##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
   FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended March 31, 2005 Commission file number 1-2198 The registrant meets the conditions set forth in General Instruction H (1) (a) and (b) of Form
10-Q and is, therefore, filing this Form with the reduced disclosure format. THE DETROIT EDISON COMPANY  Michigan
(State or other jurisdiction of
incorporation or organization)
    
    38-0478650
(I.R.S. Employer
Identification No.)2000 2nd Avenue, Detroit, Michigan
(Address of principal executive offices)
    
    48226-1279
(Zip Code)
 313-235-4000
(Registrants telephone number, including area code) Indicate by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes þ Noo Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2
of the Exchange Act). Yes o Noþ




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The Detroit Edison Company Quarterly Report on Form 10-QQuarter Ended March 31, 2005 Table of Contents PageDefinitions
    
    
    3Forward-Looking Statements
    
    
    4Part I  Financial InformationItem 1. Financial StatementsConsolidated Statement of Operations
    
    
    9Consolidated Statement of Financial Position
    
    
    10Consolidated Statement of Cash Flows
    
    
    12Consolidated Statement of Changes in Shareholders Equity and Comprehensive Income
    
    
    13Notes to Consolidated Financial Statements
    
    
    14Report of Independent Registered Public Accounting Firm
    
    
    19Item 2. Managements Narrative Analysis of Results of Operations
    
    
    5Item 4. Controls and Procedures
    
    
    8Part II  Other InformationItem 1. Legal Proceedings
    
    
    20Item 6. Exhibits
    
    
    20Signature
    
    
    21Awareness Letter of Deloitte & Touche LLPChief Executive Officer Section 302 CertificationChief Financial Officer Section 302 CertificationChief Executive Officer Section 906 CertificationChief Financial Officer Section 906 Certification
  2




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Definitions Customer Choice
    
    Statewide initiatives giving customers in Michigan
the option to choose alternative suppliers for
electricity.Detroit Edison
    
    The Detroit Edison Company (a direct wholly owned
subsidiary of DTE Energy Company) and subsidiary
companiesDTE Energy
    
    DTE Energy Company, the parent of Detroit Edison and directly or
indirectly the parent company of numerous non-utility subsidiariesEPA
    
    United States Environmental Protection AgencyFERC
    
    Federal Energy Regulatory CommissionITC
    
    International Transmission Company (until February 28, 2003, a
wholly owned subsidiary of DTE Energy Company)MPSC
    
    Michigan Public Service CommissionNRC
    
    Nuclear Regulatory CommissionPSCR
    
    A power supply cost recovery mechanism authorized by the MPSC that allows Detroit Edison to
recover through rates its fuel, fuel-related and purchased power expenses. The clause was
suspended under Michigans restructuring legislation (signed into law June 5, 2000), which
lowered and froze electric customer rates. The clause was reinstated by the MPSC effective
January 1, 2004.Securitization
    
    Detroit Edison financed specific stranded costs at lower interest rates
through the sale of rate reduction bonds by a wholly owned special
purpose entity, the Detroit Edison Securitization Funding LLC.SFAS
    
    Statement of Financial Accounting StandardsStranded costs
    
    Costs incurred by utilities in order to serve customers in a regulated environment
that absent special regulatory approval would not otherwise expect to be recoverable if
customers switch to alternative energy suppliers.Units of MeasurementgWh
    
    Gigawatthour of electricitykWh
    
    Kilowatthour of electricityMW
    
    Megawatt of electricityMWh
    
    Megawatthour of electricity
 3




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Forward-Looking Statements Certain information presented herein includes forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve certain
risks and uncertainties that may cause actual future results to differ materially from those
contemplated, projected, estimated or budgeted in such forward-looking statements. There are many
factors that may impact forward-looking statements including, but not limited to, the following:  
    the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers;
    economic climate and growth or decline in the geographic areas where we do business;
    environmental issues, laws and regulations, and the cost of remediation and compliance associated therewith;
    nuclear regulations and operations associated with nuclear facilities;
    implementation of the electric Customer Choice program;
    impact of electric utility restructuring in Michigan, including legislative amendments;
    employee relations and the impact of collective bargaining agreements;
    unplanned outages;
    access to capital markets and capital market conditions and the results of other financing efforts which can be
affected by credit agency ratings;
    the timing and extent of changes in interest rates;
    the level of borrowings;
    changes in the cost and availability of coal and other raw materials, and purchased power;
    effects of competition;
    impact of regulation by FERC, MPSC, NRC and other applicable governmental proceedings and regulations;
    changes in federal, state and local tax laws and their interpretations, including the Internal Revenue Code,
regulations, rulings, court proceedings and audits;
    the ability to recover costs through rate increases;
    the availability, cost, coverage and terms of insurance;
    the cost of protecting assets against or damage due to terrorism;
    changes in accounting standards and financial reporting regulations;
    changes in federal or state laws and their interpretation with respect to regulation, energy policy and other business
issues;
    uncollectible accounts receivable; and
    changes in the economic and financial viability of our suppliers, customers and trading counterparties, and the
continued ability of such parties to perform their obligations to Detroit Edison. New factors emerge from time to time. We cannot predict what factors may arise or how such factors
may cause our results to differ materially from those contained in any forward-looking statement.
Any forward-looking statements speak only as of the date on which such statements are made. We
undertake no obligation to update any forward-looking statement to reflect events or circumstances
after the date on which such statement is made or to reflect the occurrence of unanticipated
events. 4




