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November 13, 2001



Re: Quarterly Reports on Form 10-Q



Ladies and Gentlemen:

On behalf of DTE Energy Company, DTE Enterprises, Inc., The Detroit Edison
Company, Michigan Consolidated Gas Company and The Detroit Edison
Securitization Funding LLC, attached for filing are the Quarterly Reports on
Form 10-Q for the quarter ended September 30, 2001.

Very truly yours,



Susan M. Beale
Vice President and Corporate Secretary





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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 Quarter Ended September 30, 2001

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
(Exact name of registrant as specified in its charter)

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

313-235-8000
(Registrants telephone number, including area code)

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

Yes X IN BALLOT BOX                      No OPEN BALLOT BOX



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TABLE OF CONTENTS



|                                                 |                                                                       |                                                           |  |  |  |  |  | 
|------------------------------------------------ | --------------------------------------------------------------------- | --------------------------------------------------------- |  |  |  |  |  | 
|Definitions                                     
|                                                 | Item 2  Managements Narrative Analysis of the Results of Operations
|Part I  Financial Information                  
|                                                 | Item 1  Financial Statements                                        
|                                                 |                                                                       | Consolidated Statement of Operations                     
|                                                 |                                                                       | Consolidated Statement of Changes in Shareholders Equity
|                                                 |                                                                       | Consolidated Statement of Financial Position             
|                                                 |                                                                       | Consolidated Statement of Cash Flows                     
|                                                 |                                                                       | Notes to Consolidated Financial Statements               
|                                                 |                                                                       | Independent Accountants Report                          
|Part II  Other Information                     
|                                                 | Item 5  Other Information                                           
|                                                 | Item 6  Exhibits and Reports on Form 8-K                            
|Signature                                       
|Supplemental Indenture Dated August 15, 2001    
|Supplemental Indenture Dated September 15, 2001 
|Ninth Supplemental Indenture Dated Oct. 10, 2001
|Awareness Letter of Deloitte & Touche LLP       
|$300 Million Credit Agreement                   



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THE DETROIT EDISON COMPANY

QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2001

TABLE OF CONTENTS

|                               |  |                                                                       |                                                           |  |        |    | 
|------------------------------ |  | --------------------------------------------------------------------- | --------------------------------------------------------- |  | ------ | -- | 
|                               |  |                                                                       |                                                           |  | Page   |   
|                               |  |                                                                       |                                                           |  | Number |   
|                               |  |                                                                       |                                                           |  |        |   
|                              
|DEFINITIONS                    |  |                                                                       | 1                                                         | 
|                              
|Part I  FINANCIAL INFORMATION |  |                                                                       |                                                           | 
|                               |  | Item 1  Financial Statements                                         |                                                           |  |        |   
|                               |  |                                                                       | Consolidated Statement of Operations                      |  |        | 6  | 
|                               |  |                                                                       | Consolidated Statement of Changes in Shareholders Equity |  |        | 7  | 
|                               |  |                                                                       | Consolidated Statement of Financial Position              |  |        | 8  | 
|                               |  |                                                                       | Consolidated Statement of Cash Flows                      |  |        | 10 | 
|                               |  |                                                                       | Notes to Consolidated Financial Statements                |  |        | 11 | 
|                               |  |                                                                       | Independent Accountants Report                           |  |        | 18 | 
|                               |  | Item 2  Managements Narrative Analysis of the
Results of Operations |                                                           |  | 2      |   
|Part II  OTHER INFORMATION    |  |                                                                       | 19                                                        | 
|                               |  | Item 5  Other Information                                            |                                                           |  | 19     |   
|                               |  | Item 6  Exhibits and Reports on Form 8-K                             |                                                           |  | 20     |   
|                              
|SIGNATURE                      |  |                                                                       | 21                                                        | 





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DEFINITIONS

|                       |  |                                                                                                                                                                                                                       
|---------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ALJ                    |  | MPSC Administrative Law Judge                                                                                                                                                                                         
|                      
|Annual Report          |  | 2000 Annual Report to the Securities and Exchange Commission on
Form 10-K for The Detroit Edison Company, filed with the DTE Energy
Company Annual Report on Form 10-K                                                
|                      
|Annual Report Notes    |  | Notes to Consolidated Financial Statements appearing on
pages 41 through 71 and 76 through 78 of the Annual Report                                                                                                    
|                      
|DTE                    |  | DTE Energy Company and consolidated subsidiary companies                                                                                                                                                              
|                      
|Detroit Edison         |  | The Detroit Edison Company and consolidated subsidiary
companies, a wholly owned subsidiary of DTE Energy Company                                                                                                     
|                      
|Electric Choice        |  | Customer access to competitive electric generation resources                                                                                                                                                          
|                      
|EPA                    |  | United States Environmental Protection Agency                                                                                                                                                                         
|                      
|FASB                   |  | Financial Accounting Standards Board                                                                                                                                                                                  
|                      
|FERC                   |  | Federal Energy Regulatory Commission                                                                                                                                                                                  
|                      
|ITC                    |  | International Transmission Company, a wholly owned subsidiary of DTE
Energy                                                                                                                                           
|                      
|kWh                    |  | Kilowatthour                                                                                                                                                                                                          
|                      
|MPSC                   |  | Michigan Public Service Commission                                                                                                                                                                                    
|                      
|MW                     |  | Megawatt                                                                                                                                                                                                              
|                      
|MWh                    |  | Megawatthour                                                                                                                                                                                                          
|                      
|Note(s)                |  | Note(s) to Consolidated Financial Statements (Unaudited) appearing
herein                                                                                                                                             
|                      
|PFD                    |  | Proposal for Decision by a MPSC ALJ                                                                                                                                                                                   
|                      
|PSCR                   |  | Power Supply Cost Recovery                                                                                                                                                                                            
|                      
|Quarterly Reports      |  | Quarterly Report to the Securities and Exchange Commission on
Form 10-Q for the quarter ended March 31, 2001, filed with the DTE Energy
Company Quarterly Report on Form 10-Q, and for the quarter ended June 30,
2001
|                      
|Quarterly Report Notes |  | Notes to Consolidated Financial Statements (Unaudited)
appearing on pages 16 through 23 and 15 through 19 of the Quarterly Report
for the quarters ended March 31, 2001, and June 30, 2001, respectively              
|                      
|SFAS                   |  | Statement of Financial Accounting Standards                                                                                                                                                                           

1



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THE DETROIT EDISON COMPANYMANAGEMENTS NARRATIVE ANALYSIS OF THE 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.

For the 2001 three-month period, Detroit Edisons net income was $88 million,
compared to net income of $76 million for the same period in 2000. For the
nine-month period net income was $124 million compared to $264 million for the
same period in 2000. The decrease for the nine-month period was primarily due
to the $184 million ($120 million after tax) of merger and restructuring
charges Detroit Edison recorded. Both periods reflect the impacts of changes in
fair value of derivative instruments required by Detroit Edisons adoption of
SFAS No. 133 Accounting for Derivative Instruments and Hedging Activities, as
amended, on January 1, 2001.

