##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 ANNUAL
REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006
 Commission file number 1-2198
 The Detroit Edison Company, a Michigan corporation, meets the conditions set forth in General Instruction I (1) (a) and (b) of Form 10-K and is,
therefore, filing this form with the reduced disclosure format.
 THE DETROIT EDISON COMPANY
  Michigan
(State or other jurisdiction of incorporation or 
organization)
    
    38-0478650
(I.R.S. Employer
Identification No.)2000 2ndAvenue, Detroit, Michigan
(Address of principal executive offices)
    
    48226-1279
(Zip Code)
 313-235-4000
 
 
 Yes o No þ
 Yes o No þ
 Yes þ No o
 o
  Large accelerated filer o Accelerated filer o Non-accelerated filer þ
 Yes o No þ
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



The Detroit Edison Company  Annual Report on Form 10-K  Year Ended December 31, 2006  Table of Contents
 PageDefinitions
    
    
    
    
    1Forward-Looking Statements
    
    
    2Part IItems
1., 1A., 1B. &2.
    
    Business, Risk Factors, Unresolved Staff Comments and Properties
    
    
    3Item 3.
    
    Legal Proceedings
    
    
    11Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    11Part IIItem 5.
    
    Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    11Item 6.
    
    Selected Financial Data
    
    
    11Item 7.
    
    Managements Narrative Analysis of Results of Operations
    
    
    12Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    15Item 8.
    
    Financial Statements and Supplementary Data
    
    
    17Item 9.
    
    Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
    
    
    58Item 9A.
    
    Controls and Procedures
    
    
    58Item 9B.
    
    Other Information
    
    
    59Part IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    59Item 11.
    
    Executive Compensation
    
    
    59Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
    
    
    59Item 13.
    
    Certain Relationships and Related Transactions, and Director
Independence
    
    
    59Item 14.
    
    Principal Accountant Fees and Services
    
    
    59Part IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    60Signatures
    
    
    
    
    70Amendment No.1 to the Amended & Restated Trade Receivables Purchase & Sale AgreementAmendment No.5 to the Amended & Restated Trade Receivables Purchase & Sale AgreementComputation of Ratio of Earnings to Fixed ChargesConset of Deloitte & Touche LLPSection 302 Certification of Chief Executive OfficerSection 302 Certification of Chief Financial OfficerSection 906 Certification of Chief Executive OfficerSection 906 Certification of Chief Financial Officer




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Definitions
 Customer Choice
    
    Statewide initiatives giving customers in Michigan the option to choose alternative suppliers for
electricity.CTA
    
    Costs to achieve, consisting of project management, consultant support and employee severance, related
to the Performance Excellence ProcessDetroit Edison
    
    The Detroit Edison Company (a direct wholly owned subsidiary of
DTE Energy Company) and subsidiary companiesDTE Energy
    
    DTE Energy Company, the parent of Detroit Edison
and directly or indirectly the parent company of
numerous utility and non-utility subsidiariesEPA
    
    United States Environmental Protection AgencyFERC
    
    Federal Energy Regulatory CommissionITC
    
    International Transmission Company (until
February 28, 2003, a wholly owned subsidiary of
DTE Energy Company)MDEQ
    
    Michigan Department of Environmental QualityMISO
    
    Midwest Independent System Operator, a Regional
Transmission OrganizationMPSC
    
    Michigan Public Service CommissionNRC
    
    Nuclear Regulatory CommissionPSCR
    
    A power supply cost recovery mechanism
authorized by the MPSC that allows Detroit
Edison to recover through rates its fuel,
fuel-related and purchased power expenses. The
power supply cost recovery mechanism was
suspended under Michigans restructuring
legislation (signed into law June 5, 2000),
which lowered and froze electric customer rates
and was reinstated by the MPSC effective January
1, 2004.Securitization
    
    Detroit Edison financed specific stranded costs
at lower interest rates through the sale of rate
reduction bonds by a wholly owned special
purpose entity, the Detroit Edison
Securitization Funding LLC.SFAS
    
    Statement of Financial Accounting StandardsStranded Costs
    
    Costs incurred by utilities in order to serve
customers in a regulated environment that absent
special regulatory approval would not otherwise
be recoverable if customers switch to
alternative energy suppliers.Units of MeasurementkWh
    
    Kilowatthour of electricityMW
    
    Megawatt of electricityMWh
    
    Megawatthour of electricity
 1




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Forward-Looking Statements
  
    
    the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers;
    
    economic climate and population growth or decline in the geographic areas where we do business;
    
    environmental issues, laws and regulations, and the cost of remediation and compliance;
    
    nuclear regulations and operations associated with nuclear facilities;
    
    implementation of the electric Customer Choice program;
    
    impact of electric utility restructuring in Michigan, including legislative amendments;
    
    employee relations and the impact of collective bargaining agreements;
    
    unplanned outages;
    
    access to capital markets and capital market conditions and the results of other financing efforts that can be affected
by credit agency ratings;
    
    the timing and extent of changes in interest rates;
    
    the level of borrowing;
    
    changes in the cost and availability of coal and other raw materials, and purchased power;
    
    effects of competition;
    
    impact of regulation by FERC, MPSC, NRC and other applicable governmental proceedings and regulations, including any
associated impact on rate structures;
    
    changes in and application of federal, state and local tax laws and their interpretations, including the Internal
Revenue Code, regulations, rulings, court proceedings and audits;
    
    the ability to recover costs through rate increases;
    
    the availability, cost, coverage and terms of insurance;
    
    the cost of protecting assets against, or damage due to, terrorism;
    
    changes in and application of accounting standards and financial reporting regulations;
    
    changes in federal or state laws and their interpretation with respect to regulation, energy policy and other business
issues;
    
    uncollectible accounts receivable;
    
    binding arbitration, litigation and related appeals; and
    
    changes in the economic and financial viability of our suppliers, customers and trading counterparties, and the
continued ability of such parties to perform their obligations to Detroit Edison.
  2




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Part I
 
 Items 1., 1A. & 2. Business, Company Risk Factors and Properties
 General
     Revenue by Service
 (in Millions)
    
    2006
    
    
    2005
    
    
    2004Residential
    
    $
    1,671
    
    
    $
    1,517
    
    
    $
    1,345Commercial
    
    
    1,603
    
    
    
    1,331
    
    
    
    1,123Industrial
    
    
    835
    
    
    
    697
    
    
    
    557Wholesale
    
    
    109
    
    
    
    73
    
    
    
    65Other
    
    
    350
    
    
    
    464
    
    
    
    234Subtotal
    
    
    4,568
    
    
    
    4,082
    
    
    
    3,324Interconnection sales (1)
    
    
    169
    
    
    
    380
    
    
    
    244Total Revenue
    
    $
    4,737
    
    
    $
    4,462
    
    
    $
    3,568
 
 (1)
    
    Represents power that is not distributed by Detroit Edison.   Fuel Supply and Purchased Power
  3




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Properties
   Location by
    
    Summer NetMichigan
    
    Rated Capability (1) (2)Plant Name
    
    County
    
    (MW)
    
    (%)
    
    Year in ServiceFossil-fueled Steam-ElectricBelle River (3)
    
    St. Clair
    
    
    1,026
    
    
    
    9.2
    
    
    1984 and 1985Conners Creek
    
    Wayne
    
    
    215
    
    
    
    1.9
    
    
    1951Greenwood
    
    St. Clair
    
    
    785
    
    
    
    7.1
    
    
    1979Harbor Beach
    
    Huron
    
    
    103
    
    
    
    0.9
    
    
    1968Marysville
    
    St. Clair
    
    
    84
    
    
    
    0.8
    
    
    1943 and 1947Monroe (4)
    
    Monroe
    
    
    3,115
    
    
    
    28.0
    
    
    1971, 1973 and 1974River Rouge
    
    Wayne
    
    
    510
    
    
    
    4.6
    
    
    1957 and 1958St. Clair
    
    St. Clair
    
    
    1,415
    
    
    
    12.7
    
    
    1953, 1954, 1959, 1961 and 1969Trenton Channel
    
    Wayne
    
    
    730
    
    
    
    6.6
    
    
    1949 and 19687,983
    
    
    
    71.8Oil or Gas-fueled Peaking Units
    
    Various
    
    
    1,102
    
    
    
    9.9
    
    
    1966-1971, 1981 and 1999Nuclear-fueled Steam-ElectricFermi 2 (5)
    
    Monroe
    
    
    1,111
    
    
    
    10.0
    
    
    1988Hydroelectric Pumped StorageLudington (6)
    
    Mason
    
    
    917
    
    
    
    8.3
    
    
    197311,113
    
    
    
    100.0
 
 (1)
    
    Summer net rated capabilities of generating plants in service are based on periodic load tests and are changed depending on operating experience, the physical
condition of units, environmental control limitations and customer requirements for steam, which otherwise would be used for electric generation.(2)
    
    Excludes one oil-fueled unit, St. Clair Unit No. 5 (250 MW), in cold standby status.(3)
    
    The Belle River capability represents Detroit Edisons entitlement to 81.39% of the capacity and energy of the plant. See Note 6.(4)
    
    The Monroe Power Plant provided 38% of Detroit Edisons total 2006 power plant generation.(5)
    
    Fermi 2 has a design electrical rating (net) of 1,150 MW.(6)
    
    Represents Detroit Edisons 49% interest in Ludington with a total capability of 1,872 MW. See Note 6.  4




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Electric Distribution
 Circuit MilesOperating Voltage-Kilovolts (kV)
    
    Overhead
    
    Underground4.8 kV to 13.2 kV
    
    
    28,155
    
    
    
    13,74724 kV
    
    
    101
    
    
    
    69040 kV
    
    
    2,323
    
    
    
    332120 kV
    
    
    70
    
    
    
    1330,649
    
    
    
    14,782
  Regulation
     5




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Energy Assistance Programs
  6




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Strategy and Competition
       ENVIRONMENTAL MATTERS
  7




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( in Millions)Air
    
    $
    2,185Water
    
    
    53Other Clean Up Sites
    
    
    12MGP Sites
    
    
    4Estimated
total future expenditures
    
    $
    2,254Estimated 2007 expenditures
    
    $
    234
 Air
 Water
 Contaminated Sites
  Note
    
    Title4
    
    Regulatory Matters5
    
    Nuclear Operations13
    
    Commitments and Contingencies
 EMPLOYEES
  Item 1A. Company Risk Factors
  8




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Michigans electric Customer Choice program is negatively impacting our financial performance
 Weather significantly affects our operations .
 We are subject to rate regulation
 Adverse changes in our credit ratings may negatively affect us.
 Our ability to access capital markets at attractive interest rates is important.
 Regional and national economic conditions can have an unfavorable impact on us.
 Environmental laws and liability may be costly.
  9