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##### Table of Contents



The Detroit Edison Company 
 Managements Narrative Analysis of Results of Operations
 The Managements Narrative Analysis of Results of Operations discussion for Detroit Edison is
presented in accordance with General Instruction H(2) (a) of Form 10-Q. We had income of $55 million in the 2005 first quarter compared to income of $44 million for the
2004 first quarter. Detroit Edison has the following two reportable segments. ENERGY RESOURCES Utility - Power Generation The power generation plants of Detroit Edison comprise our regulated power generation business.
Detroit Edisons numerous fossil plants, its hydroelectric pumped storage plant and its nuclear
plant generate electricity. The generated electricity, supplemented with purchased power, is sold
principally throughout Michigan and the Midwest to residential, commercial, industrial and
wholesale customers. Factors impacting income:Power Generation earnings decreased $4 million during the 2005 first
quarter. As subsequently discussed, these results primarily reflect increased depreciation and
amortization expenses, partially offset by higher rates due to the November 2004 MPSC final rate
order and lower operations and maintenance expense. 
 Three Months EndedMarch 31(in Millions)
    
    2005
    
    
    2004Operating Revenues
    
    $
    658
    
    
    $
    551Fuel and Purchased Power
    
    
    295
    
    
    
    210Gross Margin
    
    
    363
    
    
    
    341Operation and Maintenance
    
    
    173
    
    
    
    182Depreciation and Amortization
    
    
    89
    
    
    
    50Taxes Other Than Income
    
    
    37
    
    
    
    39Operating Income
    
    
    64
    
    
    
    70Other (Income) and Deductions
    
    
    46
    
    
    
    46Income Tax Provision
    
    
    6
    
    
    
    8Net Income
    
    $
    12
    
    
    $
    16Operating Income as a Percent of Operating Revenues
    
    
    10
    %
    
    
    13
    %
 Gross marginsincreased $22 million primarily due to rate increases as a result of the MPSC
final rate order issued in November 2004. Additionally, the first quarter of 2005 has seen the
return of customers who formerly participated in the Customer Choice program. Detroit Edison lost
13 % of retail sales in the 2005 first quarter and 15% of such sales in the 2004 first quarter as a
result of Customer Choice penetration. Operating revenues and fuel and purchased power costs
increased in the 2005 first quarter compared to the 2004 first quarter reflecting a $3.46 per
megawatt hour (MWh) (23%) increase in power cost which is a pass-through with the reinstatement of
the PSCR. The increase in power supply cost is driven by higher purchase power rates, higher coal
prices and increased power purchases due to the outage at our nuclear facility, Fermi 2, which was
offline for 14 days during the 2005 first quarter. Pursuant to the MPSC final rate order, transmission
expenses previously recorded in Energy Distribution Utility  5




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Power Distribution operation and maintenance expenses are now reflected in Energy Resources Utility
 Power Generations purchased power expenses. The PSCR
mechanism provides related revenues for transmission expense. 
 Three Months EndedMarch 312005
    
    
    2004Electric Sales
(in Thousands of MWh)Retail
    
    
    10,415
    
    
    
    10,423Wholesale and other
    
    
    2,282
    
    
    
    2,18612,697
    
    
    
    12,609Internal use and line loss
    
    
    596
    
    
    
    78113,293
    
    
    
    13,390Power Generated and Purchased
(in Thousands of MWh)Power plant generationFossil
    
    
    9,763
    
    
    
    9,784Nuclear
    
    
    2,053
    
    
    
    2,40811,816
    
    
    
    12,192Purchased power
    
    
    1,477
    
    
    
    1,198System output
    
    
    13,293
    
    
    
    13,390Average Unit Cost ($/MWh)Generation (1)
    
    $
    14.40
    
    
    $
    12.88Purchased power (2)
    
    $
    49.30
    
    
    $
    34.54Overall average unit cost
    
    $
    18.28
    
    
    $
    14.82
   (1)
    
    Represents fuel costs associated with power plants.(2)
    
    Includes amounts associated with hedging activities. Operation and maintenanceexpense decreased $9 million in the first quarter of 2005. Pursuant
to the MPSC final rate order, merger interest is no longer allocated to Detroit Edison. The 2005
period also experienced lower benefit costs, partially offset by increased power plant outage
expense. Depreciation and amortizationexpense increased $39 million in the first quarter of 2005. The
increase reflects the income effect of recording regulatory assets, which lowers depreciation and
amortization expenses. The interim and final electric rate orders in 2004 recover PA 141 costs
previously deferred as regulatory assets. As a result, the regulatory asset deferrals totaled $13
million in the first quarter of 2005 compared to $42 million in the first quarter of 2004. Outlook Future operating results are expected to vary as a result of external factors such as
regulatory proceedings, new legislation, changes in market prices of power, coal and natural gas,
plant performance, changes in economic conditions, weather and the levels of customer participation
in the electric Customer Choice program. As previously discussed, we expect cash flows and operating performance will continue to be at risk
due to the electric Customer Choice program until the issues associated with this program are
resolved. We have addressed certain issues of the electric Customer Choice program in our revenue
neutral February 2005 rate restructuring proposal. We cannot predict the outcome of these matters. In conjunction with DTE Energys sale of the transmission assets of International Transmission
Company (ITC) in February 2003, the Federal Energy Regulatory Commission (FERC) froze ITCs
transmission rates through December 2004. Annual rate adjustments pursuant to a formulistic pricing
mechanism will result in an estimated increase in Detroit Edisons transmission expense of $50
million annually, beginning in January 2005. Additionally, in a proceeding before the FERC, several
Midwest utilities seek 6