Operating Revenues

Operating revenues increased (decreased) due to the following:

|              |                             |       |   |                         |    |  |                         |     |   | 
|------------- | --------------------------- | ----- | - | ----------------------- | -- |  | ----------------------- | --- | - | 
|              |                             |       |   | Three                   |    |  | Nine                    |    
|              |                             |       |   | MonthsEndedSeptember 30 |    |  | MonthsEndedSeptember 30 |    
|              |                             |       |   |                         |    |  |                         |    
|(in Millions) |                             |       |   |                         |    |  |                         |    
|              | 5% Rate reduction           |       | $ | (36                     | )  |  | $                       | (86 | )
|              | System sales volume and mix |       |   | 26                      |    |  |                         | (19 | )
|              | Cessation of PSCR mechanism |       |   | 7                       |    |  |                         | (7  | )
|              | Wholesale sales             |       |   | 5                       |    |  |                         | 91  |  
|              | Other-net                   |       |   | 10                      |    |  |                         | 29  |  
|              |                             |       |   |                         |    | 
|              |                             | Total |   | $                       | 12 |  |                         | $   | 8 | 
|              |                             |       |   |                         |    | 

Detroit Edison kWh sales increased (decreased) as compared to the prior year as follows:

|                                            |              |  |        |      |   |        |       |      |  
|------------------------------------------- | ------------ |  | ------ | ---- | - | ------ | ----- | ---- | -
|                                            |              |  | Three  |      |   | Nine   |      
|                                            |              |  | Months |      |   | Months |      
|                                            |              |  |        |      |   |        |      
|Residential                                 |              |  | 13.9   | %    |   |        | 6.5   | %   
|Commercial                                  |              |  | (2.8   | )    |   |        | (3.4  | )   
|Industrial                                  |              |  | (12.3  | )    |   |        | (10.9 | )   
|Other (includes primarily sales for resale) |              |  | (6.3   | )    |   |        | (2.2  | )   
|                                            | Total System |  |        | (1.2 | ) |        |       | (3.0 | )
|Wholesale sales                             |              |  | (52.2  | )    |   |        | (26.1 | )   
|                                            | Total        |  |        | (4.0 | ) |        |       | (3.9 | )

For the three-month period, residential sales increased due to greater cooling
demand. For the nine-month period, residential sales increased due to greater
heating and cooling demand. Commercial sales decreased due to the migration of
customers to the Electric Choice program. Industrial sales decreased due to
reduced auto and steel production and the end of the Ford Rouge plant
replacement energy sales contract in March 2001. Wholesale sales decreased for
the three-

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MANAGEMENTS NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS

and nine-month period due to the expiration of an agreement with Consumers
Energy in April 2001.

For the three-month period, the wholesale sales component of revenues decreased
$47 million as a result of recording the net change in fair value of forward
contracts to sell power.
For the nine-month period, there was no change in the wholesale sales component
of revenues as a result of recording the net change in fair value for
derivatives not designated as hedges.

Operating Expenses

Fuel and Purchased Power

Fuel and purchased power expense changed due to the recording of the net change
in fair value of forward and option contracts to purchase power for the three- and nine-month periods
(decreased $83 million and increased $9 million, respectively). Fuel and
purchased power was also favorably impacted by greater use of lower cost
nuclear power, partially offset by higher cost purchased power.

System output and average delivered fuel and purchased power unit costs for
Detroit Edison were as follows:

|                      |                           |                     |  |                                 |        |  |                                |        |        |      |  |        |        |  |  |        |        | 
|--------------------- | ------------------------- | ------------------- |  | ------------------------------- | ------ |  | ------------------------------ | ------ | ------ | ---- |  | ------ | ------ |  |  | ------ | ------ | 
|                      |                           |                     |  | Three Months EndedSeptember 30, |        |  | Nine Months EndedSeptember 30, |       
|                      |                           |                     |  |                                 |        |  |                                |       
|                      |                           |                     |  | 2001                            |        |  | 2000                           |        |        | 2001 |  |        | 2000   | 
|                      |                           |                     |  |                                 |        |  |                                |        |        |      |  |        |        | 
|(in Thousands of MWh) |                           |                     |  |                                 |        |  |                                |        |        |      |  |        |        |  |  |       
|                      | Power plant generation    |                     |  |                                 |        |  |                                |        |        |      |  |        |        |  |  |        |       
|                      |                           | Fossil              |  |                                 | 11,021 |  |                                |        | 11,556 |      |  |        | 30,639 |  |  |        | 31,449 | 
|                      |                           | Nuclear             |  |                                 | 2,406  |  |                                |        | 2,422  |      |  |        | 7,135  |  |  |        | 5,774  | 
|                      | Purchased power           |                     |  | 2,092                           |        |  |                                | 1,897  |        |      |  | 5,360  |        |  |  | 7,115  |       
|                      |                           |                     |  |                                 |        |  |                                |        |        |      |  |       
|                      | System output             |                     |  | 15,519                          |        |  |                                | 15,875 |        |      |  | 43,134 |        |  |  | 44,338 |       
|                      |                           |                     |  |                                 |        |  |                                |        |        |      |  |       
|                      | Average unit cost ($/MWh) |                     |  |                                 |        |  |                                |        |        |      |  |        |        |  |  |        |       
|                      |                           | Generation          |  | $                               | 12.60  |  |                                | $      | 12.29  |      |  | $      | 12.34  |  |  | $      | 13.12  | 
|                      |                           |                     |  |                                 |        |  |                                |        |        |      |  |       
|                      |                           | Purchased power (1) |  | $                               | 148.08 |  |                                | $      | 138.14 |      |  | $      | 92.84  |  |  | $      | 67.42  | 
|                      |                           |                     |  |                                 |        |  |                                |        |        |      |  |       



---

|(1) |  | The average purchased power amounts exclude unrealized gains and losses recorded under SFAS No. 133.
|--- |  | ----------------------------------------------------------------------------------------------------

Operation and Maintenance

For the three-month period, operation and maintenance expenses increased
approximately 26% to $279 million. For the nine-month period, operation and
maintenance expenses increased approximately 12% to $813 million. These
increases were primarily due to expenses related to increased maintenance and
reliability work for power generation, expense related to the funding of the
low income and energy efficiency fund required by Michigan
legislation (offset in revenues), costs allocated from DTE for corporate support functions, transmission expenses billed from ITC, and storm restoration costs.

3



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MANAGEMENTS NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS

Depreciation and Amortization

Depreciation and amortization expense was lower due to an extension of the
amortization period for certain regulatory assets that were securitized in March 2001.

Taxes Other Than Income

Taxes other than income decreased due to lower property tax expense of $12
million. Property tax expense decreased $10 million due to a revision of an estimated liability recorded in 2000 representing a change in the taxable value of personal property
subject to taxation by local taxing jurisdictions. New valuation tables
approved by the Michigan State Tax Commission more accurately recognize the
impact of regulation on the value of a utilitys personal property based on the
propertys age.

Merger and Restructuring Charges

For the three- and nine-month periods, Detroit Edison recorded merger and
restructuring charges of $9 million ($6 million after tax) and $184 million
($120 million after tax), respectively. See Note 2.

Interest Expense

Interest expense increased due to debt issued for securitization, partially
offset by redemptions of higher cost debt with the proceeds of the
securitization bonds. Detroit Edisons refunding of such debt is ongoing and
is expected to be completed by the end of 2001.

Income Taxes

Income taxes reflect changes in pre-tax income and the effective tax rate.

