##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period ended September 30, 2009
 Commission file number 1-2198
 The Detroit Edison Company meets the conditions set forth in General Instruction H (1) (a) and (b)
of Form 10-Q and is, therefore, filing this Form with the reduced disclosure format.
 THE DETROIT EDISON COMPANY
  Michigan
    
    38-0478650(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)One Energy Plaza, Detroit, Michigan
    
    48226-1279(Address of principal executive offices)
    
    (Zip Code)
 313-235-4000
  Yes þ No o
  Yes o No o
  Large accelerated filero
Accelerated fileroNon-accelerated filerþ(Do not check if a smaller reporting company)Smaller reporting companyo  Yes o No þ




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##### 



The Detroit Edison Company  Quarterly Report on Form 10-Q  Quarter Ended September 30, 2009
 Table Of Contents
 PageDefinitions
    
    
    1Forward-Looking Statements
    
    
    2Part I  Financial InformationItem 1. Financial StatementsConsolidated Statements of Financial Position (Unaudited)
    
    
    4Consolidated Statements of Operations (Unaudited)
    
    
    6Consolidated Statements of Cash Flows (Unaudited)
    
    
    7Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income (Unaudited)
    
    
    8Notes to Consolidated Financial Statements (Unaudited)
    
    
    9Item 2. Managements Narrative Analysis of Results of Operations
    
    
    24Item 4. Controls and Procedures
    
    
    26Part II  Other InformationItem 1. Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    27Item 6. Exhibits
    
    
    28Signature
    
    
    29EX-12.35EX-31.51EX-31.52EX-32.51EX-32.52




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Definitions
 ASC
    
    Accounting Standards CodificationCustomer Choice
    
    Statewide initiatives giving customers in Michigan the option to choose
alternative suppliers for electricity.Detroit Edison
    
    The Detroit Edison Company (a direct wholly owned subsidiary of DTE
Energy Company) and subsidiary companiesDTE Energy
    
    DTE Energy Company, the parent of Detroit Edison and directly or
indirectly the parent company of numerous non-utility subsidiariesEPA
    
    United States Environmental Protection AgencyFASB
    
    Financial Accounting Standards BoardFERC
    
    Federal Energy Regulatory CommissionFSP
    
    FASB Staff PositionFTRs
    
    Financial Transmission RightsMDEQ
    
    Michigan Department of Environmental QualityMISO
    
    Midwest Independent System Operator, a Regional Transmission OrganizationMPSC
    
    Michigan Public Service CommissionNRC
    
    Nuclear Regulatory CommissionPSCR
    
    A power supply cost recovery mechanism authorized by the MPSC that
allows Detroit Edison to recover through rates its fuel, fuel-related
and purchased power expenses.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 StandardsUnits of MeasurementkWh
    
    Kilowatthour of electricityMW
    
    Megawatt of electricityMWh
    
    Megawatthour of electricity
 1




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Forward-Looking Statements
  
    
    the length and severity of ongoing economic decline resulting in lower demand, customer
conservation and increased thefts of electricity;
    
    changes in the economic and financial viability of our customers, suppliers, and
trading counterparties, and the continued ability of such parties to perform their
obligations to the Company;
    
    high levels of uncollectible accounts receivable;
    
    access to capital markets and capital market conditions and the results of other
financing efforts which can be affected by credit agency ratings;
    
    instability in capital markets which could impact availability of short and long-term
financing;
    
    potential for continued loss on investments, including nuclear decommissioning and
benefit plan assets and the related increases in future expense and contributions;
    
    the timing and extent of changes in interest rates;
    
    the level of borrowings;
    
    the availability, cost, coverage and terms of insurance and stability of insurance
providers;
    
    the effects of weather and other natural phenomena on operations and sales to
customers, and purchases from suppliers;
    
    economic climate and population growth or decline in the geographic areas where we do
business;
    
    environmental issues, laws, regulations, and the increasing costs of remediation and
compliance, including actual and potential new federal and state requirements that include
or could include carbon and more stringent mercury emission controls, a renewable portfolio
standard, energy efficiency mandates, and a carbon tax or cap and trade structure;
    
    nuclear regulations and operations associated with nuclear facilities;
    
    impact of electric utility restructuring in Michigan, including legislative amendments
and Customer Choice programs;
    
    employee relations and the impact of collective bargaining agreements;
    
    unplanned outages;
    
    changes in the cost and availability of coal and other raw materials and purchased
power;
    
    cost reduction efforts and the maximization of plant and distribution system
performance;
    
    the effects of competition;
    
    impact of regulation by the FERC, MPSC, NRC and other applicable governmental
proceedings and regulations, including any associated impact on rate structures;
    
    changes in and application of federal, state and local tax laws and their
interpretations, including the Internal Revenue Code, regulations, rulings, court
proceedings and audits;
    
    the amount and timing of cost recovery allowed as a result of regulatory proceedings,
related appeals or new legislation;
 2




