##### 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, 2007
 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.)2000 2nd Avenue, Detroit, Michigan
    
    48226-1279(Address of principal executive offices)
    
    (Zip Code)
 313-235-4000
 Yes þ No o
  Large accelerated filer o Accelerated filer o Non-accelerated filer þ
 Yes o No þ




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##### 



The Detroit Edison Company
 Quarterly Report on Form 10-Q  Quarter Ended September 30, 2007
 Table of Contents
 PageDefinitions
    
    
    1Forward-Looking Statements
    
    
    2Part I  Financial InformationItem 1. Financial StatementsConsolidated Statements of Operations
    
    
    8Consolidated Statements of Financial Position
    
    
    9Consolidated Statements of Cash Flows
    
    
    11Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income
    
    
    12Notes to Consolidated Financial Statements
    
    
    13Item 2. Managements Narrative Analysis of Results of Operations
    
    
    3Item 4. Controls and Procedures
    
    
    7Part II  Other InformationItem 1A. Risk Factors
    
    
    25Item 6. Exhibits
    
    
    25Signature
    
    
    26Chief Executive Officer Section 302 CertificationChief Financial Officer Section 302 CertificationChief Executive Officer Section 906 CertificationChief Financial Officer Section 906 Certification




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##### Table of Contents



Definitions
 Company
    
    The Detroit Edison Company and any subsidiary companiesCTA
    
    Costs to achieve, consisting of project management, consultant support
and employee severance, related to the Performance Excellence ProcessCustomer 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 two gas utility subsidiaries and
numerous non-utility subsidiariesEPA
    
    United States Environmental Protection AgencyFERC
    
    Federal Energy Regulatory CommissionITC Transmission
    
    International Transmission Company (until February 28, 2003, a wholly
owned subsidiary of DTE Energy Company)MDEQ
    
    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 StandardsStranded Costs
    
    Costs incurred by utilities in order to serve customers in a regulated
environment that absent special regulatory approval would not otherwise
be recoverable if customers switch to alternative energy suppliers.Units of MeasurementkWh
    
    Kilowatthour of electricityMW
    
    Megawatt of electricityMWh
    
    Megawatthour of electricity
 1




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Forward-Looking Statements
  
    
    the effects of weather and other natural phenomena on operations and sales to
customers, and purchases from suppliers;
    
    economic climate and population growth or decline in the geographic areas where we do
business;
    
    environmental issues, laws, regulations, and the cost of remediation and compliance,
including potential new federal and state requirements that could include carbon and more
stringent mercury emission controls, a renewable portfolio standard and energy efficiency
mandates;
    
    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 negotiation and impacts of collective bargaining
agreements;
    
    unplanned outages;
    
    access to capital markets and capital market conditions and the results of other
financing efforts that can be affected by credit agency ratings;
    
    the timing and extent of changes in interest rates;
    
    the level of borrowings;
    
    changes in the cost and availability of coal and other raw materials, and purchased
power;
    
    effects of competition;
    
    impact of regulation by FERC, MPSC, NRC and other applicable governmental proceedings
and regulations, including any associated impact on rate structures;
    
    changes in and application of federal, state and local tax laws and their
interpretations, including the Internal Revenue Code, regulations, rulings, court
proceedings and audits;
    
    the ability to recover costs through rate increases;
    
    the availability, cost, coverage and terms of insurance;
    
    the cost of protecting assets against, or damage due to, terrorism;
    
    changes in and application of accounting standards and financial reporting regulations;
    
    changes in federal or state laws and their interpretation with respect to regulation,
energy policy and other business issues;
    
    amounts of uncollectible accounts receivable;
    
    binding arbitration, litigation and related appeals;
    
    changes in the economic and financial viability of our suppliers, customers and trading
counterparties, and the continued ability of such parties to perform their obligations to
Detroit Edison; and
    
    implementation of new processes and new core information systems.
  2




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The Detroit Edison Company  Managements Narrative Analysis of Results of Operations
  Factors impacting income:
 Increase (Decrease) in Statement of Operations Components Compared to
Prior Year
 Three
    
