##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 ANNUAL
REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 Commission file number 1-2198
 The Detroit Edison Company, a Michigan corporation, meets the conditions set forth in General
Instruction I (1) (a) and (b) of Form
10-K and is, therefore, filing this form with the reduced disclosure format.
 THE DETROIT EDISON COMPANY
  Michigan
    
    38-0478650(State or other jurisdiction of incorporation or
    
    (I.R.S. Employerorganization)
    
    Identification No.)One Energy Plaza, Detroit, Michigan
    
    48226-1279(Address of principal executive offices)
    
    (Zip Code)
 313-235-4000
 
 
 Yes o No þ
 Yes o No þ
 Yes þ No o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



The Detroit Edison Company  Annual Report on Form 10-K  Year Ended December 31, 2008  Table of Contents
 PageDefinitions
    
    
    1Forward-Looking Statements
    
    
    2Part IItems 1., 1A., 1B. &2. Business, Risk Factors, Unresolved Staff Comments and Properties
    
    
    3Item 3. Legal Proceedings
    
    
    9Item 4. Submission of Matters to a Vote of Security Holders
    
    
    11Part IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    11Item 6. Selected Financial Data
    
    
    11Item 7. Managements Narrative Analysis of Results of Operations
    
    
    12Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 8. Financial Statements and Supplementary Data
    
    
    20Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
    
    
    61Item 9A. Controls and Procedures
    
    
    61Item 9B. Other Information
    
    
    62Part IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    62Item 11. Executive Compensation
    
    
    62Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    
    62Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    62Item 14. Principal Accountant Fees and Services
    
    
    62Part IVItem 15. Exhibits and Financial Statement Schedules
    
    
    63Signatures
    
    
    71Supplemental Indenture dated as of December 1, 2008Twenty-Eighth Supplemental Indenture, dated as of December 1, 2008Computation of Ratio of Earnings to Fixed ChargesConsent of Deloitte & Touche LLPChief Executive Officer Section 302 Form 10-K CertificationChief Financial Officer Section 302 Form 10-K CertificationChief Executive Officer Section 906 Form 10-K CertificationChief Financial Officer Section 906 Form 10-K Certification




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Definitions
 CTA
    
    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 numerous utility and non-utility
subsidiariesEPA
    
    United States Environmental Protection AgencyFASB
    
    Financial Accounting Standards BoardFERC
    
    Federal Energy Regulatory CommissionMDEQ
    
    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
  
    
    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 cash equivalents and investments, including nuclear
decommissioning and benefit plan assets;
    
    the length and severity of ongoing economic decline;
    
    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;
    
    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 Detroit Edison;
    
    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 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 impact of collective bargaining agreements;
    
    unplanned outages;
    
    changes in the cost and availability of coal and other raw materials, and purchased
power;
    
    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 ability to recover costs through rate increases;
    
    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; and
 2




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
    
    binding arbitration, litigation and related appeals.
  
 Part I
 
 Items
1. and 2. Business and Properties
 General
     Revenue by Service(in Millions)
    
    2008
    
    
    2007
    
    
    2006Residential
    
    $
    1,726
    
    
    $
    1,739
    
    
    $
    1,671Commercial
    
    
    1,753
    
    
    
    1,723
    
    
    
    1,603Industrial
    
    
    894
    
    
    
    854
    
    
    
    835Wholesale
    
    
    119
    
    
    
    125
    
    
    
    109Other
    
    
    170
    
    
    
    259
    
    
    
    350Subtotal
    
    
    4,662
    
    
    
    4,700
    
    
    
    4,568Interconnection sales (1)
    
    
    212
    
    
    
    200
    
    
    
    169Total Revenue
    
    $
    4,874
    
    
    $
    4,900
    
    
    $
    4,737
 
 (1)
    
    Represents power that is not distributed by Detroit Edison.  Fuel Supply and Purchased Power
  3




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Properties
   Location by
    
    Summer NetMichigan
    
    Rated Capability (1) (2)Plant Name
    
    County
    
    (MW)
    (%)
    
    Year in ServiceFossil-fueled Steam-ElectricBelle River (3)
    
    St. Clair
    
    
    1,026
    
    
    
    9.2
    
    
    1984 and 1985Conners Creek
    
    Wayne
    
    
    230
    
    
    
    2.1
    
    
    1951Greenwood
    
    St. Clair
    
    
    785
    
    
    
    7.1
    
    
    1979Harbor Beach
    
    Huron
    
    
    103
    
    
    
    0.9
    
    

    1968Marysville
    
    St. Clair
    
    
    84
    
    
    
    0.8
    
    
    1943 and 1947Monroe (4)
    
    Monroe
    
    
    3,115
    
    
    
    28.0
    
    
    1971, 1973 and 1974River Rouge
    
    Wayne
    
    
    523
    
    
    
    4.7
    
    
    1957 and 1958St. Clair
    
    St. Clair
    
    
    1,368
    
    
    
    12.3
    
    
    1953, 1954, 1959, 1961 and 1969Trenton Channel
    
    Wayne
    
    
    730
    
    
    
    6.6
    
    
    1949 and 19687,964
    
    
    
    71.7Oil or Gas-fueled Peaking Units
    
    Various
    
    
    1,101
    
    
    
    9.9
    
    
    1966-1971, 1981 and 1999Nuclear-fueled Steam-Electric Fermi 2 (5)
    
    Monroe
    
    
    1,122
    
    
    
    10.1
    
    
    1988Hydroelectric Pumped Storage Ludington(6)
    
    Mason
    
    
    917
    
    
    
    8.3
    
    

    197311,104
    
    
    
    100.0
 
 (1)
    
    Summer net rated capabilities of generating plants in service are based on periodic load
tests and are changed depending on operating experience, the physical condition of units,
environmental control limitations and customer requirements for steam, which otherwise would
be used for electric generation.(2)
    
    Excludes one oil-fueled unit, St. Clair Unit No. 5 (250 MW) in cold standby status.(3)
    
    The Belle River capability represents Detroit Edisons entitlement to 81.39% of the capacity
and energy of the plant. See Note 6 of the Notes to the Consolidated Financial Statements in
Item 8 of this Report.(4)
    
    The Monroe Power Plant provided 38% of Detroit Edisons total 2008 power plant generation.(5)
    
    Fermi 2 has a design electrical rating (net) of 1,150 MW.(6)
    
    Represents Detroit Edisons 49% interest in Ludington with a total capability of 1,872 MW.
See Note 6 of the Notes to the Consolidated Financial Statements in Item 8 of this Report.  4




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Electric Distribution
    
    Circuit MilesOperating Voltage-Kilovolts (kV)
    
    Overhead
    
    Underground4.8 kV to 13.2 kV
    
    
    28,114
    
    
    
    13,87524 kV
    
    
    102
    
    
    
    69040 kV
    
    
    2,324
    
    
    
    335120 kV
    
    
    72
    
    
    
    1330,612
    
    
    
    14,913
  Regulation
   Energy Assistance Programs
  Strategy and Competition
    5




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ENVIRONMENTAL MATTERS
  (in Millions)Air
    
    $
    2,800Water
    
    
    55MGP sites
    
    
    3Other sites
    
    
    9Estimated total future expenditures through 2018
    
    $
    2,867Estimated 2009 expenditures
    
    $
    100
 Air
 Water 
 Manufactured Gas Plant (MGP) and Other Sites
 Global Climate Change 
 6




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EMPLOYEES
  Item 1A. Risk Factors
  Regional and national economic conditions can have an unfavorable impact on us.
 Adverse changes in our credit ratings may negatively affect us. s
 Our ability to access capital markets at attractive interest rates is important.
 Poor investment performance of pension and other postretirement benefit plan holdings and other
factors impacting benefit plan costs could unfavorably impact our liquidity and results of
operations.
 7




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We are exposed to credit risk of counterparties with whom we do business.
 We may not be fully covered by insurance.
 We are subject to rate regulation
 Michigans electric Customer Choice program could negatively impact our financial performance.
 Weather significantly affects operations .
 Operation of a nuclear facility subjects us to risk.
 The supply and price of fuel and other commodities and related transportation costs may impact our
financial results.
 8




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Unplanned power plant outages may be costly.
 Environmental laws and liability may be costly.
   Terrorism could affect our business
 Benefits of continuous improvement initiatives could be less than we expect .
 A work interruption may adversely affect us.
 Failure to retain and attract key executive officers and other skilled professional and technical
employees could have an adverse effect on our operations.
 Item 1B. Unresolved Staff Comments
  
 Item 3. Legal Proceedings
  9




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Note
    
    Title4
    
    Regulatory Matters5
    
    Nuclear Operations14
    
    Commitments and Contingencies
 10




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Item 4. Submission of Matters to a Vote of Security Holders
  
 Part II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
   
 Item 6. Selected Financial Data
  11




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Item 7. Managements Narrative Analysis of Results of Operations
  Factors impacting income:
  Increase (Decrease) in Income Statement Components Compared to Prior Year(in Millions)
    
    2008
    
    
    2007Operating revenues
    
    $
    (26
    )
    
    $
    163Fuel and purchased power
    
    
    92
    
    
    
    120Gross margin
    
    
    (118
    )
    
    
    43Operation and maintenance
    
    
    (100
    )
    
    
    85Depreciation and amortization
    
    
    (21
    )
    
    
    (48
    )Taxes other than income
    
    
    (45
    )
    
    
    25Asset (gains) losses and reserves, net
    
    
    (9
    )
    
    
    14Operating income
    
    
    57
    
    
    
    (33
    )Other (income) and deductions
    
    
    6
    
    
    
    (17
    )Income tax provision
    
    
    37
    
    
    
    (13
    )Net income before accounting change
    
    
    14
    
    
    
    (3
    )Cumulative effect of accounting change
    
    
    
    
    
    
    (1
    )Net Income
    
    $
    14
    
    
    $
    (4
    )
 Gross margin
  Increase (Decrease) in Gross Margin Components Compared to Prior Year(in Millions)
    
    2008
    
    
    2007Weather-related margin impacts
    
    $
    (37
    )
    
    $
    31Return of customers from electric Customer Choice
    
    
    35
    
    
    
    43Service territory economic performance
    
    
    (100
    )
    
    
    28Refundable pension cost
    
    
    (30
    )
    
    
    April 2008 expiration of show cause rate decrease
    
    
    46
    
    
    
    Impact of 2006 MPSC show cause order
    
    
    
    
    
    
    (64
    )Impact of 2005 MPSC PSCR reconciliation order
    
    
    (38
    )
    
    
    38Impact of 2004 MPSC PSCR reconciliation order
    
    
    
    
    
    
    (39
    )Other, net
    
    
    6
    
    
    
    6Increase (decrease) in gross margin
    
    $
    (118
    )
    
    $
    43
 12




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Power Generated and Purchased(in Thousands of MWh)
    
    2008
    
    
    
    
    
    
    2007
    
    
    
    
    
    
    2006Power Plant GenerationFossil
    
    
    41,254
    
    
    
    71
    %
    
    
    42,359
    
    
    
    72
    %
    
    
    39,686
    
    
    
    70
    %Nuclear
    
    
    9,613
    
    
    
    17
    
    
    
    8,314
    
    
    
    14
    
    
    
    7,477
    
    
    
    1350,867
    
    
    
    88
    
    
    
    50,673
    
    
    
    86
    
    
    
    47,163
    
    
    
    83Purchased Power
    
    
    6,877
    
    
    
    12
    
    
    
    8,422
    
    
    
    14
    
    
    
    9,861
    
    
    
    17System Output
    
    
    57,744
    
    
    
    100
    %
    
    
    59,095
    
    
    
    100
    %
    
    
    57,024
    
    
    
    100
    %Less Line Loss and Internal Use
    
    
    (3,445
    )
    
    
    
    
    