ENVIRONMENTAL MATTERS

As discussed in the Annual Report, the EPA has initiated enforcement actions
against several major electric utilities citing violations of new source
provisions of the Clear 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 National Energy Policy Development
Group of the Bush Administration has undertaken a review of the EPAs
interpretation of regulations applying to new source review requirements. Detroit Edison
expects this review to focus on the ability of fossil-fueled plant
owners to perform plant maintenance without additional significant
environmentally related modifications. While Detroit Edison anticipates its
ability to continue to economically maintain its plants, the outcome of this
governmental review cannot be predicted.

As discussed in the Annual Report, EPA ozone transport regulations and final
new air quality standards relating to ozone and particulate air pollution will
impact Detroit Edison. Detroit Edison has spent approximately $152 million and
estimates that it will incur approximately $400 to $500 million of future
capital expenditures over the next several years.

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MANAGEMENTS NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve certain risks and uncertainties as set forth
in Detroit Edisons 2000 Annual Report on Form 10-K.

NEW ACCOUNTING PRONOUNCEMENTS

Asset Retirement Obligations In June 2001, the FASB issued SFAS No. 143,
Accounting for Asset Retirement Obligations. This statement requires that
the fair value for an asset retirement obligation be recognized in the period
in which it is incurred. The associated asset retirement costs would be
capitalized as part of the carrying amount of the long-lived asset. It would
apply to legal obligations associated with the retirement of long-lived assets
that result from the acquisition, construction, development and (or) the normal
operation of a long-lived asset. This statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002. The Company
has not yet determined the impact of this statement on the consolidated
financial statements.

Long-Lived Assets In August 2001, the FASB issued No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets. This statement
superseded
SFAS No. 121 Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of. This statement establishes a single
accounting model for long-lived assets to be disposed of by sale, whether
previously held and used or newly acquired. This statement is effective for
financial statements issued for fiscal years beginning after December 15, 2001.
The Company has not yet determined the impact of this statement on the
consolidated financial statements.

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THE DETROIT EDISON COMPANYCONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

|                                                                           |                                           |                                  |       |                    |     |   |                   |     |     |      |       |       |       |   |       |       |       | 
|-------------------------------------------------------------------------- | ----------------------------------------- | -------------------------------- | ----- | ------------------ | --- | - | ----------------- | --- | --- | ---- | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                                                                           |                                           |                                  |       | Three Months Ended |     |   | Nine Months Ended |    
|                                                                           |                                           |                                  |       | September 30       |     |   | September 30      |    
|                                                                           |                                           |                                  |       |                    |     |   |                   |    
|                                                                           |                                           |                                  |       | 2001               |     |   | 2000              |     |     | 2001 |       |       | 2000  |  
|                                                                           |                                           |                                  |       |                    |     |   |                   |     |     |      |       |       |       |  
|(in Millions)                                                              |                                           |                                  |       |                    |     |   |                   |     |     |      |       |       |       |   |       |      
|Operating Revenues                                                         |                                           | $                                | 1,121 |                    |     | $ | 1,109             |     |     | $    | 3,137 |       |       | $ | 3,129 |      
|                                                                           |                                           |                                  |       |                    |     |   |                   |     |     |      |       |      
|Operating Expenses                                                         |                                           |                                  |       |                    |     |   |                   |     |     |      |       |       |       |   |       |      
|                                                                           | Fuel and purchased power                  |                                  |       | 414                |     |   |                   | 455 |     |      |       | 1,037 |       |   |       | 1,020 |      
|                                                                           | Operation and maintenance                 |                                  |       | 279                |     |   |                   | 222 |     |      |       | 813   |       |   |       | 727   |      
|                                                                           | Depreciation and amortization             |                                  |       | 164                |     |   |                   | 191 |     |      |       | 498   |       |   |       | 550   |      
|                                                                           | Taxes other than income                   |                                  |       | 56                 |     |   |                   | 72  |     |      |       | 207   |       |   |       | 219   |      
|                                                                           | Merger and restructuring charges (Note 2) |                                  |       | 9                  |     |   |                   | 2   |     |      |       | 184   |       |   |       | 9     |      
|                                                                           |                                           |                                  |       |                    |     |   |                   |     |     |      |       |      
|                                                                           |                                           | Total Operating Expenses         |       |                    | 922 |   |                   |     | 942 |      |       |       | 2,739 |   |       |       | 2,525 | 
|                                                                           |                                           |                                  |       |                    |     |   |                   |     |     |      |       |      
|Operating Income                                                           |                                           |                                  | 199   |                    |     |   | 167               |     |     |      | 398   |       |       |   | 604   |      
|                                                                           |                                           |                                  |       |                    |     |   |                   |     |     |      |       |      
|Interest Expense and Other                                                 |                                           |                                  |       |                    |     |   |                   |     |     |      |       |       |       |   |       |      
|                                                                           | Interest expense                          |                                  |       | 75                 |     |   |                   | 70  |     |      |       | 225   |       |   |       | 209   |      
|                                                                           | Other  net                               |                                  |       | 5                  |     |   |                   | 4   |     |      |       | 10    |       |   |       | 13    |      
|                                                                           |                                           |                                  |       |                    |     |   |                   |     |     |      |       |      
|                                                                           |                                           | Total Interest Expense and Other |       |                    | 80  |   |                   |     | 74  |      |       |       | 235   |   |       |       | 222   | 
|                                                                           |                                           |                                  |       |                    |     |   |                   |     |     |      |       |      
|Income Before Income Taxes                                                 |                                           |                                  | 119   |                    |     |   | 93                |     |     |      | 163   |       |       |   | 382   |      
|                                                                          
|Income Taxes                                                               |                                           |                                  | 31    |                    |     |   | 17                |     |     |      | 36    |       |       |   | 118   |      
|                                                                           |                                           |                                  |       |                    |     |   |                   |     |     |      |       |      
|Income Before Cumulative Effect of
a Change in Accounting Principle        |                                           |                                  | 88    |                    |     |   | 76                |     |     |      | 127   |       |       |   | 264   |      
|                                                                           |                                           |                                  |       |                    |     |   |                   |     |     |      |       |      
|Cumulative Effect of a Change in
Accounting Principle, Net of Tax (Note 6) |                                           |                                  |      |                    |     |   |                  |     |     |      | (3    | )     |       |   |      |      
|                                                                           |                                           |                                  |       |                    |     |   |                   |     |     |      |       |      
|Net Income                                                                 |                                           | $                                | 88    |                    |     | $ | 76                |     |     | $    | 124   |       |       | $ | 264   |      
|                                                                           |                                           |                                  |       |                    |     |   |                   |     |     |      |       |      

See Notes to Consolidated Financial Statements (Unaudited)

