##### 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, 2010
 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 filero
Non-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, 2010
  
 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 Shareholders 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
    
    
    28Part IIOther InformationItem 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    29Item 6. Exhibits
    
    
    30Signature
    
    
    31EX-4.269EX-4.270EX-4.271EX-4.272EX-12.38EX-31.59EX-31.60EX-32.59EX-32.60




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Definitions
 ASC
    
    Accounting Standards CodificationASU
    
    Accounting Standards UpdateCustomer Choice
    
    Michigan legislation giving customers the option to
choose alternative suppliers for electricity.Detroit Edison
    
    The Detroit Edison Company (a direct wholly owned
subsidiary of DTE Energy) and subsidiary companiesDTE Energy
    
    DTE Energy Company, directly or indirectly the parent
of Detroit Edison, Michigan Consolidated Gas Company
and numerous non-utility subsidiariesEPA
    
    United States Environmental Protection AgencyFASB
    
    Financial Accounting Standards BoardFERC
    
    Federal Energy Regulatory CommissionFTRs
    
    Financial transmission rights are financial instruments
that entitle the holder to receive payments related to
costs incurred for congestion on the transmission grid.MISO
    
    Midwest Independent System Operator is an Independent
System Operator and the Regional Transmission
Organization serving the Midwest United States and
Manitoba, Canada.MNRE
    
    Michigan Department of Natural Resources and EnvironmentMPSC
    
    Michigan Public Service CommissionNRC
    
    United States 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 costs.RDM
    
    Revenue Decoupling MechanismSecuritization
    
    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.VIE
    
    Variable Interest EntityUnits of MeasurementGWh
    
    Gigawatthour of electricitykWh
    
    Kilowatthour of electricityMW
    
    Megawatt of electricityMWh
    
    Megawatthour of electricity
 1




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Forward-Looking Statements
  
    
    economic conditions resulting in changes in 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;
    
    economic climate and population growth or decline in the geographic areas where we do
business;
    
    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;
    
    the timing and extent of changes in interest rates;
    
    the level of borrowings;
    
    the potential for losses on investments, including nuclear decommissioning and benefit plan
assets and the related increases in future expense and contributions;
    
    the potential for increased costs or delays in completion of significant construction
projects;
    
    the effects of weather and other natural phenomena on operations and sales to customers, and
purchases from suppliers;
    
    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, carbon tax or cap and trade structure and ash landfill
regulations;
    
    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;
 2




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
    
    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;
    
    the cost of protecting assets against, or damage due to, terrorism or cyber attacks;
    
    the availability, cost, coverage and terms of insurance and stability of insurance providers;
    
    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)
    
    2010
    
    
    2009ASSETSCurrent AssetsCash and cash equivalents
    
    $
    22
    
    
    $
    34Restricted cash
    
    
    43
    
    
    
    79Accounts receivable (less allowance for
doubtful accounts of $99 and $118,
respectively)Customer
    
    
    695
    
    
    
    696Affiliates
    
    
    15
    
    
    
    3Other
    
    
    29
    
    
    
    108InventoriesFuel
    
    
    180
    
    
    
    135Materials and supplies
    
    
    180
    
    
    
    173Notes ReceivableAffiliates
    
    
    89
    
    
    
    65Other
    
    
    
    
    
    
    3Prepaid property taxes
    
    
    89
    
    
    
    44Other
    
    
    67
    
    
    
    351,409
    
    
    
    1,375InvestmentsNuclear decommissioning trust funds
    
    
    890
    
    
    
    817Other
    
    
    107
    
    
    
    104997
    
    
    
    921PropertyProperty, plant and equipment
    
    
    15,868
    
    
    
    15,451Less accumulated depreciation and amortization
    
    
    (6,384
    )
    
    
    (6,133
    )9,484
    
    
    
    9,318Other AssetsRegulatory assets
    
    
    3,260
    
    
    