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
    
    the cost of protecting assets against, or damage due to, terrorism;
    
    changes in and application of accounting standards and financial reporting regulations;
    
    changes in federal or state laws and their interpretation with respect to regulation,
energy policy and other business issues; and
    
    binding arbitration, litigation and related appeals.
  3




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Part I  Item 1.
 
 The Detroit Edison Company  Consolidated Statements of Financial Position (Unaudited)
 September 30
    
    
    December 31(in Millions)
    
    2009
    
    
    2008ASSETSCurrent AssetsCash and cash equivalents
    
    $
    69
    
    
    $
    30Restricted cash
    
    
    24
    
    
    
    84Accounts receivable (less allowance for
doubtful accounts of $125 and $121,
respectively)Customer
    
    
    709
    
    
    
    709Affiliates
    
    
    1
    
    
    
    5Other
    
    
    10
    
    
    
    34InventoriesFuel
    
    
    174
    
    
    
    170Materials and supplies
    
    
    175
    
    
    
    169Notes receivableAffiliates
    
    
    169
    
    
    
    41Other
    
    
    4
    
    
    
    3Prepaid property taxes
    
    
    92
    
    
    
    43Other
    
    
    46
    
    
    
    521,473
    
    
    
    1,340InvestmentsNuclear decommissioning trust funds
    
    
    791
    
    
    
    685Other
    
    
    94
    
    
    
    99885
    
    
    
    784PropertyProperty, plant and equipment
    
    
    15,335
    
    
    
    14,977Accumulated depreciation
    
    
    (6,058
    )
    
    
    (5,828
    )9,277
    
    
    
    9,149Other AssetsRegulatory assets
    
    
    3,255
    
    
    
    3,456Securitized regulatory assets
    
    
    905
    
    
    
    1,001Intangible assets
    
    
    9
    
    
    
    19Notes receivableAffiliates
    
    
    20
    
    
    
    Other
    
    
    
    
    
    
    3Other
    
    
    112
    
    
    
    904,301
    
    
    
    4,569Total Assets
    
    $
    15,936
    
    
    $
    15,842
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The Detroit Edison Company  Consolidated Statements of Financial Position (Unaudited)
 September 30
    
    
    December 31(in Millions, Except Shares)
    
    2009
    
    
    2008LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable  affiliates
    
    $
    55
    
    
    $
    103Accounts payable  other
    
    
    241
    
    
    
    346Accrued interest
    
    
    88
    
    
    
    80Accrued vacation
    
    
    48
    
    
    
    58Accrued power supply cost recovery revenue
    
    
    63
    
    
    
    27Income taxes payable
    
    
    83
    
    
    
    39Short-term borrowings  other
    
    
    
    
    
    
    75Current portion of long-term debt, including capital leases
    
    
    160
    
    
    
    153Other
    
    
    173
    
    
    
    197911
    
    
    
    1,078Long-Term Debt (net of current portion)Mortgage bonds, notes and other
    
    
    4,079
    
    
    
    4,091Securitization bonds
    
    
    793
    
    
    
    932Capital lease obligations
    
    
    28
    
    
    
    334,900
    
    
    
    5,056Other LiabilitiesDeferred income taxes
    
    
    1,867
    
    
    
    1,894Regulatory liabilities
    
    
    630
    
    
    
    593Asset retirement obligations
    
    
    1,269
    
    
    
    1,205Unamortized investment tax credit
    
    
    78
    
    
    
    85Nuclear decommissioning
    
    
    131
    
    
    
    114Accrued pension liability  affiliates
    
    
    912
    
    
    
    978Accrued postretirement liability  affiliates
    
    
    1,101
    
    
    
    1,075Other
    
    
    247
    
    
    
    2086,235
    
    
    
    6,152Commitments and Contingencies (Notes 4 and 8)Shareholders EquityCommon stock, $10 par value, 400,000,000 shares
authorized, and 138,632,324 shares issued and outstanding
    
    
    3,196
    
    
    
    2,946Retained earnings
    
    
    706
    
    
    
