Document:

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                                                                    EXHIBIT 10.2

                                                                  CONFORMED COPY

                   SECURITIZATION PROPERTY SERVICING AGREEMENT

                                     between

                  The Detroit Edison Securitization Funding LLC
                                     Issuer

                                       and

                           THE DETROIT EDISON COMPANY
                                    Servicer

                            Dated as of March 9, 2001

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                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

                                    ARTICLE I
                                   Definitions

SECTION 1.01.  Definitions. ...................................................1
SECTION 1.02.  Other Definitional Provisions...................................1

                                   ARTICLE II
                          Appointment and Authorization

SECTION 2.01.  Appointment of Servicer; Acceptance of Appointment..............2
SECTION 2.02.  Authorization...................................................2
SECTION 2.03.  Dominion and Control Over the Securitization Property...........2

                                   ARTICLE III
                                Billing Services

SECTION 3.01.  Duties of Servicer..............................................3
SECTION 3.02.  Servicing and Maintenance Standards. ...........................4
SECTION 3.03.  Certificate of Compliance.......................................4
SECTION 3.04.  Annual Report by Independent Public Accountants.................4
SECTION 3.05.  Opinions of Counsel. ...........................................5

                                   ARTICLE IV
    Services Related To Periodic Adjustments Remittances and Reconciliations

SECTION 4.01. Periodic Adjustments.............................................6
SECTION 4.02. Limitation of Liability..........................................7
SECTION 4.03. Remittances; Reconciliations.....................................8

                                    ARTICLE V
                           The Securitization Property

SECTION 5.01. Custody of Securitization Property Records.......................9
SECTION 5.02. Duties of Servicer as Custodian..................................9
SECTION 5.03. Instructions; Authority to Act..................................10
SECTION 5.04. Effective Period and Termination................................10

                                   ARTICLE VI
                                  The Servicer

SECTION 6.01. Representations and Warranties of Servicer......................11
SECTION 6.02. Indemnities of Servicer; Release of Claims......................12

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SECTION 6.03. Merger or Consolidation of, or Assumption of the Obligations of,
              Servicer........................................................14
SECTION 6.04. Assignment of Servicer's Obligations............................16
SECTION 6.05. Limitation on Liability of Servicer and Others..................16
SECTION 6.06. Detroit Edison Not To Resign as Servicer........................16
SECTION 6.07. Servicing Fee...................................................16
SECTION 6.08. Servicer Expenses...............................................16
SECTION 6.09. Subservicing....................................................17
SECTION 6.10. No Servicer Advances............................................17
SECTION 6.11. Protection of Title.............................................17

                                   ARTICLE VII
                                     Default

SECTION 7.01. Servicer Default................................................17
SECTION 7.02. Notice of Servicer Default......................................19
SECTION 7.03. Waiver of Past Defaults.........................................19
SECTION 7.04. Appointment of Successor........................................19
SECTION 7.05. Cooperation with Successor......................................20

                                  ARTICLE VIII
                            Miscellaneous Provisions

SECTION 8.01. Amendment.......................................................20
SECTION 8.02. Maintenance of Accounts and Records.............................20
SECTION 8.03. Notices.........................................................21
SECTION 8.04. Limitations on Rights of Others.................................21
SECTION 8.05. Severability....................................................21
SECTION 8.06. Separate Counterparts...........................................22
SECTION 8.07. Headings........................................................22
SECTION 8.08. GOVERNING LAW...................................................22
SECTION 8.09. Assignment to the Trustee.......................................22
SECTION 8.10. Nonpetition Covenants...........................................22
SECTION 8.11. Termination.....................................................22
SECTION 8.12. Inter-Creditor Agreement........................................22

                        EXHIBITS, ANNEXES AND APPENDICES

EXHIBIT A                   Form of Certificate of Compliance
EXHIBIT B                   Form of Routine True-Up Adjustment Request
EXHIBIT C                   Form of Monthly Servicer Certificate
EXHIBIT D                   Form of Semiannual Servicer Certificate
EXHIBIT E                   Form of Annual Reconciliation
EXHIBIT F                   Proceedings
ANNEX I                     Servicing Procedures
APPENDIX A                  Master Definitions

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         This SECURITIZATION PROPERTY SERVICING AGREEMENT, dated as of March 9,
2001, is between The Detroit Edison Securitization Funding LLC, a Michigan
limited liability company, as issuer (the "Issuer"), and The Detroit Edison
Company, a Michigan corporation ("Detroit Edison"), as the servicer of the
Securitization Property hereunder (the "Servicer").

                              W I T N E S S E T H:

         WHEREAS the Servicer is willing to service the Securitization Property
purchased from the Seller by the Issuer; and

         WHEREAS the Issuer, in connection with ownership of Securitization
Property, desires to engage the Servicer to carry out the functions described
herein.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

         SECTION 1.01. DEFINITIONS. Capitalized terms used but not otherwise
defined herein have the meanings assigned to them in Appendix A hereto.

         SECTION 1.02. OTHER DEFINITIONAL PROVISIONS.

                  (a) "Agreement" means this Securitization Property Servicing
         Agreement, together with all Exhibits, Schedules and Annexes hereto, as
         the same may be amended, supplemented or otherwise modified from time
         to time.

                  (b) Non-capitalized terms used herein which are defined in the
         Statute, as the context requires, have the meanings assigned to such
         terms in the Statute, but without giving effect to amendments to the
         Statute after the date hereof which have a material adverse effect on
         the Issuer or the Securitization Bondholders.

                  (c) All terms defined in this Agreement have the defined
         meanings when used in any certificate or other document made or
         delivered pursuant hereto unless otherwise defined therein.

                  (d) The words "hereof", "herein", "hereunder" and words of
         similar import when used in this Agreement shall refer to this
         Agreement as a whole and not to any particular provision of this
         Agreement; Section, Annex, Schedule and Exhibit references contained in
         this Agreement are references to Sections, Annexes, Schedules and
         Exhibits in or to this Agreement unless otherwise specified; and the
         term "including" shall mean "including without limitation".

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                  (e) The definitions contained in this Agreement are applicable
         to the singular as well as the plural forms of such terms.

                                   ARTICLE II

                          APPOINTMENT AND AUTHORIZATION

         SECTION 2.01. APPOINTMENT OF SERVICER; ACCEPTANCE OF APPOINTMENT.
Subject to Section 6.06 and Article VII, the Issuer hereby appoints the
Servicer, and the Servicer hereby accepts such appointment, to perform the
Servicer's obligations pursuant to this Agreement on behalf of and for the
benefit of the Issuer or any assignee thereof in accordance with the terms of
this Agreement and applicable law. This appointment and the Servicer's
acceptance thereof may not be revoked except in accordance with the express
terms of this Agreement.

         SECTION 2.02. AUTHORIZATION. With respect to all or any portion of the
Securitization Property, the Servicer shall be, and hereby is, authorized and
empowered by the Issuer to:

                  (a) execute and deliver, on behalf of itself, the Issuer, or
         both, as the case may be, any and all instruments, documents or
         notices, and

                  (b) on behalf of itself, the Issuer, or both, as the case may
         be, make any filing and participate in proceedings of any kind with any
         governmental authorities, including with the MPSC.

         The Issuer shall furnish the Servicer with such documents as have been
prepared by the Servicer for execution by the Issuer, and with such other
documents as may be in the Issuer's possession, as necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder. Upon the written request of the Servicer, the Issuer shall furnish
the Servicer with any powers of attorney or other documents necessary or
appropriate to enable the Servicer to carry out its duties hereunder.

         SECTION 2.03. DOMINION AND CONTROL OVER THE SECURITIZATION PROPERTY.
Notwithstanding any other provision herein, the Servicer and the Issuer agree
that the Issuer is the owner of the Securitization Property and shall have
dominion and control over the Securitization Property, and the Servicer, in
accordance with the terms hereof, is acting solely as the servicing agent of the
Issuer with respect to the Securitization Property. The Servicer hereby
recognizes the security interest of the Trustee in the Securitization Property
and agrees to hold the proceeds thereof in trust for the Issuer and the Trustee.
The Servicer hereby agrees that it shall not take any action that is not
authorized by this Agreement, the Statute or the Financing Order, that is not
consistent with its customary procedures and practices, or that shall impair the
rights of the Issuer with respect to the Securitization Property, in each case
unless such action is required by law or court or regulatory order.

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                                  ARTICLE III

                                BILLING SERVICES

         SECTION 3.01. DUTIES OF SERVICER. The Servicer, as agent for the
Issuer, shall have the following duties:

                  (a)      Duties of Servicer Generally.

                           (i)   General Duties. The Servicer's duties in
                  general shall include management, servicing and administration
                  of the Securitization Property; obtaining meter reads,
                  calculating electricity usage, billing, collection and posting
                  of all payments in respect of the Securitization Property;
                  responding to inquiries by Customers, the MPSC, or any
                  federal, local or other state governmental authorities with
                  respect to the Securitization Property; delivering Bills or
                  arranging for delivery of Bills to Customers, accounting for
                  the billing and collection of the SB Charge, investigating and
                  handling delinquencies, processing and depositing collections
                  and making periodic remittances; furnishing periodic reports
                  to the Issuer, the Trustee and the Rating Agencies; and taking
                  all necessary action in connection with Periodic Adjustments
                  as set forth herein. Without limiting the generality of this
                  Section 3.01(a)(i), in furtherance of the foregoing, the
                  Servicer hereby agrees that it shall also have, and shall
                  comply with, the duties and responsibilities relating to data
                  acquisition, usage and bill calculation, billing, customer
                  service functions, collection, payment processing and
                  remittance set forth in Annex I hereto.

                           (ii)  MPSC Regulations Control. Notwithstanding
                  anything to the contrary in this Agreement, the duties of the
                  Servicer set forth in this Agreement shall be qualified in
                  their entirety by the Statute, the Financing Order and any
                  MPSC Regulations as in effect at the time such duties are to
                  be performed.

                  (b)      Reporting Functions.

                           (i)   Annual Reconciliation Report. The Servicer
                  shall deliver an annual written reconciliation report
                  substantially in the form of Exhibit E hereto as required by
                  Section 4.03(b) hereof.

                           (ii)  Notification of Laws and Regulations. The
                  Servicer shall immediately notify the Issuer, the Trustee and
                  the Rating Agencies in writing of any laws or MPSC Regulations
                  hereafter promulgated that have a material adverse effect on
                  the Servicer's ability to perform its duties under this
                  Agreement.

                           (iii) Other Information. Upon the reasonable request
                  of the Issuer, the Trustee, or any Rating Agency, the Servicer
                  shall provide to such Issuer, Trustee, or the Rating Agencies,
                  as the case may be, any public financial information in
                  respect of the Servicer, or any material information regarding
                  the Securitization Property to the extent it is reasonably
                  available to the Servicer, as may be reasonably necessary and
                  permitted by law for the Issuer, the Trustee, or the

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                  Rating Agencies to monitor the Servicer's performance
                  hereunder. In addition, so long as any of the Securitization
                  Bonds of any Series are outstanding, the Servicer shall
                  provide to the Issuer and to the Trustee, within a reasonable
                  time after written request therefor, any information available
                  to the Servicer or reasonably obtainable by it that is
                  necessary to calculate the SB Charge.

         SECTION 3.02. SERVICING AND MAINTENANCE STANDARDS. On behalf of the
Issuer, the Servicer shall (a) manage, service, administer and make collections
in respect of the Securitization Property with reasonable care and in accordance
with applicable law and regulations, including all MPSC Regulations and
guidelines, using the same degree of care and diligence that the Servicer
exercises with respect to similar assets for its own account and, if applicable,
for others; (b) follow customary standards, policies and procedures for the
industry in performing its duties as Servicer; (c) use all reasonable efforts,
consistent with its customary servicing procedures, to bill and collect the SB
Charge; (d) file Michigan UCC continuation statements to maintain the perfected
security interest of the Trustee in the Securitization Property and use all
reasonable efforts to otherwise enforce and maintain the Trustee's rights in
respect of the Securitization Property and (e) comply in all material respects
with all laws and regulations applicable to and binding on it relating to the
Securitization Property. The Servicer shall follow such customary and usual
practices and procedures as it shall deem necessary or advisable in its
servicing of all or any portion of the Securitization Property, which, in the
Servicer's judgment, may include the taking of legal action, at the Issuer's
expense.

         SECTION 3.03. CERTIFICATE OF COMPLIANCE. The Servicer shall deliver to
the Issuer, the Trustee and the Rating Agencies on or before March 31 of each
year, commencing March 31, 2002 to and including the March 31 succeeding the
Retirement of the Securitization Bonds, an Officer's Certificate substantially
in the form of Exhibit A hereto (a "Certificate of Compliance"), stating that:
(i) a review of the activities of the Servicer during the twelve months ended
the preceding December 31 (or, in the case of the first Certificate of
Compliance to be delivered on or before March 31, 2002, the period of time from
the date of this Agreement until December 31, 2001) and of its performance under
this Agreement has been made under such Authorized Officer's supervision, and
(ii) to such Authorized Officer's knowledge, based on such review, the Servicer
has fulfilled all of its material obligations in all material respects under
this Agreement throughout such twelve months (or, in the case of the Certificate
of Compliance to be delivered on or before March 31, 2002, the period of time
from the date of this Agreement until December 31, 2001), or, if there has been
a default in the fulfillment of any such material obligation, specifying each
such material default known to such Authorized Officer and the nature and status
thereof.

         SECTION 3.04. ANNUAL REPORT BY INDEPENDENT PUBLIC ACCOUNTANTS.

                  (a) The Servicer shall cause a firm of independent certified
         public accountants (which may provide other services to the Servicer)
         to prepare, and the Servicer shall deliver to the Issuer, the Trustee
         and the Rating Agencies, a report addressed to the Servicer (the
         "Annual Accountant's Report"), which may be included as part of the
         Servicer's customary auditing activities, for the information and use
         of the Issuer, the Trustee and the Rating Agencies, on or before March
         31 each year, beginning March 31, 2002 to and including the March 31
         succeeding the Retirement of the Securitization

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         Bonds, to the effect that such firm has performed certain procedures,
         agreed between the Servicer and such accountants, in connection with
         the Servicer's compliance with its obligations under this Agreement
         during the preceding twelve months ended December 31 (or, in the case
         of the first Annual Accountant's Report to be delivered on or before
         March 31, 2002, the period of time from the date of this Agreement
         until December 31, 2001), identifying the results of such procedures
         and including any exceptions noted.

                  (b) The Annual Accountant's Report shall also indicate that
         the accounting firm providing such report is independent of the
         Servicer within the meaning of the Code of Professional Ethics of the
         American Institute of Certified Public Accountants.

                  SECTION 3.05. OPINIONS OF COUNSEL. The Servicer shall deliver
to the Issuer and to the Trustee:

                  (a) promptly after the execution and delivery of this
         Agreement and of the Sale Agreement and of each amendment hereto or
         thereto, and on each Transfer Date, an Opinion of Counsel either:

                           (i)  to the effect that, in the opinion of such
                  counsel, all Michigan UCC filings that are necessary to
                  perfect the interests of the Trustee in the Securitization
                  Property, to the extent perfection can be achieved by filing
                  under the Michigan UCC and the Statute, have been executed and
                  filed, and reciting the details of such filings or referring
                  to prior Opinions of Counsel in which such details are given,
                  or

                           (ii) to the effect that, in the opinion of such
                  counsel, no such action is necessary to perfect such interest;
                  and

                  (b) within 90 days after the beginning of each calendar
         year beginning with the first calendar year beginning more than three
         full calendar months after the Initial Transfer Date, an Opinion of
         Counsel, dated as of a date during such 90-day period, either:

                           (i)  to the effect that, in the opinion of such
                  counsel, all Michigan UCC filings have been executed and filed
                  that are necessary to perfect the interest of the Trustee in
                  the Securitization Property, to the extent perfection can be
                  achieved by filing under the Michigan UCC and the Statute, and
                  reciting the details of such filings or referring to prior
                  Opinions of Counsel in which such details are given, or

                           (ii) to the effect that, in the opinion of such
                  counsel, no such action is necessary to perfect such interest.