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to recover transmission revenues lost as a result of a FERC order modifying the pricing of
transmission service in the Midwest. During the first quarter of 2005 Detroit Edison recorded an
estimated $9 million of additional expense. Detroit Edison
anticipates additional expenses of approximately $1 million per
month from April 2005 through March 2006. Detroit Edison is expected to incur an additional $15
million in 2005 for charges related to the implementation of Midwest Independent Transmission
System Operators open market. Detroit Edison received rate orders in 2004 that allow for the
recovery of increased transmission expenses through the PSCR mechanism. See Note 3  Regulatory Matters. ENERGY DISTRIBUTION Utility - Power Distribution Power Distribution operations include the electric distribution services of Detroit Edison. Power
Distribution distributes electricity generated and purchased by Energy Resources and alternative
energy suppliers to Detroit Edisons 2.1 million customers. Factors impacting income: Power Distribution earnings increased $15 million during the 2005 first
quarter. As subsequently discussed, these results primarily reflect lower operation and
maintenance expense, as well as higher rates due to the November 2004 MPSC final
rate order. 
 Three Months EndedMarch 31(in Millions)
    
    2005
    
    
    2004Operating Revenues
    
    $
    332
    
    
    $
    335Fuel and Purchased Power
    
    
    6
    
    
    
    6Operation and Maintenance
    
    
    148
    
    
    
    161Depreciation and Amortization
    
    
    61
    
    
    
    64Taxes Other Than Income
    
    
    32
    
    
    
    29Operating Income
    
    
    85
    
    
    
    75Other (Income) and Deductions
    
    
    23
    
    
    
    33Income Tax Provision
    
    
    19
    
    
    
    14Net Income
    
    $
    43
    
    
    $
    28Operating Income as a Percent of Operating Revenues
    
    
    26
    %
    
    
    22
    %Electric Deliveries(in Thousands of MWh)Residential
    
    
    4,051
    
    
    
    4,069Commercial
    
    
    3,364
    
    
    
    3,491Industrial
    
    
    2,897
    
    
    
    2,754Wholesale
    
    
    563
    
    
    
    556Other
    
    
    104
    
    
    
    10910,979
    
    
    
    10,979Electric Choice
    
    
    1,722
    
    
    
    1,975Electric Choice  Self Generations*
    
    
    192
    
    
    
    167Total Electric Deliveries
    
    
    12,893
    
    
    
    13,121
   *
    Represents deliveries for self generators who have purchased power from
alternative energy suppliers to supplement their power requirements. Operating revenuesdecreased $3 million primarily due to lower electric deliveries as a result
of economic conditions, partially offset by higher rates from the November 2004 MPSC final rate
order. 7




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Operation and maintenanceexpense decreased $13 million. Pursuant to the MPSC final electric rate
order, transmission expenses previously recorded in Energy Distribution Utility  Power
Distribution operation and maintenance expenses are now reflected in Energy Resources Utility 
Power Generations purchased power expenses with related revenues through the PSCR mechanism. In
addition, pursuant to the MPSC final rate order, merger interest is no longer allocated to Detroit
Edison. The 2005 first quarter also benefited from lower uncollectible accounts receivable expense,
partially offset by higher costs for the funding of low-income customer assistance fund and system
reliability expenses. Other income and deductionsdecreased $10 million primarily due to lower interest expense as a
result of adjustments due to settlements related to tax audits. Outlook Operating results are expected to vary as a result of external factors such as weather,
changes in economic conditions and the severity and frequency of storms. 
 CONTROLS AND PROCEDURES (a) Evaluation of disclosure controls and procedures Management of the Company carried out an evaluation, under the supervision and with the
participation of the Companys Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the Companys disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of March 31, 2005, which is the end of the period covered by this
report. Based on this evaluation, the Companys Chief Executive Officer and Chief Financial Officer
have concluded that such controls and procedures are effectively
designed and operating to ensure that
information required to be disclosed by the Company in reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified in
the SECs rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed and operating to ensure that information required to be disclosed by the Company
in the reports that it files or submits under the Exchange Act is accumulated and communicated to
the Companys management, including its Chief Executive Officer and Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosure. (b) Changes in internal control over financial reporting There has been no change in the Companys internal control over financial reporting during the
quarter ended March 31, 2005 that has materially affected, or is reasonably likely to materially
affect, the Companys internal control over financial reporting. 8




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The Detroit Edison Company 
 Consolidated Statement of Operations (unaudited)
  Three Months EndedMarch 31(in Millions)
    
    2005
    
    
    2004Operating Revenues
    
    $
    990
    
    
    $
    886Operating ExpensesFuel and purchased power
    
    
    301
    
    
    
    216Operation and maintenance
    
    
    321
    
    
    
    343Depreciation and amortization
    
    
    150
    
    
    
    114Taxes other than income
    
    
    69
    
    
    
    68841
    
    
    
    741Operating Income
    
    
    149
    
    
    
    145Other (Income) and DeductionsInterest expense
    
    
    64
    
    
    
    72Interest income
    
    
    (1
    )
    
    
    Other income
    
    
    (12
    )
    
    
    (15
    )Other expenses
    
    
    18
    
    
    
    2269
    
    
    
    79Income Before Income Taxes
    
    
    80
    
    
    
    66Income Tax Provision
    
    
    25
    
    
    
    22Net Income
    
    $
    55
    
    
    $
    44
 See Notes to Consolidated Financial Statements (Unaudited) 9




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The Detroit Edison Company 
 Consolidated Statement of Financial Position
  (Unaudited)March 31
    
    
    December 31(in Millions)
    
    2005
    
    
    2004ASSETSCurrent AssetsCash and cash equivalents
    
    $
    20
    
    
    $
    6Restricted cash
    
    
    22
    
    
    
