<PAGE>   1




                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                             ----------------------

                                    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, 1997

COMMISSION       REGISTRANTS; STATE OF INCORPORATION;         I.R.S. EMPLOYER
FILE NUMBER      ADDRESS; AND TELEPHONE NUMBER                IDENTIFICATION NO.
-----------      ------------------------------------         ------------------
1-11607          DTE Energy Company                           38-3217752
                 (a Michigan corporation)
                 2000 2nd Avenue
                 Detroit, Michigan 48226-1279
                 313-235-4000

1-2198           The Detroit Edison Company                   38-0478650
                 (a Michigan corporation)
                 2000 2nd Avenue
                 Detroit, Michigan 48226-1279
                 313-235-8000

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

  TITLE OF EACH CLASS                NAME OF EACH EXCHANGE ON WHICH REGISTERED
  -------------------                -----------------------------------------
DTE ENERGY COMPANY
------------------
Common Stock, without par value,     New York and Chicago Stock Exchanges 
with contingent preferred stock 
purchase rights 

THE DETROIT EDISON COMPANY
--------------------------
Preferred Stock (7.74% and           New York Stock Exchange
7.75% Series), Cumulative, 
$100 par value         

General and Refunding Mortgage       New York Stock Exchange
Bonds (only Series S)

Quarterly Income Debt Securities 
(QUIDS)
  (Junior Subordinated Deferrable 
  Interest Debentures
  - 8.50% and 7-5/8% Series)         New York Stock Exchange

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

                                       None     
                                ----------------     
                                (TITLE OF CLASS)

Indicate by check mark whether the registrants (1) have 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
registrants were required to file such reports), and (2) have 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. [ ]

At January 31, 1998, 145,097,829 shares of DTE Energy's Common Stock,
substantially all held by non-affiliates, were outstanding, with an aggregate
market value of approximately $5,205,384,615 based upon the closing price on the
New York Stock Exchange.

                       DOCUMENTS INCORPORATED BY REFERENCE

Certain information in DTE Energy Company's definitive Proxy Statement for its
1998 Annual Meeting of Common Shareholders to be held April 27, 1998, which will
be filed with the Securities and Exchange Commission pursuant to Regulation 14A,
not later than 120 days after the end of the Registrants' fiscal year covered by
this report on Form 10-K, is incorporated herein by reference to Part III (Items
10, 11, 12 and 13) of this Form 10-K.





<PAGE>   2








                               DTE ENERGY COMPANY
                                       AND
                           THE DETROIT EDISON COMPANY
                                    FORM 10-K
                          YEAR ENDED DECEMBER 31, 1997

     This document contains the Annual Reports on Form 10-K for the fiscal year
ended December 31, 1997 for each of DTE Energy Company and The Detroit Edison
Company. Information contained herein relating to an individual registrant is
filed by such registrant on its own behalf. Accordingly, except for its
subsidiaries, The Detroit Edison Company makes no representation as to
information relating to DTE Energy Company or any other companies affiliated
with DTE Energy Company.

                                      INDEX
<TABLE>
<CAPTION>

                                                                                                          PAGE
                                                                                                          ----
<S>                                                                                                        <C>
Definitions.............................................................................................     4

ANNUAL REPORT ON FORM 10-K FOR DTE ENERGY COMPANY:

     Part    I  - Item 1 - Business.....................................................................     5
                  Item 2 - Properties...................................................................    11
                  Item 3 - Legal Proceedings............................................................    12
                  Item 4 - Submission of Matters to a Vote of Security Holders..........................    12

     Part   II  - Item 5 - Market for Registrant's Common Equity and Related
                                Stockholder Matters.....................................................    13
                  Item 6 - Selected Financial Data......................................................    14
                  Item 7 - Management's Discussion and Analysis of Financial
                                Condition and Results of Operations.....................................    15
                  Item 8 - Financial Statements and Supplementary Data..................................    26
                  Item 9 - Changes in and Disagreements with Accountants on
                                Accounting and Financial Disclosure.....................................    61

     Part  III -  Items 10, 11, 12 and 13 - (Incorporated by
                                reference from DTE Energy Company's definitive
                                Proxy Statement which will be filed with the 
                                Securities and Exchange Commission, pursuant to 
                                Regulation 14A, not later than 120 days after 
                                the end of the fiscal year).............................................    61

ANNUAL REPORT ON FORM 10-K FOR THE DETROIT EDISON COMPANY:

     Part    I  - Item 1 - Business.....................................................................    62
                  Item 2 - Properties...................................................................    63
                  Item 3 - Legal Proceedings............................................................    63
                  Item 4 - Submission of Matters to a Vote of Security Holders..........................    63


</TABLE>
                                       2
<PAGE>   3

<TABLE>

<S>                                                                                                         <C>
     Part   II  - Item 5 - Market for Registrant's Common Equity and Related
                                Stockholder Matters.....................................................    63
                  Item 6 - Selected Financial Data......................................................    64
                  Item 7 - Management's Discussion and Analysis of Financial
                                Condition and Results of Operations.....................................    64
                  Item 8 - Financial Statements and Supplementary Data..................................    64
                  Item 9 - Changes in and Disagreements with Accountants on
                                Accounting and Financial Disclosure.....................................    66

     Part  III  - Item 10 - Directors and Executive Officers of the Registrant..........................    66
                  Item 11 - Executive Compensation......................................................    66
                  Item 12 - Security Ownership of Certain Beneficial Owners and
                                Management..............................................................    66
                  Item 13 - Certain Relationships and Related Transactions..............................    66

ANNUAL REPORTS ON FORM 10-K FOR DTE ENERGY COMPANY AND THE DETROIT EDISON
COMPANY:

     Part   IV  - Item 14 - Exhibits, Financial Statement Schedules and Reports
                                on Form 8-K.............................................................    67

Signature Page to DTE Energy Company Annual Report on Form 10-K.........................................    81
Signature Page to The Detroit Edison Company Annual Report on Form 10-K.................................    82

</TABLE>


                                       3
<PAGE>   4





                                   DEFINITIONS


Company...........   DTE Energy Company and Subsidiary Companies

Consumers.........   Consumers Energy Company (a wholly owned subsidiary of
                       CMS Energy Corporation)

Detroit Edison....   The Detroit Edison Company (a wholly owned subsidiary of
                       DTE Energy Company) and Subsidiary Companies

EPA...............   United States Environmental Protection Agency

ERA...............   Department of Energy Economic Regulatory Administration

FERC..............   Federal Energy Regulatory Commission

kWh...............   Kilowatthour

Ludington.........   Ludington Hydroelectric Pumped Storage Plant (owned jointly
                       with Consumers)

MDEQ..............   Michigan Department of Environmental Quality

MPSC..............   Michigan Public Service Commission

MW................   Megawatt

Note..............   Notes to Consolidated Financial Statements of the Company
                       and Detroit Edison

NRC...............   Nuclear Regulatory Commission

PSCR..............   Power Supply Cost Recovery

Registrant........   Company or Detroit Edison, as the case may be

SALP..............   Systematic Assessment of Licensee Performance

SEC...............   Securities and Exchange Commission

SFAS..............   Statement of Financial Accounting Standards


                                       4
<PAGE>   5

                ANNUAL REPORT ON FORM 10-K FOR DTE ENERGY COMPANY
                                     PART I

ITEM 1 - BUSINESS.

GENERAL

     The Company, a Michigan corporation incorporated in 1995, is an exempt
holding company under the Public Utility Holding Company Act. As a result of the
1996 corporate restructuring, the Company became the parent holding company of
Detroit Edison and certain previously wholly-owned Detroit Edison subsidiaries.
The Company has no significant operations of its own. Detroit Edison is the
Company's principal operating subsidiary, representing approximately 96% and
97% of the Company's assets and revenues, respectively, at December 31, 1997.
The Company has no employees. Detroit Edison has 8,506 employees and other
Company affiliates have 226 employees.

NON-REGULATED OPERATIONS

     Seven wholly-owned subsidiaries, along with various affiliates, of the
Company are engaged in non-regulated businesses, including energy-related
services and products. Such services and products include the operation of a
pulverized coal facility and a coke oven battery, coal sales and brokering,
landfill gas-to-energy facilities, providing expertise in the application of new
energy technologies, real estate development, power marketing, specialty
engineering services and retail marketing of energy and other convenience
products. An eighth wholly-owned subsidiary, DTE Capital Corporation, provides
financial services to the Company's non-regulated subsidiaries.

     At February 23, 1998, DTE Capital Corporation had a $400 million revolving 
credit agreement, backed by a Support Agreement from the Company. The Credit
Agreement provides liquidity support for a $400 million commercial paper
program, the proceeds of which are utilized to fund non-regulated operations.
At February 23, 1998, $252 million of DTE Capital commercial paper was
outstanding. DTE Capital Corporation also provides credit support for the
obligations of various non-regulated affiliates. These credit support
obligations are backed by a $60 million Support Agreement from the Company.

     Non-regulated operating revenues of $107 million for 1997 were derived
primarily from projects related to the steel industry.

UTILITY OPERATIONS

     Detroit Edison, incorporated in Michigan since 1967, is a regulated public
utility engaged in the generation, purchase, transmission, distribution and sale
of electric energy 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 

                                       5
<PAGE>   6
waters. 3,695 of Detroit Edison's 8,506 employees are represented by unions
under two collective bargaining agreements. One agreement expires in June 1999
for 3,134 employees and the other agreement expires in August 2000 for 561
employees.

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

<TABLE>
<CAPTION>
                                                  1997                      1996                       1995
                                                  ----                      ----                       ----
           Operating Revenues                                            (millions)
           ------------------
<S>                                          <C>                        <C>                       <C>
Electric
   Residential......................         $        1,179             $       1,198             $       1,211
   Commercial.......................                  1,501                     1,506                     1,496
   Industrial.......................                    726                       731                       728
   Other............................                    251                       207                       201
                                             --------------             -------------             -------------
     Total..........................         $        3,657             $       3,642             $       3,636
                                             ==============             =============             =============

<CAPTION>

                                                  1997                      1996                       1995
                                                  ----                      ----                       ----
                  Sales                                               (millions of kWh)
                  -----
<S>                                          <C>                        <C>                       <C>
Electric
   Residential......................                 12,898                    12,949                    13,006
   Commercial.......................                 17,997                    17,706                    17,471
   Industrial.......................                 14,345                    14,062                    13,825
   Other............................                  1,855                     1,690                     1,671
                                             --------------             -------------             -------------
     Total System...................                 47,095                    46,407                    45,973
   Interconnection..................                  3,547                     2,046                     2,969
                                             --------------             -------------             -------------
     Total..........................                 50,642                    48,453                    48,942
                                             ==============             =============             =============

<CAPTION>

                                                  1997                      1996                       1995
                                                  ----                      ----                       ----
         Electric Customers at Year-End                                  (thousands)
         ------------------------------
<S>                                          <C>                        <C>                       <C>
Electric
   Residential......................                  1,870                     1,847                     1,825
   Commercial.......................                    178                       175                       174
   Industrial.......................                      1                         1                         1
   Other............................                      2                         2                         2
                                             --------------             -------------             -------------
     Total..........................                  2,051                     2,025                     2,002
                                             ==============             =============             =============
</TABLE>

     Detroit Edison generally experiences its peak load and highest total system
sales during the third quarter of the year as a result of air conditioning and
cooling-related loads.

     During 1997, sales to automotive and automotive-related customers accounted
for approximately 10% of total Detroit Edison operating revenues. Detroit
Edison's 30 largest industrial customers accounted for approximately 17% of
total operating revenues in 1997, 1996 and 1995, but no one customer accounted
for more than 3% of total operating revenues.

     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 80 million tons of low-sulfur western coal to be delivered
during the period from 1998 through 2005. It also has several contracts for the
purchase of approximately 6 million tons of Appalachian coal 

                                       6
<PAGE>   7

with varying contract expiration dates through 1999. These existing long-term
coal contracts include provisions for market price reopeners and price
escalation as well as de-escalation.

   CERTAIN FACTORS AFFECTING PUBLIC UTILITIES

     The electric utility industry is facing serious issues as legislators and
regulators consider various proposals designed to reduce rates and promote
economic growth through competition and deregulation of generation assets.
Deregulation, cogeneration, independent power production, open access to
transmission lines, competitive bulk power supply markets, municipalization,
retail customer choice or open access and the unbundling of utility products and
services are issues under consideration.

     Detroit Edison is participating at both the federal and state (Michigan)
levels in legislative and administrative proceedings attempting to make the
electric energy market competitive. These proceedings, which include matters
under appeal, are dealing with the effects of competition on both public
utilities and consumers. Issues under consideration include: (1) the recovery of
stranded costs (possibly including securitization) by public utilities now
recovering capital costs under traditional ratemaking principles, (2) retail
wheeling and open transmission access, and (3) revisions to (and the possible
repeal of all or portions of) various federal and state energy-related statutes,
as well as new implementing legislation.

     Although various MPSC Orders and proposed Michigan legislation would alter
the regulatory process in Michigan and provide a plan for transition to
competition for the generation segment of the business, Detroit Edison believes
it continues to qualify under the accounting model prescribed by SFAS No. 71. In
guidance issued in 1997, the Emerging Issues Task Force (EITF) of the Financial
Accounting Standards Board concluded that the application of SFAS No. 71 to a
separable portion of a business which is subject to a deregulation plan should
cease when legislation is passed and/or a rate order is issued that contains
sufficient detail on a transition plan. The EITF also concluded that regulatory
assets and liabilities originating in the separable portion of the business
which is no longer under SFAS No. 71 should not be written off if they are
recoverable from a separable portion of business which still meets the criteria
of SFAS No. 71.

     Detroit Edison is subject to extensive environmental regulation. Additional
costs may result as the effects of various chemicals on the environment
(including nuclear waste) are studied and governmental regulations are developed
and implemented. In addition, the impact of proposed EPA ozone transport
regulations and final new air quality standards relating to particulate air
pollution are unknown. The costs of future nuclear decommissioning activities
are the subject of increased regulatory attention.

   REGULATION AND RATES

     MICHIGAN PUBLIC SERVICE COMMISSION. Detroit Edison is subject to the
general regulatory jurisdiction of the MPSC, which, from time to time, issues
its orders pertaining


                                       7
<PAGE>   8
to Detroit Edison's conditions of service, rates and recovery of certain costs,
accounting and various other matters.

     A restructuring of utility regulation is currently under consideration in
Michigan. While the orders discussed below are presently in effect, approval and
implementation of a statutory restructuring may result in substantial changes
to, if not reversal of, these orders and possible termination of the
proceedings.

     MPSC orders issued in December 1988, January 1994 and November 1997 are
currently in effect with respect to Detroit Edison's rates and certain other
revenue and operating-related matters.

     In January 1994, the MPSC issued an order reducing Detroit Edison's rates
in the amount of $78 million annually. The order was appealed before the
Michigan Court of Appeals, which issued a favorable opinion on February 7, 1997.
The Court's decision is now the subject of a motion for rehearing. See "Item 7
Electric Industry Deregulation" for a complete discussion of MPSC matters
related to deregulation.

     PSCR - A July 1997 order of the MPSC was issued directing Detroit Edison to
credit $20.1 million, a total of the 1995 PSCR reconciliation and Fermi 2
Performance Standard disallowances, against the performance standard bank
established in the 1994 settlement of the Fermi 2 turbine outage.

     A January 1998 order, addressing restructuring issues, instructed Detroit
Edison to amend its 1998 PSCR filing to address the level at which the PSCR
clause, currently a negative 2.30 mills/kWh billing factor, should be suspended,
as well as how the Fermi 2 performance standard adjustment should be modified
when this suspension becomes effective.

     Retail Wheeling - The MPSC has been considering the propriety of an
experimental retail wheeling program. In June 1995, the MPSC issued a final
order finding that a 90 MW experimental retail wheeling program for Detroit
Edison was appropriate. Detroit Edison appealed asserting that the MPSC lacks
authority to compel retail wheeling. In January 1998, the Michigan Court of
Appeals ruled that the MPSC had sufficient statutory authority under Michigan
law to authorize an experimental retail wheeling program.

     FEDERAL ENERGY REGULATORY COMMISSION. Detroit Edison is subject to the
general jurisdiction of the FERC with respect to accounting, sales for resale in
interstate commerce, certain transmission services, issuances of securities, the
licensing of hydro-electric and pumping stations and other matters. Detroit
Edison's electric transmission facilities, interconnected with those of Ontario
Hydro at the United States - Canada border, are subject to safety regulation by
various departments of the United States government and to a permit administered
by the ERA. The transmission of electric energy to Ontario Hydro is subject to
regulation by the FERC and the ERA. See "Item 7 - Federal Energy Regulatory
Commission" for further discussion of FERC related matters.



                                       8
<PAGE>   9
     NUCLEAR REGULATORY COMMISSION. The NRC has regulatory jurisdiction over all
phases of the operation, construction (including plant modifications), licensing
and decommissioning of Fermi 2.

     In January 1998, the NRC issued a SALP report on Fermi 2 operations during
the period from March 31, 1996 through November 7, 1997. The NRC increased the
rating of plant operations from "adequate" to "good." The ratings for the three
other areas remained unchanged from the last report; maintenance - "good",
engineering - "good" and plant support - "superior."

   ENVIRONMENTAL MATTERS

     DETROIT EDISON

     Detroit Edison, in common with other electric utilities, is subject to
applicable permit and associated record keeping requirements and to increasingly
stringent federal, state and local standards covering, among other things,
particulate and gaseous stack emission limitations, the discharge of effluents
(including heated cooling water) into lakes and streams and the handling and
disposal of waste material.

     AIR. During 1997, the EPA issued proposed ozone transport regulations and
final new air quality standards relating to ozone and particulate air pollution.
The proposed new rules will lead to additional controls on fossil-fueled power
plants to reduce nitrogen oxides, sulfur dioxide, carbon dioxide and particulate
emissions. See "Item 7 - Environmental Matters" for further discussion.

     WATER. Detroit Edison is required to demonstrate that the cooling water
intake structures at all of its facilities reflect the "best technology
available for minimizing adverse environmental impact." Detroit Edison filed
such demonstrations and the MDEQ Staff accepted all of them except those
relating to the St. Clair and Monroe Power Plants for which it requested further
information. Detroit Edison has subsequently submitted the information. In the
event of a final adverse decision, Detroit Edison may be required to install
additional control technologies to further minimize the impact.

      WASTES AND TOXIC SUBSTANCES. The Michigan Solid Waste and Hazardous Waste
Management Acts, the Michigan Environmental Response Act, the Federal Resource
Conservation and Recovery Act, Toxic Substances Control Act, and the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980
regulate Detroit Edison's handling, storage and disposal of its waste materials.

      The EPA and the 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 that it will be periodically included in these types of
environmental proceedings.


                                       9
<PAGE>   10


      NON-REGULATED

      The Company's non-regulated subsidiaries and affiliates are subject to a
number of environmental laws and regulations dealing with the protection of the
environment from various pollutants. These non-regulated subsidiaries and
affiliates are in substantial compliance with all environmental requirements.

EXECUTIVE OFFICERS OF THE REGISTRANT

<TABLE>
<CAPTION>


                                                                                                        PRESENT
                                                                                                       POSITION
            NAME                   AGE(a)                  PRESENT POSITION                          HELD SINCE (b)
-------------------------------------------------------------------------------------------------------------------
     <S>                            <C>    <C>                                                          <C>
     John E. Lobbia..............   56(c)  Chairman of the Board and Chief Executive Officer            1-26-95
     Anthony F. Earley, Jr.......   48(c)  President and Chief Operating Officer                        1-26-95
     Larry G. Garberding.........   59     Executive Vice President and Chief Financial Officer         1-26-95
     Gerard M. Anderson..........   39     Executive Vice President                                      4-1-97
     Robert J. Buckler...........   48     Executive Vice President                                      4-1-97
     Michael E. Champley.........   49     Senior Vice President                                         4-1-97
     Susan M. Beale..............   49     Vice President and Corporate Secretary                      12-11-95
     Leslie L. Loomans...........   54     Vice President and Treasurer                                 1-26-95
     David E. Meador.............   40     Vice President and Controller                                3-29-97
     Christopher C. Nern.........   53     Vice President and General Counsel                           1-26-95
</TABLE>

     (a) As of December 31, 1997
     (b) The Company was incorporated in January 1995, and, at that time,
         certain officers of Detroit Edison were appointed officers of the
         Company.
     (c) On February 23, 1998 John E. Lobbia, Chairman and Chief Executive
         Officer of the Company and Detroit Edison announced that he will
         retire effective August 1, 1998.  The Boards of both companies have
         elected current President and Chief Operating Officer, Anthony F.
         Earley, Jr. to fill both positions effective August 1, 1998 while
         continuing with his present duties.  Mr.  Lobbia will remain a 
         director of both companies.

     Under the Company's By-Laws, the officers of the Company are elected
annually by the Board of Directors at a meeting held for such purpose, each to
serve until the next annual meeting of directors or until their respective
successors are chosen and qualified.

     Pursuant to Article VI of the Company's Articles of Incorporation,
directors of the Company will not be personally liable to the Company or its
shareholders in the performance of their duties to the full extent permitted by
law.

     Article VII of the Company's Articles of Incorporation provides that each
person who is or was or had agreed to become a director or officer of the
Company, or each such person who is or was serving or who had agreed to serve at
the request of the Board of Directors as an employee or agent of the Company or
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (including the heirs, executors,
administrators or estate of such person), shall be indemnified by the Company to
the full extent permitted by the Michigan Business Corporation Act or any other
applicable laws as presently or hereafter in effect. In addition, the Company
has entered into indemnification agreements with all of its officers and
directors, which agreements set forth procedures for claims for indemnification
as well as contractually obligating the Company to provide indemnification to
the maximum extent permissible by law.

                                       10
<PAGE>   11
     The Company and its directors and officers in their capacities as such are
insured against liability for wrongful acts (to the extent defined) under three
insurance policies providing aggregate coverage in the amount of $95 million.

     OTHER INFORMATION.  Pursuant to the provisions of the Company's  By-Laws, 
the Board of Directors has by resolution set the number of directors comprising 
the full Board at 13.

ITEM 2 - PROPERTIES.

     DETROIT EDISON

     The summer net rated capability of Detroit Edison's generating units is as
follows:

<TABLE>
<CAPTION>

                                                             Summer Net
                                     Location By      Rated Capability (1) (2)
                                      Michigan        ------------------------                 Year
           Plant Name                  County            (MW)              %                in Service
-------------------------------------------------------------------------------------------------------------
<S>                                   <C>              <C>             <C>          <C>
Fossil-fueled Steam-Electric
   Belle River (3)                    St. Clair          1,026           10.0%      1984 and 1985
   Greenwood                          St. Clair            785            7.7       1979
   Harbor Beach                       Huron                103            1.0       1968
   Marysville                         St. Clair            167            1.6       1930, 1943 and 1947
   Monroe (4)                         Monroe             3,000           29.3       1971, 1973 and 1974
   River Rouge                        Wayne                500            4.9       1957 and 1958
   St. Clair                          St. Clair          1,379           13.5       1953, 1954, 1961 and 1969
   Trenton Channel                    Wayne                725            7.1       1949, 1950 and 1968
                                                       -------         ------
                                                         7,685           75.1%

Oil or Gas-fueled Peaking Units       Various              525            5.1       1966-1971 and 1981
Nuclear-fueled Steam-Electric
   Fermi 2 (5)                        Monroe             1,098           10.7       1988
Hydroelectric Pumped Storage
   Ludington (6)                      Mason                917            9.1       1973
                                                       -------         ------
                                                        10,225           100%
                                                       =======         ======
</TABLE>
----------------------------
(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 two oil-fueled  units,  River Rouge Unit No. 1 (206 MW) and St.
      Clair Unit No. 5 (250 MW), and one coal-fueled  power plant, Conners 
      Creek (236 MW), all 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 4.

(4)   The Monroe Power Plant provided approximately 43% of Detroit Edison's 
      total 1997 power plant generation.

(5)   Fermi 2 has a design electrical rating (net) of 1,139 MW.