Each Opinion of Counsel referred to in clause (a) or (b) above shall specify any
action necessary (as of the date of such opinion) to be taken in the following
year to preserve and protect such interest.

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                                   ARTICLE IV

                    SERVICES RELATED TO PERIODIC ADJUSTMENTS
                         REMITTANCES AND RECONCILIATIONS

         SECTION 4.01. PERIODIC ADJUSTMENTS. From time to time, until the
Retirement of the Securitization Bonds, the Servicer shall identify the need for
Periodic Adjustments and shall take all reasonable action to obtain and
implement such Periodic Adjustments, all in accordance with the following:

                  (a) Expected Amortization Schedule. The Expected
         Amortization Schedule is attached to the Series Supplement.

                  (b) Routine True-Up Adjustments.

                           (i)   With respect to each Series, the Servicer shall
                  file a Routine True-Up Adjustment Request with the MPSC on or
                  before January 15 of each year. For the purpose of preparing a
                  Routine True-Up Adjustment Request pursuant to this Section
                  4.01(b)(i), the Servicer shall: (A) update the assumptions
                  underlying the calculation of the SB Charge, including energy
                  usage volume, the rate of charge-offs and estimated expenses
                  and fees of the Issuer to the extent not fixed, in each case
                  for the Remittance Period beginning on January 1 of such year;
                  (B) update the calculation of Weighted Average Days
                  Outstanding; (C) determine the Required Debt Service for such
                  Remittance Period based upon such updated assumptions; and (D)
                  determine the SB Charge to be charged during such Remittance
                  Period based upon such Required Debt Service.

                           (ii)  With respect to each Series, beginning on the
                  date that is twelve (12) months prior to the Expected Final
                  Payment Date of the final Class of such Series and continuing
                  through the Final Maturity Date of such Class, the Servicer
                  shall file a Routine True-Up Adjustment Request with the MPSC
                  at least 45 days prior to the end of any calendar quarter at
                  such times as it may reasonably determine to meet the Required
                  Debt Service for the then current Remittance Period.

                           (iii) The Servicer shall take all reasonable actions
                  and make all reasonable efforts to secure any Periodic
                  Adjustments in clauses (i) and (ii) above (each, a "Routine
                  True-Up Adjustment").

                  (c) Non-Routine True-Up Adjustments.

                           (i)   Subject to the Rating Agency Condition,
                  whenever the Servicer determines that the existing model for
                  calculating the SB Charge should be amended or revised or the
                  Servicer otherwise determines that circumstances warrant, the
                  Servicer shall file a Non-Routine True-Up Adjustment Request
                  with the MPSC designating the adjustments to such model and/or
                  any corresponding adjustments to the SB Charge (collectively,
                  a "Non-Routine True-Up

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                  Adjustment"), subject to the review and approval of the MPSC
                  pursuant to the Financing Order.

                           (ii)  The Servicer shall take all reasonable actions
                  and make all reasonable efforts to secure any Non-Routine
                  True-Up Adjustments.

                           (iii) The Servicer shall implement any resulting
                  adjustments to the model and any resulting revised SB Charge
                  as of the effective date of the Non-Routine True-Up Adjustment
                  Request. If any Non-Routine True-Up Adjustment Request is
                  denied by the MPSC, the Servicer shall notify the Issuer, the
                  Trustee and the Rating Agencies by the end of the second
                  Servicer Business Day after the Servicer's receipt of the
                  MPSC's order denying such Non-Routine True-Up Adjustment
                  Request.

                  (d) Reports.

                           (i)   Notification of Adjustment Requests. Whenever
                  the Servicer files an Adjustment Request with the MPSC, the
                  Servicer shall send a copy of such filing to the Issuer, the
                  Trustee and the Rating Agencies concurrently therewith. If any
                  Routine True-Up Adjustment Request does not become effective
                  on the applicable date as provided in such filing and in
                  accordance with the Financing Order, the Servicer shall notify
                  the Issuer, the Trustee and the Rating Agencies by the end of
                  the second Servicer Business Day after such applicable date.

                           (ii)  Monthly Servicer Certificate. So long as any
                  Securitization Bonds are outstanding, not later than fifteen
                  (15) days after the end of each month after the Securitization
                  Bonds are issued (excluding March, 2001), or if such day is
                  not a Servicer Business Day, the next succeeding Servicer
                  Business Day the Servicer shall deliver a written report
                  substantially in the form of Exhibit C hereto (the "Monthly
                  Servicer Certificate") to the Issuer, the Trustee and the
                  Rating Agencies.

                           (iii) Semiannual Servicer Certificate. So long as any
                  Securitization Bonds are outstanding, not later than the
                  Servicer Business Day immediately preceding each Payment Date,
                  the Servicer shall deliver a written report substantially in
                  the form of Exhibit D hereto (the "Semiannual Servicer
                  Certificate") to the Issuer, the Trustee and the Rating
                  Agencies.

         SECTION 4.02. LIMITATION OF LIABILITY.

                  (a) The Issuer and the Servicer expressly agree and
acknowledge that:

                           (i)   In connection with any Periodic Adjustment, the
                  Servicer is acting solely in its capacity as the servicing
                  agent of the Issuer hereunder.

                           (ii)  Neither the Servicer nor the Issuer shall be
                  responsible in any manner for, and shall have no liability
                  whatsoever as a result of, any action, decision, ruling or
                  other determination made or not made, or any delay (other than

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                  any delay resulting from the Servicer's failure to file the
                  applications required by Section 4.01 in a timely and correct
                  manner or other material breach by the Servicer of its duties
                  under this Agreement that materially and adversely affects the
                  Periodic Adjustments), by the MPSC in any way related to the
                  Securitization Property or in connection with any Periodic
                  Adjustment, the subject of any filings under Section 4.01.

                           (iii) The Servicer shall have no liability whatsoever
                  relating to the calculation of the SB Charge and the
                  adjustments thereto (including any Non-Routine True-Up
                  Adjustment), including as a result of any inaccuracy of any of
                  the assumptions made in such calculation regarding expected
                  energy usage volume, the rate of charge-offs, estimated
                  expenses and fees of the Issuer, so long as the Servicer has
                  not acted in a grossly negligent manner in connection
                  therewith, nor shall the Servicer have any liability
                  whatsoever as a result of any Person, including the
                  Securitization Bondholders, not receiving any payment, amount
                  or return anticipated or expected in respect of any
                  Securitization Bond generally, except only to the extent that
                  the Servicer is liable under Section 6.02 of this Agreement.

                  (b)      Notwithstanding the foregoing, this Section 4.02
         shall not relieve the Servicer of any liability under Section 6.02 for
         any misrepresentation by the Servicer under Section 6.01 or for any
         breach by the Servicer of its obligations under this Agreement.

                  SECTION 4.03. REMITTANCES; RECONCILIATIONS.

                  (a)      Subject to Section 4.03(b) below, on each Servicer
         Business Day commencing 45 days after the date of mailing of the first
         Bill invoicing the SB Charge, the Servicer shall cause to be made,
         within two (2) Servicer Business Days of deemed receipt, a wire
         transfer of immediately available funds to the General Subaccount of
         the Collection Account in an amount equal to the Estimated SB Charge
         Payments (as calculated in accordance with Annex I hereto) received on
         such day and on any prior day that was not a Servicer Business Day for
         which a Remittance has not previously been made (taking into account
         the Weighted Average Days Outstanding in effect from time to time).
         Prior to or simultaneous with each Remittance to the General Subaccount
         of the Collection Account pursuant to this Section 4.03, the Servicer
         shall provide written notice to the Trustee of each such Remittance
         (including the exact dollar amount to be remitted).

                  (b)      On or before each January 15, the Servicer shall
         calculate the amount of any Remittance Shortfall or Remittance Excess
         attributable to the prior Reconciliation Period and (A) if a Remittance
         Shortfall exists, the Servicer shall make a supplemental wire transfer
         of immediately available funds to the General Subaccount of the
         Collection Account on the next Servicer Business Day following such
         calculation in the amount of such Remittance Shortfall, or (B) if a
         Remittance Excess exists, the Servicer shall deliver to the Issuer and
         the Trustee an Officer's Certificate requesting a payment or payments
         on succeeding Payment Dates from the Issuer equal to the amount of such
         Remittance Excess until the balance of the Remittance Excess has been
         reduced to zero. The Servicer shall deliver a written report
         substantially in the form of Exhibit E hereto (an

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         "Annual Reconciliation Report") setting forth in reasonable detail the
         calculation of any Remittance Excess or Remittance Shortfall to the
         Issuer, the Trustee and the Rating Agencies.

                  (c)      The Servicer agrees and acknowledges that it will
         remit Estimated SB Charge Payments in accordance with this Section 4.03
         without any surcharge, fee, offset, charge or other deduction except as
         set forth in Section 4.03(b) above.

                                   ARTICLE V

                           THE SECURITIZATION PROPERTY

                  SECTION 5.01. CUSTODY OF SECURITIZATION PROPERTY RECORDS. To
assure uniform quality in servicing the Securitization Property and to reduce
administrative costs, the Issuer hereby revocably appoints the Servicer, and the
Servicer hereby accepts such appointment, to act as the agent of the Issuer and
the Trustee as custodian of any and all documents and records that the Servicer
shall keep on file, in accordance with its customary procedures, relating to the
Securitization Property, including copies of the Financing Order and all
documents filed with the MPSC in connection with any Periodic Adjustment and
computational records relating thereto (collectively, the "Securitization
Property Records"), all of which are the sole property of the Issuer and which
are hereby constructively delivered to the Trustee, as pledgee of the Issuer
with respect to all Securitization Property.

                  SECTION 5.02. DUTIES OF SERVICER AS CUSTODIAN.

                  (a) Safekeeping. The Servicer shall hold the Securitization
         Property Records on behalf of the Issuer and maintain such accurate and
         complete accounts, records and computer systems pertaining to the
         Securitization Property Records on behalf of the Issuer and the Trustee
         as shall enable the Issuer to comply with this Agreement and the
         Indenture. In performing its duties as custodian the Servicer shall act
         with reasonable care, using that degree of care and diligence that the
         Servicer exercises with respect to comparable assets that the Servicer
         services for itself or, if applicable, for others. The Servicer shall
         promptly report to the Issuer and the Trustee any failure on its part
         to hold the Securitization Property Records and maintain its accounts,
         records and computer systems as herein provided and promptly take
         appropriate action to remedy any such failure. Nothing herein shall be
         deemed to require an initial review or any periodic review by the
         Issuer or the Trustee of the Securitization Property Records. The
         Servicer's duties to hold the Securitization Property Records on behalf
         of the Issuer set forth in this Section 5.02, to the extent such
         Securitization Property Records have not been previously transferred to
         a successor Servicer pursuant to Article VII, shall terminate one year
         and one day after the earlier of the date on which (i) the Servicer is
         succeeded by a successor Servicer in accordance with Article VII hereof
         and (ii) no Securitization Bonds are outstanding.

                  (b) Maintenance of and Access to Records. The Servicer shall
         maintain at all times records and accounts that will clearly identify
         SB Charges billed on behalf of the Issuer. The Servicer shall maintain
         the Securitization Property Records at 2000 2nd

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         Avenue, Detroit, Michigan 48226 or at such other office as shall be
         specified to the Issuer and the Trustee by written notice at least 30
         days prior to any change in location. The Servicer shall make available
         for inspection to the Issuer and the Trustee or their respective duly
         authorized representatives, attorneys or auditors the Securitization
         Property Records at such times during normal business hours as the
         Issuer or the Trustee shall reasonably request and which do not
         unreasonably interfere with the Servicer's normal operations. Nothing
         in this Section 5.02(b) shall affect the obligation of the Servicer to
         observe any applicable law (including any MPSC Regulations) prohibiting
         disclosure of information regarding the Customers, and the failure of
         the Servicer to provide access to such information as a result of such
         obligation shall not constitute a breach of this Section 5.02(b).

                  (c) Release of Documents. Upon instruction from the Trustee in
         accordance with the Indenture, the Servicer shall release any
         Securitization Property Records to the Trustee, the Trustee's agent or
         the Trustee's designee, as the case may be, at such place or places as
         the Trustee may designate, as soon as practicable.

                  (d) Defending Securitization Property Against Claims. The
         Servicer shall institute and maintain any action or proceeding
         necessary to compel performance by the MPSC or the State of Michigan of
         any of their obligations or duties under the Statute or the Financing
         Order, and the Servicer agrees to take such legal or administrative
         actions, including defending against or instituting and pursuing legal
         actions and appearing or testifying at hearings or similar proceedings,
         as may be reasonably necessary to block or overturn any attempts to
         cause a repeal of, modification of or supplement to the Statute or the
         Financing Order or the rights of holders of Securitization Property by
         legislative enactment, voter initiative, referendum, constitutional
         amendment or other means that would be adverse to Securitization
         Bondholders. The costs of any such action shall be payable as an
         Operating Expense in accordance with the priorities set forth in
         Section 8.02 of the Indenture. The Servicer's obligations pursuant to
         this Section 5.02 shall survive and continue notwithstanding the fact
         that the payment of Operating Expenses pursuant to Section 8.02 of the
         Indenture may be delayed (it being understood and agreed that the
         Servicer may be required to temporarily advance its own funds to
         satisfy its obligations hereunder).

         SECTION 5.03. INSTRUCTIONS; AUTHORITY TO ACT. For so long as any
Securitization Bonds remain outstanding, the Servicer shall be deemed to
have received proper instructions with respect to the Securitization Property
Records upon its receipt of written instructions signed by an Authorized Officer
of the Trustee.

         SECTION 5.04. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian shall become effective as of the Series Issuance Date
and shall continue in full force and effect until terminated pursuant to this
Section 5.04. If any Servicer shall resign as Servicer in accordance with the
provisions of this Agreement or if all of the rights and obligations of any
Servicer shall have been terminated under Section 7.01, the appointment of such
Servicer as custodian shall terminate upon appointment of a successor Servicer,
subject to the approval of the MPSC, and acceptance by such successor Servicer
of such appointment.

                                      -10-
<PAGE>   14
                                   ARTICLE VI

                                  THE SERVICER

         SECTION 6.01. REPRESENTATIONS AND WARRANTIES OF SERVICER. The Servicer
makes the following representations and warranties as of each Transfer Date,
on which the Issuer has relied and will rely in acquiring Securitization
Property and in entering into this Agreement. The representations and warranties
shall survive the execution and delivery of this Agreement, the sale of any of
the Securitization Property to the Issuer and the pledge thereof to the Trustee
pursuant to the Indenture.