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THE DETROIT EDISON COMPANYCONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY (UNAUDITED)

|                                                             |                                                              |  |        |         |   |        |       |       |  
|------------------------------------------------------------ | ------------------------------------------------------------ |  | ------ | ------- | - | ------ | ----- | ----- | -
|                                                             |                                                              |  | 2001   |        
|                                                             |                                                              |  |        |        
|                                                             |                                                              |  | Shares |         |   | Amount |      
|                                                             |                                                              |  |        |         |   |        |      
|(in Millions, Except Per Share Amounts; Shares in Thousands) |                                                              |  |        |         |   |        |       |      
|Common Stock                                                 |                                                              |  |        |         |   |        |       |      
|                                                             | Balance at beginning of year                                 |  |        | 145,120 |   |        | $     | 1,451 |  
|                                                             | Repurchase and retirement of common stock                    |  |        | (10,832 | ) |        |       | (108  | )
|                                                             |                                                              |  |        |         |   |       
|                                                             | Balance at September 30, 2001                                |  |        | 134,288 |   |        |       | 1,343 |  
|                                                            
|                                                            
|Premium on Common Stock                                      |                                                              |  |        |         |   |        |       |      
|                                                             | Balance at beginning of year                                 |  |        |         |   |        |       | 548   |  
|                                                             | Repurchase and retirement of common stock                    |  |        |         |   |        |       | (41   | )
|                                                             |                                                              |  |        |         |   |        |      
|                                                             | Balance at September 30, 2001                                |  |        |         |   |        |       | 507   |  
|                                                            
|                                                            
|Common Stock Expense                                         |                                                              |  |        |         |   |        |       |      
|                                                             | Balance at beginning of year                                 |  |        |         |   |        |       | (48   | )
|                                                             | Repurchase and retirement of common stock                    |  |        |         |   |        |       | 4     |  
|                                                             |                                                              |  |        |         |   |        |      
|                                                             | Balance at September 30, 2001                                |  |        |         |   |        |       | (44   | )
|                                                            
|                                                            
|Accumulated Other Comprehensive Loss (Note 7)                |                                                              |  |        |         |   |        |       |      
|Net Unrealized Losses on Derivatives Qualifying as Hedges:   |                                                              |  |        |         |   |        |       |      
|                                                             | Balance at beginning of year                                 |  |        |         |   |        |       |      |  
|                                                             | Net change in unrealized gains and losses                    |  |        |         |   |        |       | (21   | )
|                                                             |                                                              |  |        |         |   |        |      
|                                                             | Balance at September 30, 2001                                |  |        |         |   |        |       | (21   | )
|                                                            
|                                                            
|Retained Earnings                                            |                                                              |  |        |         |   |        |       |      
|                                                             | Balance at beginning of year                                 |  |        |         |   |        |       | 1,772 |  
|                                                             | Net income                                                   |  |        |         |   |        |       | 124   |  
|                                                             | Dividends declared on common stock ($1.65 per share)         |  |        |         |   |        |       | (227  | )
|                                                             | Distribution of International Transmission Company to parent |  |        |         |   |        |       | (327  | )
|                                                             | Repurchase and retirement of common stock                    |  |        |         |   |        |       | (701  | )
|                                                             |                                                              |  |        |         |   |        |      
|                                                             | Balance at September 30, 2001                                |  |        |         |   |        |       | 641   |  
|                                                            
|                                                            
|Total Shareholders Equity                                   |                                                              |  |        |         |   | $      | 2,426 |      
|                                                             |                                                              |  |        |         |   |        |      

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 |       
|                                                   |                                                |                                                                              |  |  |  |   |        | 2001         |     |   | 2000        |       
|                                                   |                                                |                                                                              |  |  |  |   |        |              |     |   |             |       
|(in Millions, Except Per Share Amounts and Shares) |                                                |                                                                              |  |  |  |   |        |              |     |   |             |       
|ASSETS                                             |                                                |                                                                              |  |  |  |   |        |              |     |   |             |       
|Current Assets                                     |                                                |                                                                              |  |  |  |   |        |              |     |   |             |       
|                                                   | Cash and cash equivalents                      |                                                                              |  |  |  |   | $      | 22           |     |   | $           | 24     |    
|                                                   | Restricted cash                                |                                                                              |  |  |  |   |        | 114          |     |   |             |       |    
|                                                   | Accounts receivable                            |                                                                              |  |  |  |   |        |              |     |   |             |        |    
|                                                   |                                                | Customer (less allowance for doubtful
accounts of $22 and $20, respectively) |  |  |  |   |        |              | 425 |   |             |        | 381 | 
|                                                   |                                                | Accrued unbilled revenues                                                    |  |  |  |   |        |              | 141 |   |             |        | 188 | 
|                                                   |                                                | Other                                                                        |  |  |  |   |        |              | 88  |   |             |        | 74  | 
|                                                   | Inventories (at average cost)                  |                                                                              |  |  |  |   |        |              |     |   |             |        |    
|                                                   |                                                | Fuel                                                                         |  |  |  |   |        |              | 116 |   |             |        | 163 | 
|                                                   |                                                | Materials and supplies                                                       |  |  |  |   |        |              | 129 |   |             |        | 139 | 
|                                                   | Other                                          |                                                                              |  |  |  |   |        | 55           |     |   |             | 25     |    
|                                                   |                                                |                                                                              |  |  |  |   |        |              |     |  
|                                                   |                                                |                                                                              |  |  |  |   | 1,090  |              |     |   | 994         |       
|                                                   |                                                |                                                                              |  |  |  |   |        |              |     |  
|Investments                                        |                                                |                                                                              |  |  |  |   |        |              |     |   |             |       
|                                                   | Nuclear decommissioning trust funds            |                                                                              |  |  |  |   |        | 388          |     |   |             | 398    |    
|                                                   | Other                                          |                                                                              |  |  |  |   |        | 34           |     |   |             | 38     |    
|                                                   |                                                |                                                                              |  |  |  |   |        |              |     |  
|                                                   |                                                |                                                                              |  |  |  |   | 422    |              |     |   | 436         |       
|                                                   |                                                |                                                                              |  |  |  |   |        |              |     |  
|Property                                           |                                                |                                                                              |  |  |  |   |        |              |     |   |             |       
|                                                   | Property, plant and equipment                  |                                                                              |  |  |  |   |        | 11,133       |     |   |             | 11,433 |    
|                                                   | Property under capital leases                  |                                                                              |  |  |  |   |        | 221          |     |   |             | 220    |    
|                                                   | Nuclear fuel under capital lease               |                                                                              |  |  |  |   |        |             |     |   |             | 705    |    
|                                                   |                                                |                                                                              |  |  |  |   |        |              |     |  
|                                                   |                                                |                                                                              |  |  |  |   | 11,354 |              |     |   | 12,358      |       
|                                                   |                                                |                                                                              |  |  |  |   |        |              |     |  
|                                                   | Less accumulated depreciation and amortization |                                                                              |  |  |  |   |        | 4,930        |     |   |             | 5,659  |    
|                                                   |                                                |                                                                              |  |  |  |   |        |              |     |  
|                                                   |                                                |                                                                              |  |  |  |   | 6,424  |              |     |   | 6,699       |       
|                                                   |                                                |                                                                              |  |  |  |   |        |              |     |  
|Other Assets                                       |                                                |                                                                              |  |  |  |   |        |              |     |   |             |       
|                                                   | Regulatory assets                              |                                                                              |  |  |  |   |        | 1,090        |     |   |             | 2,686  |    
|                                                   | Securitized regulatory assets (Note 4)         |                                                                              |  |  |  |   |        | 1,710        |     |   |             |       |    
|                                                   | Other                                          |                                                                              |  |  |  |   |        | 105          |     |   |             | 171    |    
|                                                   |                                                |                                                                              |  |  |  |   |        |              |     |  
|                                                   |                                                |                                                                              |  |  |  |   | 2,905  |              |     |   | 2,857       |       
|                                                   |                                                |                                                                              |  |  |  |   |        |              |     |  
|                                                   |                                                |                                                                              |  |  |  | $ | 10,841 |              |     | $ | 10,986      |       
|                                                   |                                                |                                                                              |  |  |  |   |        |              |     |  

See Notes to Consolidated Financial Statements (Unaudited)

