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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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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, 2003

Commission file number 1-2198

The registrant meets the conditions set forth in General Instruction H (1) (a) and (b)
of Form 10-Q and is, therefore, filing this Form with the reduced disclosure format.

THE DETROIT EDISON COMPANY

(Exact name of registrant as specified in its charter)


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

313-235-4000
(Registrants telephone number, including area code)

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

Yes   [X]   No   [  ]

Indicate by check mark whether the registrant is an accelerated filer as defined in
Rule 12b-2 of the Exchange Act.

Yes  [X]   No  [  ]



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THE DETROIT EDISON COMPANY

QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED MARCH 31, 2003

TABLE OF CONTENTS

|                               |                                                                  |                                                                                    |    |      |    | 
|------------------------------ | ---------------------------------------------------------------- | ---------------------------------------------------------------------------------- | -- | ---- | -- | 
|                               |                                                                  |                                                                                    |    | PAGE
|                               |                                                                  |                                                                                    |    |     
|DEFINITIONS                    |                                                                  |                                                                                    | 3  |     
|FORWARD-LOOKING STATEMENTS     |                                                                  |                                                                                    | 4  |     
|PART I  FINANCIAL INFORMATION |                                                                  |                                                                                    |    |     
|                               | Item 1. Financial Statements                                     |                                                                                    |    |      |   
|                               |                                                                  | Consolidated Statement of Operations                                               |    |      | 10 | 
|                               |                                                                  | Consolidated Statement of Financial Position                                       |    |      | 11 | 
|                               |                                                                  | Consolidated Statement of Cash Flows                                               |    |      | 13 | 
|                               |                                                                  | Consolidated Statement of Changes in Shareholders Equity
and Comprehensive Income |    |      | 14 | 
|                               |                                                                  | Notes to Consolidated Financial Statements                                         |    |      | 15 | 
|                               |                                                                  | Independent Accountants Report                                                    |    |      | 20 | 
|                               | Item 2. Managements Narrative Analysis of Results of Operations |                                                                                    |    | 5    |   
|                               | Item 4. Controls and Procedures                                  |                                                                                    |    | 9    |   
|PART II  OTHER INFORMATION    |                                                                  |                                                                                    |    |     
|                               | Item 6. Exhibits and Reports on Form 8-K                         |                                                                                    |    | 21   |   
|SIGNATURE                      |                                                                  |                                                                                    | 22 |     
|CERTIFICATIONS                 |                                                                  |                                                                                    | 23 |     





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|                                               |                                                                  |                                                                                    |  |  |  |  |  | 
|---------------------------------------------- | ---------------------------------------------------------------- | ---------------------------------------------------------------------------------- |  |  |  |  |  | 
|DEFINITIONS                                   
|FORWARD-LOOKING STATEMENTS                    
|                                               | Item 2. Managements Narrative Analysis of Results of Operations
|                                               | Item 4. Controls and Procedures                                 
|PART I   FINANCIAL INFORMATION               
|                                               | Item 1. Financial Statements                                    
|                                               |                                                                  | Consolidated Statement of Operations                                              
|                                               |                                                                  | Consolidated Statement of Financial Position                                      
|                                               |                                                                  | Consolidated Statement of Cash Flows                                              
|                                               |                                                                  | Consolidated Statement of Changes in Shareholders Equity and Comprehensive Income
|                                               |                                                                  | Notes to Consolidated Financial Statements                                        
|                                               |                                                                  | Independent Accountants Report                                                   
|PART II   OTHER INFORMATION                  
|                                               | Item 6. Exhibits and Reports on Form 8-K                        
|SIGNATURE                                     
|CERTIFICATIONS                                
|Eleventh Supplemental Indenture dated 12/01/02
|Awareness Letter of Deloitte & Touche LLP     
|Chief Executive Officer Certification         
|Chief Financial Officer Certification         



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DEFINITIONS

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

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FORWARD-LOOKING STATEMENTS

Certain information presented herein includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve certain risks and uncertainties that may
cause actual future results to differ materially from those contemplated,
projected, estimated or budgeted in such forward-looking statements. There are
many factors that may impact forward-looking statements including, but not
limited to, the following:



| |  | the effects of weather and other natural phenomena on operations and sales to customers;                                               
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | economic climate and growth in the geographic areas where we do business;                                                              
| 
| |  | environmental issues, including changes in the climate, and regulations;                                                               
| 
| |  | nuclear regulations and risks associated with nuclear operations;                                                                      
| 
| |  | implementation of electric Customer Choice programs;                                                                                   
| 
| |  | implementation of electric restructuring in Michigan;                                                                                  
| 
| |  | employee relations;                                                                                                                    
| 
| |  | unplanned outages;                                                                                                                     
| 
| |  | capital market conditions and access to capital markets and 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 of fuel and purchased power;                                                                                       
| 
| |  | effects of competition;                                                                                                                
| 
| |  | impact of FERC and MPSC proceedings and regulations;                                                                                   
| 
| |  | changes in federal or state tax laws and their interpretations, including the code, regulations, rulings, court proceedings
and audits;
| 
| |  | ability to recover costs through rates;                                                                                                
| 
| |  | property insurance;                                                                                                                    
| 
| |  | the cost of protecting assets against or damage due to terrorism; and                                                                  
| 
| |  | changes in accounting standards and financial reporting regulations.                                                                   

New factors emerge from time to time. We cannot predict what factors may arise
or how such factors may cause our results to differ materially from those
contained in any forward-looking statement. Any forward-looking statement
speaks only as of the date on which such 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.

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THE DETROIT EDISON COMPANY




MANAGEMENTS NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

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

Our earnings for the 2003 first quarter were $15 million compared to earnings
of $92 million for the 2002 first quarter. The comparability of earnings was
impacted by the adoption of a new accounting rule in the 2003 first quarter.
As required by generally accepted accounting principles, we adopted a new
accounting rule for asset retirement obligations as discussed in Note 2. The
cumulative effect of adopting this new accounting rule was to reduce 2003 first
quarter earnings by $6 million. Results for the current quarter were also
affected by a $14 million net of tax loss on the sale of our steam heating
business in January 2003.

Detroit Edison has the following two reportable segments.