                  (a) Organization and Good Standing. The Servicer is a
         corporation duly organized and in good standing under the laws of the
         state of its incorporation, with the corporate power and authority to
         own its properties and to conduct its business as such properties are
         currently owned and such business is presently conducted and to
         execute, deliver and carry out the terms of this Agreement, and has the
         power, authority and legal right to service the Securitization
         Property.

                  (b) Due Qualification. The Servicer is duly qualified to do
         business as a foreign corporation in good standing, and has obtained
         all necessary licenses and approvals in, all jurisdictions, other than
         Michigan, in which the ownership or lease of property or the conduct of
         its business (including the servicing of the Securitization Property as
         required by this Agreement) requires such qualifications, licenses or
         approvals (except where the failure to so qualify would not be
         reasonably likely to have a material adverse effect on the Servicer's
         business, operations, assets, revenues, properties or prospects or
         adversely affect the servicing of the Securitization Property).

                  (c) Power and Authority. The Servicer has the corporate power
         and authority to execute and deliver this Agreement and to carry out
         its terms; and the execution, delivery and performance of this
         Agreement have been duly authorized by the Servicer by all necessary
         corporate action.

                  (d) Binding Obligation. This Agreement constitutes a legal,
         valid and binding obligation of the Servicer enforceable against the
         Servicer in accordance with its terms subject to bankruptcy,
         receivership, insolvency, reorganization, moratorium or other laws
         affecting creditors' rights generally from time to time in effect and
         to general principles of equity (regardless of whether considered in a
         proceeding in equity or at law).

                  (e) No Violation. The consummation of the transactions
         contemplated by this Agreement and the fulfillment of the terms hereof
         will not conflict with, result in any breach of any of the terms and
         provisions of, or constitute (with or without notice or lapse of time)
         a default under, the articles of incorporation or by-laws of the
         Servicer, or any indenture, agreement or other instrument to which the
         Servicer is a party or by which it is bound; or result in the creation
         or imposition of any Lien upon any of its properties pursuant to the
         terms of any such indenture, agreement or other instrument; or violate
         any law or any order, rule or regulation applicable to the Servicer of
         any court or of any

                                      -11-
<PAGE>   15
         federal or state regulatory body, administrative agency or other
         governmental instrumentality having jurisdiction over the Servicer or
         its properties.

                  (f)      Approvals. Except for filings with the MPSC for
         adjusting the SB Charge pursuant to this Agreement, filing of financing
         statements under the Michigan UCC and Michigan UCC continuation
         filings, no approval, authorization, consent, order or other action of,
         or filing with, any court, federal or state regulatory body,
         administrative agency or other governmental instrumentality is required
         in connection with the execution and delivery by the Servicer of this
         Agreement, the performance by the Servicer of the transactions
         contemplated hereby or the fulfillment by the Servicer of the terms
         hereof, except those that have been obtained or made.

                  (g)      No Proceedings. There are no proceedings or
         investigations pending or, to the Servicer's best knowledge, threatened
         before any court, federal or state regulatory body, administrative
         agency or other governmental instrumentality having jurisdiction over
         the Servicer or its properties:

                           (i)   seeking to prevent the issuance of the
                  Securitization Bonds or the consummation of any of the
                  transactions contemplated by this Agreement or any of the
                  other Basic Documents;

                           (ii)  except as set forth in Exhibit F, seeking any
                  determination or ruling that might materially and adversely
                  affect the performance by the Servicer of its obligations
                  under, or the validity or enforceability against the Servicer
                  of, this Agreement or any of the other Basic Documents; or

                           (iii) relating to the Servicer and which might
                  materially and adversely affect the federal or state income,
                  gross receipts or franchise tax attributes of the
                  Securitization Bonds.

                  (h)      Reports and Certificates. Each report and certificate
         delivered in connection with any filing made to the MPSC by the
         Servicer on behalf of the Issuer with respect to the SB Charge or
         Periodic Adjustments will constitute a representation and warranty by
         the Servicer that each such report or certificate, as the case may be,
         is true and correct in all material respects; provided, however, that
         to the extent any such report or certificate is based in part upon or
         contains assumptions, forecasts or other predictions of future events,
         the representation and warranty of the Servicer with respect thereto
         will be limited to the representation and warranty that such
         assumptions, forecasts or other predictions of future events are
         reasonable based upon historical performance.

         SECTION 6.02. INDEMNITIES OF SERVICER; RELEASE OF CLAIMS.

                  (a)      The Servicer shall be liable in accordance herewith
         only to the extent of the obligations specifically undertaken by the
         Servicer under this Agreement.

                  (b)      The Servicer shall indemnify the Issuer and the
         Trustee (for itself and on behalf of the Securitization Bondholders)
         and each of their respective trustees, members, managers, officers,
         directors, employees and agents for, and defend and hold harmless

                                      -12-
<PAGE>   16

         each such Person from and against, any and all Losses that may be
         imposed upon, incurred by or asserted against any such Person as a
         result of:

                           (i)   the Servicer's wilful misconduct, bad faith or
                  gross negligence in the performance of its duties or
                  observance of its covenants under this Agreement or the
                  Servicer's reckless disregard of its obligations and duties
                  under this Agreement;

                           (ii)  the Servicer's breach of any of its
                  representations or warranties in this Agreement; and

                           (iii) litigation and related expenses relating to its
                  status and obligations as Servicer,

provided, however, that the Servicer shall not be liable for any Losses
resulting from the wilful misconduct or gross negligence of any Person
indemnified pursuant to this Section 6.02 (each, an "Indemnified Person") or
resulting from a breach of a representation or warranty made by such Indemnified
Person in any of the Basic Documents that gives rise to the Servicer's breach.

         Promptly after receipt by an Indemnified Person of notice of its
involvement in any action, proceeding or investigation, such Indemnified Person
shall, if a claim for indemnification in respect thereof is to be made against
the Servicer under this Section 6.02, notify the Servicer in writing of such
involvement. Failure by an Indemnified Person to so notify the Servicer shall
relieve the Servicer from the obligation to indemnify and hold harmless such
Indemnified Person under this Section 6.02 only to the extent that the Servicer
has actually been prejudiced as a result of such failure. With respect to any
action, proceeding or investigation brought by a third party for which
indemnification may be sought under this Section 6.02, the Servicer shall be
entitled to assume the defense of any such action, proceeding or investigation.
Upon assumption by the Servicer of the defense of any such action, proceeding or
investigation, the Indemnified Person shall have the right to participate in
such action or proceeding and to retain its own counsel (including local
counsel), and the Servicer shall bear the reasonable fees, costs and expenses of
such separate counsel. The Indemnified Person shall not settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought under this Section 6.02 (whether or not the Servicer is an actual or
potential party to such claim or action) unless the Servicer agrees in writing
to such settlement, compromise or consent and such settlement, compromise or
consent includes an unconditional release of the Servicer from all liability
arising out of such claim, action, suit or proceeding.

                  (c)      If any action, claim, demand or proceeding (including
         any governmental investigation) is brought or asserted against an
         Indemnified Person entitled to any indemnification provided for under
         this Section 6.02, such Indemnified Person shall promptly notify the
         Servicer in writing; provided, however, that failure to give such
         notification shall not affect the indemnification provided hereunder
         except to the extent the Servicer has been actually prejudiced as a
         result of such failure.

                                      -13-
<PAGE>   17

                  (d)      The Servicer shall indemnify the Trustee and its
         respective officers, directors and agents for, and defend and hold
         harmless each such Person from and against, any and all Losses that may
         be imposed upon, incurred by or asserted against any such Person as a
         result of the acceptance or performance of the trusts and duties
         contained herein and in the Indenture, except to the extent that any
         such Loss is due to the wilful misconduct, bad faith or gross
         negligence of the Trustee; provided, however, that the foregoing
         indemnity is extended to the Trustee solely in its individual capacity
         and not for the benefit of the Securitization Bondholders or any other
         Person. Such amounts with respect to the Trustee shall be deposited and
         distributed in accordance with the Indenture.

                  (e)      The Servicer's indemnification obligations under
         Section 6.02(b) and (d) for events occurring prior to the removal or
         resignation of the Trustee or the termination of this Agreement shall
         survive the resignation or removal of the Trustee or the termination of
         this Agreement and shall include reasonable costs, fees and expenses of
         investigation and litigation (including the Issuer's and the Trustee's
         reasonable attorneys' fees and expenses).

                  (f)      Except to the extent expressly provided for in the
         Basic Documents (including the Servicer's claims with respect to the
         Servicing Fees and the Seller's claim for payment of the purchase price
         of the Securitization Property), the Servicer hereby releases and
         discharges the Issuer (including its Member, Managers, officers,
         employees and agents, if any), and the Trustee (including its
         respective officers, directors and agents) (collectively, the "Released
         Parties") from any and all actions, claims and demands whatsoever,
         which the Servicer shall or may have against any such Person relating
         to the Securitization Property or the Servicer's activities with
         respect thereto other than any actions, claims and demands arising out
         of the wilful misconduct, bad faith or gross negligence of the Released
         Parties.

         SECTION 6.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SERVICER. Any Person:

                  (a) into which the Servicer may be merged or consolidated and
         which succeeds to all or the major part of the electric distribution
         business of the Servicer,

                  (b) which results from the division of the Servicer into two
         or more Persons and which succeeds to all or the major part of the
         electric distribution business of the Servicer,

                  (c) which may result from any merger or consolidation to which
         the Servicer shall be a party and which succeeds to all or the major
         part of the electric distribution business of the Servicer,

                  (d) which may succeed to the properties and assets of the
         Servicer substantially as a whole and which succeeds to all or the
         major part of the electric distribution business of the Servicer, or

                  (e) which may otherwise succeed to all or the major part of
         the electric distribution business of the Servicer,

                                      -14-
<PAGE>   18

which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Servicer under this Agreement, shall be the
successor to the Servicer hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement; provided,
however, that:

                           (i)   immediately after giving effect to such
                  transaction, no representation or warranty made pursuant to
                  Section 6.01 shall have been breached and no Servicer Default,
                  and no event that, after notice or lapse of time, or both,
                  would become a Servicer Default, shall have occurred and be
                  continuing;

                           (ii)  the Servicer shall have delivered to the
                  Issuer, the Trustee and the Rating Agencies an Officer's
                  Certificate and an Opinion of Counsel each stating that such
                  consolidation, merger or succession and such agreement of
                  assumption comply with this Section 6.03 and that all
                  conditions precedent, if any, provided for in this Agreement
                  relating to such transaction have been complied with;

                           (iii) the Servicer shall have delivered to the
                  Issuer, the Trustee and the Rating Agencies an Opinion of
                  Counsel either:

                                 (A) stating that, in the opinion of such
                           counsel, all filings to be made by the Servicer,
                           including Michigan UCC filings, that are necessary
                           fully to preserve and protect the interests of the
                           Trustee in the Securitization Property have been
                           executed and filed and reciting the details of such
                           filings, or

                                 (B) stating that, in the opinion of such
                           counsel, no such action is necessary to preserve and
                           protect such interests; (iv) the Rating Agencies
                           shall have received prior written notice of such
                           transaction; and

                           (v)   the Servicer shall have delivered to the
                  Issuer, the Trustee and the Rating Agencies an opinion of
                  independent tax counsel (as selected by, and in form and
                  substance reasonably satisfactory to, the Servicer, and which
                  may be based on a ruling from the Internal Revenue Service) to
                  the effect that, for federal income tax purposes, such
                  consolidation or merger will not result in a material adverse
                  federal income tax consequence to the Servicer, the Issuer,
                  the Trustee or the then existing Securitization Bondholders.

The Servicer shall not consummate any transaction referred to in subclauses (a),
(b), (c), (d) or (e) above except upon execution of the above described
agreement of assumption and compliance with subclauses (i), (ii), (iii), (iv)
and (v) above. When any Person acquires the properties and assets of the
Servicer substantially as a whole and becomes the successor to the Servicer in
accordance with the terms of this Section 6.03, then upon the satisfaction of
all of the other conditions of this Section 6.03, the Servicer shall
automatically and without further notice be released from its obligations
hereunder.

                                      -15-
<PAGE>   19

         SECTION 6.04. ASSIGNMENT OF SERVICER'S OBLIGATIONS. The Servicer may
not assign its obligations hereunder to any successor unless either (i) the
Rating Agency Condition and any other condition specified in the Financing Order
have been satisfied, or (ii) the Servicer is replaced by a successor pursuant to
Section 6.03 hereof.

         SECTION 6.05. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. The
Servicer shall not be liable to the Issuer or the Trustee, except as provided
under this Agreement, for any action taken or for refraining from the taking of
any action pursuant to this Agreement or for errors in judgment; provided,
however, that this provision shall not protect the Servicer against any
liability that would otherwise be imposed by reason of wilful misconduct, bad
faith or gross negligence in the performance of its duties or by reason of
reckless disregard of obligations and duties under this Agreement. The Servicer
and any director, officer, employee or agent of the Servicer may rely in good
faith on the advice of counsel reasonably acceptable to the Trustee or on any
document of any kind, prima facie properly executed and submitted by any Person,
respecting any matters arising under this Agreement.

         Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action that is not
incidental to its duties to service the Securitization Property in accordance
with this Agreement or related to its obligation to pay indemnification.

         SECTION 6.06. DETROIT EDISON NOT TO RESIGN AS SERVICER. Subject to the
provisions of Sections 6.03 and 6.04, Detroit Edison shall not resign from the
obligations and duties imposed on it as Servicer under this Agreement except
upon a determination that the performance of its duties under this Agreement
shall no longer be permissible under applicable law. Notice of any such
determination permitting the resignation of Detroit Edison shall be communicated
to the Issuer, the Trustee and each Rating Agency at the earliest practicable
time (and, if such communication is not in writing, shall be confirmed in
writing at the earliest practicable time), and any such determination shall be
evidenced by an Opinion of Counsel to such effect delivered to the Issuer and
the Trustee concurrently with or promptly after such notice. No such resignation
shall become effective until a successor Servicer has assumed the servicing
obligations and duties hereunder of the Servicer in accordance with Section
7.04.

         SECTION 6.07. SERVICING FEE. The Issuer agrees to pay the Servicer the
Servicing Fee with respect to all Series of Securitization Bonds. For so long as
Detroit Edison is the Servicer, the Servicing Fee shall be five one-hundredths
of one percent (0.05%) of the initial Principal Balance of the Securitization
Bonds per annum payable by the Issuer in semiannual installments in arrears on
each Payment Date pursuant Section 8.02 of the Indenture, by wire transfer of
immediately available funds from the Collection Account to an account designated
by the Servicer. Any portion of the Servicing Fee not paid on such date shall be
added to the Servicing Fee payable on the subsequent Payment Date. The foregoing
fees constitute a fair and reasonable price for the obligations to be performed
by the Servicer.

         SECTION 6.08. SERVICER EXPENSES. Except as otherwise expressly provided
herein, the Servicer shall be required to pay all expenses incurred by the
Servicer in performing its activities hereunder, including fees and
disbursements of independent accountants and counsel,

                                      -16-
<PAGE>   20

taxes imposed on the Servicer and expenses incurred in connection with reports
to Securitization Bondholders and shall not be entitled to any additional
payment or reimbursement therefor.

