         |                                                                                | (In millions)                                                                         |    
|Operating Activities                                     |                                                                                |                                                                                       |     |      |      |   |      |     
|                                                         | Net Income                                                                     |                                                                                       | $   | 141  |      |   | $    | 272  |     
|                                                         | Adjustments to reconcile net income to net cash
    from operating activities: |                                                                                       |     |      |      |   |      |      |     
|                                                         |                                                                                | Depreciation and amortization                                                         |     |      | 386  |   |      |      | 449  |  
|                                                         |                                                                                | Deferred income taxes                                                                 |     |      | 53   |   |      |      | 15   |  
|                                                         |                                                                                | Loss on sale of assets                                                                |     |      | 3    |   |      |      |     |  
|                                                         |                                                                                | Cumulative effect of accounting change                                                |     |      | 6    |   |      |      |     |  
|                                                         |                                                                                | Changes in assets and liabilities, exclusive of
    changes shown separately (Note 1) |     |      | (318 | ) |      |      | (180 | )
|                                                         |                                                                                |                                                                                       |     |      |      |  
|                                                         |                                                                                | Net cash from operating activities                                                    |     |      | 271  |   |      |      | 556  |  
|                                                         |                                                                                |                                                                                       |     |      |      |  
|Investing Activities                                     |                                                                                |                                                                                       |     |      |      |   |      |     
|                                                         | Plant and equipment expenditures                                               |                                                                                       |     | (438 | )    |   |      | (478 | )   
|                                                         | Proceeds from sales of assets                                                  |                                                                                       |     | 2    |      |   |      |     |     
|                                                         | Restricted cash for debt redemptions                                           |                                                                                       |     | 93   |      |   |      | 32   |     
|                                                         | Other investments                                                              |                                                                                       |     | (16  | )    |   |      | (62  | )   
|                                                         |                                                                                |                                                                                       |     |      |      |  
|                                                         |                                                                                | Net cash used for investing activities                                                |     |      | (359 | ) |      |      | (508 | )
|                                                         |                                                                                |                                                                                       |     |      |      |  
|Financing Activities                                     |                                                                                |                                                                                       |     |      |      |   |      |     
|                                                         | Issuance of long-term debt                                                     |                                                                                       |     | 49   |      |   |      |     |     
|                                                         | Redemption of long-term debt                                                   |                                                                                       |     | (502 | )    |   |      | (240 | )   
|                                                         | Short-term borrowings, net                                                     |                                                                                       |     | 203  |      |   |      | 224  |     
|                                                         | Notes payable to affiliates                                                    |                                                                                       |     | 378  |      |   |      |     |     
|                                                         | Capital contribution by parent company                                         |                                                                                       |     | 170  |      |   |      |     |     
|                                                         | Dividends on common stock                                                      |                                                                                       |     | (222 | )    |   |      | (222 | )   
|                                                         | Other                                                                          |                                                                                       |     | (5   | )    |   |      | 2    |     
|                                                         |                                                                                |                                                                                       |     |      |      |  
|                                                         |                                                                                | Net cash from (used for) financing activities                                         |     |      | 71   |   |      |      | (236 | )
|                                                         |                                                                                |                                                                                       |     |      |      |  
|Net Decrease in Cash and Cash
    Equivalents            |                                                                                |                                                                                       | (17 | )    |      |   | (188 | )   
|Cash and Cash Equivalents at Beginning of the
    Period |                                                                                |                                                                                       | 36  |      |      |   | 215  |     
|                                                         |                                                                                |                                                                                       |     |      |      |  
|Cash and Cash Equivalents at End of the
    Period       |                                                                                | $                                                                                     | 19  |      |      | $ | 27   |     
|                                                         |                                                                                |                                                                                       |     |      |      |  

See Notes to Consolidated Financial Statements
(Unaudited)

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THE DETROIT EDISON COMPANY

CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS EQUITY


AND COMPREHENSIVE INCOME (UNAUDITED)