    75Accounts receivableCustomer (less allowance for doubtful
accounts of $51 and $55, respectively)
    
    
    308
    
    
    
    258Accrued unbilled revenues
    
    
    157
    
    
    
    207Other
    
    
    96
    
    
    
    120InventoriesFuel
    
    
    104
    
    
    
    100Materials and supplies
    
    
    117
    
    
    
    118Note receivable from Affiliate
    
    
    
    
    
    
    85Other
    
    
    108
    
    
    
    46932
    
    
    
    1,015InvestmentsNuclear decommissioning trust funds
    
    
    593
    
    
    
    590Other
    
    
    53
    
    
    
    55646
    
    
    
    645PropertyProperty, plant and equipment
    
    
    13,017
    
    
    
    12,931Less accumulated depreciation and depletion.
    
    
    (5,396
    )
    
    
    (5,354
    )7,621
    
    
    
    7,577Other AssetsRegulatory assets
    
    
    2,080
    
    
    
    2,053Securitized regulatory assets
    
    
    1,414
    
    
    
    1,438Other
    
    
    105
    
    
    
    1143,599
    
    
    
    3,605Total Assets
    
    $
    12,798
    
    
    $
    12,842
 See Notes to Consolidated Financial Statements (Unaudited) 10




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The Detroit Edison CompanyConsolidated Statement of Financial Position  (Unaudited)March 31
    
    
    December 31(in Millions, Except Shares)
    
    2005
    
    
    2004LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    311
    
    
    $
    346Accrued interest
    
    
    56
    
    
    
    79Dividends payable
    
    
    76
    
    
    
    76Accrued payroll
    
    
    22
    
    
    
    12Accrued vacations
    
    
    78
    
    
    
    76Short-term borrowings
    
    
    184
    
    
    
    Accrued PSCR refund
    
    
    118
    
    
    
    112Current portion of long-term debt, including capital leases
    
    
    329
    
    
    
    499Other
    
    
    129
    
    
    
    1301,303
    
    
    
    1,330Other LiabilitiesDeferred income taxes
    
    
    1,949
    
    
    
    1,941Regulatory liabilities
    
    
    264
    
    
    
    253Asset retirement obligations (Note 2)
    
    
    883
    
    
    
    869Unamortized investment tax credit
    
    
    122
    
    
    
    125Nuclear decommissioning
    
    
    78
    
    
    
    77Accrued pension liability
    
    
    267
    
    
    
    247Other
    
    
    688
    
    
    
    6764,251
    
    
    
    4,188Long-Term Debt (net of current portion)Mortgage bonds, notes and other
    
    
    2,879
    
    
    
    2,879Securitization bonds
    
    
    1,345
    
    
    
    1,400Capital lease obligations
    
    
    63
    
    
    
    664,287
    
    
    
    4,345Contingencies (Notes 3 and 6)Shareholders EquityCommon stock, $10 par value, 400,000,000 shares
authorized, 138,632,324 shares issued
and outstanding
    
    
    1,386
    
    
    
    1,386Premium on common stock
    
    
    1,104
    
    
    
    1,104Common stock expense
    
    
    (44
    )
    
    
    (44
    )Retained earnings
    
    
    509
    
    
    
    531Accumulated other comprehensive income
    
    
    2
    
    
    
    22,957
    
    
    
    2,979Total Liabilities and Shareholders Equity
    
    $
    12,798
    
    
    $
    12,842
 See Notes to Consolidated Financial Statements (Unaudited) 11




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The Detroit Edison Company 
 Consolidated
Statement of Cash Flows (Unaudited)
  Three Months EndedMarch 31(in Millions)
    
    2005
    
    
    2004Operating ActivitiesNet Income
    
    $
    55
    
    
    $
    44Adjustments to reconcile net income to net cash from
operating activities:Depreciation, depletion and amortization
    
    
    150
    
    
    
    114Deferred income taxes
    
    
    9
    
    
    
    113Changes in assets and liabilities, exclusive of changes
shown separately (Note 1)
    
    
    (37
    )
    
    
    (153
    )Net cash from operating activities
    
    
    177
    
    
    
    118Investing ActivitiesPlant and equipment expenditures
    
    
    (151
    )
    
    
    (147
    )Restricted cash for debt redemptions
    
    
    53
    
    
    
    55Notes receivable from affiliate
    
    
    85
    
    
    
    Other investments
    
    
    (26
    )
    
    
    (15
    )Net cash used for investing activities
    
    
    (39
    )
    
    
    (107
    )Financing ActivitiesIssuance of long-term debt
    
    
    395
    
    
    
    Redemption of long-term debt
    
    
    (626
    )
    
    
    (61
    )Short-term borrowings, net
    
    
    184
    
    
    
    132Dividends on common stock
    
    
    (76
    )
    
    
    (74
    )Other
    
    
    (1
    )
    
    
    (1
    )Net cash used for financing activities
    
    
    (124
    )
    
    
    (4
    )Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    14
    
    
    
    7Cash and Cash Equivalents at Beginning of the Period
    
    
    6
    
    
    
    6Cash and Cash Equivalents at End of the Period
    
    $
    20
    
    
    $
    13
 See Notes to Consolidated Financial Statements (Unaudited) 12




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The Detroit Edison Company 
 Consolidated Statement of Changes in Shareholders Equity
 and Comprehensive Income (unaudited)
 
 Premium
    
    
    
    
    
    
    
    
    
    
    Accumulatedon
    
    
    Common
    
    
    
    
    
