##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period ended September 30, 2006
 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.
 THE DETROIT EDISON COMPANY
  Michigan
(State or other jurisdiction of 
incorporation or organization)
    
    38-0478650
(I.R.S. Employer
Identification No.)20002ndAvenue, Detroit, Michigan
(Address of principal executive offices)
    
    48226-1279
(Zip Code)
 313-235-4000
  Yes þ No o
  o o þ
  Yes o No þ




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##### 



The Detroit Edison Company
 Quarterly Report on Form 10-Q  Quarter Ended September 30, 2006
 Table of Contents
  
 PageDefinitions
    
    
    1Forward-Looking Statements
    
    
    2Part I  Financial InformationItem 1. Financial StatementsConsolidated Statement of Operations
    
    
    7Consolidated Statement of Financial Position
    
    
    8Consolidated Statement of Cash Flows
    
    
    10Consolidated Statement of Changes in Shareholders Equity
and Comprehensive Income
    
    
    11Notes to Consolidated Financial Statements
    
    
    12Item 2. Managements Narrative Analysis of Results of Operations
    
    
    3Item 4. Controls and Procedures
    
    
    6Part II  Other InformationItem 1. Legal Proceedings
    
    
    23Item 6. Exhibits
    
    
    23Signature
    
    
    24Computation of Ratios of Earnings to Fixed ChargesChief Executive Officer Section 302Chief Financial Officer Section 302Chief Executive Officer Section 906Chief Financial Officer Section 906




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##### Table of Contents



Definitions
 Customer Choice
    
    Statewide initiatives giving customers in Michigan
the option to choose alternative suppliers for
electricity.Detroit Edison
    
    The Detroit Edison Company (a direct wholly owned
subsidiary of DTE Energy) and any subsidiary
companiesDTE Energy
    
    DTE Energy Company, the parent of Detroit Edison and directly or
indirectly the parent company of numerous non-utility subsidiariesEPA
    
    United States Environmental Protection AgencyFERC
    
    Federal Energy Regulatory CommissionMPSC
    
    Michigan Public Service CommissionNRC
    
    Nuclear Regulatory CommissionPSCR
    
    A power supply cost recovery mechanism authorized by the MPSC that allows Detroit Edison to
recover through rates its fuel, fuel-related and purchased power
expenses. The clause was
suspended under Michigans restructuring legislation (signed into law June 5, 2000), which
lowered and froze electric customer rates. The clause was reinstated by the MPSC effective
January 1, 2004.Securitization
    
    Detroit Edison financed specific stranded costs at lower interest rates
through the sale of rate reduction bonds by a wholly owned special purpose entity, the Detroit Edison Securitization Funding LLC.SFAS
    
    Statement of Financial Accounting Standards
Stranded costs Costs incurred by utilities in order to serve customers in a regulated environment
that absent special regulatory approval would not otherwise expect to be recoverable if
customers switch to alternative energy suppliers.Units of MeasurementgWh
    
    Gigawatthour of electricitykWh
    
    Kilowatthour of electricityMW
    
    Megawatt of electricityMWh
    
    Megawatthour of electricity
 1




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##### Table of Contents



Forward-Looking Statements
  
    
    the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers;
 
    
    economic climate and population growth or decline in the geographic areas where we do business;
 
    
    environmental issues, laws and regulations, and the cost of remediation and compliance;
 
    
    nuclear regulations and operations associated with nuclear facilities;
 
    
    implementation of the electric Customer Choice program;
 
    
    impact of electric utility restructuring in Michigan, including legislative amendments;
 
    
    employee relations and the impact of collective bargaining agreements;
 
    
    unplanned outages;
 
    
    access to capital markets and capital market conditions and the results of other financing efforts that can be affected
by credit agency ratings;
 
    
    the timing and extent of changes in interest rates;
 
    
    the level of borrowing;
 
    
    changes in the cost and availability of coal and other raw materials, and purchased power;
 
    
    effects of competition;
 