|                                                               |  |                                            |         |         |        |   |       |        |  |   |             |  |       |               |     |   |      |   |      |       |  |   |      |   |  |   |       |  
|-------------------------------------------------------------- |  | ------------------------------------------ | ------- | ------- | ------ | - | ----- | ------ |  | - | ----------- |  | ----- | ------------- | --- | - | ---- | - | ---- | ----- |  | - | ---- | - |  | - | ----- | -
|                                                               |  |                                            |         | Premium |        |   |       |        |  |   | Accumulated |  |       |              
|                                                               |  | Common Stock                               |         |         | on     |   |       | Common |  |   |             |  | Other |               |     |  
|                                                               |  |                                            |         |         | Common |   |       | Stock  |  |   | Retained    |  |       | Comprehensive |     |   |     
|                                                               |  | Shares                                     |         |         | Amount |   |       | Stock  |  |   | Expense     |  |       | Earnings      |     |   | Loss |   |      | Total | 
|                                                               |  |                                            |         |         |        |   |       |        |  |   |             |  |       |               |     |   |      |   |      |       | 
|                                                               |  |                                           
|                                                               |  | (Dollars in millions, shares in thousands) |        
|Balance, December 31, 2002                                     |  |                                            | 134,288 |         |        | $ | 1,343 |        |  | $ | 507         |  |       | $             | (44 | ) |      | $ | 735  |       |  | $ | (419 | ) |  | $ | 2,122 |  
|                                                               |  |                                            |         |         |        |   |       |        |  |   |             |  |       |               |     |   |      |   |      |       | 
|Net income                                                     |  |                                            |        |         |        |   |      |        |  |   |            |  |       |               |    |   |      |   | 141  |       |  |   |     |   |  |   | 141   |  
|Dividends declared on common stock                             |  |                                            |        |         |        |   |      |        |  |   |            |  |       |               |    |   |      |   | (222 | )     |  |   |     |   |  |   | (222  | )
|Net change in unrealized losses on derivatives,
    net of tax |  |                                            |        |         |        |   |      |        |  |   |            |  |       |               |    |   |      |   |     |       |  |   | 2    |   |  |   | 2     |  
|Pension obligation (Note 4)                                    |  |                                            |        |         |        |   |      |        |  |   |            |  |       |               |    |   |      |   |     |       |  |   | 417  |   |  |   | 417   |  
|Capital contribution by parent company                         |  |                                            |        |         |        |   |      |        |  |   | 170         |  |       |               |    |   |      |   |     |       |  |   |     |   |  |   | 170   |  
|                                                               |  |                                            |         |         |        |   |       |        |  |   |             |  |       |               |     |   |      |   |      |       | 
|Balance, September 30, 2003                                    |  |                                            | 134,288 |         |        | $ | 1,343 |        |  | $ | 677         |  |       | $             | (44 | ) |      | $ | 654  |       |  | $ |     |   |  | $ | 2,630 |  
|                                                               |  |                                            |         |         |        |   |       |        |  |   |             |  |       |               |     |   |      |   |      |       | 

The following table displays comprehensive income
for the nine-month periods in 2003 and 2002:

|                                        |                                                                                         |               |     |     |      |   |     |    |  
|--------------------------------------- | --------------------------------------------------------------------------------------- | ------------- | --- | --- | ---- | - | --- | -- | -
|                                        |                                                                                         | 2003          |     |     | 2002 |  
|                                        |                                                                                         |               |     |     |      |  
|                                        |                                                                                         |              
|                                        |                                                                                         | (In millions) |    
|Net income                              |                                                                                         | $             | 141 |     |      | $ | 272 |   
|                                        |                                                                                         |               |     |     |      |  
|Other comprehensive income, net of tax: |                                                                                         |               |     |     |      |   |     |   
|                                        | Net unrealized income on derivatives:                                                   |               |     |     |      |   |     |    |  
|                                        | Gains (losses) arising during the period,
    net of taxes of $3 and $(3), respectively |               |     | 8   |      |   |     | (5 | )
|                                        | Amounts reclassified to earnings, net of taxes of
    $(3) and $16, respectively        |               |     | (6  | )    |   |     | 25 |  
|                                        |                                                                                         |               |     |     |      |  
|                                        |                                                                                         |               | 2   |     |      |   | 20  |   
|                                        | Pension obligation, net of taxes of $224 (Note 4)                                       |               |     | 417 |      |   |     |   |  
|                                        |                                                                                         |               |     |     |      |  
|Comprehensive income                    |                                                                                         | $             | 560 |     |      | $ | 292 |   
|                                        |                                                                                         |               |     |     |      |  

See Notes to Consolidated Financial Statements
(Unaudited)

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##### Table of Contents



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 2002 Annual Report to the Securities
and Exchange Commission 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 us to use estimates and assumptions that
impact the reported amounts of assets, liabilities, revenues and
expenses, and the disclosure of contingent assets and
liabilities. Actual results may differ from our estimates.

The consolidated financial statements are
unaudited, but in our opinion include all adjustments necessary
for a fair statement of the results for the interim periods.
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.

We reclassified some prior year balances to match
the current years presentation.