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Operation of a nuclear facility subjects us to risk.
 The supply and price of fuel and other commodities may impact our financial results.
 A work interruption may adversely affect us.
 Unplanned power plant outages may be costly.
 Michigan tax reform may be costly
 We may not be fully covered by insurance.
 Terrorism could affect our business
 Failure to successfully implement new processes and information systems could interrupt our
operations.
 Benefits of the Performance Excellence Process to the Company could be less than the Company has
projected.
 10




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Item 1B. Unresolved Staff Comments
  
 Item 3. Legal Proceedings
   Note
    
    Title4
    
    Regulatory Matters5
    
    Nuclear Operations13
    
    Commitments and Contingencies
 
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Part II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
   
 Item 6. Selected Financial Data
  11




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Item 7. Managements Narrative Analysis of Results of Operations
  Factors
impacting income:
 Increase (Decrease) in Income Statement Components Compared to Prior Year
 (in Millions)
    
    2006
    
    
    2005Operating Revenues
    
    $
    275
    
    
    $
    894Fuel and Purchased Power
    
    
    (24
    )
    
    
    705Gross Margin
    
    
    299
    
    
    
    189Operation and Maintenance
   
    
    29
    
    
    
    (87
    )Depreciation and Amortization
    
    
    172
    
    
    
    117Taxes Other Than Income
    
    
    11
    
    
    
    (8
    )Asset (Gains) and Losses, net
    
    
    20
    
    
    
    (25
    )Operating Income
    
    
    67
    
    
    
    192Other (Income) and Deductions
    
    
    11
    
    
    
    (20
    )Income Tax Provision
    
    
    13
    
    
    
    85Income Before Accounting Change
    
    
    43
    
    
    
    127Cumulative Effect of Accounting Change
    
    
    4
    
    
    
    (3
    )Net Income
    
    $
    47
    
    
    $
    124
 Gross margin
  12




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Increase (Decrease) in Gross Margin Components Compared to Prior Year
 (in Millions)
    
    2006
    
    
    2005Weather-related margin impacts
    
    $
    (81
    )
    
    $
    166Removal of residential rate caps effective January 1, 2006
    
    
    186
    
    
    
    Return of customers from electric Customer Choice
    
    
    156
    
    
    
    79Service territory economic performance
    
    
    (16
    )
    
    
    (23
    )Impact of MPSC 2004 rate orders
    
    
    26
    
    
    
    116Unrecovered power supply costs  residential customers
    
    
    
    
    
    
    (73
    )Transmission charges
    
    
    
    
    
    
    (93
    )Other, net
    
    
    28
    
    
    
    17Increase in gross margin performance
    
    $
    299
    
    
    $
    189
 Power Generated and Purchased
 (in Thousands of MWh)
    
    2006
    
    
    2005
    
    
    2004Power Plant GenerationFossil
    
    
    39,686
    
    
    
    70
    %
    
    
    40,756
    
    
    
    73
    %
    
    
    39,432
    
    
    
    75
    %Nuclear
    
    
    7,477
    
    
    
    13
    
    
    
    8,754
    
    
    
    16
    
    
    
    8,440
    
    
    
    1647,163
    
    
    
    83
    
    
    
    49,510
    
    
    
    89
    
    
    
    47,872
    
    
    
    91Purchased Power
    
    
    9,861
    
    
    
    17
    
    
    
    6,378
    
    
    
    11
    
    
    
    4,650
    
    
    
    9System Output
    
    
    57,024
    
    
    
    100
    %
    
    
    55,888
    
    
    
    100
    %
    
    
    52,522
    
    
    
    100
    %Less Line Loss and Internal Use
    
    
    (3,603
    )
    
    
    
    
    
    
    (3,205
    )
    
    
    
    
    
    
    (3,574
    )Net System Output
    
    
    53,421
    
    
    
    
    
    
    
    52,683
    
    
    
    
    
    
    
    48,948Average Unit Cost ($/MWh)Generation (1)
    
    $
    15.61
    
    
    
    
    
    
    $
    15.47
    
    
    
    
    
    
    $
    12.98Purchased Power (2)
    
    $
    53.71
    
    
    
    
    
    
    $
    89.37
    
    
    
    
    
    
    $
    37.06Overall Average Unit Cost
    
    $
    22.20
    
    
    
    
    
    
    $
    23.90
    
    
    
    
    
    
    $
    15.11
 
 (1)
    
    Represents fuel costs associated with power plants.(2)
    
    The change in purchased power costs were driven primarily by seasonal
demand and coal and gas prices. (in Thousands of MWh)
    
    2006
    
    2005
    
    2004Electric SalesResidential
    
    
    15,769
    
    
    
    16,812
    
    
    
    15,081Commercial
    
    
    17,948
    
    
    
    15,618
    
    
    
    13,425Industrial
    
    
    13,235
    
    
    
    12,317
    
    
    
    11,472Wholesale
    
    
    2,826
    
    
    
    2,329
    
    
    
    2,197Other
    
    
    402
    
    
    
    390
    
    
    
    40150,180
    
    
    
    47,466
    
    
    
    42,576Interconnection sales (1)
    
    
    3,241
    
    
    
    5,217
    
    
    
    6,372Total Electric Sales
    
    
    53,421
    
    
    
    52,683
    
    
    
    48,948Electric DeliveriesRetail and Wholesale
    
    
    50,180
    
    
    
    47,466
    
    
    
    42,576Electric Customer Choice
    
    
    2,694
    
    
    
    6,760
    
    
    
    9,245Electric Customer Choice  Self Generators (2)
    
    
    909
    
    
    
    518
    
    
    
    595Total Electric Sales and Deliveries
    
    
    53,783
    
    
    
    54,744
    
    
    
    52,416
 
 (1)
    
    Represents power that is not distributed by Detroit Edison.(2)
    
    Represents deliveries for self generators who have purchased power from alternative energy
suppliers to supplement their power requirements. Operation and maintenance
 13




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Depreciation and amortization
 Asset (gains) and losses, net
 Other income and deductions
 Outlook
     
    
    amount and timing of cost recovery allowed as a result of regulatory proceedings,
related appeals, or new legislation;
    
    our ability to reduce costs and maximize plant performance;
    
    variations in market prices of power, coal and gas;
    
    economic conditions within the State of Michigan;
    
    weather, including the severity and frequency of storms; and
    
    levels of customer participation in the electric Customer Choice program.
 14




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st
 
    
    a requirement that all retail electric suppliers obtain at least 10 percent of their
energy supplies from renewable resources by 2015;
    
    an opportunity for utility-built generation, contingent upon the granting of a
certificate of need and competitive bidding of engineering, procurement and
construction services;
    
    investigating the cost of a requirement to bury certain power lines; and
    
    creation of a Michigan Energy Efficiency Program, administered by a third party
under the direction of the MPSC with initial funding estimated at $68 million.
  CUMULATIVE EFFECT OF ACCOUNTING CHANGES
 Share-Based Payment,
 FASB Interpretation FIN No. 47, Accounting for
Conditional Asset Retirement Obligations, an interpretation of SFAS No. 143
 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Commodity Price Risk
   Credit Risk
 Bankruptcies
  15




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Other
  Interest Rate Risk
  16




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Item 8. Financial Statements and Supplementary Data
 PageReport of Independent Registered Public Accounting Firm
    
    
    18Consolidated Statement of Operations
    
    
    19Consolidated Statement of Financial Position
    
    
    20Consolidated Statement of Cash Flows
    
    
    22Consolidated Statement of Changes in Shareholders Equity and Comprehensive Income
    
    
    23Notes to Consolidated Financial Statements
    
    
    24Schedule II  Valuation and Qualifying Accounts
    
    
    71
 17




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 18




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The Detroit Edison Company
 
 Consolidated Statement of Operations
 Year Ended December 31(in Millions)
    
    2006
    
    
    2005
    
    
    2004Operating Revenues
    
    $
    4,737
    
    
    $
    4,462
    
    
    $
    3,568Operating ExpensesFuel and purchased power
    
    
    1,566
    
    
    
    1,590
    
    
    
    885Operation and maintenance
    
    
    1,337
    
    
    
    1,308
    
    
    
    1,395Depreciation and amortization
    
    
    812
    
    
    
    640
    
    
    
    523Taxes other than income
    
    
    252
    
    
    
    241
    
    
    
    249Asset (gains) and losses, net
    
    
    (6
    )
    
    
    (26
    )
    
    
    (1
    )3,961
    
    
    
    3,753
    
    
    
    3,051Operating Income
    
    
    776
    
    
    
    709
    
    
    
    517Other (Income) and DeductionsInterest expense
    
    
    278
    
    
    
    267
    
    
    
    280Interest income
    
    
    (4
    )
    
    
    (3
    )
    
    
    Other income
    
    
    (35
    )
    
    
    (27
    )
    
    
    (34
    )Other expenses
    
    
    55
    
    
    
    46
    
    
    
    57294
    
    
    
    283
    
    
    
    303Income Before Income Taxes
    
    
    482
    
    
    
    426
    
    
    
    214Income
Tax Provision (Note 7)
    
    
    162
    
    
    
    149
    
    
    
    64Income Before Accounting Change
    
    
    320
    
    
    
    277
    
    
    
    150Cumulative
Effect of Accounting Change (Notes 1 and 2)
    
    
    1
    
    
    
    (3
    )
    
    
    Net Income
    
    $
    321
    
    
    $
    274
    
    
    $
    150
  19




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The Detroit Edison Company
 
 Consolidated Statement of Financial Position
 December 31(in Millions)
    
    2006
    
    
    2005AssetsCurrent AssetsCash and cash equivalents
    
    $
    27
    
    
    $
    26Restricted cash (Note 1)
    
    
    132
    
    
    
    84Accounts receivable(less allowance for doubtful accounts
of $72 and $54, respectively)Customer
    
    
    601
    
    
    
    528Other
    
    
    70
    
    
    
    112Accrued power supply cost recovery revenue
    
    
    116
    
    
    
    144InventoriesFuel
    
    
    136
    
    
    
    123Materials and supplies
    
    
    130
    
    
    
    116Other
    
    
    54
    
    
    
    431,266
    
    
    
    1,176InvestmentsNuclear decommissioning trust funds
    
    
    740
    
    
    
    646Other
    
    
    89
    
    
    
    65829
    
    
    
    711PropertyProperty, plant and equipment
    
    
    13,916
    
    
    
    13,416Less accumulated depreciation (Note 1)
    
    
    (5,580
    )
    
    
    (5,595
    )8,336
    
    
    
    7,821Other AssetsRegulatory assets (Note 4)
    
    
    2,862
    
    
    
    2,006Securitized regulatory assets (Note 4)
    
    
    1,235
    
    
    
    1,340Intangible assets
    
    
    9
    
    
    
