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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



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FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001

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
(Exact name of registrant as specified in its charter)

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

313-235-8000
(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

|                                                                                                                               |  |                                          
|------------------------------------------------------------------------------------------------------------------------------ |  | -----------------------------------------
|Title of each class                                                                                                            |  | Name of each exchange on which registered
|                                                                                                                               |  |                                          
|Quarterly Income Debt Securities (QUIDS)
(Junior Subordinated Deferrable InterestDebentures  7.625%, 7.54%
and 7.375% Series) |  | New York Stock Exchange                  

Securities registered pursuant to Section 12(g) of the Act:

None



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]

All of the registrants 134,287,832 outstanding shares of common stock, par value $10 per share, are owned by DTE Energy Company.

DOCUMENTS INCORPORATED BY REFERENCE
None



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TABLE OF CONTENTS



|                                                  |                                                                                              |  |  |  |  |  |  | 
|------------------------------------------------- | -------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|DEFINITIONS                                      
|Part I                                           
|                                                  | Item 1. Business                                                                            
|                                                  | Item 2. Properties                                                                          
|                                                  | Item 3. Legal Proceedings                                                                   
|                                                  | Item 4. Submission of Matters to a Vote of Security Holders                                 
|Part II                                          
|                                                  | Item 5. Market for Registrants Common Equity and Related Stockholder Matters               
|                                                  | Item 6. Selected Financial Data                                                             
|                                                  | Item 7. Managements Narrative Analysis of Results of Operations                            
|                                                  | Item 7A. Quantitative and Qualitative Disclosures about Market Risk                         
|                                                  | Item 8. Financial Statements and Supplementary Data                                         
|                                                  | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|Part III                                         
|                                                  | Item 10. Directors and Executive Officers of the Registrant                                 
|                                                  | Item 11. Executive Compensation                                                             
|                                                  | Item 12. Security Ownership of Certain Beneficial Owners and Management                     
|                                                  | Item 13. Certain Relationships and Related Transactions                                     
|Part IV                                          
|                                                  | Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K                     
|SIGNATURES                                       
|Annual Report for Fiscal Year End 12/31/01       
|Computation of Ratio of Earnings to Fixed Charges
|Consent of Deloitte & Touche LLP                 



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THE DETROIT EDISON COMPANY

ANNUAL REPORT ON FORM 10-K
YEAR ENDED DECEMBER 31, 2001

TABLE OF CONTENTS

|            |  |          |  |                                                                                      |  |      |    | 
|----------- |  | -------- |  | ------------------------------------------------------------------------------------ |  | ---- | -- | 
|            |  |          |  |                                                                                      |  | Page |   
|            |  |          |  |                                                                                      |  |      |   
|DEFINITIONS |  |          |  |                                                                                      |  |      | 3  | 
|PART I      |  |          |  |                                                                                      |  |      |    | 
|            |  | Item 1.  |  | Business                                                                             |  |      | 5  | 
|            |  | Item 2.  |  | Properties                                                                           |  |      | 8  | 
|            |  | Item 3.  |  | Legal Proceedings                                                                    |  |      | 9  | 
|            |  | Item 4.  |  | Submission of Matters to a Vote of Security Holders                                  |  |      | 9  | 
|PART II     |  |          |  |                                                                                      |  |      |    | 
|            |  | Item 5.  |  | Market for Registrants Common Equity and Related
Stockholder Matters                |  |      | 9  | 
|            |  | Item 6.  |  | Selected Financial Data                                                              |  |      | 9  | 
|            |  | Item 7.  |  | Managements Narrative Analysis of the Results of Operations                         |  |      | 10 | 
|            |  | Item 7A. |  | Quantitative and Qualitative Disclosures about Market Risk                           |  |      | 13 | 
|            |  | Item 8.  |  | Financial Statements and Supplementary Data                                          |  |      | 14 | 
|            |  | Item 9.  |  | Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure |  |      | 41 | 
|PART III    |  |          |  |                                                                                      |  |      |    | 
|            |  | Item 10. |  | Directors and Executive Officers of the Registrant                                   |  |      | 42 | 
|            |  | Item 11. |  | Executive Compensation                                                               |  |      | 42 | 
|            |  | Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                       |  |      | 42 | 
|            |  | Item 13. |  | Certain Relationships and Related Transactions                                       |  |      | 42 | 
|PART IV     |  |          |  |                                                                                      |  |      |    | 
|            |  | Item 14. |  | Exhibits, Financial Statement Schedule and Reports on Form 8-K                       |  |      | 42 | 
|SIGNATURES  |  |          |  |                                                                                      |  |      | 46 | 

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DEFINITIONS

|                |  |                                                                                                                                                                                                                                                                                                                                    
|--------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ALJ             |  | MPSC Administrative Law Judge                                                                                                                                                                                                                                                                                                      
|               
|DTE Energy      |  | DTE Energy Company and Subsidiary Companies                                                                                                                                                                                                                                                                                        
|               
|Detroit Edison  |  | The Detroit Edison Company (a wholly owned subsidiary of DTE Energy Company) and
Subsidiary Companies                                                                                                                                                                                                                              
|               
|Customer Choice |  | The choice program is a statewide initiative giving customers in Michigan the
option to choose alternative suppliers for electricity.                                                                                                                                                                                              
|               
|Enterprises     |  | DTE Enterprises Inc. (successor to MCN Energy)                                                                                                                                                                                                                                                                                     
|               
|EPA             |  | United States Environmental Protection Agency                                                                                                                                                                                                                                                                                      
|               
|FASB            |  | Financial Accounting Standards Board                                                                                                                                                                                                                                                                                               
|               
|FERC            |  | Federal Energy Regulatory Commission                                                                                                                                                                                                                                                                                               
|               
|ITC             |  | International Transmission Company (a wholly owned subsidiary of DTE Energy)                                                                                                                                                                                                                                                       
|               
|kWh             |  | Kilowatthour                                                                                                                                                                                                                                                                                                                       
|               
|Ludington       |  | Ludington Hydroelectric Pumped Storage Plant (owned jointly with Consumers
Energy)                                                                                                                                                                                                                                                 
|               
|MCN Energy      |  | MCN Energy Group Inc.                                                                                                                                                                                                                                                                                                              
|               
|MichCon         |  | Michigan Consolidated Gas Company                                                                                                                                                                                                                                                                                                  
|               
|MPSC            |  | Michigan Public Service Commission                                                                                                                                                                                                                                                                                                 
|               
|MW              |  | Megawatt                                                                                                                                                                                                                                                                                                                           
|               
|MWh             |  | Megawatthour                                                                                                                                                                                                                                                                                                                       
|               
|Note(s)         |  | Note(s) to Consolidated Financial Statements of Detroit Edison                                                                                                                                                                                                                                                                     
|               
|NRC             |  | Nuclear Regulatory Commission                                                                                                                                                                                                                                                                                                      
|               
|PFD             |  | Proposal for Decision by a MPSC ALJ                                                                                                                                                                                                                                                                                                
|               
|PSCR            |  | A power supply cost recovery mechanism authorized by the MPSC that allowed
Detroit Edison to recover through rates its fuel, fuel-related and purchased
power electric expenses. The clause was suspended under Michigans
restructuring legislation signed into law June 5, 2000, which lowered and froze
electric customer rates.
|               
|Registrant      |  | Detroit Edison                                                                                                                                                                                                                                                                                                                     
|               
|SEC             |  | Securities and Exchange Commission                                                                                                                                                                                                                                                                                                 

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|               |  |                                                                                                                                                                                          
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Securitization |  | A mechanism used by Detroit Edison to refinance specific stranded costs at lower
interest rates through the sale of rate reduction bonds.                                                
|              
|SFAS           |  | Statement of Financial Accounting Standards                                                                                                                                              
|              
|Stranded Costs |  | Costs incurred by utilities in order to serve customers in a regulated
environment, but some of which may not be recoverable if customers switch to
alternative suppliers of electricity.

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FORWARD-LOOKING STATEMENTS

Certain information presented herein includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve certain risks and uncertainties that may
cause actual future results to differ materially from those contemplated,
projected, estimated or budgeted in such forward-looking statements. Factors
that may impact forward-looking statements include, but are not limited to,
interest rates, access to the capital markets, the level of borrowings,
weather, actual sales, changes in the cost of fuel and purchased power due to
the suspension of the Power Supply Cost Recovery mechanism, the effects of
competition and the implementation of electric Customer Choice programs, the
implementation of electric utility restructuring in Michigan, environmental and
nuclear requirements, the impact of FERC proceedings and regulations and the
timing of the accretive effects of DTE Energys merger with MCN Energy.




PART I




Item 1. Business

GENERAL

The Detroit Edison Company (Detroit Edison or the Company), incorporated in
Michigan since 1967, is a public utility subject to regulation by the Michigan
Public Service Commission (MPSC) and Federal Energy Regulatory Commission
(FERC) and is engaged in the generation, purchase, distribution and sale of
electric energy to 2.1 million customers in a 7,600 square mile area in
Southeastern Michigan. Detroit Edisons service area includes about 13% of
Michigans total land area and about half of its population (approximately five
million people). Detroit Edisons residential customers reside in urban and
rural areas, including an extensive shoreline along the Great Lakes and
connecting waters.

Operating revenues, sales and customer data by rate class are as follows:

|                                |  |      |        |  |      |   |        |      |  |   |        |  |  |  |  |  |  |  |  |  |  |  |  | 
|------------------------------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                |  | 2001 |        |  | 2000 |   |        | 1999 |  |   |        |  |  |  |  |  |  |  |  |  | 
|                                |  |      |        |  |      |   |        |      |  |   |        |  |  |  |  |  |  |  |  |  | 
|Operating Revenues(in Millions) |  |      |        |  |      |   |        |      |  |   |        |  |  |  |  |  |  |  |  |  |  |  |  | 
|Residential                     |  | $    | 1,298  |  |      | $ | 1,265  |      |  | $ | 1,300  |  |  |  |  |  |  |  |  |  |  |  |  | 
|Commercial                      |  |      | 1,533  |  |      |   | 1,670  |      |  |   | 1,629  |  |  |  |  |  |  |  |  |  |  |  |  | 
|Industrial                      |  |      | 773    |  |      |   | 848    |      |  |   | 809    |  |  |  |  |  |  |  |  |  |  |  |  | 
|Wholesale                       |  |      | 196    |  |      |   | 130    |      |  |   | 130    |  |  |  |  |  |  |  |  |  |  |  |  | 
|Other                           |  |      | 244    |  |      |   | 216    |      |  |   | 179    |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                |  |      |        |  |      |   |        |      |  |   |        |  |  |  |  |  |  |  |  |  | 
|                                |  | $    | 4,044  |  |      | $ | 4,129  |      |  | $ | 4,047  |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                |  |      |        |  |      |   |        |      |  |   |        |  |  |  |  |  |  |  |  |  | 
|Sales(in Thousands of MWh)      |  |      |        |  |      |   |        |      |  |   |        |  |  |  |  |  |  |  |  |  |  |  |  | 
|Residential                     |  |      | 14,503 |  |      |   | 13,903 |      |  |   | 14,064 |  |  |  |  |  |  |  |  |  |  |  |  | 
|Commercial                      |  |      | 18,777 |  |      |   | 19,762 |      |  |   | 19,546 |  |  |  |  |  |  |  |  |  |  |  |  | 
|Industrial                      |  |      | 14,430 |  |      |   | 16,090 |      |  |   | 15,647 |  |  |  |  |  |  |  |  |  |  |  |  | 
|Wholesale                       |  |      | 868    |  |      |   | 2,592  |      |  |   | 3,672  |  |  |  |  |  |  |  |  |  |  |  |  | 
|Other                           |  |      | 2,538  |  |      |   | 2,653  |      |  |   | 2,595  |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                |  |      |        |  |      |   |        |      |  |   |        |  |  |  |  |  |  |  |  |  | 
|                                |  |      | 51,116 |  |      |   | 55,000 |      |  |   | 55,524 |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                |  |      |        |  |      |   |        |      |  |   |        |  |  |  |  |  |  |  |  |  | 
|Customers(in Thousands)         |  |      |        |  |      |   |        |      |  |   |        |  |  |  |  |  |  |  |  |  |  |  |  | 
|Residential                     |  |      | 1,938  |  |      |   | 1,922  |      |  |   | 1,904  |  |  |  |  |  |  |  |  |  |  |  |  | 
|Commercial                      |  |      | 184    |  |      |   | 185    |      |  |   | 182    |  |  |  |  |  |  |  |  |  |  |  |  | 
|Industrial                      |  |      | 1      |  |      |   | 1      |      |  |   | 1      |  |  |  |  |  |  |  |  |  |  |  |  | 
|Other                           |  |      | 2      |  |      |   | 2      |      |  |   | 2      |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                |  |      |        |  |      |   |        |      |  |   |        |  |  |  |  |  |  |  |  |  | 
|                                |  |      | 2,125  |  |      |   | 2,110  |      |  |   | 2,089  |  |  |  |  |  |  |  |  |  |  |  |  | 
|                                |  |      |        |  |      |   |        |      |  |   |        |  |  |  |  |  |  | 

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Detroit Edison sales and revenues are impacted by weather. Its peak load and
highest total system sales generally occur during the third quarter of the year
due to air conditioning and cooling-related loads.

During 2001, sales to automotive and automotive-related customers accounted for
approximately 8.5 percent of total Detroit Edison operating revenues. Detroit
Edisons 30 largest industrial customers accounted for approximately 17 percent
of total operating revenues in 2001, 2000 and 1999, and no one customer
accounted for more than 5 percent of total operating revenues.
Detroit Edisons operations are not dependent upon a limited number of
customers, and the loss of any one or a few customers is not reasonably
likely to have a material adverse effect on Detroit Edison.

Detroit Edisons generating capability is primarily dependent upon coal.
Detroit Edison expects to obtain the majority of its coal requirements through
long-term contracts and the balance through short-term agreements and spot
purchases. Detroit Edison has contracts with four coal suppliers for a total
purchase of up to 34 million tons of low-sulfur western coal to be delivered
during the period from 2002 through 2005. Detroit Edison also has four
contracts for the purchase of approximately 16.8 million tons of Appalachian
coal to be delivered during the period from 2002 through 2007. These existing
long-term coal contracts include provisions for price escalation as well as
de-escalation.

REGULATION

Detroit Edison is subject to the regulatory jurisdiction of the MPSC, which
issues orders pertaining to rates, recovery of certain costs, including the
costs of generating facilities and regulatory assets, conditions of service,
accounting and operating related matters. Detroit Edison is regulated by the
FERC with respect to financing authorization. The Nuclear Regulatory
Commission (NRC) has regulatory jurisdiction over all phases of the operation,
construction (including plant modification), licensing and decommission of
Detroit Edisons Fermi 2 nuclear plant.

In June 2000, the Michigan Legislature enacted legislation that established
January 2002 as the date for full implementation of the electric Customer
Choice program, and reduced electric rates by 5%. The legislation also contains
provisions preventing rate increases for residential customers through 2005,
for small business customers through 2004, and remaining business customers
through 2003. In December 2001, the MPSC issued orders designed to increase
customer participation in the electric Customer Choice program and to allow
Detroit Edison to recover costs not previously securitized related to its
generation operations that may not otherwise be recoverable due to Customer
Choice related lost sales and margins. Detroit Edison has requested rehearing,
clarification and changes to certain aspects of the December 2001 orders.

Due to MPSC orders issued in 1997 and 1998, which altered the regulatory
process in Michigan and provided a plan for transition to competition for the
generation business of Detroit Edison, effective December 1998, Detroit
Edisons generation business no longer met the criteria of Statement of
Financial Accounting Standards (SFAS) No. 71, Accounting for the Effects of
Certain Types of Regulation.

ENVIRONMENTAL MATTERS

Detroit Edison is subject to extensive environmental regulation. Additional
costs may result as the effects of various chemicals on the environment are
studied and governmental regulations are developed and implemented. Detroit
Edison expects that it will continue to recover environmental costs through
rates charged to customers.

Detroit Edison is subject to applicable permit requirements, and to
increasingly stringent federal, state and local standards covering among other
things, particulate and gaseous stack emission limitations, the discharge of
effluents into lakes and streams and the handling and disposal of waste
material.

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The U.S. Environmental Protection Agency (EPA) issued ozone transport
regulations and air quality standards relating to ozone and particulate air
pollution. The new rules have led to additional controls on fossil-fueled power
plants to reduce nitrogen oxides, sulfur dioxide, carbon dioxide and
particulate emissions. The EPA initiated enforcement actions against several
major electric utilities citing violations of new source provisions of the
Clean Air Act. Detroit Edison received and responded to information requests
from the EPA on this subject. The Company cannot predict the future impact of
this issue upon Detroit Edison.

Detroit Edison is required to demonstrate that the cooling water intake
structures at all of its facilities minimize adverse environmental impact.
Detroit Edison filed such demonstrations and in the event of a final adverse
decision, may be required to install additional control technologies to further
minimize the impact.

Various state and federal laws regulate Detroit Edisons handling, storage and
disposal of its waste materials. The EPA and the Michigan Department of
Environmental Quality (MDEQ) have aggressive programs regarding the clean up of
contaminated property. Detroit Edison has extensive land holdings and, from
time to time, must investigate claims of improperly disposed of contaminants.
Detroit Edison anticipates it will periodically be included in these types of
environmental proceedings.

Please see Note 12  Commitments and Contingencies for further discussion of
environmental matters.

COMPETITION

The state of Michigan continues its initiatives to restructure the electric
industry by expanding the existing Customer Choice programs to allow customers
the opportunity to benefit from lower electric generation costs resulting from
competition.

Competition in the electric business is provided by alternative suppliers of
generation services in the wholesale and retail markets. Effective January 1,
2002, the electric Customer Choice program was expanded whereby all electric
customers can choose to purchase the electricity from alternative suppliers.
It is estimated that approximately 5% to 8% of Detroit Edisons generation
sales could be lost as a result of customers participating in the electric
Customer Choice program in 2002. Detroit Edison does not earn margins on
generation from customers who purchase from alternative suppliers of generation
under the electric Customer Choice program. Detroit Edison continues to earn
margins from providing distribution services to customers.

EMPLOYEES

As of December 31, 2001, Detroit Edison and its subsidiaries had 8,041
employees.

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Item 2. Properties

Detroit Edison owns generating and distribution properties and facilities that
are all located in the state of Michigan.