Consolidated
Statement of Cash Flows

We consider investments purchased with a maturity
of three months or less to be cash equivalents. Cash
contractually designated for debt service is classified as
restricted cash. The components of changes in assets and
liabilities follows.

|                                                                             |                                        |               |      |      |      |   |      |     |  
|---------------------------------------------------------------------------- | -------------------------------------- | ------------- | ---- | ---- | ---- | - | ---- | --- | -
|                                                                             |                                        |              
|                                                                             |                                        | Nine Months   |     
|                                                                             |                                        | Ended         |     
|                                                                             |                                        | September 30  |     
|                                                                             |                                        |               |     
|                                                                             |                                        | 2003          |      |      | 2002 |  
|                                                                             |                                        |               |      |      |      |  
|                                                                             |                                        |              
|                                                                             |                                        | (In millions) |     
|Changes in Assets and Liabilities, Exclusive
    of Changes Shown Separately |                                        |               |      |      |      |   |      |    
|                                                                             | Accounts receivable, net               |               | $    | (113 | )    |   | $    | (57 | )
|                                                                             | Accrued unbilled receivables           |               |      | 20   |      |   |      | (39 | )
|                                                                             | Inventories                            |               |      | 12   |      |   |      | 25  |  
|                                                                             | Accrued pensions                       |               |      | 121  |      |   |      | 29  |  
|                                                                             | Accounts payable                       |               |      | (57  | )    |   |      | (51 | )
|                                                                             | Income taxes payable                   |               |      | (10  | )    |   |      | 66  |  
|                                                                             | General taxes                          |               |      | (10  | )    |   |      | (28 | )
|                                                                             | Risk management and trading activities |               |      | (7   | )    |   |      | (32 | )
|                                                                             | Pension contributions                  |               |      | (222 | )    |   |      | (35 | )
|                                                                             | Other                                  |               |      | (52  | )    |   |      | (58 | )
|                                                                             |                                        |               |      |      |      |  
|                                                                             |                                        | $             | (318 | )    |      | $ | (180 | )  
|                                                                             |                                        |               |      |      |      |  

Other cash activities for the nine months ended
September 30 were as follows:

|                                    |                                                |               |   |     |      |  |   |     | 
|----------------------------------- | ---------------------------------------------- | ------------- | - | --- | ---- |  | - | --- | 
|                                    |                                                |              
|                                    |                                                | Nine Months   |  
|                                    |                                                | Ended         |  
|                                    |                                                | September 30  |  
|                                    |                                                |               |  
|                                    |                                                | 2003          |   |     | 2002 | 
|                                    |                                                |               |   |     |      | 
|                                    |                                                |              
|                                    |                                                | (In millions) |  
|Supplementary Cash Flow Information |                                                |               |   |     |      |  |   |    
|                                    | Interest paid (excluding interest capitalized) |               | $ | 246 |      |  | $ | 271 | 
|                                    | Income taxes paid                              |               |   | 34  |      |  |   | 55  | 

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##### Table of Contents



Note 2  New Accounting
Pronouncements

Asset Retirement Obligations On January 1, 2003, we adopted
SFAS No. 143, Accounting for Asset Retirement
Obligations, which requires that the fair value of an
asset retirement obligation be recognized in the period in which
it is incurred. It applies to legal obligations associated with
the retirement of long-lived assets resulting from the
acquisition, construction, development and (or) the normal
operation of a long-lived asset. When a new liability is
recorded, an entity will capitalize the costs of the liability
by increasing the carrying amount of the related long-lived
asset. The liability is accreted to its present value each
period, and the capitalized cost is depreciated over the useful
life of the related asset. Upon settlement of the liability, an
entity settles the obligation for its recorded amount or incurs
a gain or loss upon settlement.

We have identified a legal retirement obligation
for the decommissioning costs for our Fermi 1 and
Fermi 2 nuclear plants. We believe that adoption of SFAS
No. 143 results primarily in timing differences in the
recognition of legal asset retirement costs that we are
currently recovering in rates and will be deferring such
differences under SFAS No. 71, Accounting for the
Effects of Certain Types of Regulation.

As a result of adopting SFAS No. 143 on
January 1, 2003, we recorded a plant asset of
$278 million with offsetting accumulated depreciation of
$103 million, a retirement obligation liability of
$771 million and reversed previously recognized obligations
of $366 million, principally nuclear decommissioning
liabilities. We also recorded a cumulative effect amount related
to regulated operations as a regulatory asset of
$221 million, and a cumulative effect charge against
earnings of $6 million for 2003.

If a reasonable estimate of fair value cannot be
made in the period the asset retirement obligation is incurred,
such as assets with an indeterminate life, the liability is to
be recognized when a reasonable estimate of fair value can be
made. Generally, distribution assets have an indeterminate life,
retirement cash flows cannot be determined and there is a low
probability of retirement, therefore no liability has been
recorded for these assets.

The impact on the third quarter and nine-month
period of 2003 of SFAS No. 143 and the pro-forma effect for
the comparable 2002 periods as if SFAS No. 143 had been
adopted at January 1, 2002 are immaterial.