ENERGY RESOURCES

Power Generation

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

Power Generation earnings declined $40 million during the 2003 first quarter
reflecting lower gross margins due to higher fuel and purchased power costs and
lost margins from customers participating in the electric Customer Choice
program. The higher purchased power costs reflect unfavorable energy market
prices in 2003 and lower plant availability. As a result of the electric
Customer Choice program, Detroit Edison lost 9% of retail sales in the 2003
first quarter. To partially offset the impact of these lost margins, Detroit
Edison recorded a $6 million regulatory asset representing stranded costs that
are recoverable under Michigan legislation. The lower earnings were also
attributed to higher operation and maintenance expense due to employee pension
and health care benefit costs and expenses due to the timing of planned reliability and maintenance work done to improve the production and
availability of the generation fleet.

|                                                    |  |                    |     |      |  |   |     |  
|--------------------------------------------------- |  | ------------------ | --- | ---- |  | - | --- | -
|                                                    |  | Three Months Ended
|                                                    |  | March 31          
|                                                    |  |                   
|(in Millions)                                       |  | 2003               |     | 2002
|                                                    |  |                    |     |     
|Operating Revenues                                  |  | $                  | 617 |      |  | $ | 617 |  
|Fuel and Purchased Power                            |  |                    | 240 |      |  |   | 199 |  
|                                                    |  |                    |     |      |  |   |     |  
|Gross Margin                                        |  |                    | 377 |      |  |   | 418 |  
|Operation and Maintenance                           |  |                    | 183 |      |  |   | 138 |  
|Depreciation and Amortization                       |  |                    | 73  |      |  |   | 86  |  
|Taxes other than Income                             |  |                    | 43  |      |  |   | 40  |  
|                                                    |  |                    |     |      |  |   |     |  
|Operating Income                                    |  |                    | 78  |      |  |   | 154 |  
|Other
(Income) and Deductions                       |  |                    | 39  |      |  |   | 56  |  
|Income Tax Provision                                |  |                    | (14 | )    |  |   | (33 | )
|                                                    |  |                    |     |      |  |   |     |  
|Net Income                                          |  | $                  | 25  |      |  | $ | 65  |  
|                                                    |  |                    |     |      |  |   |     |  
|Operating Income as a Percent of Operating Revenues |  |                    | 13  | %    |  |   | 25  | %

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

|                              |         |      |                    |       |  |   |        |       | 
|----------------------------- | ------- | ---- | ------------------ | ----- |  | - | ------ | ----- | 
|                              |         |      | Three Months Ended
|                              |         |      | March 31          
|                              |         |      |                   
|(in Thousands of MWh)         |         | 2003 |                    | 2002 
|                              |         |      |                    |       | 
|Power generated and purchased |         |      |                    |       |  |   |        |      
|Power plant generation        |         |      |                    |       |  |   |        |      
|                              | Fossil  |      |                    | 9,134 |  |   |        | 9,111 | 
|                              | Nuclear |      |                    | 2,248 |  |   |        | 2,290 | 
|                              |         |      |                    |       |  |   |        |       | 
|                              |         |      | 11,382             |       |  |   | 11,401 |      
|Purchased power               |         |      | 1,888              |       |  |   | 1,640  |      
|                              |         |      |                    |       |  |   |        |       | 
|System output                 |         |      | 13,270             |       |  |   | 13,041 |      
|                              |         |      |                    |       |  |   |        |       | 
|Average unit cost ($/MWh)     |         |      |                    |       |  |   |        |      
|Generation (1)                |         | $    | 13.29              |       |  | $ | 12.09  |      
|                              |         |      |                    |       |  |   |        |       | 
|Purchased Power (2)           |         | $    | 40.67              |       |  | $ | 30.10  |      
|                              |         |      |                    |       |  |   |        |       | 
|Overall Average Unit Cost     |         | $    | 17.19              |       |  | $ | 14.34  |      
|                              |         |      |                    |       |  |   |        |       | 

(1)  Represents fuel costs associated with power plants.

(2)  The average purchased power amounts include hedging activities.

Outlook We expect electric restructuring to continue resulting in increased
customer choice in the retail electric generation business. As a result of
customers choosing to participate in the electric Customer Choice program,
Detroit Edison lost 6% of retail sales in 2002 and estimates losing 10% to 13%
of such sales in 2003. Unrecovered generation fixed costs due to electric
Customer Choice are allowed for future recovery under Michigan
legislation. As a result, Detroit Edison recorded a regulatory
asset relating to stranded costs during the first quarter of 2003 and
anticipates recording additional regulatory assets during the balance of 2003.
The regulatory asset will be subject to review by the MPSC in future regulatory
proceedings, and we cannot predict the outcome of this matter. See Note 4 
Regulatory Matters.

The June 2000 Michigan legislation imposed a rate freeze for all classes of
customers through 2003. In addition, the MPSC determined that adjusting rates
for changes in fuel and purchased power through continuance of the Power Supply
Cost Recovery (PSCR) clause would be inconsistent with the rate freeze,
therefore the MPSC suspended the PSCR clause. It is unclear at this time
whether the PSCR clause will be suspended beyond 2003. Detroit Edison expects
to file a rate case in the second quarter of 2003 addressing this and other
issues.

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

ENERGY DISTRIBUTION

Power Distribution

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

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Power Distribution earnings decreased $31 million during the 2003 first quarter
due to a net of tax loss of $14 million on the sale of our unprofitable steam
heating business (Note 3) and to higher operation and maintenance expenses,
partially offset by higher operating revenues. The increased operation and
maintenance expenses are attributable to higher employee pension and health
care benefit costs and increased costs associated with customer service process
improvements, partially offset by lower storm expenses in the 2003 first
quarter as compared to the 2002 first quarter.

|                                                    |  |                    |     |      |  |   |     |  
|--------------------------------------------------- |  | ------------------ | --- | ---- |  | - | --- | -
|                                                    |  | Three Months Ended
|                                                    |  | March 31          
|                                                    |  |                   
|(in Millions)                                       |  | 2003               |     | 2002
|                                                    |  |                    |     |     
|Operating revenues                                  |  | $                  | 320 |      |  | $ | 313 |  
|Fuel and Purchased Power                            |  |                    | 7   |      |  |   | 9   |  
|Operation and Maintenance                           |  |                    | 183 |      |  |   | 139 |  
|Depreciation and Amortization                       |  |                    | 62  |      |  |   | 62  |  
|Taxes other than Income                             |  |                    | 30  |      |  |   | 31  |  
|                                                    |  |                    |     |      |  |   |     |  
|Operating Income                                    |  |                    | 38  |      |  |   | 72  |  
|Other
(Income) and Deductions                       |  |                    | 44  |      |  |   | 32  |  
|Income Tax Benefit (Provision)                      |  |                    | 2   |      |  |   | (13 | )
|                                                    |  |                    |     |      |  |   |     |  
|Net Income (Loss)                                   |  | $                  | (4  | )    |  | $ | 27  |  
|                                                    |  |                    |     |      |  |   |     |  
|Operating Income as a Percent of Operating Revenues |  |                    | 12  | %    |  |   | 23  | %