    3,333Securitized regulatory assets
    
    
    767
    
    
    
    870Intangible assets
    
    
    21
    
    
    
    9Notes receivable  affiliates
    
    
    9
    
    
    
    17Other
    
    
    139
    
    
    
    1184,196
    
    
    
    4,347Total Assets
    
    $
    16,086
    
    
    $
    15,961
  4




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The Detroit Edison Company  Consolidated Statements of Financial Position (Unaudited)
 September 30
    
    
    December 31(in Millions, Except Shares)
    
    2010
    
    
    2009LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payableAffiliates
    
    $
    54
    
    
    $
    74Vendors and other
    
    
    274
    
    
    
    251Accrued interest
    
    
    77
    
    
    
    83Current portion of long-term debt, including capital leases
    
    
    311
    
    
    
    660Other
    
    
    317
    
    
    
    2611,033
    
    
    
    1,329Long-Term Debt (net of current portion)Mortgage bonds, notes and other
    
    
    4,026
    
    
    
    3,579Securitization bonds
    
    
    643
    
    
    
    793Capital lease obligations
    
    
    20
    
    
    
    254,689
    
    
    
    4,397Other LiabilitiesDeferred income taxes
    
    
    1,939
    
    
    
    1,871Regulatory liabilities
    
    
    758
    
    
    
    711Asset retirement obligations
    
    
    1,357
    
    
    
    1,285Unamortized investment tax credit
    
    
    69
    
    
    
    75Nuclear decommissioning
    
    
    147
    
    
    
    136Accrued pension liability  affiliates
    
    
    808
    
    
    
    987Accrued postretirement liability  affiliates
    
    
    1,072
    
    
    
    1,058Other
    
    
    226
    
    
    
    2396,376
    
    
    
    6,362Commitments and Contingencies (Notes 7 and 10)Shareholders EquityCommon stock, $10 par value, 400,000,000 shares
authorized, and 138,632,324 shares issued and outstanding
    
    
    3,196
    
    
    
    3,196Retained earnings
    
    
    807
    
    
    
    693Accumulated other comprehensive income (loss)
    
    
    (15
    )
    
    
    (16
    )3,988
    
    
    
    3,873Total Liabilities and Shareholders Equity
    
    $
    16,086
    
    
    $
    15,961
  5




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The Detroit Edison Company  Consolidated Statements of Operations (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30(in Millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Operating Revenues
    
    $
    1,444
    
    
    $
    1,289
    
    
    $
    3,798
    
    
    $
    3,515Operating ExpensesFuel and purchased power
    
    
    484
    
    
    
    400
    
    
    
    1,217
    
    
    
    1,112Operation and maintenance
    
    
    325
    
    
    
    306
    
    
    
    960
    
    
    
    928Depreciation and amortization
    
    
    230
    
    
    
    222
    
    
    
    644
    
    
    
    607Taxes other than income
    
    
    54
    
    
    
    43
    
    
    
    180
    
    
    
    147Asset gains, net
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    1,093
    
    
    
    971
    
    
    
    3,000
    
    
    
    2,794Operating Income
    
    
    351
    
    
    
    318
    
    
    
    798
    
    
    
    721Other (Income) and DeductionsInterest expense
    
    
    83
    
    
    
    82
    
    
    
    241
    
    
    
    245Interest income
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Other income
    
    
    (10
    )
    
    
    (12
    )
    
    
    (27
    )
    
    
    (29
    )Other expenses
    
    
    6
    
    
    
    5
    
    
    
    23
    
    
    
    578
    
    
    
    75
    
    
    
    236
    
    
    
    220Income Before Income Taxes
    
    
    273
    
    
    
    243
    
    
    
    562
    
    
    
    501Income Tax Provision
    
    
    108
    
    
    
    94
    
    
    
    219
    
    
    