Detroit Edison maintains the following generating facilities:

|                                           |                 |         |             |  |       |                         |            |     |      |      |                 |                          |                           |  |  |  | 
|------------------------------------------ | --------------- | ------- | ----------- |  | ----- | ----------------------- | ---------- | --- | ---- | ---- | --------------- | ------------------------ | ------------------------- |  |  |  | 
|                                           |                 |         |             |  |       |                         | Summer Net |     |      |      |                 |                         
|                                           |                 |         | Location by |  |       | Rated Capability (1)(2) |            |     |      |      |                
|                                           |                 |         | Michigan    |  |       |                         |            |     |      |      |                
|Plant Name                                 |                 | County  |             |  | (MW)  |                         |            | (%) |      |      | Year in Service |                         
|                                           |                 |         |             |  |       |                         |            |     |      |      |                 |                         
|Fossil-fueled Steam-Electric               |                 |         |             |  |       |                         |            |     |      |      |                 |                          |                           |  |  | 
|                                           | Belle River (3) |         | St. Clair   |  |       | 1,026                   |            |     |      | 9.3  | %               |                          | 1984 and 1985            
|                                           | Conners Creek   |         | Wayne       |  |       | 200                     |            |     |      | 1.8  |                 |                          | 1999                      |  | 
|                                           | Greenwood       |         | St. Clair   |  |       | 785                     |            |     |      | 7.1  |                 |                          | 1979                      |  | 
|                                           | Harbor Beach    |         | Huron       |  |       | 103                     |            |     |      | 0.9  |                 |                          | 1968                      |  | 
|                                           | Marysville      |         | St. Clair   |  |       | 167                     |            |     |      | 1.5  |                 |                          | 1930, 1943 and 1947      
|                                           | Monroe (4)      |         | Monroe      |  |       | 3,000                   |            |     |      | 27.1 |                 |                          | 1971, 1973 and 1974      
|                                           | River Rouge     |         | Wayne       |  |       | 510                     |            |     |      | 4.6  |                 |                          | 1957 and 1958            
|                                           | St. Clair       |         | St. Clair   |  |       | 1,402                   |            |     |      | 12.7 |                 |                          | 1953, 1954, 1961 and 1969
|                                           | Trenton Channel |         | Wayne       |  |       | 730                     |            |     |      | 6.6  |                 |                          | 1949, 1968 and 1999      
|                                           |                 |         |             |  |       |                         |            |     |      |      |                 |                          |                           | 
|                                           |                 |         |             |  |       |                         | 7,923      |     |      |      | 71.6            |                          |                           |  |  | 
|Oil or Gas-fueled Peaking Units            |                 | Various |             |  | 1,102 |                         |            |     | 10.0 |      |                 | 1966-1971, 1981 and 1999
|Nuclear-fueled Steam-Electric
Fermi 2 (5)  |                 | Monroe  |             |  | 1,111 |                         |            |     | 10.1 |      |                 | 1988                     |                           | 
|Hydroelectric
Pumped Storage Ludington (6) |                 | Mason   |             |  | 917   |                         |            |     | 8.3  |      |                 | 1973                     |                           | 
|                                           |                 |         |             |  |       |                         |            |     |      |      |                 |                          |                           | 
|                                           |                 |         |             |  |       |                         | 11,053     |     |      |      | 100             | %                        |                           |  |  | 
|                                           |                 |         |             |  |       |                         |            |     |      |      |                 |                          |                           | 



|(1) |  | Summer net rated capabilities of generating units 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 economy reserve status.                                                                                                                                                                                                                        
|   
|(3) |  | The Belle River capability represents Detroit Edisons entitlement to 81.39% of the capacity and energy of the plant. See Note 5.                                                                                                                                                                              
|   
|(4) |  | The Monroe Power Plant provided 36.62% of Detroit Edisons total 2001 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. Detroit Edison is leasing 306 MW to
First Energy for the six-year period June 1, 1996 through May 31, 2002.                                                                                                         

Detroit Edison and Consumers Energy interchange energy through nine
interconnections currently owned and operated by their respective affiliates,
ITC and Michigan Electric Transmission Company (METC). Detroit Edison and
Consumers Energy also have interchange agreements that permit the exchange of
electric energy through 12 ITC and METC owned interconnections with First
Energy, Indiana Michigan Power Company, Northern Indiana Public Service Company
and Ontario Hydro Services Company. In addition, Detroit Edison has
interchange agreements for the exchange of electric energy with Michigan South
Central Power Agency and the City of Wyandotte.

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Detroit Edison owns and operates 619 distribution substations with a capacity
of 18,623,000 kilovolt amperes. Electric distribution lines owned and in
service as of December 31, 2001 are as follows:

|                         |                    |            |                |        |            |                   |         |             |  |  |        |        | 
|------------------------ | ------------------ | ---------- | -------------- | ------ | ---------- | ----------------- | ------- | ----------- |  |  | ------ | ------ | 
|                         |                    |            | Overhead Lines |        |            | Underground Lines |        
|                         |                    |            |                |        |            |                   |        
|                         |                    |            |                |        |            |                   | Conduit |             |  |  |        |       
|Design Line Voltage - KV |                    | Pole Miles |                |        | Bank Miles |                   |         | Cable Miles | 
|                         |                    |            |                |        |            |                   |         |             | 
|Distribution             |                    |            |                |        |            |                   |         |             |  |  |        |       
|                         | Under 4.8 KV       |            |                |       |            |                   |         | 65          |  |  |        | 659    | 
|                         | 4.8 KV and 13.2 KV |            |                | 32,973 |            |                   |         | 459         |  |  |        | 15,163 | 
|                         | 24 KV              |            |                | 105    |            |                   |         | 258         |  |  |        | 1,047  | 
|                         | 40 KV              |            |                | 2,846  |            |                   |         | 91          |  |  |        | 338    | 
|                         | 120 KV             |            |                | 54     |            |                   |         |            |  |  |        | 16     | 
|                         |                    |            |                |        |            |                   |         |             |  | 
|                         |                    |            | 35,978         |        |            |                   | 873     |             |  |  | 17,223 |       
|                         |                    |            |                |        |            |                   |         |             | 




Item 3. Legal Proceedings

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




Item 4. Submission of Matters to a Vote of Security Holders

Omitted per general instruction I (2) (c) of Form 10-K for wholly owned
subsidiaries (reduced disclosure format).




PART II




Item 5. Market for Registrants Common Equity and Related Stockholder Matters

All of the 134,287,832 issued and outstanding shares of common stock of Detroit
Edison, par value $10 per share, are owned by DTE Energy, and constitute 100%
of the voting securities of Detroit Edison. Therefore, no market exists for
Detroit Edisons common stock.

Detroit Edison paid cash dividends of $306 million in 2001 and $319 million
each in 2000 and 1999.




Item 6. Selected Financial Data

Omitted per general instruction I (2) (a) of Form 10-K for wholly owned
subsidiaries (reduced disclosure format).

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Item 7. Managements Narrative Analysis of Results of Operations

The Results of Operations discussion for Detroit Edison is presented in
accordance with General Instruction I (2) (a) of Form 10-K for wholly owned
subsidiaries (reduced disclosure format).

Detroit Edisons net income decreased $178 million in 2001 and decreased $23
million in 2000, compared to the prior year. As subsequently discussed, the
decline in 2001 is primarily attributable to merger and restructuring charges
incurred as a result of the merger between Detroit Edisons parent company, DTE
Energy Company (DTE Energy), and MCN Energy Group Inc. (MCN Energy). Also
impacting the decline in 2001 were higher operation and maintenance costs and
lower commercial and industrial sales reflecting the impact of the current
economic recession and customers participating in the electric Customer Choice
program.

|                                                     |                             |   |      |      |     |   |      |     |    | 
|---------------------------------------------------- | --------------------------- | - | ---- | ---- | --- | - | ---- | --- | -- | 
|                                                     |                             |   |      | 2001 |     |   | 2000 |    
|                                                     |                             |   |      |      |     |   |      |    
|Increase (Decrease) in Income Compared to Prior Year |                             |   |      |      |     |   |      |    
|(in Millions)                                        |                             |   |      |      |     |   |      |    
|Operating revenues                                   |                             |   |      |      |     |   |      |    
|                                                     | Rate reduction              |   | $    | (116 | )   |   | $    | (43 | ) 
|                                                     | PSCR rate change            |   |      |     |     |   |      | 82  |   
|                                                     | System sales volume and mix |   |      | (69  | )   |   |      | 24  |   
|                                                     | Wholesale sales             |   |      | 66   |     |   |      |    |   
|                                                     | Other  net                 |   |      | 34   |     |   |      | 19  |   
|                                                     |                             |   |      |      |     |   |     
|                                                     |                             |   |      |      | (85 | ) |      |     | 82 | 
|Fuel and purchased power                             |                             |   | 30   |      |     |   | (165 | )  
|Operation and maintenance                            |                             |   | (130 | )    |     |   | 76   |    
|Depreciation and amortization                        |                             |   | 88   |      |     |   | (16  | )  
|Taxes other than income                              |                             |   | 21   |      |     |   | (14  | )  
|Merger and restructuring charges                     |                             |   | (161 | )    |     |   | (25  | )  
|Interest expense and other                           |                             |   | (26  | )    |     |   |     |    
|Income taxes                                         |                             |   | 88   |      |     |   | 39   |    
|Cumulative effect of accounting change, net of tax   |                             |   | (3   | )    |     |   |     |    
|                                                     |                             |   |      |      |     |   |     
|Net income                                           |                             | $ | (178 | )    |     | $ | (23  | )  
|                                                     |                             |   |      |      |     |   |     

Operating revenuesdecreased $85 million in 2001 due to a decline in sales
rates and electric sales for commercial and industrial customers. Sales rates
for commercial and industrial customers were lowered by a 5% legislatively
mandated rate reduction that began in April 2001. Commercial sales decreased
primarily due to increased participation of customers in the Electric Choice
Program. Under this Program, participating customers choose to purchase their
electricity from suppliers other than Detroit Edison. However, Detroit Edison
continues to provide distribution services for these customers retaining
margins from such services. Industrial sales reflect reduced auto and steel
production, the impact of Electric Choice participation and the end of a
special energy sales agreement with a large steel manufacturer in March of
2001. Partially offsetting these declines were increased revenues from
residential and wholesale customers as well as higher revenues from providing
other energy related services. Residential customer revenues reflect higher
demand resulting from weather, partially offset by the impact of a 5% rate
reduction that began in June 2000. Revenues from wholesale customers increased
due to gains from settling forward sales contracts. The sales contracts were
entered into to effectively close forward purchase contracts that hedged
Detroit Edisons power supply costs. Accordingly, the gains from forward sales
contracts were substantially offset by losses from forward purchase contracts,
which are recorded as part of fuel and purchased power costs.

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Operating revenues in 2000 increased $82 million over 1999 due to higher sales
to commercial and industrial customers, partially offset by lower residential
customer sales. Additionally, under the Power Supply Cost Recovery (PSCR)
mechanism which was in effect through June 2000, Detroit Edison increased rates
in January 2000 to recover higher power costs. The increased commercial and
industrial sales reflected favorable economic conditions in Michigan.
Industrial sales also increased due to the special sales agreement with a large
steel manufacturer. The decline in residential revenues reflects reduced
demand resulting from a cooler summer in 2000 and the impact of the 5% rate
reduction. Wholesale sales decreased due to lower demand for energy and less
availability of energy for sale. Also impacting revenues in 2000 were higher
revenues from off-system sales and providing other energy-related services.

Fuel and purchased powerexpense decreased $30 million in 2001 and increased
$165 million in 2000. The decline in 2001 is due to lower system output
resulting from reduced electric sales, as well as the result of using a more
favorable power supply mix reflecting increased usage of lower-cost power from
Detroit Edisons generating plants and reduced usage of higher-cost purchased
power. Also favorably impacting the 2001 comparison was an adjustment of a
reserve associated with a contract to purchase steam at above market prices
(Note 12). Additionally, losses on the settlement of forward and option
contracts to hedge purchase power prices increased purchased power expense in
2001. The 2000 fuel and purchased power expense increase resulted primarily
from greater reliance on higher-cost purchased power and higher purchase power
prices.

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

|                              |                     |  |        |        |  |      |        |        |      |  |        |        | 
|----------------------------- | ------------------- |  | ------ | ------ |  | ---- | ------ | ------ | ---- |  | ------ | ------ | 
|                              |                     |  | 2001   |        |  | 2000 |        |        | 1999 | 
|                              |                     |  |        |        |  |      |        |        |      | 
|(in Thousands of MWh)         |                     |  |        |        |  |      |        |        |      |  |        |       
|Power generated and purchased |                     |  |        |        |  |      |        |        |      |  |        |       
|Power plant generation        |                     |  |        |        |  |      |        |        |      |  |        |       
|                              | Fossil              |  |        | 39,711 |  |      |        | 42,100 |      |  |        | 43,016 | 
|                              | Nuclear             |  |        | 8,555  |  |      |        | 8,239  |      |  |        | 9,484  | 
|Purchased power               |                     |  | 7,482  |        |  |      | 8,877  |        |      |  | 6,959  |       
|                              |                     |  |        |        |  |      |        |        |      | 
|System output                 |                     |  | 55,748 |        |  |      | 59,216 |        |      |  | 59,459 |       
|                              |                     |  |        |        |  |      |        |        |     
|Average unit cost ($/MWh)     |                     |  |        |        |  |      |        |        |      |  |        |       
|                              | Generation (1)      |  | $      | 12.31  |  |      | $      | 12.78  |      |  | $      | 12.51  | 
|                              |                     |  |        |        |  |      |        |        |     
|                              | Purchased power (2) |  | $      | 78.24  |  |      | $      | 62.57  |      |  | $      | 54.80  | 
|                              |                     |  |        |        |  |      |        |        |     



|(1) |  | Represents fuel costs associated with power plants.                                  
|--- |  | -------------------------------------------------------------------------------------
|(2) |  | The average purchased power amounts include gains and losses from
hedging activities.

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Operating and maintenanceexpenses
increased $130 million in 2001 and decreased
$76 million in 2000. The increase in 2001 was primarily due to expenses
related to maintenance and reliability work for power generation facilities,
which reduces random outages at power plants and Detroit Edisons reliance on
purchased power. Additionally, the higher 2001 expenses include the cost of
funding the low income and energy efficiency fund required by Michigan
legislation which is recovered in current sales rates, costs allocated from
DTE Energy corporate for various corporate support services, and transmission
services billed from ITC. The increase was partially offset by synergy cost
savings related to the MCN Energy merger.

The decrease in 2000 operation and maintenance expenses resulted primarily from
lower costs associated with restoring power to customers who lost service
during severe storms, as well as the elimination of computer system related
costs associated with year 2000 (Y2K) initiatives.

Depreciation and amortizationexpense decreased $88 million in 2001 and
increased $16 million in 2000. The 2001 decline reflects the extension of the
amortization period from seven years to 15 years for certain regulatory assets
that were securitized in March 2001 (Note 3), partially offset by depreciation
on higher levels of plant in service. The increase in 2000 was due to
increased levels of plant in service and the accelerated amortization of
unamortized nuclear costs.

Taxes other than incomedecreased $21 million in 2001 and increased $14 million
in 2000. The improvement in 2001 is attributed to an adjustment in property
tax expense reflecting a change in method of calculating the taxable value of
personal property subject to taxation by local taxing jurisdictions (Note 12).
New valuation tables approved by the Michigan State Tax Commission more
accurately recognize the impact of regulation on the value of a utilitys
personal property based on the propertys age. Partially offsetting the 2001
decline and resulting in the 2000 increase were property taxes associated with
higher property balances. Lower Michigan Single Business Taxes also affected
both years.

Merger and restructuring chargestotaled $186 million in 2001 compared to $25
million in 2000. The costs represent legal, consulting, accounting, employee
benefit and other expenses associated with the merger between DTE Energy and
MCN Energy. In 2001, Detroit Edison recorded a restructuring charge in
connection with the merger, which reflects the cost associated with 890
employees electing to retire early and other employees leaving voluntarily
under programs designed to reduce the workforce in overlapping corporate
support functions.

Interest expense and otherincreased
$26 million in 2001 due primarily to debt
issued for securitization, partially offset by redemptions of higher cost debt
with the proceeds of the securitization bonds (Note 8). Detroit Edison
completed the redemption of debt with securitization proceeds in 2001.

Income taxesreflect changes in pre-tax income and the effective tax rate.

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Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Commodity Price Risk

Risk Management Activities

Detroit Edison is subject to commodity price risk in conjunction with the
anticipated purchase of electricity to meet reliability obligations during
times of peak customer demand. Detroit Edisons exposure to commodity price
risk arises from market fluctuations in commodity prices.

To limit the sensitivity to commodity price fluctuations, Detroit Edison has
entered into a series of forward electricity contracts and option contracts.
See Note 11  Financial and Other Derivative Instruments herein for a further
discussion of these derivative instruments.

Detroit Edison performed a sensitivity analysis to calculate the impact of
changes in fair values utilizing applicable forward commodity rates in effect
at December 31, 2001. The Company estimates that if commodity prices were 10%
higher or lower, the net fair value of commodity contracts would increase $11
million and decrease $22 million, respectively.

Credit Risk

Electricity is purchased from and sold to numerous companies operating in the
steel, automotive, energy and retail industries. A number of customers have
filed for bankruptcy in 2001, including certain Enron Corporation affiliates.
Detroit Edison had open transactions under a variety of agreements with
bankrupt Enron affiliates, and had an aggregate net liability of $8.2 million
to Enron. There is a master netting agreement with Enron affiliates. Internal
and external counsel are working to determine Detroit Edisons rights within
these agreements. Detroit Edison has not reserved for any exposure, in
addition to the net liabilities already recorded, as management cannot estimate
a probable loss exposure and currently does not believe the resolution of this
matter will have a material impact to Detroit Edison.

Interest Rate Risk

Detroit Edison estimates that if interest rates were 10% higher or lower, the
fair value of long-term debt at December 31, 2001 would decrease $176 million
and increase $157 million, respectively.

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Item 8. Financial Statements and Supplementary Data

|                                                          |  |      |    | 
|--------------------------------------------------------- |  | ---- | -- | 
|                                                          |  | Page |   
|                                                          |  |      |   
|Independent Auditors Report                              |  |      | 15 | 
|                                                         
|Consolidated Statement of Operations                      |  |      | 16 | 
|                                                         
|Consolidated Statement of Financial Position              |  |      | 17 | 
|                                                         
|Consolidated Statement of Cash Flows                      |  |      | 19 | 
|                                                         
|Consolidated Statement of Changes in Shareholders Equity |  |      | 20 | 
|                                                         
|Notes to Consolidated Financial Statements                |  |      | 21 | 
|                                                         
|Schedule II  Valuation and Qualifying Accounts           |  |      | 45 | 

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INDEPENDENT AUDITORS REPORT

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

We have audited the consolidated statements of financial position of The
Detroit Edison Company and subsidiaries (the Company) as of December 31, 2001
and 2000, and the related consolidated statements of operations, cash flows,
and changes in shareholders equity for each of the three years in the period
ended December 31, 2001. Our audits also included the financial statement
schedule listed in the Index at Item 8. These financial statements and
financial statement schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on the consolidated
financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of The Detroit Edison Company and
subsidiaries at December 31, 2001 and 2000, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2001 in conformity with accounting principles generally accepted in the
United States of America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements of the Company taken as a whole, present fairly, in all material
respects, the information set forth therein.