    
    impact of regulation by FERC, MPSC, NRC and other applicable governmental proceedings and regulations, including any
associated impact on rate structures;
 
    
    changes in and application of federal, state and local tax laws and their interpretations, including the Internal
Revenue Code, regulations, rulings, court proceedings and audits;
 
    
    the ability to recover costs through rate increases;
 
    
    the availability, cost, coverage and terms of insurance;
 
    
    the cost of protecting assets against, or damage due to, terrorism;
 
    
    changes in and application of accounting standards and financial reporting regulations;
 
    
    changes in federal or state laws and their interpretation with respect to regulation, energy policy and other business
issues;
 
    
    uncollectible accounts receivable;
 
    
    litigation and related appeals; and
 
    
    changes in the economic and financial viability of our suppliers, customers and trading counterparties, and the
continued ability of such parties to perform their obligations to Detroit Edison.
  2




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##### Table of Contents



The Detroit Edison Company
 
 Managements Narrative Analysis of Results of Operations
  Factors impacting income:
 Increase (Decrease) in Income Statement ComponentsCompared to Prior Year
    
    Three
    
    
    Nine(in Millions)
    
    Months
    
    
    MonthsOperating Revenues
    
    $
    51
    
    
    $
    251Fuel and Purchased Power
    
    
    (65
    )
    
    
    9Gross Margin
    
    
    116
    
    
    
    242Operation and Maintenance
    
    
    (48
    )
    
    
    14Depreciation and Amortization
    
    
    137
    
    
    
    162Taxes Other Than Income
    
    
    (4
    )
    
    
    (2
    )Asset (gains) and losses, net
    
    
    25
    
    
    
    25Operating Income
    
    
    6
    
    
    
    43Other (Income) and Deductions
    
    
    (11
    )
    
    
    (1
    )Income Tax Provision
    
    
    (7
    )
    
    
    2Net Income
    
    $
    24
    
    
    $
    42
 Gross margins
 Increase (Decrease) in Gross Margin ComponentsCompared to Prior Year
    
    Three
    
    
    Nine(in Millions)
    
    Months
    
    
    MonthsWeather related margin impacts
    
    $
    (38
    )
    
    $
    (71
    )Removal of residential rate caps effective January 1, 2006
    
    
    106
    
    
    
    160Return of customers from electric Customer Choice
    
    
    55
    
    
    
    106Service territory economic performance
    
    
    (34
    )
    
    
    (13
    )Impact of MPSC 2004 PSCR order
    
    
    39
    
    
    
    39Other, net
    
    
    (12
    )
    
    
    21Increase in gross margin performance
    
    $
    116
    
    
    $
    242
 3




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Three Months Ended
    
    
    Nine Months EndedPower Generated and Purchased
    
    September 30
    
    
    September 30(in Thousands of MWh)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Power Plant GenerationFossil
    
    
    10,867
    
    
    
    11,578
    
    
    
    29,382
    
    
    
    30,887Nuclear
    
    
    1,873
    
    
    
    1,979
    
    
    
    4,991
    
    
    
    6,30412,740
    
    
    
    13,557
    
    
    
    34,373
    
    
    
    37,191Purchased Power
    
    
    3,085
    
    
    
    2,347
    
    
    
    7,917
    
    
    
    5,156System Output
    
    
    15,825
    
    
    
    15,904
    
    
    
    42,290
    
    
    
    42,347Less Line Loss and Internal Use
    
    
    (483
    )
    
    
    (888
    )
    
    
    (2,165
    )
    
    
    (2,237
    )Net System Output
    
    
    15,342
    
    
    
    15,016
    
    
    
    40,125
    
    
    
    40,110Average Unit Cost ($/MWh)Generation (1)
    
    $
    17.78
    
    
    $
    17.69
    
    
    $
    16.33
    
    
    $
    15.68Purchased Power
    
    $
    68.28
    
    
    $
    123.36
    
    
    $
    58.89
    
    
    $
    92.39Overall Average Unit Cost
    
    $
    27.62
    
    
    $
    33.29
    
    
    $
    24.30
    
    
    $
    25.02
 
 (1)
    