    622Accumulated other comprehensive income
    
    
    (12
    )
    
    
    (12
    )3,890
    
    
    
    3,556Total Liabilities and Shareholders Equity
    
    $
    15,936
    
    
    $
    15,842
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The Detroit Edison Company  Consolidated Statements of Operations (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30(in Millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Operating Revenues
    
    $
    1,300
    
    
    $
    1,440
    
    
    $
    3,526
    
    
    $
    3,766Operating ExpensesFuel and purchased power
    
    
    400
    
    
    
    586
    
    
    
    1,112
    
    
    
    1,403Operation and maintenance
    
    
    306
    
    
    
    292
    
    
    
    928
    
    
    
    1,019Depreciation and amortization
    
    
    222
    
    
    
    193
    
    
    
    607
    
    
    
    563Taxes other than income
    
    
    43
    
    
    
    54
    
    
    
    147
    
    
    
    176Asset (gains) and reserves, net
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )971
    
    
    
    1,124
    
    
    
    2,794
    
    
    
    3,160Operating Income
    
    
    329
    
    
    
    316
    
    
    
    732
    
    
    
    606Other (Income) and DeductionsInterest expense
    
    
    82
    
    
    
    73
    
    
    
    245
    
    
    
    220Interest income
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    (3
    )Other income
    
    
    (12
    )
    
    
    (16
    )
    
    
    (29
    )
    
    
    (39
    )Other expenses
    
    
    5
    
    
    
    11
    
    
    
    5
    
    
    
    3475
    
    
    
    67
    
    
    
    220
    
    
    
    212Income Before Income Taxes
    
    
    254
    
    
    
    249
    
    
    
    512
    
    
    
    394Income Tax Provision
    
    
    98
    
    
    
    90
    
    
    
    199
    
    
    
    143Net Income
    
    $
    156
    
    
    $
    159
    
    
    $
    313
    
    
    $
    251
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The Detroit Edison Company  Consolidated Statements of Cash Flows (Unaudited)
 Nine Months EndedSeptember 30(in Millions)
    
    2009
    
    
    2008Operating ActivitiesNet income
    
    $
    313
    
    
    $
    251Adjustments to reconcile net income to net cash from operating activities:Depreciation and amortization
    
    
    607
    
    
    
    563Deferred income taxes
    
    
    (2
    )
    
    
    70Asset (gains) and reserves, net
    
    
    
    
    
    
    (1
    )Changes in assets and liabilities, exclusive of changes shown separately
    
    
    105
    
    
    
    (33
    )Net cash from operating activities
    
    
    1,023
    
    
    
    850Investing ActivitiesPlant and equipment expenditures
    
    
    (640
    )
    
    
    (651
    )Restricted cash for debt redemptions
    
    
    60
    
    
    
    101Proceeds from sale of nuclear decommissioning trust fund assets
    
    
    237
    
    
    
    180Investment in nuclear decommissioning trust funds
    
    
    (251
    )
    
    
    (202
    )Other investments
    
    
    (176
    )
    
    
    (33
    )Net cash used for investing activities
    
    
    (770
    )
    
    
    (605
    )Financing ActivitiesIssuance of long-term debt
    
    
    65
    
    
    
    566Redemption of long-term debt
    
    
    (213
    )
    
    
    (166
    )Repurchase of long-term debt
    
    
    
    
    
    
    (238
    )Short-term borrowings, net
    
    
    (82
    )
    
    
    (301
    )Capital contribution by parent company
    
    
    250
    
    
    
    175Dividends on common stock
    
    
    (228
    )
    
    
    (228
    )Other
    
    
    (6
    )
    
    
    (7
    )Net cash used for financing activities
    
    
    (214
    )
    
    
    (199
    )Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    39
    
    
    
    46Cash and Cash Equivalents at Beginning of Period
    
    
    30
    
    
    
    47Cash and Cash Equivalents at End of Period
    
    $
    69
    
    
    $
    93
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The Detroit Edison Company  Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income  ( Unaudited )
 AccumulatedAdditional
    
    
    
    
    
    OtherCommon Stock
    
    Paid In
    
    Retained
    
    Comprehensive(Dollars in Millions, shares in thousands)
    
    Shares
    
    Amount
    
    Capital
    
    Earnings
    
    Income
    
    TotalBalance, December 31, 2008
    
    
    138,632
    
    
    $
    1,386
    
    
    $
    1,560
    
    
    $
    622
    
    
    $
    (12
    )
    