(6)   Represents  Detroit  Edison's 49% interest in Ludington with a total  
      capability of 1,872 MW. Detroit Edison is leasing 312 MW to The Toledo 
      Edison Company for the six-year period June 1, 1996 through May 31, 2002.

                                       11
<PAGE>   12


     Detroit Edison and Consumers are parties to an Electric Coordination
Agreement providing for emergency assistance, coordination of operations and
planning for bulk power supply, with energy interchanged at nine
interconnections. Detroit Edison and Consumers also have interchange agreements
to exchange electric energy through 12 interconnections with The Toledo Edison
Company, Indiana Michigan Power Company, Northern Indiana Public Service Company
and Ontario Hydro. In addition, Detroit Edison has interchange agreements for
the exchange of electric energy with Michigan South Central Power Agency, Rouge
Steel Company and the City of Wyandotte.

     Detroit Edison also purchases energy from cogeneration facilities and other
small power producers. Energy purchased from cogeneration facilities and small
power producers amounted to $31.3 million, $28.3 million and $20.6 million for
1997, 1996 and 1995, respectively, and is currently estimated at $35.3 million
for 1998.

     Detroit Edison's electric generating plants are interconnected by a
transmission system operating at up to 345 kilovolts through 94 transmission
stations. As of December 31, 1997, electric energy was being distributed in
Detroit Edison's service area through 583 substations over 3,013 distribution
circuits.

     NON-REGULATED

     Non-regulated property primarily consists of a coke oven battery facility
and a coal processing facility located in River Rouge, Michigan, along with 13
landfill gas projects located throughout the United States.

ITEM 3 - LEGAL PROCEEDINGS.

     Detroit Edison in the ordinary course of its business, is involved in a
number of suits and controversies including claims for personal injuries and
property damage and matters involving zoning ordinances and other regulatory
matters. As of December 31, 1997, Detroit Edison was named as defendant in 125
lawsuits involving claims for personal injuries and property damage and had been
advised of 30 other potential claims not evidenced by lawsuits.

     From time to time, Detroit Edison has paid nominal penalties which were
administratively assessed by the United States Coast Guard, United States
Department of Transportation under the Federal Water Pollution Control Act, as
amended, with respect to minor accidental oil spills at Detroit Edison's power
plants into navigable waters of the United States. Payment of such penalties
represents full disposition of these matters.

     See "Note 11 - Commitments and Contingencies" for additional information.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     None during the fourth quarter of 1997.


                                       12
<PAGE>   13


                                     PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The Company's Common Stock is listed on the New York Stock Exchange, which
is the principal market for such stock, and the Chicago Stock Exchange. The
following table indicates the reported high and low sales prices of the
Company's Common Stock on the Composite Tape of the New York Stock Exchange and
dividends paid per share for each quarterly period during the past two years:

<TABLE>
<CAPTION>

                                  PRICE RANGE                    DIVIDENDS
                                  -----------                      PAID
     CALENDAR QUARTER           HIGH        LOW                  PER SHARE
     ----------------           ----        ---                  ---------
     <S>        <C>            <C>        <C>                     <C>
     1996       First          37-4/16    33-2/16                  $0.515
                Second         34-4/16    28                        0.515
                Third          31         27-10/16                  0.515
                Fourth         33-2/16    27-14/16                  0.515

     1997       First          32-14/16   26-4/16                  $0.515
                Second         28-6/16    26-2/16                   0.515
                Third          32-14/16   27-8/16                   0.515
                Fourth         34-12/16   28-1/16                   0.515
</TABLE>

     At December 31, 1997, there were 145,097,829 shares of the Company's Common
Stock outstanding. These shares were held by a total of 121,864 shareholders of
record.

     The Company's By-Laws provide that Chapter 7B of the Michigan Business
Corporation Act ("Act") does not apply to the Company. The Act regulates
shareholder rights when an individual's stock ownership reaches at least 20
percent of a Michigan corporation's outstanding shares. A shareholder seeking
control of the Company cannot require the Company's Board of Directors to call a
meeting to vote on issues related to corporate control within 10 days, as
stipulated by the Act. See "Note 6 - Shareholders' Equity" for additional
information.

     The amount of future dividends will depend on the Company's earnings,
financial condition and other factors, including the effects of utility
restructuring efforts, each of which is periodically reviewed by the Company's
Board of Directors.


                                       13
<PAGE>   14


ITEM 6 - SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>

                                                                Year Ended December 31
                                          ---------------------------------------------------------
                                          1997          1996           1995       1994         1993
                                          ----          ----           ----       ----         ----
                                                       (Millions, except per share amounts)
<S>                                         <C>          <C>         <C>        <C>       <C>
Operating Revenues........................  $   3,764    $   3,645   $  3,636   $ 3,519   $  3,555
Net Income................................  $     417    $     309   $    406   $   390   $    491
Earnings Per Common Share - Basic
   and Diluted............................  $    2.88    $    2.13   $   2.80   $  2.67   $   3.34
Dividends Declared Per
   Share of Common Stock..................  $    2.06    $    2.06   $   2.06   $  2.06   $   2.06
At year end:
   Total Assets...........................  $  11,223    $  11,015   $ 11,131   $10,993   $ 11,135
   Long-Term Debt Obligations
     (including capital leases) and
     Redeemable Preferred and
     Preference Stock Outstanding.........  $   4,058    $   4,038   $  4,004   $ 3,980   $  4,008
</TABLE>

                                       14
<PAGE>   15
ITEM 7-MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF
OPERATIONS


This discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and accompanying Notes thereto, contained
herein.

The Detroit Edison Company (Detroit Edison) is the principal subsidiary of DTE
Energy Company (Company) and, as such, unless otherwise identified, this
discussion explains material changes in results of operations of both the
Company and Detroit Edison and identifies recent trends and events affecting
both the Company and Detroit Edison.


CORPORATE STRUCTURE

On January 1, 1996, Detroit Edison's common stock was exchanged on a
share-for-share basis for the common stock of the Company; and the Company
became the parent holding company of Detroit Edison.  The holding company
structure was adopted to position the Company for changes in the electric
utility industry by providing financial flexibility for the development of new
non-regulated energy-related businesses.  It is also a mechanism for separating
the  regulated utility business of Detroit Edison from non-regulated businesses
thereby ensuring compliance with regulatory requirements.


GROWTH

The Company and its principal subsidiary, Detroit Edison, are developing
business strategies to remain competitive and stimulate growth.  Detroit Edison
will continue to focus on the success of its core generation business and local
distribution company.  Aggressive cost control efforts are expected to place
Detroit Edison among the top tier of coal-fired generators in North America.
An Operational Excellence Plan at Fermi 2 is designed to ensure safety and
reliability, while reducing operating and maintenance costs.  The Systematic
Assessment of Licensee Performance (SALP) Report, covering the period March 1996
through November 1997, recognized that successful implementation of this plan
resulted in significant improvements in operations.  Detroit Edison's
transmission and distribution network will be strengthened by continued
emphasis on customer service and reliability.

Detroit Edison's electric power sales and system demand have grown at
compounded annual rates of about 3% per year for the past five years.  While
the introduction of competition is expected to reduce system growth, electric
power sales for the service territory are projected to increase at a compound
annual rate of about 2% over the next five years.

Non-regulated affiliates and joint ventures have been established as the
Company pursues businesses apart from the regulated operations of Detroit
Edison.  The

                                     15


<PAGE>   16

Company is pursuing a variety of energy related business opportunities.  In
1997:


-    The Company, through its non-regulated subsidiary, EES Coke Battery
     Company, Inc., acquired a coke oven battery (a facility to process coal
     used in the production of steel) and related assets in River Rouge,
     Michigan.

-    The Company has formed a new power marketing subsidiary, DTE Energy
     Trading, Inc., in response to industry deregulation and related market
     opportunities.  The new subsidiary will market and trade electricity and
     natural gas physical products and financial instruments and provide risk
     management services.

-    The Company formed DTE-CoEnergy L.L.C., a joint venture with CoEnergy
     Trading Co., a MCN Energy Group, Inc. subsidiary, to sell natural gas and
     electricity to customers.

-    The Company formed Plug Power L.L.C., a joint venture with Mechanical
     Technology, Inc.  The primary focus of Plug Power will be to develop small
     fuel cells for use in homes.

-    The Company, through its non-regulated subsidiary, DTE Rail Services,
     Inc., acquired railcar maintenance, repair, storage and interchange
     facilities.



ELECTRIC INDUSTRY DEREGULATION

Federal and state legislators and regulators are working to introduce
competition and customer choice into the generation segment of the electric
public utility industry, believing that competition will lead to reduced
electric rates and stimulate economic growth.  Detroit Edison has been
voluntarily participating in these efforts.  Traditional utility services are
being unbundled, with many of such services becoming non-regulated; and a
demand is being created for new energy-related services.

As discussed below, there are ongoing Michigan legislative, judicial and
administrative proceedings considering the deregulation of the generation
segment of the Michigan electric public utility industry, among other things.
Neither the Company nor Detroit Edison are able to predict the outcome or
timing of these proceedings.

Michigan Public Service Commission (MPSC)

Detroit Edison is regulated at the state level by the MPSC, which agency has
been considering various proposals to implement a competitive electric utility
marketplace.  The December 1996 MPSC Staff Report on Electric Utility
Restructuring set forth principles Detroit Edison believes to be vital to a
fair and orderly transition to competition.

In a February 1997 Order, the MPSC requested that Detroit Edison make an
informational filing disclosing how the Staff Report would be implemented.  In
March
                                     16


<PAGE>   17

1997, Detroit Edison filed its response with the MPSC.  Detroit Edison  
continues to support its position that direct access must be coupled with the
opportunity to recover stranded costs.  Detroit Edison also proposed a plan for
the recovery of stranded costs, including securitization of approximately $2.8
billion and transition charges to be assessed to customers leaving the system. 
Detroit Edison proposed to mitigate approximately $800 million of stranded
costs through reductions in operation and maintenance expenses.  In addition,
because deregulation of electric markets will result in financial uncertainty
and risk to the shareholders of the Company, Detroit Edison will bear the risk
of lost electricity sales due to customer choice.

In a June 1997 Order implementing restructuring, the Commission modified
several of the recommendations contained in the Staff Report and Detroit
Edison's March filing, and left several key items to be resolved through
additional hearings.  It supported a phased-in approach to open access, but
indicated it was premature to support securitization because legislation is
required and there are unresolved tax issues.  It indicated that, due to
uncertainty regarding the future price of electricity, a true-up mechanism
should be established to adjust revenues intended to recover potential stranded
costs.  The MPSC also required additional hearings to consider how the true-up
mechanism would work, and to consider the appropriate level to freeze the Power
Supply Cost Recovery Clause (PSCR).  Detroit Edison was required to file
tariffs, subject to additional hearings.  The June Order also indicated that
December 31, 2007 would be the last day for collecting revenues to recover
stranded costs.

Thereafter, in October 1997, the MPSC issued a series of Orders, with one of
the three MPSC Commissioners dissenting, which provided for a competitive
direct access program for Detroit Edison.  These Orders did not provide a
definitive basis for Detroit Edison to recover its potentially stranded costs,
substantially all of which costs were fully litigated in previous rate
proceedings before the MPSC.  On January 14, 1998, in response to motions for 
rehearing, the MPSC, with one Commissioner dissenting, issued a
Restructuring Order.  In this Order, the MPSC expressed its long-standing view
(disputed by Detroit Edison) that it has authority under Michigan state law to
establish a mandatory direct access program.  The Order established a phase-in
schedule for open access, providing for Detroit Edison to implement the program
in incremental blocks of 225 megawatts in March and June 1998 and January 1999,
2000 and 2001, with all remaining customers having the option of choosing open
access service on January 1, 2002.  Portions of the program are subject to the
final approvals of the Federal Energy Regulatory Commission (FERC).  Using an
estimated market price for power of 2.9 cents per kilowatthour, the Commission
found that Detroit Edison's stranded costs were $2.48 billion and that a
transition charge of 1.25 cents per kilowatthour was appropriate.  Detroit
Edison is uncertain whether the transition charge will be sufficient to recover
its stranded costs. A securitization charge was not established, with the
Commission indicating that such a determination should await enabling state
legislation.  The Commission also determined that Detroit Edison's PSCR should
be suspended one month after open access load reaches 225 megawatts and that
open access customers should have rates providing for the collection of nuclear
decommissioning and site security charges.

                                     17


<PAGE>   18


The provisions of the October 1997 Orders providing for an annual proceeding
for stranded cost recovery true-up based upon the actual price paid by direct
access customers and the limitation of reciprocity prior to completion of the
phase-in period only to utilities and utility affiliates remained unchanged by
the Restructuring Order.

The January 14, 1998 MPSC Order called for the filing of tariffs to implement
the restructuring plan by June 28, 1998.  On January 21, 1998, the Commission
issued an Order indefinitely delaying the filing of tariffs and requiring,
instead, the filing of any motions for clarification by January 28, 1998
addressing issues raised by the January 14th Order.  As directed by the MPSC,
Detroit Edison has made filings requesting, among other things, clarification
of the manner in which the stranded cost true-up mechanism would work.  Detroit
Edison indicated in its filing that the mechanism as currently contemplated may
be insufficient to allow recovery of all stranded costs.

The implementation of a competitive electric industry in Michigan will also
require new state legislation.  On October 7, 1997, Michigan House Bill 5245
was introduced.  While this proposed legislation provides for the restructuring
of the electric utility industry, it substantially differs from the competitive
program contemplated by the MPSC.  Legislation more consistent with 1997 and
1998 MPSC Orders is expected to be introduced in the Michigan Legislature in
the first quarter of 1998.

On January 20, 1998, the Michigan Court of Appeals ruled that the MPSC had
sufficient statutory authority under Michigan law to authorize an experimental
retail wheeling program.  On February 10, 1998, Detroit Edison requested the
Michigan Supreme Court to grant leave to appeal the January 20, 1998, Michigan
Court of Appeals decision.

Federal Energy Regulatory Commission

Detroit Edison is regulated at the federal level by the FERC with respect to
accounting, sales for resale in interstate commerce, certain transmission
services, issuances of securities, licensing of hydro-electric and pumping
stations and other matters.

In 1996, the FERC issued Order 888 which requires public utilities to file open
access transmission tariffs for wholesale transmission services in accordance
with non-discriminatory terms and conditions and Order 889 which requires
public utilities and others to obtain transmission information for wholesale
transactions through a system on the Internet.  Order 889 also requires public
utilities to separate transmission operations from wholesale marketing
functions. During 1997, the FERC issued clarifications of  these Orders.

In July 1996, Detroit Edison filed its Pro Forma Open Access Transmission
Tariff in compliance with FERC Order 888.  During 1997, Detroit Edison was able
to negotiate a partial settlement regarding the price and terms and conditions
of certain services provided as part of the tariff.  Several remaining issues
could not be resolved through negotiation and are being litigated.  A decision
on the litigated issues is expected in 1998.  Rates currently being utilized
for transmission are consistent with the settlement

                                     18


<PAGE>   19

achieved and are subject to refund upon the FERC's decision regarding the
issues being litigated.

Detroit Edison has a power pooling agreement with Consumers Energy Company
(Consumers Energy).  In March 1997, the joint transmission tariff, filed by
Detroit Edison and Consumers Energy with the FERC in December 1996, became
effective. In compliance with FERC Order 888, the tariff modified the pooling
agreement to permit third-party access to transmission facilities utilized for
pooled operations under non-discriminatory terms and conditions.  As Detroit
Edison and Consumers Energy were unable to agree on other modifications to the
pooling agreement, Detroit Edison has requested that the FERC approve its
termination.  Consumers Energy has requested that the pooling agreement be
continued.  The FERC has not ruled on either of these requests.

In February 1997, Detroit Edison received permission to sell wholesale power at
cost-based and market-based rates per tariffs approved by the FERC. In
September 1997, Detroit Edison received permission from the FERC to sell power
to affiliates under various terms and conditions.  As a condition of the
agreement, the FERC imposed posting requirements on an electronic bulletin
board to prevent Detroit Edison from providing preferential market information
to an affiliate, or engaging in preferential wholesale power sales discounting.

Detroit Edison is unable to estimate the revenue impact, if any, of these newly
required tariffs and procedures.


ENVIRONMENTAL MATTERS

Protecting the environment from damage, as well as correcting past
environmental damage, continues to be a focus of state and federal regulators.
Legislation and/or rulemaking could further impact the electric utility
industry including Detroit Edison.  The Environmental Protection Agency (EPA)
and the Michigan Department of Environmental Quality have aggressive programs
regarding the clean-up of contaminated property.  Detroit Edison anticipates
that it will be periodically included in these types of environmental
proceedings.

During 1997, the EPA issued proposed ozone transport regulations and final new
air quality standards relating to ozone and particulate air pollution.  A
tentative international agreement was reached to address global climate change.
The proposed new rules will lead to additional controls on fossil-fueled power
plants to reduce nitrogen oxides, sulfur dioxide, carbon dioxide and fine
particulate emissions.  Unless the rulemaking process results in major
revisions to the proposal, Detroit Edison estimates that controls could cost
more than $400 million to meet the ozone transport regulations.  Until the
timing and required level of emissions reduction is determined, Detroit Edison
is unable to predict what impact the initiatives may have.  Following the
conclusion of all proceedings, it is expected that Detroit Edison's costs will
increase, perhaps substantially.  Additional environmental costs would be
expected to be recovered under traditional ratemaking 

                                     19


<PAGE>   20


principles.  However, Detroit Edison is unable to predict what effect,
if any, deregulation of the electric utility industry would have on
recoverability of such environmental costs.


LIQUIDITY AND CAPITAL RESOURCES

Cash Provided by Operating Activities

The Company generates substantial cash flows from operating activities as shown
in the Consolidated Statement of Cash Flows.  Net cash from operating
activities, which is the Company's primary source of liquidity, was $1,006
million in 1997, $1,079 million in 1996 and $913 million in 1995.  Net cash
from operating activities decreased in 1997 compared to 1996 due primarily to
changes in inventory levels.  Net cash from operating activities increased in
1996 compared to 1995 due primarily to changes in accounts receivable, mainly
as a result of the 1995 repurchase of customer accounts receivable and unbilled
revenues.

Internal cash generation is expected to be sufficient to meet cash requirements
for Detroit Edison's capital expenditures as well as the Company's scheduled
long-term debt redemption requirements.

Cash Used for Investing Activities

Net cash used for investing activities was higher for the Company in 1997 due
to the acquisition of the coke oven battery, a non-regulated expenditure.  For
Detroit Edison, net cash used for investing was lower in 1997 due primarily to
lower plant and equipment expenditures.  In 1996, net cash used for investing
activities increased due primarily to higher plant and equipment expenditures.

Cash requirements for 1997 non-regulated investments and capital expenditures
were $228 million and are estimated to be approximately $400 million in 1998.
Significant non-regulated investments are expected to be externally financed.

Detroit Edison's cash requirements for capital expenditures are expected to be
approximately $2.5 billion for the period 1998 through 2002.  In 1998, cash
requirements for capital expenditures are estimated at $575 million.  Detroit
Edison has no plans to build any additional electric generating plants.

Cash Used for Financing Activities

Net cash used for Company financing activities decreased in 1997 compared to
1996 due primarily to the issuance of non-recourse debt for the acquisition of
a coke oven battery, an increase in short-term borrowings, and a reduction in
redemption of preferred stock, partially offset by higher redemptions of
long-term debt.



                                     20


<PAGE>   21


Net cash used for financing activities increased in 1996 compared to 1995 due
primarily to the redemption of preferred stock.

The following securities were redeemed by the Company in 1997:


<TABLE>
<S>                                                       <C>  
DETROIT EDISON GENERAL AND REFUNDING MORTGAGE BONDS
        Mandatory Redemptions
               1990 Series A, B, C
                  7.9% - 8.4% redeemed in March           $         19
               1993 Series G
                  5.4% redeemed in May                             125
                                                          ------------
                                                                   144
                                                          ------------
        Open Market Purchases
               1993 Series E, J
                  7.7% - 7.8% redeemed in January,                     
                  March and April                                   41 
                                                          ------------ 
        TOTAL                                                      185 
                                                          ------------ 
      NON-RECOURSE DEBT
        7.2% redeemed in October and December                       11
                                                          ------------

      TOTAL REDEMPTIONS                                   $        196
                                                          ============ 
</TABLE>


In February 1998, Detroit Edison will redeem $150 million of 6.4% Series S 
General and Refunding Mortgage Bonds due October 1, 1998.


MARKET RISK SENSITIVITY

Detroit Edison has investments valued at market of $239 million in three
nuclear decommissioning trust funds.  These investments consist of
approximately 40% in fixed debt instruments and approximately 60% in
publicly traded equity securities.  A hypothetical 10% increase in interest
rates and a 10% decrease in equity prices quoted by stock exchanges would
result in an $8 million and $10 million reduction in the fair value of debt and
equity securities, respectively, held by the trusts at December 31, 1997.
Adjustments to market value would result in a corresponding adjustment to
accumulated depreciation or other liabilities, as applicable, based on current
regulatory treatment.  

A hypothetical 10% decrease in interest rates would increase the fair value of
long-term debt from $4.2 billion to $4.6 billion at December 31, 1997.


YEAR 2000

The Company has been involved in an enterprise-wide program to modify its
computer applications and operating systems to be Year 2000 compliant.  The
total cost of the 
                                      21

<PAGE>   22

program is being determined as part of the planning process. Initial
estimates of the costs are approximately $50 million. Modification costs will
be expensed as incurred, while the costs of new software will be capitalized and
amortized over the software's useful life. The Company believes that with the
above modifications, the Year 2000 will not have a material impact on the
operations of the Company. The Company also believes that the cost of these
modifications will not have a material effect on its financial position,
liquidity and results of operations.


RESULTS OF OPERATIONS

Net income for 1997 was $417 million, or $2.88 per share, up $108 million over
1996 earnings.  After adjusting 1996 earnings for the steam heating special
charge, 1997 earnings reflect a 2.7% increase over the prior year.

The decrease in net income for 1996 was due to a $149 million ($97 million
after-tax), or $0.67 per share, special charge following completion of Detroit
Edison's review of its steam heating operations.

The increase in net income for 1995 was due to higher sales of electricity.
The sales increase was partially offset by higher operating expenses, including
a non-cash loss of $42 million ($32 million after-tax), or $0.22 per common
share, on Detroit Edison's steam heating business due to the Company's adoption
in the fourth quarter of 1995 of Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of."


<TABLE>
<CAPTION>

OPERATING REVENUES

Total operating revenues increased (decreased) due to the following factors:

                                                   1997            1996
                                                  ----------------------
Detroit Edison                                          (Millions)
<S>                                               <C>             <C>
 Rate Changes                                     $  (62)         $  (29)
 System sales volume and mix                          27              28
 Sales between utilities                              48              (6)
 Fermi 2 performance disallowances                    (3)             12
 Other - net                                           5               1
                                                  ----------------------
   Total Detroit Edison                               15               6
Non-regulated                                        104               3
                                                  ----------------------
Total                                             $  119          $    9
                                                  ======================
</TABLE>

                                      22

<PAGE>   23


<TABLE>
<CAPTION>
Detroit Edison kilowatthour sales increased (decreased) from the prior year as
follows: 

                                       1997                1996
                                      ----------------------------     
<S>                                    <C>                <C>
Residential                            (0.4)  %            (0.4)  %
Commercial                              1.6                 1.3
Industrial                              2.0                 1.7
Other (primarily sales for resale)      9.7                 1.2
 Total System                           1.5                 0.9
Sales between utilities                73.4               (31.1)
 Total                                  4.5                (1.0)
</TABLE>                                                                  


In 1997 and 1996, residential sales decreased due to less heating and cooling
demand which more than offset growth in the customer base.  Commercial and
industrial sales increased for both periods reflecting a continuation of good
economic conditions.  Sales to other customers increased in both periods due to
a greater demand for energy.  Sales between utilities also increased in 1997
due to greater demand for energy and increased availability of energy for sale.
Sales between utilities decreased in 1996 due to lower demand for energy.