    
    (3,391
    )
    
    
    
    
    
    
    (3,603
    )Net System Output
    
    
    54,299
    
    
    
    
    
    
    
    55,704
    
    
    
    
    
    
    
    53,421Average Unit Cost ($/MWh)Generation (1)
    
    $
    17.93
    
    
    
    
    
    
    $
    15.83
    
    
    
    
    
    
    $
    15.61Purchased Power
    
    $
    69.50
    
    
    
    
    
    
    $
    62.40
    
    
    
    
    
    
    $
    53.71Overall Average Unit Cost
    
    $
    24.07
    
    
    
    
    
    
    $
    22.47
    
    
    
    
    
    
    $
    22.20
 
 (1)
    
    Represents fuel costs associated with power plants. (in Thousands of MWh)
    
    2008
    
    2007
    
    2006Electric SalesResidential
    
    
    15,492
    
    
    
    16,147
    
    
    
    15,769Commercial
    
    
    18,920
    
    
    
    19,332
    
    
    
    17,948Industrial
    
    
    13,086
    
    
    
    13,338
    
    
    
    13,235Wholesale
    
    
    2,825
    
    
    
    2,902
    
    
    
    2,826Other
    
    
    393
    
    
    
    398
    
    
    
    40250,716
    
    
    
    52,117
    
    
    
    50,180Interconnection sales (1)
    
    
    3,583
    
    
    
    3,587
    
    
    
    3,241Total Electric Sales
    
    
    54,299
    
    
    
    55,704
    
    
    
    53,421Electric DeliveriesRetail and Wholesale
    
    
    50,716
    
    
    
    52,117
    
    
    
    50,180Electric Customer Choice
    
    
    1,382
    
    
    
    1,690
    
    
    
    2,694Electric Customer Choice-Self Generators (2)
    
    
    75
    
    
    
    549
    
    
    
    909Total Electric Sales and Deliveries
    
    
    52,173
    
    
    
    54,356
    
    
    
    53,783
 
 (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
 Taxes other than income
 13




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Asset (gains)losses and reserves, net
 Other (income) and deductions
 Outlook
      
    
    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 or the potential for loss on cash equivalents and investments;
    
    Economic conditions within Michigan and corresponding impacts on demand for
electricity;
    
    Collectibility of accounts receivable;
    
    Increases in future expense and contributions to pension and other postretirement plans
due to declines in value resulting from market conditions;
 14




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
    
    The 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 and distribution system performance;
    
    Variations in market prices of power, coal and gas;
    
    Weather, including the severity and frequency of storms;
    
    The level of customer participation in the electric Customer Choice program; and
    
    Any potential new federal and state environmental, renewable energy and energy
efficiency requirements.
 Impact of Regulatory Decisions
   
    
    In order to more accurately reflect the actual cost of providing service to business
customers, the MPSC adopted an immediate 39% phase out of the residential rate subsidy,
with the remaining amount to be eliminated in equal installments over the next five years,
every October 1.
    
    Accepted Detroit Edisons proposal to reinstate and modify the tracking mechanism on
Electric Choice sales (CIM) with a base level of 1,561 GWh. The modified mechanism will not
have a cap on the amount recoverable.
    
    Terminated the Pension Equalization Mechanism.
    
    Approved an annual reconciliation mechanism to track expenses associated with
restoration costs (storm and non-storm related expenses) and line clearance expenses.
Annual reconciliations will be required using a base expense level of $110 million and $51
million, respectively.
    
    Approved Detroit Edisons proposal to recover a return on $15 million in working capital
associated with the preparation of an application for a new nuclear generation facility at
its current Fermi 2 site.
  Impact of Legislation
  15




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
    
    2008 Public Act (PA) 286 that reforms Michigans utility regulatory framework, including
the electric Customer Choice program,
    
    2008 PA 295 that establishes a renewable portfolio / energy optimization standard and
provides a funding mechanism, and
    
    2008 PA 287 that provides for an income tax credit for the purchase of energy efficient
appliances and a credit to offset a portion of the renewable charge.
  
    
    Electric Customer Choice reform The bill establishes a 10 percent limit on
participation in the electric Customer Choice program. In general, customers representing
10 percent of a utilitys load may receive electric generation from an electric supplier
that is not a utility. After that threshold is met, the remaining customers will remain on
full, bundled utility service. As of December 31, 2008, approximately 3 percent of Detroit
Edisons load was on the electric Customer Choice program. The bill also allows
continuation of prior MPSC policies for customers to return to full utility service.
    
    Cost-of-service based electric rates (deskewing) The bill requires the MPSC to set
rates based on cost-of-service for all customer classes, eliminating over a five-year
period the current subsidy by businesses of residential customer rates. This provision
does not change total revenue for Detroit Edison. It lowers rates for most commercial and
industrial customers and increases rates for residential and certain other industrial
customers to match the actual cost of service for each customer class. Rate changes will
be phased in over five years, with a 2.5% annual cap on residential rate increases due to
deskewing beginning January 1, 2009. Rates for schools and other qualified educational
institutions will be set at their cost of service sooner.
    
    File and use ratemaking The bill establishes a 12 month deadline for the MPSC to
complete a rate case and allows a utility to self-implement rate changes six months after a
rate filing, subject to certain limitations. If the final order leads to lower rates than
the utility had self-implemented, the utility will refund with interest, the difference.
In addition, utility rate cases may be based on a forward test year. The bill also has
provisions designed to help the MPSC obtain increased funding for additional staff.
    
    Certificate of Need process for major capital investments The bill establishes a
certificate of need process for capital projects costing more than $500 million. The
process requires the MPSC to review for prudence, prior to construction, proposed
investments in new generating assets, acquisitions of existing power plants, major upgrades
of power plants, and long-term power purchase agreements. The bill increases the certainty
for utilities to recover the cost of projects approved by the MPSC and provides for the
utilities to recover interest expenses during construction.
    
    Merger & Acquisition approval The bill grants the MPSC the authority to review and
approve proposed utility mergers and acquisitions in Michigan and sets out evaluation
criteria.
  16




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##### Table of Contents



Renewable Energy Standard
 
    
    The bill requires electric providers to source 10% of electricity sold to retail
customers from renewable energy resources by 2015.
    
    Qualifying renewable energy resources include wind, biomass, solar, hydro, and
geothermal, among others.
    
    Detroit Edison will be required to have a renewable energy capacity portfolio of
300MW by December 31, 2013 and 600MW by December 31, 2015.
    
    The MPSC will establish a per meter surcharge to fund the renewable energy
requirements. The recovery mechanism starts prior to actual construction in order to
smooth the rate impact for customers.
    
    The bill allows for the lowering of compliance if RPS costs exceed the
surcharge/cost cap or if other specified factors adversely affect the availability of
renewable energy.
    
    The bill specifies that a utility can build or have others build and later sell to
the utility up to 50 percent of the generation required to meet the RPS. The other 50
percent would be contracted through power purchase agreements.
    
    The bill also provides for a net metering program to be established by MPSC order
for on-site customer-owned renewable generation up to 1% of an electric utilitys load.
 Energy Optimization Standard
 
    
    Requires utilities to create electric energy optimization plans for each customer
class and includes funding surcharges as well as the potential for incentives for
exceeding performance goals.
    
    For electric sales, the program targets 0.3 percent annual savings in 2009, ramping
up to 1 percent annual savings by 2012. Savings percentages are based on prior year
retail sales.
    
    The MPSC will allow utilities to capitalize certain costs of their energy
optimization program. The costs which can be capitalized include equipment, materials,
installation costs and customer incentives.
    
    Incentives are potentially available for exceeding annual program targets. The
financial incentive could be the lesser of 25% of the net cost reduction to our
customers or 15% of total program spend, subject to MPSC approval.
    
    By March 2016, the MPSC may suspend the program if it determines the program is no
longer cost-effective.
 Impact of Financial Markets
   17




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CUMULATIVE EFFECT OF ACCOUNTING CHANGES
 Accounting for Uncertainty
in Income Taxes  an interpretation of FASB Statement No. 109
 Share-Based Payment,
 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Commodity Price Risk
  18




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Credit Risk
 Bankruptcies
   Other
  Interest Rate Risk
  19




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Item 8. Financial Statements and Supplementary Data
 PageControls and Procedures
    
    
    21Report of Independent Registered Public Accounting Firm
    
    
    22Consolidated Statements of Operations
    
    
    23Consolidated Statements of Financial Position
    
    
    24Consolidated Statements of Cash Flows
    
    
    26Consolidated Statements of Changes in Shareholders Equity and Comprehensive Income
    
    
    27Notes to Consolidated Financial Statements
    
    
    28Schedule II  Valuation and Qualifying Accounts
    
    
    70
 20




---



##### Table of Contents



Controls and Procedures
 (a) Evaluation of disclosure controls and procedures
  (b) Managements report on internal control over financial reporting
   Internal
ControlIntegrated Framework.
  (c) Changes in internal control over financial reporting
  21




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       
 22




---



##### Table of Contents



The Detroit Edison Company
 
 Consolidated Statements of Operations
 Year Ended December 31(in Millions)
    
    2008
    
    
    2007
    
    
    2006Operating Revenues
    
    $
    4,874
    
    
    $
    4,900
    
    
    $
    4,737Operating ExpensesFuel and purchased power
    
    
    1,778
    
    
    
    1,686
    
    
    
    1,566Operation and maintenance
    
    
    1,322
    
    
    
    1,422
    
    
    
    1,337Depreciation and amortization
    
    
    743
    
    
    
    764
    
    
    
    812Taxes other than income
    
    
    232
    
    
    
    277
    
    
    
    252Asset (gains) losses and reserves, net
    
    
    (1
    )
    
    
    8
    
    
    
    (6
    )4,074
    
    
    
    4,157
    
    
    
    3,961Operating Income
    
    
    800
    
    
    
    743
    
    
    
    776Other (Income) and DeductionsInterest expense
    
    
    293
    
    
    
    294
    
    
    
    278Interest income
    
    
    (6
    )
    
    
    (7
    )
    
    
    (4
    )Other income
    
    
    (51
    )
    
    
    (40
    )
    
    
    (35
    )Other expenses
    
    
    47
    
    
    
    30
    
    
    
    55283
    
    
    
    277
    
    
    
    294Income Before Income Taxes
    
    
    517
    
    
    
    466
    
    
    
    482Income Tax Provision
    
    
    186
    
    
    
    149
    
    
    
    162Income Before Accounting Change
    
    
    331
    
    
    
    317
    
    
    
    320Cumulative Effect of Accounting Change, net of tax
    
    
    
    
    
    
    
    
    
    
    1Net Income
    
    $
    331
    
    
    $
    317
    
    
    $
    321
  23




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##### Table of Contents



The Detroit Edison Company
 
 Consolidated Statements of Financial Position
 December 31(in Millions)
    
    2008
    
    
    2007AssetsCurrent AssetsCash and cash equivalents
    
    $
    30
    
    
    $
    47Restricted cash
    
    
    84
    
    
    
    135Accounts receivable (less allowance for
doubtful accounts of $121 and $93,
respectively)Customer
    
    
    709
    
    
    
    727Affiliates
    
    
    5
    
    
    
    3Other
    
    
    34
    
    
    
    90Accrued power supply cost recovery revenue
    
    
    20
    
    
    
    75InventoriesFuel
    
    
    170
    
    
    
    150Materials and supplies
    
    
    169
    
    
    
    165Notes receivableAffiliates
    
    
    41
    
    
    
    Other
    
    
    3
    
    
    
    Other
    
    
    75
    
    
    
    601,340
    
    
    
    1,452InvestmentsNuclear decommissioning trust funds
    
    
    685
    
    
    
    824Other
    
    
    99
    
    
    
    111784
    
    
    