    195Net Income
    
    $
    165
    
    
    $
    149
    
    
    $
    343
    
    
    $
    306
  6




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The Detroit Edison Company  Consolidated Statements of Cash Flows (Unaudited)
 Nine Months EndedSeptember 30(in Millions)
    
    2010
    
    
    2009Operating ActivitiesNet income
    
    $
    343
    
    
    $
    306Adjustments to reconcile net income to net cash from operating activities:Depreciation and amortization
    
    
    644
    
    
    
    607Deferred income taxes
    
    
    78
    
    
    
    (2
    )Asset gains, net
    
    
    (1
    )
    
    
    Changes in assets and liabilities, exclusive of changes shown separately
    
    
    (87
    )
    
    
    112Net cash from operating activities
    
    
    977
    
    
    
    1,023Investing ActivitiesPlant and equipment expenditures
    
    
    (641
    )
    
    
    (640
    )Restricted cash for debt redemptions
    
    
    36
    
    
    
    60Proceeds from sale of nuclear decommissioning trust fund assets
    
    
    179
    
    
    
    237Investment in nuclear decommissioning trust funds
    
    
    (204
    )
    
    
    (251
    )Notes receivable from affiliates
    
    
    (30
    )
    
    
    (148
    )Other
    
    
    (34
    )
    
    
    (28
    )Net cash used for investing activities
    
    
    (694
    )
    
    
    (770
    )Financing ActivitiesIssuance of long-term debt
    
    
    595
    
    
    
    65Redemption of long-term debt
    
    
    (652
    )
    
    
    (213
    )Short-term borrowings, net
    
    
    
    
    
    
    (75
    )Capital contribution by parent company
    
    
    
    
    
    
    250Dividends on common stock
    
    
    (228
    )
    
    
    (228
    )Other
    
    
    (10
    )
    
    
    (13
    )Net cash used for financing activities
    
    
    (295
    )
    
    
    (214
    )Net
Increase (Decrease) in Cash and Cash Equivalents
    
    
    (12
    )
    
    
    39Cash and Cash Equivalents at Beginning of Period
    
    
    34
    
    
    
    30Cash and Cash Equivalents at End of Period
    
    $
    22
    
    
    $
    69
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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
    
    Loss
    
    TotalBalance, December 31, 2009
    
    
    138,632
    
    
    $
    1,386
    
    
    $
    1,810
    
    
    $
    693
    
    
    $
    (16
    )
    
    $
    3,873Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    343
    
    
    
    
    
    
    
    343Dividends declared on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (229
    )
    
    
    
    
    
    
    (229
    )Benefit obligations, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Balance, September 30, 2010
    
    
    138,632
    
    
    $
    1,386
    
    
    $
    1,810
    
    
    $
    807
    
    
    $
    (15
    )
    
    $
    3,988
  (in Millions)
    
    2010
    
    
    2009Net income
    
    $
    343
    
    
    $
    306Other comprehensive income, net of tax:Benefit obligations, net of taxes
    
    
    1
    
    
    
    2Net unrealized gains on investments:Amounts reclassified to income, net of taxes
    
    
    
    
    
    
    (2
    )Comprehensive income
    
    $
    344
    
    
    $
    306
  8




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The Detroit Edison Company
 
 Notes to Consolidated Financial Statements (Unaudited)
 NOTE 1 BASIS OF PRESENTATION
 Corporate Structure
   Basis of Presentation
     Principles of Consolidation Variable Interest Entity (VIE)
 Amendments to FASB Interpretation 46(R)
   9




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September 30,(in Millions)
    
    2010ASSETSRestricted cash
    
    $
    43Accounts receivable
    
    
    48Securitized regulatory assets
    
    
    767Other assets
    
    
    14$
    872LIABILITIESAccounts payable and accrued current liabilities
    
    $
    4Other current liabilities
    
    
    59Current portion long-term debt, including capital leases
    
    
    150Securitization bonds
    
    
    643Other long term liabilities
    
    
    6$
    862
 NOTE 2 SIGNIFICANT ACCOUNTING POLICIES
 Income Taxes
  Stock-Based Compensation
  Government Grants
  NOTE 3 NEW ACCOUNTING PRONOUNCEMENTS
 Variable Interest Entity
 Amendments to FASB Interpretation 46(R). Consolidation
 10