    $
    3,556Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    313
    
    
    
    
    
    
    
    313Capital contribution by parent company
    
    
    
    
    
    
    
    
    
    
    250
    
    
    
    
    
    
    
    
    
    
    
    250Dividends declared on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (228
    )
    
    
    
    
    
    
    (228
    )Net change in unrealized gains on
investments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Benefits, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Balance, September 30, 2009
    
    
    138,632
    
    
    $
    1,386
    
    
    $
    1,810
    
    
    $
    706
    
    
    $
    (12
    )
    
    $
    3,890
  (in Millions)
    
    2009
    
    
    2008Net income
    
    $
    313
    
    
    $
    251Other comprehensive income, net of tax:Net unrealized gains on investments:Amounts reclassified to income, net of taxes
    
    
    (2
    )
    
    
    (1
    )Benefits, net of taxes
    
    
    2
    
    
    
    Comprehensive income
    
    $
    313
    
    
    $
    250
  8




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The Detroit Edison Company  Notes to Consolidated Financial Statements (Unaudited)
 NOTE 1  GENERAL
     Asset Retirement Obligations
   (in Millions)Asset retirement obligations at January 1, 2009
    
    $
    1,226Accretion
    
    
    60Liabilities settled
    
    
    (6
    )Revision in estimated cash flows
    
    
    5Asset retirement obligations at September 30, 2009
    
    
    1,285Less amount included in current liabilities
    
    
    (16
    )$
    1,269
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Retirement Benefits and Trusteed Assets
  (in Millions)
    
    Pension Benefits
    
    
    Other Postretirement BenefitsThree Months Ended September 30
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    11
    
    
    $
    11
    
    
    $
    11
    
    
    $
    12Interest cost
    
    
    39
    
    
    
    38
    
    
    
    26
    
    
    
    23Expected return on plan assets
    
    
    (41
    )
    
    
    (41
    )
    
    
    (10
    )
    
    
    (14
    )Amortization of:Net actuarial loss
    
    
    9
    
    
    
    6
    
    
    
    13
    
    
    
    7Prior service cost
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    1Net transition liability
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Net periodic benefit cost
    
    $
    20
    
    
    $
    16
    
    
    $
    41
    
    
    $
    29
 (in Millions)
    
    Pension Benefits
    
    
    Other Postretirement BenefitsNine Months Ended September 30
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    32
    
    
    $
    34
    
    
    $
    34
    
    
    $
    36Interest cost
    
    
    119
    
    
    
    112
    
    
    
    77
    
    
    
    70Expected return on plan assets
    
    
    (124
    )
    
    
    (123
    )
    
    
    (31
    )
    
    
    (43
    )Amortization of:Net actuarial loss
    
    
    29
    
    
    
    19
    
    
    
    39
    
    
    
    21Prior service cost
    
    
    5
    
    
    
    5
    
    
    
    1
    
    
    
    1Net transition liability
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Net periodic benefit cost
    
    $
    61
    
    
    $
    47
    
    
    $
    122
    
    
    $
    87
   Income Taxes
  Stock-Based Compensation
  10




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Consolidated Statements of Cash Flows
  Nine Months EndedSeptember 30(in Millions)
    
    2009
    
    
    2008Changes in Assets and Liabilities, Exclusive of Changes Shown SeparatelyAccounts receivable, net
    
    $
    22
    
    
    $
    (48
    )Inventories
    
    
    (11
    )
    
    
    (31
    )Accrued pension liability  affiliates
    
    
    (65
    )
    
    
    59Accounts payable
    
    
    (52
    )
    
    
    (46
    )Accrued PSCR refund
    
    
    55
    
    
    
    22Income taxes payable
    
    
    50
    
    
    
    (10
    )General taxes
    
    
    
    
    
    
    (11
    )Postretirement obligation  affiliates
    
    
    25
    
    
    
    12Other assets
    
    
    42
    
    
    
    (14
    )Other liabilities
    
    
    39
    
    
    
    34$
    105
    
    
    $
    (33
    )
 Subsequent Events
  NOTE 2  NEW ACCOUNTING PRONOUNCEMENTS
 FASB Accounting Standards Codification (Codification)
  Fair Value Accounting
 Fair Value Measurements)
  
    
    ASC 825-10 (FSP No. 107-1 and APB No. 28-1), Interim Disclosures about Fair Value of
Financial Instruments,expands the fair value disclosures required for all financial
instruments within the scope of SFAS No. 107 to interim periods.
    