    935PropertyProperty, plant and equipment
    
    
    14,977
    
    
    
    14,372Less accumulated depreciation
    
    
    (5,828
    )
    
    
    (5,640
    )9,149
    
    
    
    8,732Other AssetsRegulatory assets
    
    
    3,456
    
    
    
    2,511Securitized regulatory assets
    
    
    1,001
    
    
    
    1,124Intangible assets
    
    
    19
    
    
    
    9Other
    
    
    93
    
    
    
    1224,569
    
    
    
    3,766Total Assets
    
    $
    15,842
    
    
    $
    14,885
  24




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##### Table of Contents



The Detroit Edison Company  Consolidated Statements of Financial Position
 December 31(in Millions, Except Shares)
    
    2008
    
    
    2007Liabilities and Shareholders EquityCurrent LiabilitiesAccounts payable affiliates
    
    $
    103
    
    
    $
    138Accounts payable other
    
    
    346
    
    
    
    396Accrued interest
    
    
    80
    
    
    
    77Dividends payable
    
    
    
    
    
    
    76Accrued vacations
    
    
    58
    
    
    
    52Short-term borrowings affiliates
    
    
    
    
    
    
    277Short-term borrowings other
    
    
    75
    
    
    
    406Current portion long-term debt, including capital leases
    
    
    153
    
    
    
    174Other
    
    
    263
    
    
    
    2431,078
    
    
    
    1,839Long-Term Debt (net of current portion)Mortgage bonds, notes and other
    
    
    4,091
    
    
    
    3,473Securitization bonds
    
    
    932
    
    
    
    1,065Capital lease obligations
    
    
    33
    
    
    
    425,056
    
    
    
    4,580Other LiabilitiesDeferred income taxes
    
    
    1,894
    
    
    
    1,825Regulatory liabilities
    
    
    593
    
    
    
    583Asset retirement obligations
    
    
    1,205
    
    
    
    1,160Unamortized investment tax credit
    
    
    85
    
    
    
    95Nuclear decommissioning
    
    
    114
    
    
    
    134Accrued pension liability affiliates
    
    
    978
    
    
    
    374Accrued postretirement liability affiliates
    
    
    1,075
    
    
    
    816Other
    
    
    208
    
    
    
    1766,152
    
    
    
    5,163Commitments and Contingencies (Notes 4, 5 and 13)Shareholders EquityCommon stock, $10 par value, 400,000,000 shares
authorized, and 138,632,324 shares issued and
outstanding
    
    
    2,946
    
    
    
    2,771Retained earnings
    
    
    622
    
    
    
    528Accumulated other comprehensive income (loss)
    
    
    (12
    )
    
    
    43,556
    
    
    
    3,303Total Liabilities and Shareholders Equity
    
    $
    15,842
    
    
    $
    14,885
  25




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##### Table of Contents



The Detroit Edison Company
 
 Consolidated Statements of Cash Flows
 Year Ended December 31(in Millions)
    
    2008
    
    
    2007
    
    
    2006Operating ActivitiesNet income
    
    $
    331
    
    
    $
    317
    
    
    $
    321Adjustments to reconcile net income to net cash from operating activities:Depreciation and amortization
    
    
    743
    
    
    
    764
    
    
    
    812Deferred income taxes
    
    
    91
    
    
    
    (111
    )
    
    
    2Asset (gains) losses and reserves, net
    
    
    (2
    )
    
    
    8
    
    
    
    (6
    )Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    (1
    )Changes in assets and liabilities, exclusive of changes shown
separately (Note 1)
    
    
    118
    
    
    
    (213
    )
    
    
    (213
    )Net cash from operating activities
    
    
    1,281
    
    
    
    765
    
    
    
    915Investing ActivitiesPlant and equipment expenditures
    
    
    (943
    )
    
    
    (809
    )
    
    
    (972
    )Proceeds from sale of assets, net
    
    
    
    
    
    
    3
    
    
    
    28Restricted cash
    
    
    50
    
    
    
    (3
    )
    
    
    (48
    )Notes receivable from affiliate
    
    
    (41
    )
    
    
    
    
    
    
    Proceeds from sale of nuclear decommissioning trust fund assets
    
    
    232
    
    
    
    286
    
    
    
    253Investment in nuclear decommissioning trust funds
    
    
    (255
    )
    
    
    (323
    )
    
    
    (284
    )Other investments
    
    
    (54
    )
    
    
    (33
    )
    
    
    (29
    )Net cash used for investing activities
    
    
    (1,011
    )
    
    
    (879
    )
    
    
    (1,052
    )Financing ActivitiesIssuance of long-term debt
    
    
    862
    
    
    
    50
    
    
    
    314Redemption of long-term debt
    
    
    (166
    )
    
    
    (185
    )
    
    
    (126
    )Repurchase of long-term debt
    
    
    (238
    )
    
    
    
    
    
    
    Short-term borrowings, net
    
    
    (331
    )
    
    
    129
    
    
    
    114Short-term borrowings from affiliate
    
    
    (277
    )
    
    
    277
    
    
    
    Capital contribution by parent company
    
    
    175
    
    
    
    175
    
    
    
    150Dividends on common stock
    
    
    (305
    )
    
    
    (305
    )
    
    
    (305
    )Other
    
    
    (7
    )
    
    
    (7
    )
    
    
    (9
    )Net cash from (used for) financing activities
    
    
    (287
    )
    
    
    134
    
    
    
    138Net Increase in Cash and Cash Equivalents
    
    
    (17
    )
    
    
    20
    
    
    
    1Cash and Cash Equivalents at Beginning of the Period
    
    
    47
    
    
    
    27
    
    
    
    26Cash and Cash Equivalents at End of the Period
    
    $
    30
    
    
    $
    47
    
    
    $
    27
  26




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##### Table of Contents



The Detroit Edison Company
 
 Consolidated Statements of Changes in Shareholders Equity and Comprehensive income
 AccumulatedAdditional
    
    
    
    
    
    OtherCommon Stock
    
    Paid in
    
    Retained
    
    Comprehensive(Dollars in Millions, Shares in
Thousands)

    
    Shares
    
    Amount
    
    Capital
    
    Earnings
    
    Income
    
    TotalBalance, December 31, 2005
    
    
    138,632
    
    
    $
    1,386
    
    
    $
    1,060
    
    
    $
    500
    
    
    $
    2
    
    
    $
    2,948Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    321
    
    
    
    
    
    
    
    321Dividends declared on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (305
    )
    
    
    
    
    
    
    (305
    )Net change in unrealized gains on
investments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Capital contribution by parent
company
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    150           Balance, December 31, 2006
    
    
    138,632
    
    
    
    1,386
    
    
    
    1,210
    
    
    
    516
    
    
    $
    3
    
    
    
    3,115Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    317
    
    
    
    
    
    
    
    317Dividends declared on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (305
    )
    
    
    
    
    
    
    (305
    )Net change in unrealized gains on
investments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Capital contribution by parent
company
    
    
    
    
    
    
    
    
    
    
    175
    
    
    
    
    
    
    
    
    
    
    
    175           Balance, December 31, 2007
    
    
    138,632
    
    
    $
    1,386
    
    
    $
    1,385
    
    
    $
    528
    
    
    $
    4
    
    
    $
    3,303Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    331
    
    
    
    
    
    
    
    331Implementation of SFAS No. 158,
measurement date provision, net
of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    (9
    )Dividends declared on common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (228
    )
    
    
    
    
    
    
    (228
    )Net change in unrealized losses
on investments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Benefit obligations, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )
    
    
    (14
    )Capital contribution by parent
company
    
    
    
    
    
    
    
    
    
    
    175
    
    
    
    
    
    
    
    
    
    
    
    175Balance, December 31, 2008
    
    
    138,632
    
    
    $
    1,386
    
    
    $
    1,560
    
    
    $
    622
    
    
    $
    (12
    )
    
    $
    3,556
  (in Millions)
    
    2008
    
    
    2007
    
    
    2006Net income
    
    $
    331
    
    
    $
    317
    
    
    $
    321Other comprehensive income:Net change in unrealized gain (losses) on investments, net of tax of $(1), $1 and $1
    
    
    (2
    )
    
    
    1
    
    
    
    1Benefit
obligations, net of tax of $(7), $and $
    
    
    (14
    )
    
    
    
    
    
    
    Comprehensive income
    
    $
    315
    
    
    $
    318
    
    
    $
    322
  27




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##### Table of Contents



The Detroit Edison Company
 
 Notes to Consolidated Financial Statements
 NOTE 1  SIGNIFICANT ACCOUNTING POLICIES
 Corporate Structure
   Basis of Presentation
  Principles of Consolidation
  Consolidation of Variable Interest Entities, an Interpretation of
ARB No. 51.
 Revenues
  Comprehensive Income
  AccumulatedOtherBenefit
    
    
    
    
    
    
    Comprehensive(in Millions)
    
    Obligations
    
    
    
Other
    
    
    LossBeginning balances
    
    $
    
    
    
    $
    4
    
    
    $
    4Current period change
    
    
    (14
    )
    
    
    (2
    )
    
    
    (16
    )Ending balance
    
    $
    (14
    )
    
    $
    2
    
    
    $
    (12
    )
 28




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##### Table of Contents



Cash Equivalents and Restricted Cash
  Receivables
    Inventories
  Property, Retirement and Maintenance, and Depreciation and Depletion
  (in Millions)
    
    2008
    
    
    2007Property, Plant and EquipmentGeneration
    
    $
    8,544
    
    
    $
    8,100Distribution
    
    
    6,433
    
    
    
    6,272Total
    
    
    14,977
    
    
    
    14,372Less Accumulated Depreciation and DepletionGeneration
    
    
    (3,690
    )
    
    
    (3,539
    )Distribution
    
    
    (2,138
    )
    
    
    (2,101
    )Total
    
    
    (5,828
    )
    
    
    (5,640
    )Net Property, Plant and Equipment
    
    $
    9,149
    
    
    $
    8,732
    29




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##### Table of Contents



Asset Retirement Obligations
 Accounting for Asset
Retirement Obligations Accounting for Conditional Asset Retirement Obligations, an
interpretation of FASB Statement No. 143
 Accounting for the
Effects of Certain Types of Regulation
    (in Millions)Asset retirement obligations at January 1, 2008
    
    $
    1,170Accretion
    
    
    76Liabilities settled
    
    
    (10
    )Revision in estimated cash flows
    
    
    (10
    )Asset retirement obligations at December 31, 2008
    
    
    1,226Less amount included in current liabilities
    
    
    (21
    )$
    1,205
  Long-Lived Assets
  30




---



##### Table of Contents



Intangible Assets
  Excise and Sales Taxes
  Deferred Debt Costs
  Investments in Debt and Equity Securities
  Consolidated Statement of Cash Flows
  (in Millions)
    
    2008
    
    
    2007
    
    
    2006Changes in Assets and Liabilities, Exclusive of Changes Shown SeparatelyAccounts receivable, net
    
    $
    72
    
    
    $
    (163
    )
    
    $
    (36
    )Inventories
    
    
    (24
    )
    
    
    (47
    )
    
    
    (28
    )Recoverable pension and postretirement costs
    
    
    (852
    )
    
    
    594
    
    
    
    (925
    )Accrued
pension liability  affiliates
    
    
    598
    
    
    
    (330
    )
    
    
    125Accounts payable
    
    
    (82
    )
    
    
    73
    
    
    
    7Accrued power supply cost recovery revenue
    
    
    82
    
    
    
    41
    
    
    
    (101
    )Accrued payroll
    
    
    3
    
    
    
    (50
    )
    
    
    47Income taxes payable
    
    
    (29
    )
    
    
    10
    
    
    
    16General taxes
    
    
    (12
    )
    
    
    4
    
    
    
    13Risk management and trading activities
    
    
    1
    
    
    