    
    Nine(in Millions)
    
    Months
    
    
    MonthsOperating Revenues
    
    $
    (57
    )
    
    $
    22Fuel and Purchased Power
    
    
    (21
    )
    
    
    17Gross Margin
    
    
    (36
    )
    
    
    5Operation and Maintenance
    
    
    109
    
    
    
    123Depreciation and Amortization
    
    
    (108
    )
    
    
    (63
    )Taxes Other Than Income
    
    
    (1
    )
    
    
    6Asset (Gains) and Reserves, Net
    
    
    7
    
    
    
    13Operating Income
    
    
    (43
    )
    
    
    (74
    )Other (Income) and Deductions
    
    
    (11
    )
    
    
    Income Tax Provision
    
    
    (23
    )
    
    
    (28
    )Cumulative Effect of Accounting Change
    
    
    
    
    
    
    (1
    )Net Income
    
    $
    (31
    )
    
    $
    (47
    )
 Gross margin
  (in Millions)
    
    Three Months
    
    
    Nine MonthsWeather related margin impacts
    
    $
    (7
    )
    
    $
    21Return of customers from electric Customer Choice
    
    
    4
    
    
    
    47Service territory economic performance
    
    
    (4
    )
    
    
    (25
    )Impact of 2006 MPSC show cause order
    
    
    (19
    )
    
    
    (53
    )Impact of 2005 MPSC PSCR reconciliation order
    
    
    
    
    
    
    38Impact of 2004 MPSC PSCR reconciliation order
    
    
    (39
    )
    
    
    (39
    )Other, net
    
    
    29
    
    
    
    16Increase (decrease) in gross margin
    
    $
    (36
    )
    
    $
    5
 3




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Three Months Ended
    
    
    Nine Months EndedPower Generated and Purchased
    
    September 30
    
    
    September 30(in Thousands of MWh)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Power Plant GenerationFossil
    
    
    11,055
    
    
    
    10,867
    
    
    
    31,729
    
    
    
    29,382Nuclear
    
    
    2,352
    
    
    
    1,873
    
    
    
    7,195
    
    
    
    4,99113,407
    
    
    
    12,740
    
    
    
    38,924
    
    
    
    34,373Purchased Power
    
    
    2,765
    
    
    
    3,085
    
    
    
    5,885
    
    
    
    7,917System Output
    
    
    16,172
    
    
    
    15,825
    
    
    
    44,809
    
    
    
    42,290Less Line Loss and Internal Use
    
    
    (1,160
    )
    
    
    (483
    )
    
    
    (2,568
    )
    
    
    (2,165
    )Net System Output
    
    
    15,012
    
    
    
    15,342
    
    
    
    42,241
    
    
    
    40,125Average Unit Cost ($/MWh)Generation (1)
    
    $
    16.93
    
    
    $
    17.78
    
    
    $
    15.72
    
    
    $
    16.33Purchased Power
    
    $
    69.61
    
    
    $
    68.28
    
    
    $
    68.03
    
    
    $
    58.89Overall Average Unit Cost
    
    $
    25.94
    
    
    $
    27.62
    
    
    $
    22.59
    
    
    $
    24.30
 
 (1)
    
    Represents fuel costs associated with power plants. Three Months Ended
    
    
    Nine Months EndedSeptember30
    
    
    September 30(in Thousands of MWh)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Electric SalesResidential
    
    
    4,836
    
    
    
    4,883
    
    
    
    12,340
    
    
    
    12,233Commercial
    
    
    5,166
    
    
    
    4,927
    
    
    
    14,345
    
    
    
    13,440Industrial
    
    
    3,278
    
    
    
    3,695
    
    
    
    9,974
    
    
    
    10,058Wholesale
    
    
    718
    
    
    
    719
    
    
    
    2,170
    
    
    
    2,096Other
    
    
    93
    
    
    
    95
    
    
    