    ASC 820-10 (FSP No. 157-4), Determining Fair Value When the Volume and Level of Activity
for the Asset or Liability Have Significantly Decreased and Identifying Transactions That
Are Not Orderly,which applies to all assets and liabilities, i.e., financial and
nonfinancial, reemphasizes that the objective of fair value remains
 11




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unchanged (i.e., an exit price notion). The FSP provides application guidance on measuring fair
value when the volume and level of activity has significantly decreased and identifying
transactions that are not orderly. The FSP also emphasizes that an entity cannot presume that
an observable transaction price is not orderly even when there has been a significant decline
in the volume and level of activity.
    
    ASC 320-10 (FSP No. 115-2 and SFAS No. 124-2), Recognition and Presentation of
Other-Than-Temporary Impairments,is intended to bring greater consistency to the timing of
impairment recognition, and provide greater clarity to investors about the credit and
noncredit components of impaired debt securities that are not expected to be sold.
  Noncontrolling Interests in Consolidated Financial Statements
 Noncontrolling Interests in
Consolidated Financial Statements  an Amendment of ARB No. 51).
 Disclosures about Derivative Instruments and Guarantees
 Disclosures about Derivative Instruments
and Hedging Activities  an amendment of FASB Statement No. 133)
  Subsequent Events
 Subsequent Events)
 Transfers of Financial Assets
 Accounting for Transfers of Financial Assets  an
amendment of FASB No. 140 (not yet effective nor codified).
 12




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Variable Interest Entities (VIE)
 Amendments to FASB Interpretation 46(R) (not yet
effective nor codified).
 Fair Value Measurements and Disclosures
 Fair Value Measurements and Disclosure, Measuring Liabilities at Fair
Value.
  Revenue Arrangements
 Revenue Arrangements with Multiple
Deliverables (not yet codified).
 NOTE 3  FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS AND FAIR VALUE
 Financial and Other Derivative Instruments
  13




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Balance Sheet
    
    FairLocation
    
    ValueFTRs
    
    Other current assets
    
    $
    1Emissions
    
    Other current liabilities
    
    
    (2
    )Emissions
    
    Other non-current liabilities
    
    
    (7
    )Total derivatives not designated as hedging instrument
    
    
    
    $
    (8
    )Total derivatives:Current
    
    
    
    $
    (1
    )Noncurrent
    
    
    
    
    (7
    )Total derivatives as reported
    
    
    
    $
    (8
    )
  Three MonthsEnded
    
    
    Nine Months EndedLocation of Gain
    
    
    Gain (Loss)
    
    
    Gain (Loss)(Loss) Recognized
    
    
    Recognized in
    
    
    Recognized inin Regulatory
    
    
    Regulatory Assets
    
    
    Regulatory AssetsAssets / Liabilities
    
    
    / Liabilities on
    
    
    / Liabilities onOn Derivative
    
    
    Derivative
    
    
    DerivativeFTRs and Emissions
    
    Regulatory Asset
    
    $
    (1
    )
    
    $
    (13
    )FTRs and Emissions
    
    Regulatory Liability
    
    
    
    
    
    
    (3
    )Total
    
    
    
    
    
    $
    (1
    )
    
    $
    (16
    )
  Commodity
    
    Number of UnitsEmissions (Tons)
    
    
    5,236FTRs (MW)
    
    
    100,338
 Fair Value
  14




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
    
    Level 1  Consists of unadjusted quoted prices in active markets for identical assets
or liabilities that the Company has the ability to access as of the reporting date.
    
    Level 2  Consists of inputs other than quoted prices included within Level 1 that are
directly observable for the asset or liability or indirectly observable through
corroboration with observable market data.
    
    Level 3  Consists of unobservable inputs for assets or liabilities whose fair value
is estimated based on internally developed models or methodologies using inputs that are
generally less readily observable and supported by little, if any, market activity at the
measurement date. Unobservable inputs are developed based on the best available information
and subject to cost-benefit constraints.
  Net Balance at(in Millions)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    September 30, 2009Assets:Cash equivalents
    
    $
    50
    
    
    $
    
    
    
    $
    
    
    
    $
    50Nuclear decommissioning trusts and other investments
    
    
    558
    
    
    
    320
    
    
    
    
    
    
    
    878Derivative assets
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Total
    
    $
    608
    
    
    $
    320
    
    
    $
    1
    
    
    $
    929Liabilities:Derivative liabilities
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    (9
    )Total
    