|                                    |  |                    |        |      |  |  |        | 
|----------------------------------- |  | ------------------ | ------ | ---- |  |  | ------ | 
|                                    |  | Three Months Ended
|                                    |  | March 31          
|Electric Deliveries                 |  |                   
|(in Thousands of MWh)               |  | 2003               |        | 2002
|                                    |  |                    |        |     
|Residential                         |  |                    | 3,856  |      |  |  | 3,720  | 
|Commercial                          |  |                    | 4,126  |      |  |  | 4,342  | 
|Industrial                          |  |                    | 3,085  |      |  |  | 3,332  | 
|Wholesale                           |  |                    | 576    |      |  |  | 542    | 
|Other                               |  |                    | 107    |      |  |  | 112    | 
|                                    |  |                    |        |      |  |  |        | 
|                                    |  |                    | 11,750 |      |  |  | 12,048 | 
|Electric Customer Choice            |  |                    | 1,284  |      |  |  | 881    | 
|                                    |  |                    |        |      |  |  |        | 
|Total Electric Sales and Deliveries |  |                    | 13,034 |      |  |  | 12,929 | 
|                                    |  |                    |        |      |  |  |        | 

Outlook Regulated electric system deliveries are expected to continue to
increase in 2003 due to continued territory and economic growth. Operating
results are expected to vary as a result of various external factors such as
weather, changes in economic conditions and the severity and frequency of
storms. As previously discussed, Detroit Edison expects to file a
rate case in the second quarter of 2003 to address future operating
costs and other issues.

In April 2003, a catastrophic ice storm in our service territory resulted in
over 400,000 customers losing power and more than 3,300 downed power lines.
Restoration expenses will reduce second quarter 2003 net of tax earnings by
approximately $15 million. We expect the impact of the storm
will be partially offset by the avoidance of other costs throughout
the remainder of the year.

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CAPITAL RESOURCES AND LIQUIDITY

|                                          |                       |                                                              |      |              |      |   |      |      |      |  
|----------------------------------------- | --------------------- | ------------------------------------------------------------ | ---- | ------------ | ---- | - | ---- | ---- | ---- | -
|                                          |                       |                                                              |      | Three Months
|                                          |                       |                                                              |      | March 31    
|                                          |                       |                                                              |      |             
|(in Millions)                             |                       | 2003                                                         |      | 2002        
|                                          |                       |                                                              |      |              |      |  
|Cash and Cash Equivalents                 |                       |                                                              |      |              |      |   |      |     
|Cash Flow From (Used For)                 |                       |                                                              |      |              |      |   |      |     
|                                          | Operating activities: |                                                              |      |              |      |   |      |      |     
|                                          |                       | Net income, depreciation and amortization and deferred taxes |      | $            | 285  |   |      | $    | 300  |  
|                                          |                       | Pension contribution                                         |      |              | (222 | ) |      |      |     |  
|                                          |                       | Working capital and other                                    |      |              | (224 | ) |      |      | (349 | )
|                                          |                       |                                                              |      |              |      |   |      |      |      |  
|                                          |                       |                                                              | (161 | )            |      |   | (49  | )   
|                                          | Investing activities  |                                                              |      | (54          | )    |   |      | (134 | )   
|                                          | Financing activities  |                                                              |      | 195          |      |   |      | (15  | )   
|                                          |                       |                                                              |      |              |      |   |      |      |      |  
|Net Decrease in Cash and Cash Equivalents |                       | $                                                            | (20  | )            |      | $ | (198 | )   
|                                          |                       |                                                              |      |              |      |   |      |      |      |  

Operating Activities

Net cash used for operating activities
increased $112 million during the 2003
first quarter as compared to the same 2002 period. The increase reflects a
decline of $15 million in net income, after adjusting for non-cash items
(depreciation and amortization and deferred taxes) and a $97 million
decrease in working capital and other requirements. The decrease in working capital
requirements is primarily due to an increase in accounts payable balances in
2003 and a reduction in fuel inventories. We also contributed $222 million of
cash to our pension plan in 2003.

Investing Activities

Net cash relating to investing
activities improved $80 million in the 2003
first quarter as compared to the same 2002 period. The improvement is
attributed to decreases in cash contractually designated for debt service and
other investments, partially offset by an increase in plant and equipment
expenditures.

Financing Activities

Net cash from financing activities increased $210 million during the 2003 first
quarter as compared to the same 2002 period. The increase is primarily
attributed to higher notes payable to affiliates and a cash infusion
from its parent company, partially offset by an increase in
redemptions of long-term debt.

ENVIRONMENTAL MATTERS

EPA ozone transport regulations and final new air quality standards relating to
ozone and particulate air pollution will continue to impact us. Detroit Edison
spent approximately $488 million through March 2003 and estimates that it will
incur approximately $300 to $400 million of future capital expenditures over
the next five to eight years to comply with the existing air quality
standards. We expect to file a rate case during 2003 to securitize
costs we have incurred to comply with these standards.

NEW ACCOUNTING PRONOUNCEMENTS

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

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CONTROLS AND PROCEDURES



|(a) |  | Evaluation of disclosure controls and procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Companys Chief Executive Officer and Chief Financial Officer have
evaluated the effectiveness of the Companys disclosure controls and
procedures (as defined in the Exchange Act Rules 13a  14(c) and 15d 
14(d)) as of a date within 90 days before the filing of this quarterly
report, and have concluded that, as of the Evaluation Date, such
controls and procedures were effective at ensuring that required
information will be disclosed on a timely basis in reports filed under
the Exchange Act.
|   
|(b) |  | Changes in internal controls                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    |  | There have been no significant changes (including corrective actions with
regard to significant deficiencies or material weaknesses) in the Companys
internal controls or in other factors that could significantly affect these
controls subsequent to the Evaluation Date referenced in paragraph (a) above.                                                                                                                                                                                                     