    (4
    )
    
    
    Accrued
postretirement liability  affiliates
    
    
    259
    
    
    
    (239
    )
    
    
    803Other assets
    
    
    3
    
    
    
    (387
    )
    
    
    (114
    )Other liabilities
    
    
    99
    
    
    
    285
    
    
    
    (20
    )$
    118
    
    
    $
    (213
    )
    
    $
    (213
    )
  (in Millions)
    
    2008
    
    2007
    
    2006Cash Paid ForInterest (excluding interest capitalized)
    
    $
    290
    
    
    $
    295
    
    
    $
    278Income taxes
    
    
    24
    
    
    
    280
    
    
    
    141
 31




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##### Table of Contents



Asset (gains) and losses, net
  Note
    
    Title2
    
    New Accounting Pronouncements4
    
    Regulatory Matters7
    
    Income Taxes12
    
    Fair Value13
    
    Financial and Other Derivative Instruments15
    
    Retirement Benefits and Trusteed Assets
 32




---



##### Table of Contents



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
 Determining the Fair Value of a
Financial Asset in a Market That is Not Active Fair Value Measurements,
 Business Combinations
 Business Combinations,
 GAAP Hierarchy
 The Hierarchy of Generally Accepted Accounting
Principles. The Meaning of Present Fairly in Conformity with Generally Accepted
Accounting Principles
 33




---



##### Table of Contents



Useful Life of Intangible Assets
 Determination of the Useful Life of Intangible Assets. Goodwill and
Other Intangible Assets
 Disclosures about Derivative Instruments and Guarantees
 Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133
 Disclosures about Credit Derivatives
and Certain Guarantees: An Amendment of FASB Statement No. 133 and FASB Interpretation No. 45; and
Clarification of the Effective Date of FASB Statement No. 161.
 Noncontrolling Interests in Consolidated Financial Statements
 Noncontrolling Interests in Consolidated Financial
Statements  an Amendment of ARB No. 51.
 Employers Disclosures about Postretirement Benefit Plan Assets
 Employers
Disclosures about Postretirement Benefit Plan Assets. Employers Disclosures about Pensions and Other Postretirement Benefits,
 Stock-Based Compensation
 Share-Based
Payment,
 34




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##### Table of Contents



NOTE 3  RESTRUCTURING
 Performance Excellence Process
     Employee Severance Costs(1)
    
    Other Costs
    
    Total Cost(in Millions)
    
    2008
    
    
    2007
    
    
    2006

    2008
    
    
    2007
    
    
    2006

    2008
    
    
    2007
    

    2006Costs incurred:
    
    $
    
    
    
    $
    15
    
    
    $
    51

    $
    26
    
    
    $
    50
    
    
    $
    56

    $
    26
    
    
    $
    65
    

    $
    107Less amounts deferred or capitalized:
    
    
    
    
    
    
    15
    
    

    51

    
    26
    
    
    
    50
    
    

    56

    
    26
    
    
    
    65
    


    107Amount expensed
    
    $
    
    
    
    $
    
    
    
    $
    

    $
    
    
    
    $
    
    
    
    $
    

    $
    
    
    
    $
    
    

    $
    
 
 (1)
    
    Includes corporate allocations NOTE 4  REGULATORY MATTERS
 Regulation
  Regulatory Assets and Liabilities
 Accounting for the Effects of Certain Types
of Regulation,
  35




---



##### Table of Contents



(in Millions)
    
    2008
    
    
    2007AssetsSecuritized regulatory assets
    
    $
    1,001
    
    
    $
    1,124Recoverable income taxes related to securitized regulatory assets
    
    
    549
    
    
    
    616Recoverable pension and postretirement costPension
    
    
    1,133
    
    
    
    469Postretirement costs
    
    
    609
    
    
    
    405Asset retirement obligation
    
    
    452
    
    
    
    266Other recoverable income taxes
    
    
    89
    
    
    
    94Recoverable costs under PA 141Excess capital expenditures
    
    
    4
    
    
    
    11Deferred Clean Air Act expenditures
    
    
    10
    
    
    
    28Midwest Independent System Operator charges
    
    
    8
    
    
    
    23Electric Customer Choice implementation costs
    
    
    37
    
    
    
    58Enhanced security costs
    
    
    6
    
    
    
    10Unamortized loss on reacquired debt
    
    
    40
    
    
    
    38Accrued PSCR revenue
    
    
    20
    
    
    
    75Costs to achieve Performance Excellence Process
    
    
    154
    
    
    
    146Enterprise Business Systems costs
    
    
    26
    
    
    
    26Deferred income taxes  Michigan Business Tax
    
    
    336
    
    
    
    318Other
    
    
    3
    
    
    
    33,476
    
    
    
    2,586Less amount included in current assets
    
    
    (20
    )
    
    
    (75
    )$
    3,456
    
    
    $
    2,511LiabilitiesAsset removal costs
    
    $
    182
    
    
    $
    218Accrued pension
    
    
    72
    
    
    
    43Accrued PSCR refund
    
    
    11
    
    
    
    Refundable costs under PA 141
    
    
    16Fermi 2 refueling outage
    
    
    25
    
    
    
    4Deferred income taxes  Michigan Business Tax
    
    
    335
    
    
    
    318Other
    
    
    4
    
    
    
    5645
    
    
    
    588Less amount included in current liabilities
    
    
    (52
    )
    
    
    (5
    )$
    593
    
    
    $
    583
  ASSETS
 
    
    Securitized regulatory assets The net book balance of the Fermi 2 nuclear plant was
written off in 1998 and an equivalent regulatory asset was established. In 2001, the Fermi 2
regulatory asset and certain other regulatory assets were securitized pursuant to PA 142 and
an MPSC order. A non-bypassable securitization bond surcharge recovers the securitized
regulatory asset over a fourteen-year period ending in 2015.
    
    Recoverable income taxes related to securitized regulatory assets Receivable for the
recovery of income taxes to be paid on the non-bypassable securitization bond surcharge. A
non-bypassable securitization tax surcharge recovers the income tax over a fourteen-year
period ending 2015.
    
    Recoverable pension and postretirement costs In 2007, the Company adopted SFAS No. 158
which required, among other things, the recognition in other comprehensive income of the
actuarial gains or losses and the prior
 36




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##### Table of Contents




    
    Asset retirement obligation Asset retirement obligations were recorded pursuant to
adoption of SFAS No. 143 and FIN 47. These obligations are primarily for Fermi 2
decommissioning costs. The asset captures the timing differences between expense recognition
and current recovery in rates and will reverse over the remaining life of the related plant.
(1)
    
    Other recoverable income taxes Income taxes receivable from Detroit Edisons customers
representing the difference in property-related deferred income taxes receivable and amounts
previously reflected in Detroit Edisons rates. This asset will reverse over the remaining
life of the related plant. (1)
    
    Excess capital expenditures PA 141 permits, after MPSC authorization, the recovery of and
a return on capital expenditures that exceed a base level of depreciation expense.
    
    Deferred Clean Air Act expenditures PA 141 permits, after MPSC authorization, the recovery
of and a return on Clean Air Act expenditures.
    
    Midwest Independent System Operator charges PA 141 permits, after MPSC authorization, the
recovery of and a return on charges from a regional transmission operator such as the Midwest
Independent System Operator.
    
    Electric Customer Choice implementation costs PA 141 permits, after MPSC authorization,
the recovery of and a return on costs incurred associated with the implementation of the
electric Customer Choice program.
    
    Enhanced security costs PA 609 of 2002 permits, after MPSC authorization, the recovery of
enhanced security costs for an electric generating facility.
    
    Unamortized loss on reacquired debt The unamortized discount, premium and expense related
to debt redeemed with a refinancing are deferred, amortized and recovered over the life of the
replacement issue.
    
    Accrued PSCR revenue Receivable for the temporary under-recovery of and a return on fuel
and purchased power costs incurred by Detroit Edison which are recoverable through the PSCR
mechanism.
    
    Cost to achieve Performance Excellence Process (PEP) The MPSC authorized the deferral of
costs to implement the PEP. These costs consist of employee severance, project management and
consultant support. These costs will be amortized over a ten-year period beginning with the
year subsequent to the year the costs were deferred.
    
    Enterprise Business Systems (EBS) costs The MPSC approved the deferral and amortization
over 10 years beginning in January 2009 of EBS costs that would otherwise be expensed. (1)
    
    Deferred income taxes  Michigan Business Tax (MBT) In July 2007, the MBT was enacted by
the State of Michigan. State deferred tax liabilities were established for the Companys
utilities, and offsetting regulatory assets were recorded as the impacts of the deferred tax
liabilities will be reflected in rates as the related taxable temporary differences reverse
and flow through current income tax expense. (1)
 
  37




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##### Table of Contents



LIABILITIES
 
    
    Asset removal costs The amount collected from customers for the funding of future asset
removal activities.
    
    Accrued pension Pension expense refundable to customers representing the difference
created from volatility in the pension obligation and amounts recognized pursuant to MPSC
authorization.
    
    Accrued PSCR refund Payable for the temporary over-recovery of and a return on power
supply costs and transmission costs incurred by Detroit Edison which are recoverable through
the PSCR mechanism.
    
    Refundable costs under PA 141 Detroit Edisons 2007 Choice Incentive Mechanism (CIM) reconciliation and allocation
resulted in the elimination of Regulatory Asset Recovery Surcharge (RARS) balances for
commercial and industrial customers. RARS revenues received in 2008 that exceed the regulatory
asset balances are required to be refunded to the affected classes.
    
    Fermi 2 refueling outage Accrued liability for refueling outage at Fermi 2 pursuant to
MPSC authorization.
    
    Deferred income taxes  Michigan Business Tax In July 2007, the MBT was enacted by the
State of Michigan. State deferred tax assets were established for the Companys utilities, and
offsetting regulatory liabilities were recorded as the impacts of the deferred tax assets will
be reflected in rates.
 MPSC Show Cause Order
    38




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##### Table of Contents



2007 Electric Rate Case Filing
    
    
    In order to more accurately reflect the actual cost of providing service to business
customers, the MPSC adopted an immediate 39% phase out of the residential rate subsidy,
with the remaining amount to be eliminated in equal installments over the next five years,
every October 1.
    
    Accepted Detroit Edisons proposal to reinstate and modify the tracking mechanism on
Electric Choice sales (CIM) with a base level of 1,561 GWh. The modified mechanism will not
have a cap on the amount recoverable.
    
    Accepted Detroit Edisons proposal to terminate the Pension Equalization Mechanism.
    
    Approved an annual reconciliation mechanism to track expenses associated with
restoration costs (storm and non-storm related expenses) and line clearance expenses.
Annual reconciliations will be required using a base expense level of $110 million and $51
million, respectively.
    