    
    Other(Dollars in Millions,
    
    Common Stock
    
    
    Common
    
    
    Stock
    
    
    Retained
    
    
    ComprehensiveShares in Thousands)
    
    Shares
    
    
    Amount
    
    
    Stock
    
    
    Expense
    
    
    Earnings
    
    
    Income
    
    
    TotalBalance, December 31, 2004
    
    
    138,632
    
    
    $
    1,386
    
    
    $
    1,104
    
    
    $
    (44
    )
    
    $
    531
    
    
    $
    2
    
    
    $
    2,979Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    
    
    
    
    55Dividends declared on
common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (77
    )
    
    
    
    
    
    
    (77
    )Balance, March 31, 2005
    
    
    138,632
    
    
    $
    1,386
    
    
    $
    1,104
    
    
    $
    (44
    )
    
    $
    509
    
    
    $
    2
    
    
    $
    2,957
 The following table displays other comprehensive income for the three-month periods ended
March 31: 
 (in Millions)
    
    2005
    
    
    2004Net income
    
    $
    55
    
    
    $
    44Comprehensive income
    
    $
    55
    
    
    $
    44
 See Notes to Consolidated Financial Statements (Unaudited) 13




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The Detroit Edison Company 
 Notes to Consolidated Financial Statements (unaudited)
 NOTE 1 - GENERAL These consolidated financial statements should be read in conjunction with the notes to
consolidated financial statements included in the 2004 Annual Report on Form 10-K. The accompanying consolidated financial statements are prepared using accounting principles
generally accepted in the United States of America. These accounting principles require us to use
estimates and assumptions that impact the reported amounts of assets, liabilities, revenues and
expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from
our estimates. The consolidated financial statements are unaudited, but in our opinion include all adjustments
necessary for a fair statement of the results for the interim periods. Financial results for this
interim period are not necessarily indicative of results that may be expected for any other interim
period or for the fiscal year. We reclassified certain prior year balances to match the current years financial statement
presentation. Consolidated Statement of Cash Flows The components of changes in assets and liabilities follow:
 Three Months EndedMarch 31(in Millions)
    
    2005
    
    
    2004Changes in Assets and Liabilities, Exclusive of Changes Shown SeparatelyAccounts receivable, net
    
    $
    (23
    )
    
    $
    (18
    )Accrued unbilled receivables
    
    
    50
    
    
    
    6Inventories
    
    
    (3
    )
    
    
    21Accrued pensions
    
    
    27
    
    
    
    29Accounts payable
    
    
    (35
    )
    
    
    (14
    )Accrued PSCR refund
    
    
    (8
    )
    
    
    46Income taxes payable
    
    
    10
    
    
    
    (90
    )General taxes
    
    
    7
    
    
    
    (4
    )Risk management and trading activities
    
    
    
    
    
    
    (1
    )Other
    
    
    (62
    )
    
    
    (128
    )$
    (37
    )
    
    $
    (153
    )
 Supplementary cash and non-cash information follows:
 Three Months EndedMarch 31(in Millions)
    
    2005
    
    
    2004Cash PaidInterest (excluding interest capitalized)
    
    $
    87
    
    
    $
    94Income taxes
    
    $
    
    
    
    $
    1Non-cash Financing ActivityCommon stock issued to parent company in conjunction with parent
company common stock contribution to pension plan
    
    $
    
    
    
    $
    170
 14




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##### Table of Contents



Asset Retirement Obligations SFAS No. 143, Accounting for Asset Retirement Obligations, requires that the fair value of
an asset retirement obligation be recognized in the period in which it is incurred. We identified a
legal retirement obligation for the decommissioning costs for our Fermi 1 and Fermi 2 nuclear
plants. We believe that adoption of SFAS No. 143 results primarily in timing differences in the
recognition of legal asset retirement costs that we are currently recovering in rates and will be
deferring such differences under SFAS No. 71, Accounting for the Effects of Certain Types of
Regulation. A reconciliation of the asset retirement obligation for the 2005 three-month period follows: (in Millions)Asset retirement obligations at January 1, 2005
    
    $
    869Accretion
    
    
    14Asset retirement obligations at March 31, 2005
    
    $
    883
 A significant portion of the asset retirement obligations represents nuclear decommissioning
liabilities which are funded through a surcharge to electric customers over the life of the Fermi 2
nuclear plant. Retirement Benefits and Trusteed Assets The components of net periodic benefit costs for qualified and non-qualified pension benefits
and other postretirement benefits follow: 
 Other Postretirement(in Millions)
    
    Pension Benefits
    
    
    BenefitsThree Months Ended March 31
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Service Cost
    
    $
    14
    
    
    $
    13
    
    
    $
    11
    
    
    $
    8Interest Cost
    
    
    33
    
    
    
    33
    
    
    
    20
    
    
    
    18Expected Return on Plan Assets
    
    
    (34
    )
    
    
    (31
    )
    
    
    (15
    )
    
    
    (12
    )Amortization ofNet loss
    
    
    13
    
    
    
    12
    
    
    
    11
    
    
    
    9Prior service cost
    
    
    2
    
    
    
    2
    
    
    
    1
    
    
    
    Net transition liability
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Net Periodic Benefit Cost
    
    $
    28
    
    
    $
    29
    
    
    $
    30
    
    
    $
    25
 
 NOTE 2  NEW ACCOUNTING PRONOUNCEMENTS Medicare Act Accounting In May 2004, FASB Staff Position (FSP) No. 106-2, Accounting and Disclosure Requirements
Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, was issued
on accounting for the effects of the Medicare Act. In the second quarter of 2004, we adopted FSP
No. 106-2, retroactive to January 1, 2004 and as a result earnings for the first quarter of 2004
have been restated. As a result of the adoption, our accumulated postretirement benefit obligation
for the subsidy related to benefits attributed to past service was reduced by approximately $70
million and was accounted for as an actuarial gain. The effects of the subsidy reduced net
postretirement costs by $3 million in the first quarter of 2004. 15