In 1997, other non-regulated operating revenues increased due primarily to
revenues from EES Coke Battery Company, Inc. and PCI Enterprises Company (DTE
Energy Services, Inc. subsidiaries).

OPERATING EXPENSES

Fuel and Purchased Power

Net system output and average fuel and purchased power unit costs per
Megawatthour (MWh) were as follows:

<TABLE>
<CAPTION>
                                         1997      1996       1995
                                       -----------------------------
                                             (Thousands of MWh)
  <S>                                  <C>      <C>        <C>
  Power plant generation               
   Fossil                               42,162     41,829     41,636
   Nuclear                               5,523      4,750      5,092
  Purchased power                        6,146      5,149      5,423
                                       -----------------------------
  Net system output                     53,831     51,728     52,151
                                       =============================
  Average unit cost ($/MWh)            $ 14.54    $ 15.03    $ 15.29
                                       =============================
</TABLE>


In 1997, fuel expense decreased due to the termination of high cost long-term
coal contracts, reduction in coal contract buyout expense and a decrease in
nuclear fuel costs.  Higher purchased power expense was due primarily to
increased purchases of power while Fermi 2 was shut down.

In 1996, fuel and purchased power expense decreased due to lower average unit
costs related to declining fuel prices resulting from greater use of lower-cost
western low-sulfur coal and a decrease in nuclear fuel costs, and lower net
system output, partially offset by a reduction in the receipt of Fermi 2
business interruption insurance proceeds.

                                      23


<PAGE>   24


Operation and Maintenance

In 1997, Company operation and maintenance expenses increased $49 million due
primarily to increased non-regulated subsidiary (mainly EES Coke Battery
Company, Inc. and PCI Enterprises Company) expenses of $95 million offset by
lower net Detroit Edison operation and maintenance expenses.

As a result of stringent cost controls, Detroit Edison operation and
maintenance expenses decreased in 1997 due primarily to lower postretirement
benefit ($18.8 million) and fossil generation ($15.1 million) expenses, lower
minor storm and trouble work ($13.6 million), the Fermi 2 outage accrual in 1996
($13 million) and receipt of additional insurance proceeds related to the
1993 Fermi 2 turbine replacement ($9.8 million), partially offset by higher
compensation expenses related to a shareholder value improvement plan 
($25.7 million).

Operation and maintenance expense increased in 1996 due primarily to higher
overhead and underground lines support ($26.1 million), nuclear plant expenses
($16.6 million), operating and development expense related to new computer
systems ($12 million), non-utility operations expense ($8.2 million),
administrative and general expenses ($8.2 million) and employee benefits ($7.9
million) expenses.  These increases were partially offset by lower compensation
expenses related to a shareholder value improvement plan ($14.2 million),
expenses recorded in the year earlier period for the write-off of obsolete and
excess stock material ($12 million) and lower major storm expenses 
($8.8 million).

Depreciation and Amortization

Depreciation and amortization expense increased in 1997 due primarily to
increases in property, plant and equipment.

Depreciation and amortization expense increased in 1996 due primarily to
increases in property, plant and equipment, including internally developed
software costs, and increased Fermi 2 decommissioning costs.

Other

Other operating expense increased in 1997 due to increased legal expenses
($19.5 million).

Other operating expense decreased in 1996 due to lower promotional expense
($5.3 million) and expenses recorded in the prior year for the formation of a
holding company ($3.1 million).


                                      24


<PAGE>   25


INTEREST EXPENSE AND OTHER

Interest Expense

Interest expense increased in 1997 due primarily to the issuance of debt to
finance asset acquisitions of non-regulated subsidiaries, partially offset by
Detroit Edison's mandatory and optional redemption of debt.

Interest expense decreased in 1996 due primarily to Detroit Edison's mandatory
and optional redemption of debt.

Other - net

Other-net increased in 1997 due primarily to higher accretion expense ($9.5
million), lower accretion income ($3 million) and the write down of an equity
investment ($5 million).

Other-net decreased in 1996 due primarily to expenses recorded in the prior
year for the sale of accounts receivable and unbilled revenues ($3.1 million).


FORWARD-LOOKING STATEMENTS

Certain information presented herein is based on the expectations of the
Company and Detroit Edison, and, as such, is forward-looking.  The Private
Securities Litigation Reform Act of 1995 encourages reporting companies to
provide analyses and estimates of future prospects and also permits reporting
companies to point out that actual results may differ from those anticipated.

Actual results for the Company and Detroit Edison may differ from those
expected due to a number of variables including, but not limited to, the impact
of newly required FERC tariffs, actual sales, the effects of competition, the
implementation of utility restructuring in Michigan (which involves pending
regulatory proceedings, pending and proposed statutory changes and the recovery
of stranded costs), environmental and nuclear requirements and the success of
non-regulated lines of business.  While the Company and Detroit Edison believe
that estimates given accurately measure the expected outcome, actual results
could vary materially due to the variables mentioned as well as others.

                                      25


<PAGE>   26






ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The following consolidated financial statements and schedules are included
herein.

                                                                       Page
                                                                       ----

         Independent Auditors' Report...................................27
         DTE Energy Company:
           Consolidated Statement of Income.............................28
           Consolidated Statement of Cash Flows.........................29
           Consolidated Balance Sheet ..................................30
           Consolidated Statement of Changes in Shareholders' Equity....32
         The Detroit Edison Company:
           Consolidated Statement of Income.............................33
           Consolidated Balance Sheet ..................................34
           Consolidated Statement of Cash Flows.........................36
           Consolidated Statement of Changes in Shareholders' Equity....37
         Notes to Consolidated Financial Statements.....................38
         Schedule II - Valuation and Qualifying Accounts................80

Note:      Detroit Edison's financial statements are presented here for ease of
           reference and are not considered to be part of Part II - Item 8 of 
           the Company's report.

                                       26
<PAGE>   27



INDEPENDENT AUDITORS' REPORT


To the Boards of Directors and Shareholders of
DTE Energy Company and
The Detroit Edison Company

We have audited the consolidated balance sheets of DTE Energy Company and
subsidiaries and of The Detroit Edison Company and subsidiaries(together, the
"Companies") as of December 31, 1997 and 1996, and the related consolidated
statements of income, cash flows, and changes in common shareholders' equity
for each of the three years in the period ended December 31, 1997. 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 Companies' 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 generally accepted auditing
standards. 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 referred to above
present fairly, in all material respects, the financial position of DTE Energy
Company and subsidiaries and of The Detroit Edison Company and subsidiaries at
December 31, 1997 and 1996, and the results of their operations and their cash
flows for each of the years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles. Also, in our opinion, such
financial statement schedule, when considered in relation to the basic  
consolidated financial statements of the Companies taken as a whole, presents
fairly in all material respects the information set forth therein.


DELOITTE & TOUCHE LLP

Detroit, Michigan
January 26, 1998

                                       27
<PAGE>   28

                               DTE ENERGY COMPANY
                        CONSOLIDATED STATEMENT OF INCOME
                    (In Millions, Except Per Share Amounts)


<TABLE>
<CAPTION>
                                                    Years Ended December 31
                                                 ----------------------------
                                                   1997      1996      1995
                                                 --------  --------  --------
  <S>                                            <C>       <C>       <C>

  OPERATING REVENUES                             $  3,764  $ 3,645   $  3,636
                                                 --------  -------   --------

  OPERATING EXPENSES
     Fuel and purchased power                         837      846        850
     Operation and maintenance                        979      930        875
     Depreciation and amortization                    660      625        588
     Steam heating special charges                      -      149         42
     Taxes other than income                          265      259        252
     Other                                             22        4         14
                                                 --------  -------   --------
        Total Operating Expenses                    2,763    2,813      2,621
                                                 --------  -------   --------

  OPERATING INCOME                                  1,001      832      1,015
                                                 --------  -------   --------

  INTEREST EXPENSE AND OTHER
     Interest expense                                 297      288        294
     Preferred stock dividends of subsidiary           12       16         28
     Other - net                                       18       (2)         4
                                                 --------  -------   --------
        Total Interest Expense and Other              327      302        326
                                                 --------  -------   --------

  INCOME BEFORE INCOME TAXES                          674      530        689

  INCOME TAXES                                        257      221        283
                                                 --------  -------   --------

  NET INCOME                                     $    417  $   309   $    406
                                                 ========  =======   ========

  AVERAGE COMMON SHARES OUTSTANDING                   145      145        145
                                                 --------  -------   --------

  EARNINGS PER COMMON SHARE - BASIC AND DILUTED  $   2.88  $  2.13   $   2.80
                                                 --------  -------   --------
</TABLE>





               (See notes to consolidated financial statements.)

                                      28

<PAGE>   29




                               DTE ENERGY COMPANY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (In Millions)


<TABLE>
<CAPTION>
                                                                                        Year Ended December 31
                                                                                     ----------------------------
                                                                                      1997       1996       1995    
                                                                                     ----------------------------
<S>                                                                                  <C>        <C>        <C>        
OPERATING ACTIVITIES                                                                                                  
  Net Income                                                                         $  417     $  309     $  406   
  Adjustments to reconcile net income to net cash from operating activities:                                        
    Depreciation and amortization                                                       660        625        588   
    Steam heating special charges                                                         -        149         42   
    Other                                                                               (29)       (30)        70   
    Changes in current assets and liabilities:                                                                      
      Accounts receivable                                                               (36)       (32)      (222)  
      Inventories                                                                       (36)        42        (19)  
      Payables                                                                           16          2         17   
      Other                                                                              14         14         31   
----------------------------------------------------------------------------------------------------------------- 
    Net cash from operating activities                                                1,006      1,079        913   
----------------------------------------------------------------------------------------------------------------- 
INVESTING ACTIVITIES                                                                                                
  Plant and equipment expenditures                                                     (456)      (531)      (454)  
  Purchase of Coke Oven Battery                                                        (211)          -         -   
  Nuclear decommissioning trust funds                                                   (68)       (52)       (43)  
  Other                                                                                  (6)       (34)       (25)  
----------------------------------------------------------------------------------------------------------------- 
    Net cash used for investing activities                                             (741)      (617)      (522   
----------------------------------------------------------------------------------------------------------------- 
FINANCING ACTIVITIES                                                                                                
  Issuance of long-term debt                                                            250        224          -   
  Funds received from Trustees:  Installment sales contracts                                                        
    and loan agreements                                                                   -          -        202   
  Increase (decrease) in short-term borrowings                                           32        (27)        (2)  
  Redemption of long-term debt                                                         (196)      (176)      (221)  
  Redemption of preferred stock                                                           -       (185)        (1)  
  Dividends on common stock                                                            (299)      (299)      (299)  
  Other                                                                                  (6)       (11)       (13)  
----------------------------------------------------------------------------------------------------------------- 
    Net cash used for financing activities                                             (219)      (474)      (334)  
----------------------------------------------------------------------------------------------------------------- 
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     46        (12)        57   
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                                     53         65          8   
-----------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                                       $   99     $   53     $   65   
=================================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION                                                                                 
  Interest paid (excluding interest capitalized)                                     $  290     $  277     $  274   
  Income taxes paid                                                                     243        207        231   
  New capital lease obligations                                                          34         35         27   
  Exchange of preferred stock of subsidiary for long-term debt                            -          -         50   
</TABLE>                                                                     



               (See notes to consolidated financial statements.)

                                      29

<PAGE>   30


                               DTE ENERGY COMPANY
                           CONSOLIDATED BALANCE SHEET
               (In Millions, Except Per Share Amounts and Shares)



<TABLE>
<CAPTION>
                                                          December 31
                                                        ----------------
                                                         1997     1996
                                                        -------  -------
        <S>                                             <C>      <C>
        ASSETS
        CURRENT ASSETS
            Cash and cash equivalents                   $    99  $    53
            Accounts receivable
                Customer (less allowance for doubtful
                     accounts of $20)                       305      304
                Accrued unbilled revenues                   137      136
                Other                                        78       44
            Inventories (at average cost)
                Fuel                                        130      120
                Materials and supplies                      173      144
            Other                                            13        9
                                                        -------  -------
                                                            935      810
                                                        -------  -------
        INVESTMENTS
            Nuclear decommissioning trust funds             239      172
            Other                                            57       48
                                                        -------  -------
                                                            296      220
                                                        -------  -------
        PROPERTY
            Property, plant and equipment                14,495   13,797
            Property under capital leases                   256      228
            Nuclear fuel under capital lease                607      608
            Construction work in progress                    16      143
                                                        -------  -------
                                                         15,374   14,776
                                                        -------  -------
        Less accumulated depreciation and amortization    6,440    5,943
                                                        -------  -------
                                                          8,934    8,833
                                                        -------  -------
        OTHER ASSETS
            Regulatory assets                               856      975
            Other                                           202      177
                                                        -------  -------
                                                          1,058    1,152
                                                        -------  -------
        TOTAL ASSETS                                    $11,223  $11,015
                                                        =======  =======
</TABLE>




               (See notes to consolidated financial statements.)

                                      30

<PAGE>   31





<TABLE>
<CAPTION>
                                                                December 31
                                                              ----------------
                                                               1997     1996
                                                              -------  -------
 <S>                                                          <C>      <C>
 LIABILITIES AND SHAREHOLDERS' EQUITY
 CURRENT LIABILITIES
     Long-term debt                                           $   205  $   144
     Capital leases                                               110      144
     Accounts payable                                             161      161
     Accrued interest                                              57       60
     Dividends payable                                             78       78
     Accrued payroll                                               81       81
     Accumulated deferred income taxes                             64       44
     Other                                                        261      190
                                                              -------  -------
                                                                1,017      902
                                                              -------  -------
 OTHER LIABILITIES
     Accumulated deferred income taxes                          1,983    2,024
     Accumulated deferred investment tax credits                  301      315
     Capital leases                                               137      115
     Other                                                        302      292
                                                              -------  -------
                                                                2,723    2,746
                                                              -------  -------
 LONG-TERM DEBT                                                 3,777    3,779
                                                              -------  -------
 SHAREHOLDERS' EQUITY
     Detroit Edison cumulative preferred stock, $100
         par value, 6,747,484 shares authorized,
         5,207,657 issued, 1,501,223 shares outstanding           144      144
     Common stock, without par value, 400,000,000 shares
         authorized, 145,097,829 and 145,119,875 issued
         and outstanding, respectively                          1,951    1,951
     Retained earnings                                          1,611    1,493
                                                              -------  -------
         TOTAL SHAREHOLDERS' EQUITY                             3,706    3,588
                                                              -------  -------
 COMMITMENTS AND CONTINGENCIES (NOTES 1, 2, 3, 9, 11 AND 12)

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                   $11,223  $11,015
                                                              =======  =======
</TABLE>



               (See notes to consolidated financial statements.)

                                      31

<PAGE>   32


                               DTE ENERGY COMPANY
           CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
          (In Millions, Except Per Share Amounts; Shares in Thousands)



<TABLE>
<CAPTION>
                                                          1997             1996             1995     
                                                    ---------------------------------------------------   
                                                    SHARES   AMOUNT  SHARES   AMOUNT  SHARES     AMOUNT   
                                                    ---------------------------------------------------   
<S>                                                 <C>      <C>     <C>      <C>     <C>        <C>   

DETROIT EDISON CONVERTIBLE PREFERRED STOCK
  Balance at beginning of year                            -  $    -        -  $    -      56   $    6  
  Conversion of convertible preferred stock to                                                         
    common stock                                          -       -        -       -     (46)      (5) 
  Redemption of convertible preferred stock               -       -        -       -     (10)      (1) 
                                                    -------  ------  -------  ------  ------   ------  
  Balance at end of year                                  -  $    -        -  $    -       -   $    -  
-----------------------------------------------------------------------------------------------------  
DETROIT EDISON CUMULATIVE PREFERRED STOCK                                                              
  Balance at beginning of year                        1,501  $  144    3,351  $  327   3,850   $  375  
  Exchange of cumulative preferred stock for debt         -       -        -       -    (499)     (50) 
  Redemption of cumulative preferred stock                -       -   (1,850)   (185)      -        -  
  Preferred stock expense                                 -       -        -       2       -        2  
                                                    -------  ------  -------  ------ -------   ------  
  Balance at end of year                              1,501  $  144    1,501  $  144   3,351   $  327  
-----------------------------------------------------------------------------------------------------  
                                                                                                       
COMMON STOCK                                                                                           
  Balance at beginning of year                      145,120  $1,951  145,120  $1,951 144,863   $1,947  
  Repurchase and retirement of common stock             (22)      -        -       -       -        -  
  Conversion of cumulative preferred stock to                                                          
    common stock                                          -       -        -       -     257        4  
                                                    -------  ------  -------  ------  -------  ------  
  Balance at end of year                            145,098  $1,951  145,120  $1,951 145,120   $1,951  
-----------------------------------------------------------------------------------------------------  
                                                                                                       
RETAINED EARNINGS                                                                                      
  Balance at beginning of year                               $1,493           $1,485           $1,379  
  Net income                                                    417              309              406  
  Dividends declared on common stock ($2.06                                                            
    per share in 1997, 1996 and 1995)                          (299)            (299)            (299) 
  Preferred stock expense                                         -               (2)              (1) 
                                                             ------           ------           ------  
  Balance at end of year                                     $1,611           $1,493           $1,485  
-----------------------------------------------------------------------------------------------------  
                                                                                                       
Total Shareholders' Equity                                   $3,706           $3,588           $3,763  
=====================================================================================================  
                                                                                                      
</TABLE>                                                                     




               (See notes to consolidated financial statements.)

                                      32

<PAGE>   33



                           THE DETROIT EDISON COMPANY
                        CONSOLIDATED STATEMENT OF INCOME
                                  (In Millions)
<TABLE>
<CAPTION>
                                               Years Ended December 31
                                             --------------------------
                                              1997      1996      1995
                                             ------    ------    ------
<S>                                          <C>       <C>       <C>
OPERATING REVENUES                           $3,657    $3,642    $3,636
                                             ------    ------    ------

OPERATING EXPENSES
      Fuel and purchased power                  837       846       850
      Operation and maintenance                 873       919       875
      Depreciation and amortization             658       624       588
      Steam heating special charges               -       149        42
      Taxes other than income                   264       259       252
      Other                                      22         4        14
                                             ------    ------    ------
           Total Operating Expenses           2,654     2,801     2,621
                                             ------    ------    ------

OPERATING INCOME                              1,003       841     1,015
                                             ------    ------    ------

INTEREST EXPENSE AND OTHER
      Interest expense                          282       288       294
      Other - net                                16         -         4
                                             ------    ------    ------
           Total Interest Expense and Other     298       288       298
                                             ------    ------    ------

INCOME BEFORE INCOME TAXES                      705       553       717

INCOME TAXES                                    288       225       283
                                             ------    ------    ------

NET INCOME                                      417       328       434

PREFERRED STOCK DIVIDENDS                        12        16        28
                                             ------    ------    ------

NET INCOME AVAILABLE FOR COMMON STOCK        $  405    $  312    $  406
                                             ======    ======    ======

</TABLE>

               (See notes to consolidated financial statements)

                                       33
<PAGE>   34

                           THE DETROIT EDISON COMPANY
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (In Millions)

<TABLE>
<CAPTION>

                                                                                    Year Ended December 31
                                                                                -----------------------------
                                                                                  1997       1996       1995
OPERATING ACTIVITIES                                                            -----------------------------
<S>                                                                             <C>        <C>        <C>    
 Net Income                                                                     $   417    $   328    $   434
   Adjustments to reconcile net income to net cash from operating activities:
     Depreciation and amortization                                                  658        624        588
     Steam heating special charges                                                    -        149         42
     Other                                                                           (3)       (30)        70
     Changes in current assets and liabilities:
       Accounts receivable                                                          (18)       (30)      (222)
       Inventories                                                                  (14)        42        (19)
       Payables                                                                      12          1         17
       Other                                                                         (1)         2         31
-------------------------------------------------------------------------------------------------------------
     Net cash from operating activities                                           1,051      1,086        941
-------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
   Plant and equipment expenditures                                                (439)      (479)      (454)
   Nuclear decommissioning trust funds                                              (68)       (52)       (43)
   Other                                                                             (5)       (18)       (25)
-------------------------------------------------------------------------------------------------------------
     Net cash used for investing activities                                        (512)      (549)      (522)
-------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
   Issuance of long-term debt                                                         -        185          -
   Funds received from Trustees:  Installment sales contracts
     and loan agreements                                                              -          -        202
   Decrease in short-term borrowings                                                (10)       (27)        (2)
   Redemption of long-term debt                                                    (185)      (176)      (221)
   Redemption of preferred stock                                                      -       (185)        (1)
   Dividends on common stock and preferred stock                                   (331)      (332)      (327)
   Cash portion of restructuring dividend to parent                                   -        (56)         -
   Other                                                                              -         (9)       (13)
-------------------------------------------------------------------------------------------------------------
     Net cash used for financing activities                                        (526)      (600)      (362)
-------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                 13        (63)        57
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                                  2         65          8
-------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                                  $    15    $     2    $    65
=============================================================================================================
SUPPLEMENTARY CASH FLOW INFORMATION
   Interest paid (excluding interest capitalized)                               $   277    $   277    $   274
   Income taxes paid                                                                277        209        231
   New capital lease obligations                                                     34         35         27
   Exchange of preferred stock of subsidiary for long-term debt                       -          -         50
   Non-cash portion of restructuring dividend to parent                               -         27          -
</TABLE>

               (See notes to consolidated financial statements)

                                      36
<PAGE>   35




                           THE DETROIT EDISON COMPANY
                           CONSOLIDATED BALANCE SHEET
               (In Millions, Except Per Share Amounts and Shares)


<TABLE>
<CAPTION>
                                                        December 31
                                                    -------------------
                                                     1997         1996
                                                    ------       ------
ASSETS:
CURRENT ASSETS
<S>                                               <C>          <C>    

      Cash and cash equivalents                    $    15      $     2     
      Accounts receivable                                                   
           Customer (less allowance for doubtful                            
                 accounts of $20)                      300          304     
           Accrued unbilled revenues                   137          136     
           Other                                        63           42     
      Inventories (at average cost)                                         
           Fuel                                        130          120     
           Materials and supplies                      150          144     
      Other                                             11            9     
                                                   -------      -------     
                                                       806          757     
                                                   -------      -------     
                                                                            
INVESTMENTS                                                                 
      Nuclear decommissioning trust funds              239          172     
      Other                                             38           31     
                                                   -------      -------     
                                                       277          203     
                                                   -------      -------     
                                                                            
PROPERTY                                                                    
      Property, plant and equipment                 14,204       13,784     
      Property under capital leases                    256          228     
      Nuclear fuel under capital lease                 607          608     
      Construction work in progress                     12           91     
                                                   -------      -------     
                                                    15,079       14,711     
                                                   -------      -------     
Less accumulated depreciation and amortization       6,431        5,943     
                                                   -------      -------     
                                                     8,648        8,768     
                                                   -------      -------     
                                                                            
OTHER ASSETS                                                                
      Regulatory assets                                856          975     
      Other                                            158          171     
                                                   -------      -------     
                                                     1,014        1,146     
                                                   -------      -------     
                                                                            
                                                                            
TOTAL ASSETS                                       $10,745      $10,874     
                                                   =======      =======     
</TABLE>                                                                    
                                                                            
               (See notes to consolidated financial statements)