    40Other
    
    
    74
    
    
    
    754,180
    
    
    
    3,461Total Assets
    
    $
    14,611
    
    
    $
    13,169
  20




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The Detroit Edison Company  Consolidated Statement of Financial Position
 December 31(in Millions, Except Shares)
    
    2006
    
    
    2005Liabilities and Shareholders EquityCurrent LiabilitiesAccounts payable
    
    $
    411
    
    
    $
    392Accrued interest
    
    
    79
    
    
    
    79Dividends payable (Note 15)
    
    
    76
    
    
    
    76Accrued vacations
    
    
    77
    
    
    
    80Short-term borrowings
    
    
    277
    
    
    
    163Accrued power supply cost recovery refund
    
    
    
    
    
    
    129Current portion long-term debt, including capital leases
    
    
    142
    
    
    
    135Other
    
    
    288
    
    
    
    2081,350
    
    
    
    1,262Other LiabilitiesDeferred income taxes
    
    
    1,928
    
    
    
    1,961Regulatory
liabilities (Notes 1 and 4)
    
    
    255
    
    
    
    224Asset retirement obligations (Notes 1 and 5)
    
    
    1,069
    
    
    
    953Unamortized investment tax credit
    
    
    105
    
    
    
    115Nuclear decommissioning (Note 5)
    
    
    119
    
    
    
    85Accrued pension liability
    
    
    364
    
    
    
    261Accrued postretirement liability
    
    
    1,055
    
    
    
    252Other
    
    
    502
    
    
    
    5355,397
    
    
    
    4,386Long-Term Debt (net of current portion) (Notes 9 and 11)Mortgage bonds, notes and other
    
    
    3,515
    
    
    
    3,221Securitization bonds
    
    
    1,184
    
    
    
    1,295Capital lease obligations
    
    
    50
    
    
    
    574,749
    
    
    
    4,573Commitments and Contingencies (Notes 4, 5 and 13)Shareholders EquityCommon stock, $10 par value, 400,000,000 shares
authorized and 138,632,324 shares
issued and outstanding
    
    
    1,386
    
    
    
    1,386Additional paid in capital
    
    
    1,210
    
    
    
    1,060Retained earnings
    
    
    516
    
    
    
    500Accumulated other comprehensive income
    
    
    3
    
    
    
    23,115
    
    
    
    2,948Total Liabilities and Shareholders Equity
    
    $
    14,611
    
    
    $
    13,169
  21




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##### Table of Contents



The Detroit Edison Company
 
 Consolidated Statement of Cash Flows
 Year Ended December 31(in Millions)
    
    2006
    
    
    2005
    
    
    2004Operating ActivitiesNet Income
    
    $
    321
    
    
    $
    274
    
    
    $
    150Adjustments to reconcile net income to net cash from
operating activities:Depreciation and amortization
    
    
    812
    
    
    
    640
    
    
    
    523Deferred income taxes
    
    
    2
    
    
    
    40
    
    
    
    142Gain on sale of assets
    
    
    (6
    )
    
    
    (26
    )
    
    
    (1
    )Cumulative effect of accounting change
    
    
    (1
    )
    
    
    3
    
    
    
    Changes in assets and liabilities, exclusive of
changes shown separately (Note 1)
    
    
    (213
    )
    
    
    98
    
    
    
    376Net cash from operating activities
    
    
    915
    
    
    
    1,029
    
    
    
    1,190Investing ActivitiesPlant and equipment expenditures
    
    
    (972
    )
    
    
    (722
    )
    
    
    (702
    )Proceeds from sale of assets, net
    
    
    28
    
    
    
    30
    
    
    
    1Restricted cash for debt redemptions
    
    
    (48
    )
    
    
    (9
    )
    
    
    6Notes receivable from affiliate
    
    
    
    
    
    
    85
    
    
    
    (78
    )Proceeds from sale of nuclear decommissioning trust
fund assets
    
    
    253
    
    
    
    201
    
    
    
    254Investment in nuclear decommissioning trust funds
    
    
    (284
    )
    
    
    (235
    )
    
    
    (287
    )Other investments
    
    
    (29
    )
    
    
    (71
    )
    
    
    (33
    )Net cash used for investing activities
    
    
    (1,052
    )
    
    
    (721
    )
    
    
    (839
    )Financing ActivitiesIssuance of long-term debt
    
    
    314
    
    
    
    857
    
    
    
    266Redemption of long-term debt
    
    
    (126
    )
    
    
    (997
    )
    
    
    (206
    )Short-term borrowings, net
    
    
    114
    
    
    
    163
    
    
    
    (100
    )Capital contribution by parent company
    
    
    150
    
    
    
    
    
    
    
    Dividends on common stock
    
    
    (305
    )
    
    
    (305
    )
    
    
    (303
    )Other
    
    
    (9
    )
    
    
    (6
    )
    
    
    (8
    )Net cash from (used for) financing activities
    
    
    138
    
    
    
    (288
    )
    
    
    (351
    )Net Increase in Cash and Cash Equivalents
    
    
    1
    
    
    
    20
    
    
    
    Cash and Cash Equivalents at Beginning of the Period
    
    
    26
    
    
    
    6
    
    
    
    6Cash and Cash Equivalents at End of the Period
    
    $
    27
    
    
    $
    26
    
    
    $
    6
  22




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##### Table of Contents



The Detroit Edison Company
 
 Consolidated Statement of Changes in Shareholders Equity andComprehensive Income
 AccumulatedAdditional
    
    
    
    
    
    
    Other(Dollars in Millions,
    
    Common Stock
    
    
    Paid in
    
    
    Retained
    
    
    ComprehensiveShares in Thousands)
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Income
    
    
    TotalBalance, December 31, 2003
    
    
    134,288
    
    
    $
    1,343
    
    
    $
    933
    
    
    $
    686
    
    
    $
    1
    
    
    $
    2,963Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    
    
    
    
    150Dividends declared on
Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (305
    )
    
    
    
    
    
    
    (305
    )Net change in unrealized
losses on derivatives, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Common stock issued to
parent company
    
    
    4,344
    
    
    
    43
    
    
    
    127
    
    
    
    
    
    
    
    
    
    
    
    170Balance, December 31, 2004
    
    
    138,632
    
    
    
    1,386
    
    
    
    1,060
    
    
    
    531
    
    
    
    2
    
    
    
    2,979Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    274
    
    
    
    
    
    
    
    274Dividends declared on
Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (305
    )
    
    
    
    
    
    
    (305
    )Balance, December 31, 2005
    
    
    138,632
    
    
    
    1,386
    
    
    
    1,060
    
    
    
    500
    
    
    
    2
    
    
    
    2,948Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    321
    
    
    
    
    
    
    
    321Dividends declared on
Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (305
    )
    
    
    
    
    
    
    (305
    )Net change in unrealized
gain on investments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Capital contribution by
parent company
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    150Balance, December 31, 2006
    
    
    138,632
    
    
    $
    1,386
    
    
    $
    1,210
    
    
    $
    516
    
    
    $
    3
    
    
    $
    3,115
  (in Millions)
    
    2006
    
    
    2005
    
    
    2004Net income
    
    $
    321
    
    
    $
    274
    
    
    $
    150Other comprehensive income:Net change in unrealized gain on investments, net of tax
    
    
    1
    
    
    
    
    
    
    
    1Comprehensive income
    
    $
    322
    
    
    $
    274
    
    
    $
    151
  23




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##### Table of Contents



The Detroit Edison Company
 
 Notes to Consolidated Financial Statements
 NOTE 1  SIGNIFICANT ACCOUNTING POLICIES
 Corporate Structure
   Principles of Consolidation
  Consolidation of Variable Interest
Entities, an Interpretation of ARB No. 51.
 Basis of Presentation
  Revenues
   24




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##### Table of Contents



Comprehensive Income
  Net
    
    
    Net
    
    
    AccumulatedUnrealized
    
    
    Unrealized
    
    
    OtherLosses on
    
    
    Gains on
    
    
    Comprehensive(in Millions)
    
    Derivatives
    
    
    Investments
    
    
    IncomeBeginning balance
    
    $
    1
    
    

    $
    1
    
    

    $
    2Current-period change
    
    
    
    
    
    
    1
    
    
    
    1Ending balance
    
    $
   1
   
  
    $
    2
    
    
    $
    3
 Cash Equivalents and Restricted Cash
  Inventories
  Property, Retirement and Maintenance, and Depreciation and Depletion
  (in Millions)
    
    2006
    
    
    2005Property, Plant and EquipmentGeneration
    
    $
    7,667
    
    
    $
    7,375Distribution
    
    
    6,249
    
    
    
    6,041Total
    
    
    13,916
    
    
    
    13,416Less Accumulated Depreciation and DepletionGeneration
    
    
    (3,410
    )
    
    
    (3,439
    )Distribution
    
    
    (2,170
    )
    
    
    (2,156
    )Total
    
    
    (5,580
    )
    
    
    (5,595
    )Net Property, Plant and Equipment
    
    $
    8,336
    
    
    $
    7,821
  25




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##### Table of Contents



Asset Retirement Obligations
 Accounting for
Asset Retirement Obligations Accounting for Conditional Asset
Retirement Obligations, an interpretation of FASB Statement No. 143
 Accounting for the Effects of Certain Types of Regulation
   26




---



##### Table of Contents



(in Millions)Asset retirement obligations at January 1, 2006
    
    $
    953Accretion
    
    
    64Liabilities settled
    
    
    (7
    )Revision in estimated cash flows
    
    
    59Asset retirement obligations at December 31, 2006
    
    $
    1,069
  Long-Lived Assets
  Intangible
Assets
  Excise and Sales Taxes
  Deferred Debt Costs
  Insured and Uninsured Risks
  Investments in Debt and Equity Securities
  27




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##### Table of Contents



Affiliate Transactions
  Consolidated Statement of Cash Flows
  (in Millions)
    
    2006
    
    
    2005
    
    
    2004Changes in Assets and Liabilities, Exclusive of
Changes Shown SeparatelyAccounts receivable, net
    
    $
    (36
    )
    
    $
    (45
    )
    
    $
    80Inventories
    
    
    (28
    )
    
    
    (21
    )
    
    
    14Recoverable pension and postretirement costs
    
    
    (925
    )
    
    
    61
    
    
    
    (21
    )Accrued pensions
    
    
    125
    
    
    
    41
    
    
    
    123Accounts payable
    
    
    7
    
    
    
    46
    
    
    
    135Accrued power supply cost recovery refund
    
    
    (101
    )
    
    
    (127
    )
    
    
    112Accrued payroll
    
    
    47
    
    
    
    
    
    
    
    (15
    )Income taxes payable
    
    
    16
    
    
    
    (10
    )
    
    
    (14
    )General taxes
    
    
    13
    
    
    