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##### Table of Contents



Accounting for Conditional Asset Retirement Obligations In March 2005, the FASB issued Interpretation No. 47 (FIN 47), Accounting for Conditional
Asset Retirement Obligations, an interpretation of FASB Statement No. 143.FIN 47 seeks to clarify
the requirement to record liabilities stemming from a legal obligation to perform asset retirement
activities on fixed assets when that retirement is conditioned on a future event. FIN 47 is
effective no later than the end of fiscal years ending after December 15, 2005. The Company is
currently assessing the effects of this interpretation, and has not yet determined the impact on
the consolidated financial statements. NOTE 3  REGULATORY MATTERS Electric Rate Restructuring Proposal On February 4, 2005, Detroit Edison filed a rate restructuring proposal with the MPSC to
restructure its electric rates and begin phasing out subsidies that are part of its current pricing
structure. The proposal would adjust rates for each customer class to be reflective of the full
costs incurred to service such customers. Under the proposal, commercial and industrial rates
would be lowered, but residential rates would increase over a five-year period beginning in 2007.
The MPSC anticipates that this proceeding will be completed in time to have new rates in effect no
later than January 1, 2006. Other Postretirement Benefits Costs Tracker On February 10, 2005, Detroit Edison filed an application, pursuant to the MPSCs November
2004 final rate order, requesting MPSC approval of a proposed tracking mechanism for retiree health
care costs. This mechanism would recognize differences between cost levels collected in rates and
the actual costs under current accounting rules as regulatory assets or regulatory liabilities with
an annual reconciliation proceeding before the MPSC. 2004 PSCR Reconciliation and 2004 Net Stranded Cost Case In accordance with the MPSCs direction in the Detroit Edisons November 2004 final rate
order, on March 31, 2005, Detroit Edison filed a joint application and testimony in its 2004 PSCR
Reconciliation Case and its 2004 Net Stranded Cost Recovery Case. The combined proceeding will
provide a comprehensive true-up of the 2004 PSCR and production fixed cost stranded cost
calculations, including treatment of the Companys third party wholesale sales revenues. In the
filing, Detroit Edison recommended the following distribution of the $218 million of third party
wholesale sale revenues; $91 million to offset PSCR fuel expense, $74 million to offset 2004
production operation and maintenance expense, $40 million to offset 2004 PSCR expense and $13
million to offset 2004 production fixed cost stranded costs. Based upon this allocation of third
party wholesale sales revenues, Detroit Edison recommends the return of approximately $8 million in
over-collections to its PSCR customers and the recovery of approximately $99 million in net
stranded costs from its electric Customer Choice customers. Included with the application was the
filing of a motion for a temporary interim order requesting the continuation of the existing
electric Customer Choice transition charges until a final order is issued. DTE2 Accounting Application In 2003, we began the implementation of DTE2, a Company-wide initiative to improve existing
processes and to implement new core information systems, including finance, human resources, supply
chain and work management. The new information systems are replacing systems that are approaching
the end of their useful lives. We expect the benefits of DTE2 to include lower costs, faster
business cycles, repeatable and optimized processes, enhanced internal controls, improvements in
inventory management and reductions in system support costs. 16