    292
    
    
    
    29114,091
    
    
    
    14,319
    
    
    
    39,121
    
    
    
    38,118Interconnections sales (1)
    
    
    921
    
    
    
    1,023
    
    
    
    3,120
    
    
    
    2,007Total Electric Sales
    
    
    15,012
    
    
    
    15,342
    
    
    
    42,241
    
    
    
    40,125Electric DeliveriesRetail and Wholesale
    
    
    14,091
    
    
    
    14,319
    
    
    
    39,121
    
    
    
    38,118Electric Customer Choice
    
    
    389
    
    
    
    319
    
    
    
    1,163
    
    
    
    2,188Electric Customer Choice  Self Generators (2)
    
    
    180
    
    
    
    215
    
    
    
    447
    
    
    
    693Total Electric Sales and Deliveries
    
    
    14,660
    
    
    
    14,853
    
    
    
    40,731
    
    
    
    40,999
 
 (1)
    
    Represents power that is not distributed by Detroit Edison.(2)
    
    Represents deliveries for self generators who have purchased power from alternative energy
suppliers to supplement their power requirements. Operation and maintenance .
 Depreciation and amortization
 4




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Asset (gains) and reserves, net
 Outlook
    
    
    amount and timing of cost recovery allowed as a result of regulatory proceedings,
related appeals, or new legislation;
    
    our ability to reduce costs and maximize plant performance;
    
    variations in market prices of power, coal and gas;
    
    economic conditions within the State of Michigan;
    
    weather, including the severity and frequency of storms;
    
    levels of customer participation in the electric Customer Choice program; and
    
    potential new federal and state environmental requirements.
   
    
    a requirement that all retail electric suppliers obtain at least 10 percent of their
energy supplies from
 5




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renewable resources by 2015;
    
    an opportunity for utility-built generation, contingent upon the granting of a
certificate of need and competitive bidding of engineering, procurement and construction
services;
    
    investigating the cost of a requirement to bury certain power lines; and
    
    creation of a Michigan Energy Efficiency Program, administered by a third party under
the direction of the MPSC with initial funding estimated at $68 million.
  ENTERPRISE BUSINESS SYSTEMS
  6




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CONTROLS AND PROCEDURES
 Evaluation of disclosure controls and procedures
  (b) Changes in internal control over financial reporting
   7




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The Detroit Edison Company  Consolidated Statements of Operations (unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30(in Millions)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Operating Revenues
    
    $
    1,403
    
    
    $
    1,460
    
    
    $
    3,707
    
    
    $
    3,685Operating ExpensesFuel and purchased power
    
    
    518
    
    
    
    539
    
    
    
    1,274
    
    
    
    1,257Operation and maintenance
    
    
    386
    
    
    
    277
    
    
    
    1,114
    
    
    
    991Depreciation and amortization
    
    
    203
    
    
    
    311
    
    
    
    583
    
    
    
    646Taxes other than income
    
    
    63
    
    
    
    64
    
    
    
    204
    
    
    
    198Asset (gains) and reserves, net
    
    
    6
    
    
    
    (1
    )
    
    
    12
    
    
    
    (1
    )1,176
    
    
    
    1,190
    
    
    
    3,187
    
    
    
    3,091Operating Income
    
    
    227
    
    
    
    270
    
    
    
    520
    
    
    
    594Other (Income) and DeductionsInterest expense
    
    
    73
    
    
    
    60
    
    
    
    222
    
    
    
    208Interest income
    
    
    (2
    )
    
    
    (1
    )
    
    
    (5
    )
    
    
    (2
    )Other income
    
    
    (8
    )
    
    
    (9
    )
    
    
    (26
    )
    
    
    (22
    )Other expenses
    
    
    7
    
    
    
    9
    
    
    
    22
    
    
    
    2970
    
    
    
    59
    
    
    
    213
    
    
    
    213Income Before Income Taxes
    
    
    157
    
    
    
    211
    
    
    
    307
    
    
    