A reconciliation of the asset retirement
obligation for the 2003 nine-month period follows:

|                                                       |  |               |     |  
|------------------------------------------------------ |  | ------------- | --- | -
|                                                       |  | (In millions) |    
|                                                       |  |               |    
|Asset retirement obligations at January 1,
    2003    |  | $             | 771 |  
|Accretion                                              |  |               | 39  |  
|Liabilities settled                                    |  |               | (2  | )
|                                                       |  |               |    
|Asset retirement obligations at
    September 30, 2003 |  | $             | 808 |  
|                                                       |  |               |    

SFAS No. 143 also requires the
quantification of the estimated cost of removal obligations
arising from other than legal obligations, which have been
accrued through depreciation charges. At January 1, 2003,
we had approximately $300 million of previously accrued
asset removal costs related to our regulated operations, for
other than legal obligations, included in accumulated
depreciation.

Note 3  Disposition of Steam Heating
Business

In January 2003, we sold Detroit Edisons
steam heating business to Thermal Ventures II, LLP. This
disposition is consistent with DTE Energys strategy to
divest non-strategic assets. Due to the continuing involvement
of Detroit Edison in the steam heating business, including the
commitment to purchase $176 million in steam for resale
through 2008, fund certain capital improvements and guarantee
the buyers credit facility, we recorded a net of tax loss
of $14 million in the first quarter of 2003. As a result of
Detroit Edisons continuing involvement, this transaction
is not considered a sale for accounting purposes. The steam
heating business had assets of $6 million at
December 31, 2002, and net losses of $12 million in
2002, net income of $3 million in 2001 and a net loss of
$18 million in 2000.

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##### Table of Contents



Note 4  Regulatory
Matters



| |                                    
| | -----------------------------------
| | Electric Transitional Rate
    Plan

On June 20, 2003, Detroit Edison filed an
application for a change in retail electric rates, resumption of
the Power Supply Cost Recovery (PSCR) mechanism, and
recovery of net stranded costs with the MPSC. Detroit Edison is
specifically requesting authority to increase rates on an
interim basis by $274 million annually to all customers not
subject to a rate cap. Public Act 141 (PA141) became
effective in June 2000 and contains provisions freezing rates
through 2003 and preventing rate increases for residential
customers through 2005 and for small business customers through
2004. Detroit Edison has requested the MPSC act on our interim
request in order to be effective January 1, 2004.
Concurrent with the order for interim rate relief, Detroit
Edison requested reinstatement of the PSCR mechanism. The PSCR
mechanism allowed Detroit Edison to recover through rates its
fuel, fuel-related and purchased power electric expenses and was
suspended under PA 141. Detroit Edison is also proposing
that base rates for the customer classes still subject to rate
caps in 2004 and 2005 remain frozen and not subject to the PSCR
mechanism. Also, the interim request seeks a five-year surcharge
from both full service and electric Customer Choice customers to
recover certain deferred regulatory asset balances including
electric Customer Choice program implementation costs, return on
and of clean air investments made prior to inclusion in rates
and net stranded costs for years prior to 2004. This surcharge
would be phased in by customer class between 2004 and 2006 as
rate caps expire, and would total $109 million annually in
2006.

The application also is requesting a base rate
increase for both full service and electric Customer Choice
customers totaling $416 million annually (approximately 12%
increase) in 2006, after the expiration of all customer rate
caps. Detroit Edison is proposing that the $416 million
increase be allocated between full service customers
($265 million) and electric Customer Choice customers
($151 million). The filing also requests a permanent
capital structure based on 50% debt and 50% equity, and a
proposed return on equity (ROE) of 11.5%. Detroit Edison is also
proposing a symmetrical ROE sharing mechanism, which will apply
to full service and electric Customer Choice customers whose
rates are no longer capped under PA 141. The sharing
proposal would provide that shareholders retain all earnings
within a 1% band above and below the authorized ROE. If the
actual ROE falls outside of the band, customers would share
between 20% and 80% of the excess or shortfall of earnings,
depending on actual ROE. The ROE sharing mechanism would be
effective for the calendar year in which a final order is
received in this case.

The MPSCs current schedule regarding this
application requires the MPSC Staff report to be filed in
December 2003, with an interim order expected in February or
March of 2004.