As discussed in Note 11 to the consolidated financial statements, the Company
changed its method of accounting for derivative instruments and hedging
activities in 2001.

/s/ DELOITTE & TOUCHE LLP
Detroit, Michigan
February 26, 2002

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THE DETROIT EDISON COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS

|                                       |                                  |                                  |       |                        |       |   |       |       |       |      |       |       |       | 
|-------------------------------------- | -------------------------------- | -------------------------------- | ----- | ---------------------- | ----- | - | ----- | ----- | ----- | ---- | ----- | ----- | ----- | 
|                                       |                                  |                                  |       | Year Ended December 31 |      
|                                       |                                  |                                  |       |                        |      
|                                       |                                  |                                  |       | 2001                   |       |   | 2000  |       |       | 1999 |      
|                                       |                                  |                                  |       |                        |       |   |       |       |       |      |      
|(in Millions)                          |                                  |                                  |       |                        |       |   |       |       |       |      |       |      
|Operating Revenues                     |                                  | $                                | 4,044 |                        |       | $ | 4,129 |       |       | $    | 4,047 |      
|                                       |                                  |                                  |       |                        |       |   |       |       |      
|Operating Expenses                     |                                  |                                  |       |                        |       |   |       |       |       |      |       |      
|                                       | Fuel and purchased power         |                                  |       | 1,241                  |       |   |       | 1,271 |       |      |       | 1,106 |      
|                                       | Operation and maintenance        |                                  |       | 1,082                  |       |   |       | 952   |       |      |       | 1,028 |      
|                                       | Depreciation and amortization    |                                  |       | 631                    |       |   |       | 719   |       |      |       | 703   |      
|                                       | Taxes other than income          |                                  |       | 268                    |       |   |       | 289   |       |      |       | 275   |      
|                                       | Merger and restructuring charges |                                  |       | 186                    |       |   |       | 25    |       |      |       |      |      
|                                       |                                  |                                  |       |                        |       |   |       |       |       |      |      
|                                       |                                  | Total Operating Expenses         |       |                        | 3,408 |   |       |       | 3,256 |      |       |       | 3,112 | 
|                                       |                                  |                                  |       |                        |       |   |       |       |      
|Operating Income                       |                                  |                                  | 636   |                        |       |   | 873   |       |       |      | 935   |      
|                                       |                                  |                                  |       |                        |       |   |       |       |      
|Interest Expense and Other             |                                  |                                  |       |                        |       |   |       |       |       |      |       |      
|                                       | Interest expense                 |                                  |       | 306                    |       |   |       | 277   |       |      |       | 284   |      
|                                       | Other  net                      |                                  |       | 10                     |       |   |       | 13    |       |      |       | 6     |      
|                                       |                                  |                                  |       |                        |       |   |       |       |      
|                                       |                                  | Total Interest Expense and Other |       |                        | 316   |   |       |       | 290   |      |       |       | 290   | 
|                                       |                                  |                                  |       |                        |       |   |       |       |      
|Income Before Income Taxes             |                                  |                                  | 320   |                        |       |   | 583   |       |       |      | 645   |      
|                                       |                                  |                                  |       |                        |       |   |       |       |      
|Income Tax Provision                   |                                  |                                  | 84    |                        |       |   | 172   |       |       |      | 211   |      
|                                       |                                  |                                  |       |                        |       |   |       |       |      
|Income Before Accounting Change        |                                  |                                  | 236   |                        |       |   | 411   |       |       |      | 434   |      
|Cumulative Effect of Accounting Change |                                  |                                  | (3    | )                      |       |   |      |       |       |      |      |      
|                                       |                                  |                                  |       |                        |       |   |       |       |      
|Net Income                             |                                  | $                                | 233   |                        |       | $ | 411   |       |       | $    | 434   |      
|                                       |                                  |                                  |       |                        |       |   |       |       |      

See Notes to Consolidated Financial Statements

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THE DETROIT EDISON COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

|                              |                                     |                                                                              |        |             |     |   |        |        |     | 
|----------------------------- | ----------------------------------- | ---------------------------------------------------------------------------- | ------ | ----------- | --- | - | ------ | ------ | --- | 
|                              |                                     |                                                                              |        | December 31 |    
|                              |                                     |                                                                              |        |             |    
|                              |                                     |                                                                              |        | 2001        |     |   | 2000   |       
|                              |                                     |                                                                              |        |             |     |   |        |       
|(in Millions)                 |                                     |                                                                              |        |             |     |   |        |       
|Assets                        |                                     |                                                                              |        |             |     |   |        |       
|Current Assets                |                                     |                                                                              |        |             |     |   |        |       
|                              | Cash and cash equivalents           |                                                                              | $      | 215         |     |   | $      | 24     |    
|                              | Restricted cash                     |                                                                              |        | 68          |     |   |        |       |    
|                              | Accounts receivable                 |                                                                              |        |             |     |   |        |        |    
|                              |                                     | Customer (less allowance for
doubtful accounts of $27 and
$20, respectively) |        |             | 356 |   |        |        | 381 | 
|                              |                                     | Accrued unbilled revenues                                                    |        |             | 130 |   |        |        | 188 | 
|                              |                                     | Other                                                                        |        |             | 95  |   |        |        | 74  | 
|                              | Inventories                         |                                                                              |        |             |     |   |        |        |    
|                              |                                     | Fuel                                                                         |        |             | 162 |   |        |        | 163 | 
|                              |                                     | Materials and supplies                                                       |        |             | 127 |   |        |        | 139 | 
|                              | Other                               |                                                                              |        | 12          |     |   |        | 25     |    
|                              |                                     |                                                                              |        |             |     |  
|
|                              |                                     |                                                                              | 1,165  |             |     |   | 994    |       
|                              |                                     |                                                                              |        |             |     |  
|Investments                   |                                     |                                                                              |        |             |     |   |        |       
|                              | Nuclear decommissioning trust funds |                                                                              |        | 417         |     |   |        | 398    |    
|                              | Other                               |                                                                              |        | 97          |     |   |        | 38     |    
|                              |                                     |                                                                              |        |             |     |   |        |       
|                              |                                     |                                                                              | 514    |             |     |   | 436    |       
|                              |                                     |                                                                              |        |             |     |  
|Property                      |                                     |                                                                              |        |             |     |   |        |       
|                              | Property, plant and equipment       |                                                                              |        | 11,353      |     |   |        | 11,433 |    
|                              | Property under capital leases       |                                                                              |        | 219         |     |   |        | 220    |    
|                              | Nuclear fuel under capital lease    |                                                                              |        |            |     |   |        | 705    |    
|                              |                                     |                                                                              |        |             |     |   |        |       
|                              |                                     |                                                                              | 11,572 |             |     |   | 12,358 |       
|                              |                                     |                                                                              |        |             |     |   |        |       
|Less accumulated depreciation |                                     |                                                                              | (5,010 | )           |     |   | (5,659 | )     
|                              |                                     |                                                                              |        |             |     |   |        |       
|                              |                                     |                                                                              | 6,562  |             |     |   | 6,699  |       
|                              |                                     |                                                                              |        |             |     |  
|Other Assets                  |                                     |                                                                              |        |             |     |   |        |       
|                              | Regulatory assets                   |                                                                              |        | 1,138       |     |   |        | 2,688  |    
|                              | Securitized regulatory assets       |                                                                              |        | 1,692       |     |   |        |       |    
|                              | Other                               |                                                                              |        | 182         |     |   |        | 169    |    
|                              |                                     |                                                                              |        |             |     |   |        |       
|                              |                                     |                                                                              | 3,012  |             |     |   | 2,857  |       
|                              |                                     |                                                                              |        |             |     |  
|Total Assets                  |                                     | $                                                                            | 11,253 |             |     | $ | 10,986 |       
|                              |                                     |                                                                              |        |             |     |  

See Notes to Consolidated Financial Statements

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THE DETROIT EDISON COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

|                                                    |                                                                                            |   |             |       |   |      |        |       |  
|--------------------------------------------------- | ------------------------------------------------------------------------------------------ | - | ----------- | ----- | - | ---- | ------ | ----- | -
|                                                    |                                                                                            |   | December 31 |      
|                                                    |                                                                                            |   |             |      
|                                                    |                                                                                            |   | 2001        |       |   | 2000 |       
|                                                    |                                                                                            |   |             |       |   |      |       
|(in Millions, Except Shares)                        |                                                                                            |   |             |       |   |      |        |      
|Liabilities and Shareholders Equity                |                                                                                            |   |             |       |   |      |        |      
|Current Liabilities                                 |                                                                                            |   |             |       |   |      |        |      
|                                                    | Accounts payable                                                                           |   | $           | 303   |   |      | $      | 253   |  
|                                                    | Accrued interest                                                                           |   |             | 85    |   |      |        | 56    |  
|                                                    | Dividends payable                                                                          |   |             | 74    |   |      |        | 80    |  
|                                                    | Accrued payroll                                                                            |   |             | 89    |   |      |        | 96    |  
|                                                    | Short-term borrowings                                                                      |   |             |      |   |      |        | 245   |  
|                                                    | Income taxes                                                                               |   |             | 121   |   |      |        | 114   |  
|                                                    | Current portion long-term debt, including
capital leases                                   |   |             | 215   |   |      |        | 200   |  
|                                                    | Liabilities from risk management activities                                                |   |             | 36    |   |      |        |      |  
|                                                    | Other                                                                                      |   |             | 291   |   |      |        | 164   |  
|                                                    |                                                                                            |   |             |       |   |     
|                                                    |                                                                                            |   | 1,214       |       |   |      | 1,208  |      
|                                                    |                                                                                            |   |             |       |   |     
|Other Liabilities                                   |                                                                                            |   |             |       |   |      |        |      
|                                                    | Deferred income taxes                                                                      |   |             | 1,749 |   |      |        | 1,811 |  
|                                                    | Unamortized investment tax credit                                                          |   |             | 156   |   |      |        | 167   |  
|                                                    | Nuclear decommissioning                                                                    |   |             | 417   |   |      |        | 398   |  
|                                                    | Other                                                                                      |   |             | 461   |   |      |        | 190   |  
|                                                    |                                                                                            |   |             |       |   |     
|                                                    |                                                                                            |   | 2,783       |       |   |      | 2,566  |      
|                                                    |                                                                                            |   |             |       |   |     
|Long-Term Debt                                      |                                                                                            |   |             |       |   |      |        |      
|                                                    | Mortgage bonds, notes and other                                                            |   |             | 3,038 |   |      |        | 3,344 |  
|                                                    | Securitization bonds                                                                       |   |             | 1,673 |   |      |        |      |  
|                                                    | Capital lease obligations                                                                  |   |             | 87    |   |      |        | 145   |  
|                                                    |                                                                                            |   |             |       |   |     
|                                                    |                                                                                            |   | 4,798       |       |   |      | 3,489  |      
|                                                    |                                                                                            |   |             |       |   |     
|Commitments and Contingencies (Note 1, 3, 4, 10-13) |                                                                                            |   |             |       |   |      |        |      
|                                                   
|Shareholders Equity                                |                                                                                            |   |             |       |   |      |        |      
|                                                    | Common stock, $10 par value, 400,000,000 shares                                            |   |             |       |   |      |        |       |  
|                                                    | Authorized, 134,287,832 shares and 145,119,875
shares issued and outstanding, respectively |   |             | 1,343 |   |      |        | 1,451 |  
|                                                    | Premium on common stock                                                                    |   |             | 507   |   |      |        | 548   |  
|                                                    | Common stock expense                                                                       |   |             | (44   | ) |      |        | (48   | )
|                                                    | Accumulated other comprehensive loss                                                       |   |             | (23   | ) |      |        |      |  
|                                                    | Retained earnings                                                                          |   |             | 675   |   |      |        | 1,772 |  
|                                                    |                                                                                            |   |             |       |   |     
|                                                    |                                                                                            |   | 2,458       |       |   |      | 3,723  |      
|                                                    |                                                                                            |   |             |       |   |     
|Total Liabilities and Shareholders Equity          |                                                                                            | $ | 11,253      |       |   | $    | 10,986 |      
|                                                    |                                                                                            |   |             |       |   |     

See Notes to Consolidated Financial Statements

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THE DETROIT EDISON COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS

|                                                     |                                                                            |                                        |                                            |                            |      |                        |    |      |      |     |      |      |      |       |     |  
|---------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------- | ------------------------------------------ | -------------------------- | ---- | ---------------------- | -- | ---- | ---- | --- | ---- | ---- | ---- | ----- | --- | -
|                                                     |                                                                            |                                        |                                            |                            |      | Year Ended December 31 |   
|                                                     |                                                                            |                                        |                                            |                            |      |                        |   
|                                                     |                                                                            |                                        |                                            |                            |      | 2001                   |    |      | 2000 |     |      | 1999 |     
|                                                     |                                                                            |                                        |                                            |                            |      |                        |    |      |      |     |      |      |     
|(in Millions)                                        |                                                                            |                                        |                                            |                            |      |                        |    |      |      |     |      |     
|Operating Activities                                 |                                                                            |                                        |                                            |                            |      |                        |    |      |      |     |      |     
|                                                     | Net Income                                                                 |                                        | $                                          | 233                        |      |                        | $  | 411  |      |     | $    | 434  |     
|                                                     | Adjustments to reconcile net income to net cash
from operating activities: |                                        |                                            |                            |      |                        |    |      |      |     |      |      |     
|                                                     |                                                                            |                                        | Depreciation and amortization              |                            |      | 631                    |    |      |      | 719 |      |      |      | 703   |    
|                                                     |                                                                            |                                        | Merger and restructuring charges           |                            |      | 147                    |    |      |      |    |      |      |      |      |    
|                                                     |                                                                            |                                        | Deferred income taxes                      |                            |      | (72                    | )  |      |      | (79 | )    |      |      | 23    |    
|                                                     |                                                                            |                                        | Changes in current assets and liabilities: |                            |      |                        |    |      |      |     |      |      |      |       |    
|                                                     |                                                                            |                                        |                                            | Accounts receivable        |      |                        | 62 |      |      |     | (23  | )    |      |       | (69 | )
|                                                     |                                                                            |                                        |                                            | Inventories                |      |                        | 13 |      |      |     | 12   |      |      |       | (7  | )
|                                                     |                                                                            |                                        |                                            | Prepaid pensions           |      |                        | 9  |      |      |     | 65   |      |      |       | (51 | )
|                                                     |                                                                            |                                        |                                            | Payables                   |      |                        | 40 |      |      |     | 50   |      |      |       | 39  |  
|                                                     |                                                                            |                                        |                                            | Risk management activities |      |                        | 36 |      |      |     |     |      |      |       |    |  
|                                                     |                                                                            |                                        |                                            | Other                      |      |                        | 47 |      |      |     | (176 | )    |      |       |    |  
|                                                     |                                                                            |                                        |                                            |                            |      |                        |    |      |     
|                                                     |                                                                            |                                        | Net cash from operating activities         |                            |      | 1,146                  |    |      |      | 979 |      |      |      | 1,072 |    
|                                                     |                                                                            |                                        |                                            |                            |      |                        |    |      |     
|Investing Activities                                 |                                                                            |                                        |                                            |                            |      |                        |    |      |      |     |      |     
|                                                     | Plant and equipment expenditures                                           |                                        |                                            | (673                       | )    |                        |    | (587 | )    |     |      | (638 | )   
|                                                     | Restricted cash for debt redemptions                                       |                                        |                                            | (68                        | )    |                        |    |     |      |     |      |     |     
|                                                     | Other investments                                                          |                                        |                                            | (145                       | )    |                        |    | 41   |      |     |      | 12   |     
|                                                     |                                                                            |                                        |                                            |                            |      |                        |    |      |     
|                                                     |                                                                            | Net cash used for investing activities |                                            |                            | (886 | )                      |    |      | (546 | )   |      |      | (626 | )    
|                                                     |                                                                            |                                        |                                            |                            |      |                        |    |      |     
|Financing Activities                                 |                                                                            |                                        |                                            |                            |      |                        |    |      |      |     |      |     
|                                                     | Issuance of long-term debt                                                 |                                        |                                            | 2,679                      |      |                        |    | 270  |      |     |      | 265  |     
|                                                     | Redemption of long-term debt                                               |                                        |                                            | (1,271                     | )    |                        |    | (245 | )    |     |      | (468 | )   
|                                                     | Short-term borrowings, net                                                 |                                        |                                            | (245                       | )    |                        |    | (117 | )    |     |      | 131  |     
|                                                     | Capital lease obligations                                                  |                                        |                                            | (80                        | )    |                        |    | (2   | )    |     |      | (56  | )   
|                                                     | Repurchase of common stock                                                 |                                        |                                            | (846                       | )    |                        |    |     |      |     |      |     |     
|                                                     | Dividends on common stock                                                  |                                        |                                            | (306                       | )    |                        |    | (319 | )    |     |      | (319 | )   
|                                                     |                                                                            |                                        |                                            |                            |      |                        |    |      |     
|                                                     |                                                                            | Net cash used for financing activities |                                            |                            | (69  | )                      |    |      | (413 | )   |      |      | (447 | )    
|                                                     |                                                                            |                                        |                                            |                            |      |                        |    |      |     
|Net Increase (Decrease) in Cash and Cash
Equivalents |                                                                            |                                        | 191                                        |                            |      |                        | 20 |      |      |     | (1   | )   
|Cash and Cash Equivalents at Beginning of the
Period |                                                                            |                                        | 24                                         |                            |      |                        | 4  |      |      |     | 5    |     
|                                                     |                                                                            |                                        |                                            |                            |      |                        |    |      |     
|Cash and Cash Equivalents at End of the Period       |                                                                            | $                                      | 215                                        |                            |      | $                      | 24 |      |      | $   | 4    |     
|                                                     |                                                                            |                                        |                                            |                            |      |                        |    |      |     
|Supplementary Cash Flow Information                  |                                                                            |                                        |                                            |                            |      |                        |    |      |      |     |      |     
|                                                     | Interest paid (excluding interest capitalized)                             |                                        | $                                          | 277                        |      |                        | $  | 275  |      |     | $    | 284  |     
|                                                     | Income taxes paid                                                          |                                        | $                                          | 157                        |      |                        | $  | 235  |      |     | $    | 276  |     
|Noncash Financing Activities                         |                                                                            |                                        |                                            |                            |      |                        |    |      |      |     |      |     
|                                                     | Distribution of International Transmission
Company to parent               |                                        | $                                          | 327                        |      |                        | $  |     |      |     | $    |     |     