    (1
    )
    
    
    (13
    )Risk management and trading activities
    
    
    
    
    
    
    
    
    
    
    (1
    )Postretirement obligation
    
    
    803
    
    
    
    110
    
    
    
    11Other assets
    
    
    (114
    )
    
    
    (3
    )
    
    
    4Other liabilities
    
    
    (20
    )
    
    
    47
    
    
    
    (39
    )$
    (213
    )
    
    $
    98
    
    
    $
    376
  (in Millions)
    
    2006
    
    2005
    
    2004Cash Paid forInterest (excluding interest capitalized)
    
    $
    278
    
    
    $
    267
    
    
    $
    277Income taxes
    
    
    141
    
    
    
    118
    
    
    
    2Non-cash Financing ActivitySale of assets
    
    
    
    
    
    
    13
    
    
    
    Common stock issued to parent company in conjunction with
parent company common stock contribution to pension plan
    
    
    
    
    
    
    
    
    
    
    170
 Asset (gains) and losses, net
  28




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##### Table of Contents



Note
    
    Title2
    
    New Accounting Pronouncements4
    
    Regulatory Matters7
    
    Income Taxes12
    
    Financial and Other Derivative Instruments14
    
    Retirement Benefits and Trusteed Assets
 NOTE 2  NEW ACCOUNTING PRONOUNCEMENTS
 Accounting for Uncertainty in Income Taxes
 Accounting for
Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109  Accounting for Income
Taxes.
 Fair
Value Accounting
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of FASB Statement No. 115.
 Accounting for Defined Benefit Pension and Other Postretirement Plans
 Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans  an Amendment of FASB Statements No. 87, 88, 106, and
132(R).
  29




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##### Table of Contents



Accounting for Planned Major Maintenance
 Accounting for Planned
Major Maintenance Activities.
 Quantifying Misstatements
 Financial
Statements  Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in
Current Year Financial Statements
 Stock-Based Compensation
 Share-Based Payment,
 30




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##### Table of Contents



NOTE 3  RESTRUCTURING
 Performance Excellence Process
    Employee(in Millions)
    
    Severance Costs (1)
    
    
    Other Costs
    
    
    Total CostsCosts incurred:
    
    $
    51
    
    
    $
    56
    
    
    $
    107Less amounts deferred or capitalized:
    
    
    51
    
    
    
    56
    
    
    
    107Amount expensed
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Includes corporate allocations. Accounting for Costs
Associated with Exit or Disposal Activities
 NOTE 4  REGULATORY MATTERS
 Regulation
   31




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##### Table of Contents



Regulatory Assets and Liabilities
 Accounting for the Effects of Certain
Types of Regulation,
  (in Millions)
    
    2006
    
    
    2005AssetsSecuritized regulatory assets
    
    $
    1,235
    
    
    $
    1,340Recoverable income taxes related to securitized regulatory assets
    
    $
    677
    
    
    $
    734Recoverable pension and postretirement costs
    
    
    1,469
    
    
    
    543Asset retirement obligation
    
    
    236
    
    
    
    196Other recoverable income taxes
    
    
    100
    
    
    
    104Recoverable costs under PA 141Net stranded costs
    
    
    
    
    
    
    112Excess capital expenditures
    
    
    22
    
    
    
    22Deferred Clean Air Act expenditures
    
    
    67
    
    
    
    82Midwest Independent System Operator charges
    
    
    48
    
    
    
    56Electric Customer Choice implementation costs
    
    
    78
    
    
    
    98Enhanced security costs
    
    
    13
    
    
    
    13Unamortized loss on reacquired debt
    
    
    38
    
    
    
    41Accrued PSCR revenue
    
    
    116
    
    
    
    144Costs to achieve Performance Excellence Process
    
    
    102
    
    
    
    Enterprise Business Systems costs
    
    
    9
    
    
    
    Other
    
    
    3
    
    
    
    52,978
    
    
    
    2,150Less amount included in current assets
    
    
    (116
    )
    
    
    (144
    )$
    2,862
    
    
    $
    2,006LiabilitiesAsset removal costs
    
    $
    222
    
    
    $
    213Accrued PSCR refund
    
    
    
    
    
    
    129Accrued pension
    
    
    33
    
    
    
    11Fermi 2 refueling outage
    
    
    16
    
    
    
    25Other
    
    
    2
    
    
    
    2273
    
    
    
    380Less amount included in current liabilities
    
    
    (18
    )
    
    
    (156
    )$
    255
    
    
    $
    224
  
    
    Securitized regulatory assets The net book balance of the
Fermi 2 nuclear plant was written off in 1998 and an
equivalent regulatory asset was established. In 2001, the
Fermi 2 regulatory asset and certain other regulatory assets
were securitized pursuant to PA 142 and an MPSC order. A
non-bypassable securitization bond surcharge recovers the
securitized regulatory asset over a fourteen-year period
ending in 2015.
 32




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##### Table of Contents




    
    Recoverable income taxes related to securitized regulatory
assets Receivable for the recovery of income taxes to be
paid on the non-bypassable securitization bond surcharge. A
non-bypassable securitization tax surcharge recovers the
income tax over a fourteen-year period ending 2015.
    
    Recoverable pension and postretirement costs The
traditional rate setting process allows for the recovery of
pension and postretirement costs as measured by generally
accepted accounting principles. In 2006, we adopted SFAS No.
158. See Note 14.
    
    Asset retirement obligation Asset retirement obligations
were recorded pursuant to adoption of SFAS No. 143 in 2003
and FIN 47 in 2005. These obligations are primarily for Fermi
2 decommissioning costs that are recovered in rates.
    
    Other recoverable income taxes Income taxes receivable from
Detroit Edisons customers representing the difference in
property-related deferred income taxes receivable and amounts
previously reflected in Detroit Edisons rates.
    
    Net stranded costs PA 141 permits, after MPSC
authorization, the recovery of and a return on fixed cost
deficiency associated with the electric Customer Choice
program. Net stranded costs occured when fixed cost related
revenues did not cover the fixed cost revenue requirements.
    
    Excess capital expenditures Starting in 2004, PA 141
permits, after MPSC authorization, the recovery of and a
return on capital expenditures that exceed a base level of
depreciation expense.
    
    Deferred Clean Air Act expenditures PA 141 permits, after
MPSC authorization, the recovery of and a return on Clean Air
Act expenditures.
    
    Midwest Independent System Operator charges PA 141 permits,
after MPSC authorization, the recovery of and a return on
charges from a regional transmission operator such as the
Midwest Independent System Operator.
    
    Electric Customer Choice implementation costs PA 141
permits, after MPSC authorization, the recovery of and a
return on costs incurred associated with the implementation
of the electric Customer Choice program.
    
    Enhanced security costs PA 609 of 2002 permits, after MPSC
authorization, the recovery of enhanced security costs for an
electric generating facility.
    
    Unamortized loss on reacquired debt The unamortized
discount, premium and expense related to debt redeemed with a
refinancing are deferred, amortized and recovered over the
life of the replacement issue.
    
    Accrued PSCR revenue Receivable for the temporary
under-recovery of and a return on fuel and purchased power
costs incurred by Detroit Edison which are recoverable
through the PSCR mechanism.
    
    Cost to achieve Performance Excellence Process (PEP) The
MPSC authorized the deferral of costs to implement the PEP.
These costs consist of employee severance, project management
and consultant support. These costs will be amortized over a
ten-year period beginning with the year subsequent to the
year the costs were deferred. See Note 3.
    
    Enterprise Business Systems (EBS) costs Starting in 2006, the MPSC approved the deferral of up
to $60 million of certain EBS costs that would otherwise be
expensed.
 LIABILITIES
 
    
    Asset removal costs The amount collected from customers for
the funding of future asset removal activities.
    
    Accrued PSCR refund Payable for the temporary over-recovery
of and a return on power supply costs, and beginning with the
MPSCs November 2004 rate order, transmission costs incurred
by Detroit Edison which are recoverable through the PSCR
mechanism.
    
    Accrued pension Pension expense refundable to
customers representing the difference created from volatility
in the pension obligation and amounts recognized pursuant to
MPSC authorization.
    
    Fermi 2 refueling outage Liability for refueling outage at
Fermi 2 pursuant to MPSC authorization. See Note 2.
 33




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##### Table of Contents



Electric Rate Restructuring Proposal
  Other Postretirement Benefits Costs Tracker
  MPSC Show-Cause Order
   34




---



##### Table of Contents



Regulatory Accounting Treatment for Performance Excellence Process
  Electric Industry Restructuring
   35




---



##### Table of Contents



2004 PSCR Reconciliation and 2004 Net Stranded Cost Case
  Securitization
  Accounting
for Costs Related to Enterprise Business Systems (EBS)
  Power Supply Costs Recovery Proceedings
 2005 Plan Year
 36




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##### Table of Contents



2006 Plan Year 
  37




---



##### Table of Contents



2007 Plan Year 
 Minimum Pension Liability
  Other
  NOTE 5  NUCLEAR OPERATIONS
 General
  Property Insurance
  38




---



##### Table of Contents



Public Liability Insurance
  Decommissioning
   (in Millions)
    
    2006
    
    2005
    
    2004Revenue
    
    $
    39
    
    
    $
    40
    
    
    $
    38Net unrealized investment gains
    
    
    42
    
    
    
    
    
    
    
    17
  39




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##### Table of Contents



As of December 31,(in Millions)
    
    2006
    
    
    2005Decommissioning trust fundsFermi 2
    
    $
    694
    
    
    $
    601Fermi 1
    
    
    15
    
    
    
    18Low level radioactive waste
    
    
    31
    
    
    
    27Total
    
    $
    740
    
    
    $
    646
    Nuclear Fuel Disposal Costs
  NOTE 6  JOINTLY OWNED UTILITY PLANT
  40




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##### Table of Contents



LudingtonHydroelectricBelle River
    
    Pumped StorageIn-service date
    
    
    1984-1985
    
    
    
    1973Total plant capacity
    
    1,026 MW
    
    1,872 MWOwnership interest
    
    
    *
    
    
    
    49
    %Investment (in Millions)
    
    $
    1,578
    
    
    $
    164Accumulated depreciation (in Millions)
    
    $
    815
    
    
    $
    97
 
 *
    
    Detroit Edisons ownership interest is 63% in Unit No. 1, 81% of the facilities
applicable to Belle River used jointly by the
Belle River and St. Clair Power Plants and 75% in common facilities used at Unit No. 2. Belle River
  Ludington Hydroelectric Pumped Storage
  NOTE 7  INCOME TAXES
   (Dollars in Millions)
    
    2006
    
    
    2005
    
    
    2004Income tax expense at 35% statutory rate
    
    $
    169
    
    
    $
    149
    
    
    $
    75Investment tax credits
    
    
    (7
    )
    