                                      34

<PAGE>   36
<TABLE>
<CAPTION>
                                                                   December 31
                                                              --------------------
                                                                1997        1996
                                                              --------    --------
<S>                                                           <C>         <C>    
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES
      Long-term debt                                          $    169    $    144
      Capital leases                                               110         144
      Accounts payable                                             150         159
      Accrued interest                                              56          60
      Dividends payable                                             83          83
      Accrued payroll                                               80          81
      Accumulated deferred income taxes                             64          44
      Other                                                        218         189
                                                              --------    --------
                                                                   930         904
                                                              --------    --------
OTHER LIABILITIES
      Accumulated deferred income taxes                          1,973       2,023
      Accumulated deferred investment tax credits                  301         315
      Capital leases                                               137         116
      Other                                                        300         289
                                                              --------    --------
                                                                 2,711       2,743
                                                              --------    --------
LONG-TERM DEBT                                                   3,531       3,740
                                                              --------    --------
SHAREHOLDERS' EQUITY
      Cumulative preferred stock, $100 par value,
           6,747,484 shares authorized, 5,207,657 issued,
           1,501,223 shares outstanding                            144         144
      Common stock, $10 par value, 400,000,000 shares
           authorized, 145,119,875 issued and outstanding        1,451       1,451
      Premium on common stock                                      548         548
      Common stock expense                                         (48)        (48)
      Retained earnings                                          1,478       1,392
                                                              --------    --------
           TOTAL SHAREHOLDERS' EQUITY                            3,573       3,487
                                                              --------    --------
COMMITMENTS AND CONTINGENCIES (NOTES 1, 2, 3, 9, 11 AND 12)

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                      10,745      10,874
                                                              ========    ========
</TABLE>

               (See notes to consolidated financial statements)

                                      35
<PAGE>   37




                           THE DETROIT EDISON COMPANY
            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
          (In Millions, Except Per Share Amounts; Shares in Thousands)

<TABLE>
<CAPTION>

                                                                1997                      1996                      1995
------------------------------------------------------------------------------------------------------------------------------------
                                                          SHARES      AMOUNT       SHARES       AMOUNT       SHARES       AMOUNT
------------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>         <C>          <C>          <C>          <C>         <C>   
CONVERTIBLE PREFERRED STOCK                                                                                
   Balance at beginning of year                                -    $       -            -    $       -           56    $       6
   Conversion of convertible preferred stock to
     common stock                                              -            -            -            -          (46)          (5)
   Redemption of convertible preferred stock                   -            -            -            -          (10)          (1)
                                                       ---------    ---------    ---------    ------ --    ---------    ---------
   Balance at end of year                                      -    $       -            -    $       -            -    $       -
------------------------------------------------------------------------------------------------------------------------------------

CUMULATIVE PREFERRED STOCK
   Balance at beginning of year                            1,501    $     144        3,351    $     327        3,850    $     375
   Exchange of cumulative preferred stock for debt             -            -            -            -         (499)         (50)
   Redemption of cumulative preferred stock                    -            -       (1,850)        (185)           -            -
   Preferred stock expense                                     -            -            -            2            -            2
                                                       ---------    ---------    ---------    ---------    ---------    ---------
   Balance at end of year                                  1,501    $     144        1,501    $     144        3,351    $     327
 -----------------------------------------------------------------------------------------------------------------------------------

COMMON STOCK
   Balance at beginning of year                          145,120    $   1,451      145,120    $   1,451      144,863    $   1,448
   Conversion of cumulative preferred stock to
     common stock                                              -            -            -            -          257            3
                                                       ---------    ---------    ---------    ---------    ---------    ---------
   Balance at end of year                                145,120    $   1,451      145,120    $   1,451      145,120    $   1,451
 -----------------------------------------------------------------------------------------------------------------------------------

PREMIUM ON COMMON STOCK
   Balance at beginning of year                                     $     548                 $     548                 $     546
   Conversion of cumulative preferred
     stock to common stock                                                  -                         -                         2
                                                                    ---------                 ---------                 ---------
   Balance at end of year                                           $     548                 $     548                 $     548
 -----------------------------------------------------------------------------------------------------------------------------------

COMMON STOCK EXPENSE
   Balance at beginning of year                                     $     (48)                $     (48)                $     (47)
   Conversion of cumulative preferred
     stock to common stock                                                  -                         -                        (1)
                                                                    ---------                 ---------                 ---------
   Balance at end of year                                           $     (48)                $     (48)                $     (48)
 -----------------------------------------------------------------------------------------------------------------------------------

RETAINED EARNINGS
   Balance at beginning of year                                     $   1,392                 $   1,485                 $   1,379 
   Net income                                                             417                       328                       434 
   Dividends declared                                                                                                         
     Common stock ($2.20 per share in 1997 and 1996,                                                                          
       $2.06 per share in 1995)                                          (319)                     (319)                     (299)
     Cumulative preferred stock*                                          (12)                      (16)                      (28)
   Preferred stock expense                                                  -                        (2)                       (1)
   Restructuring dividend to parent                                         -                       (84)                        - 
                                                                    ---------                 ---------                 ---------
   Balance at end of year                                           $   1,478                 $   1,392                 $   1,485 
 -----------------------------------------------------------------------------------------------------------------------------------

Total Shareholders' Equity                                          $   3,573                 $   3,487                 $   3,763
====================================================================================================================================
</TABLE>

* At established rate for each series.

                                       37
<PAGE>   38

DTE ENERGY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

CORPORATE STRUCTURE AND PRINCIPLES OF CONSOLIDATION - DTE Energy Company
(Company), a Michigan corporation incorporated in 1995, is an exempt holding
company under the Public Utility Holding Company Act.  The Company has no
significant operations of its own, holding instead the stock of The Detroit
Edison Company (Detroit Edison), an electric utility, and other energy-related
businesses.  On January 1, 1996, the holders of Detroit Edison's common stock
exchanged such stock on a share-for-share basis for the common stock of the
Company; and certain Detroit Edison subsidiaries were transferred to the
Company in the form of a dividend.

Detroit Edison, incorporated in Michigan since 1967, is a regulated public
utility engaged in the generation, purchase, transmission, distribution and
sale of electric energy in a 7,600 square mile area in Southeastern Michigan.
This service area includes about 13% of Michigan's total land area, and about
half of its population (approximately 5 million people), electric energy
consumption and industrial capacity.  At December 31, 1997, Detroit Edison
represented approximately 96% of the Company's assets.

The consolidated financial statements presented herein include the financial
results of operations of the Company and its wholly-owned subsidiaries as if
the Company's current holding company structure had existed in all periods
shown.  All significant intercompany balances and transactions have been
eliminated.  Investments in limited liability companies, partnerships and joint
ventures are accounted for using the equity method when significant control
provisions are met.

USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS - The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.  Actual results
could differ from those estimates.

REGULATION AND REGULATORY ASSETS AND LIABILITIES - Detroit Edison is subject to
regulation by the Michigan Public Service Commission (MPSC) and the Federal
Energy Regulatory Commission (FERC).  Detroit Edison meets the criteria of
Statement of Financial Accounting Standards (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 permits the recording of regulatory
assets and liabilities that would have been treated as revenue and expense in
non-regulated businesses.  The deferred amounts are being amortized to revenue
and expense as they are included in rates.  Continued applicability of SFAS No.


                                      38


<PAGE>   39

71 requires that rates be designed to recover specific costs of providing       
regulated services and products, including regulatory assets, and that it be
reasonable to assume that rates are set at levels that will recover a utility's
costs and can be charged to and collected from customers. Although various MPSC
Orders and proposed Michigan legislation would alter the regulatory process in
Michigan and provide a plan for transition to competition for the generation
segment of the business, Detroit Edison believes it continues to qualify under
the accounting model prescribed by SFAS No. 71. In guidance issued in 1997, the
Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board
(FASB) concluded that the application of SFAS No. 71 to a separable portion of a
business which is subject to a deregulation plan should cease when legislation
is passed and/or a rate order is issued that contains sufficient detail on a
transition plan. The EITF also concluded that regulatory assets and liabilities
originating in the separable portion of the business which is no longer under
SFAS No. 71 should not be written off if they are recoverable from a separable
portion of business which still meets the criteria of SFAS No. 71.

Detroit Edison has recorded the following regulatory assets and liabilities at
December 31:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
                                                        1997        1996
-----------------------------------------------------------------------------
                                              Recovery   (Millions)
                                              Through*
                                              --------
      <S>                                     <C>     <C>      <C>   
      ASSETS
         Unamortized loss on reacquired debt    2033  $   101  $      111
         Recoverable income taxes               2027      562         588
         Fermi 2 phase-in plan                  1998       84         196
         Fermi 2 deferred amortization          2008       66          63
         1997 storm damage costs                1999       30           -
         Other                                  2022       13          17
                                                      -------  ----------
         Total Assets                                 $   856  $      975
                                                      =======  ==========

      LIABILITIES
         Unamortized deferred investment tax
            credits                             2025  $   301  $      315
         Fermi 2 capacity factor performance          
            standard                            1999       74          73
         Other                                  2003       25           6
                                                      -------  ----------
         Total Liabilities                            $   400  $      394
                                                      =======  ==========
</TABLE>
-----------------------------------------------------------------------------
*    Year through which the assets and liabilities will be recovered.  As
     discussed later herein, the potential deregulation of the Michigan
     electric industry may affect the recovery periods.


-    UNAMORTIZED LOSS ON REACQUIRED DEBT  - In accordance with  MPSC    
     regulations applicable to Detroit Edison, the discount, premium and
     expense related to debt redeemed with refunding are amortized over the
     life of the replacement issue.

                                      39


<PAGE>   40

-    RECOVERABLE INCOME TAXES - See Note 5.

-    FERMI 2 PHASE-IN PLAN - SFAS No. 92, "Regulated Enterprises -      
     Accounting for Phase-in Plans," permits the capitalization of costs
     deferred for future recovery under a phase-in plan.  Based on a MPSC
     authorized phase-in plan, Detroit Edison recorded a receivable totaling
     $506.5 million from 1988 through 1992.  Beginning in 1993 and continuing
     through 1998, these amounts will be amortized to operating expense as they
     are included in rates. Amortization of these amounts totaled $112 million,
     $102 million and $93 million in 1997, 1996 and 1995, respectively.

-    FERMI 2 DEFERRED AMORTIZATION - A December 1988 MPSC rate  order provided
     for Detroit Edison's February 1990 purchase of Wolverine Power Supply      
     Cooperative, Inc.'s (Cooperative) ownership interest in Fermi 2.  Since
     the straight-line amortization of the asset exceeds the revenues provided
     for such amortization during the first 10 years of the recovery period,
     Detroit Edison is capitalizing deferred amortization, totaling $67.2
     million through 1999.  For 1997, 1996 and 1995, the amounts deferred were
     $3 million, $4.5 million and $6 million, respectively.  The deferred
     amounts will be amortized to operating expense as they are included in
     rates during the years 2000 through 2008. 


-    1997 STORM DAMAGE COSTS - The costs of major storms in 1997, as    
     authorized by the MPSC, were deferred and will be amortized into
     expense in 1998 and 1999 as they are recovered through rates.


-    UNAMORTIZED DEFERRED INVESTMENT TAX CREDITS - Investment tax credits
     utilized which relate to utility property were deferred and are amortized
     over the estimated composite service life of the related property.

-    FERMI 2 CAPACITY FACTOR PERFORMANCE STANDARD - The MPSC has established a
     capacity factor performance standard which provides for the disallowance
     of net incremental replacement power cost if Fermi 2 does not perform to
     certain operating criteria.  A disallowance will be imposed for the amount
     by which the Fermi 2 three-year rolling average capacity factor is less
     than the greater of either the average of the top 50% of U.S. boiling
     water reactors or 50%.  An estimate of the incremental cost of replacement
     power is required in computing the reserve for amounts due customers under
     this performance standard.


CASH EQUIVALENTS - For purposes of the Consolidated Statement of Cash Flows,
the Company considers investments purchased with a maturity of three months or
less to be cash equivalents.

REVENUES - Detroit Edison records unbilled revenues for electric and steam
heating services provided after cycle billings through month-end.

PROPERTY, RETIREMENT AND MAINTENANCE, DEPRECIATION AND AMORTIZATION - Utility
properties are recorded at original cost less regulatory disallowances and an
impairment loss for the steam plant in 1995.  In general, the cost of
properties retired in the normal 



                                      40

<PAGE>   41



course of business is charged to accumulated depreciation.  Expenditures      
for maintenance and repairs are charged to expense, and the cost of new
property installed, which replaces property retired, is charged to property
accounts.  The annual provision for utility property depreciation is calculated
on the straight-line remaining life method by applying annual rates approved by
the MPSC to the average of year-beginning and year-ending balances of
depreciable property by primary plant accounts. Provision for depreciation of
Fermi 2, excluding decommissioning expense, was 3.26% of average depreciable
property for 1997, 1996 and 1995.  See Note 3. Provision for depreciation of
all other utility plant, as a percent of average depreciable property, was
3.29% for 1997, 1996 and 1995.

SOFTWARE COSTS - Detroit Edison capitalizes the cost of software developed for
internal use.  These costs are amortized on a straight-line basis over a
five-year period beginning with a project's completion.

ACCRETION INCOME - SFAS No. 90, "Regulated Enterprises - Accounting for
Abandonments and Disallowances of Plant Costs," permits losses recorded due to
discounting indirect disallowances of plant costs to be restored to income.
The net after-tax losses originally totaled $198 million based on the
discounting required by SFAS No. 90.  These amounts are being restored to
income from 1988-1998 as Detroit Edison records a non-cash return (accretion
income).  The net after-tax income was $3.4 million, $5.3 million and $7.2
million in 1997, 1996 and 1995, respectively.

CAPITALIZATION - DISCOUNT AND EXPENSE - The discount and expense related to the
issuance of long-term debt are amortized over the life of each issue.  In
accordance with MPSC regulations applicable to Detroit Edison, the discount and
expense related to debt redeemed without refunding are written off to expense.
Expense related to redeemed preferred stock of Detroit Edison is written off
against retained earnings used in the business. 

FERMI 2 REFUELING OUTAGES - Detroit Edison recognizes the cost of Fermi 2
refueling outages over periods in which related revenues are recognized.  Under
this procedure, it records a provision for incremental costs anticipated to be
incurred during the next scheduled Fermi 2 refueling outage.  See Note 2.

POWER SUPPLY COST RECOVERY (PSCR) - The MPSC determines the amount that Detroit
Edison can recover for changes in power supply costs for purchased power and
generation based on usage.

STOCK-BASED COMPENSATION - The Company accounts for stock-based compensation
using the intrinsic value method.  Compensation expense is not recorded for
stock options granted with an exercise price equal to the fair market value at
the date of grant.  For grants of restricted stock, compensation equal to the
market value of the shares at the date of grant is deferred and amortized to
expense over the vesting period.

EARNINGS PER SHARE - In 1997, the Company adopted SFAS No. 128, "Earnings Per
Share."  Under the new statement, two earnings per share (EPS) amounts are
calculated, 

                                      41


<PAGE>   42
basic and diluted. The adoption of this statement did not affect the         
Company's calculation of EPS due to the insignificant number of potential
common shares.

RECLASSIFICATIONS - Certain prior year balances have been reclassified to
conform to the 1997 presentation.


NOTE 2 - FERMI 2

GENERAL - Fermi 2, a nuclear generating unit, began commercial operation in
January 1988.  Fermi 2 has a design electrical rating (net) of 1,139 megawatts
(MW).  This unit represents approximately 24% of total assets, 10% of total
operation and maintenance expenses and 11% of summer net rated capability.

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.  Consequently, Fermi 2 is subjected to greater scrutiny than a
conventional fossil-fueled plant.

MPSC rate orders issued in April 1986, December 1988 and January 1994 contain
provisions with respect to the recovery of Fermi 2 costs.  See Note 3 for a
discussion of Fermi 2 rate matters and the MPSC's treatment of Fermi 2's
original project costs of $4.858 billion.

LICENSING AND OPERATION - The Nuclear Regulatory Commission (NRC) maintains
jurisdiction over the licensing and operation of Fermi 2.

Due to a December 1993 turbine-generator failure, Fermi 2 was out of service
during 1994 through early 1995 and thereafter operated at a reduced power
output through September 26, 1996.  Detroit Edison's insurance reimbursement
was $93 million for property damage and $89.6 million for replacement power
costs related to the 1993 turbine-generator failure.

Detroit Edison removed Fermi 2 from service as of September 27, 1996 through
January 3, 1997 to replace a portion of the plant's nuclear fuel and install
three new low-pressure turbines.  The $49 million cost of replacing the
turbines, not covered by insurance, was capitalized and is expected to be
recovered in rates under a provision of a December 1988 MPSC Order.

A January 17, 1997 electrical components failure damaged Fermi 2's main
generator and required the unit to be removed from service until May 2, 1997.
Subject to a $1 million deductible, repair costs related to the electrical
failure are expected to be reimbursed by insurance.  Fermi 2 was removed from
service during the period October 3-19, 1997 for the replacement of defective
fuel assemblies.

See Note 3 for a discussion of applicable MPSC Orders.


                                      42


<PAGE>   43


INSURANCE - Detroit Edison insures Fermi 2 with property damage insurance
provided by Nuclear Mutual Limited (NML) and Nuclear Electric Insurance Limited
(NEIL).  The NML and NEIL insurance policies provide $500 million of composite
primary coverage (with a $1 million deductible and, effective January 22, 1997,
a $10 million deductible for the turbine-generator unit) and $2.25 billion of
excess coverage, respectively, for stabilization, decontamination and debris
removal costs, repair and/or replacement of property and decommissioning.
Accordingly, the combined limits provide total property damage insurance of
$2.75 billion.

Detroit 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.  This policy, which has a 21-week
waiting period, provides for three years of coverage.

Under the NML and NEIL policies, Detroit Edison could be liable for maximum
retrospective assessments of up to approximately $26 million per loss if any
one loss should exceed the accumulated funds available to NML and NEIL.

As required by federal law, Detroit Edison maintains $200 million of public
liability insurance for a nuclear incident.  Further, under the Price-Anderson
Amendments Act of 1988, deferred premium charges of $75.5 million could be
levied against each licensed nuclear facility, but not more than $10 million
per year per facility.  On December 31, 1997, there were 110 licensed nuclear
facilities in the United States.  Thus, deferred premium charges in the
aggregate amount of approximately $8.3 billion could be levied against all
owners of licensed nuclear facilities in the event of a nuclear incident at any
of these facilities.

DECOMMISSIONING - The 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.  The MPSC's January 1994 Order includes an increase
in rates for the decommissioning of Fermi 2.  Detroit Edison is continuing to
fund for decommissioning even though explicit provisions are not included in
FERC rates.  Detroit Edison believes that the MPSC and FERC collections will be
adequate to fund the estimated cost of decommissioning using the NRC formula.
See Note 3.

Detroit Edison has established external trust funds to hold decommissioning and
low-level radioactive waste disposal funds collected from customers.  During
1997, 1996 and 1995, Detroit Edison collected $35.4 million, $37.7 million and
$36.2 million, respectively, from customers for decommissioning and low-level
radioactive waste disposal.  Such amounts were recorded as components of
depreciation and amortization expense in the Consolidated Statement of Income
and accumulated depreciation and amortization in the Consolidated Balance
Sheet.  In accordance with SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," net unrealized gains of $31.5 million and $8.7
million in 1997 and 1996, respectively, were recorded as increases to the
nuclear 
                                      43


<PAGE>   44
decommissioning trust funds and accumulated depreciation and
amortization in the Consolidated Balance Sheets.
        
At December 31, 1997, Detroit Edison had a reserve of $202.6 million for the
future decommissioning of Fermi 2 and $9.7 million for low-level radioactive
waste disposal costs.  These reserves are included in accumulated depreciation
and amortization in the Consolidated Balance Sheet with a like amount deposited
in external trust funds.  It is estimated that the cost of decommissioning
Fermi 2 when its license expires in the year 2025 will be $523 million in 1997
dollars and $3 billion in 2025 dollars using a 6% growth rate.

Detroit Edison also had a reserve of $26.7 million at December 31, 1997 for the
future decommissioning of Fermi 1, an experimental nuclear unit on the Fermi 2
site that has been shut down since 1972.  This reserve is included in other
deferred credits in the Consolidated Balance Sheet with a like amount deposited
in an external trust fund.  Detroit Edison estimates that the cost of
decommissioning Fermi 1 in the year 2025 is $22 million in 1997 dollars and
$114 million in 2025 dollars using a 6% growth rate.

During 1995, shipment of low-level radioactive waste to a permanent disposal
site resumed.  Detroit Edison's disposal costs of $5.5 million and $3.5 million
during 1997 and 1996, respectively, were reimbursed by the external trust
funds.

The FASB is reviewing the accounting for obligations associated with the
retirement of long lived assets, including decommissioning of nuclear power
plants.

NUCLEAR FUEL DISPOSAL COSTS -  In 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 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 and
estimates that existing storage capacity will be sufficient until the year
2001, or until 2017 with expansion of such storage capacity.


NOTE 3 - REGULATORY MATTERS

Detroit Edison is subject to the primary regulatory jurisdiction of the MPSC,
which, from time to time, issues its Orders pertaining to Detroit Edison's
conditions of service, rates and recovery of certain costs including the costs
of generating facilities.  MPSC Orders issued in December 1988 and January 1994
are currently in effect with respect to Detroit Edison's rates and certain
other revenue and operating-related matters.

ELECTRIC INDUSTRY DEREGULATION - There are ongoing Michigan administrative,
judicial and legislative proceedings considering electric industry
deregulation.  Detroit Edison has been participating in these proceedings on a
voluntary basis.  Issues concerning 
                                      44


<PAGE>   45
deregulation are the subject of several MPSC orders that are under appeal; and
Michigan legislation is currently pending with respect to the issue, with
additional legislation expected to be introduced in the first quarter of
1998. In an opinion released on January 20, 1998, the Michigan Court of
Appeals indicated that the MPSC has sufficient statutory authority under
Michigan law to authorize an experimental retail wheeling program. Detroit
Edison has filed an application for leave to appeal in the Michigan Supreme
Court. Neither the Company nor Detroit Edison are able to predict the outcome
and timing of these proceedings.

COMMERCIAL AND INDUSTRIAL RATES - Detroit Edison addressed the competitive
environment by entering into long-term service contracts with certain of its
large commercial and industrial customers.  These contracts accounted for
revenues of approximately $378 million and $299 million for 1997 and 1996,
respectively.

FERMI 2 - The December 1988 MPSC Order established, for the period January 1989
through December 2003, (1) a cap on Fermi 2 capital additions of $25 million
per year, in 1988 dollars adjusted by the Consumers Price Index (CPI),
cumulative, (2) a cap on Fermi 2 non-fuel operation and maintenance expenses
adjusted by the CPI and (3) a capacity factor performance standard based on a
three-year rolling average commencing in 1991.  For a capital investment of
$200 million or more (in 1988 dollars adjusted by the CPI), Detroit Edison must
obtain prior MPSC approval to include the investment in rate base.

Under the cap on Fermi 2 capital expenditures, the cumulative amount available
totals $65 million (in 1997 dollars) at December 31, 1997.  Under the cap on
non-fuel operation and maintenance expenses, the cumulative amount available
totals $99.3 million (in 1997 dollars) at December 31, 1997.

The capacity factor disallowance for 1996 has not yet been determined by the
MPSC.  At December 31, 1997 and 1996, Detroit Edison had accruals of $74
million and $72.9 million, respectively, for the Fermi 2 capacity factor
performance standard disallowances that are expected to be imposed by the MPSC
during the period 1996-1999.

Also, Detroit Edison has a liability of $8.8 million at December 31, 1997 for
reduced efficiency of the Fermi 2 turbine in 1996 when the unit operated at a
reduced power output.

In accordance with the April 1986 and December 1988 MPSC rate orders,
ratemaking treatment of Detroit Edison's Fermi 2 original project costs of
$4.858 billion is as follows:  (1) $3.018 billion in rate base with recovery
and return, (2) $300 million amortized over 10 years with no return, beginning
in 1989, (3) $513 million amortized over 19 years with associated interest of
8%, beginning in 1990 and (4) $1.027 billion disallowed and written off in
1988.  At December 31, 1997, Detroit Edison's net plant investment in Fermi 2
was $2.7 billion ($4 billion less accumulated depreciation and amortization
of $1.3 billion).