    $
    
    
    
    $
    (9
    )
    
    $
    
    
    
    $
    (9
    )Net Assets at September 30, 2009
    
    $
    608
    
    
    $
    311
    
    
    $
    1
    
    
    $
    920
  Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30(in Millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Asset balance as of beginning of period
    
    $
    2
    
    
    $
    4
    
    
    $
    4
    
    
    
    4Changes in fair value recorded in income
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    2Changes in fair value recorded in regulatory assets/liabilities
    
    
    (1
    )
    
    
    
    
    
    
    (2
    )
    
    
    Purchases, issuances and settlements
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (3
    )Transfers in/out of Level 3
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    Asset balance as of September 30
    
    $
    1
    
    
    $
    3
    
    
    $
    1
    
    
    $
    3The amount of total gains (losses) included in regulatory
assets and liabilities attributed to the change in unrealized
gains (losses) related to assets and liabilities held at
September 30, 2009 and 2008
    
    $
    (1
    )
    
    $
    
    
    
    $
    2
    
    
    $
    3
 15




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##### Table of Contents



Cash Equivalents
  Nuclear Decommissioning Trusts and Other Investments
  Derivative Assets and Liabilities
  Fair Value of Financial Instruments
  September 30, 2009
    
    December 31, 2008Fair Value
    
    Carrying Value
    
    Fair Value
    
    Carrying ValueLong-Term Debt
    
    $5.3 billion
    
    $5.0 billion
    
    $5.0 billion
    
    $5.2 billion
 Investments in Debt and Equity Securities
  16




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##### Table of Contents



Decommissioning
  September 30
    
    
    December 31(in Millions)
    
    2009
    
    
    2008Fermi 2
    
    $
    762
    
    
    $
    649Fermi 1
    
    
    3
    
    
    
    3Low level radioactive waste
    
    
    26
    
    
    
    33Total
    
    $
    791
    
    
    $
    685
   Three Months Ended
    
    Nine Months EndedSeptember 30
    
    September 30(in Millions)
    
    2009

    
    2008

    
    2009

    
    2008Realized gains
    
    $
    9
    
    
    $
    7
    
    
    $
    28
    
    
    $
    18Realized losses
    
    $
    (12
    )
    
    $
    (15
    )
    
    $
    (45
    )
    
    $
    (31
    )Proceeds from sales of securities
    
    $
    55
    
    
    $
    68
    
    
    $
    237
    
    
    $
    180
  Fair
    
    
    Unrealized(in Millions)
    
    Value
    
    
    GainsAs of September 30, 2009Equity securities
    
    $
    400
    
    
    $
    118Debt securities
    
    
    381
    
    
    
    19Cash and cash equivalents
    
    
    10
    
    
    
    $
    791
    
    
    $
    137As of December 31, 2008Equity securities
    
    $
    288
    
    
    $
    65Debt securities
    
    
    388
    
    
    
    17Cash and cash equivalents
    
    
    9
    
    
    
    $
    685
    
    
    $
    82
   17




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##### Table of Contents



Other
  September 30, 2009
    
    December 31, 2008(in Millions)
    
    Fair Value
    
    Carrying value
    
    Fair Value
    
    Carrying ValueCash equivalents
    
    $
    47
    
    
    $
    47
    
    
    $
    98
    
    
    $
    98Equity securities
    
    $
    3
    
    
    $
    3
    
    
    $
    20
    
    
    $
    20
  NOTE 4  REGULATORY MATTERS
 2009 Electric Rate Case Filing
   
    
    Continued progress toward correcting the existing rate structure to more accurately reflect
the actual cost of providing service to business customers;
 
    
    Continued application of an adjustment mechanism to enable the Company to address the costs
associated with retail electric customers migrating to and from Detroit Edisons full service
retail electric tariff service;
 
    
    Application of an uncollectible expense true-up mechanism based on the $87 million expense
level of uncollectible expenses that occurred during the 12 month period ended June 2008;
 
    
    Continued application of the storm restoration expense recovery mechanism and modification to
the line clearance expense recovery mechanism; and
 
    
    Implementation of a revenue decoupling mechanism. Revenue decoupling is an adjustment
mechanism that would provide revenues consistent with the allowed revenue requirement with a
periodic adjustment for changes in sales levels.
  Renewable Energy Plan
  18




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##### Table of Contents



Energy Optimization Plans
  Power Supply Cost Recovery Proceedings
 2008 Plan Year 
 2009 Plan Year
 19