    Approved Detroit Edisons proposal to recover a return on $15 million of costs in
working capital associated with expenses associated with preparation of an application for
a new nuclear generation facility at its current Fermi 2 site.
 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;
 39




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##### Table of Contents




    
    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.
 Cost-Based Tariffs for Schools
  Accounting for Costs Related to Enterprise Business Systems
  Fermi 2 Enhanced Security Costs Settlement
  Reconciliation of Regulatory Asset Recovery Surcharge
  Power Supply Cost Recovery Proceedings
 2005 Plan Year
 40




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##### Table of Contents



2006 Plan Year 
 2007 Plan Year 
 2008 Plan Year 
 2009 Plan Year
 41




---



##### Table of Contents



Other
   NOTE 5  NUCLEAR OPERATIONS
 General
  Property Insurance
      42




---



##### Table of Contents



Public Liability Insurance
  Decommissioning
      As of December 31(in Millions)
    
    2008
    
    
    2007Fermi 2
    
    $
    649
    
    
    $
    778Fermi 1
    
    
    3
    
    
    
    13Low level radioactive waste
    
    
    33
    
    
    
    33Total
    
    $
    685
    
    
    $
    824
  43




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##### Table of Contents



Year Ended December 31(in Millions)
    
    2008
    
    2007
    
    2006Realized gains
    
    $
    34
    
    
    $
    25
    
    
    $
    21Realized losses
    
    $
    (49
    )
    
    $
    (17
    )
    
    $
    (9
    )Proceeds from sales of securities
    
    $
    232
    
    
    $
    286
    
    
    $
    253
  Fair
    
    
    Unrealized(in Millions)
    
    Value
    
    
    GainsAs of December 31, 2008Equity Securities
    
    $
    288
    
    
    $
    65Debt Securities
    
    
    388
    
    
    
    17Cash and Cash Equivalents
    
    
    9
    
    
    
    $
    685
    
    
    $
    82As of December 31, 2007Equity Securities
    
    $
    443
    
    
    $
    170Debt Securities
    
    
    373
    
    
    
    9Cash and Cash Equivalents
    
    
    8
    
    
    
    $
    824
    
    
    $
    179
   Nuclear Fuel Disposal Costs
  44




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##### Table of Contents



NOTE 6  JOINTLY OWNED UTILITY PLANT
  LudingtonHydroelectricBelle River
    
    Pumped StorageIn-service date
    
    
    1984-1985
    
    
    
    1973Total plant capacity
    
    1,260
    MW
    
    1,872
    MWOwnership interest
    
    
    
    *

    
    
    49
    %Investment (in Millions)
    
    $
    1,588
    
    
    $
    165Accumulated depreciation (in Millions)
    
    $
    853
    
    
    $
    106
 
 *
    
    Detroit Edisons ownership interest is 63% in Unit No. 1, 81% of the facilities applicable to
Belle River used jointly by the Belle River and St. Clair Power Plants and 75% in common
facilities used at Unit No. 2. Belle River
  Ludington Hydroelectric Pumped Storage
  NOTE 7  INCOME TAXES
 Income Tax Summary
   (Dollars in Millions)
    
    2008
    
    
    2007
    
    
    2006Income tax expense at 35% statutory rate
    
    $
    181
    
    
    $
    163
    
    
    $
    169Investment tax credits
    
    
    (6
    )
    
    
    (7
    )
    
    
    (7
    )Depreciation
    
    
    3
    
    
    
    3
    
    
    
    3Employee Stock Ownership Plan dividends
    
    
    (2
    )
    
    
    (4
    )
    
    
    (4
    )Medicare Part D subsidy
    
    
    (4
    )
    
    
    (4
    )
    
    
    (5
    )State and other income taxes, net of federal benefit
    
    
    19
    
    
    
    1
    
    
    
    2Other, net
    
    
    (5
    )
    
    
    (3
    )
    
    
    4Total
    
    $
    186
    
    
    $
    149
    
    
    $
    162Effective income tax rate
    
    
    36.0
    %
    
    
    32.0
    %
    
    
    33.6
    %
 45




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##### Table of Contents



(in Millions)
    
    2008
    
    
    2007
    
    
    2006Current income taxes
Federal
    
    $
    66
    
    
    $
    257
    
    
    $
    157State and other income tax expense
    
    
    30
    
    
    
    3
    
    
    
    3Total current income taxes
    
    
    96
    
    
    
    260
    
    
    
    160Deferred federal and other income tax expense
Federal
    
    
    91
    
    
    
    (109
    )
    
    
    1State and other income tax expense
    
    
    (1
    )
    
    
    (2
    )
    
    
    1Total deferred income taxes
    
    
    90
    
    
    
    (111
    )
    
    
    2Total
    
    $
    186
    
    
    $
    149
    
    
    $
    162
    (in Millions)
    
    2008
    
    
    2007Property, plant and equipment
    
    $
    (1,297
    )
    
    $
    (1,156
    )Securitized regulatory assets
    
    
    (545
    )
    
    
    (621
    )Pension and benefits
    
    
    110
    
    
    
    101Other comprehensive income
    
    
    (1
    )
    
    
    (2
    )Other, net
    
    
    (142
    )
    
    
    (176
    )$
    (1,875
    )
    
    $
    (1,854
    )Deferred income tax liabilities
    
    $
    (2,777
    )
    
    $
    (2,662
    )Deferred income tax assets
    
    
    902
    
    
    
    808$
    (1,875
    )
    
    $
    (1,854
    )Current deferred income tax asset (liabilities)
included in Current Assets  Other or Current
Liabilities  Other
    
    $
    19
    
    
    $
    (29
    )Long term deferred income tax liabilities
    
    
    (1,894
    )
    
    
    (1,825
    )$
    (1,875
    )
    
    $
    (1,854
    )
  46




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##### Table of Contents



Uncertain Tax Positions
 Accounting for Uncertainty in
Income Taxes  an interpretation of FASB Statement No. 109 (FIN 48)
 (in Millions)
    
    2008
    
    
    2007Balance at January 1
    
    $
    7
    
    
    $
    12Additions for tax positions of current years
    
    
    72
    
    
    
    2Reductions for tax positions of prior years
    
    
    (9
    )
    
    
    Settlements
    
    
    
    
    
    
    (7
    )Balance at December 31
    
    $
    70
    
    
    $
    7
    Michigan Business Tax
   Accounting for the Effects of Certain Types of Regulation,
 47




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##### Table of Contents



NOTE 8  LONG-TERM DEBT
  (in Millions)
    
    2008
    
    
    2007Detroit Edison Taxable Debt, Principally Secured5.9% due 2010 to 2038
    
    $
    2,841
    
    
    $
    2,305Detroit Edison Tax- Exempt Revenue Bonds (2)5.2% due 2011 to 2036
    
    
    1,263
    
    
    
    1,2134,104
    
    
    
    3,518Less amount due within one year
    
    
    (13
    )
    
    
    (45
    )$
    4,091
    
    
    $
    3,473Securitization Bonds6.4% due 2009 to 2015
    
    $
    1,064
    
    
    $
    1,185Less amount due within one year
    
    
    (132
    )
    
    
    (120
    )$
    932
    
    
    $
    1,065
 
 (1)
    
    Weighted average interest rates as of December 31, 2008 are shown below the description of
each category of debt.(2)
    
    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. Debt Issuances
  (in Millions)Month Issued
    
    
    Type
    
    Interest Rate
    
    
    Maturity
    
    
    AmountApril
    
    Tax-Exempt Revenue Bonds (2) (3)
    
    Variable
    
    
    2036
    
    
    
    69May
    
    Tax-Exempt Revenue Bonds (2) (3)
    
    Variable
    
    
    2029
    
    
    
    118May
    
    Tax-Exempt Revenue Bonds (2) (4)
    
    
    5.30
    %
    
    
    2030
    
    
    
    51June
    
    Senior Notes (1)
    
    
    5.60
    %
    
    
    2018
    
    
    
    300July
    
    Tax-Exempt Revenue Bonds (2) (6)
    
    Variable
    
    
    2020
    
    
    
    32October
    
    Senior Notes (1)
    
    
    6.40
    %
    
    
    2013
    
    
    
    250December
    
    Tax-Exempt Revenue Bonds (2) (5)
    
    
    6.75
    %
    
    
    2038
    
    
    
    50$
    870
 
 (1)
    
    Proceeds were used to pay down short-term debt and for general corporate purposes.(2)
    
    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.(3)
    
    Proceeds were used to refinance auction rate Tax-Exempt Revenue Bonds.(4)
    
    These Tax-Exempt Revenue Bonds were converted from an auction rate mode and remarketed in a
fixed rate mode to maturity.(5)
    
    Proceeds to be used to finance the construction, acquisition, improvement and installation of
certain solid waste disposal facilities at Detroit Edisons Monroe Power Plant.(6)
    
    Proceeds were used to refinance Tax-Exempt Revenue Bonds that matured July 2008. 48




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##### Table of Contents



Debt Retirements and Redemptions
  (in Millions)Month Retired
    
    
    Type
    
    Interest Rate
    
    
    Maturity
    
    
    AmountApril
    
    Tax-Exempt Revenue Bonds (1)
    
    Variable
    
    
    2036
    
    
    $
    69May
    
    Tax-Exempt Revenue Bonds (1)
    
    Variable
    
    
    2029
    
    
    
    118July
    
    Tax-Exempt Revenue Bonds (2)
    
    
    7.00
    %
    
    
    2008
    
    
    
    32$
    219
 
 (1)
    
    These Tax-Exempt Revenue Bonds were converted from auction rate mode and subsequently
redeemed with proceeds from the issuance of new Detroit Edison Tax-Exempt Revenue Bonds.(2)
    
    These Tax-Exempt Revenue Bonds were redeemed with the proceeds from the issuance of new
Detroit Edison Tax-Exempt Revenue Bonds.  2014 &(in Millions)
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    thereafter
    
    TotalAmount to mature
    
    $
    145
    
    
    $
    652
    
    
    $
    303
    
    
    $
    402
    
    
    $
    490
    
    
    $
    3,183
    
    
    $
    5,175
 Default Provisions
  NOTE 9  PREFERRED SECURITIES
  NOTE 10  SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS
     49




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##### Table of Contents



NOTE 11  CAPITAL AND OPERATING LEASES
 Lessee
  Capital
    
    
    Operating(in Millions)
    
    Leases
    
    
    Leases2009
    
    $
    11
    
    
    $
    272010
    
    
    9
    
    
    
    212011
    
    
    7
    
    
    
    202012
    
    
    5
    
    
    
    222013
    
    
    5
    
    
    
    18Thereafter
    
    
    12
    
    
    
    91Total minimum lease payments
    
    
    49
    
    
    $
    199Less imputed interest
    
    
    (8
    )Present value of net minimum lease payments
    
    
    41Less current portion
    
    
    (8
    )Non-current portion
    
    $
    33
  NOTE 12  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.
 50




---



##### Table of Contents




    
    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
    
    
    December 31, 2008Assets:Cash equivalents
    
    $
    9
    
    
    $
    
    
    
    $
    
    
    
    $
    9Nuclear decommissioning trusts and other investments
    
    
    464
    
    
    
    310
    
    
    
    
    
    
    
    774Derivative assets
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    4Total
    
    $
    473
    
    
    $
    310
    
    
    $
    4
    
    
    $
    787Liabilities:Derivative liabilities
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )Total
    
    $
    
    
    
    $
    (1
    )
    
    $
    
    
    
    $
    (1
    )Net Assets (Liabilities) at December 31, 2008
    
    $
    473
    
    
    $
    309
    
    
    $
    4
    
    
    $
    786
  (in Millions)
    
    DerivativesAsset balance as of January 1, 2008
    
    $
    4Changes in fair value recorded in regulatory liabilities
    
    
    2Changes in fair value recorded in other comprehensive income
    
    
    Purchases, issuances and settlements
    
    
    (2
    )Transfers in/out of Level 3
    
    
    Asset balance as of December 31, 2008
    
    $
    4The amount of total gains included in net income attributed to
the change in unrealized gains (losses) related to assets and
liabilities held at December 31, 2008
    
    $
    
  Cash Equivalents
  Nuclear Decommissioning Trusts
  51




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##### Table of Contents



Derivative Assets and Liabilities
  Fair Value of Financial Instruments
  2008
    
    
    2007Fair Value
    
    
    Carrying Value
    
    
    Fair Value
    
    
    Carrying ValueLong-Term Debt
    
    $5.0 billion
    
    $5.2 billion
    
    $4.8 billion
    
    $4.7 billion
 NOTE 13  FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS
 Accounting for Derivative Instruments and Hedging Activities
  52




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##### Table of Contents



Commodity Price Risk
  Credit Risk
   NOTE 14  COMMITMENTS AND CONTINGENCIES
 Environmental
 Air
 Water
 Contaminated Sites
 Labor Contracts
  53