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Fair Value Measurements and Disclosures
 Improving Disclosures about Fair Value Measurements
 NOTE 4 FAIR VALUE
   
    
    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.
 11




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Net Balance at(in Millions)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    September 30, 2010Assets:Nuclear decommissioning trusts
    
    $
    606
    
    
    $
    284
    
    
    $
    
    
    
    $
    890Other investments
    
    
    42
    
    
    
    55
    
    
    
    
    
    
    
    97Derivative assets  FTRs
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Total
    
    $
    648
    
    
    $
    339
    
    
    $
    2
    
    
    $
    989Liabilities:Derivative liabilities  Emissions
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    (7
    )Total
    
    $
    
    
    
    $
    (7
    )
    
    $
    
    
    
    $
    (7
    )Net Assets at September 30, 2010
    
    $
    648
    
    
    $
    332
    
    
    $
    2
    
    
    $
    982
 Net Balance at(in Millions)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    September 30, 2010Assets:Current
    
    $
    
    
    
    $
    
    
    
    $
    2
    
    
    $
    2Noncurrent(1)
    
    
    648
    
    
    
    339
    
    
    
    
    
    
    
    987Total Assets
    
    $
    648
    
    
    $
    339
    
    
    $
    2
    
    
    $
    989Liabilities:Current
    
    $
    
    
    
    $
    (6
    )
    
    $
    
    
    
    $
    (6
    )Noncurrent
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Total Liabilities
    
    $
    
    
    
    $
    (7
    )
    
    $
    
    
    
    $
    (7
    )Net Assets at September 30, 2010
    
    $
    648
    
    
    $
    332
    
    
    $
    2
    
    
    $
    982
  Net Balance at(in Millions)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    December 31, 2009Assets:Cash equivalents
    
    $
    15
    
    
    $
    
    
    
    $
    
    
    
    $
    15Nuclear decommissioning trusts and other investments
    
    
    589
    
    
    
    325
    
    
    
    
    
    
    
    914Derivative assets
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Total
    
    $
    604
    
    
    $
    325
    
    
    $
    2
    
    
    $
    931Liabilities:Derivative liabilities
    
    
    
    
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )Total
    
    $
    
    
    
    $
    (8
    )
    
    $
    
    
    
    $
    (8
    )Net Assets at December 31, 2009
    
    $
    604
    
    
    $
    317
    
    
    $
    2
    
    
    $
    923
 
 (1)
    
    Includes $97 million of other investments that are included in the Consolidated Statements of
Financial Position in Other Investments. 12




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Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30(in Millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Asset balance as of beginning of the period
    
    $
    3
    
    
    $
    2
    
    
    $
    2
    
    
    $
    4Changes in fair value recorded in regulatory
assets/liabilities
    
    
    
    
    
    
    (1
    )
    
    
    4
    
    
    
    (2
    )Purchases, issuances and settlements
    
    
    (1
    )
    
    
    
    
    
    
    (4
    )
    
    
    1Transfers in/out of Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Asset balance as of September 30
    
    $
    2
    
    
    $
    1
    
    
    $
    2
    
    
    $
    1The 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,
2010 and 2009
    
    $
    
    
    
    $
    (1
    )
    
    $
    2
    
    
    $
    2
  Cash Equivalents
  Nuclear Decommissioning Trusts and Other Investments
  Derivative Assets and Liabilities
  13




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Fair Value of Financial Instruments
  September 30, 2010
    
    December 31, 2009Fair Value
    
    Carrying Value
    
    Fair Value
    
    Carrying ValueLong-Term Debt
    
    $5.5 billion
    
    $5.0 billion
    
    $5.2 billion
    
    $5.0 billion
 Nuclear Decommissioning Trust Funds
     September 30,
    
    
    December 31,(in Millions)
    