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##### Table of Contents



2010 Plan Year
 Merger Control Premium Costs
  Other
  NOTE 5  SHAREHOLDERS EQUITY
  20




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##### Table of Contents



NOTE 6  LONG-TERM DEBT
 Debt Issuances
   Month Issued
    
    Type
    
    Interest Rate
    
    
    Maturity
    
    
    AmountApril
    
    Tax-Exempt Revenue Bonds (1)(2)
    
    
    6.00
    %
    
    
    2036
    
    
    $
    69June
    
    Tax-Exempt Revenue Bonds (1)(3)
    
    
    5.625
    %
    
    
    2020
    
    
    
    32June
    
    Tax-Exempt Revenue Bonds (1)(4)
    
    
    5.25
    %
    
    
    2029
    
    
    
    60June
    
    Tax-Exempt Revenue Bonds (1)(5)
    
    
    5.50
    %
    
    
    2029
    
    
    
    59$
    220
 
 (1)
    
    Detroit Edison Tax-Exempt Revenue Bonds are issued by a public body that loans the proceeds
to Detroit Edison on terms substantially mirroring the Revenue Bonds.(2)
    
    Proceeds were used to refund existing Tax-Exempt Revenue Bonds.(3)
    
    These Tax-Exempt Revenue Bonds were converted from a variable rate mode and remarketed in a
fixed rate mode to maturity.(4)
    
    These Tax-Exempt Revenue Bonds were converted from a variable rate mode and remarketed in a
fixed rate mode to maturity with a five-year mandatory put.(5)
    
    These Tax-Exempt Revenue Bonds were converted from a variable rate mode and remarketed in a
fixed rate mode to maturity with a seven-year mandatory put. Debt Retirements and Redemptions
   Month Retired
    
    Type
    
    Interest Rate
    
    
    Maturity
    
    
    AmountApril
    
    Tax-Exempt Revenue Bonds (1)
    
    Variable
    
    
    2036
    
    
    $
    69$
    69
 
 (1)
    
    These Tax-Exempt Revenue Bonds were redeemed with the proceeds from the issuance of new
Detroit Edison Tax-Exempt Revenue Bonds. NOTE 7  SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS
  21




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NOTE 8  COMMITMENTS AND CONTINGENCIES
 Environmental
 Electric Utility
 Air
  Water
 Landfill
 Contaminated Sites
 Guarantees
  22




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##### Table of Contents



Labor Contracts
  Purchase Commitments
   Bankruptcies
   Other Contingencies
   23




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##### Table of Contents



Part I  Item 2.
 The Detroit Edison Company
Managements Narrative Analysis of Results of Operations
   Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30(in Millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Operating Revenues
    
    $
    1,300
    
    
    $
    1,440
    
    
    $
    3,526
    
    
    $
    3,766Fuel and Purchased Power
    
    
    400
    
    
    
    586
    
    
    
    1,112
    
    
    
    1,403Gross Margin
    
    
    900
    
    
    
    854
    
    
    
    2,414
    
    
    
    2,363Operation and Maintenance
    
    
    306
    
    
    
    292
    
    
    
    928
    
    
    
    1,019Depreciation and Amortization
    
    
    222
    
    
    
    193
    
    
    
    607
    
    
    
    563Taxes Other Than Income
    
    
    43
    
    
    
    54
    
    
    
    147
    
    
    
    176Asset (Gains) and Reserves, Net
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Operating Income
    
    
    329
    
    
    
    316
    
    
    
    732
    
    
    
    606Other (Income) and Deductions
    
    
    75
    
    
    
    67
    
    
    
    220
    
    
    
    212Income Tax Provision
    
    
    98
    
    
    
    90
    
    
    
    199
    
    
    
    143Net Income Attributable to DTE Energy Company
    
    $
    156
    
    
    $
    159
    
    
    $
    313
    
    
    $
    251Operating Income as a Percentage of
Operating Revenues
    
    
    25
    %
    
    
    22
    %
    
    
    21
    %
    
    
    16
    %
 Gross margin
 (in Millions)
    
    Three Months
    
    
    Nine MonthsDecember 2008 rate order
    
    $
    33
    
    
    $
    94Securitization bond and tax surcharge rate increase
    
    
    20
    
    
    
    45July 2009 rate self-implementation
    
    
    40
    
    
    
    40Energy Optimization and Renewable Energy surcharge
    
    
    17
    
    
    
    19Weather
    
    
    (41
    )
    