                                      45


<PAGE>   46
Under the December 1988 MPSC Order, if nuclear operations at Fermi 2
permanently cease, amortization in rates of the $300 million and $513 million
investments in Fermi 2 would continue and the remaining net rate base
investment amount would be removed from rate base and amortized in rates,
without return, over 10 years with such amortization not to exceed $290 million
per year.  In this event, unamortized amounts of deferred depreciation and
deferred return, recorded in the Consolidated Balance Sheet under the phase-in
plan prior to the removal of Fermi 2 from rate base, will continue to be
amortized, with a full return on such unamortized balances, so that all amounts
deferred are recovered during the period ending no later than December 31,
1998.  The December 1988 and January 1994 rate orders do not address the costs
of decommissioning if operations at Fermi 2 prematurely cease.

Detroit Edison will reduce rates by $53 million in 1998 to reflect the
scheduled reduction in the revenue requirement for Fermi 2, in accordance with
the 1988 settlement agreement.  In addition, in accordance with a November 1997
MPSC Order, Detroit Edison will recover approximately $15 million in rates for
the amortization of 1997 storm damage costs.  The total costs of $30 million
were deferred and will be amortized to expense over a 24 month period beginning
January 1998.  In December 1997, the Association of Businesses Advocating
Tariff Equity and the Residential Ratepayer Consortium filed a lawsuit in
Ingham County Michigan Circuit Court contending that Detroit Edison and the
MPSC breached the December 1988 MPSC Order by offsetting the stipulated 1998
revenue reduction with the amortization of the storm costs.  On February 18,
1998, the Ingham County Michigan Circuit Court denied Detroit Edison's motion
for summary judgment and indicated it would request the Michigan Court of
Appeals to determine its jurisdiction over the matter.  The Company is
uncertain of the outcome of this matter.


NOTE 4 - JOINTLY-OWNED UTILITY PLANT

Detroit Edison's portion of jointly-owned utility plant is as follows:


<TABLE>
<CAPTION>
                                        Belle River    Ludington Pumped Storage

   <S>                                     <C>                   <C>
   In-service date                         1984-1985             1973
   Ownership interest                          *                    49%
   Investment (millions)                    $ 1,030              $ 190
   Accumulated depreciation (millions)      $   368              $  82
</TABLE>


   *    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, 1997, 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 

                                      46


<PAGE>   47

the capacity and energy of the entire plant 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 (Ludington) are shared by Detroit Edison and
Consumers Energy in proportion to their respective ownership interests in the
plant.


NOTE 5 - INCOME TAXES

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



<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
                                                     Percent of Income Before Tax
                                                  ----------------------------------
                                                      1997        1996        1995
 
<S>                                                <C>         <C>         <C>
Statutory income tax rate                              35.0%       35.0%       35.0%
   Deferred Fermi 2 depreciation and return             4.6         5.3         3.7
   Investment tax credit                               (2.1)       (2.8)       (2.1)
   Depreciation                                         4.6         6.0         3.3
   Removal costs                                       (1.5)       (2.2)       (1.5)
   Alternate fuels credit                              (3.5)       (0.4)       (0.2)
   Other-net                                            0.4        (0.4)        1.3
                                                  ----------------------------------
Effective income tax rate                              37.5%       40.5%       39.5%
                                                  ==================================

------------------------------------------------------------------------------------
</TABLE>


Components of income tax expense are as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
                                                        1997        1996       1995
------------------------------------------------------------------------------------
                                                              (Millions)
<S>                                               <C>         <C>         <C>
 Current federal tax expense                            $267        $219       $221
 Deferred federal tax expense - net                        5          17         79
 Investment tax credit                                   (15)        (15)       (17)
                                                  ---------------------------------
   Total                                                $257        $221       $283
                                                  =================================
                                                                           
-----------------------------------------------------------------------------------
</TABLE>                                                                   



The Fermi 2 phase-in plan required Detroit Edison to record additional deferred
income tax expense related to deferred depreciation totaling $33.5 million,
with this amount amortized to income over the six-year period ending December
31, 1998.

Recoverable income taxes, a regulatory asset, represents future revenue
recovery from customers for deferred income taxes recorded upon the adoption of
SFAS No. 109 in 1993.  At that time, an increase in accumulated deferred income
tax liabilities was recorded

                                      47


<PAGE>   48
representing the tax effect of temporary differences not previously
recognized and the recomputation of the tax liability at the current tax rate. 
The MPSC issued an order providing assurance that the effects of previously
flowed-through tax benefits will continue to be allowed rate recovery.

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


<TABLE>
<CAPTION>
                                              1997              1996
                                                   (Millions)
      <S>                                   <C>               <C>      
      Property                              $(2,233)          $(2,220)
      Fermi 2 deferred depreciation                            
        and return                              (37)              (85)
      Property taxes                            (62)              (58)
      Investment tax credit                     162               170
      Reacquired debt losses                    (35)              (39)
      Contributions in aid of construction       55                47
      Other                                     103               117
                                            --------          --------
                                            $(2,047)          $(2,068)
                                            ========          ========
                                                                      
      Deferred income tax liabilities       $(2,572)          $(2,594)
      Deferred income tax assets                525               526 
                                            --------          --------
                                            $(2,047)          $(2,068)
                                            ========          ========
</TABLE>


The federal income tax returns of the Company are settled through the year
1988.  The Company believes that adequate provisions for federal income taxes
have been made through December 31, 1997.


NOTE 6 - SHAREHOLDERS' EQUITY

At December 31, 1997, the Company had Cumulative Preferred Stock, without par
value, 5 million shares authorized with no shares issued.  At December 31,
1997, 1.5 million shares of preferred stock are reserved for issuance in
accordance with the Shareholders Rights Agreement.

At December 31, 1997, Detroit Edison had Cumulative Preference Stock of $1 par
value, 30 million shares authorized with no shares issued.


                                      48


<PAGE>   49


Detroit Edison had the following Cumulative Preferred Stock at December 31,
1997 and 1996:


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                Shares Outstanding       Amount    
--------------------------------------------------------------------------------
                                   (Thousands)        (Millions)   
       <S>                      <C>                    <C>         
       7.75% Series                   1,001              $100      
       7.74% Series                     500                50      
       Preferred stock expense            -                (6)     
                                      -----              ----      
                                      1,501              $144      
                                      =====              ==== 
--------------------------------------------------------------------------------
</TABLE>



The 7.75% Series and the 7.74% Series of Cumulative Preferred Stock are
redeemable solely at the option of Detroit Edison at a per share redemption
price of $100, plus accrued dividends, on or after April 15, 1998 and July 15,
1998, respectively.

In September 1997, the Board of Directors of the Company declared a
dividend distribution of one right (Right) for each share of Company common
stock outstanding.  Under certain circumstances, each Right entitles the
shareholder to purchase one one-hundredth of a share of Company Series A Junior
Participating Preferred Stock at a price of $90.  The Right is transferable
apart from the Company common stock until 10 days following a public
announcement that a person or group has acquired beneficial ownership of 10% or
more of outstanding Company common shares, or the commencement or announcement
of a reclassification, merger or consolidation which would result in a 10% plus
shareholder increasing its ownership of the Company more than 1% .  If the
acquiring person or group acquires 10% or more of the Company Common Stock, and
the Company survives, each Right (other than those held by the acquiror) will
entitle its holder to buy Company common stock having a value of $180 for $90. 
If the acquiring person or group acquires 10% or more of the Company Common
Stock, and the Company does not survive, each Right (other than those held by
the surviving or acquiring company) will entitle its holder to buy shares of
common stock of the surviving or acquiring company having a value of $180 for
$90.  The Rights will expire on October 6, 2007 unless redeemed by the Company
at $0.01 per Right at any time prior to an event which would permit the Rights
to be exercised.  The Company may amend the Rights agreement without the
approval of the holders of the Rights Certificates, except that the redemption
price may not be less than $0.01 per Right.

Apart from MPSC or FERC approval and the requirement that common, preferred and
preference stock be sold for at least par value, there are no legal
restrictions on the issuance of additional authorized shares of stock by
Detroit Edison.

There are no legal restrictions on the issuance of additional authorized shares
of the Company's common and preferred stock.



                                      49


<PAGE>   50


NOTE 7 - LONG-TERM DEBT

Detroit Edison's 1924 Mortgage and Deed of Trust (Mortgage), the lien of which
covers substantially all of Detroit Edison's properties, provides for the
issuance of additional General and Refunding Mortgage Bonds (Mortgage Bonds).
At December 31, 1997, approximately $3.6 billion principal amount of Mortgage
Bonds could have been issued on the basis of property additions, combined with
an earnings test provision, assuming an interest rate of 7.12% on any such
additional Mortgage Bonds.  An additional $1.4 billion principal amount of
Mortgage Bonds could have been issued on the basis of bond retirements.

Unless an event of default has occurred, and is continuing, each series of
Quarterly Income Debt Securities (QUIDS) provides that interest will be paid
quarterly.  However, Detroit Edison also 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.
Detroit Edison may redeem any series of capital stock pursuant to the terms of
any sinking fund provisions during the deferral period.  Additionally, during
any deferral period, Detroit Edison may not enter into any inter-company
transactions with any affiliate of Detroit Edison, including the Company, to
enable the payment of dividends on any equity securities of the Company.

At December 31, 1997, $100 million of the Remarketed Notes and $103 million of
Tax Exempt Revenue Bonds are subject to periodic remarketings.  At December 31,
1996 there were $103 million in Tax Exempt Revenue Bonds subject to periodic
remarketings.  Remarketing agents remarket the notes at the lowest interest 
rate necessary to produce a par bid.  In the event that a Remarketed Note or 
Tax Exempt Revenue Bond remarketing fails, Standby Note Purchase Agreements and 
Letters of Credit provide that banks will purchase the notes or bonds, 
respectively; and, after the conclusion of all necessary proceedings, remarket
the notes or bonds.  In the event the banks' obligations under the Standby 
Note Purchase Agreements and Letters of Credit are not honored, then, Detroit 
Edison would be required to purchase any notes or bonds subject to a failed 
remarketing.


<TABLE>
<CAPTION>
          Long-term debt outstanding at December 31 was:
--------------------------------------------------------------------------------
                                                        1997          1996
--------------------------------------------------------------------------------
                                                              (Millions)
<S>                                                   <C>          <C>
       DETROIT EDISON
          MORTGAGE BONDS
             6.4% to 8.4% due 1998 to 2023            $    1,911   $   2,096
          REMARKETED NOTES
             5.9% to 6.4% due 2028 to 2034 (a)               410         410
          TAX EXEMPT REVENUE BONDS
             SECURED BY MORTGAGE BONDS
                Installment Sales Contracts
                   7.1% due 2004 to 2024 (b)                 282         282
                Loan Agreements
                   6.7% due 2008 to 2025 (b)                 607         607
</TABLE>

                                      50


<PAGE>   51

<TABLE>
<S>                                                        <C>     <C>

             UNSECURED
                Installment Sales Contracts
                   7.5% due 2004 to 2019 (b)                 142      142
                Loan Agreements
                   5.0% due 2024 to 2030 (a)                 113      113
          QUIDS
             7.6% to 8.5% due 2025 to 2026                   235      235
          Less amount due within one year                   (169)    (144)
          Less unamortized debt discount                       -       (1)
                                                          ---------------
             Total Detroit Edison Long-Term Debt           3,531    3,740
                                                          ---------------
       NON-RECOURSE DEBT
             7.8% due 1998 to 2009 (b) (c)                   282       39
          Less amount due within one year                    (36)       -
                                                          ---------------
       TOTAL COMPANY LONG-TERM DEBT                       $3,777   $3,779
                                                          ===============
</TABLE>


(a) Variable rate at December 31, 1997.
(b) Weighted average interest rate at December 31, 1997.
(c) The  Company held $54 million in cash and cash equivalents restricted by
    debt requirements at December 31, 1997.

In the years 1998 - 2002, the Company's long-term debt maturities are $205,
$260, $234, $158 and $237 million, respectively.


NOTE 8 - SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

At December 31, 1997, Detroit Edison had total short-term credit arrangements
of approximately $688 million, under which there were no amounts outstanding.
At December 31, 1996, $10 million of short-term borrowings were outstanding.
The weighted average interest rates for short-term borrowings during 1997, 1996
and 1995 were 5.7%, 5.6% and 6.1%, respectively.

Detroit Edison had bank lines of credit of $200 million, all of which had
commitment fees in lieu of compensating balances.  Commitment fees of $0.3
million were incurred for each of the years 1997 and 1996.  Detroit Edison 
uses bank lines of credit to support the issuance of commercial paper and bank
loans.  All borrowings are at prevailing money market rates which are below 
the banks' prime lending rates.

Detroit Edison has a nuclear fuel financing arrangement (heat purchase
contract) with Renaissance Energy Company (Renaissance), an unaffiliated
company.  Renaissance may issue commercial paper or borrow from participating
banks on the basis of promissory notes. To the extent the maximum amount of     
funds available to Renaissance (currently $400 million) is not needed by
Renaissance to purchase nuclear fuel, such funds may be loaned to Detroit
Edison for general corporate purposes pursuant to a separate Loan Agreement. At 
December 31, 1997, approximately $288 million was available to Detroit Edison
under such Loan Agreement. See Note 9 for a discussion of Detroit Edison's
heat purchase contract with Renaissance.




                                      51


<PAGE>   52


Detroit Edison has a $200 million short-term financing agreement secured by its
customer accounts receivable and unbilled revenues portfolio.  Borrowings are
at prevailing money market rates.  Commitment fees of $0.3 million were
incurred for each of the years 1997 and 1996.  There were no outstanding
borrowings under this agreement at December 31, 1997 and 1996.

At December 31, 1997, DTE Capital Corporation (DTE  Capital), a Company
subsidiary, had a $200 million Revolving Credit Agreement, backed by a Support
Agreement from the Company, under which $42 million was outstanding.
Commitment fees incurred in 1997 for this credit agreement were approximately
$0.3 million.  The amount available under the Revolving Credit Agreement was
increased to $400 million in January 1998.  Also in January 1998, the Company
entered into a $60 million Support Agreement with DTE Capital for the purpose
of DTE Capital's credit enhancing activities on behalf of DTE-CoEnergy L.L.C.
and DTE Energy Trading, Inc.


NOTE 9 - LEASES

Future minimum lease payments under long-term noncancellable leases, consisting
of nuclear fuel ($104 million computed on a projected units of production
basis), lake vessels ($30 million), locomotives and coal cars ($190 million),
office space ($14 million), and computers, vehicles and other equipment ($2
million) at December 31, 1997 are as follows:
--------------------------------------------------------------------------------
                                   (Millions)

<TABLE>
<CAPTION>
                                                       Remaining               
1998         1999       2000      2001       2002        Years       Total     
--------------------------------------------------------------------------------
<S>        <C>         <C>      <C>        <C>         <C>         <C>          
$ 71       $  57       $  36    $   29     $   20      $   127     $       340  
                                                                   ===========  
--------------------------------------------------------------------------------

</TABLE>



Rental expenses for both capital and operating leases were $72 million
(including $42 million for nuclear fuel), $78 million (including $53 million
for nuclear fuel) and $97 million (including $67 million for nuclear fuel) for
1997, 1996 and 1995, respectively.

Detroit Edison has a heat purchase contract with Renaissance which provides for
the purchase by Renaissance for Detroit Edison of up to $400 million of nuclear
fuel, subject to the continued availability of funds to Renaissance to purchase
such fuel.  Title to the nuclear fuel is held by Renaissance.  Detroit Edison
makes quarterly payments under the heat purchase contract based on the
consumption of nuclear fuel for the generation of electricity.

Under SFAS No. 71, amortization of Detroit Edison's leased assets is modified
so that the total of interest on the obligation and amortization of the leased
asset is equal to the rental expense allowed for ratemaking purposes.  For
ratemaking purposes, the MPSC has treated all leases as operating leases.  Net
income is not affected by capitalization of leases.


                                      52


<PAGE>   53


NOTE 10 - FINANCIAL INSTRUMENTS

TRADING ACTIVITIES - DTE Energy Trading, Inc., a power marketing subsidiary,
was formed in 1997 and is expected to begin trading in early 1998.

NON-TRADING ACTIVITIES - In October 1996, Detroit Edison entered into a
three-year interest rate swap agreement based on a notional amount of $25
million, which is nominally linked to the Detroit Edison 1993 Series B
Remarketed Notes.  Detroit Edison receives a rate equal to the London Interbank
Offered Rate (LIBOR) and pays a rate equal to the quarterly weighted average
Public Securities Association Municipal Swap Index divided by 67.3%.  The
intent of the swap is to shift floating rate exposure from taxable to
tax-exempt markets.  In 1997 the average rate received was 5.70% and the 
average rate paid was 5.36%.  The net of interest received and interest
paid on the swap is accrued as a component of interest expense in the current
period.  The swap is subject to market risk of changes in both interest rates
and tax rates.

PCI Enterprises Company (PCI), a coal pulverizing subsidiary of DTE Energy
Services, Inc., entered into a seven-year interest rate swap agreement
beginning June 30, 1997, with the intent of reducing the impact of changes in
interest rates on its variable rate non-recourse debt.  The initial notional
amount was $30 million which was based on 60% of its term loan of $50 million.
The notional amount outstanding at December 31, 1997, was $29.2 million and
will decline throughout the term of the loan based on amortization of principal
amounts.  PCI pays a fixed interest rate of 6.96% on the notional amount and
receives a variable interest rate based on LIBOR.  In 1997, the average rate
received was 5.69%.  The net of interest received and interest paid on the swap
is accrued as a component of interest expense in the current period.  The swap
is subject to market risk of changes in interest rates.

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, approximates fair value.  The estimated fair value of total
long-term debt at December 31, 1997 and 1996 was $4.2 billion and $4 billion,
respectively, compared to the carrying amount of $4 billion and $3.9 billion,
respectively.  Investments in debt and equity securities are classified as
"available for sale."


NOTE 11 - COMMITMENTS AND CONTINGENCIES

COMMITMENTS - Detroit Edison has entered into purchase commitments of   
approximately $621 million at December 31, 1997, which includes, among other
things, line construction and clearance costs.  Detroit Edison also has entered
into long-term fuel supply commitments of approximately $500 million.

Detroit Edison has an Energy Purchase Agreement (Agreement) for the purchase of
steam and electricity from the Detroit Resource Recovery Facility.  Under the
Agreement, Detroit Edison will purchase steam through the year 2008 and
electricity through June 30,


                                      53


<PAGE>   54

2024.  Purchases of steam and electricity were $34.3 million, $30.2
million and $28.2 million for 1997, 1996 and 1995, respectively.  Annual
purchase commitments are approximately $36 million, $37 million, $39 million,
$40 million and $41 million for 1998, 1999, 2000, 2001 and 2002, respectively.
See Note 13 relating to steam heating special charges.

In October 1995, the MPSC issued an Order approving Detroit Edison's six-year
capacity and energy purchase agreement with Ontario Hydro.  Ontario Hydro
agreed to sell Detroit Edison 300 MW of capacity from mid-May through
mid-September.  This purchase will offset a concurrent agreement to lease
approximately a third of Detroit Edison's Ludington 917 MW capacity to Toledo
Edison for the same time period.  The net economic effect of the Ludington lease
and the Ontario Hydro purchase is an estimated reduction in PSCR expense of $74
million which will be refunded to Detroit Edison customers over the life of the
agreement.

In December 1997, Detroit Edison and Consumers Energy entered into a three-year
contract to implement an energy exchange and also to sell additional off-peak
energy to Ontario Hydro.  The energy exchange requires Detroit Edison and
Consumers Energy to jointly supply 1,500 GWh of off-peak energy during the
first four months of each year to Ontario Hydro.  Ontario Hydro is required to
return the energy to Detroit Edison and Consumers Energy during the summer
months.  The energy exchange agreement modifies the existing six-year capacity
and energy agreement with Detroit Edison, by allowing an energy exchange
instead of an energy purchase.  In addition, Ontario Hydro agreed to purchase
an additional 1,500 to 2,000 GWh annually of off-peak energy from Detroit
Edison and Consumers Energy.

CONTINGENCIES - LEGAL PROCEEDINGS - Plaintiffs in a class action pending in the
Circuit Court for Wayne County, Michigan (Gilford, et al v. Detroit Edison,) as
well as plaintiffs in two other pending actions which make class claims
(Sanchez, et al v. Detroit Edison, Circuit Court for Wayne County, Michigan;
and Frazier v. Detroit Edison, United States District Court, Eastern District
of Michigan,) allege that Detroit Edison has engaged in age, racial and
national origin discrimination in employment.  On February 6, 1998, Detroit
Edison and the other parties to the three actions agreed to settle the Gilford,
Sanchez and Frazier individual and class claims through binding arbitration.
The agreement provides that Detroit Edison's monetary liability is to be no
less than $17.5 million and no greater than $65 million (subject to a potential
$3 million upward adjustment that may be possible if the class size increases
by a specified number) after the conclusion of all related proceedings.  An
amount related to this agreement was accrued in 1997.

OTHER - In addition to the matters reported herein, the Company and its
subsidiaries are involved in litigation and environmental matters dealing with
the numerous aspects of their business operations.  The Company believes that
such litigation and the matters discussed above will not have a material effect
on its financial position, results of operations and cash flows.

                                      54


<PAGE>   55
See Notes 2 and 3 for a discussion of contingencies related to Fermi 2 and
Regulatory Matters.


NOTE 12 - EMPLOYEE BENEFITS

RETIREMENT PLAN - Detroit Edison has a trusteed and non-contributory defined
benefit retirement plan (Plan) covering all eligible employees who have
completed six months of service.  The Plan provides retirement benefits based
on the employees' years of benefit service, average final compensation and age
at retirement.  Detroit Edison's policy is to fund pension cost calculated
under the projected unit credit actuarial cost method.  The Company was
operating under the IRS full funding limitation and, therefore, did not make a
contribution to the Plan in 1997.  Contributions were made to the Plan totaling
$16 million and $29.6 million for 1996 and 1995, respectively.


<TABLE>
<CAPTION>
Net pension cost included the following components:
---------------------------------------------------------------------------------------------------------------------------------
                                                           1997                   1996                1995
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                     <C>                  <C>                         
                                                                                (Millions)                                    
Service cost - benefits earned during the period     $           27          $           25       $         22                
Interest cost on projected benefit obligation                    86                      82                 79                
Actual return on Plan assets                                   (163)                   (120)              (164)               
Net amortization and deferral                                    60                      19                 65                
                                                     ----------------------------------------------------------------------------
Net pension cost                                     $           10          $            6       $          2                
                                                     ============================================================================
---------------------------------------------------------------------------------------------------------------------------------

<CAPTION>

Assumptions used in determining net pension cost are as follows:
---------------------------------------------------------------------------------------------------------------------------------
                                                                        1997         1996       1995
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>           <C>         <C>                         
Discount rate                                                           7.5%         7.5%        8.0%
Annual increase in future compensation levels                           4.5          4.5         4.5
Expected long-term rate of return on Plan assets                        9.0          9.0         9.5
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>


The following reconciles the funded status of the Plan to the amount recorded
in the Consolidated Balance Sheet:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                                                              December 31
                                                          ------------------
                                                              1997      1996
-------------------------------------------------------------------------------
                                                               (Millions)   
<S>                                                       <C>         <C> 
     Plan assets at fair value, primarily equity            
      and debt securities                                  $  1,347    $  1,232 
                                                          --------------------- 
     Less actuarial present value of benefit obligation:     
       Accumulated benefit obligation, including vested      
          benefits of $1,047 and $994, respectively           1,123       1,022 
       Increase in future compensation levels                   171         154 
                                                          --------------------- 
                                                            
       Projected benefit obligation                           1,294       1,176 
                                                          --------------------- 
</TABLE>


                                      55


<PAGE>   56

<TABLE>
<S>                                                        <C>      <C>

     Plan assets in excess of projected benefit obligation      53      56
     Unrecognized net asset resulting from initial
       application                                             (20)    (24)
     Unrecognized net (gain) loss                               (4)      2
     Unrecognized prior service cost                            52      58
                                                            --------------

     Asset recorded in the Consolidated Balance Sheet       $   81  $   92
                                                            ==============
----------------------------------------------------------------------------------
</TABLE>



Assumptions used in determining the projected benefit obligation are as
follows:


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
                                                       December 31
                                                     -----------------
                                                     1997        1996
----------------------------------------------------------------------------------
<S>                                                  <C>         <C>  
      Discount rate                                   7.0 %       7.5 %
      Annual increase in future compensation levels   4.5         4.5
----------------------------------------------------------------------------------
</TABLE>


The unrecognized net asset at date of initial application is being amortized
over approximately 15.4 years, which was the average remaining service period
of employees at January 1, 1987.