See Notes to Consolidated Financial Statements

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THE DETROIT EDISON COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY

|                                                             |  |              |         |   |        |   |       |        |  |         |          |   |  |               |       |   |      |   |       |       |             |   |     |   |  |   |       |  
|------------------------------------------------------------ |  | ------------ | ------- | - | ------ | - | ----- | ------ |  | ------- | -------- | - |  | ------------- | ----- | - | ---- | - | ----- | ----- | ----------- | - | --- | - |  | - | ----- | -
|                                                             |  |              |         |   |        |   |       |        |  | Premium |          |   |  |               |       |   |      |   |       |       | Accumulated |   |     |   |  |  
|                                                             |  | Common Stock |         |   | On     |   |       | Common |  |         |          |   |  |               | Other |   |      |   |       |      
|                                                             |  |              |         |   | Common |   |       | Stock  |  |         | Retained |   |  | Comprehensive |       |   |      |   |      
|                                                             |  | Shares       |         |   | Amount |   |       | Stock  |  |         | Expense  |   |  | Earnings      |       |   | Loss |   |       | Total |            
|                                                             |  |              |         |   |        |   |       |        |  |         |          |   |  |               |       |   |      |   |       |       |            
|(Dollars in Millions,
Shares in Thousands)                   |  |              |         |   |        |   |       |        |  |         |          |   |  |               |       |   |      |   |       |       |             |   |     |   |  |   |       |  
|Balance, December 31, 1998                                   |  |              | 145,120 |   |        | $ | 1,451 |        |  | $       | 548      |   |  | $             | (48   | ) |      | $ | 1,562 |       |             | $ |    |   |  | $ | 3,513 |  
|Net income                                                   |  |              |        |   |        |   |      |        |  |         |         |   |  |               |      |   |      |   | 434   |       |             |   |    |   |  |   | 434   |  
|Dividends declared on
common stock                           |  |              |        |   |        |   |      |        |  |         |         |   |  |               |      |   |      |   | (319  | )     |             |   |    |   |  |   | (319  | )
|                                                             |  |              |         |   |        |   |       |        |  |         |          |   |  |               |       |   |      |   |       |       |            
|Balance, December 31, 1999                                   |  |              | 145,120 |   |        |   | 1,451 |        |  |         | 548      |   |  |               | (48   | ) |      |   | 1,677 |       |             |   |    |   |  |   | 3,628 |  
|                                                             |  |              |         |   |        |   |       |        |  |         |          |   |  |               |       |   |      |   |       |       |            
|Net income                                                   |  |              |        |   |        |   |      |        |  |         |         |   |  |               |      |   |      |   | 411   |       |             |   |    |   |  |   | 411   |  
|Dividends declared on
common stock                           |  |              |        |   |        |   |      |        |  |         |         |   |  |               |      |   |      |   | (319  | )     |             |   |    |   |  |   | (319  | )
|Other                                                        |  |              |        |   |        |   |      |        |  |         |         |   |  |               |      |   |      |   | 3     |       |             |   |    |   |  |   | 3     |  
|                                                             |  |              |         |   |        |   |       |        |  |         |          |   |  |               |       |   |      |   |       |       |            
|Balance, December 31, 2000                                   |  |              | 145,120 |   |        |   | 1,451 |        |  |         | 548      |   |  |               | (48   | ) |      |   | 1,772 |       |             |   |    |   |  |   | 3,723 |  
|                                                             |  |              |         |   |        |   |       |        |  |         |          |   |  |               |       |   |      |   |       |       |            
|Net income                                                   |  |              |        |   |        |   |      |        |  |         |         |   |  |               |      |   |      |   | 233   |       |             |   |    |   |  |   | 233   |  
|Dividends declared on
common stock                           |  |              |        |   |        |   |      |        |  |         |         |   |  |               |      |   |      |   | (301  | )     |             |   |    |   |  |   | (301  | )
|Distribution of
International
Transmission Company
to Parent |  |              |        |   |        |   |      |        |  |         |         |   |  |               |      |   |      |   | (327  | )     |             |   |    |   |  |   | (327  | )
|Repurchase and
retirement
of common stock                    |  |              | (10,832 | ) |        |   | (108  | )      |  |         | (41      | ) |  |               | 4     |   |      |   | (701  | )     |             |   |    |   |  |   | (846  | )
|Net change in
unrealized losses
on derivatives,
net of tax   |  |              |        |   |        |   |      |        |  |         |         |   |  |               |      |   |      |   |      |       |             |   | (23 | ) |  |   | (23   | )
|Other                                                        |  |              |        |   |        |   |      |        |  |         |         |   |  |               |      |   |      |   | (1    | )     |             |   |    |   |  |   | (1    | )
|                                                             |  |              |         |   |        |   |       |        |  |         |          |   |  |               |       |   |      |   |       |       |            
|Balance, December 31, 2001                                   |  |              | 134,288 |   |        | $ | 1,343 |        |  | $       | 507      |   |  | $             | (44   | ) |      | $ | 675   |       |             | $ | (23 | ) |  | $ | 2,458 |  
|                                                             |  |              |         |   |        |   |       |        |  |         |          |   |  |               |       |   |      |   |       |       |            

Detroit Edison did not have other comprehensive income (loss) in 2000 and
1999. The following table displays comprehensive income (loss) for 2001:

|                                               |                                       |                                                                           |     |     |     |  
|---------------------------------------------- | ------------------------------------- | ------------------------------------------------------------------------- | --- | --- | --- | -
|(in Millions)                                  |                                       |                                                                           |     |    
|Net income                                     |                                       | $                                                                         | 233 |    
|                                               |                                       |                                                                           |    
|Other comprehensive income (loss), net of tax: |                                       |                                                                           |     |    
|                                               | Net unrealized losses on derivatives: |                                                                           |     |     |    
|                                               |                                       | Cumulative effect of a change in accounting principle, net of taxes of $6 |     |     | 13  |  
|                                               |                                       | Losses arising during the year, net of taxes of $30                       |     |     | (55 | )
|                                               |                                       | Amounts reclassified to earnings, net of taxes of $10                     |     |     | 19  |  
|                                               |                                       |                                                                           |    
|                                               | Total other comprehensive loss        |                                                                           |     | (23 | )  
|                                               |                                       |                                                                           |    
|Comprehensive income                           |                                       | $                                                                         | 210 |    
|                                               |                                       |                                                                           |    

See Notes to Consolidated Financial Statements

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THE DETROIT EDISON COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  SIGNIFICANT ACCOUNTING POLICIES

Corporate Structure

Detroit Edison is a Michigan public utility engaged in the generation,
purchase, distribution and sale of electric energy to 2.1 million customers in
a 7,600-square-mile Southeastern Michigan service area and is regulated by the
Michigan Public Service Commission (MPSC) and the Federal Energy Regulatory
Commission (FERC).

On May 31, 2001, Detroit Edisons parent company, DTE Energy Company (DTE
Energy), completed the acquisition of MCN Energy Group Inc. (MCN Energy), now
DTE Enterprises Inc. (Enterprises).

Principles of Consolidation

Detroit Edison consolidates all majority-owned subsidiaries. Detroit Edison
accounts for non-majority owned investments under the equity method when
Detroit Edison is able to influence the financial operating policies of the
investee. For all other investments, the Detroit Edison applies the cost
method.

Basis of Presentation

The accompanying consolidated financial statements were prepared in conformity
with accounting principles generally accepted in the United States of America.
In connection with their preparation, management makes estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses, and the disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.

Detroit Edison reclassified certain prior year balances to conform to the 2001
presentation.

Revenues

Revenues from deliveries of electricity are recognized as services are
provided. Detroit Edison accrues revenues for electric and steam heating
services provided but unbilled at month-end. Pursuant to a June 2000 MPSC
order, Detroit Edisons rates are frozen for all classes of customers through
2003.

Comprehensive Income

Detroit Edison complies with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 130, Reporting Comprehensive Income, which
establishes standards for the reporting and display of comprehensive income.
SFAS No. 130 defines comprehensive income as the change
in common shareholders equity during a period from transactions and events
from non-owner sources, including net income.

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Cash Equivalents and Restricted Cash

For purposes of the Consolidated Statement of Cash Flows, Detroit Edison
considers investments purchased with a maturity of three months or less to be
cash equivalents. Cash required to be maintained for securitization bond debt
service requirements is classified as restricted cash.

Inventories

Materials and supplies, and fuel inventory are valued at average cost.

Property, Retirement and Maintenance, and Depreciation

A summary of property by classification at December 31 is as follows:

|                                  |                       |      |        |        |      |   |        |        |  
|--------------------------------- | --------------------- | ---- | ------ | ------ | ---- | - | ------ | ------ | -
|(in Millions)                     |                       | 2001 |        |        | 2000 |  
|                                  |                       |      |        |        |      |  
|Property, Plant and Equipment     |                       |      |        |        |      |   |        |       
|                                  | Distribution          |      | $      | 5,407  |      |   | $      | 5,163  |  
|                                  | Generation            |      |        | 6,165  |      |   |        | 6,423  |  
|                                  | Transmission          |      |        |       |      |   |        | 772    |  
|                                  |                       |      |        |        |      |  
|Total                             |                       |      | 11,572 |        |      |   | 12,358 |       
|                                  |                       |      |        |        |      |  
|Less accumulated depreciation     |                       |      |        |        |      |   |        |       
|                                  | Electric Distribution |      |        | (2,062 | )    |   |        | (1,924 | )
|                                  | Electric Generation   |      |        | (2,948 | )    |   |        | (3,346 | )
|                                  | Electric Transmission |      |        |       |      |   |        | (389   | )
|                                  |                       |      |        |        |      |  
|Total                             |                       |      | (5,010 | )      |      |   | (5,659 | )     
|                                  |                       |      |        |        |      |  
|Net Property, Plant and Equipment |                       | $    | 6,562  |        |      | $ | 6,699  |       
|                                  |                       |      |        |        |      |  

Property is stated at cost and includes construction-related labor and
materials. Expenditures for maintenance and repairs are charged to expense as
incurred, except for Fermi 2. The cost of properties retired plus removal
costs, less salvage is charged to accumulated depreciation.

Detroit Edison bases depreciation provisions for utility property on
straight-line and units of production rates approved by the MPSC. The
composite depreciation rate was 3.4% in 2001 and 2000, and 3.3% in 1999.

Detroit Edison accrues in advance the incremental costs, including maintenance
activities, that it anticipates incurring during the next scheduled Fermi 2
refueling outage. Detroit Edison began accruing approximately $21 million on a
pro-rata basis over an 18-month period beginning in November 2001 for the next
scheduled refueling outage in the spring of 2003.

Transmission Business

Effective January 2001, Detroit Edison transferred its transmission assets,
with a book value of approximately $390 million, to a wholly owned subsidiary,
International Transmission Company
(ITC). On May 31, 2001, Detroit Edison distributed 100 percent of the shares
of ITC to DTE Energy.

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Long-Lived Assets

Long-lived assets held and used by Detroit Edison are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. If the carrying amount of the asset
exceeds the expected future cash flows expected to be generated by the asset,
an impairment loss is recognized, and the asset is written down to its
estimated fair value. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell.

Software Costs

Detroit Edison capitalizes the cost of software developed for internal use.
These costs are amortized on a straight-line basis over a maximum period of
five years, beginning with the projects completion.

Deferred Debt Costs

The costs related to the issuance of long-term debt are amortized over the life
of each issue. In accordance with MPSC regulations, the unamortized discount,
premium and expense related to debt redeemed with a refinancing are amortized
over the life of the replacement issue. Discount, premium and expense on early
redemptions of debt are charged to earnings if they relate to the electric
generation business.

Recently Issued Accounting Pronouncements

Derivatives Effective January 1, 2001, Detroit Edison adopted SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, as amended.
SFAS No. 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133 requires that companies
recognize all derivatives as either assets or liabilities measured at fair
value on the statement of financial position. SFAS No. 133 provides an
exception for certain contracts that qualify as normal purchases and sales.
To qualify for this exception, certain criteria must be met, including that it
must be probable that the contract will result in physical delivery.

See Note 11  Financial and Other Derivative Instruments herein for additional information.

Asset Retirement Obligations In June 2001, the FASB issued SFAS No. 143,
Accounting for Asset Retirement Obligations. This statement requires that
the fair value of an asset retirement obligation be recognized in the period in
which it is incurred. The associated asset retirement costs would be
capitalized as part of the carrying amount of the long-lived asset. It would
apply to legal obligations associated with the retirement of long-lived assets
that result from the acquisition, construction, development and (or) the normal
operation of a long-lived asset. This statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002. Detroit
Edison has not yet determined the impact of this statement on the consolidated
financial statements.

Long-Lived Assets In August 2001, the FASB issued SFAS No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets. This statement
supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of. This statement establishes a
single accounting model for long-lived assets to be disposed of
by sale, whether previously held and used, or newly acquired. This statement is
effective for financial statements issued for fiscal years beginning after
December 15, 2001. Detroit Edison adopted this statement on January 1, 2002,
with no impact on the consolidated financial statements.

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Other

For significant accounting policies regarding regulatory matters, see Note 3;
income taxes, see Note 6; financial and other derivative instruments, see Note
11; and retirement benefits and trusteed assets, see Note 13.

NOTE 2  MERGER AND RESTRUCTURING CHARGES

On May 31, 2001, Detroit Edisons parent company, DTE Energy, completed the
acquisition of MCN Energy. Detroit Edison incurred merger-related charges and
restructuring charges associated with the acquisition. The merger-related
charges of $20 million ($13 million after tax) in 2001 and $25 million ($16
million after tax) in 2000, consisted primarily of system integration,
relocation, legal, accounting and consulting costs. Restructuring charges of
$166 million ($108 million after tax) in 2001, were primarily associated with a
work force reduction plan. The plan included early retirement incentives along
with voluntary separation arrangements for 890 employees, primarily in
overlapping corporate support functions. The merger and restructuring costs
had the effect of decreasing Detroit Edisons earnings by $186 million ($121
million after tax) and $25 million ($16 million after tax) in 2001 and 2000,
respectively. Approximately $39 million of the merger and restructuring
charges have been paid as of December 31, 2001, including approximately $16
million of benefits, and it is anticipated that the remaining benefits of $147
million have been or will be paid from retirement plans.

NOTE 3  REGULATORY MATTERS

Regulation

Detroit Edison is subject to the regulatory jurisdiction of the MPSC, which
issues orders pertaining to rates, recovery of certain costs, including the
costs of generating facilities and regulatory assets, conditions of service,
accounting and operating-related matters. Detroit Edison is regulated by the
FERC with respect to financing authorization.

Detroit Edisons electric distribution operations meet the criteria of SFAS No.
71, Accounting for the Effects of Certain Types of Regulation. This
accounting standard recognizes the cost-based ratemaking process, which results
in differences in the application of generally accepted accounting principles
between regulated and non-regulated businesses. SFAS No. 71 requires the
recording of regulatory assets and liabilities for certain transactions that
would have been treated as revenue and expense in non-regulated businesses.
Regulatory assets represent costs that will be recovered from customers through
the ratemaking process. Regulatory liabilities represent benefits that will be
refunded to customers through reduced rates. Continued applicability of SFAS
No. 71 requires that rates be designed to recover specific costs of providing
regulated services and be charged to and collected from customers. Management
believes that currently available facts support the continued application of
SFAS No. 71 to these businesses. Future regulatory changes or changes in the
competitive environment could result in Detroit Edison discontinuing the
application of SFAS No. 71 for some or all of its businesses and require the
write-off of the portion of any regulatory asset or liability that was no
longer probable of recovery through rates or refund. If Detroit Edison
(excluding its subsidiary, The Detroit Edison Securitization Funding LLC) were
to have discontinued the application of SFAS No. 71 for all of its operations
as of December 31, 2001, it would have had an extraordinary noncash charge to
income of approximately $58 million.

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Regulatory Assets and Liabilities

The Company recorded the following regulatory assets and liabilities at
December 31:

|              |                                                                   |  |                   |       |      |       |   |       |   |       | 
|------------- | ----------------------------------------------------------------- |  | ----------------- | ----- | ---- | ----- | - | ----- | - | ----- | 
|              |                                                                   |  |                   |       | 2001 |       |   | 2000  |  
|              |                                                                   |  |                   |       |      |       |   |       |  
|(in Millions) |                                                                   |  |                   |       |      |       |   |      
|Assets        |                                                                   |  |                   |       |      |       |   |      
|              | Unamortized nuclear costs                                         |  | $                 |      |      |       | $ | 2,328 |  
|              | Securitized regulatory assets                                     |  |                   | 1,692 |      |       |   |      |  
|              | Recoverable income taxes related to securitized
regulatory assets |  |                   | 928   |      |       |   |      |  
|              | Other recoverable income taxes                                    |  |                   | 120   |      |       |   | 196   |  
|              | Unamortized loss on reacquired debt                               |  |                   | 20    |      |       |   | 82    |  
|              | Electric Choice implementation costs                              |  |                   | 53    |      |       |   | 57    |  
|              | Other                                                             |  |                   | 17    |      |       |   | 25    |  
|              |                                                                   |  |                   |       |      |      
|              |                                                                   |  | Total Assets      |       | $    | 2,830 |   |       | $ | 2,688 | 
|              |                                                                   |  |                   |       |      |      
|Liabilities   |                                                                   |  |                   |       |      |       |   |      
|              | Refundable income taxes                                           |  | $                 |      |      |       |   | 2     |  
|              | Residual savings                                                  |  |                   | 43    |      |       |   | 1     |  
|              |                                                                   |  |                   |       |      |      
|              |                                                                   |  | Total Liabilities |       | $    | 43    |   |       | $ | 3     | 
|              |                                                                   |  |                   |       |      |      

Electric Industry Restructuring

MPSC orders issued in 1997 and 1998 altered the regulatory process in Michigan
and provided a plan for transition to competition for the generation business
of Detroit Edison. Therefore, effective December 31, 1998, Detroit Edisons
generation business no longer met the criteria of SFAS No. 71. Also, at that
time, the 1,150 megawatt (MW) Fermi 2 nuclear generating plant was determined
to be impaired. Since a December 1998 MPSC order provided for full recovery of
Fermi 2 through the regulated transmission and distribution businesses, a
regulatory asset was established representing the net book value of Fermi 2 and
related assets.