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THE DETROIT EDISON COMPANYCONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

|                                                   |                                                                                                                              |   |              |       |   |             |        |       |  
|-------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- | - | ------------ | ----- | - | ----------- | ------ | ----- | -
|                                                   |                                                                                                                              |   | September 30 |       |   | December 31 |       
|                                                   |                                                                                                                              |   | 2001         |       |   | 2000        |       
|                                                   |                                                                                                                              |   |              |       |   |             |       
|(in Millions, Except Per Share Amounts and Shares) |                                                                                                                              |   |              |       |   |             |        |      
|LIABILITIES AND SHAREHOLDERS EQUITY               |                                                                                                                              |   |              |       |   |             |        |      
|Current Liabilities                                |                                                                                                                              |   |              |       |   |             |        |      
|                                                   | Accounts payable                                                                                                             |   | $            | 231   |   |             | $      | 253   |  
|                                                   | Accrued interest                                                                                                             |   |              | 50    |   |             |        | 56    |  
|                                                   | Dividends payable                                                                                                            |   |              | 74    |   |             |        | 80    |  
|                                                   | Accrued payroll                                                                                                              |   |              | 73    |   |             |        | 96    |  
|                                                   | Short-term borrowings                                                                                                        |   |              | 301   |   |             |        | 245   |  
|                                                   | Income taxes                                                                                                                 |   |              | 129   |   |             |        | 114   |  
|                                                   | Current portion long-term debt                                                                                               |   |              | 300   |   |             |        | 159   |  
|                                                   | Current portion capital leases                                                                                               |   |              | 13    |   |             |        | 41    |  
|                                                   | Liabilities from risk management activities                                                                                  |   |              | 34    |   |             |        |      |  
|                                                   | Other                                                                                                                        |   |              | 203   |   |             |        | 164   |  
|                                                   |                                                                                                                              |   |              |       |   |            
|                                                   |                                                                                                                              |   | 1,408        |       |   |             | 1,208  |      
|                                                   |                                                                                                                              |   |              |       |   |            
|Other Liabilities                                  |                                                                                                                              |   |              |       |   |             |        |      
|                                                   | Deferred income taxes                                                                                                        |   |              | 1,759 |   |             |        | 1,811 |  
|                                                   | Capital leases                                                                                                               |   |              | 90    |   |             |        | 145   |  
|                                                   | Unamortized investment tax credit                                                                                            |   |              | 159   |   |             |        | 167   |  
|                                                   | Other                                                                                                                        |   |              | 767   |   |             |        | 588   |  
|                                                   |                                                                                                                              |   |              |       |   |            
|                                                   |                                                                                                                              |   | 2,775        |       |   |             | 2,711  |      
|                                                   |                                                                                                                              |   |              |       |   |            
|Long-Term Debt (Notes 4 and 5)                     |                                                                                                                              |   | 4,232        |       |   |             | 3,344  |      
|                                                   |                                                                                                                              |   |              |       |   |            
|Contingencies (Note 9)                             |                                                                                                                              |   |              |       |   |             |        |      
|                                                  
|Shareholders Equity                               |                                                                                                                              |   |              |       |   |             |        |      
|                                                   | Common stock, $10 par value, 400,000,000 shares
authorized, 134,287,832 and 145,119,875 issued
and outstanding, respectively |   |              | 1,343 |   |             |        | 1,451 |  
|                                                   | Premium on common stock                                                                                                      |   |              | 507   |   |             |        | 548   |  
|                                                   | Common stock expense                                                                                                         |   |              | (44   | ) |             |        | (48   | )
|                                                   | Accumulated other comprehensive loss (Note 7)                                                                                |   |              | (21   | ) |             |        |      |  
|                                                   | Retained earnings                                                                                                            |   |              | 641   |   |             |        | 1,772 |  
|                                                   |                                                                                                                              |   |              |       |   |            
|                                                   |                                                                                                                              |   | 2,426        |       |   |             | 3,723  |      
|                                                   |                                                                                                                              |   |              |       |   |            
|                                                   |                                                                                                                              | $ | 10,841       |       |   | $           | 10,986 |      
|                                                   |                                                                                                                              |   |              |       |   |            

See Notes to Consolidated Financial Statements (Unaudited)

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THE DETROIT EDISON COMPANYCONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

|                                                     |                                                                            |                                            |                            |       |                   |     |    |      |      |     |  
|---------------------------------------------------- | -------------------------------------------------------------------------- | ------------------------------------------ | -------------------------- | ----- | ----------------- | --- | -- | ---- | ---- | --- | -
|                                                     |                                                                            |                                            |                            |       | Nine Months Ended |    
|                                                     |                                                                            |                                            |                            |       | September 30      |    
|                                                     |                                                                            |                                            |                            |       |                   |    
|                                                     |                                                                            |                                            |                            |       | 2001              |     |    | 2000 |     
|                                                     |                                                                            |                                            |                            |       |                   |     |    |      |     
|(in Millions)                                        |                                                                            |                                            |                            |       |                   |     |    |     
|Operating Activities                                 |                                                                            |                                            |                            |       |                   |     |    |     
|                                                     | Net Income                                                                 |                                            | $                          | 124   |                   |     | $  | 264  |     
|                                                     | Adjustments to reconcile net income to net cash from
operating activities: |                                            |                            |       |                   |     |    |      |     
|                                                     |                                                                            | Depreciation and amortization              |                            |       | 498               |     |    |      | 550  |    
|                                                     |                                                                            | Merger and restructuring charges           |                            |       | 150               |     |    |      |     |    
|                                                     |                                                                            | Deferred income taxes                      |                            |       | (60               | )   |    |      | (71  | )  
|                                                     |                                                                            | Other                                      |                            |       | (81               | )   |    |      | (15  | )  
|                                                     |                                                                            | Changes in current assets and liabilities: |                            |       |                   |     |    |      |      |    
|                                                     |                                                                            |                                            | Accounts receivable        |       |                   | (11 | )  |      |      | (21 | )
|                                                     |                                                                            |                                            | Inventories                |       |                   | 57  |    |      |      | 18  |  
|                                                     |                                                                            |                                            | Payables                   |       |                   | (51 | )  |      |      | (17 | )
|                                                     |                                                                            |                                            | Risk management activities |       |                   | 34  |    |      |      |    |  
|                                                     |                                                                            |                                            | Other                      |       |                   | 9   |    |      |      | (53 | )
|                                                     |                                                                            |                                            |                            |       |                   |    
|                                                     |                                                                            | Net cash from operating activities         |                            |       | 669               |     |    |      | 655  |    
|                                                     |                                                                            |                                            |                            |       |                   |    
|Investing Activities                                 |                                                                            |                                            |                            |       |                   |     |    |     
|                                                     | Plant and equipment expenditures                                           |                                            |                            | (564  | )                 |     |    | (413 | )   
|                                                     |                                                                            |                                            |                            |       |                   |    
|                                                     |                                                                            | Net cash used for investing activities     |                            |       | (564              | )   |    |      | (413 | )  
|                                                     |                                                                            |                                            |                            |       |                   |    
|Financing Activities                                 |                                                                            |                                            |                            |       |                   |     |    |     
|                                                     | Issuance of long-term debt                                                 |                                            |                            | 1,890 |                   |     |    | 270  |     
|                                                     | Increase (decrease) in short-term borrowings, net                          |                                            |                            | 56    |                   |     |    | (20  | )   
|                                                     | Increase in restricted cash for debt redemptions                           |                                            |                            | (114  | )                 |     |    |     |     
|                                                     | Redemption of long-term debt                                               |                                            |                            | (861  | )                 |     |    | (245 | )   
|                                                     | Repurchase of common stock                                                 |                                            |                            | (846  | )                 |     |    |     |     
|                                                     | Dividends on common stock                                                  |                                            |                            | (232  | )                 |     |    | (239 | )   
|                                                     |                                                                            |                                            |                            |       |                   |    
|                                                     |                                                                            | Net cash used for financing activities     |                            |       | (107              | )   |    |      | (234 | )  
|                                                     |                                                                            |                                            |                            |       |                   |    
|Net Increase (Decrease) in Cash and Cash Equivalents |                                                                            |                                            | (2                         | )     |                   |     | 8  |     
|Cash and Cash Equivalents at Beginning of the Period |                                                                            |                                            | 24                         |       |                   |     | 4  |     
|                                                     |                                                                            |                                            |                            |       |                   |    
|Cash and Cash Equivalents at End of the Period       |                                                                            | $                                          | 22                         |       |                   | $   | 12 |     
|                                                     |                                                                            |                                            |                            |       |                   |    
|Supplementary Cash Flow Information                  |                                                                            |                                            |                            |       |                   |     |    |     
|                                                     | Interest paid (excluding interest capitalized)                             |                                            | $                          | 231   |                   |     | $  | 203  |     
|                                                     | Income taxes paid                                                          |                                            |                            | 80    |                   |     |    | 142  |     
|Noncash Investing and Financing Activities           |                                                                            |                                            |                            |       |                   |     |    |     
|                                                     | New capital lease obligations                                              |                                            |                            | 13    |                   |     |    | 41   |     
|                                                     | Distribution of International Transmission Company to
parent (Note 3)      |                                            |                            | 327   |                   |     |    |     |     