    2010
    
    
    2009Fermi 2
    
    $
    861
    
    
    $
    790Fermi 1
    
    
    3
    
    
    
    3Low level radioactive waste
    
    
    26
    
    
    
    24Total
    
    $
    890
    
    
    $
    817
 14




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Three Months Ended
    
    Nine Months EndedSeptember 30
    
    September 30(in Millions)
    
    2010
    
    2009
    
    2010
    
    2009Realized gains
    
    $
    8
    
    
    $
    9
    
    
    $
    29
    
    
    $
    28Realized losses
    
    
    (6
    )
    
    
    (12
    )
    
    
    (25
    )
    
    
    (45
    )Proceeds from sales of securities
    
    
    51
    
    
    
    55
    
    
    
    179
    
    
    
    237
  Fair
    
    
    Unrealized(in Millions)
    
    Value
    
    
    GainsAs of September 30, 2010Equity securities
    
    $
    462
    
    
    $
    151Debt securities
    
    
    417
    
    
    
    29Cash and cash equivalents
    
    
    11
    
    
    
    $
    890
    
    
    $
    180As of December 31, 2009Equity securities
    
    $
    420
    
    
    $
    135Debt securities
    
    
    388
    
    
    
    17Cash and cash equivalents
    
    
    9
    
    
    
    $
    817
    
    
    $
    152
   Other Available-For-Sale Securities
  September 30, 2010
    
    December 31, 2009(in Millions)
    
    Fair Value
    
    Carrying value
    
    Fair Value
    
    Carrying ValueCash equivalents
    
    $
    64
    
    
    $
    64
    
    
    $
    105
    
    
    $
    105Equity securities
    
    
    4
    
    
    
    4
    
    
    
    4
    
    
    
    4
  15




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NOTE 5 FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS
    Balance Sheet
    
    Fair(in Millions)
    
    Location
    
    ValueFTRs
    
    Other current assets
    
    $
    2Emissions
    
    Other current liabilities
    
    
    (6
    )Emissions
    
    Other non-current liabilities
    
    
    (1
    )Total derivatives not designated as hedging instrument
    
    
    
    $
    (5
    )
   Commodity
    
    Number of UnitsEmissions (Tons)
    
    
    4,650FTRs (MW)
    
    
    87,013
 NOTE 6 ASSET RETIREMENT OBLIGATIONS
  (in Millions)Asset retirement obligations at December 31, 2009
    
    $
    1,300Accretion
    
    
    64Liabilities incurred
    
    
    10Liabilities settled
    
    
    (4
    )Asset retirement obligations at September 30, 2010
    
    
    1,370Less amount included in current liabilities
    
    
    (13
    )$
    1,357
 16




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NOTE 7 REGULATORY MATTERS
 2010 Electric Rate Case Filing
  Detroit Edison Uncollectible Expense True-Up Mechanism (UETM)
  Power Supply Cost Recovery Proceedings
  2011 Plan Year
  Net Over-recovery,
    
    PSCR Cost ofPSCR Year
    
    Date Filed
    
    including interest
    
    Power Sold2009
    
    March 2010
    
    $15.6 million
    
    $1.1 billion
 Other
  17




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NOTE 8 LONG-TERM DEBT
 Debt Issuances
   Month Issued
    
    Type
    
    
    Interest Rate
    
    
    Maturity
    
    
    AmountAugust
    
    Senior Notes(1)
    
    
    3.45
    %
    
    
    2020
    
    
    $
    300September
    
    Senior Notes(1)(2)
    
    
    4.89
    %
    
    
    2020
    
    
    
    300$
    600
 
 (1)
    
    Proceeds were used to repay a portion of Detroit Edisons $500 million 6.125% Senior Notes
due October 1, 2010 and for general corporate purposes.(2)
    