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THE DETROIT EDISON COMPANY










CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)


|                                       |                               |      |                    |      |   |   |     |     |  
|-------------------------------------- | ----------------------------- | ---- | ------------------ | ---- | - | - | --- | --- | -
|                                       |                               |      | Three Months Ended
|                                       |                               |      | March 31          
|                                       |                               |      |                   
|(in Millions)                          |                               | 2003 |                    | 2002
|                                       |                               |      |                    |      |  
|Operating Revenues                     |                               | $    | 937                |      |   | $ | 930 |    
|                                       |                               |      |                    |      |   |   |     |    
|Operating Expenses                     |                               |      |                    |      |   |   |     |    
|                                       | Fuel and purchased power      |      |                    | 247  |   |   |     | 208 |  
|                                       | Operation and maintenance     |      |                    | 366  |   |   |     | 277 |  
|                                       | Depreciation and amortization |      |                    | 135  |   |   |     | 148 |  
|                                       | Taxes other than income       |      |                    | 73   |   |   |     | 71  |  
|                                       |                               |      |                    |      |   |   |     |    
|                                       |                               |      | 821                |      |   |   | 704 |    
|                                       |                               |      |                    |      |   |   |     |    
|Operating Income                       |                               |      | 116                |      |   |   | 226 |    
|                                       |                               |      |                    |      |   |   |     |    
|Other
(Income) and Deductions          |                               |      |                    |      |   |   |     |    
|                                       | Interest expense              |      |                    | 75   |   |   |     | 78  |  
|                                       | Interest income               |      |                    |     |   |   |     | (1  | )
|                                       | Other income                  |      |                    | (11  | ) |   |     | (5  | )
|                                       | Other expense                 |      |                    | 19   |   |   |     | 16  |  
|                                       |                               |      |                    |      |   |   |     |    
|                                       |                               |      | 83                 |      |   |   | 88  |    
|                                       |                               |      |                    |      |   |   |     |    
|Income Before Income Taxes             |                               |      | 33                 |      |   |   | 138 |    
|Income Tax Provision                   |                               |      | 12                 |      |   |   | 46  |    
|                                       |                               |      |                    |      |   |   |     |    
|Income Before Accounting Change        |                               |      | 21                 |      |   |   | 92  |    
|Cumulative Effect of Accounting Change |                               |      | (6                 | )    |   |   |    |    
|                                       |                               |      |                    |      |   |   |     |    
|Net Income                             |                               | $    | 15                 |      |   | $ | 92  |    
|                                       |                               |      |                    |      |   |   |     |    

See Notes to Consolidated Financial Statements (Unaudited)

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THE DETROIT EDISON COMPANY




CONSOLIDATED STATEMENT OF FINANCIAL POSITION


|               |                                           |                                                                              |        |          |     |             |        |        |     | 
|-------------- | ----------------------------------------- | ---------------------------------------------------------------------------- | ------ | -------- | --- | ----------- | ------ | ------ | --- | 
|               |                                           |                                                                              |        | March 31 |     |             |        |       
|               |                                           |                                                                              |        | 2003     |     | December 31
|(in Millions)  |                                           | (Unaudited)                                                                  |        | 2002    
|               |                                           |                                                                              |        |         
|Assets         |                                           |                                                                              |        |          |     |             |        |       
|Current Assets |                                           |                                                                              |        |          |     |             |        |       
|               | Cash and cash equivalents                 |                                                                              | $      | 16       |     |             | $      | 36     |    
|               | Restricted cash                           |                                                                              |        | 45       |     |             |        | 131    |    
|               | Accounts receivable                       |                                                                              |        |          |     |             |        |        |    
|               |                                           | Customer (less allowance for doubtful accounts of $52 and
$48, respectively) |        |          | 355 |             |        |        | 325 | 
|               |                                           | Accrued unbilled revenues                                                    |        |          | 147 |             |        |        | 177 | 
|               |                                           | Other                                                                        |        |          | 95  |             |        |        | 142 | 
|               | Inventories                               |                                                                              |        |          |     |             |        |        |    
|               |                                           | Fuel                                                                         |        |          | 100 |             |        |        | 126 | 
|               |                                           | Materials and supplies                                                       |        |          | 131 |             |        |        | 130 | 
|               | Property taxes assessed to future periods |                                                                              |        | 61       |     |             |        |       |    
|               | Other                                     |                                                                              |        | 162      |     |             |        | 14     |    
|               |                                           |                                                                              |        |          |     |             |        |        |    
|               |                                           |                                                                              | 1,112  |          |     |             | 1,081  |       
|               |                                           |                                                                              |        |          |     |             |        |        |    
|Investments    |                                           |                                                                              |        |          |     |             |        |       
|               | Nuclear decommissioning trust funds       |                                                                              |        | 423      |     |             |        | 417    |    
|               | Other                                     |                                                                              |        | 26       |     |             |        | 82     |    
|               |                                           |                                                                              |        |          |     |             |        |        |    
|               |                                           |                                                                              | 449    |          |     |             | 499    |       
|               |                                           |                                                                              |        |          |     |             |        |        |    
|Property       |                                           |                                                                              |        |          |     |             |        |       
|               | Property, plant and equipment             |                                                                              |        | 12,477   |     |             |        | 12,121 |    
|               | Less accumulated depreciation             |                                                                              |        | (5,446   | )   |             |        | (5,324 | )  
|               |                                           |                                                                              |        |          |     |             |        |        |    
|               |                                           |                                                                              | 7,031  |          |     |             | 6,797  |       
|               |                                           |                                                                              |        |          |     |             |        |        |    
|Other Assets   |                                           |                                                                              |        |          |     |             |        |       
|               | Regulatory
assets (Notes 2 and 4)         |                                                                              |        | 2,011    |     |             |        | 1,143  |    
|               | Securitized regulatory assets             |                                                                              |        | 1,591    |     |             |        | 1,613  |    
|               | Other                                     |                                                                              |        | 136      |     |             |        | 128    |    
|               |                                           |                                                                              |        |          |     |             |        |        |    
|               |                                           |                                                                              | 3,738  |          |     |             | 2,884  |       
|               |                                           |                                                                              |        |          |     |             |        |        |    
|Total Assets   |                                           | $                                                                            | 12,330 |          |     | $           | 11,261 |       
|               |                                           |                                                                              |        |          |     |             |        |        |    

See Notes to Consolidated Financial Statements (Unaudited)