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

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

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

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In several orders issued in June 2000, the MPSC determined that adjusting rates
for changes in fuel and purchased power expenses through continuance of the
power supply cost recovery (PSCR) clause would be inconsistent with the rate
freeze. Detroit Edison was not permitted to collect the 1998 PSCR
under-recovery of $9 million, plus accrued interest of $3 million. Also,
Detroit Edison was not required to refund approximately $55 million of
liabilities for over-recoveries of PSCR expenses for 1999 and 2000, and
disallowances under the Fermi 2 performance standard mechanism. In January
2002, the Michigan Court of Appeals rejected appeals filed by parties opposing
the MPSCs actions in this proceeding.

In October 2000, the MPSC initiated a case to determine the methodology of
calculating net stranded costs as required by PA 141. As a result of an MPSC
order in December 2001, Detroit Edison would recover the net stranded costs
associated with its electric generation operations. Specifically, there would
be an annual filing with the MPSC comparing actual revenues from generation
services to the revenue requirements, including an allowance for the cost of
capital, to recover the costs of generation operations. The MPSC, in its
orders, determined that Detroit Edison had no stranded costs using 2000 data,
established a zero 2002 transition charge and deferred the issues of refining
the net stranded costs methodology and the recalculating of net stranded costs
to 2002. The MPSC also determined that Detroit Edison should provide a full
and offsetting credit for the securitization and tax charges applied to
Electric Choice bills in 2002. In addition, the MPSC ordered an additional
credit on Electric Choice bills equivalent to the 5% rate reduction benefiting
full service customers funded by savings derived from securitization. The
provisions of this order will likely encourage additional customer
participation in the Electric Choice program and result in the loss of margins
from providing generation services. Detroit Edison has asked for rehearing and
clarification on certain aspects of the order and has requested that the MPSC
initiate an expedited proceeding to implement those clarifications and
interpretations.

In June 2001, pursuant to PA 141, Detroit Edison filed with the MPSC an
application outlining a proposal to unbundle its existing rates. Detroit
Edisons initial proposal did not unbundle all tariffs but instead included a
bill message stating the amount of distribution charges a customer would incur
under Electric Choice. A December 2001 MPSC order found that the June 2001
filing did not meet the requirements of PA 141 and ordered Detroit Edison to
make a new filing. In February 2002, Detroit Edison made a filing that
unbundled existing rates using updated cost data. Detroit Edison is unable to
determine the timing or outcome of this proceeding.

In another December 2001 order, the MPSC finalized the prices, terms and
conditions contained in the Retail Access Service Tariff (RAST) that will
likely encourage additional customer participation in the Electric Choice
program. The implementation of the order will result in increased expenses
associated with implementing Electric Choice, including meter installation,
meter reading and computer system enhancements. Detroit Edison has asked for
rehearing and clarification on certain aspects of the order.

Securitization In an order issued in November 2000 and clarified in January
2001, the MPSC approved the issuance of securitization bonds to recover
qualified costs that included the unamortized investment in Fermi 2, costs of
certain other regulatory assets, Electric Choice implementation costs, costs of
issuing securitization bonds, and the costs of retiring securities with the
proceeds of securitization.

Detroit Edison formed The Detroit Edison Securitization Funding LLC
(Securitization LLC), a wholly owned subsidiary, for the purpose of
securitizing its qualified costs. In March 2001, the Securitization LLC issued
$1.75 billion of Securitization Bonds, and Detroit Edison sold $1.75 billion of
qualified costs to the Securitization LLC. The Securitization Bonds mature
over a period of up to 15 years and have an average interest rate of 6.1%.
Detroit Edison used the proceeds to retire debt and equity in approximately
equal amounts. DTE Energy likewise retired approximately 50% debt and 50%
equity with the proceeds received
as the sole shareholder of Detroit Edison. Detroit Edison implemented a
non-bypassable surcharge on its customer bills, effective March 26, 2001, for
the purpose of collecting amounts sufficient to provide for the payment of
interest and principal and the payment of income tax on the additional revenue
from the


26Table of Contentssurcharge. As a result of securitization, Detroit Edison established a
regulatory asset for securitized costs including costs that had previously been
recorded in other regulatory asset accounts.The Securitization LLC is independent of Detroit Edison, as is its ownership of
the securitization property. Due to principles of consolidation, qualified
costs sold by Detroit Edison to the Securitization LLC and the $1.75 billion of
securitization bonds appear on the Companys consolidated statement of
financial position. The Company makes no claim to these assets. Ownership of
such assets has vested in the Securitization LLC and been assigned to the
trustee for the Securitization Bonds. Funds collected by Detroit Edison,
acting in the capacity of a servicer for the Securitization LLC, are remitted
to the trustee for the Securitization Bonds. Neither the securitization
property nor funds collected from Detroit Edisons customers for the payment of
costs related to the Securitization LLC and Securitization Bonds are available
to Detroit Edisons creditors.OtherIn accordance with a November 1997 MPSC order, Detroit Edison reduced rates by
$53 million annually to reflect the scheduled reduction in the revenue
requirement for Fermi 2. The $53 million reduction was effective in January
1999. In addition, the November 1997 MPSC order authorized the deferral of $30
million of storm damage costs and amortization and recovery of the costs over a
24-month period commencing January 1998. After various legal appeals, the
Michigan Court of Appeals remanded back to the MPSC for hearing the November
1997 order. In December 2000, the MPSC issued an order reopening the case for
hearing. The parties in the case have agreed to a stipulation of fact and
waiver of hearing. In February 2002, an MPSC administrative law judge issued a
proposal for decision that supports Detroit Edisons actions in this matter. A
final order is expected in 2002.Detroit Edison is unable to predict the outcome of the regulatory matters
discussed herein. Resolution of these matters is dependent upon future MPSC
orders, which may impact the financial position and results of operations of
Detroit Edison.NOTE 4  FERMI 2GeneralFermi 2, a nuclear generating unit, began commercial operation in January 1988.
The Nuclear Regulatory Commission (NRC) maintains jurisdiction over the
licensing and operation of Fermi 2. Fermi 2 has a design electrical rating
(net) of 1,150 MW. This unit represents approximately 10% of Detroit Edisons
summer net rated capability. The net book balance of the Fermi 2 plant was
written off at December 31, 1998, and an equivalent regulatory asset was
established. In 2001, the Fermi 2 regulatory asset was securitized. See Note 3
- Regulatory Matters.Ownership of an operating nuclear generating unit subjects Detroit Edison to
significant additional risks. Fermi 2 is regulated by a number of different
governmental agencies concerned with public health, safety and environmental
protection.InsuranceDetroit Edison insures Fermi 2 with property damage insurance provided by
Nuclear Electric Insurance Limited (NEIL). The NEIL insurance policies provide
$500 million of primary coverage (with a $1 million deductible) and $2.25
billion of excess coverage for stabilization, decontamination and debris
removal costs, repair and/or replacement of property and decommissioning. The
combined limits provide total property damage insurance of $2.75 billion.27Table of ContentsDetroit Edison maintains an insurance policy with NEIL providing for extra
expenses, including certain replacement power costs necessitated by Fermi 2s
unavailability due to an insured event. These policies have a 12-week waiting
period and provide for three years of coverage.Terrorism coverage under the NEIL policies has been modified for multiple
terrorism losses occurring within one year after the first loss from terrorism.
NEIL would make available to all insured entities up to $3.2 billion and any
amounts it recovers from reinsurance, government indemnity or other sources for
such losses.Under the NEIL policies, Detroit Edison could be liable for maximum assessments
of up to approximately $27 million per event if the loss associated with any
one event should exceed the accumulated funds available to NEIL.As required by federal law, Detroit Edison maintains $200 million of public
liability insurance for a nuclear incident. For liabilities arising out of
terrorist acts, the policy is now subject to one industry aggregate limit of
$200 million. Further, under the Price-Anderson Amendments Act of 1988 (Act),
deferred premium charges up to $84 million could be levied against each
licensed nuclear facility, but not more than $10 million per year per facility.
Thus, deferred premium charges could be levied against all owners of licensed
nuclear facilities in the event of a nuclear incident at any of these
facilities. The Act will expire on August 1, 2002. It is unknown whether this
statute will be renewed or modified.DecommissioningThe NRC has jurisdiction over the decommissioning of nuclear power plants and
requires decommissioning funding based upon a formula. The MPSC and FERC
regulate the recovery of costs of decommissioning nuclear power plants and both
require the use of external trust funds to finance the decommissioning of Fermi
2. Rates approved by the MPSC provide for the decommissioning costs of Fermi
2. Detroit Edison is continuing to fund FERC jurisdictional amounts for
decommissioning even though explicit provisions are not included in FERC rates.
The Company believes that the MPSC and FERC collections will be adequate to
fund the estimated cost of decommissioning using the NRC formula.Detroit Edison has established external trust funds to hold decommissioning and
low-level radioactive waste disposal funds collected from customers. During
2001, 2000 and 1999, Detroit Edison collected $38 million in each year from
customers for decommissioning and low-level radioactive waste disposal. Such
amounts were recorded as components of depreciation, depletion and amortization
expense, and in other liabilities. Net unrealized losses of $23 million and
$18 million in 2001 and 2000, respectively, were recorded as adjustments to the
nuclear decommissioning trust funds and other liabilities. At December 31,
2001, investments in the external trust funds consisted of approximately 50.7%
in publicly traded equity securities, 46.1% in fixed debt instruments and 3.2%
in cash equivalents. Investments in debt and equity securities held within the
external trust funds are classified as available for sale.At December 31, 2001 and 2000, Detroit Edison had reserves of $373 million and
$351 million for the future decommissioning of Fermi 2, and $29 million and $32
million for the decommissioning of Fermi 1, a nuclear unit that has been shut
down since 1972, respectively. Detroit Edison also had a reserve of $15 million
for low-level radioactive waste disposal costs at December 31, 2001 and 2000.
These reserves are included in other liabilities, with an equivalent amount
deposited in external trust funds. It is estimated that the cost of
decommissioning Fermi 2, when its license expires in 2025, will be $913 million
in 2001 dollars and $3.5 billion in 2025 dollars, using a 6% inflation rate.
In 2001, Detroit Edison began the decommissioning of Fermi 1, with the goal of
removing the radioactive material and terminating the Fermi 1 license. The
decommissioning is expected to be completed by 2007.28Table of ContentsNuclear Fuel Disposal CostsIn accordance with the Federal Nuclear Waste Policy Act of 1982, Detroit Edison
has a contract with the U.S. Department of Energy (DOE) for the future storage
and disposal of spent nuclear fuel from Fermi 2. Detroit Edison is obligated
to pay the DOE a fee of one mill per net kilowatthour of Fermi 2 electricity
generated and sold. The fee is a component of nuclear fuel expense. Delays
have occurred in the DOEs program for the acceptance and disposal of spent
nuclear fuel at a permanent repository. Until the DOE is able to fulfill its
obligation under the contract, Detroit Edison is responsible for the spent
nuclear fuel storage. Detroit Edison estimates that existing storage capacity
will be sufficient until 2007.NOTE 5  JOINTLY OWNED UTILITY PLANTDetroit Edisons portion of jointly owned utility plant at December 31, 2001 is
as follows:

|                                    |  |             |           |  |                |           |      |  
|----------------------------------- |  | ----------- | --------- |  | -------------- | --------- | ---- | -
|                                    |  |             |           |  |                | Ludington |     
|                                    |  | Belle River |           |  | Pumped Storage |          
|                                    |  |             |           |  |                |          
|In-service date                     |  |             | 1984-1985 |  |                |           | 1973 |  
|Ownership interest                  |  |             | *         |  |                |           | 49   | %
|Investment (millions)               |  | $           | 1,031     |  |                | $         | 194  |  
|Accumulated depreciation (millions) |  | $           | 461       |  |                | $         | 102  |  



|* |  | Detroit Edisons ownership interest is 62.78% in Unit No. 1, 81.39% of
the portion of the facilities applicable to Belle River used jointly by
the Belle River and St. Clair Power Plants, 49.59% in certain transmission
lines and, at December 31, 2001, 75% in facilities used in common with
Unit No. 2.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Belle River

The Michigan Public Power Agency (MPPA) has an ownership interest in Belle
River Unit No. 1 and certain other related facilities. MPPA is entitled to
18.61% of the capacity and energy of the entire plant (1,026 MW) and is
responsible for the same percentage of the plants operation and maintenance
expenses and capital improvements.

Ludington Pumped Storage

Operation, maintenance and other expenses of the Ludington Pumped Storage Plant
(1,872 MW) are shared by Detroit Edison and Consumers Energy Company in
proportion to their respective ownership interests in the plant.

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NOTE 6  INCOME TAXES

Detroit Edison is part of the consolidated federal income tax return of DTE
Energy. The federal income tax expense for Detroit Edison is determined on an
individual company basis with no allocation of tax benefits or expenses from
other affiliates of DTE Energy.

Total income tax expense as a percent of income before tax varied from the
statutory federal income tax rate for the following reasons:

|                                 |  |      |      |   |      |  |      |      |  |  |      |  
|-------------------------------- |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                 |  | 2001 |      |   | 2000 |  |      | 1999 | 
|                                 |  |      |      |   |      |  |      |      | 
|Statutory income tax rate        |  |      | 35.0 | % |      |  | 35.0 | %    |  |  | 35.0 | %
|Removal costs                    |  |      |     |   |      |  | (4.1 | )    |  |  | (1.9 | )
|Investment tax credit            |  |      | (2.1 | ) |      |  | (1.8 | )    |  |  | (1.6 | )
|Depreciation                     |  |      | 0.9  |   |      |  | 1.9  |      |  |  | 1.2  |  
|Research expenditures tax credit |  |      | (2.1 | ) |      |  |     |      |  |  |     |  
|ESOP                             |  |      | (0.8 | ) |      |  |     |      |  |  |     |  
|Other-net                        |  |      | (4.6 | ) |      |  | (1.5 | )    |  |  |     |  
|                                 |  |      |      |   |      |  |      |      | 
|Effective income tax rate        |  |      | 26.3 | % |      |  | 29.5 | %    |  |  | 32.7 | %
|                                 |  |      |      |   |      |  |      |      | 

Components of income tax expense were as follows:

|                                             |       |   |      |    |  |      |     |     |      |   |     |     | 
|-------------------------------------------- | ----- | - | ---- | -- |  | ---- | --- | --- | ---- | - | --- | --- | 
|                                             |       |   | 2001 |    |  | 2000 |     |     | 1999 |  
|                                             |       |   |      |    |  |      |     |     |      |  
|(in Millions)                                |       |   |      |    |  |      |     |     |      |   |     |    
|Current federal and other income tax expense |       | $ | 199  |    |  | $    | 245 |     |      | $ | 282 |    
|Deferred federal income tax benefit          |       |   | (108 | )  |  |      | (62 | )   |      |   | (60 | )  
|Investment tax credit                        |       |   | (7   | )  |  |      | (11 | )   |      |   | (11 | )  
|                                             |       |   |      |    |  |      |     |     |     
|                                             | Total |   | $    | 84 |  |      | $   | 172 |      |   | $   | 211 | 
|                                             |       |   |      |    |  |      |     |     |     

Deferred tax assets and liabilities are recognized for the estimated future tax
effect of temporary differences between the tax basis of assets or liabilities
and the reported amounts in the financial statements. Deferred tax assets and
liabilities are classified as current or noncurrent according to the
classification of the related assets or liabilities. Deferred tax assets and
liabilities not related to assets or liabilities are classified according to
the expected reversal date of the temporary differences.

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Deferred income tax assets (liabilities) were comprised of the following at
December 31:

|                                     |  |      |        |   |      |   |        |  
|------------------------------------ |  | ---- | ------ | - | ---- | - | ------ | -
|                                     |  | 2001 |        |   | 2000 |  
|                                     |  |      |        |   |      |  
|(in Millions)                        |  |      |        |   |      |   |        |  
|Property                             |  | $    | (1,178 | ) |      | $ | (1,199 | )
|Securitized regulatory assets        |  |      | (909   | ) |      |   |       |  
|Unamortized nuclear costs            |  |      |       |   |      |   | (822   | )
|Property taxes                       |  |      | (73    | ) |      |   | (68    | )
|Investment tax credit                |  |      | 90     |   |      |   | 90     |  
|Contributions in aid of construction |  |      | 102    |   |      |   | 90     |  
|Other                                |  |      | 191    |   |      |   | 38     |  
|                                     |  |      |        |   |      |  
|                                     |  | $    | (1,777 | ) |      | $ | (1,871 | )
|                                     |  |      |        |   |      |  
|Deferred income tax liabilities      |  | $    | (2,275 | ) |      | $ | (2,293 | )
|Deferred income tax assets           |  |      | 498    |   |      |   | 422    |  
|                                     |  |      |        |   |      |  
|                                     |  | $    | (1,777 | ) |      | $ | (1,871 | )
|                                     |  |      |        |   |      |  

NOTE 7  PREFERRED AND PREFERENCE SECURITIES

At December 31, 2001, Detroit Edison had 6.75 million shares of preferred stock
with a par value of $100 per share and 30 million shares of preference stock
with a par value of $1 per share authorized, with no shares issued.