    These bonds were priced in March 2010 in a private placement transaction which was closed and
funded in September 2010. Debt Retirements and Redemptions
   Month Retired
    
    Type
    
    
    Interest Rate
    
    
    Maturity
    
    
    AmountSeptember
    
    Senior Notes(1)
    
    
    6.125
    %
    
    
    2010
    
    
    $
    500
 
 (1)
    
    These Senior Notes, maturing October 1, 2010, were optionally redeemed on September 30, 2010. NOTE 9 SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS
   18




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NOTE 10 COMMITMENTS AND CONTINGENCIES
 Environmental
 Air
    Water
 Contaminated Sites
 19




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Landfill
  Nuclear Operations
 Property Insurance
      20




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Public Liability Insurance
  Nuclear Fuel Disposal Costs
  Guarantees
   Labor Contracts
  Purchase Commitments
  Bankruptcies
  21




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Other Contingencies
   NOTE 11 RETIREMENT BENEFITS AND TRUSTEED ASSETS
  Other PostretirementPension Benefits
    
    
    Benefits(in Millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Three Months Ended September 30Service cost
    
    $
    13
    
    
    $
    11
    
    
    $
    12
    
    
    $
    11Interest cost
    
    
    38
    
    
    
    39
    
    
    
    24
    
    
    
    26Expected return on plan assets
    
    
    (43
    )
    
    
    (41
    )
    
    
    (13
    )
    
    
    (10
    )Amortization of:Net actuarial loss
    
    
    18
    
    
    
    9
    
    
    
    10
    
    
    
    13Prior service cost
    
    
    1
    
    
    
    2
    
    
    
    
    
    
    
    Net transition liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Net periodic benefit cost
    
    $
    27
    
    
    $
    20
    
    
    $
    33
    
    
    $
    41Nine Months Ended September 30Service cost
    
    $
    39
    
    
    $
    32
    
    
    $
    35
    
    
    $
    34Interest cost
    
    
    115
    
    
    
    119
    
    
    
    71
    
    
    
    77Expected return on plan assets
    
    
    (129
    )
    
    
    (124
    )
    
    
    (39
    )
    
    
    (31
    )Amortization of:Net actuarial loss
    
    
    53
    
    
    
    29
    
    
    
    29
    
    
    
    39Prior service cost
    
    
    4
    
    
    
    5
    
    
    
    1
    
    
    
    1Net transition liability
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Net periodic benefit cost
    
    $
    82
    
    
    $
    61
    
    
    $
    99
    
    
    $
    122
 Pension and Other Postretirement Contributions
   22




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Healthcare Legislation
    NOTE 12 SUPPLEMENTAL CASH FLOW INFORMATION
  Nine Months EndedSeptember 30(in Millions)
    
    2010
    
    
    2009Changes in Assets and Liabilities, Exclusive of Changes Shown SeparatelyAccounts receivable, net
    
    $
    (8
    )
    
    $
    22Inventories
    
    
    (38
    )
    
    
    (11
    )Accrued pension liability  affiliates
    
    
    (179
    )
    
    
    (65
    )Accounts payable
    
    
    34
    
    
    
    (52
    )Income taxes payable
    
    
    119
    
    
    
    46Postretirement obligation  affiliates
    
    
    14
    
    
    
    25Other assets
    
    
    (47
    )
    
    
    40Other liabilities
    
    
    18
    
    
    
    107$
    (87
    )
    
    $
    112
 23




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##### Table of Contents



Part I Item 2.
 The Detroit Edison Company
 Managements Narrative Analysis of Results of Operations
  Overview
     24




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Results of Operations
  Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30(in Millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Operating Revenues
    
    $
    1,444
    
    
    $
    1,289
    
    
    $
    3,798
    
    
    $
    3,515Fuel and Purchased Power
    
    
    484
    
    
    
    400
    
    
    
    1,217
    
    
    