    Represents fuel costs associated with power plants. Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30(in Thousands of MWh)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Electric SalesResidential
    
    
    4,883
    
    
    
    5,554
    
    
    
    12,233
    
    
    
    13,371Commercial
    
    
    4,927
    
    
    
    4,462
    
    
    
    13,440
    
    
    
    11,646Industrial
    
    
    3,695
    
    
    
    3,197
    
    
    
    10,058
    
    
    
    9,118Wholesale
    
    
    719
    
    
    
    599
    
    
    
    2,096
    
    
    
    1,719Other
    
    
    95
    
    
    
    93
    
    
    
    291
    
    
    
    28514,319
    
    
    
    13,905
    
    
    
    38,118
    
    
    
    36,139Interconnections sales (1)
    
    
    1,023
    
    
    
    1,111
    
    
    
    2,007
    
    
    
    3,971Total Electric Sales
    
    
    15,342
    
    
    
    15,016
    
    
    
    40,125
    
    
    
    40,110Electric DeliveriesRetail and Wholesale
    
    
    14,319
    
    
    
    13,905
    
    
    
    38,118
    
    
    
    36,139Electric Customer Choice
    
    
    319
    
    
    
    1,635
    
    
    
    2,188
    
    
    
    5,178Electric Customer Choice  Self Generators (2)
    
    
    215
    
    
    
    62
    
    
    
    693
    
    
    
    429Total Electric Sales and Deliveries
    
    
    14,853
    
    
    
    15,602
    
    
    
    40,999
    
    
    
    41,746
 
 (1)
    
    Represents power that is not distributed by Detroit Edison.(2)
    
    Represents deliveries for self generators who have purchased power from alternative energy
suppliers to supplement their power requirements. Operation and maintenance
 4




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##### Table of Contents



Depreciation and amortization
 Asset (gains) and losses, net
 Outlook
    
    
    amount and timing of cost recovery allowed as a result of regulatory proceedings,
related appeals, or new legislation;
    
    our ability to reduce costs and maximize plant performance;
    
    variations in market prices of power, coal and gas;
    
    economic conditions within the State of Michigan;
    
    weather, including the severity and frequency of storms; and
    
    levels of customer participation in the electric Customer Choice program.
  5




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CONTROLS AND PROCEDURES
 (a) Evaluation of disclosure controls and procedures
  (b) Changes in internal control over financial reporting
  6




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The Detroit Edison Company
 
 Consolidated Statement of Operations (unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30(in Millions)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Operating Revenues
    
    $
    1,460
    
    
    $
    1,409
    
    
    $
    3,685
    
    
    $
    3,434Operating ExpensesFuel and purchased power
    
    
    539
    
    
    
    604
    
    
    
    1,257
    
    
    
    1,248Operation and maintenance
    
    
    277
    
    
    
    325
    
    
    
    990
    
    
    
    976Depreciation and amortization
    
    
    311
    
    
    
    174
    
    
    
    646
    
    
    
    484Taxes other than income
    
    
    64
    
    
    
    68
    
    
    
    198
    
    
    
    200Asset (gains) and losses, net
    
    
    (1
    )
    
    
    (26
    )
    
    
    (1
    )
    
    
    (26
    )1,190
    
    
    
    1,145
    
    
    
    3,090
    
    
    
    2,882Operating Income
    
    
    270
    
    
    
    264
    
    
    
    595
    
    
    
    552Other (Income) and DeductionsInterest expense
    
    
    60
    
    
    
    68
    
    
    
    208
    
    
    
    201Interest income
    
    
    (1
    )
    
    
    (1
    )
    
    
    (2
    )
    
    
    (2
    )Other income
    
    
    (9
    )
    
    
    (6
    )
    
    
    (22
    )
    
    
    (19
    )Other expenses
    
    
    9
    
    
    
    9
    
    
    
    29
    
    
    
    3459
    
    
    
    70
    
    
    
    213
    
    
    