    381Income Tax Provision
    
    
    50
    
    
    
    73
    
    
    
    100
    
    
    
    128Income Before Accounting Change
    
    
    107
    
    
    
    138
    
    
    
    207
    
    
    
    253Cumulative
Effect of Accounting Change, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Net Income
    
    $
    107
    
    
    $
    138
    
    
    $
    207
    
    
    $
    254
  8




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The Detroit Edison Company  Consolidated Statements of Financial Position (Unaudited)
 September 30
    
    
    December 31(in Millions)
    
    2007
    
    
    2006ASSETSCurrent AssetsCash and cash equivalents
    
    $
    43
    
    
    $
    27Restricted cash
    
    
    87
    
    
    
    132Accounts receivable (less allowance for
doubtful accounts of $86 and $72,
respectivelyCustomer
    
    
    684
    
    
    
    601Collateral held by others
    
    
    37
    
    
    
    Affiliates
    
    
    15
    
    
    
    19Other
    
    
    24
    
    
    
    51Accrued power supply cost recovery revenue
    
    
    115
    
    
    
    116Notes
receivable from affiliates
    
    
    139
    
    
    
    InventoriesFuel
    
    
    145
    
    
    
    136Materials and supplies
    
    
    149
    
    
    
    130Prepaid property taxes
    
    
    88
    
    
    
    34Other
    
    
    5
    
    
    
    201,531
    
    
    
    1,266InvestmentsNuclear decommissioning trust funds
    
    
    825
    
    
    
    740Other
    
    
    96
    
    
    
    89921
    
    
    
    829PropertyProperty, plant and equipment
    
    
    14,352
    
    
    
    13,916Less accumulated depreciation
    
    
    (5,732
    )
    
    
    (5,580
    )8,620
    
    
    
    8,336Other AssetsRegulatory assets
    
    
    2,969
    
    
    
    2,862Securitized regulatory assets
    
    
    1,154
    
    
    
    1,235Intangible assets
    
    
    9
    
    
    
    9Other
    
    
    76
    
    
    
    744,208
    
    
    
    4,180Total Assets
    
    $
    15,280
    
    
    $
    14,611
  9




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The Detroit Edison Company  Consolidated Statements of Financial Position (Unaudited)
 September 30
    
    
    December 31(in Millions, Except Shares)
    
    2007
    
    
    2006LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payableAffiliates
    
    $
    426
    
    
    $
    84Other
    
    
    312
    
    
    
    327Accrued interest
    
    
    65
    
    
    
    79Dividends payable
    
    
    76
    
    
    
    76Accrued vacations
    
    
    46
    
    
    
    77Income and other taxes payable
    
    
    220
    
    
    
    26Short-term borrowings
    
    
    240
    
    
    
    277Current portion of long-term debt, including capital leases
    
    
    186
    
    
    
    142Other
    
    
    232
    
    
    
    2621,803
    
    
    
    1,350Long-term Debt (net of current portion)Mortgage bonds, notes and other
    
    
    3,461
    
    
    
    3,515Securitization bonds
    
    
    1,064
    
    
    
    1,184Capital lease obligations
    
    
    44
    
    
    
    504,569
    
    
    
    4,749Other LiabilitiesDeferred income taxes
    
    
    1,755
    
    
    
    1,928Regulatory liabilities
    
    
    604
    
    
    
    255Asset retirement obligations
    
    
    1,111
    
    
    
    1,069Unamortized investment tax credit
    
    
    97
    
    
    
    105Nuclear decommissioning
    
    
    129
    
    
    
    119Accrued pension liability
    
    
    376
    
    
    
    364Accrued postretirement liability
    
    
    1,064
    
    
    
    1,055Other
    
    
    501
    
    
    
    5025,637
    
    
    
    5,397Commitments and Contingencies (Notes 4 and 6)Shareholders EquityCommon stock, 400,000,000 shares authorized, 138,632,324
shares issued and outstanding
    
    
    2,771
    
    
    
    2,596Retained earnings
    
    
    495
    
    
    