    
    (7
    )
    
    
    (7
    )Depreciation
    
    
    3
    
    
    
    3
    
    
    
    3Employee Stock Ownership Plan dividends
    
    
    (4
    )
    
    
    (4
    )
    
    
    (4
    )Medicare
part D subsidy
    
    
    (5
    )
    
    
    (6
    )
    
    
    (3
    )Adjustment to deferred tax accounts
    
    
    
    
    
    
    14
    
    
    
    Other, net
    
    
    6
    
    
    
    
    
    
    
    Total
    
    $
    162
    
    
    $
    149
    
    
    $
    64Effective federal income tax rate
    
    
    33.3
    %
    
    
    35.0
    %
    
    
    29.9
    %
 41




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##### Table of Contents



(in Millions)
    
    2006
    
    
    2005
    
    
    2004Current federal and other income tax expense (benefit)
    
    $
    160
    
    
    $
    110
    
    
    $
    (78
    )Deferred federal and other income tax expense
    
    
    2
    
    
    
    39
    
    
    
    142Total
    
    $
    162
    
    
    $
    149
    
    
    $
    64
   (in Millions)
    
    2006
    
    
    2005Property, plant and equipment
    
    $
    (1,209
    )
    
    $
    (1,179
    )Securitized regulatory assets
    
    
    (670
    )
    
    
    (723
    )Pension and benefits
    
    
    94
    
    
    
    92Other Comprehensive Income
    
    
    (1
    )
    
    
    (1
    )Other, net
    
    
    (180
    )
    
    
    (146
    )$
    (1,966
    )
    
    $
    (1,957
    )Deferred income tax liabilities
    
    $
    (2,478
    )
    
    $
    (2,328
    )Deferred income tax assets
    
    
    512
    
    
    
    371$
    (1,966
    )
    
    $
    (1,957
    )Current deferred income tax assets
(included in Current Assets  Other)
    
    
    
    
    
    
    4Current deferred income tax liabilities
(included in Current Liabilities  Other
    
    
    (38
    )
    
    
    Long term deferred income tax liabilities
    
    
    (1,928
    )
    
    
    (1,961
    )(1,966
    )
    
    
    (1,957
    )
   NOTE 8  COMMON STOCK
  42




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NOTE 9  LONG-TERM DEBT AND PREFERRED SECURITIES
 Long-Term Debt
  (in Millions)
    
    2006
    
    
    2005Detroit Edison Taxable Debt, Principally Secured5.9%  due 2010 to 2037
    
    $
    2,267
    
    
    $
    2,030Detroit Edison Tax Exempt Revenue Bonds (2)5.2%  due 2008 to 2036
    
    
    1,213
    
    
    
    1,145Other Long-Term Debt
    
    
    59
    
    
    
    673,539
    
    
    
    3,242Less amount due within one year
    
    
    (24
    )
    
    
    (21
    )$
    3,515
    
    
    $
    3,221Securitization Bonds
    
    $
    1,295
    
    
    $
    1,400Less amount due within one year
    
    
    (111
    )
    
    
    (105
    )$
    1,184
    
    
    $
    1,295
 
 (1)
    
    Weighted average interest rate as of December 31, 2006 are shown below the description
of each debt issue.(2)
    
    Detroit Edison Tax Exempt Revenue Bonds are issued by a public body that loans the
proceeds to Detroit Edison on terms substantially mirroring the Revenue Bonds. Debt Issuances
  Month
    
    
    
    
    
    
    
    (in Millions)Company
    
    Issued
    
    Type
    
    Interest Rate
    
    Maturity
    
    AmountDetroit Edison
    
    May
    
    Senior Notes (1)
    
    6.625%
    
    June 2036
    
    
    250Detroit Edison
    
    December
    
    Tax Exempt Revenue Bonds (2)
    
    Variable
    
    December 2036
    
    
    69Total Issuances
    
    $
    319
 
 (1)
    
    The proceeds from the issuance were used to repay short-term borrowings and for general corporate purposes.(2)
    
    The proceeds from the issuance to be used to finance the construction, acquisition, improvement and installation of certain
solid waste disposal facilities at Detroit Edisons Monroe Power Plant.  2012 &(in millions)
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    thereafter
    
    TotalAmount to mature
    
    $
    135
    
    
    $
    178
    
    
    $
    158
    
    
    $
    667
    
    
    $
    310
    
    
    $
    3,392
    
    
    $
    4,840
 43




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##### Table of Contents



Cross Default Provisions
  Preferred and Preference Securities  Authorized and Unissued
  NOTE 10  SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS
       44




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##### Table of Contents



NOTE 11  CAPITAL AND OPERATING LEASES
 Lessee
  Capital
    
    
    Operating(in Millions)
    
    Leases
    
    
    Leases2007
    
    $
    10
    
    
    $
    382008
    
    
    11
    
    
    
    322009
    
    
    11
    
    
    
    262010
    
    
    9
    
    
    
    212011
    
    
    7
    
    
    
    20Thereafter
    
    
    22
    
    
    
    130Total minimum lease payments
    
    
    70
    
    
    $
    267Less imputed interest
    
    
    (13
    )Present value of net minimum lease payments
    
    
    57Less current portion
    
    
    (7
    )Non-current portion
    
    $
    50
  NOTE 12  FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS
 Accounting for Derivative Instruments and Hedging Activities
 
    
    Derivative instruments must be recognized as assets or liabilities
and measured at fair value, unless they meet the normal purchases
and sales exemption.
    
    Accounting for changes in fair value depends upon the purpose of
the derivative instrument and whether it is designated as a hedge
and qualifies for hedge accounting.
    
    Special accounting is allowed for  derivative instruments
that
qualify as a hedge and are designated as a hedge for the
variability of cash flow associated with a forecasted transaction.
Gain or loss associated with the effective portion of the hedge is
recorded in other comprehensive income. The ineffective portion
is recorded to earnings. Amounts recorded in other comprehensive
income will be reclassified to net income when the forecasted
transaction affects earnings. If a cash flow hedge is
discontinued because it is likely the forecasted transaction will
not occur, net gains or losses are immediately recorded to
earnings.
    
    Special accounting is also allowed for  derivative
instruments that
qualify as a hedge and are designated as a hedge of the changes in
fair value of an existing asset, liability or firm commitment.
Gain or loss on the hedging instrument is recorded into earnings.
An offsetting loss or gain on the underlying asset, liability or
firm commitment is also recorded to earnings.
  45




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##### Table of Contents



Commodity Price Risk
  Credit Risk
  Fair Value of Other Financial Instruments
  2006
    
    2005Fair Value
    
    Carrying Value
    
    Fair Value
    
    Carrying ValueLong-Term Debt
    
    $5.0 billion
    
    $4.8 billion
    
    $4.8 billion
    
    $4.6 billion
 NOTE 13  COMMITMENTS AND CONTINGENCIES
 Environmental
 Air
 Water
 46




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Contaminated Sites
 Personal Property Taxes
   Labor Contracts
  Other Commitments
   47




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##### Table of Contents



Bankruptcies
  Other
    NOTE 14  RETIREMENT BENEFITS AND TRUSTEED ASSETS
 Adoption of SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans
 Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans  an Amendment of FASB Statements No. 87, 88, 106, and
132(R)
 48




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##### Table of Contents



Measurement Date
  Qualified and Nonqualified Pension Plan Benefits
 
   49




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##### Table of Contents



Qualified Pension Plans
    
    
    Nonqualified Pension Plans(in Millions)
    
    2006
    
    
    2005
    
    
    2004
    
    
    2006
    
    
    2005
    
    
    2004Service Cost
    
    $
    49
    
    
    $
    53
    
    
    $
    47
    
    
    $
    2
    
    
    $
    1
    
    
    $
    1Interest Cost
    
    
    133
    
    
    
    130
    
    
    
    130
    
    
    
    3
    
    
    
    2
    
    
    
    2Expected Return on Plan Assets
    
    
    (135
    )
    
    
    (135
    )
    
    
    (135
    )
    
    
    
    
    
    
    
    
    
    
    Amortization ofNet income
    
    
    44
    
    
    
    50
    
    
    
    49
    
    
    
    1
    
    
    
    1
    
    
    
    1Prior service cost
    
    
    8
    
    
    
    9
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    Special Termination Benefits
    
    
    38
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net Pension Cost
    
    $
    137
    
    
    $
    107
    
    
    $
    100
    
    
    $
    6
    
    
    $
    4
    
    
    $
    4
   50




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##### Table of Contents



Qualified Pension Plans
    
    
    Nonqualified Pension Plans(in Millions)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Accumulated Benefit Obligation-End of Period
    
    $
    2,668
    
    
    $
    2,497
    
    
    $
    46
    
    
    $
    37Projected Benefit Obligation-Beginning of Period
    
    $
    2,738
    
    
    $
    2,643
    
    
    $
    41
    
    
    $
    36Service Cost
    
    
    55
    
    
    
    59
    
    
    
    2
    
    
    
    1Interest Cost
    
    
    156
    
    
    
    154
    
    
    
    3
    
    
    
    2Actuarial Loss
    
    
    66
    
    
    
    35
    
    
    
    5
    
    
    
    4Benefits Paid
    
    
    (180
    )
    
    
    (153
    )
    
    
    (3
    )
    
    
    (2
    )Plan Amendments
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    Special Termination Benefits
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    Projected Benefit Obligation-End of Period
    
    $
    2,872
    
    
    $
    2,738
    
    
    $
    48
    
    
    $
    41Plan Assets at Fair Value-Beginning of Period
    
    $
    2,273
    
    
    $
    2,235
    
    
    $
    
    
    
    $
    Actual Return on Plan Assets
    
    
    280
    
    
    
    191
    
    
    
    
    
    
    
    Company Contributions
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    2Benefits Paid
    
    
    (180
    )
    
    
    (153
    )
    
    
    (3
    )
    
    
    (2
    )Plan Assets at Fair Value-End of Period
    
    $
    2,373
    
    
    $
    2,273
    
    
    $
    
    
    
    $
    Funded Status of the Plans
    
    $
    (499
    )
    
    $
    (465
    )
    
    $
    (48
    )
    
    $
    (41
    )December Adjustment
    
    
    180
    
    
    
    
    
    
    
    
    
    
    
    Funded Status, End of Year
    
    $
    (319
    )
    
    $
    (465
    )
    
    $
    (48
    )
    
    $
    (41
    )Unrecognized (a)Net Actuarial loss (a)
    
    
    
    
    
    
    773
    
    
    
    
    
    
    $
    15Prior service cost (a)
    
    
    
    
    
    
    34
    
    
    
    
    
    
    
    1Net Amount Recognized-End of Period (a)
    
    
    
    
    
    $
    342
    
    
    
    
    