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NOTE 8  LONG-TERM DEBT

Detroit Edisons long-term debt outstanding and weighted average interest
rates of debt outstanding at December 31 were:

|                                         |           |                             |                       |   |       |      |       |   |       |     |  | 
|---------------------------------------- | --------- | --------------------------- | --------------------- | - | ----- | ---- | ----- | - | ----- | --- |  | 
|                                         |           |                             |                       |   |       | 2001 |       |   | 2000  |    
|                                         |           |                             |                       |   |       |      |       |   |       |    
|(in Millions)                            |           |                             |                       |   |       |      |       |  
|Mortgage Bonds                           |           |                             |                       |   |       |      |       |  
|                                         |           | 7.6% due 2001 to 2023       |                       | $ | 748   |      |       | $ | 1,564 |    
|Remarketed Notes                         |           |                             |                       |   |       |      |       |  
|                                         | Secured   |                             |                       |   |       |      |       |   |      
|                                         |           | 5.9% due 2034 to 2038       |                       |   | 100   |      |       |   | 410   |    
|Tax Exempt Revenue Bonds                 |           |                             |                       |   |       |      |       |  
|                                         | Secured   |                             |                       |   |       |      |       |   |      
|                                         |           | Installment Sales Contracts |                       |   |       |      |       |   |       |    
|                                         |           |                             | 6.6% due 2004 to 2024 |   |       | 125  |       |   |       | 125 | 
|                                         |           | Loan Agreements             |                       |   |       |      |       |   |       |    
|                                         |           |                             | 5.8% due 2008 to 2030 |   |       | 882  |       |   |       | 882 | 
|                                         | Unsecured |                             |                       |   |       |      |       |   |      
|                                         |           | Installment Sales Contracts |                       |   |       |      |       |   |       |    
|                                         |           |                             | 6.4% due 2004         |   |       | 24   |       |   |       | 24  | 
|                                         |           | Loan Agreements             |                       |   |       |      |       |   |       |    
|                                         |           |                             | 4.8% due 2024 to 2030 |   |       | 113  |       |   |       | 113 | 
|Senior Notes                             |           |                             |                       |   |       |      |       |  
|                                         | Secured   |                             |                       |   |       |      |       |   |      
|                                         |           |                             | 5.8% due 2005 to 2010 |   |       | 700  |       |   |       |    | 
|Quarterly Income Debt Securities (QUIDS) |           |                             |                       |   |       |      |       |  
|                                         |           | 7.5% due 2026 to 2028       |                       |   | 385   |      |       |   | 385   |    
|Other Long-Term Debt                     |           |                             | 90                    |   |       |      |      |  
|                                         |           |                             |                       |   |       |     
|                                         |           |                             | 3,167                 |   |       |      | 3,503 |  
|Less amount due within one year          |           |                             | (129                  | ) |       |      | (159  | )
|                                         |           |                             |                       |   |       |     
|                                         |           | $                           | 3,038                 |   |       | $    | 3,344 |  
|                                         |           |                             |                       |   |       |     
|Securitization Bonds                     |           |                             |                       |   |       |      |       |  
|                                         |           | 6.1% due 2002 to 2016       |                       | $ | 1,746 |      |       | $ |      |    
|Less amount due within one year          |           |                             | (73                   | ) |       |      |      |  
|                                         |           |                             |                       |   |       |     
|                                         |           | $                           | 1,673                 |   |       | $    |      |  
|                                         |           |                             |                       |   |       |     

In the years 2002 - 2006, Detroit Edisons long-term debt maturities are $202
million, $256 million, $138 million, $430 million and $126 million,
respectively.

Substantially all of the property of Detroit Edison is pledged as security for
the payment of outstanding mortgage bonds and other secured debt.

Each series of QUIDS provides that interest will be paid quarterly. However,
Detroit Edison has the right to extend the interest payment period on the QUIDS
for up to 20 consecutive interest payment periods. Interest would continue to
accrue during the deferral period. If this right is exercised, Detroit Edison
may not declare or pay dividends on, or redeem, purchase or acquire, any of its
capital stock during the deferral period.

At December 31, 2001, $100 million of notes were subject to periodic
remarketings. Remarketing agents remarket these securities at the lowest
interest rate necessary to produce a par bid. In the event that a remarketing
fails, Standby Note Purchase Agreements and/or Letters of Credit are in place
for a portion of the notes that provide that banks will purchase the
securities and, after the conclusion of all necessary

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proceedings, remarket the bonds. In the event the banks obligations under the Standby Note
Purchase Agreements and/or Letters of Credit are not honored, then the Company
would be required to purchase any securities subject to a failed remarketing.

Detroit Edison formed the Securitization LLC, a wholly owned subsidiary, for
the purpose of securitizing its stranded costs. In March 2001, the
Securitization LLC issued $1.75 billion of Securitization Bonds, Series 2001-1,
and Detroit Edison sold $1.75 billion of qualified costs to the Securitization
LLC. During the year ended December 31, 2001, Detroit Edison used proceeds from
securitization along with other refinancings to redeem $1.3 billion in debt, of
which $1.1 billion represented unscheduled redemptions.

During 2001, Detroit Edison issued $200 million of 5.05% senior secured notes
due 2005, and $500 million of 6.125% senior secured notes due 2010. Interest
is payable on a semi-annual basis beginning April 1, 2002. Detroit Edison also
issued $139.9 million of 5.45% tax-exempt bonds due 2029. Interest is payable
on a semi-annual basis beginning March 1, 2002.

During 2001, Detroit Edison entered into a financing arrangement for certain
equipment with a value of approximately $90 million. The arrangement has an
implicit interest rate of 7.6% with a term of approximately nine years.

NOTE 9  SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

During 2001, Detroit Edison entered into a bank facility arrangement used to
support commercial paper in the amount of $300 million. Commercial paper is
usually issued in lieu of an equivalent amount of borrowings under these lines
of credit. Detroit Edison had no amounts outstanding under this facility at
December 31, 2001. At December 31, 2000, $45 million of commercial paper was
outstanding under a prior facility with a weighted average interest of 6.6%.

Detroit Edison also has a $200 million short-term financing agreement secured
by its customer accounts receivable and unbilled revenues portfolio under which
there were no outstanding amounts at December 31, 2001. There was $200 million
outstanding at December 31, 2000, with a weighted average interest rate of
6.8%.

NOTE 10  CAPITAL AND OPERATING LEASES

Lessee Detroit Edison leases various assets under capital and operating
leases including lake vessels, locomotives and coal cars, computers, vehicles
and other equipment. The lease arrangements expire at various dates through
2016, with renewal options extending beyond that date.

In July 2001, Detroit Edison terminated its nuclear fuel financing arrangement
and purchased the leased nuclear fuel for $79 million.

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Future minimum lease payments under non-cancelable leases at December 31, 2001
were:

|                                            |  |         |     |   |           |   |    | 
|------------------------------------------- |  | ------- | --- | - | --------- | - | -- | 
|                                            |  | Capital |     |   | Operating |  
|                                            |  | Leases  |     |   | Leases    |  
|                                            |  |         |     |   |           |  
|(in Millions)                               |  |         |     |   |           |   |    | 
|2002                                        |  | $       | 20  |   |           | $ | 9  | 
|2003                                        |  |         | 15  |   |           |   | 9  | 
|2004                                        |  |         | 11  |   |           |   | 8  | 
|2005                                        |  |         | 11  |   |           |   | 8  | 
|2006                                        |  |         | 13  |   |           |   | 8  | 
|2007 and thereafter                         |  |         | 74  |   |           |   | 19 | 
|                                            |  |         |     |   |           |  
|Total minimum lease payments                |  |         | 144 |   |           | $ | 61 | 
|                                            |  |         |     |   |           |   |   
|Less imputed interest                       |  |         | (44 | ) |           |   |    | 
|                                            |  |         |     |   |           |   |   
|Present value of net minimum lease payments |  |         | 100 |   |           |   |    | 
|Less current portion                        |  |         | (13 | ) |           |   |    | 
|                                            |  |         |     |   |           |   |   
|Noncurrent portion                          |  | $       | 87  |   |           |   |    | 
|                                            |  |         |     |   |           |   |   

Rental expenses for operating leases were approximately $9 million, $9 million
and $4 million for 2001, 2000 and 1999, respectively.

NOTE 11  FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133, as amended, establishes
accounting and reporting standards for derivative instruments and for hedging
activities. It requires that all derivative instruments be recognized as
either assets or liabilities, measured at fair value. The accounting for
changes in fair value depends upon the purpose of the derivative instrument and
whether it is designated as a hedge and qualifies for hedge accounting. To the
extent derivative instruments qualify as hedges and are designated as hedges of
the variability of cash flows associated with forecasted transactions, the
effective portion of the gain or loss on such derivative instruments is
reported in other comprehensive income. The ineffective portion, if any, is
reported in net income. Such amounts reported in other comprehensive income
are reclassified into net income when the forecasted transaction affects
earnings. If a cash flow hedge is discontinued because it is probable that the
forecasted transaction will not occur, the net gain or loss is immediately
reclassified into earnings. To the extent derivative instruments qualify as
hedges and are designated as hedges of changes in fair value of an existing
asset, liability or firm commitment, the gain or loss on the hedging instrument
is recognized in earnings along with the changes in fair value of the hedged
asset, liability or firm commitment attributable to the hedged risk.

SFAS No. 133 requires that as of the date of initial adoption, the difference
between the fair value of derivative instruments and the previous carrying
amount of those derivatives be reported in net income or other comprehensive
income, as appropriate, as the cumulative effect of a change in accounting
principle in accordance with Accounting Principles Board (APB) Opinion 20,
Accounting Changes.

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As of January 1, 2001, Detroit Edison adopted SFAS No. 133, as required. The
financial statement impact of recording the various SFAS No. 133 transactions
at January 1, 2001 was as follows:

|                                                       |                            |            |          |    |  
|------------------------------------------------------ | -------------------------- | ---------- | -------- | -- | -
|                                                       |                            |            | Increase |   
|Financial
Statement Line Item                          |                            | (Decrease) |         
|                                                       |                            |            |         
|(in Millions)                                          |                            |            |          |   
|Assets from risk management activities                 |                            | $          | 26       |   
|Liabilities from risk management activities            |                            | $          | 10       |   
|Income taxes payable                                   |                            | $          | 6        |   
|Cumulative effect of a change in accounting principle: |                            |            |          |   
|                                                       | Other comprehensive income |            | $        | 13 |  
|                                                       | Net income                 |            | $        | (3 | )

Detroit Edisons primary market risk exposure is associated with commodity
prices. Detroit Edison has risk management policies to monitor and assist in
mitigating this market risk and uses derivative instruments to manage some of
the exposures. Detroit Edison does not hold or issue derivative instruments
for trading purposes. All derivatives are recorded at fair value and shown as
assets or liabilities from risk management activities in the consolidated
statement of financial position.

The FASB continues to develop interpretive guidance for SFAS No. 133.
Accordingly, any future interpretations of SFAS No. 133 may impact the
Companys ultimate application of the standard.

RISK MANAGEMENT ACTIVITIES

Credit Risk

Detroit Edison is exposed to credit risk in the event of nonperformance by
customers or counterparties of its contractual obligations. Detroit Edison
maintains credit policies with regard to its customers and counterparties that
management believes significantly minimize overall credit risk. These policies
include an evaluation of potential customers and counterparties financial
condition and credit rating, collateral requirements or other credit
enhancements such as letters of credit or guarantees, and the use of
standardized agreements which allow for the netting or offsetting of positive
and negative exposures associated with a single counterparty.

Commodity Price Risk

Detroit Edison uses forward energy, capacity, and futures contracts to manage
the risk of fluctuations in the market price of electricity and natural gas.
Certain of these contracts have been formally designated as cash flow hedges of
the forecasted purchase of power and natural gas. For the year ended December
31, 2001, Detroit Edison recorded a loss of $23 million, net of tax, in other
comprehensive loss for these hedges. Amounts recorded in other comprehensive
loss will be reclassified to fuel and purchased power expense as the forecasted
purchases of electricity and natural gas affect earnings. At December 31,
2001, the estimated net amount of existing loss expected to be reclassified
into earnings within the next 12 months is approximately $21 million. The
maximum length of time over which Detroit Edison is hedging its exposure to the
variability of future cash flows is two years. Ineffectiveness recognized in
these hedging relationships was immaterial for the year ended December 31,
2001.

Certain of Detroit Edisons forward electric contracts are considered normal
purchases and sales and therefore are excluded from the scope of SFAS No. 133.

In June 2001, the FASB provided guidance on the implementation of SFAS No. 133
regarding certain contracts in the power generation industry. In June 2001,
issue No. C15, Scope Exceptions: Normal

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Purchases and Normal Sales Exception for Option-Type Contracts and Forward
Contracts in Electricity, was issued. The FASB concluded that because
electricity cannot be readily stored in significant quantities, and the entity
engaged in selling electricity is obligated to maintain sufficient capacity to
meet the electricity needs of its customer base, an option-like contract for
the purchase of electricity that meets certain criteria is eligible for the
normal purchases and sales exception. Detroit Edison adopted this new guidance
on July 1, 2001, as required, classified certain contracts as normal, and began
amortizing the previously recorded liability on option-like contracts over
their remaining lives. In December 2001, the FASB issued revisions to issue No.
C15 that are effective in April 2002. The revised guidance differentiates
characteristics of traditional capacity contracts used by electric utilities to
meet electric load and financial options on electricity. Traditional capacity
contracts are eligible for settlement accounting under the normal purchases and
sales exception. Financial options on electricity will not be eligible for
settlement accounting. Financial options on electricity will be recorded at
fair value on the statement of financial position using mark-to-market
accounting.

FAIR VALUE OF OTHER FINANCIAL INSTRUMENTS

The fair value of financial instruments is determined by reference to various
market data and other valuation techniques as appropriate. The carrying amount
of financial instruments, except for long-term debt, approximate fair value.
The estimated fair value of total long-term debt at December 31, 2001 and 2000
was $ 5.1 billion and $3.5 billion, respectively, compared to the carrying
amount of $4.9 billion and $3.5 billion, respectively.

NOTE 12  COMMITMENTS AND CONTINGENCIES

Personal Property Taxes

Detroit Edison and other Michigan utilities have asserted that Michigans
valuation tables result in the substantial overvaluation of utility personal
property. Valuation tables established by the Michigan State Tax Commission
(STC) are used to estimate the reduction in value of personal property based on
the propertys age. In November 1999, the STC approved new valuation tables
that more accurately recognize the value of a utilitys personal property. The
new tables became effective in 2000 and are being used for current year
assessments in most jurisdictions. However, several local taxing jurisdictions
have taken legal action attempting to prevent the STC from implementing the new
valuation tables and have continued to prepare assessments based on the
superseded tables. The legal actions regarding the appropriateness of the new
tables are currently before the Michigan Tax Tribunal (MTT), which issued an
order in June 2000 stating that the tables are presumed to be correct, thus
assigning the burden of proving otherwise to the taxing jurisdictions. The
hearing before the MTT concluded in June 2001, with the STC subsequently filing
a motion for summary judgment. All briefs related to that motion have been
filed, and the parties now await the MTT decision.

Beginning in 2000, Detroit Edison accrues property tax expense based on the new tables. Detroit
Edison will seek to apply the new tables retroactively and to ultimately settle
the pending tax appeals related to 1997 through 1999. This is a solution
supported by the STC in the past. The legal action, along with possible
additional appeals by local taxing jurisdictions, is expected to delay any
recoveries realized by Detroit Edison related to the new valuation tables.

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Commitments

Detroit Edison has an Energy Purchase Agreement for the purchase of steam and
electricity from the Detroit Resource Recovery Facility. Under the Agreement,
Detroit Edison will purchase steam through 2008 and electricity through June
2024. In 1996, a special charge to income was recorded that included a reserve
for steam purchase commitments in excess of replacement costs from 1997 through
2008. The reserve for steam purchase commitments is being amortized to fuel
and purchased power expense with non-cash accretion expense being recorded
through 2008. During 2001, the reserve for future steam purchase commitments
was reduced by $22 million due to changes in estimated future replacement
costs. Purchases of steam and electricity were approximately $41 million, $35
million and $35 million for 2001, 2000 and 1999, respectively. Annual steam
and electric purchase commitments are approximately $40 million, $41 million,
$42 million, $44 million and $45 million for 2002, 2003, 2004, 2005 and 2006,
respectively.

The EPA has issued ozone transport regulations and final new air quality
standards relating to ozone and particulate air pollution. In September 1998,
the EPA issued a State Implementation Plan (SIP) call giving states a year to
develop new regulations to limit nitrogen oxide emissions because of their
contribution to ozone formation. Detroit Edison has spent approximately $221
million through December 2001 and estimates that it will incur approximately
$400 million to $500 million of future capital expenditures over the next three
years to comply. In March 2000, the U.S. Court of Appeals ruled in favor of
the EPAs SIP call regulations. The new air quality standards have been upheld
in legal challenges in the U.S. Court of Appeals, but the U.S. Supreme Court
has agreed to hear the appeal. Until the legal issues are resolved, management
is unable to predict the full impact of the new air quality standards. Under
the June 2000 Michigan restructuring legislation, beginning January 1, 2004,
annual return of and on this capital expenditure, in excess of current
depreciation levels, would be deferred in ratemaking, until after the
expiration of the rate cap period, presently expected to end December 31, 2005.

Detroit Edison has also entered into long-term fuel supply commitments of
approximately $900 million at December 31, 2001. Detroit Edison expects that
its 2002 capital expenditures will approximate $600 million. Certain
commitments have been made in connection with such capital expenditures.

Other Contingencies

Electricity is purchased from and sold to numerous companies operating in the
steel, automotive, energy and retail industries. A number of customers have
filed for bankruptcy in 2001, including certain Enron Corporation affiliates.
Detroit Edison had open transactions under a variety of agreements with
bankrupt Enron affiliates, and had an aggregate net liability of $8.2 million
to Enron. There is a master netting agreement with Enron affiliates. Internal
and external counsel are working to determine Detroit Edisons rights within
these agreements. Detroit Edison has not reserved for any exposure, in
addition to the net liabilities already recorded, as management cannot estimate
a probable loss exposure and currently does not believe the resolution of this
matter will have a material impact to Detroit Edison.

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

See Notes 3 and 4 for a discussion of contingencies related to Regulatory
Matters and Fermi 2.

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NOTE 13  RETIREMENT BENEFITS AND TRUSTEED ASSETS

Pension Plan Benefits

Detroit Edison has a defined benefit retirement plan. Effective December 31,
2001, the MCN Energy Group Retirement Plan, that covered nonunion employees, merged into Detroit Edisons retirement plan. The combined plan
is noncontributory, covers substantially all employees and provides retirement
benefits based on the employees years of benefit service, average final
compensation and age at retirement. Detroit Edison operates as the
sponsor of the merged plan, which is treated as a multiemployer plan
from the affiliates perspective. The 2001 annual expense disclosed
below is Detroit Edisons portion of the total plan expense.
Each affiliate is charged their portion of the expense. Detroit Edisons policy is to fund pension
cost calculated under the projected unit credit actuarial cost method.