In addition to the Plan, there are several supplemental non-qualified,
non-contributory, retirement benefit plans for certain management employees.

LONG-TERM INCENTIVE PLAN - The Company adopted a Long-Term Incentive Plan
(LTIP) in 1995.  Under the LTIP, certain key employees may be granted
restricted common stock, stock options, stock appreciation rights, performance
shares and performance units.  Common stock granted under the LTIP may not
exceed 7.2 million shares.  Performance units (which have face amount of $1)
granted under the LTIP may not exceed 25 million in the aggregate.  As of
December 31, 1997, no stock appreciation rights, performance shares or
performance units have been granted under the LTIP.

Under the LTIP, shares of restricted common stock were awarded to officers of
Detroit Edison and are restricted for a period not exceeding four years.  All
shares are subject to forfeiture if specified performance measures are not met.
There are no exercise prices related to these shares.  During the applicable
restriction period, the recipient has all the voting, dividend and other rights
of a record holder except that the shares are nontransferable, and non-cash
distributions paid upon the shares would be subject to transfer restrictions
and risk of forfeiture to the same extent as the shares themselves.  The shares
were recorded at the market value on the date of grant and amortized to expense
based on the award that was expected to vest and the period to which the
related employee services were to be rendered.  Restricted common stock awarded
and annual expense for the year ended December 31 was:

                                      56



<PAGE>   57




<TABLE>
<CAPTION>
------------------------------------------------------------------------------
                                                     1997     1996     1995
------------------------------------------------------------------------------
   <S>                                              <C>      <C>      <C>
   Restricted common shares awarded                  68,500   56,000   66,500
   Weighted average market price of shares awarded  $ 28.38  $ 34.28  $ 28.90
   Annual expense (in thousands)                    $   222  $ 1,165  $   571
------------------------------------------------------------------------------
</TABLE>



Under the LTIP, stock options were issued in 1997 and will become exercisable
at a rate of 25% each year over the next four years.  The options will expire
10 years after the date of the grant.  The option exercise price equals the
fair market value of the stock on the date that the option was granted.  In
1997, 310,500 shares were granted at a weighted average exercise price of
$28.38.  No amounts were forfeited or expired during 1997.

The Company continues to apply APB Opinion 25, "Accounting for Stock Issued to
Employees."  Accordingly, no compensation expense has been recorded for options
granted.  As required by SFAS No. 123, "Accounting for Stock-Based
Compensation," the Company has determined the pro forma information as if the
Company has accounted for its employee stock options under the fair value
method.  The fair value for these options was estimated at the date of grant
using a modified Black/Scholes option pricing model - American style, a
risk-free interest rate of 6.83%, a dividend yield of 7.26%, an expected
volatility of 18.31%, and an expected life of 10 years.  The fair value of the
options granted in 1997 was $4.15 per option.  The pro forma effect of these
options was to reduce net income for the year ending December 31, 1997, by
$244,000.  There was no pro forma effect on EPS.

SAVINGS & INVESTMENT PLANS - Detroit Edison has voluntarily defined
contribution plans qualified under Section 401 (a) and (k) of the Internal
Revenue Code for all eligible employees.  Detroit Edison matches employee
contributions up to 8% of base compensation.  Matching contributions were $19.8
million, $17.2 million and $13.7 million for 1997, 1996 and 1995, respectively.

OTHER POSTRETIREMENT BENEFITS - Detroit Edison provides certain postretirement
health care and life insurance benefits for retired employees.  Substantially
all of Detroit Edison's  employees will become eligible for such benefits if
they reach retirement age while working for Detroit Edison.  These benefits are
provided principally through insurance companies and other organizations.


                                      57



<PAGE>   58


<TABLE>
<CAPTION>
Net other postretirement benefits cost included the following components:
-----------------------------------------------------------------------------------------------------------------------------------
                                                                1997              1996            1995             
-----------------------------------------------------------------------------------------------------------------------------------
                                                                               (Millions)                                 
<S>                                                           <C>                <C>              <C>                        
Service cost - benefits earned during the period                $ 19              $ 20            $ 17                 
Interest cost on accumulated postretirement                                                                              
 benefit obligation                                               39                40              40                 
Actual return on assets                                          (39)              (19)            (17)                
Net amortization and deferral                                     40                26              32                 
                                                                --------------------------------------------------------------------
                                                                                                                         
Net other postretirement benefits cost                          $ 59              $ 67            $ 72                 
                                                                ====================================================================
                                                                       

<CAPTION>

Assumptions used in determining net other postretirement benefits cost are as follows:
-----------------------------------------------------------------------------------------------------------------------------------

                                                                  1997                 1996            1995
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                   <C>            <C>                        
Discount rate                                                     7.5%                 7.5%            8.0%
Annual increase in future compensation levels                     4.5                  4.5             4.5
Expected long-term rate of return on assets                       8.5                  8.5             8.5
</TABLE>


The following reconciles the funded status to the amount recorded in the
Consolidated Balance Sheet:


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                    December 31
                                                    -------------------------------------------
                                                        1997                            1996
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                              <C>              
                                                                    (Millions) 
Actuarial present value of benefit obligation:                                                          
  Retirees, spouses and surviving spouses            $     289                         $  312           
  Fully eligible active participants                        91                             74           
  Other active participants                                200                            197           
                                                     -------------------------------------------        
Accumulated postretirement benefit obligation              580                            583           

Less assets at fair value, primarily                                                                    
  equity and debt securities                               309                            208           
                                                     -------------------------------------------        
Benefit obligation in excess of assets                     271                            375           

Unrecognized transition obligation                        (308)                          (328)          
Unrecognized net gain (loss)                                16                            (41)          
                                                     -------------------------------------------        
(Asset) Liability recorded as (Deferred Debits)                                                   
  Other Non-Current Liabilities in the Consolidated                                                 
  Balance Sheet                                      $     (21)                        $    6           
                                                     ===========================================        
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



                                      58
                                      


<PAGE>   59

Assumptions used in determining the accumulated benefit obligation are
as follows:
<TABLE>
-------------------------------------------------------------------------------
                                                      December 31
                                                 1997             1996
-------------------------------------------------------------------------------
<S>                                              <C>              <C>      
Discount rate                                    7.0 %            7.5 %  
Annual increase in future compensation levels    4.5              4.5     
-------------------------------------------------------------------------------
</TABLE>




Benefit costs were calculated assuming health care cost trend rates beginning
at 9.1% for 1998 and decreasing to 5.0% in 2008 and thereafter for persons
under age 65 and decreasing from 6.1% to 5.0% for persons age 65 and over.  A
one-percentage-point increase in health care cost trend rates would increase
the aggregate of the service cost and interest cost components of benefit costs
by $9 million for 1997 and increase the accumulated benefit obligation by $75
million at December 31, 1997.


NOTE 13 - STEAM HEATING SPECIAL CHARGES

As part of a review of the operations of Detroit Edison's steam heating
business, in 1995, the remaining book value of steam heating plant assets of
$42 million ($32 million after-tax) or $0.22 cents per share, was written off.
In 1996, a special charge to net income of $149 million ($97 million after-tax)
or $0.67 cents per share was recorded.  The special charge included a reserve
for steam purchase commitments during the period from 1997 through 2008 under
the agreement with the Detroit Resource Recovery Facility, expenditures for
closure of a portion of the steam heating system and improvements in service to
remaining customers.  The reserve for steam purchase commitments was recorded
at its present value, therefore Detroit Edison will record non-cash accretion
expense during the period 1997 through 2008.  In addition, beginning in 1997,
amortization of the reserve for steam purchase commitments is netted against
losses on steam purchases recorded in fuel and purchased power expense.


NOTE 14 - SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION (UNAUDITED)


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
                                             1997 Quarter Ended
                           --------------------------------------------------------
                           Mar. 31       June 30       Sept. 30        Dec. 31
-----------------------------------------------------------------------------------
                                 (Millions, except per share amounts)
<S>                        <C>         <C>          <C>             <C>         
Operating Revenues         $  868       $   892       $ 1,030        $   974
Operating Income              202           225           285            289
Net Income                     71            85           132            129
Earnings Per Common Share    0.49          0.59          0.91           0.89
-----------------------------------------------------------------------------------
</TABLE>


                                      59



<PAGE>   60



<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
                                        1996 Quarter Ended
                          -----------------------------------------------------
                           Mar. 31      June 30     Sept. 30     Dec. 31
-------------------------------------------------------------------------------
                                 (Millions, except per share amounts)
<S>                         <C>         <C>          <C>          <C>       
Operating Revenues          $  910      $  871       $  977       $  887
Operating Income               263         211          154          204
Net Income                     108          78           45           78
Earnings Per Common Share     0.75        0.54         0.31         0.54
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------

</TABLE>



The third quarter of 1996 includes the steam heating special charge to net
income of $149 million ($97 million after-tax) or $0.67 per share.  See Note
13.

The fourth quarter of 1996 includes a provision for Fermi 2 capacity factor
disallowances in the period 1996-1998 and for reduced efficiency of the Fermi 2
turbine in 1995 and 1996 of $20 million ($13 million after-tax) or $0.09 per
share.  See Note 3.

EPS amounts for each quarter are required to be computed independently and,
therefore, may not equal the amount computed for the total year.


                                      60


<PAGE>   61


ITEM 9 -   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
           FINANCIAL DISCLOSURE.

     None.


                                    PART III

ITEMS 10, 11, 12 AND 13

     Information required by Part III (Items 10, 11, 12 and 13) of this Form
10-K is incorporated by reference from DTE Energy Company's definitive Proxy
Statement for its 1998 Annual Meeting of Common Shareholders to be held April
27, 1998, which will be filed with the Securities and Exchange Commission,
pursuant to Regulation 14A, not later than 120 days after the end of the
Company's fiscal year covered by this report on Form 10-K, all of which
information is hereby incorporated by reference in, and made part of, this Form
10-K, except that the information required by Item 10 with respect to executive
officers of the Registrant is included in Part I of this report.

                                       61
<PAGE>   62


            ANNUAL REPORT ON FORM 10-K FOR THE DETROIT EDISON COMPANY
                                     PART I

ITEM 1 - BUSINESS.

     See the Company's "Item 1 - Business" which is incorporated herein by this
reference. 

EXECUTIVE OFFICERS OF THE REGISTRANT                                           

<TABLE>
<CAPTION>                                                                      
                                                                                                             PRESENT
                                                                                                            POSITION
           NAME                    AGE(a)                    PRESENT POSITION                              HELD SINCE
-----------------------------------------------------------------------------------------------------------------------------------
    <S>                              <C>     <C>                                                            <C>    
    John E. Lobbia...............    56      Chairman of the Board and Chief Executive Officer                5-1-90
    Anthony F. Earley, Jr........    48      President and Chief Operating Officer                            3-1-94
    Larry G. Garberding..........    59      Executive Vice President and Chief Financial Officer             8-1-90
    Gerard M. Anderson...........    39      Executive Vice President                                         4-1-97
    Robert J. Buckler............    48      Executive Vice President                                         4-1-97
    Michael E. Champley..........    49      Senior Vice President                                            4-1-97
    Douglas R. Gipson............    50      Senior Vice President-Nuclear Generation                         4-1-93
    Susan M. Beale...............    49      Vice President and Corporate Secretary                          3-27-95
    Leslie L. Loomans............    54      Vice President and Treasurer                                    10-1-89
    David E. Meador..............    40      Vice President and Controller                                   3-29-97
    Christopher C. Nern..........    53      Vice President and General Counsel                               6-1-93
    Michael C. Porter............    44      Vice President - Corporate Communications                       9-22-97
    Haven E. Cockerham...........    50      Vice President                                                   6-1-94
    William R. Roller............    52      Vice President                                                  4-22-96
    S. Martin Taylor.............    57      Vice President                                                 11-28-94
</TABLE>

    (a)  As of December 31, 1997

     Under Detroit Edison By-Laws, the officers of Detroit Edison are elected
annually by the Board of Directors at a meeting held for such purpose, each to
serve until the next annual meeting of directors or until their respective
successors are chosen and qualified. With the exception of Messrs. Anderson,
Cockerham, Earley, Meador and Porter, all of the above officers have been
employed by Detroit Edison in one or more management capacities during the past
five years.

     Gerard M. Anderson was a senior engagement manager at McKinsey & Company,
Inc., a management consulting firm, from 1988 to 1993. Effective December 1,
1993, he was elected Vice President of Detroit Edison and effective April 1,
1997, he was elected Executive Vice President.

     Haven E. Cockerham was president of Cockerham, McCain & Associates, Inc., a
management, business development and human resources consulting firm in
Columbia, South Carolina, from 1991 until 1994.

     Anthony F. Earley, Jr., was President and Chief Operating Officer of Long
Island Lighting Company, an electric and gas utility company serving Long
Island, New York, from 1989 to 1994. Effective March 1, 1994, he was elected
President and Chief Operating Officer and a member of the Board of Directors of
Detroit Edison.

                                      62
<PAGE>   63


     David E. Meador was Controller, Mopar Parts Division, at Chrysler
Corporation, an international automotive manufacturer, from November 1996 until
February 1997. From 1986 to 1996, he held a variety of executive financial
positions at Chrysler. Effective February 28, 1997, he was elected Vice
President and effective March 29, 1997, he assumed the duties of Controller.

     Michael C. Porter was Senior Vice President and Managing Director at
McCann-Erickson in Detroit from 1994 to September 1997 and Vice President of
Marketing for The Stroh Brewery Company in Detroit from 1990 to 1994. Effective
September 22, 1997, he was elected Vice President - Corporate Communications.

ITEM 2 - PROPERTIES.

     See the Company's "Item 2 - Properties - Detroit Edison," which is
incorporated herein by this reference.

ITEM 3 - LEGAL PROCEEDINGS.

     See the Company's "Item 3 - Legal Proceedings," which is incorporated
herein by this reference.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     Not applicable.


                                     PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     See the Company's "Item 5 - Market for Registrant's Common Equity and
Related Stockholder Matters," the third paragraph of which is incorporated
herein by this reference. Detroit Edison's By-Laws contain this same provision
with respect to the Michigan Business Corporation Act. All of Detroit Edison's
Common Stock is held by the Company.

     The amount of future dividends paid by Detroit Edison to the Company will
depend on Detroit Edison's earnings, financial condition and other factors,
including the effects of utility restructuring efforts, each of which is
periodically reviewed by Detroit Edison's Board of Directors.


                                      63
<PAGE>   64


ITEM 6 - SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>

                                                                  Year Ended December 31
                                             -----------------------------------------------------------------
                                             1997           1996           1995            1994           1993
                                             ----           ----           ----            ----           ----
                                                                        (Millions)
<S>                                      <C>            <C>             <C>            <C>             <C>
Operating Revenues....................   $    3,657     $    3,642      $    3,636     $    3,519      $   3,555
Net Income............................   $      417     $      328      $      434     $      420      $     522
Net Income Available
   for Common Stock...................   $      405     $      312      $      406     $      390      $     491
At year end:
   Total Assets.......................   $   10,745     $   10,874      $   11,131     $   10,993      $  11,135
   Long-Term Debt
     Obligations (including capital
     leases) and Redeemable
     Preferred and Preference
     Stock Outstanding................   $    3,812     $    4,000      $    4,004     $    3,980      $   4,008
</TABLE>

ITEM 7 -   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
           RESULTS OF OPERATIONS.

     See the Company's and Detroit Edison's "Item 7 - Management's Discussion
and Analysis of Financial Condition and Results of Operations," which is
incorporated herein by this reference.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     See pages 26 through 60 (except for Note 5 and Note 14 below).

NOTE 5 - INCOME TAXES

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

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
                                                   Percent of Income Before Tax
                                                   ----------------------------
                                                     1997      1996      1995
                                                     ----      ----      ----
<S>                                                  <C>       <C>       <C> 
Statutory income tax rate                            35.0 %    35.0  %   35.0 %
     Deferred Fermi 2 depreciation and return         4.5       5.2       3.7
     Investment tax credit                           (2.0)     (2.7)     (2.1)
     Depreciation                                     4.5       5.9       3.3
     Removal costs                                   (1.5)     (2.2)     (1.5)
     Other-net                                        0.4      (0.5)      1.1
                                                -------------------------------
Effective income tax rate                            40.9 %    40.7  %   39.5 %
                                                ===============================
                                                   
--------------------------------------------------------------------------------
</TABLE>

                                      64
<PAGE>   65


Components of income tax expense are as follows:
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
                                                                     1997             1996                1995
-------------------------------------------------------------------------------------------------------------------
                                                                                   (Millions)
   <S>                                                        <C>               <C>                <C>          
   Current federal tax expense                                $         308     $         224      $         221
   Deferred federal tax expense - net                                    (6)               16                 79
   Investment tax credits                                               (14)              (15)               (17)
                                                              --------------    -------------      -------------
     Total                                                    $         288     $         225      $         283
                                                              -------------     -------------      -------------

-------------------------------------------------------------------------------------------------------------------
</TABLE>

The Fermi 2 phase-in plan required Detroit Edison to record additional deferred
income tax expense related to deferred depreciation totaling $33.5 million, with
this amount amortized to income over the six-year period ending December 31,
1998.

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

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
                                                                          1997                        1996
-------------------------------------------------------------------------------------------------------------------
                                                                                    (Millions)
   <S>                                                           <C>                          <C>    
   Property                                                      $          (2,233)           $         (2,220)
   Fermi 2 deferred depreciation
       and return                                                              (37)                        (85)
   Property taxes                                                              (62)                        (58)
   Investment tax credit                                                       162                         170
   Reacquired debt losses                                                      (35)                        (39)
   Contributions in aid of construction                                         55                          47
   Other                                                         $             114                         118
                                                                 -----------------            ----------------
                                                                            (2,036)           $         (2,067)
                                                                 ==================           ================

   Deferred income tax liabilities                               $          (2,560)           $         (2,593)
   Deferred income tax assets                                                  524                         526
                                                                 -----------------            ----------------
                                                                 $          (2,036)           $         (2,067)
                                                                 ==================           ================
</TABLE>

NOTE 14 - SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION> 
-------------------------------------------------------------------------------------------------------------------
                                                                    1997 Quarter Ended
                                           ------------------------------------------------------------------------
                                            Mar. 31           June 30            Sept. 30          Dec. 31
-------------------------------------------------------------------------------------------------------------------
                                                            (Millions, except per share amounts)
<S>                                        <C>               <C>                <C>               <C>   
Operating Revenues                          $   864           $   878            $   985           $   930
Operating Income                                203               225                285               290
Net Income                                       74                86                128               129
-------------------------------------------------------------------------------------------------------------------
</TABLE>
                                      65
<PAGE>   66
<TABLE>
<CAPTION>

                                            1996 Quarter Ended
                             ---------------------------------------------------
                             Mar. 31     June 30       Sept. 30     Dec. 31
--------------------------------------------------------------------------------
                                    (Millions, except per share amounts)
<S>                         <C>         <C>           <C>          <C>    
Operating Revenues           $   909     $   871       $   976      $   886
Operating Income                 264         212           156          209
Net Income                       116          81            48           83
--------------------------------------------------------------------------------
                                                                
================================================================================

</TABLE>

The third quarter of 1996 includes the steam heating special charge to net
income of $149 million ($97 million after-tax) or $0.67 per share. See Note 13.

The fourth quarter of 1996 includes a provision for Fermi 2 capacity factor
disallowances in the period 1996-1998 and for reduced efficiency of the Fermi 2
turbine in 1995 and 1996 of $20 million ($13 million after-tax) or $0.09 per
share. See Note 3.

ITEM 9 -   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
           FINANCIAL DISCLOSURE.

     None.


                                    PART III

ITEMS 10, 11, 12 AND 13

     See the Company's "Items 10, 11, 12 and 13" which is incorporated herein by
this reference, except for the information required by Item 10 with respect to
executive officers of the Registrant which is included in Part 1 of this report.
All of Detroit Edison's directors are the same as the Company's directors.



                                      66
<PAGE>   67

              ANNUAL REPORTS ON FORM 10-K FOR DTE ENERGY COMPANY
                        AND THE DETROIT EDISON COMPANY

                                   PART IV

ITEM 14 -     EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

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

              (1) Consolidated financial statements.  See "Item 8 Financial 
                  Statements and Supplementary Data" on page 26.

              (2) Financial statement schedules.  See "Item 8 Financial 
                  Statements and Supplementary Data" on page 26.

              (3) Exhibits (*Denotes management contract or compensatory plan or
                  arrangement required to be filed as an exhibit to this report
                  pursuant to Item 14 (c) of this report).


                 (i)      Exhibits filed herewith.

                               Exhibit
                               Number
                               -----

                                 4-183 -    $60,000,000  Support  Agreement  
                                          dated as of  January  21,  1998  
                                          between DTE Energy Company and DTE 
                                          Capital Corporation.

                                 4-184 -    $400,000,000 Support Agreement,
                                          dated as of January 21, 1998, between
                                          DTE Energy Company and DTE Capital
                                          Corporation.

                                 4-185 -    Fourth Amendment to Trust Agreement
                                          Between Fidelity Management Trust
                                          Company and The Detroit Edison Company
                                          (July 1996).

                                 4-186 -    Fifth Amendment to Trust Agreement
                                          Between Fidelity Management Trust
                                          Company and The Detroit Edison Company
                                          (December 1997).

                                10-10* -    Fourth Restatement of The Retirement
                                          Reparation Plan for Certain Employees
                                          of The Detroit Edison Company (October
                                          1997).


                                       67
<PAGE>   68
                              Exhibit
                              Number
                              -----

                                10-11* -  Fourth Restatement of The Benefit
                                          Equalization Plan for Certain
                                          Employees of The Detroit Edison
                                          Company (October 1997).

                                10-12* -  The Detroit Edison Company Key 
                                          Employee Deferred Compensation Plan 
                                          (October 1997).

                                10-13* -  The Detroit Edison Company Executive 
                                          Incentive Plan (October 1997).

                                10-14* -  Fifth Restatement of The Detroit
                                          Edison Company Management Supplemental
                                          Benefit Plan (October 1977).

                                10-15* -  The Detroit Edison Company Shareholder
                                          Value Improvement Plan-A (October 
                                          1997).

                                10-16* -  Trust Agreement for DTE Energy
                                          Company Change-In-Control Severance
                                          Agreements between DTE Energy Company
                                          and Wachovia Bank, N.A.

                                 11-10 -  DTE Energy Company Basic and Diluted 
                                          Earnings Per Share of Common Stock.

                                  12-8 -  DTE Energy Company Computation of 
                                          Ratio of Earnings to Fixed Charges.

                                  12-9 -  The Detroit Edison Company 
                                          Computation of Ratio of Earnings to 
                                          Fixed Charges.

                                 12-10 -  DTE Energy Company Computation of
                                          Ratio of Earnings to Fixed Charges and
                                          Preferred Stock Dividends.

                                 12-11 -  The Detroit Edison Company
                                          Computation of Ratio of Earnings to
                                          Fixed Charges and Preferred Stock
                                          Dividends.

                                  21-2 -  Subsidiaries of the Company and 
                                          Detroit Edison.

                                 23-11 -  Consent of Deloitte & Touche LLP.

                                 27-17 -  Financial  Data  Schedule  for the  
                                          period  ended  December 31, 1997 for
                                          DTE Energy Company.

                                 27-18 -  Financial  Data  Schedule  for the 
                                          period  ended  December 31, 1997 
                                          for The Detroit Edison Company.





                                      68
<PAGE>   69
                                Exhibit
                                Number
                                ------

                                 99-27 -  Amended and Restated Credit Agreement,
                                          Dated as of January 21, 1998 among DTE
                                          Capital Corporation, the Initial
                                          Lenders, Citibank, N.A., as Agent, and
                                          Barclays Bank PLC, New York Branch and
                                          The First National Bank of Chicago, as
                                          Co-Agents, and Citicorp Securities,
                                          Inc., as Arranger.