         SECTION 6.09. SUBSERVICING. The Servicer may at any time appoint a
subservicer to perform all or any portion of its obligations as Servicer
hereunder; provided, however, that unless such subservicer is an Affiliate of
the Servicer the Rating Agency Condition shall have been satisfied in connection
therewith; provided further that the Servicer shall notify Moody's of any
appointment of an Affiliate of the Servicer, other than DTE Energy Company, as a
subservicer; and provided further that the Servicer shall remain obligated and
be liable to the Issuer, the Trustee and the Securitization Bondholders for the
servicing and administering of the Securitization Property in accordance with
the provisions hereof without diminution of such obligation and liability by
virtue of the appointment of such subservicer and to the same extent and under
the same terms and conditions as if the Servicer alone were servicing and
administering the Securitization Property. The fees and expenses of the
subservicer shall be as agreed between the Servicer and its subservicer from
time to time, and none of the Issuer, the Trustee or the Securitization
Bondholders shall have any responsibility therefor. Any such appointment shall
not constitute a Servicer resignation under Section 6.06.

         SECTION 6.10. NO SERVICER ADVANCES. The Servicer shall not make any
advances of interest on or principal of the Securitization Bonds.

         SECTION 6.11. PROTECTION OF TITLE. The Servicer shall take such actions
and execute and file such filings and cause to be executed and filed such
filings, all in such manner and in such places as may be required by law to
fully preserve, maintain and protect the interests of the Issuer and the Trustee
in the Securitization Property, including all filings required under the
Michigan UCC relating to the transfer of ownership of the Securitization
Property by the Seller to the Issuer or the security interest granted by the
Issuer to the Trustee in the Securitization Property. The Servicer shall deliver
(or cause to be delivered) to the Issuer and the Trustee file-stamped copies of,
or filing receipts for, any document filed as provided above, as soon as
available following such filing.

                                  ARTICLE VII

                                     DEFAULT

         SECTION 7.01. SERVICER DEFAULT. If any one of the following events
(each a "Servicer Default") shall occur and be continuing:

                  (a) any failure by the Servicer to remit to the Trustee, on
         behalf of the Issuer, any required remittance that continues unremedied
         for a period of five Business Days after written notice of such failure
         is received by the Servicer from the Issuer or the Trustee; or

                  (b) any failure by the Servicer duly to observe or perform in
         any material respect any other covenant or agreement of the Servicer
         set forth in this Agreement, which failure:

                                      -17-
<PAGE>   21

                           (i)  materially and adversely affects the
                  Securitization Property or the rights of the Securitization
                  Bondholders, and

                           (ii) continues unremedied for a period of 60 days
                  after written notice of such failure has been given to the
                  Servicer by the Issuer or by the Trustee or after discovery of
                  such failure by an officer of the Servicer; or

                  (c)      any representation or warranty made by the Servicer
         in this Agreement proves to have been incorrect when made, which has a
         material adverse effect on the Issuer or the Securitization Bondholders
         and which material adverse effect continues unremedied for a period of
         60 days after the date on which written notice thereof has been given
         to the Servicer by the Issuer or the Trustee or after discovery of such
         failure by an officer of the Servicer, as the case may be;

                  (d)      an Insolvency Event occurs with respect to the
         Servicer; or

                  (e)      an Event of Investment Ineligibility under the trade
         receivables purchase and sale agreement, dated as of February 28, 1989,
         as amended and restated, among Detroit Edison, as seller, Corporate
         Asset Funding Company, Inc. and Citibank, N.A. and Citicorp North
         America, Inc., individually and as agent, and/or an Event of
         Termination under the trade receivables purchase and sale agreement
         dated as of February 28, 1989, as amended and restated, among Detroit
         Edison, as seller, Citibank, N.A. and Citicorp North America, Inc.,
         individually and as agent;

then, and in each and every case, so long as the Servicer Default shall not have
been remedied, the Trustee, with the consent of the Holders of a majority of the
outstanding principal amount of the Securitization Bonds of all Series, by
notice then given in writing to the Servicer (a "Termination Notice") may
terminate all the rights and obligations (other than the indemnification
obligations set forth in Section 6.02 hereof and the obligation under Section
7.04 to continue performing its functions as Servicer until a successor Servicer
is appointed) of the Servicer under this Agreement. In addition, upon a Servicer
Default, the Issuer and the Trustee shall be entitled to apply to the MPSC or
any court of competent jurisdiction for sequestration and payment to the Trustee
of revenues arising with respect to the Securitization Property.

         On or after the receipt by the Servicer of a Termination Notice, all
authority and power of the Servicer under this Agreement, whether with respect
to the Securitization Property, the related SB Charge or otherwise, shall, upon
appointment of a successor Servicer pursuant to Section 7.04, without further
action, pass to and be vested in such successor Servicer and, without
limitation, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the predecessor Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
Termination Notice, whether to complete the transfer of the Securitization
Property Records and related documents, or otherwise. The predecessor Servicer
shall cooperate with the successor Servicer, the Trustee and the Issuer in
effecting the termination of the responsibilities and rights of the predecessor
Servicer under this Agreement, including the transfer to the successor Servicer
for administration by it of all cash amounts that shall at the time be held by
the predecessor Servicer for remittance, or shall thereafter be

                                      -18-
<PAGE>   22

received by it with respect to the Securitization Property or the related SB
Charge. As soon as practicable after receipt by the Servicer of such Termination
Notice, the Servicer shall deliver the Securitization Property Records to the
successor Servicer. All reasonable costs and expenses (including attorneys fees
and expenses) incurred in connection with transferring the Securitization
Property Records to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section 7.01 shall be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses. Termination of Detroit Edison as Servicer shall not
terminate Detroit Edison's rights or obligations under the Sale Agreement.

         SECTION 7.02. NOTICE OF SERVICER DEFAULT. The Servicer shall deliver to
the Issuer, the Trustee and each Rating Agency promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice in an Officer's Certificate of any event or circumstance which,
with the giving of notice or the passage of time, would become a Servicer
Default under Section 7.01.

         SECTION 7.03. WAIVER OF PAST DEFAULTS. The Trustee, with the consent of
Holders of the majority of the outstanding principal amount of the
Securitization Bonds of all Series, may waive in writing any default by the
Servicer in the performance of its obligations hereunder and its consequences,
except a default in making any required Remittances to the Trustee in accordance
with this Agreement. Upon any such waiver of a past default, such default shall
cease to exist, and any Servicer Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto.

         SECTION 7.04. APPOINTMENT OF SUCCESSOR.

                  (a)      Upon the Servicer's receipt of a Termination Notice
         pursuant to Section 7.01 or the Servicer's resignation in accordance
         with the terms of this Agreement, the predecessor Servicer shall
         continue to perform its functions as Servicer under this Agreement and
         shall be entitled to receive the requisite portion of the Servicing
         Fees, until a successor Servicer has assumed in writing the obligations
         of the Servicer hereunder pursuant to an assumption agreement or
         pursuant to clause (iii) below. In the event of the Servicer's removal
         or resignation hereunder, the Trustee, as assignee of the Issuer, may
         appoint a successor Servicer, with the consent of the Holders of a
         majority of the outstanding principal amount of the Securitization
         Bonds of all Series, and the successor Servicer shall accept its
         appointment by a written assumption in form acceptable to the Issuer
         and the Trustee. If, within 30 days after the delivery of the
         Termination Notice, a new Servicer has not been appointed and accepted
         such appointment, the Trustee may petition the MPSC or a court of
         competent jurisdiction to appoint a successor Servicer under this
         Agreement. A Person shall qualify as a successor Servicer only if:

                           (i)   such Person is permitted to perform the duties
                  of the Servicer pursuant to the Statute, the MPSC Regulations,
                  the Financing Order and this Agreement;

                                      -19-
<PAGE>   23

                           (ii)  the Rating Agency Condition has been satisfied;
                  and

                           (iii) such Person enters into a servicing agreement
                  with the Issuer having substantially the same provisions as
                  this Agreement.

                  (b)      Upon appointment, the successor Servicer shall be the
         successor in all respects to the predecessor Servicer under this
         Agreement and shall be subject to all the responsibilities, duties and
         liabilities arising thereafter relating thereto placed on the
         predecessor Servicer and shall be entitled to the Servicing Fee and all
         the rights granted to the predecessor Servicer by the terms and
         provisions of this Agreement.

                  (c)      The successor Servicer may resign only if it is
         prohibited from serving as such by applicable law.

         SECTION 7.05. COOPERATION WITH SUCCESSOR. The Servicer covenants and
agrees with the Issuer that it will, on an ongoing basis, cooperate with the
successor Servicer and provide whatever information is, and take whatever
actions are, reasonably necessary to assist the successor Servicer in performing
its obligations hereunder.

                                  ARTICLE VIII

                            MISCELLANEOUS PROVISIONS

         SECTION 8.01. AMENDMENT. This Agreement may be amended by the Servicer
and the Issuer, with the consent of the Trustee and the satisfaction of the
Rating Agency Condition. Promptly after the execution of any such amendment or
consent, the Issuer shall furnish written notification of the substance of such
amendment or consent to each of the Rating Agencies.

         Prior to the execution of any amendment to this Agreement, the Issuer
and the Trustee shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement and the most recent Opinion of Counsel referred to in Section 3.05.
The Issuer and the Trustee may, but shall not be obligated to, enter into any
such amendment which affects their own rights, duties or immunities under this
Agreement or otherwise.

         SECTION 8.02. MAINTENANCE OF ACCOUNTS AND RECORDS.

                  (a)      The Servicer shall maintain accounts and records as
         to the Securitization Property accurately and in accordance with its
         standard accounting procedures and in sufficient detail to permit
         reconciliation between Estimated SB Charge Payments and Deemed SB
         Charge Payments.

                  (b)      The Servicer shall permit the Trustee and its agents
         at any time during normal business hours, upon reasonable notice to the
         Servicer and to the extent it does not unreasonably interfere with the
         Servicer's normal operations, to inspect, audit and make copies of and
         abstracts from the Servicer's records regarding the Securitization
         Property and the SB Charge. Nothing in this Section 8.02(b) shall
         affect the obligation of the Servicer to observe any
         applicable law (including any MPSC Regulation) prohibiting

                                      -20-
<PAGE>   24

         disclosure of information regarding the Customers, and the failure of
         the Servicer to provide access to such information as a result of such
         obligation shall not constitute a breach of this Section 8.02(b).

         SECTION 8.03. NOTICES. Unless otherwise specifically provided herein,
all notices, directions, consents and waivers required under the terms and
provisions of this Agreement shall be in English and in writing, and any such
notice, direction, consent or waiver may be given by United States first-class
mail, reputable overnight courier service, facsimile transmission or electronic
mail (confirmed by telephone, United States first-class mail or reputable
overnight courier service in the case of notice by facsimile transmission or
electronic mail) or any other customary means of communication, and any such
notice, direction, consent or waiver shall be effective when delivered or
transmitted, or if mailed, five days after deposit in the United States
first-class mail with proper postage for first-class mail prepaid,

                  (a) in the case of the Servicer, at The Detroit Edison
         Company, 2000 2nd Avenue, Detroit, Michigan 48226-1279, Attention:
         Corporate Secretary;

                  (b) in the case of the Issuer, at The Detroit Edison
         Securitization Funding LLC, 2000 2nd Avenue, 937 WCB, Detroit, Michigan
         48226-1279, Attention: Corporate Secretary;

                  (c) in the case of the Trustee, at the address provided for
         notices or communications to the Trustee in the Indenture;

                  (d) in the case of Moody's, at Moody's Investors Service,
         Inc., ABS Monitoring Department, 99 Church Street, New York, New York
         10007;

                  (e) in the case of Standard & Poor's, at Standard & Poor's
         Ratings Services, 55 Water Street, New York, New York 10041, Attention:
         Asset Backed Surveillance Department; and

                  (f) in the case of Fitch, at Fitch, Inc., 1 State Street
         Plaza, New York, New York 10004, Attention: ABS Surveillance;

or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.

         SECTION 8.04. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Servicer, the Issuer and the
Trustee, on behalf of itself and the Securitization Bondholders, and nothing in
this Agreement, whether express or implied, shall be construed to give to any
other Person any legal or equitable right, remedy or claim in any Collateral or
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.

         SECTION 8.05. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any

                                      -21-
<PAGE>   25

such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

         SECTION 8.06. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

         SECTION 8.07. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.

         SECTION 8.08. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN, WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         SECTION 8.09. ASSIGNMENT TO THE TRUSTEE.

                  (a) The Servicer hereby acknowledges and consents to any
         pledge, assignment and grant of a security interest by the Issuer to
         the Trustee pursuant to the Indenture for the benefit of the
         Securitization Bondholders of all right, title and interest of the
         Issuer in, to and under the Securitization Property owned by the Issuer
         and the proceeds thereof and the assignment of any or all of the
         Issuer's rights hereunder to the Trustee.

                  (b) In no event shall the Trustee have any liability for the
         representations, warranties, covenants, agreements or other obligations
         of the Issuer hereunder or in any of the certificates, notices or
         agreements delivered pursuant hereto, as to all of which recourse shall
         be had solely to the assets of the Issuer.

         SECTION 8.10. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement or the Indenture, the Servicer hereby covenants
and agrees that it shall not, prior to the date which is one year and one day
after the termination of the Indenture and the payment in full of the
Securitization Bonds, any other amounts owed under the Indenture, including,
without limitation, any amounts owed to third-party credit enhancers, and any
amounts owed by the Issuer under any Interest Rate Swap Agreement, acquiesce in,
petition or otherwise invoke or cause the Issuer to invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Issuer under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or any substantial part of
the property of the Issuer, or ordering the winding up or liquidation of the
affairs of the Issuer.

         SECTION 8.11. TERMINATION. This Agreement shall terminate when all
Securitization Bonds have been retired, redeemed or defeased in full in
accordance with the Indenture.

         SECTION 8.12. INTER-CREDITOR AGREEMENT. The Issuer and the Servicer are
parties to an inter-creditor agreement with the parties referred to in Section
7.01(e). So long as such inter-

                                      -22-
<PAGE>   26

creditor agreement remains in effect, to the extent of inconsistencies, if any,
herewith, the inter-creditor agreement shall govern.

                                      -23-
<PAGE>   27

         IN WITNESS WHEREOF, the parties hereto have caused this Securitization
Property Servicing Agreement to be duly executed by their respective officers as
of the day and year first above written.

                                 THE DETROIT EDISON SECURITIZATION FUNDING LLC,
                                      as Issuer

                                 By: /s/ Kathleen Hier
                                     -----------------------------------------
                                 Name:  Kathleen Hier
                                 Title: Treasurer

                                 THE DETROIT EDISON COMPANY,
                                      as Servicer

                                 By: /s/ N.A. Khouri
                                     -----------------------------------------
                                 Name:  N.A. Khouri
                                 Title: Vice President and Treasurer

                                 Acknowledged and Accepted:

                                 THE BANK OF NEW YORK,
                                      as Trustee

                                 By: /s/ Mauro Palladino
                                     -----------------------------------------
                                 Name:  Mauro Palladino
                                 Title: Vice President

                                      S-1
<PAGE>   28

                                    EXHIBIT A

                            CERTIFICATE OF COMPLIANCE

         The undersigned hereby certifies that he/she is the duly elected and
acting ________ of The Detroit Edison Company, as servicer (the "Servicer")
under the Securitization Property Servicing Agreement, dated as of ________ (the
"Servicing Agreement"), between the Servicer and The Detroit Edison
Securitization Funding LLC (the "Issuer"), and further certifies on behalf of
the Servicer that:

         1. A review of the activities of the Servicer and of its performance
under the Servicing Agreement during the twelve months ended December 31, _____
has been made under the supervision of the undersigned pursuant to Section 3.03
of the Servicing Agreement; and

         2. To the undersigned's knowledge, based on such review, the Servicer
has fulfilled all of its material obligations in all material respects under the
Servicing Agreement throughout the twelve months ended December 31, ___, except
as listed on Annex A hereto.