Net pension cost for the years ended December 31 includes the following
components:

|                                      |                      |      |      |    |      |   |      |      |   |   |      |    |  
|------------------------------------- | -------------------- | ---- | ---- | -- | ---- | - | ---- | ---- | - | - | ---- | -- | -
|(in Millions)                         |                      | 2001 |      |    | 2000 |   |      | 1999 |  
|                                      |                      |      |      |    |      |   |      |      |  
|Service Cost                          |                      | $    | 35   |    |      | $ | 35   |      |   | $ | 35   |   
|Interest Cost                         |                      |      | 117  |    |      |   | 107  |      |   |   | 92   |   
|Expected Return on Plan Assets        |                      |      | (139 | )  |      |   | (139 | )    |   |   | (124 | ) 
|Amortization of                       |                      |      |      |    |      |   |      |      |   |   |      |   
|                                      | Prior service cost   |      |      | 10 |      |   |      | 10   |   |   |      | 5  |  
|                                      | Net transition asset |      |      | (5 | )    |   |      | (4   | ) |   |      | (4 | )
|
|Special Termination Benefits (Note 2) |                      |      | 119  |    |      |   |     |      |   |   |     |   
|                                      |                      |      |      |    |      |   |      |      |  
|                                      |                      |      |      |    |      |   |      |      |  

The following table sets forth a reconciliation of the obligations, assets and
funded status of the plan as well as the amounts recognized as prepaid pension
cost in the consolidated statement of financial position at
December 31. The results include liabilities and assets for
Detroit Edison and all affiliates participating in the combined plan.
The prepaid asset contributed to the combined plan by such affiliates
is reflected as an amount due to affiliates, $143,148,000 at December
31, 2001.

|                                                            |  |      |       |   |      |   |       |  
|----------------------------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | -
|(in Millions)                                               |  | 2001 |       |   | 2000 |  
|                                                            |  |      |       |   |      |  
|Accumulated Benefit Obligation at the End of the Period     |  | $    | 1,857 |   |      | $ | 1,408 |  
|                                                            |  |      |       |   |      |  
|Projected Benefit Obligation at the Beginning of the Period |  | $    | 1,540 |   |      | $ | 1,457 |  
|Service Cost                                                |  |      | 40    |   |      |   | 35    |  
|Interest Cost                                               |  |      | 142   |   |      |   | 107   |  
|Actuarial Loss                                              |  |      | 82    |   |      |   | 21    |  
|Special Termination Benefits (Note 2)                       |  |      | 167   |   |      |   |      |  
|Benefits Paid                                               |  |      | (209  | ) |      |   | (82   | )
|Plan Amendments                                             |  |      | (43   | ) |      |   | 2     |  
|Plan Merger                                                 |  |      | 317   |   |      |   |      |  
|                                                            |  |      |       |   |      |  
|Projected Benefit Obligation at the End of the Period       |  | $    | 2,036 |   |      | $ | 1,540 |  
|                                                            |  |      |       |   |      |  
|Plan Assets at Fair Value at the Beginning of the Period    |  | $    | 1,416 |   |      | $ | 1,585 |  
|Actual Return on Plan Assets                                |  |      | (48   | ) |      |   | (87   | )
|Company Contributions                                       |  |      | 35    |   |      |   |      |  
|Benefits Paid                                               |  |      | (209  | ) |      |   | (82   | )
|Plan Merger                                                 |  |      | 671   |   |      |   |      |  
|                                                            |  |      |       |   |      |  
|Plan Assets at Fair Value at the End of the Period          |  | $    | 1,865 |   |      | $ | 1,416 |  
|                                                            |  |      |       |   |      |  

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|                           |  |   |      |   |  |   |      |   |  | 
|-------------------------- |  | - | ---- | - |  | - | ---- | - |  | 
|Funded Status of the Plans |  | $ | (171 | ) |  | $ | (124 | )
|Unrecognized
Net loss      |  |   | 256  |   |  |   | 112  |  
|Prior service cost         |  |   | 35   |   |  |   | 85   |  
|Net transition asset       |  |   | (14  | ) |  |   | (7   | )
|                           |  |   |      |   |  |  
|Prepaid Pension Cost       |  | $ | 106  |   |  | $ | 66   |  
|                           |  |   |      |   |  |  

Assumptions used in determining the projected benefit obligation at December 31
were as follows:

|                                                 |  |      |      |   |      |  |     |      |  |  |     |  
|------------------------------------------------ |  | ---- | ---- | - | ---- |  | --- | ---- |  |  | --- | -
|                                                 |  | 2001 |      |   | 2000 |  |     | 1999 | 
|                                                 |  |      |      |   |      |  |     |      | 
|Discount rate                                    |  |      | 7.25 | % |      |  | 7.5 | %    |  |  | 7.5 | %
|Annual increase in future compensation levels    |  |      | 4.0  |   |      |  | 4.0 |      |  |  | 4.0 |  
|Expected long-term rate of return on Plan assets |  |      | 9.5  |   |      |  | 9.5 |      |  |  | 9.5 |  

There are also several supplemental nonqualified, noncontributory, retirement
benefit plans for certain management employees.

Detroit Edison also sponsors defined contribution retirement savings plans.
Participation in one of these plans is available to substantially all union and
nonunion employees. Detroit Edison matches employee contributions up to 6% of
base compensation for non-represented employees and up to 4% for represented
employees. The cost of these plans was $21 million in 2001, $22 million in
2000, and $21 million in 1999.

Other Postretirement Benefits

The Company provides certain postretirement healthcare and life insurance
benefits for retired employees who may become eligible for these benefits if
they reach retirement age while working for the Company.

Net postretirement cost for the years ended December 31 includes the following
components:

|                                      |  |      |     |   |      |   |     |      |  |   |     |   | 
|------------------------------------- |  | ---- | --- | - | ---- | - | --- | ---- |  | - | --- | - | 
|(in Millions)                         |  | 2001 |     |   | 2000 |   |     | 1999 | 
|                                      |  |      |     |   |      |   |     |      | 
|Service Cost                          |  | $    | 26  |   |      | $ | 22  |      |  | $ | 23  |  
|Interest Cost                         |  |      | 55  |   |      |   | 48  |      |  |   | 41  |  
|Expected Return on Plan Assets        |  |      | (47 | ) |      |   | (46 | )    |  |   | (39 | )
|Amortization
ofNet loss               |  |      | 1   |   |      |   |    |      |  |   |    |  
|Net transition obligation             |  |      | 20  |   |      |   | 20  |      |  |   | 21  |  
|Special Termination Benefits (Note 2) |  |      | 27  |   |      |   |    |      |  |   |    |  
|                                      |  |      |     |   |      |   |     |      | 
|Net Postretirement Cost               |  | $    | 82  |   |      | $ | 44  |      |  | $ | 46  |  
|                                      |  |      |     |   |      |   |     |      | 

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The following table sets forth a reconciliation of the obligations, assets and
funded status of the plan as well as the amounts recorded as accrued
postretirement cost in the consolidated statement of financial position at
December 31:

|                                                                             |  |      |      |   |      |   |      |   | 
|---------------------------------------------------------------------------- |  | ---- | ---- | - | ---- | - | ---- | - | 
|(in Millions)                                                                |  | 2001 |      |   | 2000 |  
|                                                                             |  |      |      |   |      |  
|Accumulated Postretirement Benefit Obligation at the
Beginning of the Period |  | $    | 751  |   |      | $ | 607  |  
|Service Cost                                                                 |  |      | 26   |   |      |   | 22   |  
|Interest Cost                                                                |  |      | 55   |   |      |   | 48   |  
|Actuarial Loss                                                               |  |      | 57   |   |      |   | 105  |  
|Special Termination Benefits (Note 2)                                        |  |      | 27   |   |      |   |     |  
|Plan Amendments                                                              |  |      | (12  | ) |      |   |     |  
|Benefits Paid                                                                |  |      | (41  | ) |      |   | (31  | )
|                                                                             |  |      |      |   |      |  
|Accumulated Postretirement Benefit Obligation at the
End of the Period       |  | $    | 863  |   |      | $ | 751  |  
|                                                                             |  |      |      |   |      |  
|Plan Assets at Fair Value at the Beginning of the Period                     |  | $    | 517  |   |      | $ | 501  |  
|Actual Return on Plan Assets                                                 |  |      | (14  | ) |      |   | 2    |  
|Company Contributions                                                        |  |      | 11   |   |      |   | 23   |  
|Benefits Paid                                                                |  |      | (39  | ) |      |   | (9   | )
|                                                                             |  |      |      |   |      |  
|Plan Assets at Fair Value at the End of the Period                           |  | $    | 475  |   |      | $ | 517  |  
|                                                                             |  |      |      |   |      |  
|Funded Status of the Plans                                                   |  | $    | (389 | ) |      | $ | (234 | )
|Unrecognized
Net loss                                                        |  |      | 161  |   |      |   | 44   |  
|Prior service cost                                                           |  |      | (12  | ) |      |   |     |  
|Net transition obligation                                                    |  |      | 226  |   |      |   | 246  |  
|                                                                             |  |      |      |   |      |  
|Accrued Postretirement Asset (Liability)                                     |  | $    | (14  | ) |      | $ | 56   |  
|                                                                             |  |      |      |   |      |  

Assumptions used in determining the projected benefit obligation at December 31
were as follows:

|                                                 |  |      |      |   |      |  |     |      |  |  |     |  
|------------------------------------------------ |  | ---- | ---- | - | ---- |  | --- | ---- |  |  | --- | -
|                                                 |  | 2001 |      |   | 2000 |  |     | 1999 | 
|                                                 |  |      |      |   |      |  |     |      | 
|Discount rate                                    |  |      | 7.25 | % |      |  | 7.5 | %    |  |  | 7.5 | %
|Expected long-term rate of return on Plan assets |  |      | 9.5  |   |      |  | 9.0 |      |  |  | 9.0 |  

Benefit costs were calculated assuming healthcare cost trend rates beginning at
8.5% for 2002 and decreasing to 5% in 2008 and thereafter for persons under age
65 and decreasing from 9% to 5% for persons age 65 and over. A
one-percentage-point increase in healthcare cost trend rates would have
increased the aggregate of the service cost and interest cost components of
benefit costs by $14 million and would have increased the accumulated benefit
obligation by $111 million at December 31, 2001. A one-percentage-point
decrease in the healthcare cost trend rates would have decreased the aggregate
of the service cost and interest cost components of benefit costs by $11
million and would have decreased the accumulated benefit obligation by $91
million at December 31, 2001.

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NOTE 14  RELATED PARTY TRANSACTIONS

Detroit Edison has transactions with affiliated companies to provide fuel
supply services and power plant operation and maintenance services for the
delivery of electric energy. Under a service agreement with DTE Energy,
Detroit Edison provides corporate support services and various financial,
auditing, tax, legal, treasury and cash management, human resources,
information technology, regulatory and other services, which were
billed to DTE Energy corporate.  These administrative and general
expenses along with interest and financing costs were then billed
down to various subsidiaries of DTE Energy, including Detroit
Edison.  The net amount of expenses included in the consolidated statement of
operations in 2001 was $4 million.

Detroit Edison continues to bill and collect transmission revenues as currently
authorized in its bundled distribution rates approved by the MPSC. ITC
provides transmission services to customers of Detroit Edison and other
non-affiliated customers. ITC billed Detroit Edison approximately $57 million
since June 1, 2001, for the costs of providing transmission services to utility
customers.

As of December 31, 2001 and 2000, Detroit Edison
reported net accounts payable due to affiliated companies of $113
million and $20 million, respectively.

NOTE 15  SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)

|                                       |  |         |       |  |         |   |       |         |  |   |         |  |  |      |       |  |  |   |       | 
|-------------------------------------- |  | ------- | ----- |  | ------- | - | ----- | ------- |  | - | ------- |  |  | ---- | ----- |  |  | - | ----- | 
|                                       |  | First   |       |  | Second  |   |       | Third   |  |   | Fourth  |  |  |      |       | 
|                                       |  | Quarter |       |  | Quarter |   |       | Quarter |  |   | Quarter |  |  | Year |      
|                                       |  |         |       |  |         |   |       |         |  |   |         |  |  |      |      
|(in Millions)                          |  |         |       |  |         |   |       |        
|                                      
|2001                                   |  |         |       |  |         |   |       |         |  |   |         |  |  |      |       |  |  |   |       | 
|Operating Revenues                     |  | $       | 1,024 |  |         | $ | 992   |         |  | $ | 1,121   |  |  | $    | 907   |  |  | $ | 4,044 | 
|Operating Income (Loss)                |  |         | 246   |  |         |   | (47   | )       |  |   | 199     |  |  |      | 238   |  |  |   | 636   | 
|Income (Loss) before accounting
Change |  |         | 116   |  |         |   | (77   | )       |  |   | 88      |  |  |      | 109   |  |  |   | 236   | 
|Net Income (Loss)                      |  |         | 113   |  |         |   | (77   | )       |  |   | 88      |  |  |      | 109   |  |  |   | 233   | 
|                                      
|2000                                   |  |         |       |  |         |   |       |         |  |   |         |  |  |      |       |  |  |   |       | 
|Operating Revenue                      |  | $       | 949   |  |         |   | 1,071 |         |  | $ | 1,109   |  |  | $    | 1,000 |  |  | $ | 4,129 | 
|Operating Income                       |  |         | 223   |  |         |   | 214   |         |  |   | 167     |  |  |      | 269   |  |  |   | 873   | 
|Net Income                             |  |         | 97    |  |         |   | 91    |         |  |   | 76      |  |  |      | 147   |  |  |   | 411   | 




Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.

41



---



##### Table of Contents






PART III




Item 10. Directors and Executive Officers of the Registrant




Item 11. Executive Compensation




Item 12. Security Ownership of Certain Beneficial Owners and Management




Item 13. Certain Relationships and Related Transactions

All omitted per general instruction I (2) (c) of Form 10-K for wholly owned
subsidiaries (reduced disclosure format).




PART IV




Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K

(a)  The following documents are filed as part of this Annual Report on Form 10-K.



| | (1) |  | Consolidated financial statements. See Item 8  Financial Statements
and Supplementary Data on page 14.
| | --- |  | ---------------------------------------------------------------------------------------------------------
|
| | (2) |  | Financial Statement schedule. See Item 8  Financial Statements and
Supplementary Data on Page 14.      
|
| | (3) |  | Exhibits.                                                                                                
|
| | (i) |  | Exhibits filed herewith.                                                                                 

|        |  |                                                                                                                                                                                                                                                                                                                                   
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                   
|Number  |  | Description                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                   
|12-18   |  | Computation of Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                                                 
|       
|23-14   |  | Consent of Deloitte & Touche LLP                                                                                                                                                                                                                                                                                                  
|       
|(ii)    |  | Exhibits incorporated herein by reference                                                                                                                                                                                                                                                                                         
|       
|3(a)    |  | Restated Articles of Incorporation of Detroit Edison, as filed
December 10, 1991 with the State of Michigan, Department of Commerce  Corporation
and Securities Bureau (Exhibit 3-13 to Form 10-Q for 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 quarter ended September 30, 1999)                                                                                                                                                                                     
|       
|4(a)    |  | Mortgage and Deed of Trust, dated as of October 1, 1924, between Detroit
Edison (File No. 1-2198) and First Chicago Trust Company of New York as
Trustee (Exhibit B-1 to Registration No. 2-1630) and indentures
supplemental thereto, dated as of dates indicated below, and filed as
exhibits to the filings as set forth below:
|       
|        |  | September 1, 1947   Exhibit B-20 to Registration No. 2-7136                                                                                                                                                                                                                                                                       
|        |  | November 15, 1971 Exhibit 2-B-38 to Registration No. 2-42160                                                                                                                                                                                                                                                                      

42



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##### Table of Contents



|                   |  |                                                                             
|------------------ |  | ----------------------------------------------------------------------------
|January 15, 1973   |  | Exhibit 2-B-39 to Registration No. 2-46595                                  
|June 1, 1978       |  | Exhibit 2-B-51 to Registration No. 2-61643                                  
|June 30, 1982      |  | Exhibit 4-30 to Registration No. 2 78941                                    
|August 15, 1982    |  | Exhibit 4-32 to Registration No. 2-79674                                    
|December 1, 1989   |  | Exhibit 4-211 to Form 10-K for year ended December 31, 2000                 
|February 15, 1990  |  | Exhibit 4-212 to Form 10-K for year ended December 31, 2000                 
|April 1, 1991      |  | Exhibit 4-15 to Form 10-K for year ended December 31, 1996                  
|November 1, 1991   |  | Exhibit 4-181 to Form 10-K for year ended December 31, 1996                 
|January 15, 1992   |  | Exhibit 4-182 to Form 10-K for year ended December 31, 1996                 
|February 29, 1992  |  | Exhibit 4-187 to Form 10-Q for quarter ended March 31, 1998                 
|April 15, 1992     |  | Exhibit 4-188 to Form 10-Q for quarter ended March 31, 1998                 
|July 15, 1992      |  | Exhibit 4-189 to Form 10-Q for quarter ended March 31, 1998                 
|November 30, 1992  |  | Exhibit 213 to Form 10-K for year ended December 31, 2000                   
|January 1, 1993    |  | Exhibit 4-131 to Registration No. 33-56496                                  
|March 1, 1993      |  | Exhibit 4-191 to Form 10-Q for quarter ended March 31, 1998                 
|April 1, 1993      |  | Exhibit 4-214 to Form 10-K for year ended December 31, 2000                 
|April 26, 1993     |  | Exhibit 4-215 to Form 10-K for year ended December 31, 2000                 
|May 31, 1993       |  | Exhibit 4-148 to Registration No. 33-64296                                  
|June 30, 1993      |  | Exhibit 4-216 to Form 10-K for year ended December 31, 2000
(1993 Series AP)
|June 30, 1993      |  | Exhibit 4-150 to Form 10-Q for quarter ended June 30, 1993 (1993
Series H)  
|September 15, 1993 |  | Exhibit 4-217 to
Form 10-K for year ended December 31, 2000                 
|March 1, 1994      |  | Exhibit 4-163 to Registration No. 33-53207                                  
|June 15, 1994      |  | Exhibit 4-218 to Form 10-K for year ended December 31, 2000                 
|August 15, 1994    |  | Exhibit 4-220 to Form 10-K for year ended December 31, 2000                 
|August 1, 1995     |  | Exhibit 4-221 to Form 10-K for year ended December 31, 2000                 
|August 1, 1999     |  | Exhibit 4-204 to Form 10-Q for quarter ended September 30, 1999             
|August 15, 1999    |  | Exhibit 4-205 to Form 10-Q for quarter ended September 30, 1999             
|January 1, 2000    |  | Exhibit 4-205 to Form 10-K for year ended December 31, 1999                 
|April 15, 2000     |  | Exhibit 206 to Form 10-Q for quarter ended March 31, 2000                   
|August 1, 2000     |  | Exhibit 4-210 to Form 10-Q for quarter ended September 30, 2000             
|March 15, 2001     |  | Exhibit 4-222 to Form 10-Q for quarter ended March 31, 2001                 
|May 1, 2001        |  | Exhibit 4-226 to Form 10-Q for quarter ended June 30, 2001                  
|August 15, 2001    |  | Exhibit 4-227 to Form 10-Q for quarter ended September 30, 2001             
|September 15, 2001 |  | Exhibit 4-228 to Form 10-Q for quarter ended September 30, 2001             

|     |                                                                                                                                                                                                                                                
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4(b) | Collateral Trust Indenture (notes), dated as of June 30, 1993 (Exhibit 4-152 to Registration
No. 33-50325)                                                                                                                                     
|4(c) | First Supplemental Note Indenture, dated as of June 30, 1993 (Exhibit 4-153 to Registration
No. 33-50325)                                                                                                                                      
|4(d) | First Amendment, dated as of July, 2000, to the First
Supplemental Indenture, dated as of June 30, 1993, to the
Collateral Trust Indenture (Notes), dated as of June 30,
1993 (Exhibit 4-208 to Form 10-Q for quarter ended
September 30, 2000)
|4(e) | Second Supplemental Note Indenture, dated as of September
15, 1993 (Exhibit 4-159 to Form 10-Q for quarter ended
September 30, 1993)                                                                                                           
|4(f) | First Amendment, dated as of August 15, 1996, to Second
Supplemental Note Indenture (Exhibit 4-17 to Form 10-Q
for quarter ended September 30, 1996)                                                                                           
|4(g) | Third Supplemental Note Indenture, dated as of August 15,
1994 (Exhibit 4-169 to Form                                                                                                                                                          