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THE DETROIT EDISON COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

|                                           |                                                                                                           |             |          |       |             |   |        |       |  
|------------------------------------------ | --------------------------------------------------------------------------------------------------------- | ----------- | -------- | ----- | ----------- | - | ------ | ----- | -
|                                           |                                                                                                           |             | March 31 |       |             |   |       
|                                           |                                                                                                           |             | 2003     |       | December 31
|(in Millions, Except Shares)               |                                                                                                           | (Unaudited) |          | 2002 
|                                           |                                                                                                           |             |          |       |            
|Liabilities and Shareholders Equity       |                                                                                                           |             |          |       |             |   |        |      
|Current Liabilities                        |                                                                                                           |             |          |       |             |   |        |      
|                                           | Accounts payable                                                                                          |             | $        | 175   |             |   | $      | 238   |  
|                                           | Accrued interest                                                                                          |             |          | 56    |             |   |        | 83    |  
|                                           | Dividends payable                                                                                         |             |          | 74    |             |   |        | 74    |  
|                                           | Accrued payroll                                                                                           |             |          | 16    |             |   |        | 24    |  
|                                           | Notes payable to affiliates                                                                               |             |          | 408   |             |   |        |      |  
|                                           | Income taxes                                                                                              |             |          | 61    |             |   |        | 30    |  
|                                           | Current portion long-term debt, including capital leases                                                  |             |          | 115   |             |   |        | 319   |  
|                                           | Other                                                                                                     |             |          | 268   |             |   |        | 328   |  
|                                           |                                                                                                           |             |          |       |             |   |        |       |  
|                                           |                                                                                                           |             | 1,173    |       |             |   | 1,096  |      
|                                           |                                                                                                           |             |          |       |             |   |        |       |  
|Other Liabilities                          |                                                                                                           |             |          |       |             |   |        |      
|                                           | Deferred income taxes                                                                                     |             |          | 1,812 |             |   |        | 1,501 |  
|                                           | Asset
retirement obligations (Note 2)                                                                     |             |          | 784   |             |   |        |      |  
|                                           | Unamortized investment tax credit                                                                         |             |          | 143   |             |   |        | 146   |  
|                                           | Nuclear decommissioning                                                                                   |             |          | 54    |             |   |        | 416   |  
|                                           | Accrued pension liability                                                                                 |             |          | 358   |             |   |        | 561   |  
|                                           | Other                                                                                                     |             |          | 521   |             |   |        | 484   |  
|                                           |                                                                                                           |             |          |       |             |   |        |       |  
|                                           |                                                                                                           |             | 3,672    |       |             |   | 3,108  |      
|                                           |                                                                                                           |             |          |       |             |   |        |       |  
|Long-Term Debt                             |                                                                                                           |             |          |       |             |   |        |      
|                                           | Mortgage bonds, notes and other                                                                           |             |          | 3,214 |             |   |        | 3,270 |  
|                                           | Securitization bonds                                                                                      |             |          | 1,539 |             |   |        | 1,585 |  
|                                           | Capital lease obligations                                                                                 |             |          | 79    |             |   |        | 80    |  
|                                           |                                                                                                           |             |          |       |             |   |        |       |  
|                                           |                                                                                                           |             | 4,832    |       |             |   | 4,935  |      
|                                           |                                                                                                           |             |          |       |             |   |        |       |  
|Contingencies (Note 4)                     |                                                                                                           |             |          |       |             |   |        |      
|Shareholders Equity                       |                                                                                                           |             |          |       |             |   |        |      
|                                           | Common stock, $10 par value, 400,000,000 shares
authorized, and 134,287,832 shares
issued and outstanding |             |          | 1,343 |             |   |        | 1,343 |  
|                                           | Premium on common stock                                                                                   |             |          | 677   |             |   |        | 507   |  
|                                           | Common stock expense                                                                                      |             |          | (44   | )           |   |        | (44   | )
|                                           | Retained earnings                                                                                         |             |          | 676   |             |   |        | 735   |  
|                                           | Accumulated other comprehensive income (loss)                                                             |             |          | 1     |             |   |        | (419  | )
|                                           |                                                                                                           |             |          |       |             |   |        |       |  
|                                           |                                                                                                           |             | 2,653    |       |             |   | 2,122  |      
|                                           |                                                                                                           |             |          |       |             |   |        |       |  
|Total Liabilities and Shareholders Equity |                                                                                                           | $           | 12,330   |       |             | $ | 11,261 |      
|                                           |                                                                                                           |             |          |       |             |   |        |       |  

See Notes to Consolidated Financial Statements (Unaudited)

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THE DETROIT EDISON COMPANY




CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)


|                                                     |                                                                            |                                                                                   |     |                    |      |   |      |      |      |  
|---------------------------------------------------- | -------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | --- | ------------------ | ---- | - | ---- | ---- | ---- | -
|                                                     |                                                                            |                                                                                   |     | Three Months Ended
|                                                     |                                                                            |                                                                                   |     | March 31          
|                                                     |                                                                            |                                                                                   |     |                   
|(in Millions)                                        |                                                                            | 2003                                                                              |     | 2002              
|                                                     |                                                                            |                                                                                   |     |                   
|Operating Activities                                 |                                                                            |                                                                                   |     |                    |      |   |      |     
|                                                     | Net Income                                                                 |                                                                                   | $   | 15                 |      |   | $    | 92   |     
|                                                     | Adjustments to reconcile net income to net cash from
operating activities: |                                                                                   |     |                    |      |   |      |      |     
|                                                     |                                                                            | Depreciation and amortization                                                     |     |                    | 135  |   |      |      | 147  |  
|                                                     |                                                                            | Deferred income taxes                                                             |     |                    | 135  |   |      |      | 61   |  
|                                                     |                                                                            | Loss on sale of assets                                                            |     |                    | 3    |   |      |      |     |  
|                                                     |                                                                            | Cumulative effect of accounting change                                            |     |                    | 6    |   |      |      |     |  
|                                                     |                                                                            | Changes in assets and liabilities, exclusive of changes
Shown separately (Note 1) |     |                    | (455 | ) |      |      | (349 | )
|                                                     |                                                                            |                                                                                   |     |                    |      |   |      |      |     
|                                                     |                                                                            | Net cash used for operating activities                                            |     |                    | (161 | ) |      |      | (49  | )
|                                                     |                                                                            |                                                                                   |     |                    |      |   |      |      |     
|Investing Activities                                 |                                                                            |                                                                                   |     |                    |      |   |      |     
|                                                     | Plant and equipment expenditures                                           |                                                                                   |     | (178               | )    |   |      | (145 | )   
|                                                     | Proceeds from sales of assets                                              |                                                                                   |     | 2                  |      |   |      |     |     
|                                                     | Restricted cash for debt redemptions                                       |                                                                                   |     | 86                 |      |   |      | 44   |     
|                                                     | Other investments                                                          |                                                                                   |     | 36                 |      |   |      | (33  | )   
|                                                     |                                                                            |                                                                                   |     |                    |      |   |      |      |     
|                                                     |                                                                            | Net cash used for investing activities                                            |     |                    | (54  | ) |      |      | (134 | )
|                                                     |                                                                            |                                                                                   |     |                    |      |   |      |      |     
|Financing Activities                                 |                                                                            |                                                                                   |     |                    |      |   |      |     
|                                                     | Redemption of long-term debt                                               |                                                                                   |     | (307               | )    |   |      | (71  | )   
|                                                     | Notes payable to affiliates                                                |                                                                                   |     | 408                |      |   |      | 131  |     
|                                                     | Capital
contribution by parent company                                     |                                                                                   |     | 170                |      |   |      |     |     
|                                                     | Dividends on common stock                                                  |                                                                                   |     | (74                | )    |   |      | (74  | )   
|                                                     | Other                                                                      |                                                                                   |     | (2                 | )    |   |      | (1   | )   
|                                                     |                                                                            |                                                                                   |     |                    |      |   |      |      |     
|                                                     |                                                                            | Net cash from (used for) financing activities                                     |     |                    | 195  |   |      |      | (15  | )
|                                                     |                                                                            |                                                                                   |     |                    |      |   |      |      |     
|Net Decrease in Cash and Cash Equivalents            |                                                                            |                                                                                   | (20 | )                  |      |   | (198 | )   
|Cash and Cash Equivalents at Beginning of the Period |                                                                            |                                                                                   | 36  |                    |      |   | 215  |     
|                                                     |                                                                            |                                                                                   |     |                    |      |   |      |      |     
|Cash and Cash Equivalents at End of the Period       |                                                                            | $                                                                                 | 16  |                    |      | $ | 17   |     
|                                                     |                                                                            |                                                                                   |     |                    |      |   |      |      |     