         Executed as of this ___ day of ________.

                                         By:
                                             -----------------------------------
                                         Name:
                                         Title:

<PAGE>   29
                                                            ANNEX A TO EXHIBIT A

                            LIST OF SERVICER DEFAULTS

Nature of Default                                  Status

<PAGE>   30
                                                                       EXHIBIT B

                   FORM OF ROUTINE TRUE-UP ADJUSTMENT REQUEST

DATE:

Executive Secretary
Michigan Public Service Commission
6545 Mercantile Way, Suite 7
Lansing, MI  48911

Re:  Case No. U-12478

Dear __________________:

As required by Section 10k(3) of 2000 PA 142 and pursuant to the Order dated
November 2, 2000 in Case No. U-12478 as clarified by an Order dated January 4,
2001 ("Financing Order"), The Detroit Edison Company ("Company") as Servicer (or
any successor Servicer) of the Securitization Bonds, Series 2001-1
("Securitization Bonds"), and on behalf of the trustee as assignee of The
Detroit Edison Securitization Funding LLC hereby requests an adjustment to the
Securitization Bond Charge ("SB Charge") and the securitization bond tax charge
(the "Tax Charge").

This proposed adjustment is intended to satisfy Section 10k(3) and the Financing
Order by ensuring that the SB Charge will recover amounts sufficient to timely
provide all payments of debt service and other required amounts and charges in
connection with the Securitization Bonds as it [increases] [decreases] the
charges due to [reduced] [increased] projected energy consumption levels
[Explain other facts]. The proposed adjustment to the Tax Charge will ensure
recovery of the associated tax liability.

Using the formula approved by the Commission in the Financing Order, this filing
modifies the variables used in the SB Charge and provides the resulting adjusted
SB Charge and Tax Charge. Attachment A shows, among other things, the revised
assumptions and values for each of the variables used in calculating the
proposed adjusted SB Charge, and Tax Charge, which is _______ (mills/kWh) and
_______ (mills/kWh) respectively.

In accordance with the Financing Order, the Company requests that the Commission
review and approve, on an expedited basis, the arithmetic computations set forth
Attachment A. Assuming such review and approval, these changes shall be
effective no later than [insert date 45 days after letter date].

Respectfully submitted,

Attachment

<PAGE>   31
                                                       ATTACHMENT A TO EXHIBIT B

Table I below shows the current assumptions for each of the variables used in
the SB Charge and Tax Charge calculation.

                                     TABLE I
                           INPUT VALUES FOR SB CHARGE

a)  Most recent payment date for which payment data is available ("Measure
    Date"):
b)  Last payment date related to this remittance period ("Target Date"):
c)  Annual ongoing transaction expenses to be paid through Target Date:
d)  Unpaid ongoing transaction expenses following payments on Measure Date:
e)  Required annual overcollateralization amount:
f)  Overcollateralization account deficiency following payments on Measure Date:
g)  Capital account deficiency following payments on Measure Date:
h)  Expected annual principal payments through Target Date:
i)  Unpaid principal payments following payments on Measure Date:
j)  Interest payments on outstanding principal to be paid through Target Date:
k)  Unpaid interest following payments on Measure Date:
l)  Total annual revenue requirement (sum of c. through k. above):
m)  Amounts on deposit in reserve account following payments on Measure Date:
n)  Collections expected to be realized in this remittance period from prior SB
    Charge:
o)  Required Debt Service (l. - m. - n.):
p)  KWh consumption on which SB Charge is expected to be billed and collected in
    this remittance period:
q)  Federal corporate income tax rate:
r)  Michigan single business tax rate:
s)  Adjusted SB Charge ((cent)/kWh) (o. / p.):
t)  Adjusted Tax Charge:

                                    TABLE II
            INPUT VALUES FOR WEIGHTED AVERAGE DAYS SALES OUTSTANDING

a)  Weighted Average Days Sales Outstanding ("WAD"):
b)  WAD: Percent of billed amounts collected in current month:
c)  WAD: Percent of billed amounts collected in second month after billing:
d)  WAD: Percent of billed amounts collected in third month after billing:
e)  WAD: Percent of billed amounts collected in fourth month after billing:
f)  WAD: Percent of billed amounts collected in fifth month after billing:
g)  Annual charge-offs for most recent reconciliation period:

<PAGE>   32
                                                                       EXHIBIT C

                      FORM OF MONTHLY SERVICER CERTIFICATE

         Pursuant to Section 4.01(d)(ii) of the Securitization Property
Servicing Agreement, dated as of ________ (the "Agreement"), between The Detroit
Edison Company, as servicer (the "Servicer") and The Detroit Edison
Securitization Funding LLC, the Servicer does hereby certify as follows:

         Capitalized terms used herein have their respective meanings as set
forth in the Agreement.

For the Monthly Period:_____________

1.       BILLINGS:

a)       Monthly kWh Consumption:
b)       Applicable SB Charge:
c)       Total SB Charge Amount Invoiced this Month:
d)       Cumulative SB Charge Amount Invoiced this Remittance Period:

2.       REMITTANCES:

a)       Weighted Average Days Outstanding:
b)       Total Amount Remitted this Month:
c)       Cumulative Amount Remitted this Remittance Period:

3.       BALANCES ON SUBACCOUNTS (AT END OF MONTHLY PERIOD):

a)       Collection Account Balance:
b)       Reserve Subaccount Balance:
c)       Series Overcollateralization Subaccount Balance:
d)       Series Capital Subaccount Balance:

Executed as of this __ day of __________.

                                         THE DETROIT EDISON COMPANY
                                         as Servicer

                                         By:
                                             -----------------------------------
                                             Name:
                                             Title:

<PAGE>   33
                                                                       EXHIBIT D

                     FORM OF SEMIANNUAL SERVICER CERTIFICATE

         Pursuant to Section 4.01(d)(iii) of the Securitization Property
Servicing Agreement, dated as of ________ (the "Agreement"), between The Detroit
Edison Company, as servicer and The Detroit Edison Securitization Funding LLC,
the Servicer does hereby certify, for the current Payment Date, as follows:

         Capitalized terms used herein have their respective meanings as set
forth in the Agreement. References herein to certain sections and subsections
are references to the respective sections of the Agreement.

1.       ESTIMATED SB CHARGE PAYMENTS AND AGGREGATE AMOUNTS AVAILABLE FOR THE
         CURRENT PAYMENT DATE:

         i.       Amount Remitted [Month] [Year]
         ii.      Amount Remitted [Month] [Year]
         iii.     Amount Remitted [Month] [Year]
         iv.      Amount Remitted [Month] [Year]
         v.       Amount Remitted [Month] [Year]
         vi.      Amount Remitted [Month] [Year]
         VII.     TOTAL AMOUNT REMITTED FOR THIS PERIOD (SUM OF I. THROUGH VI.
                  ABOVE):
         viii.    Net Earnings on Collection Account:
         ix.      Expenses Paid to Date:
         X.       GENERAL SUBACCOUNT BALANCE (SUM OF VII. AND VIII. ABOVE MINUS
                  IX.):
         xi.      Reserve Subaccount Balance
         xii.     Overcollateralization Subaccount Balance
         xiii.    Capital Subaccount Balance
         XIV.     COLLECTION ACCOUNT BALANCE (SUM OF X. THROUGH XIII. ABOVE):

2.        OUTSTANDING PRINCIPAL BALANCE AS OF PRIOR PAYMENT DATE BY TRANCHE:

         i.       Class A-1 Principal Balance Outstanding Securitization Bond:
         ii.      Class A-2 Principal Balance Outstanding Securitization Bond:
         iii.     Class A-3 Principal Balance Outstanding Securitization Bond:
         iv.      Class A-4 Principal Balance Outstanding Securitization Bond:
         v.       Class A-5 Principal Balance Outstanding Securitization Bond:
         vi.      Class A-6 Principal Balance Outstanding Securitization Bond:
         VII.     TOTAL SECURITIZATION BOND PRINCIPAL BALANCE:

<PAGE>   34

3.       REQUIRED FUNDING/PAYMENTS AS OF CURRENT PAYMENT DATE:

         A) PROJECTED PRINCIPAL BALANCES AND PAYMENTS

<TABLE>
<CAPTION>

                                                                          Projected
                                                                      Principal Balance               Principal Due
                                                                      -----------------               -------------
<S>                                                                <C>                              <C>
         i.       Class A-1 Securitization Bond
         ii.      Class A-2 Securitization Bond
         iii      Class A-3 Securitization Bond
         iv.      Class A-4 Securitization Bond
         v.       Class A-5 Securitization Bond
         vi.      Class A-6 Securitization Bond
         VII.     TOTAL PROJECTED PRINCIPAL AMOUNT:
</TABLE>

         B) REQUIRED INTEREST PAYMENTS

<TABLE>
<CAPTION>

                                                                Securitization Bond          Days in          Interest
                                                                   Interest Rate        Applicable Period        Due
                                                                   -------------        -----------------        ---
<S>                                                            <C>                     <C>                   <C>
         i.       Class A-1 Securitization Bond
         ii.      Class A-2 Securitization Bond
         iii.     Class A-3 Securitization Bond
         iv.      Class A-4 Securitization Bond
         v.       Class A-5 Securitization Bond
         vi.      Class A-6 Securitization Bond
         VII.     TOTAL REQUIRED INTEREST AMOUNT:
</TABLE>

         C) PROJECTED SUBACCOUNT PAYMENTS AND LEVELS

<TABLE>
<CAPTION>

        Subaccount                                                   Projected Level             Funding Required
        ----------                                                   ---------------             ----------------
<S>                                                                <C>                          <C>
         i.       Capital Subaccount:
         ii.      Overcollateralization Subaccount:
         III.     TOTAL SUBACCOUNT PAYMENTS AND LEVELS:
</TABLE>

4.       ALLOCATION OF REMITTANCES AS OF CURRENT PAYMENT DATE PURSUANT TO
         SECTION 8.02 OF INDENTURE:

         A) SEMIANNUAL EXPENSES

                  Net Expense Amount (Payable on current Payment Date)
         i.       Trustee Fees and Expenses:
         ii.      Semiannual Total of Servicing Fee:
         iii.     Semiannual Administration Fee:
         iv.      Operating Expenses (subject to $100,000 cap):
         V.       TOTAL EXPENSES:

<PAGE>   35

         B) SEMIANNUAL INTEREST

                                                                    Aggregate
                                                                    ---------
         i.       Class A-1 Securitization Bond
         ii.      Class A-2 Securitization Bond
         iii      Class A-3 Securitization Bond
         iv.      Class A-4 Securitization Bond
         v.       Class A-5 Securitization Bond
         vi.      Class A-6 Securitization Bond
         VII.     TOTAL SEMIANNUAL INTEREST:

         C) SEMIANNUAL PRINCIPAL

                                                                    Aggregate
                                                                    ---------
         i.       Class A-1 Securitization Bond
         ii.      Class A-2 Securitization Bond
         iii      Class A-3 Securitization Bond
         iv.      Class A-4 Securitization Bond
         v.       Class A-5 Securitization Bond
         vi.      Class A-6 Securitization Bond
         VII.     TOTAL SEMIANNUAL PRINCIPAL:

         D) OTHER PAYMENTS

         i.       Operating Expenses (in excess of $100,000):
         ii.      Funding of Series Capital Subaccount (to required amount):
         iii.     Funding of Series Overcollateralization Subaccount (to
                  required level):
         iv.      Deposits to Reserve Subaccount:

5.        OUTSTANDING PRINCIPAL BALANCE AND CoLLECTION ACCOUNT BALANCE AS OF
          CURRENT PAYMENT DATE (AFTER GIVING EFFECT TO PAYMENTS TO BE MADE ON
          SUCH DISTRIBUTION DATE):

         A) PRINCIPAL BALANCE OUTSTANDING:

         i.       Class A-1 Principal Balance Outstanding Securitization Bond:
         ii.      Class A-2 Principal Balance Outstanding Securitization Bond:
         iii.     Class A-3 Principal Balance Outstanding Securitization Bond:
         iv.      Class A-4 Principal Balance Outstanding Securitization Bond:
         v.       Class A-5 Principal Balance Outstanding Securitization Bond:
         vi.      Class A-6 Principal Balance Outstanding Securitization Bond:
         VII.     TOTAL SECURITIZATION BOND PRINCIPAL BALANCE:

         B) COLLECTION ACCOUNT BALANCES OUTSTANDING:

         i.       Series Capital Subaccount:
         ii.      Series Overcollateralization Subaccount:
         iii.     Reserve Subaccount:
         IV.      TOTAL SUBACCOUNT AMOUNT:

<PAGE>   36

6.       SUBACCOUNT BALANCES AS OF CURRENT PAYMENT DATE (IF APPLICABLE, PURSUANT
         TO SECTION 8.02 OF INDENTURE):

         i.       Series Capital Subaccount:
         ii.      Series Overcollateralization Subaccount:
         iii.     Reserve Subaccount:
         IV.      TOTAL SUBACCOUNT BALANCES:

7.       SHORTFALLS IN INTEREST AND PRINCIPAL PAYMENTS AS OF CURRENT PAYMENT
         DATE (IF APPLICABLE):

         A) SEMIANNUAL INTEREST SHORTFALL

         i.       Class A-1 Securitization Bond
         ii.      Class A-2 Securitization Bond
         iii      Class A-3 Securitization Bond
         iv.      Class A-4 Securitization Bond
         v.       Class A-5 Securitization Bond
         vi.      Class A-6 Securitization Bond
         VII.     TOTAL SEMIANNUAL INTEREST SHORTFALL:

         B) SEMIANNUAL PRINCIPAL SHORTFALL

         i.       Class A-1 Securitization Bond
         ii.      Class A-2 Securitization Bond
         iii      Class A-3 Securitization Bond
         iv.      Class A-4 Securitization Bond
         v.       Class A-5 Securitization Bond
         vi.      Class A-6 Securitization Bond
         VII.     TOTAL SEMIANNUAL PRINCIPAL SHORTFALL:

8.       SHORTFALLS IN REQUIRED SUBACCOUNT LEVELS AS OF CURRENT DISTRIBUTION
         DATE:

         i.       Series Capital Subaccount:
         ii.      Series Overcollateralization Subaccount:
         III.     TOTAL SUBACCOUNT SHORTFALLS:

<PAGE>   37

         IN WITNESS WHEREOF, the undersigned has duly executed and delivered
this Semiannual Servicer Certificate this __ day of __________.