See Notes to Consolidated Financial Statements (Unaudited)

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THE DETROIT EDISON COMPANYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1  GENERAL

Detroit Edison, a wholly owned subsidiary of DTE (an exempt holding company
under the Public Utility Holding Company Act of 1935, as amended), is a
Michigan public utility engaged in the generation, purchase, distribution and
sale of electric energy to 2.1 million customers in a 7,600 square-mile
Southeastern Michigan service area.

These consolidated financial statements (unaudited) should be read in
conjunction with the Annual Report Notes and the Quarterly Report Notes. The
Notes contained herein update and supplement matters discussed in the Annual
Report Notes and the Quarterly Report Notes.

The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.

The consolidated financial statements are unaudited, but in the opinion of
Detroit Edison, 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.

Certain prior year balances have been reclassified to conform to the current
years presentation.

NOTE 2  MERGER AND RESTRUCTURING CHARGES

During the third quarter of 2001, Detroit Edison incurred merger-related
charges of $9 million ($6 million after tax) consisting of system integration,
relocations, legal and consulting costs. During the nine-month period ended
September 30, 2001, Detroit Edison incurred merger and restructuring charges of
$184 million ($120 million after tax) primarily associated with a workforce
reduction plan in conjunction with DTEs acquisition of MCN. The plan included
early retirement incentives along with voluntary separation arrangements for
890 employees primarily in overlapping corporate support functions.
Approximately $13 million of the benefits have been paid as of September 30,
2001, and it is anticipated that the remaining benefits will be paid from
Detroit Edisons retirement plans.

NOTE 3  TRANSMISSION BUSINESS

Effective January 2001, Detroit Edison transferred its transmission assets,
with a book value of approximately $390 million, to a wholly owned subsidiary,
ITC. On May 31, 2001, Detroit Edison distributed 100 percent of the shares of
ITC to DTE.

Detroit Edison continues to bill and collect transmission revenues as currently
authorized in its bundled distribution rates approved by the MPSC. ITC
provides transmission services to customers of Detroit Edison and other
non-affiliated customers. ITC billed Detroit Edison $24 million and $32
million for the three- and nine-month periods ended September 30, 2001,
respectively, for the costs of providing transmission services to utility
customers.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 4  SECURITIZATION

Michigan Public Acts 141 and 142 permit Detroit Edison to recover certain
stranded costs through securitization. The stranded costs primarily represent
Detroit Edisons unamortized investment in the 1,150 MW Fermi 2 nuclear power plant that was classified as a
regulatory asset. The MPSC approved the issuance of securitization bonds for
the benefit of Detroit Edison. Detroit Edison formed The Detroit Edison
Securitization Funding LLC (Securitization LLC) for the purpose of securitizing
its stranded costs.

In March 2001, the Securitization LLC issued $1.750 billion of Securitization
Bonds, Series 2001-1, and Detroit Edison sold $1.750 billion of stranded costs
to the Securitization LLC. The Securitization Bonds mature over a period of up
to fifteen years and have an average interest rate of 6.3%. Detroit Edison
implemented a non-bypassable surcharge on its customer bills, effective March
26, 2001, for the purpose of collecting amounts sufficient to provide for the
payment of interest and principal.

The Securitization LLC is independent of Detroit Edison, as is its ownership of
the securitization property. Due to principles of consolidation, stranded
costs sold by Detroit Edison to the Securitization LLC and the $1.750 billion
of securitization bonds appear on Detroit Edisons consolidated statement of financial position.
Detroit Edison makes no claim to these assets. Ownership of such assets has
vested in the Securitization LLC and has been assigned to the trustee for the
Securitization Bonds. Funds collected by Detroit Edison, acting in the
capacity of a servicer for the Securitization LLC, are remitted to the trustee
for the Securitization Bonds. Neither the securitization property nor funds
collected from Detroit Edisons customers for the payment of costs related to
the Securitization LLC and Securitization Bonds are available to Detroit
Edisons creditors.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 5  LONG-TERM DEBT

In September 2001, Detroit Edison issued $139.9 million of tax-exempt revenue
bonds secured by mortgage bonds due 2029. Interest on the notes is payable on
a semi-annual basis, beginning March 1, 2002.

The following debt was redeemed during the nine-month period ended September
30, 2001:

|                      |       |      |               |   |            |           |                   |            |        |   |     |     | 
|--------------------- | ----- | ---- | ------------- | - | ---------- | --------- | ----------------- | ---------- | ------ | - | --- | --- | 
|                      |       |      | Interest      |   |            | Scheduled |                   |            | Amount |  
|Series                |       | Rate |               |   | Redemption |           |                   | (millions) |       
|                      |       |      |               |   |            |           |                   |            |       
|1990 Series A         |       |      | 7.904         | % |            |           | 04/02/01          |            |        | $ | 6   |    
|1990 Series A         |       |      | 7.904         |   |            |           | 04/01/02-03/31/20 |            |        |   | 119 |    
|1990 Series B         |       |      | 7.904         |   |            |           | 04/02/01          |            |        |   | 10  |    
|1990 Series C         |       |      | 8.357         |   |            |           | 04/02/01          |            |        |   | 3   |    
|1991 Series CC        |       |      | 6.95          |   |            |           | 09/01/21          |            |        |   | 42  |    
|1992 Series D         |       |      | 7.110 - 8.310 |   |            |           | 08/01/02-08/01/22 |            |        |   | 96  |    
|1993 Series B         |       |      | Variable      |   |            |           | 08/15/33          |            |        |   | 160 |    
|1993 Series C         |       |      | 7.350 - 8.30  |   |            |           | 01/15/03-01/15/23 |            |        |   | 55  |    
|1993 Series E         |       |      | 7.770 - 7.820 |   |            |           | 03/15/23          |            |        |   | 23  |    
|1993 Series G         |       |      | 6.56          |   |            |           | 05/01/01          |            |        |   | 100 |    
|1993 Series J         |       |      | 7.74          |   |            |           | 06/01/18          |            |        |   | 44  |    
|1994 Series C         |       |      | Variable      |   |            |           | 08/15/34          |            |        |   | 100 |    
|1999 Series D         |       |      | Variable      |   |            |           | 09/17/01          |            |        |   | 40  |    
|2000 Series A         |       |      | 7.5           |   |            |           | 02/01/05          |            |        |   | 59  |    
|Securitization 2001-1 |       |      | 5.18          |   |            |           | 09/01/01          |            |        |   | 4   |    
|                      |       |      |               |   |            |           |                   |            |        |   |    
|                      | Total |      |               |   |            |           |                   |            |        |   | $   | 861 | 
|                      |       |      |               |   |            |           |                   |            |        |   |    