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##### Table of Contents



In July 2004, Detroit Edison filed an accounting application with the MPSC requesting authority to
capitalize and amortize DTE2 costs, consisting of computer equipment, software and development
costs, as well as related training, maintenance and overhead costs. In March 2005, a settlement
agreement was reached with all parties to this proceeding providing for the deferral of up to $60
million of certain DTE2 costs that would otherwise be expensed, as a regulatory asset for future
rate recovery starting January 1, 2006. In addition, DTE2 costs recorded as plant assets will be
amortized over a 15-year period. In April 2005, the MPSC approved the settlement agreement. Power Supply Recovery Proceedings 2005 Plan Year In September 2004, Detroit Edison filed its 2005 PSCR plan case seeking
approval of a levelized PSCR factor of 1.82 mills per kWh above the amount included in base rates.
In December 2004, Detroit Edison filed revisions to its 2005 PSCR plan case in accordance with the
November 2004 MPSC rate order. The revised filing seeks approval of a levelized PSCR factor of up
to 0.48 mills per kWh above the new base rates established in the final electric rate order.
Included in the factor are power supply costs, transmission expenses and NOx emission allowance
costs. Detroit Edison self-implemented a factor of a negative 2.00 mills per kWh on January 1,
2005. At March 31, 2005, Detroit Edison has recorded an
under-recovery of approximately $14 million related to the 2005 plan
year. The Michigan Attorney General has filed a motion for summary disposition of this proceeding
based on arguments that the PSCR statute requires a fixed 48-month PSCR factor. We cannot predict
the nature or timing of actions the MPSC will take on this motion. Other We are unable to predict the outcome of the regulatory matters discussed herein. Resolution
of these matters is dependent upon future MPSC orders, which may materially impact the financial
position, results of operations and cash flows of the Company. NOTE 4  LONG -TERM DEBT In February 2005, we issued $400 million of senior notes in two series, $200 million of 4.8%
series due 2015 and $200 million of 5.45% series due 2035. The proceeds were used to redeem the
$385 million of 7.5% Quarterly Income Debt Securities due 2026 to 2028. Also in February 2005, we redeemed $76 million of 7.5% senior notes and $100 million of 7.0%
remarketed secured notes, which matured February 2005. NOTE 5  COMMITMENTS
AND CONTINGENCIES Environmental Air- The EPA issued ozone transport and acid rain regulations and, in December 2003, proposed
additional emission regulations relating to ozone, fine particulate and mercury air pollution. The
new rules have led to additional controls on fossil-fueled power plants to reduce nitrogen oxide,
sulfur dioxide, carbon dioxide and particulate emissions. To comply with these new controls,
Detroit Edison has spent approximately $580 million through December 2004, and estimates that it
will spend up to $100 million in 2005 and incur up to $1.8 billion of additional
future capital expenditures through 2018 to satisfy both the existing and
proposed new control requirements.Under the June 2000 Michigan restructuring legislation,
beginning January 1, 2004, annual return of and on this capital expenditure, in excess of current
depreciation levels, could be deferred in ratemaking, until after the expiration of the rate cap
period, presently expected to end on December 31, 2005 upon MPSC authorization. Under PA 141 and
the MPSCs November 2004 final rate order, we believe that prudently incurred capital expenditures,
in excess of current depreciation levels, are recoverable in rates. Water- Detroit Edison is required to examine alternatives for reducing the environmental impacts
of the cooling water intake structures at several of its facilities. Based on the results of the
studies to be conducted over the next several years, Detroit Edison may be required to install
additional control technologies to reduce the impacts of the intakes. It is estimated that we will
incur up to $50 million over the next five to seven years in additional capital expenditures for
Detroit Edison. Contaminated Sites- Detroit Edison conducted remedial investigations at contaminated sites,
including two former manufactured gas plant sites, the area surrounding an ash landfill and several
underground and aboveground storage tank locations. The findings of these investigations indicated
that the cost to remediate these sites is approximately $8 million, which is expected to be
incurred over the next several years. As a result of the investigation, Detroit Edison accrued an
$8 million liability during 2004. Personal Property Taxes Prior to 1999, Detroit Edison and other Michigan utilities asserted that Michigans valuation
tables result in the substantial overvaluation of utility personal property. Valuation tables
established by the Michigan State Tax Commission (STC) are used to determine the taxable value of
personal property based on the propertys age. In November 1999, the STC approved new valuation
tables that more accurately recognize the value of a utilitys personal property. The new tables
became effective in 2000 and are currently used to calculate property tax expense. However,
several local taxing jurisdictions have taken legal action attempting to prevent the STC from
implementing the new valuation tables and have continued to prepare assessments based on the
superseded tables. The legal actions regarding the appropriateness of the new tables were before
the Michigan Tax Tribunal (MTT) which, in April 2002, issued its decision essentially affirming the
validity of the STCs new tables. In June 2002, petitioners in the case filed an appeal of the
MTTs decision with the Michigan Court of Appeals. In January 2004, the Michigan Court of Appeals
upheld the validity of the new tables. With no further appeal by the petitioners available, the MTT
began to schedule utility personal property valuation cases for Prehearing General Calls. Detroit
Edison has filed motions and the MTT agreed to place the cases in abeyance pending the conclusion
of settlement negotiations being conducted by State of Michigan Treasury officials. On February
14, 2005, MTT issued a scheduling order that lifts the
prior abeyances in a significant number of Detroit Edison appeals. The scheduling order sets
litigation calendars for these cases extending into mid-2006. 17




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##### Table of Contents



Detroit Edison continues to record property tax expense based on the new tables. Detroit Edison
will continue through settlement or litigation to seek to apply the new tables retroactively and to
ultimately resolve the pending tax appeals related to 1997 through 1999. This is a solution
supported by the STC in the past. To the extent that settlements cannot be achieved with the
jurisdictions, litigation regarding the valuation of utility property will delay any recoveries by
Detroit Edison. Other Commitments Detroit Edison has an Energy Purchase Agreement to purchase steam and electricity from the
Greater Detroit Resource Recovery Authority (GDRRA). Under the Agreement, Detroit Edison will
purchase steam through 2008 and electricity through June 2024. In 1996, a special charge to income
was recorded that included a reserve for steam purchase commitments in excess of replacement costs
from 1997 through 2008. The reserve for steam purchase commitments is being amortized to fuel,
purchased power and gas expense with non-cash accretion expense being recorded through 2008. During
the first quarter of 2005 we purchased $12 million of steam and electricity. For the full year
2004, we purchased $42 million of steam and electricity. We estimate steam and electric purchase
commitments through 2024 will not exceed $472 million. As discussed in Note 3  Dispositions, in
January 2003, we sold the steam heating business of Detroit Edison to Thermal Ventures II, LP. Due
to terms of the sale, Detroit Edison remains contractually obligated to buy steam from GDRRA until
2008 and recorded an additional liability of $20 million for future commitments. Also, we have
guaranteed bank loans that Thermal Ventures II, LP may use for capital improvements to the steam
heating system. At December 31, 2004, we have entered into numerous long-term purchase commitments relating to a
variety of goods and services required for our business. These agreements primarily consist of
fuel supply commitments. We estimate that these commitments will be approximately $1.4 billion
through 2018. We also estimate that 2005 base level capital expenditures will be $800 million. We
have made certain commitments in connection with expected capital expenditures. Bankruptcies We purchase and sell electricity from and to numerous companies operating in the steel,
automotive, energy and retail industries. Several customers have filed for bankruptcy protection
under Chapter 11 of the U.S. Bankruptcy Code. We have negotiated or are currently involved in
negotiations with each of the companies, or their successor companies, that have filed for
bankruptcy protection. We regularly review contingent matters relating to purchase and sale
contracts and record provisions for amounts considered probable of loss. We believe our previously
accrued amounts are adequate for probable losses. The final resolution of these matters is not
expected to have a material effect on our financial statements in the period they are resolved. Other We are involved in certain legal, regulatory, administrative and environmental proceedings
before various courts, arbitration panels and governmental agencies concerning claims arising in
the ordinary course of business. These proceedings include certain contract disputes,
environmental
reviews and investigations, audits, inquiries from various regulators, and pending judicial
matters. We cannot predict the final disposition of such proceedings. We regularly review legal
matters and record provisions for claims that are considered probable of loss. The resolution of
pending proceedings is not expected to have a material effect on our operations or financial
statements in the period they are resolved. See Note 3 for a discussion of contingencies related to Regulatory Matters. NOTE 6  SEGMENT INFORMATION Detroit Edison has the following two reportable segments. Inter-segment revenues are not material.
 Three Months EndedMarch 31(in Millions)
    