    
    (57
    )Reduction in customer demand and other
    
    
    (23
    )
    
    
    (90
    )Increase in gross margin
    
    $
    46
    
    
    $
    51
 Electric Sales
 Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30(in Thousands of MWh)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Residential
    
    
    4,107
    
    
    
    4,595
    
    
    
    10,992
    
    
    
    11,955Commercial
    
    
    4,806
    
    
    
    5,072
    
    
    
    13,764
    
    
    
    14,347Industrial
    
    
    2,562
    
    
    
    3,327
    
    
    
    7,584
    
    
    
    10,074Wholesale
    
    
    720
    
    
    
    700
    
    
    
    2,119
    
    
    
    2,123Other
    
    
    79
    
    
    
    89
    
    
    
    280
    
    
    
    28512,274
    
    
    
    13,783
    
    
    
    34,739
    
    
    
    38,784Interconnections sales (1)
    
    
    1,644
    
    
    
    618
    
    
    
    3,868
    
    
    
    2,627Total Electric Sales
    
    
    13,918
    
    
    
    14,401
    
    
    
    38,607
    
    
    
    41,411Electric DeliveriesRetail and Wholesale
    
    
    12,274
    
    
    
    13,783
    
    
    
    34,739
    
    
    
    38,784Electric Customer Choice (2)
    
    
    337
    
    
    
    329
    
    
    
    998
    
    
    
    1,081Total Electric Sales and Deliveries
    
    
    12,611
    
    
    
    14,112
    
    
    
    35,737
    
    
    
    39,865
 24




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##### Table of Contents



(1)
    
    Represents power that is not distributed by Detroit Edison.(2)
    
    Includes deliveries for self generators who have purchased power from alternative energy
suppliers to supplement their power requirements. Power Generated and Purchased
 Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30(in Thousands of MWh)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Power Plant GenerationFossil
    
    
    10,729
    
    
    
    10,566
    
    
    
    30,424
    
    
    
    31,153Nuclear
    
    
    2,367
    
    
    
    2,405
    
    
    
    6,106
    
    
    
    7,15613,096
    
    
    
    12,971
    
    
    
    36,530
    
    
    
    38,309Purchased Power
    
    
    1,753
    
    
    
    2,486
    
    
    
    4,569
    
    
    
    5,725System Output
    
    
    14,849
    
    
    
    15,457
    
    
    
    41,099
    
    
    
    44,034Less Line Loss and Internal Use
    
    
    (931
    )
    
    
    (1,056
    )
    
    
    (2,492
    )
    
    
    (2,623
    )Net System Output
    
    
    13,918
    
    
    
    14,401
    
    
    
    38,607
    
    
    
    41,411Average Unit Cost ($/MWh)Generation (1)
    
    $
    18.01
    
    
    $
    19.32
    
    
    $
    18.07
    
    
    $
    17.98Purchased Power
    
    $
    35.50
    
    
    $
    88.43
    
    
    $
    37.07
    
    
    $
    73.23Overall Average Unit Cost
    
    $
    20.08
    
    
    $
    30.43
    
    
    $
    20.18
    
    
    $
    25.16
 
 (1)
    
    Represents fuel costs associated with power plants. Operation and maintenance
 Taxes other than income
 Outlook
  25




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Part I  Item 4.
 CONTROLS AND PROCEDURES
 (a) Evaluation of disclosure controls and procedures
  (b) Changes in internal control over financial reporting
  26




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##### Table of Contents



Part II
 
 Item 1.  Legal Proceedings
   
 Item 1A.  Risk Factors
  We may be required to refund amounts we collect under self-implemented rates.
 Adverse changes in our credit ratings may negatively affect us.
 27




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##### Table of Contents



Item 6.  Exhibits
 ExhibitNumber
    
    DescriptionExhibits filed herewith:12-35
    
    Computation of Ratio of Earnings to Fixed Charges31-51
    
    Chief Executive Officer Section 302 Form 10-Q Certification31-52
    
    Chief Financial Officer Section 302 Form 10-Q CertificationExhibits furnished herewith:32-51
    
    Chief Executive Officer Section 906 Form 10-Q Certification32-52
    
    Chief Financial Officer Section 906 Form 10-Q Certification
 28




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##### Table of Contents



SIGNATURE
  THE DETROIT EDISON COMPANY
(Registrant)Date: October 30, 2009
    /s/ PETER B. OLEKSIAKPeter B. OleksiakVice President and Controller and
Chief Accounting Officer 29