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##### Table of Contents



Purchase Commitments
    Bankruptcies
   Other
   NOTE 15  RETIREMENT BENEFITS AND TRUSTEED ASSETS
 Adoption of SFAS No. 158, Employers 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)
 54




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##### Table of Contents



Measurement Date
  Pension Plan Benefits
    Pension Plans(in Millions)
    
    2008
    
    
    2007
    
    
    2006Service cost
    
    $
    45
    
    
    $
    51
    
    
    $
    51Interest cost
    
    
    148
    
    
    
    138
    
    
    
    136Expected return on plan assets
    
    
    (163
    )
    
    
    (148
    )
    
    
    (135
    )Amortization of:Net actuarial loss
    
    
    27
    
    
    
    46
    
    
    
    45Prior service cost
    
    
    5
    
    
    
    6
    
    
    
    8Special termination benefits
    
    
    
    
    
    
    8
    
    
    
    38Net pension cost
    
    $
    62
    
    
    $
    101
    
    
    $
    143
  55




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##### Table of Contents



Pension Plans(in Millions)
    
    2008
    
    
    2007Other changes in plan assets and benefit obligations recognized in other
comprehensive income and regulatory assetsNet actuarial loss (gain)
    
    $
    665
    
    
    $
    (187
    )Amortization of net actuarial (gain)
    
    
    (27
    )
    
    
    (45
    )Prior service cost
    
    
    12
    
    
    
    1Amortization of prior service cost
    
    
    (6
    )
    
    
    (7
    )Total recognized in other comprehensive income and regulatory assets
    
    $
    644
    
    
    $
    (238
    )Total recognized in net periodic pension cost and other comprehensive
income and regulatory assets
    
    $
    707
    
    
    $
    (137
    )Estimated amounts to be amortized
from accumulated other
comprehensive income and
regulatory assets into net
periodic benefit cost during next
fiscal yearNet actuarial loss
    
    $
    37
    
    
    $
    27Prior service cost
    
    
    7
    
    
    
    6
  Pension Plans(in Millions)
    
    2008
    
    
    2007Accumulated benefit obligation, end of year
    
    $
    2,206
    
    
    $
    2,567Change in projected benefit obligation
Projected benefit obligation, beginning of year
    
    $
    2,754
    
    
    $
    2,920Adjustment due to plan sponsorship change
    
    
    (385
    )
    
    
    December 2007 benefit payments
    
    
    (15
    )
    
    
    Service cost
    
    
    45
    
    
    
    55Interest cost
    
    
    149
    
    
    
    162Actuarial (gain) loss
    
    
    (53
    )
    
    
    (189
    )Benefits paid
    
    
    (156
    )
    
    
    (203
    )Measurement date change
    
    
    16
    
    
    
    Special termination benefits
    
    
    
    
    
    
    8Plan amendments
    
    
    13
    
    
    
    1Projected benefit obligation, end of year
    
    $
    2,368
    
    
    $
    2,754Change in plan assetsPlan assets at fair value, beginning of year
    
    $
    2,599
    
    
    $
    2,373Adjustment due to plan sponsorship change
    
    
    (752
    )
    
    
    December 2007 contributions
    
    
    150
    
    
    
    December 2007 payments
    
    
    (15
    )
    
    
    Actual return on plan assets
    
    
    (557
    )
    
    
    246Company contributions
    
    
    104
    
    
    
    183Measurement date change
    
    
    14
    
    
    
    Benefits paid
    
    
    (156
    )
    
    
    (203
    )Plan assets at fair value, end of year
    
    $
    1,387
    
    
    $
    2,599Funded status of the plans
    
    $
    
    
    
    $
    (155
    )December contribution
    
    
    
    
    
    
    150Funded status, end of year
    
    $
    (981
    )
    
    $
    (5
    )
 56




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##### Table of Contents



Pension Plans(in Millions)
    
    2008
    
    
    2007Amount recorded as:Noncurrent assets
    
    $
    
    
    
    $
    372Current liabilities
    
    
    (3
    )
    
    
    (3
    )Noncurrent liabilities
    
    
    (978
    )
    
    
    (374
    )$
    (981
    )
    
    $
    (5
    )Amounts recognized in regulatory assetsNet actuarial loss
    
    $
    1,106
    
    
    $
    454Prior service cost
    
    
    27
    
    
    
    15Regulatory assets
    
    $
    1,133
    
    
    $
    469
    2008
    
    2007
    
    2006Projected benefit obligationDiscount rate
    
    
    6.90
    %
    
    
    6.50
    %
    
    
    5.70
    %Rate of compensation increase
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %Net pension costsDiscount rate
    
    
    6.50
    %
    
    
    5.70
    %
    
    
    5.90
    %Rate of compensation increase
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %Expected long-term rate of return on Plan assets
    
    
    8.75
    %
    
    
    8.75
    %
    
    
    8.75
    %
  2014 &(in Millions)
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    thereafter
    
    TotalAmount to be paid
    
    $
    156
    
    
    $
    159
    
    
    $
    163
    
    
    $
    169
    
    
    $
    173
    
    
    $
    963
    
    
    $
    1,783
   57




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##### Table of Contents



2008
    
    2007
    
    TargetU.S. equity securities
    
    
    31
    %
    
    
    48
    %
    
    
    35
    %Non U.S. equity securities
    
    
    16
    %
    
    
    18
    %
    
    
    20
    %Debt securities
    
    
    24
    %
    
    
    19
    %
    
    
    20
    %Hedge funds and similar
    
    
    22
    %
    
    
    12
    %
    
    
    20
    %Private equity and other
    
    
    7
    %
    
    
    3
    %
    
    
    5
    %100
    %
    
    
    100
    %
    
    
    100
    %
  Other Postretirement Benefits
   (in Millions)
    
    2008
    
    
    2007
    
    
    2006Service cost
    
    $
    48
    
    
    $
    48
    
    
    $
    45Interest cost
    
    
    94
    
    
    
    90
    
    
    
    88Expected return on plan assets
    
    
    (58
    )
    
    
    (54
    )
    
    
    (49
    )Amortization of:Net loss
    
    
    27
    
    
    
    51
    
    
    
    53Prior service costs
    
    
    2
    
    
    
    4
    
    
    
    4Net transition obligation
    
    
    2
    
    
    
    7
    
    
    
    7Special termination benefits
    
    
    
    
    
    
    2
    
    
    
    6Net postretirement cost
    
    $
    115
    
    
    $
    148
    
    
    $
    154
  (in Millions)
    
    2008
    
    
    2007Other changes in plan assets and APBO recognized in regulatory assetsNet actuarial loss (gain)
    
    $
    237
    
    
    $
    (216
    )Amortization of net actuarial (gain)
    
    
    (28
    )
    
    
    (51
    )Prior service (credit)
    
    
    (1
    )
    
    
    (39
    )Amortization of prior service cost
    
    
    (2
    )
    
    
    (4
    )Amortization of transition (asset)
    
    
    (2
    )
    
    
    (7
    )Total recognized in regulatory assets
    
    $
    204
    
    
    $
    (317
    )Total recognized in net periodic pension cost and regulatory assets
    
    $
    319
    
    
    $
    (169
    )
 (in Millions)Estimated amounts to be amortized from regulatory assets into net
periodic benefit cost during next fiscal yearNet actuarial loss
    
    $
    49
    
    
    $
    27Prior service cost
    
    $
    2
    
    
    $
    2Net transition obligation
    
    $
    2
    
    
    $
    2
 58




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##### Table of Contents



(in Millions)
    
    2008
    
    
    2007Change in accumulated post retirement benefit obligation during the yearAccumulated postretirement benefit obligation, beginning of year
    
    $
    1,479
    
    
    $
    1,660December 2007 cash flow
    
    
    (4
    )
    
    
    Service cost
    
    
    48
    
    
    
    48Interest cost
    
    
    94
    
    
    
    90Plan amendments
    
    
    (1
    )
    
    
    (39
    )Actuarial gain
    
    
    (7
    )
    
    
    (214
    )Measurement date change
    
    
    11
    
    
    
    Benefits paid
    
    
    (72
    )
    
    
    (73
    )Special termination benefits
    
    
    
    
    
    
    2Medicare Part D
    
    
    5
    
    
    
    5Accumulated postretirement benefit obligation , end of year
    
    $
    1,553
    
    
    $
    1,479Change in plan assets during the yearPlan assets at fair value, beginning of year
    
    $
    658
    
    
    $
    636December 2007 cash flow
    
    
    1
    
    
    
    Actual return on plan assets
    
    
    (189
    )
    
    
    56Measurement date change
    
    
    5
    
    
    
    Company contributions
    
    
    76
    
    
    
    36Benefits paid
    
    
    (73
    )
    
    
    (70
    )Plan assets at fair value, end of year
    
    $
    478
    
    
    $
    658
 (in Millions)
    
    2008
    
    
    2007Funded status of the Plans, as of November 30
    
    $
    
    
    
    $
    (821
    )December adjustment
    
    
    
    
    
    
    5Funded status, as of December 31
    
    $
    (1,075
    )
    
    $
    (816
    )Non-current liabilities
    
    $
    (1,075
    )
    
    $
    (816
    )Amounts recognized in regulatory assetsNet actuarial loss
    
    $
    600
    
    
    $
    391Prior service cost
    
    $
    
    
    
    $
    3Net transition obligation
    
    $
    9
    
    
    $
    11$
    609
    
    
    $
    405
  2008
    
    2007
    
    2006Projected Benefit ObligationDiscount rate
    
    
    6.90
    %
    
    
    6.50
    %
    
    
    5.70
    %Net Benefit CostsDiscount rate
    
    
    6.50
    %
    
    
    5.70
    %
    
    
    5.90
    %Expected long-term rate of return on Plan assets
    
    
    8.75
    %
    
    
    8.75
    %
    
    
    8.75
    %Health care trend rate pre-65
    
    
    7.00
    %
    
    
    8.00
    %
    
    
    9.00
    %Health care trend rate post-65
    
    
    6.00
    %
    
    
    7.00
    %
    
    
    8.00
    %Ultimate health care trend rate
    
    
    5.00
    %
    
    
    5.00
    %
    
    
    5.00
    %Year in which ultimate reached
    
    
    2011
    
    
    
    2011
    
    
    
    2011
  59




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##### Table of Contents



2014 &(in Millions)
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    thereafter
    
    TotalAmount to be paid
    
    $
    96
    
    
    $
    102
    
    
    $
    105
    
    
    $
    106
    
    
    $
    110
    
    
    $
    595
    
    
    $
    1,114
   2008
    
    2007
    
    TargetU.S. equity securities
    
    
    39
    %
    
    
    50
    %
    
    
    27
    %Non U.S. equity securities
    
    
    17
    %
    
    
    18
    %
    
    
    24
    %Debt securities
    
    
    26
    %
    
    
    20
    %
    
    
    16
    %Hedge funds and similar
    
    
    13
    %
    
    
    11
    %
    
    
    28
    %Private equity and other
    
    
    5
    %
    
    
    1
    %
    
    
    5
    %100
    %
    
    
    100
    %
    
    
    100
    %
   2014 &(in Millions)
    
    2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    thereafter
    
    TotalAmount to be paid
    
    $
    3
    
    
    $
    4
    
    
    $
    4
    
    
    $
    5
    
    
    $
    5
    
    
    $
    29
    
    
    $
    50
 NOTE 16  RELATED PARTY TRANSACTIONS
   (in Millions)
    
    2008
    
    
    2007
    
    
    2006RevenuesEnergy sales
    
    $
    
    
    
    $
    
    
    
    $
    46Other services
    
    
    6
    
    
    
    5
    
    
    
    5Shared capital assets
    
    
    23
    
    
    