    214Income Before Income Taxes
    
    
    211
    
    
    
    194
    
    
    
    382
    
    
    
    338Income Tax Provision
    
    
    73
    
    
    
    80
    
    
    
    128
    
    
    
    126Net Income
    
    $
    138
    
    
    $
    114
    
    
    $
    254
    
    
    $
    212
  7




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The Detroit Edison Company
 
 Consolidated Statement of Financial Position
 v(Unaudited)September 30
    
    
    December 31(in Millions)
    
    2006
    
    
    2005ASSETSCurrent AssetsCash and cash equivalents
    
    $
    18
    
    
    $
    26Restricted cash
    
    
    41
    
    
    
    84Accounts receivableCustomer (less allowance for doubtful accounts of $64 and $54, respectively)
    
    
    608
    
    
    
    528Other
    
    
    128
    
    
    
    112Accrued power supply cost recovery revenue
    
    
    178
    
    
    
    144InventoriesFuel
    
    
    142
    
    
    
    123Materials and supplies
    
    
    125
    
    
    
    116Other
    
    
    102
    
    
    
    431,342
    
    
    
    1,176InvestmentsNuclear decommissioning trust funds
    
    
    709
    
    
    
    646Other
    
    
    67
    
    
    
    65776
    
    
    
    711PropertyProperty, plant and equipment
    
    
    13,701
    
    
    
    13,416Less accumulated depreciation
    
    
    (5,526
    )
    
    
    (5,595
    )8,175
    
    
    
    7,821Other AssetsRegulatory assets
    
    
    1,889
    
    
    
    2,006Securitized regulatory assets
    
    
    1,264
    
    
    
    1,340Intangible assets
    
    
    44
    
    
    
    40Other
    
    
    73
    
    
    
    753,270
    
    
    
    3,461Total Assets
    
    $
    13,563
    
    
    $
    13,169
  8




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##### Table of Contents



The Detroit Edison Company  Consolidated Statement of Financial Position
 (Unaudited)September 30
    
    
    December 31(in Millions, Except Shares)
    
    2006
    
    
    2005LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    389
    
    
    $
    392Accrued interest
    
    
    72
    
    
    
    79Dividends payable
    
    
    76
    
    
    
    76Accrued vacations
    
    
    79
    
    
    
    80Short-term borrowings
    
    
    147
    
    
    
    163Accrued power supply cost recovery
    
    
    1
    
    
    
    129Deferred income taxes
    
    
    77
    
    
    
    Current portion of long-term debt, including capital leases
    
    
    141
    
    
    
    135Other
    
    
    247
    
    
    
    2081,229
    
    
    
    1,262Other LiabilitiesDeferred income taxes
    
    
    1,916
    
    
    
    1,961Regulatory liabilities
    
    
    249
    
    
    
    224Asset retirement obligations (Note 1)
    
    
    1,010
    
    
    
    953Unamortized investment tax credit
    
    
    107
    
    
    
    115Nuclear decommissioning
    
    
    94
    
    
    
    85Accrued pension liability
    
    
    349
    
    
    
    261Other
    
    
    800
    
    
    
    7874,525
    
    
    
    4,386Long-Term Debt (net of current portion)Mortgage bonds, notes and other
    
    
    3,449
    
    
    
    3,221Securitization bonds
    
    
    1,185
    
    
    
    1,295Capital lease obligations
    
    
    52
    
    
    
    574,686
    
    
    
    4,573Contingencies (Notes 4 and 6)Shareholders EquityCommon stock, $10 par value, 400,000,000 shares
authorized, 138,632,324 shares issued
and outstanding
    
    
    1,386
    
    
    
    1,386Additional paid in capital
    
    
    1,254
    
    
    
    1,104Common stock expense
    
    
    (44
    )
    
    
    (44
    )Retained earnings
    
    
    525
    
    
    
    500Accumulated other comprehensive income
    
    
    2
    
    
    
    23,123
    
    
    