On August 18, 2003, the MPSC issued an order
directing interested parties to file briefs by October 17,
2003, and reply briefs by October 31, 2003 in response to
the Companys request that its PSCR clause remain suspended
and that implementation of a new PSCR factor not begin until the
date of the MPSC order authorizing adequate and compensatory
relief. The MPSC has recognized that this issue needs to be
addressed before January 1, 2004. The MPSC Staff and
interveners contend that the PSCR clause should restart
January 1, 2004 and apply to both capped and uncapped rate
classes. They do not support the mitigation adjustment proposed
by Detroit Edison. The differences between Detroit Edison and
the opposing parties positions average approximately
$10 million per month in PSCR revenue.



| |               
| | --------------
| | Blackout Costs

On August 14, 2003, failures in the regional
power transmission grid caused nine of Detroit Edisons
power plants to trip offline, which left virtually all of its
2.1 million customers without power. We estimate that
amounts expensed in the 2003 third quarter related to the
blackout, excluding lost margins, were approximately
$25 million pre-tax ($16 million net of tax). On
October 24, 2003, Detroit Edison filed an accounting
application with the MPSC requesting authority to defer outage
related costs associated with the blackout until a future rate
proceeding to recover outage costs from customers in a manner
consistent with the provisions of PA 141. We anticipate an
accounting order in the fourth quarter of 2003 or the first
quarter of 2004, but we cannot predict the ultimate outcome or
timing of this proceeding.

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| |                                    
| | -----------------------------------
| | Electric Industry
    Restructuring

Electric Rates, Customer Choice and Stranded
Costs PA 141 provided
Detroit Edison with the right to recover net stranded costs,
codified and established January 1, 2002 as the date for
full implementation of the MPSCs existing electric
Customer Choice program, and required the MPSC to reduce
residential electric rates by 5%. At that time, Public
Act 142 (PA 142) also became effective. PA 142
provided for the recovery through securitization of
qualified costs which consist of an electric
utilitys regulatory assets, plus various costs associated
with, or resulting from, the establishment of a competitive
electric market and the issuance of securitization bonds.

Acting pursuant to PA 141, in an order
issued in June 2000, the MPSC reduced Detroit Edisons
residential electric rates by 5% and imposed a rate freeze for
all classes of customers through 2003. In April 2001, commercial
and industrial rates were lowered by 5% as a result of savings
derived from the issuance of securitization bonds in March 2001,
as subsequently discussed.

Certain costs may be deferred and recovered once
rates can be increased. This rate cap may be lifted when certain
market test provisions are met, specifically, when an electric
utility has no more than 30% of generation capacity in its
relevant market, with consideration for capacity needed to meet
a utilitys responsibility to serve its retail customers.
Statewide, multi-utility transmission system improvements also
are required. In May 2003, Detroit Edison submitted filings with
the MPSC regarding its compliance with the provisions of PA 141
related to market test and transmission system improvements. If
the MPSC finds that Detroit Edison has complied with the
PA 141 provisions, the rate caps established under
PA 141 will not continue after the dates specified in the
legislation. Detroit Edison has entered into a settlement
agreement in regards to the market power test provisions of
PA 141. All intervening parties have signed the settlement
agreement. Detroit Edison is awaiting MPSC approval, which is
expected by year-end 2003.

As required by PA 141, the MPSC conducted a
proceeding to develop a methodology for calculating the net
stranded costs associated with electric Customer Choice. In a
December 2001 order, the MPSC determined that Detroit Edison
could recover net stranded costs associated with the fixed cost
component of its electric generation operations. Specifically,
there would be an annual filing with the MPSC comparing the
receipt of revenues associated with the fixed cost component of
its generation services to the revenue requirement for the fixed
cost component of those services, inclusive of an allowance for
the cost of capital. Any resulting shortfall in recovery, net of
mitigation, would be considered a net stranded cost. The MPSC,
in its December 2001 order, also determined that Detroit Edison
had no net stranded costs in 2000 and consequently established a
zero net stranded cost transition charge for billing purposes in
2002. The MPSC authorized Detroit Edison to establish a
regulatory asset to defer recovery of its incurred stranded
costs, subject to review in a subsequent annual net stranded
cost proceeding. The MPSC also determined that Detroit Edison
should provide a full and offsetting credit for the
securitization and tax charges applied to electric Customer
Choice bills in 2002. In addition, the MPSC ordered an
additional credit on bills equal to the 5% rate reduction
realized by full service customers. Both credits were to be
funded from savings derived from securitization. The December
2001 order, coupled with lower wholesale power prices in 2002,
has encouraged additional customer participation in the electric
Customer Choice program and has resulted in the loss of margins
attributable to generation services. In May 2002, the MPSC
denied Detroit Edisons request for rehearing and
clarification of the December 2001 order. In June 2002, Detroit
Edison filed an appeal of the MPSC order at the Michigan Court
of Appeals, challenging the legality of specific aspects of the
MPSC order. The Court of Appeals has not yet issued a decision
on this appeal.