                                      THE DETROIT EDISON COMPANY, as Servicer

                                      By:
                                          -------------------------------------
                                      Name:
                                      Title:

<PAGE>   38
                                                                       EXHIBIT E

                          FORM OF ANNUAL RECONCILIATION

         Pursuant to Section 4.03(b) of the Securitization Property Servicing
Agreement, dated as of ________, between The Detroit Edison Company, as servicer
(the "Servicer") and The Detroit Edison Securitization Funding LLC, the Servicer
does hereby certify as follows:

For the Reconciliation Period:_____________ to _____________

         1.       CALCULATION OF REMITTANCE SHORTFALL OR REMITTANCE EXCESS:

         a)       System-wide Billed Revenues:
         b)       System-wide Charge-Offs:
         c)       Actual Charge-Off % (b / a):
         f)       "Estimated Charge-Off Percent":
         g)       kWh Consumption ( [          ] to  [          ]):
         h)       SB Charge ( [          ] to  [          ]):
         i)       [Billed SB Charges ( [          ] to  [          ]) (g x h):]
         j)       kWh Consumption ( [          ] to  [          ]):
         k)       SB Charge ( [          ] to  [          ]):
         l)       [Billed SB Charges ( [          ] to  [          ]) (j x k):]
         m)       Deemed SB Charge Payments ([100% - c] x [i + l]):
         n)       Estimated SB Charge Payments ([100% - f] x [i + l]):
         o)       Remittance Shortfall (m - n, if positive):
         p)       Remittance Excess (n - m, if positive):

         Executed as of this __ day of __________.

                                         THE DETROIT EDISON COMPANY,
                                         as Servicer

                                         By:
                                             ----------------------------------
                                             Name:
                                             Title:

<PAGE>   39

                                                                       EXHIBIT F

                                   PROCEEDINGS

None.

<PAGE>   40

                                                                         ANNEX I

                              SERVICING PROCEDURES

         The Servicer agrees to comply with the following servicing procedures:

         SECTION 1.  DEFINITIONS

         Capitalized terms used herein and not otherwise defined herein shall
have the meanings set forth in the Agreement and Appendix A thereto.

         SECTION 2.  DATA ACQUISITION

         (a) Installation and Maintenance of Meters. The Servicer shall cause to
be installed, replaced and maintained meters in accordance with the Servicer
Policies and Practices.

         (b) Meter Reading. In accordance with the Servicer Policies and
Practices, the Servicer shall obtain usage measurements for each Customer;
provided, however, that the Servicer may determine any Customer's usage on the
basis of estimates in accordance with MPSC Regulations.

         (c) Cost of Metering. The Issuer shall not be obligated to pay any
costs associated with the metering duties set forth in this Section 2, including
the costs of installing, replacing and maintaining meters, nor shall the Issuer
be entitled to any credit against the Servicing Fee for any cost savings
realized by the Servicer as a result of new metering and/or billing
technologies.

         SECTION 3.  USAGE AND BILL CALCULATION

         The Servicer shall obtain a calculation of each Customer's usage (which
may be based on data obtained from such Customer's meter read or on usage
estimates determined in accordance with MPSC Regulations) in accordance with the
Servicer Policies and Practices and shall determine therefrom Billed SB Charges.

         SECTION 4.  BILLING

         (a) The Servicer shall implement the SB Charge as soon as practical and
shall thereafter bill each Customer for each Customer's Billed SB Charges in
accordance with the provisions of this Section 4.

         (b) Frequency of Bills; Billing Practices. In accordance with the
Servicer Policies and Practices, the Servicer shall generate and issue a Bill to
each Customer. In the event that the Servicer makes any material modification to
the Servicer Policies and Practices, it shall notify the Issuer, the Trustee and
the Rating Agencies as soon as practicable, and in no event later than 60
Servicer Business Days after such modification goes into effect; provided,
however, that the Servicer may not make any modification that will materially
adversely affect the Securitization Bondholders.

<PAGE>   41

         (c)      Format.

                  (i)   Each Bill to a Customer shall contain or be deemed to
contain a Securitization Charge that shall include the SB Charge owed by such
Customer for the applicable billing period.

                  (ii)  Each Bill shall identify the SB Charge and shall state
that the entire SB Charge is owned by the Issuer and not the Seller.

                  (iii) The Servicer shall conform to such requirements in
respect of the format, structure and text of Bills delivered to Customers as
MPSC Regulations shall from time to time prescribe. To the extent that Bill
format, structure and text are not prescribed by applicable law or by MPSC
Regulations, the Servicer shall, subject to clauses (i) and (ii) of this
subsection (c), determine the format, structure and text of all Bills in
accordance with its reasonable business judgment, the Servicer Policies and
Practices and historical practice.

         (d)      Delivery. Except as provided in the next sentence, the
Servicer shall deliver all Bills to Customers (i) by United States mail in such
class or classes as are consistent with the Servicer Policies and Practices or
(ii) by any other means, whether electronic or otherwise, that the Servicer may
from time to time use in accordance with the Servicer Policies and Practices.
The Servicer shall pay from its own funds all costs of issuance and delivery of
all Bills that it renders, including printing and postage costs as the same may
increase or decrease from time to time.

         SECTION 6.  CUSTOMER SERVICE FUNCTIONS

         The Servicer shall handle all Customer inquiries and other Customer
service matters according to the Servicer Policies and Practices.

         SECTION 7.  COLLECTIONS; PAYMENT PROCESSING; REMITTANCE

         (a)      Collection Efforts, Policies, Procedures.

                  (i)   The Servicer shall collect Billed SB Charges from
Customers as and when the same become due in accordance with such collection
procedures as it follows with respect to comparable assets that it services for
itself or others, including the following:

                        (A) The Servicer shall prepare and deliver overdue
notices to Customers in accordance with MPSC Regulations and the Servicer
Policies and Practices.

                        (B) The Servicer shall deliver past-due and shut-off
notices in accordance with MPSC Regulations and the Servicer Policies and
Practices.

                        (C) The Servicer may employ the assistance of collection
agents in accordance with MPSC Regulations and the Servicer Policies and
Practices.

                        (D) The Servicer shall apply Customer deposits to the
payment of delinquent accounts in accordance with MPSC Regulations and the
Servicer Policies and Practices.

                                       2
<PAGE>   42

                  (ii)     The Servicer shall not waive any late payment charge
or any other fee or charge relating to delinquent payments, if any, or waive,
vary or modify any terms of payment of any amounts payable by a Customer, in
each case unless such waiver or action: (A) would be in accordance with the
Servicer Policies and Practices and (B) would comply in all material respects
with applicable law.

                  (iii)    The Servicer shall accept payment from Customers in
respect of Billed SB Charges in such forms and methods and at such times and
places in accordance with the Servicer Policies and Practices.

         (b)      Payment Processing, Allocation, Priority of Payments. The
Servicer shall post all payments received to Customer accounts as promptly as
practicable, and, in any event, substantially all payments shall be posted no
later than two Servicer Business Days after receipt.

         (c)      Investment of Estimated SB Charge Payments Received. Prior to
remittance on the applicable Remittance Date, the Servicer may invest Estimated
SB Charge Payments at its own risk and for its own benefit, and such investments
and funds shall not be required to be segregated from the other investments and
funds of the Servicer. The Servicer shall be entitled to retain as additional
compensation any interest earnings on Estimated SB Charge Payments invested by
it.

         (d)      Calculation of Estimated SB Charge Payments and Deemed SB
Charge Payments; Remittances. In accordance with Section 4.03(a) of the
Agreement, the Servicer shall remit to the Trustee for deposit in the Collection
Account an amount equal to the product of the Billed SB Charges for a particular
billing date multiplied by the result of one hundred percent less the Estimated
Charge-Off Percent. Such product shall constitute the amount of Estimated SB
Charge Payments. Pursuant to Section 4.03(b) of the Agreement, on or before [ ]
of each year, the Servicer shall calculate the amount of Deemed SB Charge
Payments by multiplying the Billed SB Charges by the result of one hundred
percent less the Actual Charge-Off Percent.

         (e)      Remittances.

                  (i)   The Issuer shall cause to be established the Collection
Account in the name of the Trustee in accordance with Section 8.02 of the
Indenture.

                  (ii)  The Servicer shall make or cause to be made Remittances
to the Collection Account in accordance with Section 4.03 of the Agreement.

                  (iii) Any change of account or change of institution affecting
the Collection Account shall not take effect until the Issuer has provided at
least fifteen (15) Servicer Business Days written notice thereof to the
Servicer.

         (f)      Partial Collections. Upon a partial payment of amounts billed,
including amounts billed under special contracts, such partial payments shall be
allocated ratably among the SB Charge, the SB Tax Charge (as defined in the
Financing Order) and the Seller's other billed amounts (including any accrued
interest and late fees) based on the ratio of each component of the bill to the
total bill.

         SECTION 8. Alternative Energy Suppliers

                                       3
<PAGE>   43

         The Servicer shall not permit any AES to bill or collect SB Charges on
behalf of the Issuer unless required by applicable law or regulation and, to the
extent permitted by applicable law or regulation, the Rating Agency Condition is
satisfied.

         SECTION 9. Semiannual Notice to Moody's of Input Values for Weighted
Average Days Outstanding

         On a semiannual basis, the Servicer shall provide Moody's a notice
containing the input values for Weighted Average Days Outstanding current as of
a date three calendar months prior to such report.

                                       4
<PAGE>   44

                                   APPENDIX A

                               MASTER DEFINITIONS

             To be used in connection with the Servicing Agreement,
      the Sale Agreement, the Administration Agreement and the Indenture.

The definitions contained in this Appendix A are applicable to the singular as
well as the plural forms of such terms.

         Act has the meaning specified in Section 11.03 of the Indenture.

         Actual Charge-Off Percent means the Servicer's actual system-wide
         charge-off percentage.

         Adjustment Request means any filing made with the MPSC by the Servicer
         on behalf of the Issuer for a Periodic Adjustment.

         Administration Agreement means the Administration Agreement dated as of
         March 9, 2001, between the Administrator and the Issuer, as the same
         may be amended or supplemented from time to time.

         Administrator means Detroit Edison, as administrator under the
         Administration Agreement, and each successor to Detroit Edison, in the
         same capacity, pursuant to Section 14 of the Administration Agreement.

         AES means an alternative energy supplier pursuant to the Statute.

         Affiliate means, with respect to any specified Person, any other Person
         controlling or controlled by or under common control with such
         specified Person. For the purposes of this definition, control when
         used with respect to any specified Person means the power to direct the
         management and policies of such Person, directly or indirectly, whether
         through the ownership of voting securities, by contract or otherwise;
         and the terms controlling and controlled have meanings correlative to
         the foregoing.

         Annual Accountant's Report has the meaning set forth in Section 3.04 of
         the Servicing Agreement.

         Annual Reconciliation Report has the meaning set forth in Section
         4.03(b) of the Servicing Agreement.

         Authorized Denominations means, with respect to any Series or Class of
         Securitization Bonds, $1,000 and integral multiples of $1.00 above that
         amount, provided, however, that one bond of each Class may have a
         denomination of less than $1,000, or such other denominations as may be
         specified in the Series Supplement therefor.

         Authorized Newspaper means the Luxemburger Wort or any other newspaper
         published in Luxembourg on a daily basis.

<PAGE>   45

         Authorized Officer means,

             (a)   with respect to the Issuer, (i) any Manager and (ii) any
                   person authorized by the Managers pursuant to the Issuer LLC
                   Agreement;

             (b)   with respect to the Servicer, the chief executive officer,
                   the president, the vice chairman of the board, any vice
                   president, the treasurer, any assistant treasurer, the
                   secretary, any assistant secretary, the controller or any
                   assistant controller of the Servicer;

             (c)   with respect to the Trustee, any officer assigned to the
                   Corporate Trust Division (or any successor thereto),
                   including any vice president, assistant vice president, trust
                   officer, secretary, assistant secretary or any other officer
                   of the Trustee customarily performing functions similar to
                   those performed by any of the above designated officers, in
                   each case having direct responsibility for the administration
                   of this Indenture; and

             (d)   with respect to any other corporation, the chief executive
                   officer, chief operating officer, chief financial officer,
                   chief information officer, president, executive vice
                   president, any vice president, the secretary or the treasurer
                   of such corporation; and with respect to any limited
                   liability company, any manager thereof.

         Basic Documents means the Formation Documents, the Sale Agreement, any
         Bills of Sale, the Servicing Agreement, the Administration Agreement,
         the Indenture, the Underwriting Agreement and any Interest Rate Swap
         Agreement, as each may be amended or supplemented from time to time.

         Bill of Sale means any bill of sale issued by the Seller to the Issuer
         pursuant to the Sale Agreement evidencing the sale of Securitization
         Property by the Seller to the Issuer.

         Billed SB Charges means the dollar amounts billed to Customers in
         respect of the SB Charge.

         Bills means each of the regular monthly bills, summary bills and other
         bills issued to Customers by Detroit Edison on its own behalf and in
         its capacity as Servicer.

         Book-Entry Securitization Bonds means beneficial interests in the
         Securitization Bonds, ownership and transfers of which shall be made
         through book entries by a Clearing Agency as described in Section 2.11
         of the Indenture.

         Business Day means any day other than a Saturday or Sunday or a day on
         which banking institutions in Detroit, Michigan, or in New York, New
         York or, with respect to any Securitization Bonds listed on the
         Luxembourg Stock Exchange, in Luxembourg, are required or authorized by
         law or executive order to remain closed.

         Capital Subaccount has the meaning specified in Section 8.02(a) of the
         Indenture.

                                       A-2
<PAGE>   46

         Certificate of Compliance has the meaning set forth in Section 3.03 of
         the Servicing Agreement.

         Class means, with respect to any Series, any one of the classes of
         Securitization Bonds of that Series, as specified in the Series
         Supplement for that Series.

         Class Final Maturity Date means the Final Maturity Date of a Class, as
         specified in the Series Supplement for the related Series.

         Class Subaccount has the meaning specified in Section 8.02(a) of the
         Indenture.

         Clearing Agency means an organization registered as a "clearing agency"
         pursuant to Section 17A of the Exchange Act.

         Clearing Agency Participant means a broker, dealer, bank, other
         financial institution or other Person for whom from time to time a
         Clearing Agency effects book-entry transfers and pledges of securities
         deposited with the Clearing Agency.

         Code means the Internal Revenue Code of 1986, as amended from time to
         time, and Treasury Regulations promulgated thereunder.

         Collateral has the meaning specified in the Granting Clause of the
         Indenture.

         Collection Account has the meaning specified in Section 8.02(a) of the
         Indenture.

         Commission means the U.S. Securities and Exchange Commission, and any
         successor thereof.

         Corporate Trust Office means the designated office of the Trustee at
         which at any particular time its corporate trust business shall be
         administered, which office at the date of the execution of this
         Indenture is located at 101 Barclay Street, Floor 12 East, New York,
         New York 10286, Attention: ABS Unit, or at such other address as the
         Trustee may designate from time to time by notice to the Securitization
         Bondholders and the Issuer, or the principal corporate trust office of
         any successor Trustee (the address of which the successor Trustee will
         notify the Securitization Bondholders and the Issuer in writing).

         Covenant Defeasance Option has the meaning specified in Section 4.01(b)
         of the Indenture.

         Customer means a person that is an electric customer taking delivery of
         electricity from Detroit Edison or from its successor on its
         MPSC-approved rate schedules or under special contracts.

         Deemed SB Charge Payments means the amount, calculated by the Servicer
         on or before January 15 of each year, equal to the product of the
         Billed SB Charges for such Remittance Period multiplied by the result
         of one hundred percent (100%) less the Actual Charge-Off Percent.

                                      A-3
<PAGE>   47

         Default means any occurrence that is, or with notice or the lapse of
         time or both would become, an Event of Default.

         Defeasance Subaccount has the meaning specified in Section 8.02(a) of
         the Indenture.

         Definitive Securitization Bonds has the meaning specified in Section
         2.11 of the Indenture.

         Detroit Edison means The Detroit Edison Company, a Michigan
         corporation, or its successor.