    2,948Total Liabilities and Shareholders Equity
    
    $
    13,563
    
    
    $
    13,169
  9




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The Detroit Edison Company
 
 Consolidated Statement of Cash Flows (Unaudited)
 Nine Months EndedSeptember 30(in Millions)
    
    2006
    
    
    2005Operating ActivitiesNet Income
    
    $
    254
    
    
    $
    212Adjustments to reconcile net income to net cash from
operating activities:Depreciation and amortization
    
    
    646
    
    
    
    484Deferred income taxes
    
    
    31
    
    
    
    50Gain on sale of assets, net
    
    
    (1
    )
    
    
    (26
    )Changes in assets and liabilities, exclusive of changes
shown separately (Note 1)
    
    
    (252
    )
    
    
    (46
    )Net cash from operating activities
    
    
    678
    
    
    
    674Investing ActivitiesPlant and equipment expenditures
    
    
    (735
    )
    
    
    (479
    )Proceeds from sale of other assets, net
    
    
    22
    
    
    
    30Restricted cash for debt redemptions
    
    
    43
    
    
    
    46Notes receivable from affiliate
    
    
    
    
    
    
    85Proceeds from sale of nuclear decommissioning trust funds
    
    
    136
    
    
    
    159Investment in nuclear decommissioning trust funds
    
    
    (163
    )
    
    
    (188
    )Other investments
    
    
    (12
    )
    
    
    (46
    )Net cash used for investing activities
    
    
    (709
    )
    
    
    (393
    )Financing ActivitiesIssuance of long-term debt
    
    
    247
    
    
    
    612Redemption of long-term debt
    
    
    (123
    )
    
    
    (795
    )Short-term borrowings, net
    
    
    (16
    )
    
    
    141Capital contribution by parent company
    
    
    150
    
    
    
    Dividends on common stock
    
    
    (229
    )
    
    
    (229
    )Other
    
    
    (6
    )
    
    
    (4
    )Net cash from (used for) financing activities
    
    
    23
    
    
    
    (275
    )Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    (8
    )
    
    
    6Cash and Cash Equivalents at Beginning of the Period
    
    
    26
    
    
    
    6Cash and Cash Equivalents at End of the Period
    
    $
    18
    
    
    $
    12
  10




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The Detroit Edison Company
 
 Consolidated Statement of Changes in Shareholders Equity
 and Comprehensive Income (unaudited)
 Accumulated(Dollars in Millions,
    
    
    
    
    
    
    
    
    
    Additional
    
    Common
    
    
    
    
    
    OtherShares in Thousands)
    
    Common Stock
    
    Paid in
    
    Stock
    
    Retained
    
    ComprehensiveShares
    
    Amount
    
    Capital
    
    Expense
    
    Earnings
    
    Income
    
    TotalBalance, December 31, 2005
    
    
    138,632
    
    
    $
    1,386
    
    
    $
    1,104
    
    
    $
    (44
    )
    
    $
    500
    
    
    $
    2
    
    
    $
    2,948Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    254
    
    
    
    
    
    
    
    254Capital contribution by
parent company
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150Dividends declared on
common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (229
    )
    
    
    
    
    
    
    (229
    )Balance, September 30,
2006
    
    
    138,632
    
    
    $
    1,386
    
    
    $
    1,254
    
    
    $
    (44
    )
    
    $
    525
    
    
    $
    2
    
    
    $
    3,123
  (in Millions)
    
    2006
    
    
    2005Net income
    
    $
    254
    
    
    $
    212Comprehensive income
    
    $
    254
    
    
    $
    212
  11




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The Detroit Edison Company
 
 Notes to Consolidated Financial Statements (unaudited)
 NOTE 1  GENERAL
     Consolidated Statement of Cash Flows
  Nine Months EndedSeptember 30(in Millions)
    
    2006
    
    
    2005Changes in Assets and Liabilities, Exclusive
of Changes Shown SeparatelyAccounts receivable, net
    
    $
    (116
    )
    
    $
    (118
    )Inventories
    
    
    (28
    )
    
    
    (12
    )Accrued pensions
    
    
    104
    
    
    