    516Accumulated other comprehensive income
    
    
    5
    
    
    
    33,271
    
    
    
    3,115Total Liabilities and Shareholders Equity
    
    $
    15,280
    
    
    $
    14,611
  10




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The Detroit Edison Company  Consolidated Statements of Cash Flows (Unaudited)
 Nine Months EndedSeptember 302007
    
    
    2006(in Millions)Operating ActivitiesNet Income
    
    $
    207
    
    
    $
    254Adjustments to reconcile net income to net cash from operating activities:Depreciation and amortization
    
    
    583
    
    
    
    646Deferred income taxes
    
    
    (191
    )
    
    
    31Asset (gains) and reserves, net
    
    
    12
    
    
    
    (1
    )Changes in assets and liabilities, exclusive of changes shown separately
    
    
    367
    
    
    
    (252
    )Net cash from operating activities
    
    
    978
    
    
    
    678Investing ActivitiesPlant and equipment expenditures
    
    
    (598
    )
    
    
    (735
    )Proceeds from sale of assets, net
    
    
    
    
    
    
    22Restricted cash for debt redemptions
    
    
    45
    
    
    
    43Proceeds from sale of nuclear decommissioning trust fund assets
    
    
    227
    
    
    
    136Investment in nuclear decommissioning trust funds
    
    
    (254
    )
    
    
    (163
    )Notes
receivable from affiliates
    
    
    (139
    )
    
    
    Other investments
    
    
    (16
    )
    
    
    (12
    )Net cash used for investing activities
    
    
    (735
    )
    
    
    (709
    )Financing ActivitiesIssuance of long-term debt
    
    
    
    
    
    
    247Redemption of long-term debt
    
    
    (132
    )
    
    
    (123
    )Short-term borrowings, net
    
    
    (37
    )
    
    
    (16
    )Capital contribution by parent company
    
    
    175
    
    
    
    150Dividends on common stock
    
    
    (228
    )
    
    
    (229
    )Other
    
    
    (5
    )
    
    
    (6
    )Net cash from (used for) financing activities
    
    
    (227
    )
    
    
    23Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    16
    
    
    
    (8
    )Cash and Cash Equivalents at Beginning of the Period
    
    
    27
    
    
    
    26Cash and Cash Equivalents at End of the Period
    
    $
    43
    
    
    $
    18
  11




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The Detroit Edison Company  Consolidated Statements of Changes in Shareholders Equity  and Comprehensive Income (unaudited)
 AccumulatedOther(Dollars in Millions,
    
    Common Stock
    
    Retained
    
    ComprehensiveShares in Thousands)
    
    Shares
    
    Amount
    
    Earnings
    
    Income
    
    TotalBalance, December 31, 2006
    
    
    138,632
    
    
    $
    2,596
    
    
    $
    516
    
    
    $
    3
    
    
    $
    3,115Net income
    
    
    
    
    
    
    
    
    
    
    207
    
    
    
    
    
    
    
    207Capital contribution by parent company
    
    
    
    
    
    
    175
    
    
    
    
    
    
    
    
    
    
    
    175Dividends declared on common stock
    
    
    
    
    
    
    
    
    
    
    (228
    )
    
    
    
    
    
    
    (228
    )Net change in unrealized gains on
investments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Balance, September 30, 2007
    
    
    138,632
    
    
    $
    2,771
    
    
    $
    495
    
    
    $
    5
    
    
    $
    3,271
  (in Millions)
    
    2007
    
    
    2006Net income
    
    $
    207
    
    
    $
    254Other comprehensive income, net of tax:Net unrealized gains on investments:Amounts reclassified from income, net of taxes of $1 and $-, respectively
    
    
    2
    
    
    
    Comprehensive income
    
    $
    209
    
    
    $
    254
  12




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The Detroit Edison Company  Notes to Consolidated Financial Statements (unaudited)
 
 NOTE 1  GENERAL
     Asset Retirement Obligations
  Accounting for the
Effects of Certain Types of Regulation
  (in Millions)Asset retirement obligations at January 1, 2007
    