                 (ii)     Exhibits incorporated herein by reference.

                                  3(a) -  Amended and Restated Articles of
                                          Incorporation of DTE Energy Company,
                                          dated December 13, 1995. (Exhibit 3-5
                                          to Form 10-Q for quarter ended
                                          September 30, 1997).

                                  3(b) -  Certificate of Designation of Series
                                          A Junior Participating Preferred Stock
                                          of DTE Energy Company. (Exhibit 3-6 to
                                          Form 10-Q for quarter ended September
                                          30, 1997).

                                  3(c) -  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 4-117
                                          to Form 10-Q for quarter ended March
                                          31, 1993).

                                  3(d) -  Certificate containing resolution of
                                          the Detroit Edison Board of Directors
                                          establishing the Cumulative Preferred
                                          Stock, 7.75% Series as filed February
                                          22, 1993 with the State of Michigan,
                                          Department of Commerce - Corporation
                                          and Securities Bureau (Exhibit 4-134
                                          to Form 10-Q for quarter ended March
                                          31, 1993).

                                  3(e) -  Certificate containing resolution of
                                          the Detroit Edison Board of Directors
                                          establishing the Cumulative Preferred
                                          Stock, 7.74% Series, as filed April
                                          21, 1993 with the State of Michigan,
                                          Department of Commerce - Corporation
                                          and Securities Bureau (Exhibit 4-140
                                          to Form 10-Q for quarter ended March
                                          31, 1993).

                                  3(f) -  Rights Agreement, dated as of
                                          September 23, 1997, by and between DTE
                                          Energy Company and The Detroit Edison
                                          Company, as Rights Agent (Exhibit 4-1
                                          to DTE Energy Company Current Report
                                          on Form 8-K, dated September 22,
                                          1997).

                                  3(g) -  Agreement and Plan of Exchange
                                          (Exhibit 1(2) to DTE Energy Form 8-B
                                          filed January 2, 1996, File No.
                                          1-11607).


                                      69
<PAGE>   70

                    Exhibit
                    Number
                    ------

                    3(h) -  Bylaws of DTE Energy Company, as     
                            amended through September 22, 1997.  
                            (Exhibit 3-7 to Form 10-Q for quarter
                            ended September 30, 1997).
                                                                 
                    3(i) -  Bylaws of The Detroit Edison         
                            Company, as amended through September
                            22, 1997. (Exhibit 3-8 to Form 10-Q  
                            for quarter ended September 30, 1997).
                                                                 
                    4(a) -  Mortgage and Deed of Trust, dated as 
                            of October 1, 1924, between Detroit  
                            Edison (File No. 1-2198) and Bankers 
                            Trust Company 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             
                            October 1, 1968      Exhibit 2-B-33 to Registration
                                                  No. 2-30096            
                            November 15, 1971    Exhibit 2-B-38 to Registration
                                                  No. 2-42160            
                            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            
                            October 15, 1985     Exhibit 4-170 to Form 10-K for 
                                                  year ended December 31, 1994 
                            November 30, 1987    Exhibit 4-139 to Form 10-K for
                                                  year ended December 31, 1992 
                            July 15, 1989        Exhibit 4-171 to Form 10-K for
                                                  year ended December 31, 1994 
                            December 1, 1989     Exhibit 4-172 to Form 10-K for
                                                  year ended December 31, 1994 
                            February 15, 1990    Exhibit 4-173 to Form 10-K for
                                                  year ended December 31, 1994 
                            April 1, 1991        Exhibit 4-15 to Form 10-K for
                                                  year ended December 31, 1996 
                            May 1, 1991          Exhibit 4-178 to Form 10-K for
                                                  year ended December 31, 1996 
                            May 15, 1991         Exhibit 4-179 to Form 10-K for
                                                  year ended December 31, 1996 
                                                       



                                      70
<PAGE>   71


                 Exhibit
                 Number
                 ------

                         September 1, 1991    Exhibit 4-180 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 4-121 to Form 10-Q for
                                               quarter ended March 31, 1992
                         April 15, 1992       Exhibit 4-122 to Form 10-Q for
                                               quarter ended June 30, 1992
                         July 15, 1992        Exhibit 4-123 to Form 10-Q for
                                               quarter ended September 30, 1992
                         July 31, 1992        Exhibit 4-124 to Form 10-Q for
                                               quarter ended September 30, 1992
                         November 30, 1992    Exhibit 4-130 to Registration
                                               No. 33-56496
                         January 1, 1993      Exhibit 4-131 to Registration
                                               No. 33-56496
                         March 1, 1993        Exhibit 4-141 to Form 10-Q for
                                               quarter ended March 31, 1993
                         March 15, 1993       Exhibit 4-142 to Form 10-Q for
                                               quarter ended March 31, 1993
                         April 1, 1993        Exhibit 4-143 to Form 10-Q for
                                               quarter ended March 31, 1993
                         April 26, 1993       Exhibit 4-144 to Form 10-Q for
                                               quarter ended March 31, 1993
                         May 31, 1993         Exhibit 4-148 to Registration
                                               No. 33-64296
                         June 30, 1993        Exhibit 4-149 to Form 10-Q for
                                               quarter ended June 30, 1993 
                                               (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 4-158 to Form 10-Q for
                                               quarter ended September 30, 1993
                         March 1, 1994        Exhibit 4-163 to Registration
                                               No. 33-53207
                         June 15, 1994        Exhibit 4-166 to Form 10-Q for
                                               quarter ended June 30, 1994
                         August 15, 1994      Exhibit 4-168 to Form 10-Q for
                                               quarter ended September 30, 1994
                         December 1, 1994     Exhibit 4-169 to Form 10-K for
                                               year ended December 31, 1994



                                      71
<PAGE>   72


            Exhibit  
            Number 
            ------

                        August 1, 1995       Exhibit 4-174 to Form 10-Q for 
                                             quarter ended September 30, 1995

             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) -     Second Supplemental Note Indenture,
                        dated as of September 15, 1993
                        (Exhibit 4-159 to Form 10-Q for
                        quarter ended September 30, 1993).
                       
             4(e) -     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(f) -     Third  Supplemental  Note  Indenture, 
                        dated as of August 15, 1994 (Exhibit 
                        4-169 to Form 10-Q for quarter ended 
                        September 30, 1994).
                       
             4(g) -     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(h) -     Fourth Supplemental Note Indenture,
                        dated as of August 15, 1995 (Exhibit
                        4-175 to Detroit Edison Form 10-Q for
                        quarter ended September 30, 1995).
                       
             4(i) -     Fifth  Supplemental  Note  Indenture, 
                        dated as of February 1, 1996  
                        (Exhibit 4-14 to Form 10-K for year 
                        ended December 31, 1996).
                       
             4(j) -     Standby Note Purchase Credit
                        Facility, dated as of August 17, 1994,
                        among The Detroit Edison Company,
                        Barclays Bank PLC, as Bank and
                        Administrative Agent, Bank of America,
                        The Bank of New York, The Fuji Bank
                        Limited, The Long-Term Credit Bank of
                        Japan, LTD, Union Bank and Citicorp
                        Securities, Inc. and First Chicago
                        Capital Markets, Inc. as Remarketing
                        Agents (Exhibit 99-18 to Form 10-Q for
                        quarter ended September 30, 1994).
                       
           *10(a) -     Certain  arrangements  pertaining to 
                        the  employment  of Michael C. 
                        Porter. (Exhibit 10-8* to Form 10-Q 
                        for Quarter ended September 30, 1997).
             
                                       72
<PAGE>   73

                    Exhibit
                    Number
                    ------

                    10(b) -   Form of Change-in-Control  Severance 
                              Agreement,  dated as of October 1,
                              1997, between DTE Energy  Company  and
                              Gerard M. Anderson, Susan M. Beale,
                              Robert J. Buckler, Michael C.
                              Champley, Haven C. Cockerham, Anthony
                              F. Earley, Jr., Larry G. Garberding,
                              Douglas R. Gipson, John E. Lobbia,
                              Leslie L. Loomans, David E. Meador,
                              Christopher C. Nern, Michael C.
                              Porter, William R. Roller and S.
                              Martin Taylor. (Exhibit 10-9* to Form
                              10-Q for quarter ended September 30,
                              1997).
                    
                    *10(c) -  Form of 1995 Indemnification
                              Agreement between the Company and its
                              directors and officers (Exhibit 3L
                              (10-1) to DTE Energy Company Form 8-B
                              dated January 2, 1996).
                    
                    *10(d) -  Form of Indemnification Agreement
                              between Detroit Edison and its
                              officers other than those identified
                              in *10(l) (Exhibit 10-41 to Detroit
                              Edison's Form 10-Q for quarter ended
                              June 30, 1993).
                    
                    *10(e) -  Certain arrangements pertaining to
                              the employment of S. Martin Taylor
                              (Exhibit 10-38 to Detroit Edison's
                              Form 10-K for year ended December 31,
                              1992).
                    
                    *10(f) -  Certain arrangements pertaining to
                              the employment of Anthony F. Earley,
                              Jr. (Exhibit 10-53 to Detroit Edison's
                              Form 10-Q for quarter ended March 31,
                              1994).
                    
                    *10(g) -  Amended and Restated Detroit Edison
                              Company Savings Reparation Plan
                              (Exhibit 10-4 to Form 10-Q for quarter
                              ended March 31, 1996).
                    
                    *10(h) -  Certain arrangements pertaining to
                              the employment of Haven E. Cockerham
                              (Exhibit 10-55 to Detroit Edison's
                              Form 10-Q for quarter ended September
                              30, 1994).
                    
                    *10(i) -  Certain arrangements pertaining to
                              the employment of Larry G. Garberding
                              (Exhibit 28-52 to Detroit Edison's
                              Form 10-Q for quarter ended June 30,
                              1990).
                    
                    *10(j) -  Form of Indemnification Agreement,
                              between Detroit Edison and (1) John E.
                              Lobbia, (2) Larry G. Garberding and
                              (3) Anthony F. Earley, Jr. (Exhibit
                              19-7 to Detroit Edison's Form 10-Q for
                              quarter ended March 31, 1992).


                                      73

<PAGE>   74

                    Exhibit
                    Number
                    ------
                    
                    *10(k) -  Form of Indemnification Agreement
                              between Detroit Edison and its
                              directors (Exhibit 19-8 to Detroit
                              Edison's Form 10-Q for quarter ended
                              March 31, 1992).
                    
                    *10(l) -  Executive Vehicle Program, dated
                              October 1, 1993 (Exhibit 10-47 to
                              Detroit Edison's Form 10-Q for quarter
                              ended September 30, 1993).
                    
                    *10(m) -  Amendment No. 1 to Executive  Vehicle 
                              Plan, November 1993 (Exhibit 10-58 to
                              Detroit Edison's Form 10-K for year
                              ended December 31, 1993).
                    
                    *10(n) -  Certain arrangements pertaining to
                              the employment of Gerard M. Anderson
                              (Exhibit 10-40 to Detroit Edison's
                              Form 10-K for year ended December 31,
                              1993).
                    
                    *10(o) -  Third Restatement of The Detroit
                              Edison Company Plan for Deferring the
                              Payment of Directors' Fees (January 1,
                              1996) (Exhibit 3L (10-19) to DTE
                              Energy Form 8-B dated January 2, 
                              1996). 
                    
                    *10(p) -  DTE Energy  Company  Retirement  Plan 
                              for Non-Employee Directors (January 1,
                              1996) (Exhibit 3L (10-20) to DTE
                              Energy Form 8-B dated January 2,
                              1996).
                    
                    *10(q) -  DTE Energy Company Plan for
                              Deferring the Payment of Directors'
                              Fees (January 1, 1996) (Exhibit 3L
                              (10-21) to DTE Energy Form 8-B dated
                              January 2, 1996).
                    
                    *10(r) -  Long-Term Incentive Plan (Exhibit
                              10-3 to Form 10-K for year ended
                              December 31, 1996).
                    
                    *10(s) -  1997 Executive Incentive Plan
                              Measures (Exhibit *10-7 to Form 10-Q
                              for quarter ended March 31, 1997).
                    
                    *10(t) -  Certain arrangements pertaining to
                              the employment of David E. Meador
                              (Exhibit 10-5 to Form 10-K for year
                              ended December 31, 1996).
                    
                    *10(u) -  Amended and Restated Supplemental
                              Long-Term Disability Plan, dated
                              January 27, 1997. (Exhibit *10-4 to
                              Form 10-K for year ended December 31,
                              1996).
                    
                     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).


                                       74


<PAGE>   75
                    
                    Exhibit
                    Number
                    ------
                    
                     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) -  1988 Amended and Restated Loan
                              Agreement, dated as of October 4,
                              1988, between Renaissance Energy
                              Company (an unaffiliated company)
                              ("Renaissance") and Detroit Edison
                              (Exhibit 99-6 to Registration No.
                              33-50325).
                    
                     99(d) -  First Amendment to 1988 Amended and
                              Restated Loan Agreement, dated as of
                              February 1, 1990, between Detroit
                              Edison and Renaissance (Exhibit 99-7
                              to Registration No. 33-50325).
                    
                     99(e) -  Second Amendment to 1988 Amended and
                              Restated Loan Agreement, dated as of
                              September 1, 1993, between Detroit
                              Edison and Renaissance (Exhibit 99-8
                              to Registration No. 33-50325).
                    
                     99(f) -  Third Amendment, dated as of August
                              28, 1997, to 1988 Amended and Restated
                              Loan Agreement between Detroit Edison
                              and Renaissance. (Exhibit 99-22 to
                              Form 10-Q for quarter ended September
                              30, 1997).
                    
                     99(g) -  $200,000,000 364-Day Credit
                              Agreement, dated as of September 1,
                              1993, among Detroit Edison,
                              Renaissance and Barclays Bank PLC, New
                              York Branch, as Agent (Exhibit 99-12
                              to Registration No. 33-50325).
                    
                     99(h) -  First Amendment, dated as of August
                              31, 1994, to $200,000,000 364-Day
                              Credit Agreement, dated September 1,
                              1993, among The Detroit Edison
                              Company, Renaissance, the Banks 
                              party thereto and Barclays
                              Bank, PLC, New York Branch, as Agent
                              (Exhibit 99-19 to Form 10-Q for
                              quarter ended September 30, 1994).
                    
                     99(i) -  Third Amendment, dated as of March
                              8, 1996, to $200,000,000 364-Day
                              Credit Agreement, dated September 1,
                              1993, as amended, among Detroit
                              Edison, Renaissance, the Banks party
                              thereto and Barclays Bank, PLC, New
                              York Branch, as Agent (Exhibit 99-11
                              to Form 10-Q for quarter ended March
                              31, 1996).




                                       75
<PAGE>   76

                    Exhibit
                    Number
                    ------
                    
                     99(j) -  Fourth Amendment, dated as of August
                              29, 1996, to $200,000,000 364-Day
                              Credit Agreement as of September 1,
                              1990, as amended, among Detroit
                              Edison, Renaissance, the Banks party
                              thereto and Barclays Bank, PLC, New
                              York Branch, as Agent (Exhibit 99-13
                              to Form 10-Q for quarter ended
                              September 30, 1996).
                    
                     99(k) -  Fifth Amendment, dated as of September
                              1, 1997, to $200,000,000 Multi-Year
                              Credit Agreement, dated as of
                              September 1, 1993, as amended, among
                              Detroit Edison, Renaissance, the Banks
                              Party thereto and Barclays Bank PLC,
                              New York Branch, as Agent. (Exhibit
                              99-24 to Form 10-Q for quarter ended
                              September 30, 1997).
                    
                     99(l) -  $200,000,000 Three-Year Credit
                              Agreement, dated September 1, 1993,
                              among Detroit Edison, Renaissance and
                              Barclays Bank, PLC, New York Branch,
                              as Agent (Exhibit 99-13 to
                              Registration No. 33-50325).
                    
                     99(m) -  First  Amendment,  dated as of 
                              September 1, 1994, to $200,000,000
                              Three-Year Credit Agreement, dated as
                              of September 1, 1993, among Detroit 
                              Edison, Renaissance, the Banks party
                              thereto and Barclays Bank, PLC, New
                              York Branch, as Agent (Exhibit 99-20
                              to Form 10-Q for quarter ended
                              September 30, 1994).
                    
                     99(n) -  Third Amendment, dated as of March
                              8, 1996, to $200,000,000 Three-Year
                              Credit Agreement, dated September 1,
                              1993, as amended among Detroit Edison,
                              Renaissance, the Banks party thereto
                              and Barclays Bank, PLC, New York
                              Branch, as Agent (Exhibit 99-12 to
                              Form 10-Q for quarter ended March 31,
                              1996).
                    
                     99(o) -  Fourth Amendment, dated as of
                              September 1, 1996, to $200,000,000
                              Multi-Year (formerly Three-Year)
                              Credit Agreement, dated as of
                              September 1, 1993, as amended among
                              Detroit Edison, Renaissance, the Banks
                              party thereto and Barclays Bank, PLC,
                              New York Branch, as Agent (Exhibit
                              99-14 to Form 10-Q for quarter ended
                              September 30, 1996).


                                       76
<PAGE>   77
                     Exhibit
                     Number
                     ------
                    
                     99(p) -  Fifth Amendment, dated as of August
                              28, 1997, to $200,000,000 364-Day
                              Credit Agreement, dated as of
                              September 1, 1990, as amended, among
                              Detroit Edison, Renaissance, the Banks
                              Party thereto and Barclays Bank PLC,
                              New York Branch, as Agent. (Exhibit
                              99-25 to Form 10-Q for quarter ended
                              September 30, 1997).
                    
                     99(q) -  1988 Amended and Restated Nuclear
                              Fuel Heat Purchase Contract, dated
                              October 4, 1988, between Detroit
                              Edison and Renaissance (Exhibit 99-9
                              to Registration No. 33-50325).
                    
                     99(r) -  First Amendment to 1988 Amended and
                              Restated Nuclear Fuel Heat Purchase
                              Contract, dated as of February 1,
                              1990, between Detroit Edison and
                              Renaissance (Exhibit 99-10 to
                              Registration No. 33-50325).
                    
                     99(s) -  Second  Amendment,  dated as of  
                              September 1, 1993, to 1988 Amended and
                              Restated Nuclear Fuel Heat Purchase
                              Contract between Detroit Edison and
                              Renaissance (Exhibit 99-11 to
                              Registration No. 33-50325).
                    
                     99(t) -  Third Amendment, dated as of August
                              31, 1994, to 1988 Amended and Restated
                              Nuclear Fuel Heat Purchase Contract,
                              dated October 4, 1988, between 
                              Detroit Edison and Renaissance
                              (Exhibit 99-21 to Form 10-Q for 
                              quarter ended September 30, 1994).
                    
                     99(u) -  Fourth Amendment, dated as of March
                              8, 1996, to 1988 Amended and Restated
                              Nuclear Fuel Heat Purchase Contract
                              Agreement, dated as of October 4,
                              1988, between Detroit Edison and
                              Renaissance (Exhibit 99-10 to Form
                              10-Q for quarter ended March 31,
                              1996).
                    
                     99(v) -  Sixth Amendment, dated as of August
                              28, 1997, to 1988 Amended and Restated
                              Nuclear Fuel Heat Purchase Contract
                              between Detroit Edison and
                              Renaissance. (Exhibit 99-23 to Form
                              10-Q for quarter ended September 30,
                              1997).


                                       77
<PAGE>   78
                      Exhibit
                      Number
                      ------
                    
                      99(w) -  Standby Note Purchase  Credit  
                               Facility, dated as of September 12,
                               1997, among Detroit Edison and the 
                               Bank's Signatory thereto and The 
                               Chase Manhattan Bank, as 
                               Administrative Agent, and Citicorp
                               Securities, Inc., Lehman Brokers,
                               Inc., as Remarketing Agents and Chase
                               Securities, Inc. as Arranger. (Exhibit
                               999-26 to Form 10-Q for quarter ended
                               September 30, 1997).
                    
                      99(x) -  Master Trust Agreement ("Master
                               Trust"), dated as of June 30, 1994,
                               between Detroit Edison and Fidelity
                               Management Trust Company relating to
                               the Savings & Investment Plans
                               (Exhibit 4-167 to Form 10-Q for
                               quarter ended June 30, 1994).
                    
                      99(y) -  First  Amendment,  effective as of 
                               February 1, 1995, to Master Trust
                               (Exhibit 4-10 to Registration No.
                               333-00023).
                    
                      99(z) -  Second  Amendment,  effective  as of 
                               February 1, 1995 to Master Trust
                               (Exhibit 4-11 to Registration No.
                               333-00023).
                    
                     99(aa) -  Third  Amendment,  effective  
                               January 1, 1996, to Master Trust 
                               (Exhibit 4-12 to Registration No. 
                               333-00023).
                    
                     99(bb) -  The Detroit Edison Company 
                               Irrevocable Grantor Trust for The
                               Detroit Edison Company Savings
                               Reparation Plan (Exhibit 99-1 to Form
                               10-K for year ended December 31,
                               1996).
                    
                     99(cc) -  The Detroit Edison Company
                               Irrevocable Grantor Trust for The
                               Detroit Edison Company Retirement
                               Reparation Plan (Exhibit 99-2 to Form
                               10-K for year ended December 31,
                               1996).
                    
                     99(dd) -  The Detroit Edison Company
                               Irrevocable Grantor Trust for The
                               Detroit Edison Company Management
                               Supplemental Benefit Plan (Exhibit
                               99-3 to Form 10-K for year ended
                               December 31, 1996).
                    
                     99(ee) -  The Detroit Edison Company
                               Irrevocable Grantor Trust for The
                               Detroit Edison Company Benefit
                               Equalization Plan (Exhibit 99-4 to
                               Form 10-K for year ended December 31,
                               1996).

                                       78
<PAGE>   79
                     Exhibit
                     Number
                     ------
                    
                     99(ff) -  The Detroit Edison Company
                               Irrevocable Grantor Trust for The
                               Detroit Edison Company Plan for
                               Deferring the Payment of Directors'
                               Fees (Exhibit 99-5 to Form 10-K for
                               year ended December 31, 1996).
                    
                     99(gg) -  Detroit  Edison  Irrevocable
                               Grantor Trust for DTE Energy 
                               Company Retirement Plan for
                               Non-Employee Directors (Exhibit 99-6
                               to Form 10-K for year ended December
                               31, 1996).
                    
                     99(hh) -  DTE Energy Company Irrevocable
                               Grantor Trust for DTE Energy
                               Company Plan for Deferring the Payment
                               of Directors' Fees (Exhibit 99-7 to
                               Form 10-K for year ended December 31,
                               1996).
                    
                     99(ii) -  DTE Energy Company Irrevocable
                               Grantor Trust for DTE Energy
                               Company Retirement Plan for
                               Non-Employee Directors (Exhibit 99-8
                               to Form 10-K for year ended December
                               31, 1996).

       (b)    Registrants filed a report on Form 8-K, dated November 4, 1997,
              discussing a series of MPSC Orders providing for a competitive
              direct access program for Detroit Edison.

       (c)    *Denotes management contract or compensatory plan or arrangement
              required to be entered as an exhibit to this report.