NOTE 6  FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133, as amended, establishes
accounting and reporting standards for derivative instruments and for hedging
activities. It requires that all derivative instruments be recognized as
either assets or liabilities, measured at fair value. The accounting for
changes in fair value depends upon the purpose of the derivative instrument and
whether it is designated as a hedge and qualifies for hedge accounting. To the
extent derivative instruments qualify as hedges and are designated as hedges of
the variability of cash flows associated with forecasted transactions, the
effective portion of the gain or loss on such derivative instruments is
reported in other comprehensive income. The ineffective portion, if any, is
recorded in net income. Such amounts recorded in other comprehensive income
are reclassified into net income when the forecasted transaction affects
earnings. If a cash flow hedge is discontinued because it is probable that the
forecasted transaction will not occur, the net gain or loss is immediately

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

reclassified into earnings. To the extent derivative instruments qualify as
hedges and are designated as hedges of changes in fair value of an existing
asset, liability or firm commitment, the gain or loss on the hedging instrument
is recognized in earnings along with the changes in fair value of the hedged
asset, liability or firm commitment attributable to the hedged risk.

SFAS No. 133 requires that as of the date of initial adoption, the difference
between the fair value of derivative instruments and the previous carrying amount of those derivatives be recorded in net
income or other comprehensive income, as appropriate, as the cumulative effect
of a change in accounting principle in accordance with Accounting Principles
Board Opinion 20, Accounting Changes.

As of January 1, 2001, Detroit Edison adopted SFAS No. 133, as required. The
financial statement impact of recording the various SFAS No. 133 transactions
at January 1, 2001 was as follows:

|                              |                                                        |                            |   |        |    |  
|----------------------------- | ------------------------------------------------------ | -------------------------- | - | ------ | -- | -
|                              |                                                        |                            |   | Amount |   
|Financial Statement Line Item |                                                        | Increase (Decrease)        |  
|                              |                                                        |                            |  
|(in Millions)                 |                                                        |                            |   |       
|                              | Assets from risk management activities                 |                            | $ | 26     |   
|                              | Liabilities from risk management activities            |                            | $ | 10     |   
|                              | Income taxes payable                                   |                            | $ | 6      |   
|                              | Cumulative effect of a change in accounting principle: |                            |   |        |   
|                              |                                                        | Other comprehensive income |   | $      | 13 |  
|                              |                                                        | Net income                 |   | $      | (3 | )

The FASB continues to develop interpretive guidance for SFAS No. 133.
Accordingly, any future interpretations of SFAS No. 133 may impact Detroit
Edisons ultimate application of the standard.

Commodity Price Risk

Detroit Edison uses over-the-counter forward contracts and options to manage
the risk of fluctuations in the market price of electricity. Certain of these
contracts have been formally designated as cash flow hedges of the forecasted
purchase of power. Such contracts are measured at fair value and are recorded
as assets and liabilities in the consolidated statement of financial position with gains and
losses included in other comprehensive income. For the three- and nine-month
periods ended September 30, 2001, Detroit Edison recorded a gain of $10 million
and a loss of $34 million, respectively, net of tax, in other comprehensive
income for these hedges. Amounts recorded in other comprehensive income will
be reclassified to fuel and purchased power expense as the forecasted purchases
of electricity affect earnings. At September 30, 2001, the estimated net
amount of existing loss that is expected to be reclassified into earnings
within the next 12 months is approximately $19 million. The maximum length of
time over which Detroit Edison is hedging its exposure to the variability of
future cash flows is two years. Ineffectiveness recognized in these hedging
relationships was immaterial for the three- and nine-month periods ended
September 30, 2001.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Certain of Detroit Edisons electricity and natural gas forward purchase and
sale contracts, and purchased electricity and coal option contracts entered
into for the purpose of economically hedging its exposure to commodity risk, do
not qualify for hedge accounting under SFAS No. 133. Detroit
Edison marks these contracts to market on its consolidated statement of
financial position and records a corresponding gain or loss in earnings. Such
holding gains and losses are recorded in revenues or fuel and purchased power
expense, depending on the type of contract.

Certain of Detroit Edisons forward electric contracts are considered normal
purchases and sales, and therefore are excluded
from the scope of SFAS No. 133. In June 2001, FASB provided guidance on the
implementation of SFAS No. 133, regarding certain contracts
in the power generation industry. In June 2001, issue No. C15, Scope
Exceptions: Normal Purchases and Normal Sales Exception for Option-Type
Contracts and Forward Contracts in Electricity was issued. The FASB concluded
that because electricity cannot be readily stored in significant
quantities,
and the entity engaged in selling electricity is obligated to maintain
sufficient capacity to meet the electricity needs of its customer base, an
option-like contract for the purchase of electricity that meets certain
criteria is eligible for the normal purchases and sales exception. Detroit
Edison adopted this new guidance on July 1, 2001, as required, and began
amortizing the previously recorded liability on option-like contracts over their remaining lives. In October 2001, the FASB issued revisions to issue No. C15 which
would be effective on January 1, 2002. If issue No. C15 is not further revised
by the FASB, mark-to-market accounting may be required for such option-like contracts. Detroit Edison
continues to analyze the impact this new guidance will have on its accounting
for derivative instruments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 7  COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) is the change in equity during a period from transactions
and other events and circumstances from non-owner sources. Detroit Edison did
not have other comprehensive income (loss) in 2000. The following table displays
comprehensive income (loss) for the applicable periods:

|                                              |                                                            |                                                                            |    |              |    |   |              |  |     |  
|--------------------------------------------- | ---------------------------------------------------------- | -------------------------------------------------------------------------- | -- | ------------ | -- | - | ------------ |  | --- | -
|                                              |                                                            |                                                                            |    | Three Months |    |   | Nine Months  | 
|                                              |                                                            |                                                                            |    | Ended        |    |   | Ended        | 
|                                              |                                                            |                                                                            |    | September 30 |    |   | September 30 | 
|                                              |                                                            |                                                                            |    |              |    |   |              | 
|(in Millions)                                 |                                                            |                                                                            |    |              |    |   |              | 
|Net Income                                    |                                                            | $                                                                          | 88 |              |    | $ | 124          | 
|                                              |                                                            |                                                                            |    |              |    |  
|Other comprehensive income (loss) net of tax: |                                                            |                                                                            |    |              |    |   |              | 
|                                              | Net unrealized losses on derivatives qualifying as hedges: |                                                                            |    |              |    |   |              |  |    
|                                              |                                                            | Cumulative effect of a change in accounting principle,
Net of taxes of $6  |    |              |   |   |              |  | 13  |  
|                                              |                                                            | Losses arising during the period, net of taxes of
$4 and $29, respectively |    |              | (7 | ) |              |  | (54 | )
|                                              |                                                            | Amounts reclassified to earnings, net of taxes of $9
and $11, respectively |    |              | 17 |   |              |  | 20  |  
|                                              |                                                            |                                                                            |    |              |    |   |              | 
|                                              |                                                            | Total other comprehensive income (loss)                                    |    |              | 10 |   |              |  | (21 | )
|                                              |                                                            |                                                                            |    |              |    |   |              | 
|Comprehensive Income                          |                                                            | $                                                                          | 98 |              |    | $ | 103          | 
|                                              |                                                            |                                                                            |    |              |    |  