    
    $
    (25
    )Amount Recorded as (a)Accrued pension liability (a)
    
    
    
    
    
    
    (224
    )
    
    
    
    
    
    
    (37
    )Regulatory asset (a)
    
    
    
    
    
    
    532
    
    
    
    
    
    
    
    11Intangible Asset (a)
    
    
    
    
    
    
    34
    
    
    
    
    
    
    
    1$
    342
    
    
    
    
    
    
    $
    (25
    )Current Liabilities (b)
    
    $
    
    
    
    
    
    
    
    $
    (3
    )Noncurrent Liabilities (b)
    
    
    (319
    )
    
    
    
    
    
    
    (45
    )$
    (319
    )
    
    
    
    
    
    $
    (48
    )Amounts Recognized in Regulatory AssetsNet Actuarial loss (b)
    
    $
    706
    
    
    
    
    
    
    $
    18Prior service cost (b)
    
    $
    20
    
    
    
    
    
    
    $
    2
 
 a
    
    - Disclosure no longer required by FAS 158, adopted in 2006, retroactive adoption not
permitted.b
    
    - New disclosure required by FAS 158, adopted in 2006, retroactive adoption not
permitted. 51




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2006
    
    2005
    
    2004Projected Benefit ObligationDiscount rate
    
    
    5.70
    %
    
    
    5.90
    %
    
    
    6.00
    %Annual increase in future compensation levels
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    4.0
    %Net Pension CostsDiscount rate
    
    
    5.90
    %
    
    
    6.00
    %
    
    
    6.25
    %Annual increase in future compensation levels
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    4.0
    %Expected long-term rate of return on Plan assets
    
    
    8.75
    %
    
    
    9.0
    %
    
    
    9.0
    %
  (in Millions)2007
    
    $
    1632008
    
    
    1672009
    
    
    1732010
    
    
    1812011
    
    
    1862012  2016
    
    
    1,053Total
    
    $
    1,923
   52




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2006
    
    2005Equity Securities
    
    
    68
    %
    
    
    68
    %Debt Securities
    
    
    23
    
    
    
    27Other
    
    
    9
    
    
    
    5100
    %
    
    
    100
    %
  Equity Securities
    
    
    65
    %Debt Securities
    
    
    20Other
    
    
    15100
    %
  Other Postretirement Benefits
   (in Millions)
    
    2006
    
    
    2005
    
    
    2004Service Cost
    
    $
    45
    
    
    $
    44
    
    
    $
    33Interest Cost
    
    
    88
    
    
    
    80
    
    
    
    69Expected Return on Plan Assets
    
    
    (49
    )
    
    
    (58
    )
    
    
    (45
    )Amortization ofNet loss
    
    
    53
    
    
    
    44
    
    
    
    33Prior service costs
    
    
    4
    
    
    
    3
    
    
    
    Net transition obligation
    
    
    7
    
    
    
    7
    
    
    
    8Special Termination Benefits
obligation
    
    
    6
    
    
    
    
    
    
    
    Net Postretirement Cost
    
    $
    154
    
    
    $
    120
    
    
    $
    98
  53




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##### Table of Contents



(in Millions)
    
    2006
    
    
    2005Accumulated Postretirement Benefit Obligation-Beginning of Period
    
    $
    1,525
    
    
    $
    1,361Service Cost
    
    
    45
    
    
    
    44Interest Cost
    
    
    88
    
    
    
    80Actuarial Loss
    
    
    63
    
    
    
    111Plan Amendments
    
    
    2
    
    
    
    (5
    )Benefits Paid
    
    
    (70
    )
    
    
    (66
    )Special Termination Benefits
    
    
    6
    
    
    
    Medicare Part D subsidy
    
    
    1
    
    
    
    Accumulated Postretirement Benefit Obligation-End of Period
    
    $
    1,660
    
    
    $
    1,525Plan Assets at Fair Value-Beginning of Period
    
    $
    581
    
    
    $
    551Actual Return on Plan Assets
    
    
    70
    
    
    
    49Company Contributions
    
    
    40
    
    
    
    40Benefits Paid
    
    
    (55
    )
    
    
    (59
    )Plan Assets at Fair Value-End of Period
    
    
    636
    
    
    $
    581Funded Status of the Plans
    
    $
    (1,024
    )
    
    $
    (944
    )December Adjustment
    
    
    (31
    )
    
    
    (50
    )Funded Status, as of December 31
    
    $
    (1,055
    )
    
    $
    (994
    )Unrecognized (a)Net Actuarial loss (a)
    
    
    
    
    
    $
    670Prior service cost (a)
    
    
    
    
    
    
    26Net transition obligation (a)
    
    
    
    
    
    
    46Accrued Postretirement Liability-End of Period (a)
    
    
    
    
    
    $
    (252
    )Noncurrent Assets (b)
    
    $
    Current Liabilities (b)
    
    $
    Noncurrent Liabilities (b)
    
    $
    (1,055
    )Amounts Recognized in Regulatory Assets (b)Net Actuarial loss (b)
    
    $
    659Prior service cost (b)
    
    $
    24Net transition obligation (b)
    
    $
    40
 
 (a)
    
     Disclosure no longer required by FAS 158, adopted in 2006, retroactive adoption not
permitted.(b)
    
    - New disclosure required by FAS 158, adopted in 2006, retroactive adoption not permitted. 54




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##### Table of Contents



2006
    
    2005
    
    2004Projected Benefit ObligationDiscount rate
    
    
    5.70
    %
    
    
    5.90
    %
    
    
    6.00
    %Net Benefit CostsDiscount rate
    
    
    5.90
    %
    
    
    6.00
    %
    
    
    6.25
    %Expected long-term rate of return on Plan assets
    
    
    8.75
    %
    
    
    9.0
    %
    
    
    9.0
    %
   (in Millions)2007
    
    $
    912008
    
    
    962009
    
    
    992010
    
    
    1022011
    
    
    1052012 - 2016
    
    
    547Total
    
    $
    1,040
   (in Millions)2007
    
    $
    32008
    
    
    32009
    
    
    32010
    
    
    52011
    
    
    52012 - 2016
    
    
    27Total
    
    $
    46
   2006
    
    2005Equity Securities
    
    
    68
    %
    
    
    68
    %Debt Securities
    
    
    25
    
    
    
    28Other
    
    
    7
    
    
    
    4100
    %
    
    
    100
    %
 55




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##### Table of Contents



Equity Securities
    
    
    65
    %Debt Securities
    
    
    20Other
    
    
    15100
    %
  Non-Qualified
    
    Postretirement
    
    Total Benefit Plans(in Millions)
    
    Qualified Plans
    
    Plans
    
    Plans
    
    PlansIncrease (Decrease)
in Assets and
LiabilitiesAccrued pension
liability
    
    $
    204
    
    
    $
    3
    
    
    $
    
    
    
    $
    207Accrued
postretirement
liability
    
   $
    
    
    
    $
    
    
    
    $
    723
    
    
    $
    723Intangible assets
    
    $
    (20
    )
    
    $
    (1
    )
    
    $
    
    
    
    $
    (21
    )Regulatory assets
    
    $
    224
    
    
    $
    4
    
    
    $
    723
    
    
    $
    951
 56




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NOTE 15  RELATED PARTY TRANSACTIONS
   (in Millions)
    
    2006
    
    2005
    
    2004RevenuesEnergy sales
    
    $
    46
    
    
    $
    192
    
    
    $
    206Other services
    
    
    5
    
    
    
    5
    
    
    
    37Shared capital assets
    
    
    13
    
    
    
    14
    
    
    
    12CostsPower purchases
    
    
    35
    
    
    
    102
    
    
    
    61Other services and interest
    
    
    3
    
    
    
    7
    
    
    
    5Corporate expenses and merger costs (net) (1)
    
    
    (86
    )
    
    
    (97
    )
    
    
    (19
    )
 December 31,(in Millions)
    
    2006
    
    2005AssetsAccounts receivable
    
    $
    19
    
    
    $
    27Liabilities & EquityAccounts payable
    
    
    84
    
    
    
    51Other
liabilities (pension obligations)
    
    
    295
    
    
    
    273Dividends payable
    
    
    76
    
    
    
    76Dividends declared
    
    
    305
    
    
    
    305Dividends paid
    
    
    305
    
    
    
    305Capital contribution
    
    
    150
    
    
    
    
 
 (1)
    
    As a result of an MPSC order, DTE Energy ceased billing merger costs to Detroit
Edison effective January 2005.  57




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NOTE 16  SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
 First
    
    Second
    
    Third
    
    Fourth(in Millions)
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Year2006Operating Revenues
    
    $
    1,050
    
    
    $
    1,175
    
    
    $
    1,460
    
    
    $
    1,052
    
    
    $
    4,737Operating Income
    
    
    161
    
    
    
    164
    
    
    
    270
    
    
    
    181
    
    
    
    776Net Income
    
    
    59
    
    
    
    57
    
    
    
    138
    
    
    
    67
    
    
    
    3212005Operating Revenues
    
    
    990
    
    
    
    1,035
    
    
    
    1,409
    
    
    
    1,028
    
    
    
    4,462Operating Income
    
    
    149
    
    
    
    139
    
    
    
    264
    
    
    
    157
    
    
    
    709Net Income
    
    
    55
    
    
    
    43
    
    
    
    114
    
    
    
    62
    
    
    
    274
 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 (a) Evaluation of disclosure controls and procedures
  (b) Changes in internal control over financial reporting
  58




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##### Table of Contents



Item 9B. Other Information
  
 Part III
 
 Item 10. Directors, Executive Officers and Corporate Governance
 
 Item 11. Executive Compensation
 
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accountant Fees and Services
  2006
    
    
    2005Audit fees (1)
    
    $
    1,222,952
    
    
    $
    1,978,724Audit-related fees (2)(3)
    
    
    35,750
    
    
    
    13,000Tax fees (3)
    
    
    
    
    
    
    All other fees
    
    
    
    
    
    
    Total
    
    $
    1,258,702
    
    
    $
    1,991,724
 
 (1)
    
    Represents the aggregrate fees billed for the audit of Detroit Edisons annual financial statements
and for the reviews of the financial statements included in Detroit Edisons Quarterly Reports on Form 10-Q(2)
    
    Represents the aggregrate fees billed for audit-related services.(3)
    
    Certain audit-related and tax fees are charged to DTE Energy and are indirectly allocated to Detroit
Edison through overheads.   59




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##### Table of Contents



Part
IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    The following documents are filed as part of this Annual Report on Form 10-K.
 (1)
    
    Consolidated financial statements. See Item 8  Financial Statements and Supplementary
Data.(2)
    
    Financial statement schedule. See Item 8  Financial Statements and Supplementary Data.(3)
    
    Exhibits.
 (i)
    