    21
    
    
    
    13CostsFuel and power purchases
    
    
    5
    
    
    
    3
    
    
    
    35Other services and interest
    
    
    7
    
    
    
    6
    
    
    
    3Corporate expenses (net)
    
    
    388
    
    
    
    331
    
    
    
    (86
    )
 60




---



##### Table of Contents



(in Millions)
    
    2008
    
    
    2007
    
    
    2006OtherDividends declared
    
    
    228
    
    
    
    305
    
    
    
    305Dividends paid
    
    
    305
    
    
    
    305
    
    
    
    305Capital contribution
    
    
    175
    
    
    
    175
    
    
    
    150
 December 31,(in Millions)
    
    2008
    
    
    2007AssetsAccounts receivable
    
    $
    5
    
    
    $
    3Notes receivable
    
    
    41
    
    
    
    Liabilities & EquityAccounts payable
    
    
    103
    
    
    
    138Short-term borrowings
    
    
    
    
    
    
    277Other liabilitiesAccrued pension liability
    
    
    978
    
    
    
    374Accrued postretirement liability
    
    
    1,075
    
    
    
    816Dividends payable
    
    
    
    
    
    
    76
  NOTE 17  SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
 First
    
    Second
    
    Third
    
    Fourth(in Millions)
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter(1)
    
    Year2008Operating Revenues
    
    $
    1,153
    
    
    $
    1,173
    
    
    $
    1,440
    
    
    $
    1,108
    
    
    $
    4,874Operating Income
    
    
    139
    
    
    
    151
    
    
    
    316
    
    
    
    194
    
    
    
    800Net Income
    
    
    41
    
    
    
    51
    
    
    
    159
    
    
    
    80
    
    
    
    3312007Operating Revenues
    
    
    1,094
    
    
    
    1,210
    
    
    
    1,403
    
    
    
    1,193
    
    
    
    4,900Operating Income
    
    
    131
    
    
    
    162
    
    
    
    227
    
    
    
    223
    
    
    
    743Net Income
    
    
    40
    
    
    
    60
    
    
    
    107
    
    
    
    110
    
    
    
    317
 
 (1)
    
    In the fourth quarter of 2007, Detroit Edison recorded adjustments that increased operating
income by $27 million ($18 million after-tax) to correct prior amounts. These adjustments were
primarily to record property, plant and equipment and deferred CTA costs for expenditures that
had been expensed in earlier quarters of 2007, including $14 million ($9 million after-tax)
expensed in the second quarter of 2007. 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
  61




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##### Table of Contents



Item 9B. Other Information
  
 Part III
 
 Item 10. Directors, Executive Officers and Corporate Governance
 
 Item 11. Executive Compensation
 
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
 
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accountant Fees and Services
  2008
    
    
    2007Audit fees (1)
    
    $
    1,206,038
    
    
    $
    1,275,216Audit-related fees (2)
    
    
    7,000
    
    
    
    6,179Total
    
    $
    1,213,038
    
    
    $
    1,281,395
 
 (1)
    
    Represents the aggregrate fees for the audits of Detroit Edisons annual financial statements
and for the reviews of the financial statements included in Detroit Edisons Quarterly Reports
on Form 10-Q. .(2)
    
    Represents the aggregrate fees billed for audit-related services.  62




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##### Table of Contents



Part
 
 Item 15. Exhibits and Financial Statement Schedules
     (i) Exhibits filed herewith.
 4-261
    
    Supplemental Indenture, dated as of December 1, 2008 to Mortgage and Deed
of Trust dated as of October 1, 1924 between The Detroit Edison Company and The Bank
of New York Mellon Trust Company, N.A., as successor trustee, providing for General
and Refunding Mortgage Bonds, 2008 Series LT.4-262
    
    Twenty-Eighth Supplemental Indenture, dated as of December 1, 2008 to the
Collateral Trust Indenture, dated as of June 30, 1993 between The Detroit Edison
Company and The Bank of New York Mellon Trust Company, N.A, providing for 2008 Series
LT 6.75% Senior Notes due 2038.12-32
    
    Computation of Ratio of Earnings to Fixed Charges.23-21
    
    Consent of Deloitte & Touche LLP.31-45
    
    Chief Executive Officer Section 302 Form 10-K Certification of Periodic Report.31-46
    
    Chief Financial Officer Section 302 Form 10-K Certification of Periodic Report.
 (ii) Exhibits incorporated herein by reference.
 3
    (a)
    
    Restated Articles of Incorporation of The Detroit Edison Company, as
filed December 10, 1991. (Exhibit 3-13 to Form 10-Q for the quarter
ended June 30, 1999).3
    (b)
    
    Bylaws of The Detroit Edison Company, as amended through September
22, 1999. (Exhibit 3-14 to Form 10-Q for the quarter ended September
30, 1999).4
    (a)
    
    Mortgage and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit B-1 to Registration
Statement on Form A-2 (File No. 2-1630)) and indentures supplemental
thereto, dated as of dates indicated below, and filed as exhibits to
the filings set forth below:
Supplemental Indenture, dated as of December 1, 1940, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit B-14 to Registration
Statement on Form A-2 (File No. 2-4609)). (amendment)
Supplemental Indenture, dated as of September 1, 1947, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit B-20 to Registration
Statement on Form S-1 (File No. 2-7136)). (amendment)
 63




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##### Table of Contents



Supplemental Indenture, dated as of March 1, 1950, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit B-22 to Registration Statement on Form
S-1 (File No. 2-8290)). (amendment)
Supplemental Indenture, dated as of November 15, 1951, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit B-23 to Registration
Statement on Form S-1 (File No. 2-9226)). (amendment)
Supplemental Indenture, dated as of August 15, 1957, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 3-B-30 to Form 8-K dated September 11,
1957). (amendment)
Supplemental Indenture, dated as of December 1, 1966, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 2-B-32 to Registration
Statement on Form S-9 (File No. 2-25664)). (amendment)
Supplemental Indenture, dated as of February 15, 1990, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4-212 to Form 10-K for
the year ended December 31, 2000). (1990 Series B, C, E and F)
Supplemental Indenture, dated as of May 1, 1991, to the Mortgage and
Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 4-178 to Form 10-K for the year ended
December 31, 1996). (1991 Series BP and CP)
Supplemental Indenture, dated as of May 15, 1991, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 4-179 to Form 10-K for the year ended
December 31, 1996). (1991 Series DP)
Supplemental Indenture, dated as of February 29, 1992, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4-187 to Form 10-Q for
the quarter ended March 31, 1998). (1992 Series AP)
Supplemental Indenture, dated as of April 26, 1993, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 4-215 to Form 10-K for the year ended
December 31, 2000). (amendment)
Supplemental Indenture, dated as of June 30, 1993, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 4-216 to Form 10-K for the year ended
December 31, 2000). (1993 Series AP)
Supplemental Indenture, dated as of August 1, 1999, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 4-204 to Form 10-Q for the quarter
ended September 30, 1999). (1999 Series AP, BP and CP)
 64




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##### Table of Contents



Supplemental Indenture, dated as of August 1, 2000, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 4-210 to Form 10-Q for the quarter
ended September 30, 2000). (2000 Series BP)
Supplemental Indenture, dated as of March 15, 2001, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 4-222 to Form 10-Q for the quarter
ended March 31, 2001). (2001 Series AP)
Supplemental Indenture, dated as of May 1, 2001, to the Mortgage and
Deed of Trust, dated as of October 1, 1924, between Detroit Edison
and The Bank of New York Mellon Trust Company, N.A., as successor
trustee (Exhibit 4-226 to Form 10-Q for the quarter ended June 30,
2001). (2001 Series BP)
Supplemental Indenture, dated as of August 15, 2001, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 4-227 to Form 10-Q for the quarter
ended September 30, 2001). (2001 Series CP)
Supplemental Indenture, dated as of September 15, 2001, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4-228 to Form 10-Q for
the quarter ended September 30, 2001). (2001 Series D and E)
Supplemental Indenture, dated as of September 17, 2002, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4.1 to Registration
Statement on Form S-3 (File No. 333-100000)). (amendment and
successor trustee)
Supplemental Indenture, dated as of October 15, 2002, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4-230 to Form 10-Q for
the quarter ended September 30, 2002). (2002 Series A and B)
Supplemental Indenture, dated as of December 1, 2002, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4-232 to Form 10-K for
the year ended December 31, 2002). (2002 Series C and D)
Supplemental Indenture, dated as of August 1, 2003, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 4-235 to Form 10-Q for the quarter
ended September 30, 2003). (2003 Series A)
Supplemental Indenture, dated as of March 15, 2004, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 4-238 to Form 10-Q for the quarter
ended March 31, 2004). (2004 Series A and B)
Supplemental Indenture, dated as of July 1, 2004, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 4-240 to Form 10-Q for the quarter
ended June 30, 2004). (2004 Series D)

Supplemental Indenture, dated as of April 1, 2005, to the Mortgage
and Deed of Trust, dated as
 65




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##### Table of Contents



of October 1, 1924, between Detroit
Edison and The Bank of New York Mellon Trust Company, N.A., as
successor trustee (Exhibit 4.3 to Registration Statement on Form S-4
(File No. 333-123926)). (2005 Series AR and BR)
Supplemental Indenture, dated as of September 15, 2005, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4.2 to Form 8-K dated
September 29, 2005). (2005 Series C)
Supplemental Indenture, dated as of September 30, 2005, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
Detroit Edison and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 4-248 to Form 10-Q for the quarter
ended September 30, 2005). (2005 Series E)
Supplemental Indenture, dated as of May 15, 2006, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The Detroit
Edison Company and The Bank of New York Mellon Trust Company, N.A.,
as successor trustee (Exhibit 4-250 to Form 10-Q for the quarter
ended June 30, 2006). (2006 Series A)
Supplemental Indenture, dated as of December 1, 2007, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4.2 to Form 8-K dated
December 18, 2007). (2007 Series A)
Supplemental Indenture, dated as of April 1, 2008 to Mortgage and
Deed of Trust as of October 1, 1924, between The Detroit Edison
Company and The Bank of New York Mellon Trust Company, N.A., as
successor trustee (Exhibit 4-251 to Form 10-Q for the quarter ended
March 31, 2008. (2008 Series DT)
Supplemental Indenture, dated as of May 1, 2008 to Mortgage and Deed
of Trust dated as of October 1, 1924 between The Detroit Edison
Company and The Bank of New York Mellon Trust Company, N.A., as
successor trustee (Exhibit 4-253 to Form 10-Q for the quarter ended
June 30, 2008). (2008 Series ET)
Supplemental Indenture, dated as of June 1, 2008 to Mortgage and
Deed of Trust dated as of October 1, 1924 between The Detroit Edison
Company and The Bank of New York Mellon Trust Company, N.A., as
successor trustee (Exhibit 4-255 to Form 10-Q for the quarter ended
June 30, 2008). (2008 Series G)
Supplemental Indenture, dated as of July 1, 2008 to Mortgage and
Deed of Trust dated as of October 1, 1924 between The Detroit Edison
Company and The Bank of New York Mellon Trust Company, N.A., as
successor trustee (Exhibit 4-257 to Form 10-Q for the quarter ended
June 30, 2008). (2008 Series KT)
Supplemental Indenture, dated as of October 1, 2008 to Mortgage and
Deed of Trust dated as of October 1, 1924 between The Detroit Edison
Company and The Bank of New York Mellon Trust Company, N.A., as
successor trustee (Exhibit 4-259 to Form 10-Q for the quarter ended
September 30, 2008). (2008 Series J)
 4
    (b)
    
    Collateral Trust Indenture, dated as of June 30, 1993, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4-152 to Registration
Statement on Form S-3 (File No. 33-50325)).4
    (c)
    