See Notes to Consolidated Financial Statements (Unaudited)

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THE DETROIT EDISON COMPANY




CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY
AND COMPREHENSIVE INCOME (UNAUDITED)


|                                                           |  |              |         |        |  |        |       |          |  |               |     |       |  |       |     |   |  |   |     |             |  |   |      |   |  |   |       |  
|---------------------------------------------------------- |  | ------------ | ------- | ------ |  | ------ | ----- | -------- |  | ------------- | --- | ----- |  | ----- | --- | - |  | - | --- | ----------- |  | - | ---- | - |  | - | ----- | -
|                                                           |  |              |         |        |  |        |       |          |  | Premium       |     |       |  |       |     |   |  |   |     | Accumulated |  |   |      |  
|                                                           |  | Common Stock |         | on     |  | Common |       |          |  |               |     | Other |  |       |     |  
|(Dollars in Millions,                                      |  |              |         | Common |  | Stock  |       | Retained |  | Comprehensive |     |       |  |      
|Shares in Thousands)                                       |  | Shares       |         | Amount |  | Stock  |       | Expense  |  | Earnings      |     | Loss  |  | Total
|                                                           |  |              |         |        |  |        |       |          |  |               |     |       |  |      
|Balance, December 31, 2002                                 |  |              | 134,288 |        |  | $      | 1,343 |          |  | $             | 507 |       |  | $     | (44 | ) |  | $ | 735 |             |  | $ | (419 | ) |  | $ | 2,122 |  
|                                                           |  |              |         |        |  |        |       |          |  |               |     |       |  |       |     |   |  |   |     |             |  |   |      |   |  |   |       |  
|Net income                                                 |  |              |        |        |  |        |      |          |  |               |    |       |  |       |    |   |  |   | 15  |             |  |   |     |   |  |   | 15    |  
|Dividends declared on
Common stock                         |  |              |        |        |  |        |      |          |  |               |    |       |  |       |    |   |  |   | (74 | )           |  |   |     |   |  |   | (74   | )
|Net change in unrealized
losses
on derivatives, net of tax |  |              |        |        |  |        |      |          |  |               |    |       |  |       |    |   |  |   |    |             |  |   | 3    |   |  |   | 3     |  
|Pension obligation ( Note 4)                               |  |              |        |        |  |        |      |          |  |               |    |       |  |       |    |   |  |   |    |             |  |   | 417  |   |  |   | 417   |  
|Capital
contribution by parent company                     |  |              |        |        |  |        |      |          |  |               | 170 |       |  |       |    |   |  |   |    |             |  |   |     |   |  |   | 170   |  
|                                                           |  |              |         |        |  |        |       |          |  |               |     |       |  |       |     |   |  |   |     |             |  |   |      |   |  |   |       |  
|Balance, March 31, 2003                                    |  |              | 134,288 |        |  | $      | 1,343 |          |  | $             | 677 |       |  | $     | (44 | ) |  | $ | 676 |             |  | $ | 1    |   |  | $ | 2,653 |  
|                                                           |  |              |         |        |  |        |       |          |  |               |     |       |  |       |     |   |  |   |     |             |  |   |      |   |  |   |       |  

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

|                                        |                                                                             |      |     |      |   |   |    |   |  |  | 
|--------------------------------------- | --------------------------------------------------------------------------- | ---- | --- | ---- | - | - | -- | - |  |  | 
|(in Millions)                           |                                                                             | 2003 |     | 2002
|                                        |                                                                             |      |     |      |   |   |   
|Net income                              |                                                                             | $    | 15  |      |   | $ | 92 |  
|                                        |                                                                             |      |     |      |   |   |    |  
|Other comprehensive income, net of tax: |                                                                             |      |     |      |   |   |    |  
|                                        | Net unrealized income on derivatives:                                       |      |     |      |   |   |    |   | 
|                                        | Gains
arising during the period, net of taxes of $3                         |      |     | 5    |   |   |    |  | 
|                                        | Amounts
reclassified to earnings, net of taxes of $(1) and $2, respectively |      |     | (2   | ) |   |    | 3 | 
|                                        |                                                                             |      |     |      |   |   |    |  
|                                        |                                                                             |      | 3   |      |   |   | 3  |  
|                                        | Pension obligation, net of taxes of $224 (Note 4)                           |      |     | 417  |   |   |    |  | 
|                                        |                                                                             |      |     |      |   |   |    |  
|Comprehensive income                    |                                                                             | $    | 435 |      |   | $ | 95 |  
|                                        |                                                                             |      |     |      |   |   |    |  

See Notes to Consolidated Financial Statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1  GENERAL

These consolidated financial statements should be read in conjunction with the
notes to consolidated financial statements included in the 2002 Annual Report
to the Securities and Exchange Commission on Form 10-K.