    $
    1,069Accretion
    
    
    53Liabilities settled
    
    
    (5
    )Revision in estimated cash flows
    
    
    3Asset retirement obligations at September 30, 2007
    
    $
    1,120Less amount included in current liabilities
    
    
    (9
    )$
    1,111
  13




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Retirement Benefits and Trusteed Assets
  Other PostretirementPension Benefits
    
    
    Benefits(in Millions)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Three Months Ended September 30Service cost
    
    $
    13
    
    
    $
    12
    
    
    $
    13
    
    
    $
    10Interest cost
    
    
    36
    
    
    
    34
    
    
    
    21
    
    
    
    22Expected return on plan assets
    
    
    (36
    )
    
    
    (34
    )
    
    
    (13
    )
    
    
    (12
    )Amortization ofNet loss
    
    
    12
    
    
    
    11
    
    
    
    13
    
    
    
    14Prior service cost
    
    
    2
    
    
    
    2
    
    
    
    1
    
    
    
    1Net transition liability
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Special termination benefits
    
    
    3
    
    
    
    14
    
    
    
    
    
    
    
    2Net periodic benefit cost
    
    $
    30
    
    
    $
    39
    
    
    $
    37
    
    
    $
    39
 Other PostretirementPension Benefits
    
    
    Benefits(in Millions)

    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Nine Months Ended September 30Service cost
    
    $
    38
    
    
    $
    38
    
    
    $
    36
    
    
    $
    34Interest cost
    
    
    104
    
    
    
    102
    
    
    
    67
    
    
    
    66Expected return on plan assets
    
    
    (111
    )
    
    
    (102
    )
    
    
    (40
    )
    
    
    (37
    )Amortization ofNet loss
    
    
    34
    
    
    
    34
    
    
    
    38
    
    
    
    40Prior service cost
    
    
    5
    
    
    
    6
    
    
    
    3
    
    
    
    3Net transition liability
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    5Special termination benefits
    
    
    8
    
    
    
    28
    
    
    
    2
    
    
    
    3Net periodic benefit cost
    
    $
    78
    
    
    $
    106
    
    
    $
    111
    
    
    $
    114
  Income Taxes
 Uncertain Tax Positions
 Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109 (FIN 48)
   14




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Michigan Business Tax
   
    
    An apportioned modified gross receipts tax of 0.8 percent; and
    
    An apportioned business income tax of 4.95 percent.
   Accounting for the Effects of
Certain Types of Regulation,
 Stock-Based Compensation
 Share-Based
Payment (SFAS 123(R),
 15




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##### Table of Contents



Consolidated Statements of Cash Flows
  Nine Months EndedSeptember 302007
    
    
    2006(in Millions)Changes in Assets and Liabilities, Exclusive of Changes Shown SeparatelyAccounts receivable, net
    
    $
    (103
    )
    
    $
    (116
    )Inventories
    
    
    (25
    )
    
    
    (28
    )Accrued pensions
    
    
    36
    
    
    
    104Accounts payable
    
    
    329
    
    
    
    6Accrued PSCR refund
    
    
    2
    
    
    
    (162
    )Income taxes payable
    
    
    173
    
    
    
    76General taxes
    
    
    32
    
    
    
    10Postretirement obligation
    
    
    9
    
    
    
    21Other assets
    
    
    (303
    )
    
    
    (136
    )Other liabilities
    
    
    217
    
    
    
    (27
    )$
    367
    
    
    $
    (252
    )
  Nine Months EndedSeptember 30(in Millions)
    
    2007
    
    2006Cash Paid for:Interest paid (excluding interest capitalized)
    