NOTE 8   REGULATORY MATTERS

In October 2000, the MPSC initiated a case to determine the methodology of
calculating net
stranded costs, as required by Public Act 141 of 2000 (PA 141). In a filing in
February 2001, Detroit Edison defined net stranded costs as the economic harm
that results from the loss of bundled rate generation revenue resulting from
Electric Choice, offset by the benefits received when Detroit Edison sells this
available power into the market. Detroit Edison proposed a zero transition
charge for the year 2002. A transition charge or credit would begin in 2003,
based on actual net stranded costs or benefits, as defined, experienced in
2002. The MPSC Staff proposed to determine a net stranded cost transition
charge based on revenue requirements for the fixed cost component of generation
plant, with a surcharge floor of zero. On November 8, 2001, a MPSC ALJ issued a PFD that generally supported the MPSC staff's proposal. The PFD also proposed the recognition of variable as well as fixed costs of generation. An order is not expected
before the end of 2001.

NOTE 9  CONTINGENCIES

Detroit Edison is 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.
Management cannot predict the final disposition of such proceedings.
Management regularly reviews legal matters and records provisions for claims
that are considered probable of loss. The

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

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INDEPENDENT ACCOUNTANTS REPORT

To the Board of Directors 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,
2001, and the related condensed consolidated statements of operation for the
three-month and nine-month periods ended September 30, 2001 and 2000, the
condensed consolidated statements of cash flows for the nine-month periods
ended September 30, 2001 and 2000, and the condensed consolidated statement of
changes in shareholders equity for the nine-month period ended September 30,
2001. These financial statements are the responsibility of The Detroit Edison
Companys management.

We conducted our review 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 to
financial data and of 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 review, we are not aware of any material modifications that should
be made to such condensed consolidated 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 balance sheet of The
Detroit Edison Company and subsidiaries as of December 31, 2000, and the
related consolidated statements of income, changes in shareholders equity, and
cash flows for the year then ended (not presented herein); and in our report
dated January 24, 2001, 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,
2000 is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.

DELOITTE & TOUCHE LLP

Detroit, Michigan
November 13, 2001

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OTHER INFORMATION




Other Information

MPSC

Unbundling Case

On June 4, 2001, pursuant to Public Act 141 of 2000 (PA 141), Detroit Edison
filed with the MPSC an application outlining its proposal to unbundle its
existing rates. PA 141 required utilities to submit applications to unbundle
their existing rates and separately identify and charge for discrete services.
Detroit Edison believes, and has proposed, that it provides two discrete
services: distribution service, which will continue to be regulated by the
MPSC, and bulk power supply service, which is also available from market
suppliers. Distribution service has already been unbundled through the
MPSC-authorized Retail Access Service Tariffs. In its application, Detroit
Edison has proposed to make its customers aware of the costs associated with
distribution service defined by the Retail Access Service Tariffs. The
remaining costs are those against which price comparisons can be made when the
customer receives bulk power supply offers from alternative electric suppliers.
On August 23, 2001, a MPSC ALJ issued a PFD that indicates Detroit Edisons June 4, 2001 filing did not
comport with the requirements of PA 141 and recommends Detroit Edison should be
required to refile an application with the MPSC. Detroit Edison has filed
exceptions to the PFD with the MPSC to have the ALJs ruling overturned.

Transfer of Transmission Assets

As discussed in Note 3, Detroit Edison transferred its transmission assets to
ITC. The MPSC initiated a case in February 2001 to address the August 2000
request by the Association of Businesses Advocating Tariff Equity (ABATE) to
consider the consequences of the transfer of transmission assets from Detroit
Edison to ITC. The request by ABATE, which had been adjourned pending the June
4, 2001 unbundling filing, was reinstated with testimony to be filed in the
fourth quarter of 2001 and hearings planned for 2002.

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EXHIBITS AND REPORTS ON FORM 8-K



|(a) |  | Exhibits                
|--- |  | ------------------------
|   
|(i) |  | Exhibits filed herewith.

|        |  |                                                                                                                                             |  |  |  | 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit |  |                                                                                                                                             |  |  |  | 
|Number  |  | Description                                                                                                                                 |  |  |  | 
|        |  |                                                                                                                                             |  |  |  | 
|       
|4-227   |  | Supplemental Indenture dated as of August 15, 2001,
establishing the 2001 Series CP Mortgage Bonds.                                        
|       
|4-228   |  | Supplemental Indenture, dated as of September 15, 2001
establishing the 2001 Series D and 2001 Series E Mortgage Bonds.                    
|       
|4-229   |  | Ninth Supplemental Indenture, dated as of October 10, 2001,
establishing the 5.050% Senior Notes due 2005 and 6.125% Senior
Notes due 2010.
|       
|15-19   |  | Awareness Letter of Deloitte & Touche LLP regarding
their report dated November 13, 2001.                                                  
|       
|99-1    |  | $300 million Credit Agreement dated as of November 7, 2001.                                                                                



|(b) |  | Reports on Form 8-K
|--- |  | -------------------
|   
|    |  | None.              

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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   
|     
|     
|Date: |  | November 13, 2001 |  | By /s/ DANIEL G. BRUDZYNSKI  
|      |  |                   |  |                              
|      |  |                   |  | Daniel G. Brudzynski         
|      |  |                   |  | Chief Accounting Officer,    
|      |  |                   |  | Vice President and Controller

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Exhibit Index

|        |  |                                                                                                                                             |  |  |  | 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit |  |                                                                                                                                             |  |  |  | 
|Number  |  | Description                                                                                                                                 |  |  |  | 
|        |  |                                                                                                                                             |  |  |  | 
|       
|4-227   |  | Supplemental Indenture dated as of August 15, 2001,
establishing the 2001 Series CP Mortgage Bonds.                                        
|       
|4-228   |  | Supplemental Indenture, dated as of September 15, 2001
establishing the 2001 Series D and 2001 Series E Mortgage Bonds.                    
|       
|4-229   |  | Ninth Supplemental Indenture, dated as of October 10, 2001,
establishing the 5.050% Senior Notes due 2005 and 6.125% Senior
Notes due 2010.
|       
|15-19   |  | Awareness Letter of Deloitte & Touche LLP regarding
their report dated November 13, 2001.                                                  
|       
|99-1    |  | $300 million Credit Agreement dated as of November 7, 2001.