    82Accounts payable
    
    
    6
    
    
    
    27Accrued power supply cost recovery refund
    
    
    (162
    )
    
    
    (121
    )Income taxes payable
    
    
    76
    
    
    
    70General taxes
    
    
    10
    
    
    
    6Postretirement obligation
    
    
    21
    
    
    
    42Other assets
    
    
    (136
    )
    
    
    (50
    )Other liabilities
    
    
    (27
    )
    
    
    28$
    (252
    )
    
    $
    (46
    )
  Nine Months EndedSeptember 30(in Millions)
    
    2006
    
    2005Cash Paid for:Interest (excluding interest capitalized)
    
    $
    215
    
    
    $
    225Income taxes
    
    $
    1
    
    
    $
    1Non-cash Investing and Financing ActivitiesSale of assets
    
    
    
    
    
    
    13
 12




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##### Table of Contents



Asset Retirement Obligations
 Accounting for
Asset Retirement Obligations Accounting for Conditional Asset
Retirement Obligations, an interpretation of FASB Statement No. 143
 Accounting for the
Effects of Certain Types of Regulation.
  (in Millions)Asset retirement obligations at January 1, 2006
    
    $
    953Accretion
    
    
    47Liabilities settled
    
    
    (5
    )Revisions in estimated cash flows
    
    
    15Asset retirement obligations at September 30, 2006
    
    $
    1,010
  Retirement Benefits and Trusteed Assets
  Other Postretirement(in Millions)
    
    Pension Benefits
    
    
    BenefitsThree Months Ended September 30
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Service Cost
    
    $
    12
    
    
    $
    13
    
    
    $
    10
    
    
    $
    11Interest Cost
    
    
    34
    
    
    
    33
    
    
    
    22
    
    
    
    19Expected Return on Plan Assets
    
    
    (34
    )
    
    
    (34
    )
    
    
    (12
    )
    
    
    (14
    )Amortization ofNet loss
    
    
    11
    
    
    
    13
    
    
    
    14
    
    
    
    11Prior service cost
    
    
    2
    
    
    
    2
    
    
    
    1
    
    
    
    1Net transition liability
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Special Termination Benefits
    
    
    14
    
    
    
    
    
    
    
    2
    
    
    
    Net Periodic Benefit Cost
    
    $
    39
    
    
    $
    27
    
    
    $
    39
    
    
    $
    30
 13




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##### Table of Contents



Other Postretirement(in Millions)
    
    Pension Benefits
    
    
    BenefitsNine Months Ended September 30
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Service Cost
    
    $
    38
    
    
    $
    40
    
    
    $
    34
    
    
    $
    33Interest Cost
    
    
    102
    
    
    
    99
    
    
    
    66
    
    
    
    59Expected Return on Plan Assets
    
    
    (102
    )
    
    
    (101
    )
    
    
    (37
    )
    
    
    (43
    )Amortization ofNet loss
    
    
    34
    
    
    
    38
    
    
    
    40
    
    
    
    33Prior service cost
    
    
    6
    
    
    
    7
    
    
    
    3
    
    
    
    3Net transition liability
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    5Special Termination Benefits
    
    
    28
    
    
    
    
    
    
    
    3
    
    
    
    Net Periodic Benefit Cost
    
    $
    106
    
    
    $
    83
    
    
    $
    114
    
    
    $
    90
  Affiliate Transactions
  NOTE 2
 NEW ACCOUNTING PRONOUNCEMENTS
 Stock-Based Compensation
 Share-Based Payment,
  Accounting for Uncertainty in Income Taxes
 Accounting for
Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109  Accounting for Income
Taxes.
 14




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##### Table of Contents



Fair Value Measurements
 Fair Value Measurements
 Accounting for Defined Benefit Pension and Other Postretirement Plans
 Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans  an Amendment of FASB Statements No. 87, 88, 106, and
132(R).
  Accounting for Planned Major Maintenance
 Accounting for Planned
Major Maintenance Activities.
 15