    Exhibits filed herewith.10-41
    
    Amendment No. 1 dated as of January 17, 2003 to the Amended and Restated Trade
Receivables Purchase and Sale Agreement among Detroit Edison, CAFCO, Citibank and
Citicorp, individually and as Agent dated March 9, 2001, as amended.10-42
    
    Amendment No. 5 dated as of January 19, 2006 to the Amended and Restated Trade
Receivables Purchase and Sale Agreement among Detroit Edison, CAFCO, Citibank and
Citicorp, individually and as Agent dated March 9, 2001, as amended.12-27
    
    Computation of Ratio of Earnings to Fixed Charges.23-19
    
    Consent of Deloitte & Touche LLP.31-29
    
    Chief Executive Officer Section 302 Form 10-K Certification of Periodic Report.31-30
    
    Chief Financial Officer Section 302 Form 10-K Certification of Periodic Report.(ii)
    
    Exhibits incorporated herein by reference.3(a)
    
    Restated Articles of The Detroit Edison Company, as filed December 10, 1991.
(Exhibit 3-13 to Form 10-Q for the quarter ended June 30, 1999)3(b)
    
    Bylaws of The Detroit Edison Company, as amended through September 22, 1999.
(Exhibit 3-14 to Form 10-Q for the quarter ended September 30, 1999)4(a)
    
    Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison
Company and J.P. Morgan Trust Company, National Association, as successor trustee
(Exhibit B-1 to Registration Statement on Form A-2 (File No. 2-1630)) and indentures
supplemental thereto, dated as of dates indicated below, and filed as exhibits to
the filings set forth below:Supplemental Indenture, dated as of December
1, 1940, to the Mortgage and Deed of Trust,
dated as of October 1, 1924, between The
Detroit Edison Company and J.P. Morgan Trust
Company, National Association, as successor
trustee (Exhibit B-14 to Registration
Statement on Form A-2 (File No. No. 2-4609)).
(amendment)Supplemental Indenture, dated as of September 1, 1947, to the
Mortgage and
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##### Table of Contents



Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit B-20 to
Registration Statement on Form S-1 (File No. 2-7136)).
(amendment)Supplemental Indenture, dated as of March 1, 1950, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit B-22 to
Registration Statement on Form S-1 (File No. 2-8290)).
(amendment)Supplemental Indenture, dated as of November 15, 1951, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit B-23 to
Registration Statement on Form S-1 (File No. 2-9226)).
(amendment)Supplemental Indenture, dated as of August 15, 1957, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 3-B-30 to
Form 8-K dated September 11, 1957). (amendment)Supplemental Indenture, dated as of December 1, 1966, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 2-B-32 to
Registration Statement on Form S-9 (File No. 2-25664)).
(amendment)Supplemental Indenture, dated as of February 15, 1990, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-212 to Form
10-K for the year ended December 31, 2000). (1990 Series B, C, E
and F)Supplemental Indenture, dated as of April 1, 1991, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-15 to Form
10-K for the year ended December 31, 1995). (1991 Series AP)Supplemental Indenture, dated as of May 1, 1991, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and J.P. Morgan Trust Company, National
Association, as successor trustee (Exhibit 4-178 to Form 10-K for
the year ended December 31, 1996). (1991 Series BP and CP)Supplemental Indenture, dated as of May 15, 1991, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and J.P. Morgan Trust Company, National
Association, as successor trustee (Exhibit 4-179 to Form 10-K for
the year ended December 31, 1996). (1991 Series DP)
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##### Table of Contents



Supplemental Indenture, dated as of February 29, 1992, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-187 to Form
10-Q for the quarter ended March 31, 1998). (1992 Series AP)Supplemental Indenture, dated as of April 26, 1993, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-215 to Form
10-K for the year ended December 31, 2000). (amendment)Supplemental Indenture, dated as of June 30, 1993, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-216 to Form
10-K for the year ended December 31, 2000). (1993 Series AP)Supplemental Indenture, dated as of August 1, 1999, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-204 to Form
10-Q for the quarter ended September 30, 1999). (1999 Series AP,
BP and CP)Supplemental Indenture, dated as of August 1, 2000, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-210 to Form
10-Q for the quarter ended September 30, 2000). (2000 Series BP)Supplemental Indenture, dated as of March 15, 2001, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-222 to Form
10-Q for the quarter ended March 31, 2001). (2001 Series AP)Supplemental Indenture, dated as of May 1, 2001, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between Detroit
Edison and J.P. Morgan Trust Company, National Association, as
successor trustee (Exhibit 4-226 to Form 10-Q for the quarter
ended June 30, 2001). (2001 Series BP)Supplemental Indenture, dated as of August 15, 2001, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-227 to Form
10-Q for the quarter ended September 30, 2001). (2001 Series CP)Supplemental Indenture, dated as of September 15, 2001, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-228 to Form
10-Q for the quarter ended September 30, 2001).
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##### Table of Contents



(2001 Series E)Supplemental Indenture, dated as of September 17, 2002, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4.1 to
Registration Statement on Form S-3 (File No. 333-100000)).
(amendment and successor trustee)Supplemental Indenture, dated as of October 15, 2002, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-230 to Form
10-Q for the quarter ended September 30, 2002). (2002 Series A
and B)Supplemental Indenture, dated as of December 1, 2002, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-232 to Form
10-K for the year ended December 31, 2002). (2002 Series C and D)Supplemental Indenture, dated as of August 1, 2003, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-235 to Form
10-Q for the quarter ended September 30, 2003). (2003 Series A)Supplemental Indenture, dated as of March 15, 2004, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-238 to Form
10-Q for the quarter ended March 31, 2004). (2004 Series A and B)Supplemental Indenture, dated as of July 1, 2004, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and J.P. Morgan Trust Company, National
Association, as successor trustee (Exhibit 4-240 to Form 10-Q for
the quarter ended June 30, 2004). (2004 Series D)Supplemental Indenture, dated as of April 1, 2005, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
Detroit Edison and J.P. Morgan Trust Company, National
Association, as successor trustee (Exhibit 4.3 to Registration
Statement on Form S-4 (File No. 333-123926)). (2005 Series AR and
BR)Supplemental Indenture, dated as of August 1, 2005, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4.2 to Form
8-K dated August 17, 2005). (2005 Series DT)Supplemental Indenture, dated as of September 15, 2005, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison
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##### Table of Contents



Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4.2 to Form
8-K dated September 29, 2005). (2005 Series C)Supplemental Indenture, dated as of September 30, 2005, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
Detroit Edison and J.P. Morgan Trust Company, National
Association, as successor trustee (Exhibit 4-248 to Form 10-Q for
the quarter ended September 30, 2005). (2005 Series E)Supplemental Indenture, dated as of May 15, 2006, to the Mortgage
and Deed of Trust, dated as of October 1, 1924, between The
Detroit Edison Company and J.P. Morgan Trust Company, National
Association, as successor trustee (Exhibit 4-250 to Form 10-Q for
the quarter ended June 30, 2006). (2006 Series A)Supplemental Indenture, dated as of December 1, 2006, to the
Mortgage and Deed of Trust, dated as of October 1, 1924, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4.2 to Form
8-K dated December 8, 2006). (2006 Series CT)4(b)
    
    Collateral Trust Indenture, dated as of June 30, 1993, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-152 to
Registration Statement (File No. 33-50325)).4(c)
    
    Ninth Supplemental Indenture, dated as of October 10, 2001, to
the Collateral Trust Indenture, dated as of June 30, 1993,
between The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-229 to Form
10-Q for the quarter ended September 30, 2001). (5.050% Senior
Notes due 2005 and 6.125% Senior Notes due 2010)4(d)
    
    Tenth Supplemental Indenture, dated as of October 23, 2002, to
the Collateral Trust Indenture, dated as of June 30, 1993,
between The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-231 to Form
10-Q for the quarter ended September 30, 2002). (5.20% Senior
Notes due 2012 and 6.35% Senior Notes due 2032)4(e)
    
    Eleventh Supplemental Indenture, dated as of December 1, 2002, to
the Collateral Trust Indenture, dated as of June 30, 1993,
between The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-233 to Form
10-Q for the quarter ended March 31, 2003). (5.45% Senior Notes
due 2032 and 5.25% Senior Notes due 2032)4(f)
    
    Twelfth Supplemental Indenture, dated as of August 1, 2003, to
the Collateral Trust Indenture, dated as of June 30, 1993,
between The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-236 to Form
10-Q for the quarter ended September 30, 2003). (5 1/2% Senior
Notes due 2030)4(g)
    
    Thirteenth Supplemental Indenture, dated as of April 1, 2004, to
the Collateral Trust Indenture, dated as of June 30, 1993,
between The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-237 to Form
10-Q for the quarter ended March 31, 2004). (4.875% Senior Notes
Due 2029 and 4.65% Senior Notes due 2028)
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##### Table of Contents



4(h)
    
    Fourteenth Supplemental Indenture, dated as of July 15, 2004, to
the Collateral Trust Indenture, dated as of June 30, 1993,
between The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-239 to Form
10-Q for the quarter ended June 30, 2004). (2004 Series D 5.40%
Senior Notes due 2014)4(i)
    
    Sixteenth Supplemental Indenture, dated as of April 1, 2005, to
the Collateral Trust Indenture, dated as of June 30, 1993,
between The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4.1 to
Registration Statement on Form S-4 (File No. 333-123926)). (2005
Series AR 4.80% Senior Notes due 2015 and 2005 Series BR 5.45%
Senior Notes due 2035)4(j)
    
    Seventeenth Supplemental Indenture, dated as of August 1, 2005,
to the Collateral Trust Indenture, dated as of June 30, 1993
between The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4.1 to Form
8-K dated August 17, 2005). (2005 Series DT Variable Rate Senior
Notes due 2029)4(k)
    
    Eighteenth Supplemental Indenture, dated as of September 15,
2005, to the Collateral Trust Indenture, dated as of June 30,
1993, between The Detroit Edison Company and J.P. Morgan Trust
Company, National Association, as successor trustee (Exhibit 4.1
to Form 8-K dated September 29, 2005). (2005 Series C 5.19%
Senior Notes due October 1, 2023)4(l)
    
    Nineteenth Supplemental Indenture, dated as of September 30,
2005, to the Collateral Trust Indenture, dated as of June 30,
1993, between The Detroit Edison Company and J.P. Morgan Trust
Company, National Association, as successor trustee (Exhibit
4-247 to Form 10-Q for the quarter ended September 30, 2005).
(2005 Series E 5.70% Senior Notes due 2037)4(m)
    
    Twentieth Supplemental Indenture, dated as of May 15, 2006, to
the Collateral Trust Indenture dated as of June 30, 1993, between
The Detroit Edison Company and J.P. Morgan Trust Company,
National Association, as successor trustee (Exhibit 4-249 to Form
10-Q for the quarter ended June 30, 2006). (2006 Series A Senior
Notes due 2036)4(n)
    