                                       79
<PAGE>   80


                             DTE ENERGY COMPANY AND
                           THE DETROIT EDISON COMPANY

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>

                                                                          Additions                                  
                                           Balance at           ----------------------------                         Balance
                                           Beginning            Charged to        Charged to                          at End
                                               of               Costs and           Other                               of
Description                                  Period              Expenses        Accounts(a)      Deductions(b)       Period
-----------                                  ------              --------        -----------      -------------       ------
                                                                           (Thousands)
<S>                                        <C>                 <C>              <C>               <C>              <C>        
YEAR 1997                         
Allowance for                     
   uncollectible accounts         
   (shown as deduction            
   from accounts receivable       
   in balance sheet)..................      $  20,000           $  18,738        $  2,657          $ (21,395)       $  20,000
                                                                                                                     
YEAR 1996                                                                                                            
Allowance for                                                                                                        
   uncollectible accounts                                                                                            
   (shown as deduction                                                                                               
   from accounts receivable                                                                                          
   in balance sheet)..................      $  22,000           $  12,756        $  2,763          $ (17,519)       $  20,000
                                                                                                                     
                                                                                                                     
YEAR 1995                                                                                                            
Allowance for                                                                                                        
   uncollectible accounts                                                                                            
   (shown as deduction                                                                                               
   from accounts receivable                                                                                          
   in balance sheet)..................      $  30,000           $   4,849        $  3,253          $ (16,102)       $  22,000
</TABLE>
-----------------
(a) Collection of accounts previously written off.

(b) Uncollectible accounts written off.

                                       80
<PAGE>   81



                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

<TABLE>

   <S>                                                           <C>
                                                                                     DTE ENERGY COMPANY
                                                                      --------------------------------------------------
                                                                                        (Registrant)


   By                    /s/ JOHN E. LOBBIA                      By                /s/ LARRY G. GARBERDING
          --------------------------------------------------          --------------------------------------------------
                           John E. Lobbia                                            Larry G. Garberding
                       Chairman of the Board,                                     Executive Vice President,
                Chief Executive Officer and Director                        Chief Financial Officer and Director


   By                /s/ ANTHONY F. EARLEY, JR.                  By                  /s/ DAVID E. MEADOR
          --------------------------------------------------          --------------------------------------------------
                       Anthony F. Earley, Jr.                                          David E. Meador
                             President,                                         Vice President and Controller
                Chief Operating Officer and Director


   By                  /s/ TERENCE E. ADDERLEY                   By                  /s/ LILLIAN BAUDER
          --------------------------------------------------          --------------------------------------------------
                    Terence E. Adderley, Director                                 Lillian Bauder, Director


   By                   /s/ EUGENE A. MILLER                     By                    /s/ DAVID BING
          --------------------------------------------------          --------------------------------------------------
                     Eugene A. Miller, Director                                     David Bing, Director


   By                  /s/ DEAN E. RICHARDSON                    By                 /s/ WILLIAM C. BROOKS
          --------------------------------------------------          --------------------------------------------------
                    Dean E. Richardson, Director                                 William C. Brooks, Director


   By                   /s/ ALLAN D. GILMOUR                     By                 /s/ ALAN E. SCHWARTZ
          --------------------------------------------------          --------------------------------------------------
                     Allan D. Gilmour, Director                                  Alan E. Schwartz, Director


   By                /s/ THEODORE S. LEIPPRANDT                  By                  /s/ WILLIAM WEGNER
          --------------------------------------------------          --------------------------------------------------
                  Theodore S. Leipprandt, Director                                William Wegner, Director

</TABLE>


Date:  February 23, 1998

                                       81
<PAGE>   82


                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.
<TABLE>

   <S>                                                           <C>
                                                                                 THE DETROIT EDISON COMPANY
                                                                      --------------------------------------------------
                                                                                        (Registrant)


   By                    /s/ JOHN E. LOBBIA                      By                /s/ LARRY G. GARBERDING
          --------------------------------------------------          --------------------------------------------------
                           John E. Lobbia                                            Larry G. Garberding
                       Chairman of the Board,                                     Executive Vice President,
                Chief Executive Officer and Director                        Chief Financial Officer and Director


   By                /s/ ANTHONY F. EARLEY, JR.                  By                  /s/ DAVID E. MEADOR
          --------------------------------------------------          --------------------------------------------------
                       Anthony F. Earley, Jr.                                          David E. Meador
                             President,                                         Vice President and Controller
                Chief Operating Officer and Director


   By                  /s/ TERENCE E. ADDERLEY                   By                  /s/ LILLIAN BAUDER
          --------------------------------------------------          --------------------------------------------------
                    Terence E. Adderley, Director                                 Lillian Bauder, Director


   By                   /s/ EUGENE A. MILLER                     By                    /s/ DAVID BING
          --------------------------------------------------          --------------------------------------------------
                     Eugene A. Miller, Director                                     David Bing, Director


   By                  /s/ DEAN E. RICHARDSON                    By                 /s/ WILLIAM C. BROOKS
          --------------------------------------------------          --------------------------------------------------
                    Dean E. Richardson, Director                                 William C. Brooks, Director


   By                   /s/ ALLAN D. GILMOUR                     By                 /s/ ALAN E. SCHWARTZ
          --------------------------------------------------          --------------------------------------------------
                     Allan D. Gilmour, Director                                  Alan E. Schwartz, Director


   By                /s/ THEODORE S. LEIPPRANDT                  By                  /s/ WILLIAM WEGNER
          --------------------------------------------------          --------------------------------------------------
                  Theodore S. Leipprandt, Director                                William Wegner, Director


</TABLE>

Date:  February 23, 1998

                                       82
<PAGE>   83




                               DTE ENERGY COMPANY
                                                    FILE NO. 1-11707

                           THE DETROIT EDISON COMPANY

                                                    FILE NO. 1-2198

                           ANNUAL REPORTS ON FORM 10-K
                      FOR THE YEAR ENDED DECEMBER 31, 1997

                                  EXHIBIT INDEX

        Exhibits filed herewith.

                                 Exhibit
                                 Number                            Page No. 
                                 --------                                  -----

                                 4-183  - $60,000,000 Support Agreement dated
                                          as of January 21, 1998 between DTE
                                          Energy Company and DTE Capital
                                          Corporation.

                                 4-184  - $400,000,000 Support Agreement,
                                          dated as of January 21, 1998, between
                                          DTE Energy Company and DTE Capital
                                          Corporation.

                                 4-185  - Fourth Amendment to Trust Agreement
                                          Between Fidelity Management Trust
                                          Company and The Detroit Edison Company
                                          (July 1996).

                                 4-186  - Fifth Amendment to Trust Agreement
                                          Between Fidelity Management Trust
                                          Company and The Detroit Edison Company
                                          (December 1997).

                                10-10*  - Fourth Restatement of The Retirement
                                          Reparation Plan for Certain Employees
                                          of The Detroit Edison Company (October
                                          1997).

                                10-11*  - Fourth Restatement of The Benefit
                                          Equalization Plan for Certain
                                          Employees of The Detroit Edison
                                          Company (October 1997).

                                10-12*  - The  Detroit  Edison  Company  Key  
                                          Employee   Deferred   Compensation  
                                          Plan (October 1997).

                                10-13*  - The Detroit Edison Company Executive
                                          Incentive Plan (October 1997).

                                      1
<PAGE>   84



                                10-14* -  Fifth Restatement of The Detroit
                                          Edison Company Management Supplemental
                                          Benefit Plan (October 1977).

                                10-15* -  The Detroit Edison Company
                                          Shareholder Value Improvement Plan-A
                                          (October 1997).

                                10-16* -  Trust Agreement for DTE Energy
                                          Company Change-In-Control Severance
                                          Agreements between DTE Energy Company
                                          and Wachovia Bank, N.A.

                                 11-10 -  DTE Energy Company and Subsidiary
                                          Companies Primary and Fully Diluted
                                          Earnings Per Share of Common Stock.

                                  12-8 -  DTE Energy Company and Subsidiary
                                          Companies Computation of Ratio of
                                          Earnings to Fixed Charges.

                                  12-9 -  The Detroit Edison Company and
                                          Subsidiary Companies Computation of
                                          Ratio of Earnings to Fixed Charges.

                                 12-10 -  DTE Energy Company and Subsidiary
                                          Companies Computation of Ratio of
                                          Earnings to Fixed Charges and
                                          Preferred Stock Dividends.

                                 12-11 -  The Detroit Edison Company and
                                          Subsidiary Companies Computation of
                                          Ratio of Earnings to Fixed Charges and
                                          Preferred Stock Dividends.

                                 21-2  -  Subsidiaries of the Companies and
                                          Detroit Edison.

                                 23-11 -  Consent of Deloitte & Touche LLP.

                                 27-17 -  Financial Data Schedule for the
                                          period ended December 31, 1997 for DTE
                                          Energy Company and Subsidiary
                                          Companies.

                                 27-18 -  Financial Data Schedule for the
                                          period ended December 31, 1997 for The
                                          Detroit Edison Company and Subsidiary
                                          Companies.

                                 99-27 -  Amended and Restated Credit Agreement,
                                          Dated as of January 21, 1998 among DTE
                                          Capital Corporation, the Initial
                                          Lenders, Citibank, N.A., as Agent, and
                                          Barclays Bank PLC, New York Branch and
                                          The First National Bank of Chicago, as
                                          Co-Agents, and Citicorp Securities,
                                          Inc., as Arranger.

                                      2
<PAGE>   85



               (ii) Exhibits incorporated herein by reference.   See Page Nos.
                                                                 ___ through ___
                                                                 for location


                                  3(a) -  Amended and Restated Articles of
                                          Incorporation of DTE Energy Company,
                                          dated December 13, 1995.

                                  3(b) -  Certificate of Designation of Series
                                          A Junior Participating Preferred Stock
                                          of DTE Energy Company.

                                  3(c) -  Restated Articles of Incorporation
                                          of Detroit Edison, as filed December
                                          10, 1991 with the State of Michigan,
                                          Department of Commerce - Corporation
                                          and Securities Bureau.

                                  3(d) -  Certificate containing resolution of
                                          the Detroit Edison Board of Directors
                                          establishing the Cumulative Preferred
                                          Stock, 7.75% Series as filed February
                                          22, 1993 with the State of Michigan,
                                          Department of Commerce Corporation and
                                          Securities Bureau.

                                  3(e) -  Certificate containing resolution of
                                          the Detroit Edison Board of Directors
                                          establishing the Cumulative Preferred
                                          Stock, 7.74% Series, as filed April
                                          21, 1993 with the State of Michigan,
                                          Department of Commerce - Corporation
                                          and Securities Bureau.

                                  3(f) -  Rights Agreement, dated as of
                                          September 23, 1997, by and between DTE
                                          Energy Company and The Detroit Edison
                                          Company, as Rights Agent .

                                  3(g) -  Agreement and Plan of Exchange.

                                  3(h) -  Bylaws of DTE Energy Company, as
                                          amended through September 22, 1997.

                                  3(i) -  Bylaws of The Detroit Edison
                                          Company, as amended through September
                                          22, 1997.

                                  4(a) -  Mortgage and Deed of Trust, dated as
                                          of October 1, 1924, between Detroit
                                          Edison and Bankers Trust Company as
                                          Trustee and indentures supplemental
                                          thereto, dated as of dates indicated
                                          below.

                                          September 1, 1947
                                          October 1, 1968

                                      3
<PAGE>   86



                                          November 15, 1971 
                                          January 15, 1973
                                          June 1, 1978 
                                          June 30, 1982  
                                          August 15, 1982 
                                          October 15, 1985 
                                          December 31, 1994 
                                          November 30, 1987 
                                          December 31, 1992 
                                          July 15, 1989 
                                          December 1, 1989
                                          February 15, 1990 
                                          April 1, 1991 
                                          May 1, 1991 
                                          May 15, 1991 
                                          September 1, 1991
                                          November 1, 1991 
                                          January 15, 1992
                                          February 29, 1992 
                                          April 15, 1992 
                                          July 15, 1992 
                                          July 31, 1992 
                                          November 30, 1992 
                                          January 1, 1993 
                                          March 1, 1993
                                          March 15, 1993 
                                          April 1, 1993 
                                          April 26, 1993 
                                          May 31, 1993 
                                          June 30, 1993 
                                          June 30, 1993 
                                          September 15, 1993 
                                          March 1, 1994 
                                          June 15, 1994 
                                          August 15, 1994
                                          December 1, 1994 
                                          August 1, 1995

                                4(b)   -  Collateral Trust Indenture (notes),
                                          dated as of June 30, 1993.

                                4(c)   -  First Supplemental Note Indenture,
                                          dated as of June 30, 1993.

                                4(d)   -  Second Supplemental Note Indenture,
                                          dated as of September 15, 1993.



                                      4
<PAGE>   87


                                4(e)   -  First Amendment, dated as of August
                                          15, 1996, to Second Supplemental Note
                                          Indenture.

                                4(f)   -  Third Supplemental Note Indenture,
                                          dated as of August 15, 1994.

                                4(g)   -  First Amendment, dated as of
                                          December 12, 1995, to Third
                                          Supplemental Note Indenture, dated as
                                          of August 15, 1994.

                                4(h)   -  Fourth Supplemental Note Indenture,
                                          dated as of August 15, 1995.

                                4(i)   -  Fifth Supplemental Note Indenture,
                                          dated as of February 1, 1996.

                                4(j)   -  Standby Note Purchase Credit
                                          Facility, dated as of August 17, 1994,
                                          among The Detroit Edison Company,
                                          Barclays Bank PLC, as Bank and
                                          Administrative Agent, Bank of America,
                                          The Bank of New York, The Fuji Bank
                                          Limited, The Long-Term Credit Bank of
                                          Japan, LTD, Union Bank and Citicorp
                                          Securities, Inc. and First Chicago
                                          Capital Markets, Inc. as Remarketing
                                          Agents.

                                *10(a) -  Certain arrangements pertaining to
                                          the employment of Michael C. Porter.

                                *10(b) -  Form of Change-in-Control Severance
                                          Agreement, dated as of October 1,
                                          1997, between DTE Energy Company and
                                          Gerard M. Anderson, Susan M. Beale,
                                          Robert J. Buckler, Michael C.
                                          Champley, Haven C. Cockerham, Anthony
                                          F. Earley, Jr., Larry G. Garberding,
                                          Douglas R. Gipson, John E. Lobbia,
                                          Leslie L. Loomans, David E. Meador,
                                          Christopher C. Nern, Michael C.
                                          Porter, William R. Roller and S.
                                          Martin Taylor.

                                *10(c) -  Form of 1995 Indemnification
                                          Agreement between the Company and its
                                          directors and officers.

                                *10(d) -  Form of Indemnification Agreement
                                          between Detroit Edison and its
                                          officers other than those identified
                                          in *10(l).

                                *10(e) -  Certain arrangements pertaining to
                                          the employment of S. Martin Taylor.

                                *10(f) -  Certain arrangements pertaining to
                                          the employment of Anthony F. Earley,
                                          Jr.



                                      5
<PAGE>   88



                                *10(g) -  Amended and Restated Detroit Edison
                                          Company Savings Reparation Plan.

                                *10(h) -  Certain arrangements pertaining to
                                          the employment of Haven E. Cockerham.

                                *10(i) -  Certain arrangements pertaining to
                                          the employment of Larry G. Garberding.

                                *10(j) -  Form of Indemnification Agreement,
                                          between Detroit Edison and (1) John E.
                                          Lobbia, (2) Larry G. Garberding and
                                          (3) Anthony F. Earley, Jr.

                                *10(k) -  Form of Indemnification Agreement
                                          between Detroit Edison and its
                                          directors.

                                *10(l) -  Executive Vehicle Program, dated
                                          October 1, 1993.

                                *10(m) -  Amendment No. 1 to Executive Vehicle
                                          Plan, November 1993.

                                *10(n) -  Certain arrangements pertaining to
                                          the employment of Gerard M. Anderson.

                                *10(o) -  Third Restatement of The Detroit
                                          Edison Company Plan for Deferring the
                                          Payment of Directors' Fees.

                                *10(p) -  DTE Energy Company Retirement Plan
                                          for Non-Employee Directors (January 1,
                                          1996).

                                *10(q) -  DTE Energy Company Plan for
                                          Deferring the Payment of Directors'
                                          Fees (January 1, 1996).

                                *10(r) -  Long-Term Incentive Plan.

                                *10(s) -  1997 Executive Incentive Plan
                                          Measures.

                                *10(t) -  Certain arrangements pertaining to
                                          the employment of David E. Meador.

                                *10(u) -  Amended and Restated Supplemental
                                          Long-Term Disability Plan, dated
                                          January 27, 1997.

                                 99(a) -  Belle River Participation Agreement
                                          between Detroit Edison and Michigan
                                          Public Power Agency, dated as of
                                          December 1, 1982.

                                      6
<PAGE>   89



                                99(b)  -  Belle River Transmission Ownership
                                          and Operating Agreement between
                                          Detroit Edison and Michigan Public
                                          Power Agency, dated as of December 1,
                                          1982.

                                99(c)  -  1988 Amended and Restated Loan
                                          Agreement, dated as of October 4,
                                          1988, between Renaissance Energy
                                          Company (an unaffiliated company)
                                          ("Renaissance") and Detroit Edison.

                                99(d)  -  First Amendment to 1988 Amended and
                                          Restated Loan Agreement, dated as of
                                          February 1, 1990, between Detroit
                                          Edison and Renaissance.

                                99(e)  -  Second Amendment to 1988 Amended and
                                          Restated Loan Agreement, dated as of
                                          September 1, 1993, between Detroit
                                          Edison and Renaissance.

                                99(f)  -  Third Amendment, dated as of August
                                          28, 1997, to 1988 Amended and Restated
                                          Loan Agreement between Detroit Edison
                                          and Renaissance.

                                99(g)  -  $200,000,000 364-Day Credit
                                          Agreement, dated as of September 1,
                                          1993, among Detroit Edison,
                                          Renaissance and Barclays Bank PLC, New
                                          York Branch, as Agent.

                                99(h)  -  First Amendment, dated as of August
                                          31, 1994, to $200,000,000 364-Day
                                          Credit Agreement, dated September 1,
                                          1993, among The Detroit Edison
                                          Company, Renaissance, the Banks 
                                          party thereto and Barclays
                                          Bank, PLC, New York Branch, as Agent.
                                          99(i) - Third Amendment, dated as of
                                          March 8, 1996, to $200,000,000 364-Day
                                          Credit Agreement, dated September 1,
                                          1993, as amended, among Detroit
                                          Edison, Renaissance, the Banks party
                                          thereto and Barclays Bank, PLC, New
                                          York Branch, as Agent.

                                99(j)  -  Fourth Amendment, dated as of August
                                          29, 1996, to $200,000,000 364-Day
                                          Credit Agreement as of September 1,
                                          1990, as amended, among Detroit
                                          Edison, Renaissance, the Banks party
                                          thereto and Barclays Bank, PLC, New
                                          York Branch, as Agent.

                                99(k)  -  Fifth Amendment, dated as of September
                                          1, 1997, to $200,000,000 Multi-Year
                                          Credit Agreement, dated as of
                                          September 1, 1993, as amended, among
                                          Detroit Edison,

                                      7
<PAGE>   90


                                          Renaissance, the Banks Party thereto
                                          and Barclays Bank PLC, New York
                                          Branch, as Agent.

                                99(l)  -  $200,000,000 Three-Year Credit
                                          Agreement, dated September 1, 1993,
                                          among Detroit Edison, Renaissance and
                                          Barclays Bank, PLC, New York Branch,
                                          as Agent.

                                99(m)  -  First Amendment, dated as of
                                          September 1, 1994, to $200,000,000
                                          Three-Year Credit Agreement, dated as
                                          of September 1, 1993, among Detroit 
                                          Edison, Renaissance, the Banks party
                                          thereto and Barclays Bank, PLC, New
                                          York Branch, as Agent.

                                99(n)  -  Third Amendment, dated as of March
                                          8, 1996, to $200,000,000 Three-Year
                                          Credit Agreement, dated September 1,
                                          1993, as amended among Detroit Edison,
                                          Renaissance, the Banks party thereto
                                          and Barclays Bank, PLC, New York
                                          Branch, as Agent.

                                99(o)  -  Fourth Amendment, dated as of
                                          September 1, 1996, to $200,000,000
                                          Multi-Year (formerly Three-Year)
                                          Credit Agreement, dated as of
                                          September 1, 1993, as amended among
                                          Detroit Edison, Renaissance, the Banks
                                          party thereto and Barclays Bank, PLC,
                                          New York Branch, as Agent.

                                99(p)  -  Fifth Amendment, dated as of August
                                          28, 1997, to $200,000,000 364-Day
                                          Credit Agreement, dated as of
                                          September 1, 1990, as amended, among
                                          Detroit Edison, Renaissance, the Banks
                                          Party thereto and Barclays Bank PLC,
                                          New York Branch, as Agent.

                                99(q)  -  1988 Amended and Restated Nuclear
                                          Fuel Heat Purchase Contract, dated
                                          October 4, 1988, between Detroit
                                          Edison and Renaissance.

                                99(r)  -  First Amendment to 1988 Amended and
                                          Restated Nuclear Fuel Heat Purchase
                                          Contract, dated as of February 1,
                                          1990, between Detroit Edison and
                                          Renaissance.

                                99(s)  -  Second Amendment, dated as of
                                          September 1, 1993, to 1988 Amended and
                                          Restated Nuclear Fuel Heat Purchase
                                          Contract between Detroit Edison and
                                          Renaissance.

                                99(t)  -  Third Amendment, dated as of August
                                          31, 1994, to 1988 Amended and Restated
                                          Nuclear Fuel Heat Purchase

                                      8
<PAGE>   91


                                          Contract, dated October 4, 1988,
                                          between Detroit Edison and
                                          Renaissance. 

                                99(u)  -  Fourth Amendment, dated as of March
                                          8, 1996, to 1988 Amended and Restated
                                          Nuclear Fuel Heat Purchase Contract
                                          Agreement, dated as of October 4,
                                          1988, between Detroit Edison and
                                          Renaissance.

                                99(v)  -  Sixth Amendment, dated as of August
                                          28, 1997, to 1988 Amended and Restated
                                          Nuclear Fuel Heat Purchase Contract
                                          between Detroit Edison and
                                          Renaissance.

                                99(w)  -  Standby Note Purchase Credit
                                          Facility, dated as of September 12,
                                          1997, among Detroit Edison 
                                          and the Bank's Signatory thereto and
                                          The Chase Manhattan Bank, as
                                          Administrative Agent, and Citicorp
                                          Securities, Inc., Lehman Brokers,
                                          Inc., as Remarketing Agents and Chase
                                          Securities, Inc. as Arranger.

                                99(x)  -  Master Trust Agreement ("Master
                                          Trust"), dated as of June 30, 1994,
                                          between Detroit Edison and Fidelity
                                          Management Trust Company relating to
                                          the Savings & Investment Plans.

                                99(y)  -  First Amendment, effective as of
                                          February 1, 1995, to Master Trust .

                                99(z)  -  Second Amendment, effective as of
                                          February 1, 1995 to Master Trust.

                                99(aa) -  Third Amendment, effective January
                                          1, 1996, to Master Trust.

                                99(bb) -  The Detroit Edison Company
                                          Irrevocable Grantor Trust for The
                                          Detroit Edison Company Savings
                                          Reparation Plan.

                                99(cc) -  The Detroit Edison Company
                                          Irrevocable Grantor Trust for The
                                          Detroit Edison Company Retirement
                                          Reparation Plan.

                                99(dd) -  The Detroit Edison Company
                                          Irrevocable Grantor Trust for The
                                          Detroit Edison Company Management
                                          Supplemental Benefit Plan.

                                99(ee) -  The Detroit Edison Company
                                          Irrevocable Grantor Trust for The
                                          Detroit Edison Company Benefit
                                          Equalization Plan.

                                      9
<PAGE>   92



                                99(ff) -  The Detroit Edison Company
                                          Irrevocable Grantor Trust for The
                                          Detroit Edison Company Plan for
                                          Deferring the Payment of Directors'
                                          Fees.

                                99(gg) -  Detroit Edison Irrevocable Grantor 
                                          Trust for DTE Energy Company 
                                          Retirement Plan for Non-Employee 
                                          Directors.

                                99(hh) -  DTE Energy Company Irrevocable
                                          Grantor Trust for DTE Energy Company 
                                          Plan for Deferring the Payment
                                          of Directors' Fees.

                                99(ii) -  DTE Energy Company Irrevocable
                                          Grantor Trust for DTE Energy
                                          Company Retirement Plan for
                                          Non-Employee Directors.

              (c) *Denotes management contract or compensatory plan or
              arrangement required to be entered as an exhibit to this report.





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