    $
    235
    
    
    $
    215Income taxes paid, net of refunds
    
    $
    112
    
    
    $
    1
  Asset (gains) and reserves, net
 Asset (gains) and reserves, net
 NOTE 2  NEW ACCOUNTING PRONOUNCEMENTS
 Fair Value Accounting
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of FASB Statement No. 115
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Accounting for Defined Benefit Pension and Other Postretirement Plans
 Employers Accounting for Defined Benefit Pension
and Other Postretirement Plans  an Amendment of FASB Statements No. 87, 88, 106, and 132(R).
   NOTE 3  RESTRUCTURING
 Performance Excellence Process
    Employee Severance Costs (1)
    
    
    Other Costs
    
    
    Total Cost(in Millions)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Costs incurred:
    
    $
    3
    
    
    $
    18
    
    
    $
    16
    
    
    $
    10
    
    
    $
    19
    
    
    $
    28Less amounts deferred or capitalized:
    
    
    3
    
    
    
    36
    
    
    
    16
    
    
    
    41
    
    
    
    19
    
    
    
    77Amount expensed
    
    $
    
    
    
    $
    (18
    )
    
    $
    
    
    
    $
    (31
    )
    
    $
    
    
    
    $
    (49
    )
 
 (1)
    
    Includes corporate allocations. 17




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##### Table of Contents



Employee Severance Costs (1)
    
    
    Other Costs
    
    
    Total Cost(in Millions)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Costs incurred:
    
    $
    14
    
    
    $
    36
    
    
    $
    30
    
    
    $
    41
    
    
    $
    44
    
    
    $
    77Less amounts deferred or capitalized:
    
    
    14
    
    
    
    36
    
    
    
    30
    
    
    
    41
    
    
    
    44
    
    
    
    77Amount expensed
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Includes corporate allocations. Accounting for Costs
Associated with Exit or Disposal Activities
 NOTE 4  REGULATORY MATTERS
 Regulation
  MPSC Show-Cause Order
   2007 Electric Rate Case Filing
   18




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##### Table of Contents




    
    Make progress toward correcting the existing rate structure to more accurately reflect
the actual cost of providing service to customers.
    
    Equalize distribution rates between Detroit Edison full service and electric Customer
Choice customers.
    
    Re-establish with modification the CIM originally established in the Detroit Edison
2006 show cause filing. The CIM reconciles changes related to customers moving between
Detroit Edison full service and electric Customer Choice.
    
    Terminate the Pension Equalization Mechanism.
    
    Establish an emission allowance pre-purchase plan to ensure that adequate emission
allowances will be available for environmental compliance.
    
    Establish a methodology for recovery of the costs associated with preparation of an
application for a new nuclear generation facility.
   Regulatory Accounting Treatment for Performance Excellence Process
  19




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Accounting for Costs Related to Enterprise Business Systems (EBS)
  Fermi 2 Enhanced Security Costs Settlement
  Reconciliation of Regulatory Asset Recovery Surcharge
  Power Supply Costs Recovery Proceedings
 2005 Plan Year
 20




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2006 Plan Year 
  2007 Plan Year 
 21




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2008 Plan Year 
 Other
   NOTE 5  SHAREHOLDERS EQUITY
  NOTE 6  COMMITMENTS AND CONTINGENCIES
 Environmental
 Air
 Water
 22




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Contaminated Sites
 Labor Contracts
  Purchase Commitments
  .
 Bankruptcies
  Other Contingencies
   23




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24




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Other Information
 
 Risk Factors
  A work interruption may adversely affect us.
 Failure to successfully implement new processes and information systems could interrupt our
operations.
 
 Exhibits
 ExhibitNumber
    
    DescriptionFiled:31-35
    
    Chief Executive Officer Section 302 Form 10-Q Certification31-36
    
    Chief Financial Officer Section 302 Form 10-Q CertificationFurnished:32-35
    
    Chief Executive Officer Section 906 Form 10-Q Certification32-36
    
    Chief Financial Officer Section 906 Form 10-Q Certification
 25




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SIGNATURE
  THE DETROIT EDISON COMPANYDate: November 9, 2007

/s/ PETER B. OLEKSIAKPeter B. OleksiakVice President, Controller and Chief
Accounting Officer
 26