    Twenty-First Supplemental Indenture, dated as of December 1,
2006, to the Collateral Trust Indenture, dated as of June 30,
1993, between The Detroit Edison Company and The Bank of New York
Trust Company, N.A., as successor trustee (Exhibit 4.1 to Form
8-K dated December 8, 2006). (2006 Series CT Variable Rate Senior
Notes due 2036)4(o)
    
    Trust Agreement of Detroit Edison Trust I. (Exhibit 4-9 to
Registration Statement on Form S-3 (File No. 333-100000))4(p)
    
    Trust Agreement of Detroit Edison Trust II. (Exhibit 4-10 to
Registration Statement on Form S-3 (File No. 333-100000))4(q)
    
    Registration Rights
Agreement, dated as of
February 7, 2005, between
The Detroit Edison Company
and the Initial Purchasers
named therein. (Exhibit 4-3
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##### Table of Contents



to Form 8-K dated February
7, 2005)10(a)
    
    Securitization Property
Sales Agreement dated as of
March 9, 2001, between The
Detroit Edison
Securitization Funding LLC
and The Detroit Edison
Company. (Exhibit 10-42 to
Form 10-Q for the quarter
ended March 31, 2001)10(b)
    
    Form of The Detroit Edison
Companys Five-Year Credit
Agreement, dated as of
October 17, 2005, by and
among The Detroit Edison
Company, the lenders party
thereto, Barclays Bank PLC,
as Administrative Agent,
and Citibank, N.A. and
JPMorgan Chase Bank, N.A.,
as Co-Syndication Agents
(Exhibit 10.1 to Form 8-K
dated October 17, 2005).10(c)
    
    Form of Amendment No.1 to
The Detroit Edison
Companys Five-Year Credit
Agreement, dated as of
January 10, 2007, by and
among The Detroit Edison
Company, the lenders party
thereto, Barclays Bank PLC,
as Administrative Agent,
and Citibank, N.A. and
JPMorgan Chase Bank, N.A.,
as Co-Syndication Agents
(Exhibit 10.1 to Form 8-K
dated January 10, 2007).10(d)
    
    Form of Second Amended and
Restated Five-Year Credit
Agreement, dated as of
October 17, 2005, by and
among The Detroit Edison
Company, the lenders party
thereto, Barclays Bank PLC,
as Administrative Agent,
and Citibank, N.A. and
JPMorgan Chase Bank, N.A.,
as Co-Syndication Agents
(Exhibit 10.2 to Form 8-K
dated October 17, 2005)10(e)
    
    Form of Amendment No. 1. to
Second Amended and Restated
Five-Year Credit Agreement
dated as of January 10,
2007, by and among The
Detroit Edison Company, the
lenders party thereto,
Barclays Bank PLC, as
Administrative Agent, and
Citibank, N.A. and JPMorgan
Chase Bank, N.A., as
Co-Syndication Agents
(Exhibit 10.2 to Form 8-K
dated January 10, 2007).10(f)
    
    Form of Indemnification
Agreement between The
Detroit Edison Company and
its officers. (Exhibit
10-40 to Form 10-K for the
year ended December 31,
2000)10(g)
    
    Certain arrangements
pertaining to the
employment of Anthony F.
Earley, Jr. with The
Detroit Edison Company,
dated April 25, 1994.
(Exhibit 10-53 to Form 10-Q
for the quarter ended March
31, 1994)10(h)
    
    Certain arrangements
pertaining to the
employment of Gerard M.
Anderson with The Detroit
Edison Company, dated
October 6, 1993. (Exhibit
10-48 to Form 10-K for year
ended December 31, 1993)10(i)
    
    Certain arrangements
pertaining to the
employment of David E.
Meador with The Detroit
Edison Company, dated
January 14, 1997. (Exhibit
10-5 to Form 10-K for the
year ended December 31,
1996)10(j)
    
    Amended and Restated
Post-Employment Income
Agreement, dated March 23,
1998, between The Detroit
Edison Company and Anthony
F. Earley, Jr. (Exhibit
10-21 to Form 10-Q for the
quarter ended March 31,
1998)10(k)
    
    Executive Post-Employment
Income Arrangement, dated
March 27, 1989, between The
Detroit Edison Company and
S. Martin Taylor. (Exhibit
10-22
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##### Table of Contents



to Form 10-Q for the
quarter ended March 31,
1998)10(l)
    
    The Detroit Edison Company
Supplemental Long-Term
Disability Plan, dated
January 27, 1997. (Exhibit
10-4 to Form 10-K for the
year ended December 31,
1996)10(m)
    
    Executive Vehicle Plan of
The Detroit Edison Company,
dated as of September 1,
1999. (Exhibit 10-41 to
Form 10-Q for the quarter
ended March 31, 2001)10(n)
    
    Loan Agreement dated as of
December 1, 2006 between
The Detroit Edison Company
and the Michigan Strategic
Fund (Exhibit 10.1 to Form
8-K dated December 8, 2006)10(o)
    
    Amended and Restated Trade
Receivables Purchase and
Sale Agreement among
Detroit Edison, CAFCO,
Citibank and Citicorp,
individually and as Agent
dated March 9, 2001
(Exhibit 99-43 to Form 10-Q
dated March 31, 2001)10(p)
    
    Amendment No. 2 dated as of
May 28, 2003 to the Amended
and Restated Trade
Receivables Purchase and
Sale Agreement among
Detroit Edison, CAFCO,
Citibank and Citicorp,
individually and as Agent
dated March 9, 2001, as
amended (Exhibit 99-12 to
Form 10-Q dated June 30,
2003)10(q)
    
    Amendment No. 3 dated as of
February 25, 2004 to the
Amended and Restated Trade
Receivables Purchase and
Sale Agreement among
Detroit Edison, CAFCO,
Citibank and Citicorp,
individually and as Agent
dated March 9, 2001, as
amended (Exhibit 99-16 to
Form 10-Q dated March 31,
2004)10(r)
    
    Amendment No. 4 dated as of
January 20, 2005 to the
Amended and Restated Trade
Receivables Purchase and
Sale Agreement among
Detroit Edison, CAFCO,
Citibank and Citicorp,
individually and as Agent
dated March 9, 2001, as
amended (Exhibit 99-18 to
Form 10-K dated December
31, 2004)10(s)
    
    Amendment No. 6 dated as of
January 18, 2007 to the
Amended and Restated Trade
Receivables Purchase and
Sale Agreement among
Detroit Edison, CAFCO,
Citibank and Citicorp,
individually and as Agent
dated March 9, 2001, as
amended (Exhibit 10.01 to
Form 8-K dated January 18,
2007)99(a)
    
    Belle River Participation
Agreement, dated as of
December 1, 1982, between
The Detroit Edison Company
and Michigan Public Power
Agency. (Exhibit 28-5 to
Registration Statement No.
2-81501)99(b)
    
    Belle River Transmission
Ownership and Operating
Agreement, dated as of
December 1, 1982, between
The Detroit Edison Company
and Michigan Public Power
Agency. (Exhibit 28-6 to
Registration Statement No.
2-81501)99(c)
    
    Inter-Creditor Agreement,
dated as of March 9, 2001,
among Citicorp North
America, Inc., Citibank,
N.A., The Bank of New York,
The Detroit Edison
Securitization Funding LLC
and The Detroit Edison
Company. (Exhibit 99-41 to
Form 10-Q for the quarter
ended March 31, 2001)
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(iii)
    
    Exhibits furnished herewith.32-29
    
    Chief Executive Officer
Section 906 Form 10-K
Certification of Periodic
Report.32-30
    
    Chief Financial Officer
Section 906 Form 10-K
Certification of Periodic
Report.
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The Detroit Edison Company
 
 Schedule II  Valuation and Qualifying Accounts
 Year Ending December 31,(in Millions)
    
    2006
    
    
    2005
    
    
    2004Allowance for Doubtful Accounts (shown as
deduction from accounts receivable in
the consolidated statement
of financial position)Balance at Beginning of Period
    
    $
    54
    
    
    $
    55
    
    
    $
    51Additions:Charged to costs and expenses
    
    
    53
    
    
    
    41
    
    
    
    45Charged to other accounts (1)
    
    
    3
    
    
    
    4
    
    
    
    5Deductions (2)
    
    
    (38
    )
    
    
    (46
    )
    
    
    (46
    )Balance At End of Period
    
    $
    72
    
    
    $
    54
    
    
    $
    55
 
 (1)
    
    Collection of accounts previously written off.(2)
    
    Non-collectible accounts written off. 69




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Signatures
  THE DETROIT EDISON COMPANY(Registrant)Date: March 1, 2007
    
    By
    
    /s/ PETER B. OLEKSIAK

Peter B. Oleksiak
Vice President and Controller, and
Chief Accounting Officer
  By
    
    /s/ ANTHONY F. EARLEY, JR.

Anthony F. Earley, Jr. 
Chairman of the Board and
Chief Executive Officer
    
    
    
    By
    
    /s/ PETER B. OLEKSIAK

Peter B. Oleksiak
Vice President and Controller, and
Chief Accounting OfficerBy
    
    /s/ SANDRA KAY ENNIS

Sandra Kay Ennis
Director and Corporate Secretary
    
    
    
    By
    
    /s/ DAVID E. MEADOR

David E. Meador
Director, Executive Vice President
and Chief Financial OfficerBy
    
    /s/ BRUCE D. PETERSONBruce D. Peterson
DirectorDate: March 1, 2007
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Exhibit Index
 Exhibit No.
    
    Description(i)
    
    Exhibits filed herewith.10-41
    
    Amendment No. 1 dated as of January 17, 2003 to the Amended and Restated Trade
Receivables Purchase and Sale Agreement among Detroit Edison, CAFCO, Citibank and
Citicorp, individually and as Agent dated March 9, 2001, as amended.10-42
    
    Amendment No. 5 dated as of January 19, 2006 to the Amended and Restated Trade
Receivables Purchase and Sale Agreement among Detroit Edison, CAFCO, Citibank and
Citicorp, individually and as Agent dated March 9, 2001, as amended.12-27
    
    Computation of Ratio of Earnings to Fixed Charges.23-19
    
    Consent of Deloitte & Touche LLP.31-29
    
    Chief Executive Officer Section 302 Form 10-K Certification of Periodic Report.31-30
    
    Chief Financial Officer Section 302 Form 10-K Certification of Periodic Report.(iii)
    
    Exhibits furnished herewith.32-29
    
    Chief Executive Officer
Section 906 Form 10-K
Certification of Periodic
Report.32-30
    
    Chief Financial Officer
Section 906 Form 10-K
Certification of Periodic
Report.