    Ninth Supplemental Indenture, dated as of October 10, 2001, to the
Collateral Trust Indenture, dated as of June 30, 1993, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4-229 to Form 10-Q for
the quarter ended September 30, 2001). (6.125% Senior Notes due
2010)4
    (d)
    
    Tenth Supplemental Indenture, dated as of October 23, 2002, to the
Collateral Trust Indenture, dated as of June 30, 1993, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4-231 to Form 10-Q for
the quarter ended September 30, 2002). (5.20% Senior Notes due 2012
and 6.35% Senior Notes due 2032)
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4
    (e)
    
    Eleventh Supplemental Indenture, dated as of December 1, 2002, to
the Collateral Trust Indenture, dated as of June 30, 1993, between
The Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4-233 to Form 10-Q for
the quarter ended March 31, 2003). (5.45% Senior Notes due 2032 and
5.25% Senior Notes due 2032)4
    (f)
    
    Twelfth Supplemental Indenture, dated as of August 1, 2003, to the
Collateral Trust Indenture, dated as of June 30, 1993, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4-236 to Form 10-Q for
the quarter ended September 30, 2003). (5 1/2% Senior Notes due
2030)4
    (g)
    
    Thirteenth Supplemental Indenture, dated as of April 1, 2004, to the
Collateral Trust Indenture, dated as of June 30, 1993, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4-237 to Form 10-Q for
the quarter ended March 31, 2004). (4.875% Senior Notes Due 2029 and
4.65% Senior Notes due 2028)4
    (h)
    
    Fourteenth Supplemental Indenture, dated as of July 15, 2004, to the
Collateral Trust Indenture, dated as of June 30, 1993, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4-239 to Form 10-Q for
the quarter ended June 30, 2004). (2004 Series D 5.40% Senior Notes
due 2014)4
    (i)
    
    Sixteenth Supplemental Indenture, dated as of April 1, 2005, to the
Collateral Trust Indenture, dated as of June 30, 1993, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4.1 to Registration
Statement on Form S-4 (File No. 333-123926)). (2005 Series AR 4.80%
Senior Notes due 2015 and 2005 Series BR 5.45% Senior Notes due
2035)4
    (j)
    
    Eighteenth Supplemental Indenture, dated as of September 15, 2005,
to the Collateral Trust Indenture, dated as of June 30, 1993,
between The Detroit Edison Company and The Bank of New York Mellon
Trust Company, N.A., as successor trustee (Exhibit 4.1 to Form 8-K
dated September 29, 2005). (2005 Series C 5.19% Senior Notes due
October 1, 2023)4
    (k)
    
    Nineteenth Supplemental Indenture, dated as of September 30, 2005,
to the Collateral Trust Indenture, dated as of June 30, 1993,
between The Detroit Edison Company and The Bank of New York Mellon
Trust Company, N.A., as successor trustee (Exhibit 4-247 to Form
10-Q for the quarter ended September 30, 2005). (2005 Series E 5.70%
Senior Notes due 2037)4
    (l)
    
    Twentieth Supplemental Indenture, dated as of May 15, 2006, to the
Collateral Trust Indenture dated as of June 30, 1993, between The
Detroit Edison Company and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (Exhibit 4-249 to Form 10-Q for
the quarter ended June 30, 2006). (2006 Series A Senior Notes due
2036)4
    (m)
    
    Twenty-Second Supplemental Indenture, dated as of December 1, 2007,
to the Collateral Trust Indenture, dated as of June 30, 1993,
between The Detroit Edison Company and The Bank of New York Trust
Company, N.A., as successor trustee (Exhibit 4.1 to Form 8-K dated
December 18, 2007). (2007 Series A Senior Notes due 2038)4
    (n)
    
    Twenty-Third Supplemental Indenture, dated as of April 1, 2008, to
the Collateral Trust Indenture, dated as of June 30, 1993, between
The Detroit Edison Company and The Bank of New York Trust Company,
N.A., as successor trustee (Exhibit 4-252 to Form 10-Q for
the quarter ended March 31, 2008). (2008 Series DT Variable Rate Senior
Notes due 2036)
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##### Table of Contents



4
    (o)
    
    Twenty-Fourth Supplemental Indenture, dated as of May 1, 2008, to
the Collateral Trust Indenture, dated as of June 30, 1993, between
The Detroit Edison Company and The Bank of New York Trust Company,
N.A., as successor trustee (Exhibit 4-254 to Form 10-Q for the
quarter ended June 30, 2008). (2008 Series ET Variable Rate Senior
Notes due 2029)4
    (p)
    
    Twenty-Fifth Supplemental Indenture, dated as of June 1, 2008, to
the Collateral Trust Indenture, dated as of June 30, 1993, between
The Detroit Edison Company and The Bank of New York Trust Company,
N.A., as successor trustee (Exhibit 4-256 to Form 10-Q for the
quarter ended June 30, 2008). (2008 Series G 5.60% Senior Notes due
2018)4
    (q)
    
    Twenty-Sixth Supplemental Indenture, dated as of July 1, 2008, to
the Collateral Trust Indenture, dated as of June 30, 1993, between
The Detroit Edison Company and The Bank of New York Trust Company,
N.A., as successor trustee (Exhibit 4-258 to Form 10-Q for the
quarter ended June 30, 2008). (2008 Series KT Variable Rate Senior
Notes due 2020)4
    (r)
    
    Twenty-Seventh Supplemental Indenture, dated as of October 1, 2008,
to the Collateral Trust Indenture, dated as of June 30, 1993,
between The Detroit Edison Company and The Bank of New York Trust
Company, N.A., as successor trustee (Exhibit 4-260 to Form 10-Q for
the quarter ended September 30, 2008). (2008 Series J 6.40% Senior
Notes due 2013)4
    (s)
    
    Trust Agreement of Detroit Edison Trust I. (Exhibit 4.9 to
Registration Statement on Form S-3 (File No. 333-100000)).4
    (t)
    
    Trust Agreement of Detroit Edison Trust II. (Exhibit 4.10 to
Registration Statement on Form S-3 (File No. 333-100000)).10
    (a)
    
    Securitization Property Sales Agreement dated as of March 9, 2001,
between The Detroit Edison Securitization Funding LLC and The
Detroit Edison Company. (Exhibit 10-42 to Form 10-Q for the quarter
ended March 31, 2001).10
    (b)
    
    Form of The Detroit Edison Companys Five-Year Credit Agreement,
dated as of October 17, 2005, by and among The Detroit Edison
Company, the lenders party thereto, Barclays Bank PLC, as
Administrative Agent, and Citibank, N.A. and JPMorgan Chase Bank,
N.A., as Co-Syndication Agents (Exhibit 10.1 to Form 8-K dated
October 17, 2005).10
    (c)
    
    Form of Amendment No.1 to The Detroit Edison Companys Five-Year
Credit Agreement, dated as of January 10, 2007, by and among The
Detroit Edison Company, the lenders party thereto, Barclays Bank
PLC, as Administrative Agent, and Citibank, N.A. and JPMorgan Chase
Bank, N.A., as Co-Syndication Agents (Exhibit 10.1 to Form 8-K dated
January 10, 2007).10
    (d)
    
    Form of Second Amended and Restated Five-Year Credit Agreement,
dated as of October 17, 2005, by and among The Detroit Edison
Company, the lenders party thereto, Barclays Bank PLC, as
Administrative Agent, and Citibank, N.A. and JPMorgan Chase Bank,
N.A., as Co-Syndication Agents (Exhibit 10.2 to Form 8-K dated
October 17, 2005).10
    (e)
    
    Form of Amendment No. 1. to Second Amended and Restated Five-Year
Credit Agreement dated as of January 10, 2007, by and among The
Detroit Edison Company, the lenders party thereto, Barclays Bank
PLC, as Administrative Agent, and Citibank, N.A. and JPMorgan Chase
Bank, N.A., as Co-Syndication Agents (Exhibit 10.2 to Form 8-K dated
January 10, 2007).10
    (f)
    
    Certain arrangements pertaining to the employment of Anthony F.
Earley, Jr. with The Detroit Edison Company, dated April 25, 1994.
(Exhibit 10-53 to Form 10-Q for the quarter ended March 31, 1994).10
    (g)
    
    Certain arrangements pertaining to the employment of Gerard M.
Anderson with The Detroit Edison Company, dated October 6, 1993.
(Exhibit 10-48 to Form 10-K for year ended December 31, 1993).
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##### Table of Contents



10
    (h)
    
    Certain arrangements pertaining to the employment of David E. Meador
with The Detroit Edison Company, dated January 14, 1997. (Exhibit
10-5 to Form 10-K for the year ended December 31, 1996).10
    (i)
    
    Amended and Restated Post-Employment Income Agreement, dated March
23, 1998, between The Detroit Edison Company and Anthony F. Earley,
Jr. (Exhibit 10-21 to Form 10-Q for the quarter ended March 31,
1998).10
    (j)
    
    The Detroit Edison Company Supplemental Long-Term Disability Plan,
dated January 27, 1997. (Exhibit 10-4 to Form 10-K for the year
ended December 31, 1996).10
    (k)
    
    Executive Vehicle Plan of The Detroit Edison Company, dated as of
September 1, 1999. (Exhibit 10-41 to Form 10-Q for the quarter ended
March 31, 2001).99
    (a)
    
    Belle River Participation Agreement, dated as of December 1, 1982,
between The Detroit Edison Company and Michigan Public Power Agency.
(Exhibit 28-5 to Registration Statement No. 2-81501).99
    (b)
    
    Belle River Transmission Ownership and Operating Agreement, dated as
of December 1, 1982, between The Detroit Edison Company and Michigan
Public Power Agency. (Exhibit 28-6 to Registration Statement No.
2-81501).
 (iii) Exhibits furnished herewith.
 32-45
    
    Chief Executive Officer Section 906 Form 10-K Certification of Periodic Report.32-46
    
    Chief Financial Officer Section 906 Form 10-K Certification of Periodic Report.
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##### Table of Contents



The Detroit Edison Company
 
 Schedule II  Valuation and Qualifying Accounts
 Year Ended December 31(in Millions)
    
    2008
    
    
    2007
    
    
    2006Allowance for Doubtful Accounts
(shown as deduction from
accounts receivable in the
consolidated statements of
financial position)Balance at Beginning of Period
    
    $
    93
    
    
    $
    72
    
    
    $
    54Additions:Charged to costs and expenses
    
    
    81
    
    
    
    63
    
    
    
    53Charged to other accounts (1)
    
    
    5
    
    
    
    4
    
    
    
    3Deductions (2)
    
    
    (58
    )
    
    
    (46
    )
    
    
    (38
    )Balance at End of Period
    
    $
    121
    
    
    $
    93
    
    
    $
    72
 
 (1)
    
    Collection of accounts previously written off.(2)
    
    Non-collectible accounts written off. 70




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##### Table of Contents



Signatures
  THE DETROIT EDISON COMPANY(Registrant)Date: February 27, 2009
    
    By
    
    /s/ PETER B. OLEKSIAKPeter B. OleksiakVice President and Controller, andChief Accounting Officer
  By
    
    /s/ ANTHONY F. EARLEY, JR.
    
    By
    
    /s/ PETER B. OLEKSIAKAnthony F. Earley, Jr.
    
    
    
    Peter B. OleksiakChairman of the Board and
    
    
    
    Vice President and Controller, andChief Executive Officer
    
    
    
    Chief Accounting OfficerBy
    
    /s/ SANDRA KAY ENNIS
    
    By
    
    /s/ DAVID E. MEADORSandra Kay Ennis
    
    
    
    David E. MeadorDirector and Corporate Secretary
    
    
    
    Director, Executive Vice Presidentand Chief Financial OfficerBy
    
    /s/ BRUCE D. PETERSONBruce D. PetersonDirector
  71