The accompanying consolidated financial statements are prepared using
accounting principles generally accepted in the United States of America. These
accounting principles require us to use estimates and assumptions that impact
the reported amounts of assets, liabilities, revenues and expenses, and the
disclosure of contingent assets and liabilities. Actual results may differ
from our estimates.

The consolidated financial statements are unaudited, but in our opinion include
all adjustments necessary for a fair statement of the results for the interim
periods. Financial results for this interim period are not necessarily
indicative of results that may be expected for any other interim period or for
the fiscal year.

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

Consolidated Statement of Cash Flows

We consider investments purchased with a maturity of three months or less to be
cash equivalents. Cash contractually designated for debt service is classified
as restricted cash.

|                                                                         |                                        |      |                    |      |   |   |      |      |  
|------------------------------------------------------------------------ | -------------------------------------- | ---- | ------------------ | ---- | - | - | ---- | ---- | -
|                                                                         |                                        |      | Three Months Ended
|                                                                         |                                        |      | March 31          
|                                                                         |                                        |      |                   
|(in Millions)                                                            |                                        | 2003 |                    | 2002
|                                                                         |                                        |      |                    |      |  
|Changes in Assets and Liabilities, Exclusive of Changes Shown Separately |                                        |      |                    |      |   |   |      |     
|                                                                         | Accounts receivable, net               |      | $                  | (40  | ) |   | $    | (1   | )
|                                                                         | Accrued unbilled receivables           |      |                    | 30   |   |   |      | (4   | )
|                                                                         | Inventories                            |      |                    | 24   |   |   |      | (6   | )
|                                                                         | Accrued pensions                       |      |                    | (204 | ) |   |      | (47  | )
|                                                                         | Accounts payable                       |      |                    | (61  | ) |   |      | (34  | )
|                                                                         | Income taxes payable                   |      |                    | (18  | ) |   |      | (58  | )
|                                                                         | General taxes                          |      |                    | (9   | ) |   |      | (19  | )
|                                                                         | Risk management and trading activities |      |                    | (5   | ) |   |      | (6   | )
|                                                                         | Other                                  |      |                    | (172 | ) |   |      | (174 | )
|                                                                         |                                        |      |                    |      |   |   |      |      |  
|                                                                         |                                        | $    | (455               | )    |   | $ | (349 | )   
|                                                                         |                                        |      |                    |      |   |   |      |      |  

Other cash and non-cash investing and financing activities for the three months
ended March 31 were as follows:

|                                    |                                                |      |                    |      |  |  |   |     | 
|----------------------------------- | ---------------------------------------------- | ---- | ------------------ | ---- |  |  | - | --- | 
|                                    |                                                |      | Three Months Ended
|                                    |                                                |      | March 31          
|                                    |                                                |      |                   
|(in Millions)                       |                                                | 2003 |                    | 2002
|                                    |                                                |      |                    |      | 
|Supplementary Cash Flow Information |                                                |      |                    |      |  |  |   |    
|                                    | Interest paid (excluding interest capitalized) |      | $                  | 101  |  |  | $ | 102 | 
|
|                                    | Income taxes paid                              |      |                    | 32   |  |  |   | 55  | 

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##### Table of Contents



NOTE 2  NEW ACCOUNTING PRONOUNCEMENTS

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

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

As a result of adopting SFAS
No. 143, we recorded a plant asset of $278
million with offsetting accumulated depreciation of $103 million, a retirement
obligation liability of $771 million and reversed previously recognized
obligations of $366 million. We also recorded a cumulative effect amount
related to regulated operations as a regulatory asset of $221 million, and a
cumulative effect charge against earnings of $6 million (net of taxes of $3
million).

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

A reconciliation of the asset retirement obligation for the first quarter of
2003 follows:

|                                               |  |   |     | 
|---------------------------------------------- |  | - | --- | 
|(In Millions)                                  |  |   |     | 
|Asset Retirement Obligation at January 1, 2003 |  | $ | 771 | 
|Accretion                                      |  |   | 13  | 
|                                               |  |   |     | 
|Asset Retirement Obligation at March 31, 2003  |  | $ | 784 | 
|                                               |  |   |     | 

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

NOTE 3  DISPOSITION OF STEAM HEATING BUSINESS

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

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##### Table of Contents



NOTE 4  REGULATORY MATTERS

Electric Industry Restructuring

Electric Rates, Customer Choice and Stranded Costs- In June 2000, PA 141
became effective. PA 141 provided Detroit Edison with the right to recover
stranded costs, codified and established January 1, 2002 as the date for full
implementation of the MPSCs existing electric Customer Choice program, and
required the MPSC to reduce residential electric rates by 5%. At that time,
Public Act 142 (PA 142) also became effective. PA 142 provided for the
recovery through securitization of qualified costs which consist of an
electric utilitys regulatory assets, plus various costs, associated with, or
resulting from, the establishment of a competitive electric market and the
issuance of securitization bonds.

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

The legislation also contains provisions freezing rates through 2003 and
preventing rate increases for residential customers through 2005 and for small
business customers through 2004. Certain costs may be deferred and recovered
once rates can be increased. This rate cap may be lifted when certain market
test provisions are met, specifically, when an electric utility has no more
than 30% of generation capacity in its relevant market, with consideration for
capacity needed to meet a utilitys responsibility to serve its retail
customers. Statewide, multi-utility transmission system improvements also are
required. Detroit Edison expects that these market and transmission
improvement conditions will be met, and the rate cap will not continue after
the dates specified in the legislation.

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

In May 2002, Detroit Edison submitted its 2002 net stranded cost filing with
the MPSC. The filing provides refinements to the MPSC Staffs calculation of
net stranded costs that was adopted in the December 2001 order, seeks more
timely recovery of net stranded costs, and addresses issues raised by

17



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the continuation of securitization offsets and rate reduction equalization
credits. Detroit Edisons filing supports the following conclusions: (i)
Detroit Edison had no net stranded costs in 2000 and $13 million of recoverable
net stranded costs attributable to electric Customer Choice in 2001; (ii)
Detroit Edison requested recovery of 2001 net stranded costs through the use of
excess securitization savings; (iii) Detroit Edison expects to incur additional
net stranded costs in 2002 and 2003 as a result of increased electric Customer
Choice participation; and (iv) Detroit Edison recommended that a pro-forma or
forward looking transition charge be approved for billing during the remainder
of 2002 and for 2003 to eliminate the time lag between the occurrence and
recovery of net stranded costs inherent in the methodology approved in the
December 2001 order. In November 2002, the MPSC Staff and other interveners
submitted their 2002 net stranded cost filings. In the fourth quarter of 2002,
Detroit Edison recorded a regulatory asset of $21 million representing 2002 net
stranded costs and the deferral of environmental expenditures recoverable under
PA 141. The effect of recording the regulatory asset increased 2002 earnings
by $13 million, net of taxes. In the first quarter of 2003, Detroit Edison
recorded a regulatory asset of $12 million representing net stranded costs
and the deferral of environmental expenditures recoverable under PA 141, which
increased after tax earnings by $8 million. The MPSC has not yet acted upon
this Detroit Edison filing.