         DTC Agreement means the agreement between the Issuer, the Trustee and
         The Depository Trust Company, as the initial Clearing Agency, dated on
         or about March 9, 2001, relating to the Securitization Bonds, as the
         same may be amended or supplemented from time to time.

         Eligible Guarantor Institution means a firm or other entity identified
         in Rule 17Ad-15 under the Exchange Act as "an eligible guarantor
         institution," including (as such terms are defined therein):

             (a)   a bank;

             (b)   a broker, dealer, municipal securities broker or dealer or
                   government securities broker or dealer;

             (c)   a credit union;

             (d)   a national securities exchange, registered securities
                   association or clearing agency; or

             (e)   a savings association that is a participant in a securities
                   transfer association.

         Eligible Institution means:

             (a)   the corporate trust department of the Trustee, so long as any
                   of the securities of the Trustee have a credit rating from
                   each Rating Agency in one of its generic rating categories
                   which signifies investment grade, or

             (b)   a depositary institution organized under the laws of the
                   United States of America or any state (or any domestic branch
                   of a foreign bank), which

                   (i)  has either

                        (A)   with respect to any Eligible Investment having a
                              maturity of greater than one month, a long-term
                              unsecured debt rating of "AAA" by Standard &
                              Poor's and Fitch and "Aaa" by Moody's, or

                                      A-4
<PAGE>   48

                        (B)   with respect to any Eligible Investment having a
                              maturity of one month or less, a short-term or
                              certificate of deposit rating of "A-1+" by
                              Standard & Poor's and "P-1" by Moody's, or any
                              other long-term, short-term or certificate of
                              deposit rating acceptable to the Rating Agencies,
                              and

                   (ii) whose deposits are insured by the FDIC.

         Eligible Investments mean book-entry securities, negotiable instruments
         or securities represented by instruments in bearer or registered form
         which evidence:

             (a)   direct obligations of, and obligations fully and
                   unconditionally guaranteed as to timely payment by, the
                   United States of America;

             (b)   demand deposits, time deposits or certificates of deposit of
                   any depository institution or trust company (any depositary
                   institution or trust company being referred to in this
                   definition as a "financial institution") incorporated under
                   the laws of the United States of America or any state thereof
                   (or any domestic branch of a foreign bank) and subject to
                   supervision and examination by federal or state banking or
                   depositary institution authorities; provided, however, that
                   at the time of the investment or contractual commitment to
                   invest therein, the commercial paper or other short-term
                   unsecured debt obligations (other than such obligations the
                   rating of which is based on the credit of a Person other than
                   such depositary institution or trust company) thereof shall
                   have a credit rating from each of the Rating Agencies in the
                   highest investment category granted thereby;

             (c)   commercial paper or other short-term obligations of any
                   corporation organized under the laws of the United States of
                   America (other than Detroit Edison) whose ratings, at the
                   time of the investment or contractual commitment to invest
                   therein, from each of the Rating Agencies are in the highest
                   investment category granted thereby;

             (d)   investments in money market funds having a rating from each
                   of the Rating Agencies in the highest investment category
                   granted thereby (including funds for which the Trustee or any
                   of its Affiliates act as investment manager or advisor);

             (e)   bankers' acceptances issued by any depositary institution or
                   trust company referred to in clause (b) above;

             (f)   repurchase obligations with respect to any security that is a
                   direct obligation of, or fully guaranteed by, the United
                   States of America or any agency or instrumentality thereof
                   the obligations of which are backed by the full faith and
                   credit of the United States of America, in either case
                   entered into with a depositary institution or trust company
                   (acting as principal) described in clause (b) above;

                                      A-5
<PAGE>   49

             (g)   repurchase obligations with respect to any security or whole
                   loan entered into with

                   (i)    a financial institution (acting as principal)
                          described in clause (b) above,

                   (ii)   a broker/dealer (acting as principal) registered as a
                          broker or dealer under Section 15 of the Exchange Act
                          (any broker/dealer being referred to in this
                          definition as a "broker/dealer"), the unsecured
                          short-term debt obligations of which are rated P-1 by
                          Moody's and A-1+ by Standard & Poor's at the time of
                          entering into the repurchase obligation, or

                   (iii)  an unrated broker/dealer, acting as principal, that is
                          a wholly-owned subsidiary of a non-bank or bank
                          holding company the unsecured short-term debt
                          obligations of which are rated P-1 by Moody's and A-1+
                          by Standard & Poor's at the time of purchase; or

             (h)   any other investment permitted by each Rating Agency;

         provided, however, that, with respect to Moody's only, the obligor
         related to clauses (b), (c), (d), (f), (g) and (h) above must have both
         a long term rating of at least Aa3 and a short term rating of at least
         P1, and provided further, that, unless otherwise permitted by each
         Rating Agency, upon the failure of any Eligible Institution to maintain
         any applicable rating set forth in this definition or the definition of
         Eligible Institution, the related investments at such institution shall
         be reinvested in Eligible Investments at a successor Eligible
         Institution within 10 days, and provided further, that any Eligible
         Investment must not:

             (a)   be sold, liquidated or otherwise disposed of at a loss, prior
                   to the maturity thereof, or

             (b)   mature later than (i) the date on which the proceeds of such
                   Eligible Investment will be required to be on deposit in the
                   Collection Account in order for the Trustee to make all
                   required and scheduled payments and deposits into Subaccounts
                   under the Indenture, if such Eligible Investment is held by
                   an Affiliate of the Trustee, or (ii) the Business Day prior
                   to the date on which the proceeds of such Eligible Investment
                   will be required to be on deposit in the Collection Account
                   in order for the Trustee to make all required and scheduled
                   payments and deposits into Subaccounts under the Indenture,
                   if such Eligible Investment is not held by an Affiliate of
                   the Trustee.

         Eligible Securities Account means either:

                                      A-6
<PAGE>   50

             (a)   a segregated trust account with an Eligible Institution or

             (b)   a segregated trust account with the corporate trust
                   department of a depositary institution organized under the
                   laws of the United States of America or any state (or any
                   domestic branch of a foreign bank), having corporate trust
                   powers and acting as trustee for funds deposited in such
                   account, so long as any of the securities of such depositary
                   institution shall have a credit rating from each Rating
                   Agency in one of its generic rating categories which
                   signifies investment grade.

         Estimated Charge-Off Percent means the Servicer's good faith estimate
         of the Actual Charge-Off Percent.

         Estimated SB Charge Payments means an amount equal to the product of
         the Billed SB Charges for a particular billing date multiplied by the
         result of one hundred percent (100%) less the Estimated Charge-Off
         Percent.

         Event of Default has the meaning specified in Section 5.01 of the
         Indenture.

         Event of Investment Ineligibility has the meaning specified in the
         Trade Receivables Purchase and Sale Agreement dated as of February 28,
         1989, as later amended and restated, among The Detroit Edison Company,
         Corporate Asset Funding Company, Inc., Citibank, N.A., and Citicorp
         North America, Inc., individually and as agent.

         Event of Termination has the meaning specified in the Trade Receivables
         Purchase and Sale Agreement dated as of February 28, 1989, as later
         amended and restated, among The Detroit Edison Company, Citibank, N.A.,
         and Citicorp North America, Inc., individually and as agent.

         Exchange Act means the Securities Exchange Act of 1934, as amended.

         Expected Amortization Schedule means, with respect to each Series or,
         if applicable, each Class of Securitization Bonds, the expected
         amortization schedule for principal thereof, as specified in the Series
         Supplement therefor.

         Expected Final Payment Date means, with respect to each Series or, if
         applicable, each Class of Securitization Bonds, the date when all
         interest and principal is scheduled to be paid with respect to that
         Series or Class in accordance with the Expected Amortization Schedule,
         as specified in the Series Supplement therefor.

         FDIC means the Federal Deposit Insurance Corporation or its successor.

         Final Maturity Date means, for each Series or, if applicable, each
         Class of Securitization Bonds, the date by which all principal of and
         interest on such Series or Class of Securitization Bonds is required to
         be paid, as specified in the Series Supplement therefor.

                                      A-7
<PAGE>   51

         Financing Issuance means an issuance of a new Series of Securitization
         Bonds under the Indenture to provide funds to finance the purchase by
         the Issuer of Securitization Property.

         Financing Order means, collectively, the order of the MPSC, Case No.
         U-12478, issued on November 2, 2000, as clarified by the opinion and
         order of the MPSC issued on January 4, 2001.

         Fitch means Fitch, Inc., or its successor.

         Formation Documents means, collectively, the Issuer LLC Agreement and
         the Issuer Articles of Organization, as each may be amended or
         supplemented from time to time.

         General Subaccount has the meaning specified in Section 8.02(a) of the
         Indenture.

         Grant means mortgage, pledge, bargain, sell, warrant, alienate, remise,
         release, convey, assign, transfer, create, and grant a lien upon and a
         security interest in and right of set-off against, deposit, set over
         and confirm. Grant, used as a noun, and Granting, used as an adjective,
         have correlative meanings consistent with preceding sentence. A Grant
         of the Collateral or of any other agreement or instrument shall include
         all rights, powers and options (but none of the obligations) of the
         Granting party thereunder, including the immediate and continuing right
         to claim for, collect, receive and give receipt for principal, interest
         and other payments in respect of the Collateral or such other agreement
         or instrument and all other moneys payable thereunder, to give and
         receive notices and other communications, to make waivers or other
         agreements, to exercise all rights and options, to bring Proceedings in
         the name of the Granting party or otherwise and generally to do and
         receive anything that the Granting party is or may be entitled to do or
         receive thereunder or with respect thereto.

         Holder or Securitization Bondholder means the Person in whose name a
         Securitization Bond of any Series or Class is registered in the
         Securitization Bond Register.

         Indemnification Event means an event which triggers Detroit Edison's
         obligation to indemnify the Issuer and the Trustee, for itself and on
         behalf of the Securitization Bondholders, and each of their respective
         managers, officers, directors and agents, pursuant to Section 5.01 of
         the Sale Agreement.

         Indemnity Amount means the amount of any indemnification obligation
         payable under the Basic Documents.

         Indenture means the Indenture dated as of March 9, 2001, between the
         Issuer and the Trustee, as the same may be amended and supplemented
         from time to time by one or more Supplemental Indentures, and shall
         include each Series Supplement and the forms and terms of the
         Securitization Bonds established thereunder.

         Independent means, when used with respect to any specified Person, that
         the Person

                                      A-8
<PAGE>   52

             (a)   is in fact independent of the Issuer, any other obligor on
                   the Securitization Bonds, Detroit Edison and any Affiliate of
                   any of the foregoing Persons,

             (b)   does not have any direct financial interest or any material
                   indirect financial interest in the Issuer, any such other
                   obligor, Detroit Edison or any Affiliate of any of the
                   foregoing Persons, and

             (c)   is not connected with the Issuer, any such other obligor,
                   Detroit Edison or any Affiliate of any of the foregoing
                   Persons as an officer, employee, promoter, underwriter,
                   trustee, partner, director or person performing similar
                   functions.

         Independent Certificate means a certificate or opinion to be delivered
         to the Trustee under the circumstances described in, and otherwise
         complying with, the applicable requirements of Section 11.01 of the
         Indenture, made by an Independent appraiser or other expert appointed
         by an Issuer Order and approved by the Trustee in the exercise of
         reasonable care, and such certificate or opinion shall state that the
         signer has read the definition of "Independent" in this Appendix A and
         that the signer is Independent within the meaning thereof.

         Independent Manager has the meaning set forth in the Issuer LLC
         Agreement.

         Initial Securitization Property means the Securitization Property sold
         by the Seller to the Issuer as of the Initial Transfer Date pursuant to
         the Sale Agreement and the Bill of Sale delivered on or prior to the
         Initial Transfer Date as identified in such Bill of Sale.

         Initial Transfer Date means the Series Issuance Date for the first
         Series of Securitization Bonds.

         Insolvency Event means, with respect to a specified Person,

             (a)   the filing of a decree or order for relief by a court having
                   jurisdiction in the premises in respect of such Person or any
                   substantial part of its property in an involuntary case under
                   any applicable federal or state bankruptcy, insolvency or
                   other similar law now or hereafter in effect, or appointing a
                   receiver, liquidator, assignee, custodian, trustee,
                   sequestrator or similar official for such Person or for any
                   substantial part of its property, or ordering the winding-up
                   or liquidation of such Person's affairs, and such decree or
                   order shall remain unstayed and in effect for a period of 90
                   consecutive days or

             (b)   the commencement by such Person of a voluntary case under any
                   applicable federal or state bankruptcy, insolvency or other
                   similar law now or hereafter in effect, or the consent by
                   such Person to the entry of an order for relief in an
                   involuntary case under any such law, or the consent by such
                   Person to the appointment of a receiver, liquidator,
                   assignee, custodian, trustee, sequestrator or similar
                   official for such Person or for any substantial part of its
                   property, or the making by such Person of any

                                      A-9
<PAGE>   53

                   general assignment for the benefit of creditors, or the
                   failure by such Person generally to pay its debts as such
                   debts become due, or the taking of action by such Person in
                   furtherance of any of the foregoing.

         Interest means, for any Payment Date for any Series or Class of
         Securitization Bonds, the sum, without duplication, of:

             (a)   an amount equal to the amount of interest accrued at the
                   applicable Interest Rate from the prior Payment Date with
                   respect to that Series or Class;

             (b)   any unpaid interest, to the extent permitted by applicable
                   law, plus any interest accrued on such unpaid interest at the
                   applicable Interest Rate, to the extent permitted by
                   applicable law;

             (c)   if the Securitization Bonds have been declared due and
                   payable, all accrued and unpaid interest thereon; and

             (d)   with respect to a Series or Class to be redeemed prior to the
                   next Payment Date, the amount of interest that will be
                   payable as interest on such Series or Class upon such
                   redemption.

         Interest Rate means, with respect to each Series or Class of
         Securitization Bonds, the rate at which interest accrues on the
         principal balance of Securitization Bonds of such Series or Class, as
         specified in the Series Supplement therefor.

         Interest Rate Swap Agreement means any ISDA Master Agreement, together
         with the related Schedule and Confirmation, between the Issuer and a
         Swap Counterparty, as same may be amended or supplemented from time to
         time.

         Issuer means The Detroit Edison Securitization Funding LLC, a Michigan
         limited liability company, or its successor under the Indenture or the
         party named as such in the Indenture until a successor replaces it and,
         thereafter, means the successor.

         Issuer Articles of Organization means the Articles of Organization of
         the Issuer which were filed with the Bureau of Commercial Services,
         Corporation Division, of the Michigan Department of Consumer and
         Industry Services (the "Department") on November 20, 2000, as amended
         by the Restated Articles of Organization of the Issuer, which were
         filed with the Department on March 8, 2001.

         Issuer LLC Agreement means the Limited Liability Company Agreement
         between the Issuer, Detroit Edison, as sole Member, and the Managers
         dated as of November 20, 2000, as the same may be amended or
         supplemented from time to time.

         Issuer Officer's Certificate means a certificate signed by any
         Authorized Officer of the Issuer, under the circumstances described in,
         and otherwise complying with, the applicable requirements of Section
         11.01 of the Indenture, and delivered to the Trustee.

                                      A-10
<PAGE>   54

         Unless otherwise specified, any reference in the Indenture to an
         Officer's Certificate shall be to an Issuer Officer's Certificate.