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##### Table of Contents



Quantifying Misstatements
 Financial
Statements  Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in
Current Year Financial Statements
 NOTE 3
 RESTRUCTURING
 Restructuring
 Performance Excellence Process
    Employee Severance Costs (1)
    
    
    Other Costs (1)
    
    
    Total CostThree
    
    
    Nine
    
    
    Three
    
    
    Nine
    
    
    Three
    
    
    NineMonths
    
    
    Months
    
    
    Months
    
    
    Months
    
    
    Months
    
    
    MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended(in Millions)
    
    September
    
    
    September
    
    
    September
    
    
    September
    
    
    September
    
    
    SeptemberBusiness Segment
    
    30
    
    
    30
    
    
    30
    
    
    30
    
    
    30
    
    
    30Costs incurred:Electric Utility
    
    $
    18
    
    
    $
    36
    
    
    $
    10
    
    
    $
    41
    
    
    $
    28
    
    
    $
    77Less amounts deferred or
capitalized:Electric Utility
    
    
    36
    
    
    
    36
    
    
    
    41
    
    
    
    41
    
    
    
    77
    
    
    
    77Amount expensed or
capitalized
    
    $
    (18
    )
    
    $
    
    
    
    $
    (31
    )
    
    $
    
    
    
    $
    (49
    )
    
    $
    
 
 (1)
    
    Includes corporate allocations. 16




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##### Table of Contents



Accounting
for Costs Associated with Exit or Disposal Activities
 NOTE 4
 REGULATORY MATTERS
 Electric Rate Restructuring Proposal
  2004 PSCR Reconciliation and 2004 Net Stranded Cost Case
  MPSC Show-Cause Order
  17




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##### Table of Contents



Regulatory Accounting Treatment for Performance Excellence Process
  Power Supply Costs Recovery Proceedings
 2005
Plan Year
 18




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##### Table of Contents



2006 Plan Year 
  2007 Plan Year 
 19




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##### Table of Contents



Electric Shut-Off and Restoration
  Revenue Sufficiency Guarantee
  Other
  NOTE 5
 LONG -TERM DEBT
 Debt Issuances
  (in Millions)MonthCompany
    
    Issued
    

    Type
    
    Interest Rate
    
    Maturity
    
    AmountDetroit Edison
    
    May
    
    Senior Notes (1)
    
    6.625%
    
    June 2036
    
    $250
 
 (1)
    
    The proceeds from the issuance were used to repay short-term borrowings of Detroit Edison and
for general corporate purposes NOTE 6
 COMMITMENTS AND CONTINGENCIES
 Environmental
 Air
 20




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##### Table of Contents



Water
 Contaminated Sites
 Personal Property Taxes
   Income Taxes
  21




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##### Table of Contents



Other Commitments
   Bankruptcies
  Other
    22




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##### Table of Contents



Other Information
 
 Legal Proceedings
   
 Exhibits
 ExhibitNumber
    
    DescriptionFiled:12-26
    
    Computation of Ratios of Earnings to Fixed Charges31-27
    
    Chief Executive Officer Section 302 Form 10-Q Certification31-28
    
    Chief Financial Officer Section 302 Form 10-Q CertificationFurnished:32-27
    
    Chief Executive Officer Section 906 Form 10-Q Certification32-28
    
    Chief Financial Officer Section 906 Form 10-Q Certification
 23




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##### Table of Contents



Signature
  THE DETROIT EDISON COMPANYDate: November 14, 2006
    /s/ PETER B. OLEKSIAKPeter B. OleksiakController 24




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##### Table of Contents



ExhibitNumber
    
    DescriptionFiled:12-26
    
    Computation of Ratios of Earnings to Fixed Charges31-27
    
    Chief Executive Officer Section 302 Form 10-Q Certification31-28
    
    Chief Financial Officer Section 302 Form 10-Q CertificationFurnished:32-27
    
    Chief Executive Officer Section 906 Form 10-Q Certification32-28
    
    Chief Financial Officer Section 906 Form 10-Q Certification