    1,112Gross Margin
    
    
    960
    
    
    
    889
    
    
    
    2,581
    
    
    
    2,403Operation and Maintenance
    
    
    325
    
    
    
    306
    
    
    
    960
    
    
    
    928Depreciation and Amortization
    
    
    230
    
    
    
    222
    
    
    
    644
    
    
    
    607Taxes Other Than Income
    
    
    54
    
    
    
    43
    
    
    
    180
    
    
    
    147Asset Gains, Net
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    Operating Income
    
    
    351
    
    
    
    318
    
    
    
    798
    
    
    
    721Other (Income) and Deductions
    
    
    78
    
    
    
    75
    
    
    
    236
    
    
    
    220Income Tax Provision
    
    
    108
    
    
    
    94
    
    
    
    219
    
    
    
    195Net Income
    
    $
    165
    
    
    $
    149
    
    
    $
    343
    
    
    $
    306Operating Income as a Percentage of Operating Revenues
    
    
    24
    %
    
    
    25
    %
    
    
    21
    %
    
    
    21
    %
 Gross margin
 (in Millions)
    
    Three Months
    
    
    Nine MonthsWeather, net of RDM
    
    
    50
    
    
    
    50Restoration and line clearance tracker
    
    
    29
    
    
    
    27Customer
Choice, net of CIM
    
    
    (9
    )
    
    
    (17
    )2010 rate
order,
surcharges and other
    
    
    1
    
    
    
    118Increase in gross margin
    
    $
    71
    
    
    $
    178
 Three Months Ended
    
    Nine Months EndedSeptember 30
    
    September 30(in Thousands of MWh)
    
    2010
    
    2009
    
    2010
    
    2009Electric SalesResidential
    
    
    5,034
    
    
    
    4,107
    
    
    
    12,301
    
    
    
    10,992Commercial
    
    
    4,730
    
    
    
    4,806
    
    
    
    12,660
    
    
    
    13,764Industrial
    
    
    2,357
    
    
    
    2,562
    
    
    
    7,438
    
    
    
    7,584Other
    
    
    798
    
    
    
    799
    
    
    
    2,398
    
    
    
    2,39912,919
    
    
    
    12,274
    
    
    
    34,797
    
    
    
    34,739Interconnections sales (1)
    
    
    1,270
    
    
    
    1,644
    
    
    
    4,031
    
    
    
    3,868Total Electric Sales
    
    
    14,189
    
    
    
    13,918
    
    
    
    38,828
    
    
    
    38,607Electric DeliveriesRetail and Wholesale
    
    
    12,919
    
    
    
    12,274
    
    
    
    34,797
    
    
    
    34,739Electric Customer Choice,
including self generators (2)
    
    
    1,289
    
    
    
    337
    
    
    
    3,675
    
    
    
    998Total Electric Sales and Deliveries
    
    
    14,208
    
    
    
    12,611
    
    
    
    38,472
    
    
    
    35,737
 
 (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. 25




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Power Generated and Purchased
 Three Months Ended
    
    
    Nine Months EndedSeptember 30
    
    
    September 30(in Thousands of MWh)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Power Plant GenerationFossil
    
    
    11,224
    
    
    
    10,729
    
    
    
    30,339
    
    
    
    30,424Nuclear
    
    
    2,368
    
    
    
    2,367
    
    
    
    6,656
    
    
    
    6,10613,592
    
    
    
    13,096
    
    
    
    36,995
    
    
    
    36,530Purchased Power
    
    
    1,669
    
    
    
    1,753
    
    
    
    4,465
    
    
    
    4,569System Output
    
    
    15,261
    
    
    
    14,849
    
    
    
    41,460
    
    
    
    41,099Less Line Loss and Internal Use
    
    
    (1,072
    )
    
    
    (931
    )
    
    
    (2,632
    )
    
    
    (2,492
    )Net System Output
    
    
    14,189
    
    
    
    13,918
    
    
    