    2005
    
    
    2004Operating RevenuesEnergy Resources
    
    $
    658
    
    
    $
    551Energy Distribution
    
    
    332
    
    
    
    335$
    990
    
    
    $
    886Net IncomeEnergy Resources
    
    $
    12
    
    
    $
    16Energy Distribution
    
    
    43
    
    
    
    28$
    55
    
    
    $
    44
 
 18




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholder of
The Detroit Edison Company We have reviewed the accompanying condensed consolidated statement of financial position of The
Detroit Edison Company and subsidiaries as of March 31, 2005, and the related condensed
consolidated statements of operations and cash flows for the three-month periods ended March 31,
2005 and 2004, and changes in shareholders equity and comprehensive income for the three-month
period ended March 31, 2005 and the three-month periods ended March 31, 2005 and 2004,
respectively. These interim financial statements are the responsibility of The Detroit Edison
Companys management. We conducted our reviews in accordance with the standards of the Public Company Accounting
Oversight Board (United States). A review of interim financial information consists principally of
applying analytical procedures and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in accordance with
the standards of the Public Company Accounting Oversight Board (United States), the objective of
which is the expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to such
condensed consolidated interim financial statements for them to be in conformity with accounting
principles generally accepted in the United States of America. We have previously audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated statement of financial position of The Detroit
Edison Company and subsidiaries as of December 31, 2004, and the related consolidated statements of
operations, cash flows and changes in shareholders equity and comprehensive income for the year
then ended (not presented herein); and in our report dated March 15, 2005 (which report includes an
explanatory paragraph relating to the change in the methods of accounting for asset retirement
obligations in 2003), we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying condensed consolidated
statement of financial position as of December 31, 2004 is fairly stated, in all material respects,
in relation to the consolidated statement of financial position from which it has been derived. /S/ DELOITTE & TOUCHE LLP Detroit, Michigan
May 10, 2005 19




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##### Table of Contents



Other Information 
 Legal Proceedings We are involved in certain legal, regulatory, administrative and environmental proceedings
before various courts, arbitration panels and governmental agencies concerning matters arising in
the ordinary course of business. These proceedings include certain contract disputes,
environmental reviews and investigations, audits, inquiries from various regulators, and pending
judicial matters. We cannot predict the final disposition of such proceedings. We regularly
review legal matters and record provisions for claims that are considered probable of loss. The
resolution of pending proceedings is not expected to have a material effect on our operations or
financial statements in the period they are resolved. 
 Exhibits ExhibitNumber
    
    DescriptionFiled:15- 29
    
    Awareness Letter of Deloitte & Touche LLP31- 15
    
    Chief Executive Officer Section 302 Form 10-Q Certification31-16
    
    Chief Financial Officer Section 302 Form 10-Q CertificationIncorporated by reference:4-241
    
    Sixteenth Supplemental Indenture,
dated as of April 1, 2005, to the Collateral
Trust Indenture, dated as of June 30, 1993, between The Detroit Edison
Company and J. P. Morgan Trust Company, National Association, as
successor trustee, providing for 2005 Series AR 4.80% Senior Notes due 2015
and 2005 Series BR 5.45% Senior Notes due 2035 (Exhibit 4.1 to Registration
Statement on Form S-4 (File No. 333-123926))4-242
    
    Supplemental Indenture, dated as of April 1, 2005, to the Mortgage and Deed
of Trust, dated as of October 1, 1924, between The Detroit Edison
Company and J.P. Morgan Trust Company, National Association, as successor
trustee, providing for General and Refunding Mortgage Bonds 2005 Series AR and
2005 Series BR (Exhibit 4.3 to Registration Statement on Form S-4
(File No. 333-123926))Furnished:32- 15
    
    Chief Executive Officer Section 906 Certification32- 16
    
    Chief Financial Officer Section 906 Certification
 20




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##### Table of Contents



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 COMPANYDate:
    
    May 10, 2005
    
    /s/ DANIEL G. BRUDZYNSKIDaniel G. BrudzynskiChief Accounting Officer,Vice President and Controller
 21




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##### Table of Contents



Exhibit Index ExhibitNumber
    
    DescriptionFiled:15- 29
    
    Awareness Letter of Deloitte & Touche LLP31- 15
    
    Chief Executive Officer Section 302 Form 10-Q Certification31-16
    
    Chief Financial Officer Section 302 Form 10-Q Certification32- 15
    
    Chief Executive Officer Section 906 Certification of Periodic Report32- 16
    
    Chief Financial Officer Section 906 Certification of Periodic Report
 22