In May 2002, Detroit Edison submitted its 2001
net stranded cost filing with the MPSC. The filing provided
refinements to the MPSC Staffs calculation of net stranded
costs that was adopted in the December 2001 order, sought more
timely recovery of net stranded costs, and addressed issues
raised by the continuation of securitization offsets and rate
reduction equalization credits. The filing supported that
Detroit Edison had no net stranded costs in 2000 and
$13 million of recoverable net stranded costs attributable
to electric Customer Choice in 2001. On July 31, 2003, the
MPSC issued an order finding that Detroit Edison had no net
stranded costs in 2000 and 2001 and established a zero net
stranded cost transition charge for billing purposes in 2003. In
addition, this order clarified the inclusion of revenue
discounts granted customers under special

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##### Table of Contents



contracts in the net stranded cost calculation,
but deferred finalizing the methods for determining net stranded
costs. In the fourth quarter of 2002, Detroit Edison recorded a
regulatory asset of $21 million, of which $10 million
represented an estimate of net stranded costs during 2001, and
the remaining balance represented the deferral of environmental
expenditures recoverable under PA 141. The effect of
recording the regulatory asset increased 2002 earnings by
$14 million, net of tax. During the 2003 nine-month period,
Detroit Edison recorded a regulatory asset of $54 million,
of which $30 million represented an adjustment for net
stranded costs for 2003, and the remainder representing the
deferral of environmental expenditures. The effect for the 2003
nine-month period was an increase in earnings of
$35 million, net of tax. As a result of the MPSC
July 31, 2003, order and the related clarifying language,
we recalculated net stranded costs for 2002 and 2003. Our
revised and ongoing calculations conclude that the
$30 million of net stranded costs recorded as of
September 30, 2003 is appropriate. Detroit Edison has filed
a petition for rehearing of the July 31, 2003 order.


Low-Income Energy Assistance
Credit On October 20,
2003, Detroit Edison filed an application with the MPSC to
implement a low-income energy assistance credit for residential
electric customers. The credit is expected to assist many
low-income customers who are experiencing difficulties in paying
their electric bills due to poor economic conditions in Detroit
Edisons service area. Detroit Edison has proposed to fund
the low-income energy assistance credit by utilizing excess
securitization savings currently being used to provide credits
to electric Choice Customers.



| |                          
| | -------------------------
| | Minimum Pension Liability

In December 2002, we recorded an additional
minimum pension liability as required under SFAS No. 87,
Employers Accounting for Pensions, with
offsetting amounts to an intangible asset and other
comprehensive income. During the first quarter of 2003, the MPSC
Staff provided an opinion that the MPSCs traditional rate
setting process allowed for the recovery of pension costs as
measured by SFAS No. 87. Based on the MPSC Staff opinion,
management believes that it will be allowed to recover in rates
the minimum pension liability associated with its regulated
operations. Accordingly, in the first quarter of 2003 we
reclassified approximately $641 million ($417 million
net of tax) of other comprehensive loss associated with the
minimum pension liability to a regulatory asset.

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

Note 5  Long-Term
Debt

In August 2003, Detroit Edison issued
$49 million of 5.5% tax-exempt bonds due in June 2030.
The proceeds were used to redeem $49 million of
6.55% tax-exempt bonds due 2024.

Note 6  Short Term Credit
Arrangements and Borrowings

On October 24, 2003, Detroit Edison entered
into a $137.5 million, 364-day revolving credit facility
and a $137.5 million, three-year revolving credit facility
with a syndicate of banks. These credit facilities may be
utilized for general corporate borrowings, but primarily are
intended to provide liquidity support for Detroit Edisons
commercial paper program up to $200 million. These
agreements require Detroit Edison to maintain a debt to
capitalization ratio of no more than 0.65 to 1 and an
earnings before interest, taxes, depreciation and
amortization (EBITDA) to interest ratio of no less than 2
to 1. Detroit Edison is currently in compliance with these
financial covenants.

Note 7 
Contingencies

We are involved in certain legal (including
commercial matters), 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, environmental reviews and investigations, and pending
judicial matters. We cannot predict the final disposition of
such proceedings. We regularly review legal matters and record
provisions for claims that are considered probable of loss. The

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##### Table of Contents



resolution of pending proceedings is not expected
to have a material effect on our financial statements in the
period they are resolved.


See Note 4 for a discussion of contingencies
related to Regulatory Matters.

Note 8  Segment
Information

Detroit Edison has the following
two reportable segments. Inter-segment revenues are not
material.