43



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##### Table of Contents



|                                                                                                       |  |                                                                                                                                                                                                                                                                               
|------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                       |  | 10-Q for quarter ended September 30, 1994)                                                                                                                                                                                                                                    
|4(h)                                                                                                   |  | First Amendment, dated as of December 12, 1995, to Third
Supplemental Note Indenture, dated as of August 15, 1994
(Exhibit 4-12 to Registration No. 333-00023)                                                                                                                
|4(i)                                                                                                   |  | Sixth Supplemental Note Indenture, dated as of May 1, 1998,
between Detroit Edison and Bankers Trust Company, as Trustee,
creating the 7.54% Quarterly Income Debt Securities (QUIDS),
including form of QUIDS. (Exhibit 4-193 to Form 10-Q for
quarter ended June 30, 1998)
|4(j)                                                                                                   |  | Seventh Supplemental Note Indenture, dated as of October 15,
1998, between Detroit Edison and Bankers Trust Company, as
Trustee, creating the 7.375% QUIDS, including form of QUIDS.
(Exhibit 4-198 to Form 10-K for year ended December 31, 1998)                            
|4(k)                                                                                                   |  | Eighth Supplemental Indenture, dated as of April 15, 2000,
appointing Bank One Trust Company of New York as Trustee under
the Detroit Edison Trust Indenture (Notes), dated as of June
30, 1993. (Exhibit 4-207 to form 10-Q for the quarter ended
March 31, 2000)            
|4(l)                                                                                                   |  | Ninth Supplemental Indenture, dated as of September 15, 2001,
establishing the 5.050% Senior Notes due 2005 and 6.125%
Senior Notes due 2010.                                                                                                                                 
|10(a)                                                                                                  |  | Securitization Property Sale Agreement (Exhibit 10-42 to Form
10-Q for quarter ended March 31, 2001)                                                                                                                                                                          
|99(a)                                                                                                  |  | Belle River Participation Agreement between Detroit Edison and
Michigan Public Power Agency, dated as of December 1, 1982
(Exhibit 28-5 to Registration No. 2-81501)                                                                                                          
|99(b)                                                                                                  |  | Belle River Transmission Ownership and Operating Agreement
between Detroit Edison and Michigan Public Power Agency, dated
as of December 1, 1982 (Exhibit 28-6 to Registration No.
2-81501)                                                                                   
|99(c)                                                                                                  |  | Inter-Creditor Agreement (Exhibit 99-41 to Form 10-Q for
quarter ended March 31, 2001)                                                                                                                                                                                        
|99(d)                                                                                                  |  | Amendment to Trade Receivables Purchase and Sale Agreement
(Exhibit 99-42 to Form 10-Q for quarter ended March 31, 2001)                                                                                                                                                      
|99(e)                                                                                                  |  | Amended and Restated Trade Receivables Purchase and Sale
Agreement (Exhibit 99-43 to Form 10-Q for quarter ended March
31, 2001)                                                                                                                                              
|99(f)                                                                                                  |  | $300 Million Credit Agreement (Exhibit 99-1 to Form 10-Q for
quarter ended September 30, 2001.)                                                                                                                                                                               
|(b)         Registrant did not file any Current Reports on Form 8-K during the fourth
quarter of 2001.

44



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##### Table of Contents



THE DETROIT EDISON COMPANY
SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

|                                                                                                                             |                                                                                         |   |         |        |  |  |                          |  |  |      |         |        |  |  |  |  |      |   |         |        |  |  |  |  | 
|---------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- | - | ------- | ------ |  |  | ------------------------ |  |  | ---- | ------- | ------ |  |  |  |  | ---- | - | ------- | ------ |  |  |  |  | 
|                                                                                                                             |                                                                                         |   |         |        |  |  | Year Ending December 31, |  |  |      |         |        |  |  |  | 
|                                                                                                                             |                                                                                         |   |         |        |  |  |                          |  |  |      |         |        |  |  |  | 
|                                                                                                                             |                                                                                         |   | 2001    |        |  |  |                          |  |  | 2000 |         |        |  |  |  |  | 1999 |   |         |        |  | 
|                                                                                                                             |                                                                                         |   |         |        |  |  |                          |  |  |      |         |        |  |  |  |  |      |   |         |        |  | 
|(in Thousands)                                                                                                               |                                                                                         |   |         |        |  |  |                          |  |  |      |         |        |  |  |  |  |      |   |         |        |  |  |  | 
|Allowance for Non-collectible Accounts (shown as                                                                             |                                                                                         |   |         |        |  |  |                          |  |  |      |         |        |  |  |  |  |      |   |         |        |  |  |  | 
|                                                                                                                             | deduction from accounts receivable in the
consolidated
statement of financial position) |   |         |        |  |  |                          |  |  |      |         |        |  |  |  |  |      |   |         |        |  |  |  |  | 
|Balance at Beginning of Period                                                                                               |                                                                                         | $ | 20,000  |        |  |  |                          |  |  | $    | 20,000  |        |  |  |  |  |      | $ | 20,000  |        |  |  |  | 
|Additions:                                                                                                                   |                                                                                         |   |         |        |  |  |                          |  |  |      |         |        |  |  |  |  |      |   |         |        |  |  |  | 
|                                                                                                                             | Charged to costs and expenses                                                           |   |         | 22,510 |  |  |                          |  |  |      |         | 18,219 |  |  |  |  |      |   |         | 20,363 |  |  |  |  | 
|                                                                                                                             | Charged to other accounts (a)                                                           |   |         | 11,846 |  |  |                          |  |  |      |         | 3,677  |  |  |  |  |      |   |         | 3,357  |  |  |  |  | 
|Deductions (b)                                                                                                               |                                                                                         |   | (27,056 | )      |  |  |                          |  |  |      | (21,896 | )      |  |  |  |  |      |   | (23,720 | )      |  |  |  | 
|                                                                                                                             |                                                                                         |   |         |        |  |  |                          |  |  |      |         |        |  |  |  |  |      |   |         |        | 
|Balance At End of Period                                                                                                     |                                                                                         | $ | 27,300  |        |  |  |                          |  |  | $    | 20,000  |        |  |  |  |  |      | $ | 20,000  |        |  |  |  | 
|                                                                                                                             |                                                                                         |   |         |        |  |  |                          |  |  |      |         |        |  |  |  |  |      |   |         |        | 
|Fermi 2 Refueling Outage Accrual (included in other
current liabilities in the consolidated
statement of financial position) |                                                                                         |   |         |        |  |  |                          |  |  |      |         |        |  |  |  |  |      |   |         |        |  |  |  | 
|Balance at Beginning of Period                                                                                               |                                                                                         | $ | 9,789   |        |  |  |                          |  |  | $    | 18,221  |        |  |  |  |  |      | $ | 3,156   |        |  |  |  | 
|Charged to costs and expenses                                                                                                |                                                                                         |   | 12,837  |        |  |  |                          |  |  |      | 14,002  |        |  |  |  |  |      |   | 15,065  |        |  |  |  | 
|Deductions (c)                                                                                                               |                                                                                         |   | (21,459 | )      |  |  |                          |  |  |      | (22,434 | )      |  |  |  |  |      |   |        |        |  |  |  | 
|                                                                                                                             |                                                                                         |   |         |        |  |  |                          |  |  |      |         |        |  |  |  |  |      |   |         |        | 
|Balance At End of Period                                                                                                     |                                                                                         | $ | 1,167   |        |  |  |                          |  |  | $    | 9,789   |        |  |  |  |  |      | $ | 18,221  |        |  |  |  | 
|                                                                                                                             |                                                                                         |   |         |        |  |  |                          |  |  |      |         |        |  |  |  |  |      |   |         |        | 



---

|(a) |  | Collection of accounts previously written off.  
|--- |  | ------------------------------------------------
|   
|(b) |  | Non-collectible accounts written off.           
|   
|(c) |  | Actual amounts paid during the refueling outage.

45



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##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|      |  |                |  |    |  |                                                                           
|----- |  | -------------- |  | -- |  | --------------------------------------------------------------------------
|      |  |                |  |    |  | THE DETROIT EDISON COMPANY(Registrant)                                    
|     
|Date: |  | March 28, 2002 |  | By |  | /s/ DANIEL G. BRUDZYNSKIDaniel G. Brudzynski
Vice President and Controller



|   |  |                                                                                                                                        | 
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------- | 
|By |  | /s/ ANTHONY F. EARLEY, JR.Anthony F. Earley, Jr.
Chairman of the Board,
Chief Executive Officer, President and
Chief Operating Officer | 
|  
|By |  | /s/ SUSAN M. BEALESusan M. Beale
Director, Vice President and
Corporate Secretary                                                      | 
|  
|By |  | /s/ DAVID E. MEADORDavid E. Meador
Director                                                                                            | 

46



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##### Table of Contents



Exhibit Index

|        |  |                                                                                                                                                                                                                                                                                                                                   
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                   
|Number  |  | Description                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                   
|12-18   |  | Computation of Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                                                 
|       
|23-14   |  | Consent of Deloitte & Touche LLP                                                                                                                                                                                                                                                                                                  
|       
|(ii)    |  | Exhibits incorporated herein by reference                                                                                                                                                                                                                                                                                         
|       
|3(a)    |  | Restated Articles of Incorporation of Detroit Edison, as filed December
10, 1991 with the State of Michigan, Department of Commerce  Corporation
and Securities Bureau (Exhibit 3-13 to Form 10-Q for 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 quarter ended
September 30, 1999).                                                                                                                                                                                    
|       
|4(a)    |  | Mortgage and Deed of Trust, dated as of October 1, 1924, between Detroit
Edison (File No. 1-2198) and First Chicago Trust Company of New York as
Trustee (Exhibit B-1 to Registration No. 2-1630) and indentures
supplemental thereto, dated as of dates indicated below, and filed as
exhibits to the filings as set forth below:
|       
|        |  | September 1, 1947    Exhibit B-20 to Registration No. 2-7136                                                                                                                                                                                                                                                                      
|        |  | November 15, 1971  Exhibit 2-B-38 to Registration No. 2-42160                                                                                                                                                                                                                                                                     





---



##### Table of Contents



|                   |  |                                                                             
|------------------ |  | ----------------------------------------------------------------------------
|January 15, 1973   |  | Exhibit 2-B-39 to Registration No. 2-46595                                  
|June 1, 1978       |  | Exhibit 2-B-51 to Registration No. 2-61643                                  
|June 30, 1982      |  | Exhibit 4-30 to Registration No. 2 78941                                    
|August 15, 1982    |  | Exhibit 4-32 to Registration No. 2-79674                                    
|December 1, 1989   |  | Exhibit 4-211 to Form 10-K for year ended December 31, 2000                 
|February 15, 1990  |  | Exhibit 4-212 to Form 10-K for year ended December 31, 2000                 
|April 1, 1991      |  | Exhibit 4-15 to Form 10-K for year ended December 31, 1996                  
|November 1, 1991   |  | Exhibit 4-181 to Form 10-K for year ended December 31, 1996                 
|January 15, 1992   |  | Exhibit 4-182 to Form 10-K for year ended December 31, 1996                 
|February 29, 1992  |  | Exhibit 4-187 to Form 10-Q for quarter ended March 31, 1998                 
|April 15, 1992     |  | Exhibit 4-188 to Form 10-Q for quarter ended March 31, 1998                 
|July 15, 1992      |  | Exhibit 4-189 to Form 10-Q for quarter ended March 31, 1998                 
|November 30, 1992  |  | Exhibit 213 to Form 10-K for year ended December 31, 2000                   
|January 1, 1993    |  | Exhibit 4-131 to Registration No. 33-56496                                  
|March 1, 1993      |  | Exhibit 4-191 to Form 10-Q for quarter ended March 31, 1998                 
|April 1, 1993      |  | Exhibit 4-214 to Form 10-K for year ended December 31, 2000                 
|April 26, 1993     |  | Exhibit 4-215 to Form 10-K for year ended December 31, 2000                 
|May 31, 1993       |  | Exhibit 4-148 to Registration No. 33-64296                                  
|June 30, 1993      |  | Exhibit 4-216 to Form 10-K for year ended December 31, 2000
(1993 Series AP)
|June 30, 1993      |  | Exhibit 4-150 to Form 10-Q for quarter ended June 30, 1993 (1993
Series H)  
|September 15, 1993 |  | Exhibit 4-217 to
Form 10-K for year ended December 31, 2000                 
|March 1, 1994      |  | Exhibit 4-163 to Registration No. 33-53207                                  
|June 15, 1994      |  | Exhibit 4-218 to Form 10-K for year ended December 31, 2000                 
|August 15, 1994    |  | Exhibit 4-220 to Form 10-K for year ended December 31, 2000                 
|August 1, 1995     |  | Exhibit 4-221 to Form 10-K for year ended December 31, 2000                 
|August 1, 1999     |  | Exhibit 4-204 to Form 10-Q for quarter ended September 30, 1999             
|August 15, 1999    |  | Exhibit 4-205 to Form 10-Q for quarter ended September 30, 1999             
|January 1, 2000    |  | Exhibit 4-205 to Form 10-K for year ended December 31, 1999                 
|April 15, 2000     |  | Exhibit 206 to Form 10-Q for quarter ended March 31, 2000                   
|August 1, 2000     |  | Exhibit 4-210 to Form 10-Q for quarter ended September 30, 2000             
|March 15, 2001     |  | Exhibit 4-222 to Form 10-Q for quarter ended March 31, 2001                 
|May 1, 2001        |  | Exhibit 4-226 to Form 10-Q for quarter ended June 30, 2001                  
|August 15, 2001    |  | Exhibit 4-227 to Form 10-Q for quarter ended September 30, 2001             
|September 15, 2001 |  | Exhibit 4-228 to Form 10-Q for quarter ended September 30, 2001             

|     |                                                                                                                                                                                                                                                 
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4(b) | Collateral Trust Indenture (notes), dated as of June 30, 1993 (Exhibit 4-152 to Registration
No. 33-50325).                                                                                                                                     
|4(c) | First Supplemental Note Indenture, dated as of June 30, 1993 (Exhibit 4-153 to Registration
No. 33-50325).                                                                                                                                      
|4(d) | First Amendment, dated as of July, 2000, to the First
Supplemental Indenture, dated as of June 30, 1993, to the
Collateral Trust Indenture (Notes), dated as of June 30,
1993 (Exhibit 4-208 to Form 10-Q for quarter ended
September 30, 2000).
|4(e) | Second Supplemental Note Indenture, dated as of September
15, 1993 (Exhibit 4-159 to Form 10-Q for quarter ended
September 30, 1993).                                                                                                           
|4(f) | First Amendment, dated as of August 15, 1996, to Second
Supplemental Note Indenture (Exhibit 4-17 to Form 10-Q
for quarter ended September 30, 1996).                                                                                           
|4(g) | Third Supplemental Note Indenture, dated as of August 15,
1994 (Exhibit 4-169 to Form                                                                                                                                                           





---



##### Table of Contents



|      |  |                                                                                                                                                                                                                                                                                
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  | 10-Q for quarter ended
September 30, 1994).                                                                                                                                                                                                                                    
|4(h)  |  | First Amendment, dated as of December 12, 1995, to Third
Supplemental Note Indenture, dated as of August 15, 1994
(Exhibit 4-12 to Registration No. 333-00023).                                                                                                                
|4(i)  |  | Sixth Supplemental Note Indenture, dated as of May 1, 1998,
between Detroit Edison and Bankers Trust Company, as Trustee,
creating the 7.54% Quarterly Income Debt Securities (QUIDS),
including form of QUIDS. (Exhibit 4-193 to Form 10-Q for
quarter ended June 30, 1998).
|4(j)  |  | Seventh Supplemental Note Indenture, dated as of October 15,
1998, between Detroit Edison and Bankers Trust Company, as
Trustee, creating the 7.375% QUIDS, including form of QUIDS.
(Exhibit 4-198 to Form 10-K for year ended
December 31, 1998).                            
|4(k)  |  | Eighth Supplemental Indenture, dated as of April 15, 2000,
appointing Bank One Trust Company of New York as Trustee under
the Detroit Edison Trust Indenture (Notes), dated as of June
30, 1993. (Exhibit 4-207 to form 10-Q for the quarter ended
March 31, 2000).            
|4(l)  |  | Ninth Supplemental Indenture, dated as of September 15, 2001,
establishing the 5.050% Senior Notes due 2005 and 6.125%
Senior Notes due 2010.                                                                                                                                  
|10(a) |  | Securitization Property Sale Agreement (Exhibit 10-42 to Form
10-Q for quarter ended March 31, 2001).                                                                                                                                                                          
|99(a) |  | Belle River Participation Agreement between Detroit Edison and
Michigan Public Power Agency, dated as of December 1, 1982
(Exhibit 28-5 to Registration No. 2-81501).                                                                                                          
|99(b) |  | Belle River Transmission Ownership and Operating Agreement
between Detroit Edison and Michigan Public Power Agency, dated
as of December 1, 1982 (Exhibit 28-6 to Registration No.
2-81501).                                                                                   
|99(c) |  | Inter-Creditor Agreement (Exhibit 99-41 to Form 10-Q for
quarter ended March 31, 2001).                                                                                                                                                                                        
|99(d) |  | Amendment to Trade Receivables Purchase and Sale Agreement
(Exhibit 99-42 to Form 10-Q for quarter ended
March 31, 2001).                                                                                                                                                      
|99(e) |  | Amended and Restated Trade Receivables Purchase and Sale
Agreement (Exhibit 99-43 to Form 10-Q for quarter ended March
31, 2001).                                                                                                                                              
|99(f) |  | $300 Million Credit Agreement (Exhibit 99-1 to Form 10-Q for
quarter ended September 30, 2001.)