Minimum Pension Liability

In December 2002, we recorded an additional minimum pension liability as
required under SFAS No. 87, Employers Accounting for Pensions, with
offsetting amounts to an intangible asset and other comprehensive income.
During the first quarter of 2003, the MPSC Staff provided an opinion that the
MPSCs traditional rate setting process allowed for the recovery of pension
costs as measured by SFAS No. 87. Based on the MPSC Staff discussions, management
believes that it will be allowed to recover in rates the minimum pension
liability associated with its regulated operations. Accordingly, we
reclassified approximately $641 million ($417 million net of tax) of
other comprehensive loss associated with the minimum pension liability to a
regulatory asset as of March 31, 2003.

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 5  CONTINGENCIES

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

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

18



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NOTE 6  SEGMENT INFORMATION

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

|                   |                                        |      |                    |      |   |   |     |     | 
|------------------ | -------------------------------------- | ---- | ------------------ | ---- | - | - | --- | --- | 
|                   |                                        |      | Three Months Ended
|                   |                                        |      | March 31          
|                   |                                        |      |                   
|(in Millions)      |                                        | 2003 |                    | 2002
|                   |                                        |      |                    |      |  
|Operating Revenues |                                        |      |                    |      |   |   |     |    
|                   | Energy Resources                       |      | $                  | 617  |   |   | $   | 617 | 
|                   | Energy Distribution                    |      |                    | 320  |   |   |     | 313 | 
|                   |                                        |      |                    |      |   |   |     |     | 
|                   |                                        | $    | 937                |      |   | $ | 930 |    
|                   |                                        |      |                    |      |   |   |     |     | 
|Net Income         |                                        |      |                    |      |   |   |     |    
|                   | Energy Resources                       |      | $                  | 25   |   |   | $   | 65  | 
|                   | Energy Distribution                    |      |                    | (4   | ) |   |     | 27  | 
|                   | Cumulative Effect of Accounting Change |      |                    | (6   | ) |   |     |    | 
|                   |                                        |      |                    |      |   |   |     |     | 
|                   |                                        | $    | 15                 |      |   | $ | 92  |    
|                   |                                        |      |                    |      |   |   |     |     | 

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INDEPENDENT ACCOUNTANTS REPORT

To the Board of Directors and
Shareholder of
The Detroit Edison Company

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

/S/ DELOITTE & TOUCHE LLP

Detroit, Michigan
May 2, 2003

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EXHIBITS AND REPORTS ON FORM 8-K



|(a) |  | Exhibits.
|--- |  | ---------

|        |  |                                                                                                                                                                                                        
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                        
|Number  |  | Description                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                        
|4-233   |  | Eleventh Supplemental Indenture dated December 1, 2002,
Supplementing the Collateral Trust Indenture dated as of June
30,1993 providing for 5.45% Senior Notes Due 2032 and 5.25% Senior
Notes Due 2032
|        |  |                                                                                                                                                                                                        
|15-23   |  | Awareness Letter of Deloitte & Touche LLP                                                                                                                                                              
|        |  |                                                                                                                                                                                                        
|99-9    |  | Chief Executive Officer Certification of Periodic Report                                                                                                                                               
|        |  |                                                                                                                                                                                                        
|99-10   |  | Chief Financial Officer Certification of Periodic Report                                                                                                                                               



|(b) |  | Reports on Form 8-K.                                                                                 
|--- |  | -----------------------------------------------------------------------------------------------------
|   
|    |  | We filed a report on Form 8-K during the first quarter ended March 31, 2003, dated February 28, 2003.





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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 COMPANY                   
|                   |  |                                              
|Date: May 14, 2003 |  | /s/ DANIEL G. BRUDZYNSKI
Daniel G. Brudzynski
|                   |  | Chief Accounting Officer,                    
|                   |  | Vice President and Controller                

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FORM 10-Q CERTIFICATION

I, Anthony F. Earley, Jr., Chairman, President, Chief Executive and Chief
Operating Officer of The Detroit Edison Company, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of The Detroit Edison
Company;                                                                                                                                                                                                                                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | (a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | (c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                   |  |                   
|-------------------------------------------------- |  | ------------------
|/s/ ANTHONY F. EARLEY, JR.

Anthony F. Earley, Jr. |  | Date: May 14, 2003
|Chairman, President, Chief Executive and           |  |                   
|Chief Operating Officer of                         |  |                   
|The Detroit Edison Company                         |  |                   

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##### Table of Contents



FORM 10-Q CERTIFICATION

I, David E. Meador, Senior Vice President and Chief Financial Officer of The
Detroit Edison Company, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of The Detroit Edison
Company;                                                                                                                                                                                                                                             
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | (a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | (c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                     |  |                   
|------------------------------------ |  | ------------------
|/s/ DAVID E. MEADOR

David E. Meador |  | Date: May 14, 2003
|Senior Vice President and            |  |                   
|Chief Financial Officer of           |  |                   
|The Detroit Edison Company           |  |                   

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##### Table of Contents



The Detroit Edison Company
Quarterly Report on Form 10-Q for Quarter Ended March 31, 2003
File No.1-2198

Exhibit Index

|        |  |                                                                                                                                                                                                        
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                        
|Number  |  | Description                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                        
|4-233   |  | Eleventh Supplemental Indenture dated December 1, 2002,
Supplementing the Collateral Trust Indenture dated as of June
30,1993 providing for 5.45% Senior Notes Due 2032 and 5.25% Senior
Notes Due 2032
|        |  |                                                                                                                                                                                                        
|15-23   |  | Awareness Letter of Deloitte & Touche LLP                                                                                                                                                              
|        |  |                                                                                                                                                                                                        
|99-9    |  | Chief Executive Officer Certification of Periodic Report                                                                                                                                               
|        |  |                                                                                                                                                                                                        
|99-10   |  | Chief Financial Officer Certification of Periodic Report