|                                       |       |               |       |    |              |   |       |      |  |   |       |     |  |   |       |     | 
|-------------------------------------- | ----- | ------------- | ----- | -- | ------------ | - | ----- | ---- |  | - | ----- | --- |  | - | ----- | --- | 
|                                       |       |               |       |   
|                                       |       | Three Months  |       |    | Nine Months  |  
|                                       |       | Ended         |       |    | Ended        |  
|                                       |       | September 30  |       |    | September 30 |  
|                                       |       |               |       |    |              |  
|                                       |       | 2003          |       |    | 2002         |   |       | 2003 |  |   | 2002  |    
|                                       |       |               |       |    |              |   |       |      |  |   |       |    
|                                       |       |              
|                                       |       | (In millions) |      
|Operating Revenues                     |       |               |       |    |              |   |       |      |  |   |       |     |  |   |       |    
|Energy Resources                       |       | $             | 669   |    |              | $ | 806   |      |  | $ | 1,874 |     |  | $ | 2,082 |    
|Energy Distribution                    |       |               | 348   |    |              |   | 394   |      |  |   | 950   |     |  |   | 1,010 |    
|                                       |       |               |       |    |              |   |       |      |  |   |       |    
|                                       |       | $             | 1,017 |    |              | $ | 1,200 |      |  | $ | 2,824 |     |  | $ | 3,092 |    
|                                       |       |               |       |    |              |   |       |      |  |   |       |    
|Net Income                             |       |               |       |    |              |   |       |      |  |   |       |     |  |   |       |    
|Energy Resources                       |       | $             | 61    |    |              | $ | 54    |      |  | $ | 132   |     |  | $ | 175   |    
|Energy Distribution                    |       |               | 35    |    |              |   | 51    |      |  |   | 15    |     |  |   | 97    |    
|Cumulative Effect of Accounting Change |       |               |      |    |              |   |      |      |  |   | (6    | )   |  |   |      |    
|                                       |       |               |       |    |              |   |       |      |  |   |       |    
|                                       | Total |               | $     | 96 |              |   | $     | 105  |  |   | $     | 141 |  |   | $     | 272 | 
|                                       |       |               |       |    |              |   |       |      |  |   |       |    

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INDEPENDENT ACCOUNTANTS REPORT


To the Board of Directors and Shareholder of

The Detroit Edison Company


We have reviewed the accompanying condensed
consolidated statement of financial position of The Detroit
Edison Company and subsidiaries as of September 30, 2003,
the related condensed consolidated statement of operations for
the three-month and nine-month periods ended September 30,
2003 and 2002, the condensed consolidated statement of cash
flows for the nine-month periods ended September 30, 2003
and 2002, and the condensed consolidated statement of changes in
shareholders equity and comprehensive income for the
nine-month period ended September 30, 2003 and nine-month
periods ended September 30, 2003 and 2002, respectively.
These interim financial statements are the responsibility of The
Detroit Edison Companys management.

We conducted our reviews in accordance with
standards established by the American Institute of Certified
Public Accountants. A review of interim financial information
consists principally of applying analytical procedures and
making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with auditing standards generally
accepted in the United States of America, the objective of which
is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such
an opinion.

Based on our reviews, we are not aware of any
material modifications that should be made to such condensed
consolidated interim financial statements for them to be in
conformity with accounting principles generally accepted in the
United States of America.

We have previously audited, in accordance with
auditing standards generally accepted in the United States of
America, the consolidated statement of financial position of The
Detroit Edison Company and subsidiaries as of December 31,
2002, and the related consolidated statements of operations,
cash flows and changes in shareholders equity and
comprehensive income for the year then ended (not presented
herein); and in our report dated February 11, 2003, we
expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the
accompanying condensed consolidated statement of financial
position as of December 31, 2002 is fairly stated, in all
material respects, in relation to the consolidated statement of
financial position from which it has been derived.

/S/ DELOITTE & TOUCHE LLP

Detroit, Michigan

November 7, 2003


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OTHER INFORMATION


Legal Proceedings

We are involved in certain legal (including
commercial matters), administrative and environmental
proceedings before various courts, arbitration panels and
governmental agencies concerning claims arising in the ordinary
course of business. These proceedings include contract disputes,
environmental reviews and investigations, and pending judicial
matters. We cannot predict the final disposition of such
proceedings. We regularly review legal matters and record
provisions for claims that are considered probable of loss. The
resolution of pending proceedings is not expected to have a
material effect on our financial statements in the period they
are resolved. For additional discussion on legal matters, see
the Notes to the Consolidated Financial Statements.