    38,828
    
    
    
    38,607Average Unit Cost ($/MWh)Generation (1)
    
    $
    19.81
    
    
    $
    18.01
    
    
    $
    19.22
    
    
    $
    18.07Purchased Power
    
    $
    51.07
    
    
    $
    35.50
    
    
    $
    43.71
    
    
    $
    37.07Overall Average Unit Cost
    
    $
    23.23
    
    
    $
    20.08
    
    
    $
    21.85
    
    
    $
    20.18
 
 (1)
    
    Represents fuel costs associated with power plants. Operation and maintenance
 Taxes other than income
 Outlook
 Environmental Matters
 Global Climate Change
  26




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Capital Resources and Liquidity
       27




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##### Table of Contents



Part I Item 4.
 CONTROLS AND PROCEDURES
 (a) Evaluation of disclosure controls and procedures
  (b) Changes in internal control over financial reporting
  28




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Part II Other Information
 
 Item 1. Legal Proceedings
     
 Item 1A. Risk Factors
  A work interruption may adversely affect us.
 29




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##### Table of Contents



Item 6. Exhibits
 ExhibitNumber
    
    DescriptionExhibits filed herewith:4-269
    
    Supplemental Indenture, dated as of August 1, 2010, to the Mortgage and Deed of
Trust, dated as of October 1, 1924, by and between the Company and The Bank of New
York Mellon Trust Company, N.A. as successor trustee. (2010 Series B)4-270
    
    Thirty-First Supplemental Indenture, dated as of August 1, 2010 to the
Collateral Trust Indenture, dated as of June 1, 1993 by and between the Company and
The Bank of New York Mellon Trust Company, N.A., as successor trustee. (2010 Series
B 3.45% Senior Notes due 2020)4-271
    
    Supplemental Indenture, dated as of September 1, 2010, to the Mortgage and Deed
of Trust, dated as of October 1, 1924, by and between the Company and The Bank of New
York Mellon Trust Company, N.A. as successor trustee. (2010 Series A)4-272
    
    Thirty-Second Supplemental Indenture, dated as of September 1, 2010, by and
between the Detroit Edison Company and The Bank of New York Mellon Trust Company,
N.A., as successor trustee. (2010 Series A 4.89% Senior Notes due 2020)12-38
    
    Computation of Ratio of Earnings to Fixed Charges31-59
    
    Chief Executive Officer Section 302 Form 10-Q Certification31-60
    
    Chief Financial Officer Section 302 Form 10-Q CertificationExhibits incorporated herein by reference:4-273
    
    Form of Amended and Restated Detroit Edison Two-Year Credit Agreement, dated as
of April 29, 2009 and amended and restated as of August 20, 2010, by and among The
Detroit Edison Company the lenders party thereto, Barclays Bank plc, as
Administrative Agent, and Citibank N.A., JPMorgan Chase Bank, N.A. and the Royal Bank
of Scotland plc, as Co-Syndication Agents (Exhibit 10.1 to Detroit Edison Form 8-K
filed on August 26, 2010).4-274
    
    Form of Detroit Edison Three-Year Credit Agreement, dated as of August 20,
2010, by and among The Detroit Edison Company, the lenders party thereto, Barclays
Bank plc, as Administrative Agent, and Citibank N.A., JPMorgan Chase Bank, N.A. and
the Royal Bank of Scotland plc, as Co-Syndication Agents (Exhibit 10.2 to Detroit
Edison Form 8-K filed on August 26, 2010).Exhibits furnished herewith:32-59
    
    Chief Executive Officer Section 906 Form 10-Q Certification32-60
    
    Chief Financial Officer Section 906 Form 10-Q Certification
 30




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SIGNATURE
  THE DETROIT EDISON COMPANY
(Registrant)Date: October 29, 2010
    /s/ PETER B. OLEKSIAKPeter B. OleksiakVice President and Controller
and Chief Accounting Officer 31