Exhibits and Reports on Form 8-K

(a) Exhibits

|        |            |  |             |                                                                                                                                                                                                                                                                           
|------- | ---------- |  | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |            |  |            
|Number  |            |  | Description
|        |            |  |            
|        | Filed:     |  |             |                                                                                                                                                                                                                                                                           
|        | 4-234      |  |             | Insurance Agreement dated as of August 28,
    2003, among XL Capital Assurance Inc., The Detroit Edison
    Company, and Bank One Trust Company, National Association                                                                                                    
|        | 4-235      |  |             | Indenture dated as of August 1, 2003,
    Supplementing the Mortgage and Deed of Trust Dated as of
    October 1, 1924, providing for (a) General and
    Refunding Mortgage Bonds, 2003 Series A and
    (b) Recording and Filing Data.                                  
|        | 4-236      |  |             | Twelfth Supplemental Indenture dated as of
    August 1, 2003, Supplementing the Collateral Trust
    Indenture dated as of June 30, 1993, providing for
    5 1/2% Senior Notes Due 2030                                                                                 
|        | 15-25      |  |             | Awareness Letter of Deloitte & Touche LLP                                                                                                                                                                                                                                 
|        | 31-3       |  |             | Chief Executive Officer Section 302
    Form 10-Q Certification                                                                                                                                                                                                           
|        | 31-4       |  |             | Chief Financial Officer Section 302
    Form 10-Q Certification                                                                                                                                                                                                           
|        | 99-13      |  |             | 364-Day Credit Agreement dated as of
    October 24, 2003 among The Detroit Edison Company, The
    Banks, Financial Institutions and Other Institutional Lenders
    and Barclays Bank PLC and Banc One Capital Markets, Inc., and
    Citigroup Global Markets Inc.     
|        | 99-14      |  |             | Three-Year Credit Agreement dated as of
    October 24, 2003 among The Detroit Edison Company, The
    Banks, Financial Institutions, and Other Institutional Lenders,
    and Barclays Bank PLC and Banc One Capital Markets, Inc., and
    Citigroup Global Markets Inc.
|        | Furnished: |  |             |                                                                                                                                                                                                                                                                           
|        | 32-3       |  |             | Chief Executive Officer Section 906
    Certification of Periodic Report                                                                                                                                                                                                  
|        | 32-4       |  |             | Chief Financial Officer Section 906
    Certification of Periodic Report                                                                                                                                                                                                  

(b) Reports on
Form 8-K

During the quarterly period ended
September 30, 2003, we filed Current Reports on
Form 8-K covering matters, as follows:

Item 7. Exhibits and Item 9.
Regulation FD Disclosure  Information Provided
Under Item 12. (Results of Operations and Financial
Condition) filed and dated July 28, 2003;

Item 5. Other Events and Item 7.
Financial Statements and Exhibits and Item 9.
Regulation FD Disclosure  Information Provided
Under Item 12. (Results of Operations and Financial
Condition) filed and dated August 1, 2003;

Item 7. Exhibits and Item 12.
Results of Operations and Financial Conditions filed and dated
August 14, 2003; and

Item 5. Other Events and Item 7.
Exhibits filed and dated August 27, 2003.

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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             
|
| | /S/ DANIEL G. BRUDZYNSKI               
| | _______________________________________
| | DANIEL G. BRUDZYNSKI                   
| | Chief Accounting Officer,              
| | Vice President and Controller          

Date: November 7, 2003

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10-Q EXHIBIT INDEX


|           |       |  |             |                                                                                                                                                                                                                                                                           
|---------- | ----- |  | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit    |       |  |            
|Number     |       |  | Description
|           |       |  |            
|Filed:    
|           | 4-234 |  |             | Insurance Agreement dated as of August 28,
    2003, among XL Capital Assurance Inc., The Detroit Edison
    Company, and Bank One Trust Company, National Association                                                                                                    
|           | 4-235 |  |             | Indenture dated as of August 1, 2003,
    Supplementing the Mortgage and Deed of Trust Dated as of
    October 1, 1924, providing for (a) General and
    Refunding Mortgage Bonds, 2003 Series A and
    (b) Recording and Filing Data.                                  
|           | 4-236 |  |             | Twelfth Supplemental Indenture dated as of
    August 1, 2003, Supplementing the Collateral Trust
    Indenture dated as of June 30, 1993, providing for
    5 1/2% Senior Notes Due 2030                                                                                 
|           | 15-25 |  |             | Awareness Letter of Deloitte & Touche LLP                                                                                                                                                                                                                                 
|           | 31-3  |  |             | Chief Executive Officer Section 302
    Form 10-Q Certification                                                                                                                                                                                                           
|           | 31-4  |  |             | Chief Financial Officer Section 302
    Form 10-Q Certification                                                                                                                                                                                                           
|           | 99-13 |  |             | 364-Day Credit Agreement dated as of
    October 24, 2003 among The Detroit Edison Company, The
    Banks, Financial Institutions and Other Institutional Lenders
    and Barclays Bank PLC and Banc One Capital Markets, Inc., and
    Citigroup Global Markets Inc.     
|           | 99-14 |  |             | Three-Year Credit Agreement dated as of
    October 24, 2003 among The Detroit Edison Company, The
    Banks, Financial Institutions, and Other Institutional Lenders,
    and Barclays Bank PLC and Banc One Capital Markets, Inc., and
    Citigroup Global Markets Inc.
|Furnished:
|           | 32-3  |  |             | Chief Executive Officer Section 906
    Certification of Periodic Report                                                                                                                                                                                                  
|           | 32-4  |  |             | Chief Financial Officer Section 906
    Certification of Periodic Report