         Issuer Opinion of Counsel means one or more written opinions of counsel
         who may, except as otherwise expressly provided in the Indenture, be an
         employee of or counsel to the Issuer or the Seller and who shall be
         reasonably satisfactory to the Trustee, and which opinion or opinions
         shall be addressed to the Trustee, and shall be in a form reasonably
         satisfactory to the Trustee.

         Issuer Order or Issuer Request means a written order or request,
         respectively, signed in the name of the Issuer by any one of its
         Authorized Officers and delivered to the Trustee.

         Legal Defeasance Option has the meaning specified in Section 4.01(b) of
         the Indenture.

         Lien means a security interest, lien, charge, pledge or encumbrance of
         any kind.

         Losses means, collectively, any and all liabilities, obligations,
         losses, damages, payments, costs or expenses of any kind whatsoever.

         Manager has the meaning set forth in the Issuer LLC Agreement.

         Member means Detroit Edison, as the sole member of the Issuer, in its
         capacity as such member under the Issuer LLC Agreement.

         Michigan UCC means the Uniform Commercial Code, as in effect in the
         State of Michigan, as amended from time to time.

         Monthly Servicer Certificate has the meaning assigned to that term in
         Section 4.01(d)(ii) of the Servicing Agreement.

         Moody's means Moody's Investors Service, Inc., or its successor.

         MPSC means the Michigan Public Service Commission and any successor
         thereto.

         MPSC Regulations means any applicable regulations, orders or rules
         promulgated, issued or adopted by the MPSC, as in effect from time to
         time.

         Non-Routine True-Up Adjustment has the meaning set forth in Section
         4.01(c)(i) of the Servicing Agreement.

         Non-Routine True-Up Adjustment Request means an Adjustment Request
         filed with the MPSC in accordance with the Financing Order with respect
         to any Non-Routine True-Up Adjustment, pursuant to which the related
         Non-Routine True-Up Adjustment will become effective upon the review
         and approval of the MPSC.

         Officer's Certificate means a certificate of the Servicer signed by an
         Authorized Officer.

         Ongoing Other Qualified Costs has the meaning assigned to that term in
         the Financing Order.

                                      A-11
<PAGE>   55

         Operating Expenses means, with respect to the Issuer, all fees, costs,
         expenses and indemnity payments owed by the Issuer, including, without
         limitation, all amounts owed by the Issuer to the Trustee, the
         Servicing Fee, the fees and expenses payable by the Issuer to the
         Administrator under the Administration Agreement, the fees and expenses
         payable by the Issuer to the Independent Managers and Special Members
         of the Issuer, fees of the Rating Agencies, legal fees and expenses of
         the Servicer pursuant to Section 5.02(d) of the Servicing Agreement,
         legal and accounting fees, costs and expenses of the Issuer, and legal,
         accounting or other fees, costs and expenses of the Seller (including,
         without limitation, any costs and expenses incurred by the Seller
         pursuant to Section 4.08 of the Sale Agreement) under or in connection
         with the Basic Documents or the Financing Order.

         Opinion of Counsel means one or more written opinions of counsel who
         may be an employee of or counsel to Detroit Edison, the Issuer or any
         other Person (as the context may require), which counsel shall be
         reasonably acceptable to the Trustee, the Issuer or the Rating
         Agencies, as applicable, and which shall be in form reasonably
         satisfactory to the Trustee, if applicable, according to context.

         Outstanding with respect to Securitization Bonds means, as of the date
         of determination, all Securitization Bonds theretofore authenticated
         and delivered under the Indenture except:

             (a)   Securitization Bonds theretofore canceled by the
                   Securitization Bond Registrar or delivered to the
                   Securitization Bond Registrar for cancellation;

             (b)   Securitization Bonds or portions thereof for the payment of
                   which money in the necessary amount has been theretofore
                   deposited with the Trustee or any Paying Agent in trust for
                   the Holders of such Securitization Bonds; provided, however,
                   that if such Securitization Bonds are to be redeemed, notice
                   of such redemption has been duly given pursuant to the
                   Indenture or provision therefor, satisfactory to the Trustee,
                   made; and

             (c)   Securitization Bonds in exchange for or in lieu of other
                   Securitization Bonds which have been authenticated and
                   delivered pursuant to the Indenture unless proof satisfactory
                   to the Trustee is presented that any such Securitization
                   Bonds are held by a protected purchaser;

         provided that in determining whether the Holders of the requisite
         Outstanding Amount of the Securitization Bonds or any Series or Class
         thereof have given any request, demand, authorization, direction,
         notice, consent or waiver under any Basic Document, Securitization
         Bonds owned by the Issuer, any other obligor upon the Securitization
         Bonds, Detroit Edison or any Affiliate of any of the foregoing Persons
         shall be disregarded and deemed not to be Outstanding, except that, in
         determining whether the Trustee shall be protected in relying upon any
         such request, demand, authorization, direction, notice, consent or
         waiver, only Securitization Bonds that the Trustee knows to be so owned
         shall be so disregarded. Securitization Bonds so owned that have been

                                      A-12
<PAGE>   56

         pledged in good faith may be regarded as Outstanding if the pledgee
         establishes to the satisfaction of the Trustee the pledgee's right so
         to act with respect to such Securitization Bonds and that the pledgee
         is not the Issuer, any other obligor upon the Securitization Bonds,
         Detroit Edison or any Affiliate of any of the foregoing Persons.

         Outstanding Amount means the aggregate principal amount of all
         Outstanding Securitization Bonds or, if the context requires, all
         Securitization Bonds of a Series or Class Outstanding at the date of
         determination.

         Overcollateralization means, with respect to any Payment Date, an
         amount that, if deposited to the Overcollateralization Subaccount,
         would cause the balance in such subaccount to equal the Scheduled
         Overcollateralization Level for such Payment Date.

         Overcollateralization Amount means, with respect to any Series of
         Securitization Bonds, the amount specified as such in the Series
         Supplement therefor.

         Overcollateralization Subaccount has the meaning specified in Section
         8.02(a) of the Indenture.

         Paying Agent means the Trustee or any other Person, including any
         Person appointed pursuant to Section 3.02(b) of the Indenture, that
         meets the eligibility standards for the Trustee specified in Section
         6.11 of the Indenture and is authorized by the Issuer to make the
         payments of principal of or premium, if any, or interest on the
         Securitization Bonds on behalf of the Issuer.

         Payment Date means, with respect to each Series or Class of
         Securitization Bonds, each date or dates respectively specified as
         Payment Dates for such Series or Class in the Series Supplement
         therefor.

         Periodic Adjustment means each Routine True-Up Adjustment and
         Non-Routine True-Up Adjustment made pursuant to the terms of the
         Financing Order and in accordance with Section 4.01 of the Servicing
         Agreement.

         Person means any individual, corporation, estate, partnership, joint
         venture, association, joint stock company, trust (including any
         beneficiary thereof), business trust, limited liability company,
         unincorporated organization or government or any agency or political
         subdivision thereof.

         Predecessor Securitization Bond means, with respect to any particular
         Securitization Bond, every previous Securitization Bond evidencing all
         or a portion of the same debt as that evidenced by such particular
         Securitization Bond; and, for the purpose of this definition, any
         Securitization Bond authenticated and delivered under Section 2.06 of
         the Indenture in lieu of a mutilated, lost, destroyed or stolen
         Securitization Bond shall be deemed to evidence the same debt as the
         mutilated, lost, destroyed or stolen Securitization Bond.

         Principal means, with respect to any Payment Date and each Series or
         Class of Securitization Bonds:

                                      A-13
<PAGE>   57

             (a)   the amount of principal scheduled to be paid on such Payment
                   Date in accordance with the Expected Amortization Schedule;

             (b)   the amount of principal due on the Final Maturity Date of
                   such Series or Class if such Payment Date is the Final
                   Maturity Date;

             (c)   the amount of principal due as a result of the occurrence and
                   continuance of an Event of Default and acceleration of the
                   Securitization Bonds;

             (d)   the amount of principal and premium, if any, due as a result
                   of a redemption of Securitization Bonds on such Payment Date;
                   and

             (e)   any overdue payments of principal.

         Principal Balance means, as of any Payment Date, the Outstanding Amount
         of the Securitization Bonds.

         Proceeding means any suit in equity, action at law or other judicial or
         administrative proceeding.

         Projected Principal Balance means, as of any Payment Date, the
         projected Outstanding Amount for such Payment Date set forth in the
         Expected Amortization Schedule.

         Qualified Costs means those qualified costs approved for recovery in
         the Financing Order.

         Rating Agency means, as of any date, any rating agency rating the
         Securitization Bonds of any Class or Series at the time of original
         issuance thereof at the request of the Issuer, or any successor to such
         rating agency. If such organization or successor is no longer in
         existence, in lieu thereof "Rating Agency" means a nationally
         recognized statistical rating organization or other comparable Person
         designated by the Issuer, notice of which designation shall be given to
         the Trustee, the Member and the Servicer.

         Rating Agency Condition means, with respect to any action, the
         notification to each Rating Agency and the Trustee of such action, and
         the notification from each of Fitch and S&P to the Trustee and the
         Issuer that such action will not result in a reduction or withdrawal of
         the then current rating by such Rating Agency of any Outstanding Series
         or Class of Securitization Bonds.

         Reconciliation Period means the twelve-month period commencing on
         January 1 of each year and ending on December 31 of each year;
         provided, however, that the initial Reconciliation Period shall
         commence on the first Series Issuance Date and end on December 31,
         2001.

         Record Date has the meaning set forth in each Supplemental Indenture.

                                      A-14
<PAGE>   58

         Redemption Date means, with respect to each Series or Class of
         Securitization Bonds, the date for the redemption of the Securitization
         Bonds of such Series or Class pursuant to Sections 10.01 or 10.02 of
         the Indenture or the Series Supplement for such Series or Class, which
         in each case shall be a Payment Date.

         Redemption Price has the meaning set forth in Section 10.01 or Section
         10.02 of the Indenture, as applicable.

         Refunding Issuance means an issuance of a new Series of Securitization
         Bonds under the Indenture to pay the cost of refunding, through
         redemption or payment on the Expected Final Payment Date for a Series
         or Class of Securitization Bonds, all or part of the Securitization
         Bonds of such Series or Class to the extent permitted by the terms
         thereof.

         Registered Holder means, as of any date, the Person in whose name a
         Securitization Bond is registered in the Securitization Bond Register
         on such date.

         Released Parties has the meaning specified in Section 6.02(f) of the
         Servicing Agreement.

         Remittance means each remittance under the Servicing Agreement of
         Estimated SB Charge Payments by the Servicer to the Trustee.

         Remittance Date means each Servicer Business Day on which a Remittance
         is to be made by the Servicer pursuant to Section 4.03 of the Servicing
         Agreement.

         Remittance Excess means the amount, if any, calculated for a particular
         Reconciliation Period, by which all Estimated SB Charge Payments during
         such Reconciliation Period exceed Deemed SB Charge Payments during such
         Reconciliation Period.

         Remittance Period means the twelve-month period commencing on January 1
         of each year and ending on December 31 of each year; provided, however,
         that the initial Remittance Period shall commence on the first Series
         Issuance Date and end on December 31, 2001.

         Remittance Shortfall means, the amount, if any, calculated for a
         particular Reconciliation Period, by which Deemed SB Charge Payments
         during such Reconciliation Period exceed Estimated SB Charge Payments
         during such Reconciliation Period.

         Required Capital Amount means, with respect to any Series, the amount
         required to be deposited in the Capital Subaccount on the Series
         Issuance Date of such Series, as specified in the related Series
         Supplement.

         Required Debt Service means, for any Remittance Period, the total
         dollar amount calculated by the Servicer in accordance with Section
         4.01(b)(i) of the Servicing Agreement as necessary to be remitted to
         the Collection Account during such Remittance Period (after giving
         effect to (a) the allocation and distribution of amounts on deposit in
         the Reserve Subaccount at the time of calculation and which are
         available for payments on the Securitization Bonds, (b) any shortfalls
         in Required Debt Service for any prior

                                      A-15
<PAGE>   59

         Remittance Period, (c) the required payment or credit of any Remittance
         Excess or Remittance Shortfall during such Remittance Period and (d)
         any Remittances based upon the SB Charge in effect in the prior
         Remittance Period that are expected to be realized in such Remittance
         Period) in order to ensure that, as of the Payment Date immediately
         following the end of such period, (i) all accrued and unpaid interest
         on the Securitization Bonds then due shall have been paid in full, (ii)
         the Principal Balance of the Securitization Bonds is equal to the
         Projected Principal Balance of the Securitization Bonds for that
         Payment Date, (iii) the balance on deposit in the Capital Subaccount
         equals the aggregate Required Capital Amount, (iv) the balance on
         deposit in the Overcollateralization Subaccount equals the aggregate
         Scheduled Overcollateralization Level and (v) all other fees, expenses
         and indemnities due and owing and required or allowed to be paid under
         Section 8.02 of the Indenture as of such date shall have been paid in
         full; provided, however, that, with respect to any Periodic Adjustment
         occurring after the last Expected Final Payment Date for any
         Securitization Bonds, the Required Debt Service shall be calculated to
         ensure that sufficient amounts will be collected to retire such
         Securitization Bonds in full as of the earlier of (x) the next Payment
         Date and (y) the Final Maturity Date for such Securitization Bonds.

         Reserve Subaccount has the meaning specified in Section 8.02(a) of the
         Indenture.

         Retirement of the Securitization Bonds means the day on which the final
         payment is made to the Trustee in respect of the last outstanding
         Securitization Bond.

         Retiring Trustee means a Trustee that resigns or vacates the office of
         Trustee for any reason.

         Routine True-Up Adjustment has the meaning set forth in Section
         4.01(b)(iii) of the Servicing Agreement.

         Routine True-Up Adjustment Request means an Adjustment Request filed
         with the MPSC in respect of a Routine True-Up Adjustment, substantially
         in the form of Exhibit B to the Servicing Agreement. Pursuant to the
         Financing Order, the Routine True-Up Adjustment Request will become
         effective within 45 days after the filing of such Routine True-Up
         Adjustment Request.

         Sale Agreement means the Securitization Property Sale Agreement dated
         as of March 9, 2001, between the Seller and the Issuer, as the same may
         be amended and supplemented from time to time.

         SB Charge means the securitization charge designated and approved
         pursuant to the Financing Order as constituting part of the
         Securitization Property, as the same may be adjusted from time to time
         as provided in the Servicing Agreement and in accordance the Financing
         Order.

         Scheduled Overcollateralization Level means, with respect to each
         Series and any Payment Date, the amount with respect to such Series set
         forth as such in Schedule I of the Indenture, as such Schedule has been
         adjusted in accordance with Section 3.19 of the

                                      A-16
<PAGE>   60

         Indenture to reflect redemptions or defeasances of Securitization Bonds
         and issuances of additional Series of Securitization Bonds.

         Securities Account Control Agreement means the securities account
         control agreement among The Detroit Edison Securitization Funding LLC,
         as debtor, the Trustee, as Secured Party, and The Bank of New York, in
         its capacity as securities intermediary thereunder.

         Securitization Bond means any of the securitization bonds (as approved
         in the Financing Order) issued by the Issuer pursuant to the Indenture.

         Securitization Bond Balance means, as of any date, the aggregate
         Outstanding Amount of all Series of Securitization Bonds on such date.

         Securitization Bond Owner means, with respect to a Book-Entry
         Securitization Bond, the Person who is the beneficial owner of such
         Book-Entry Securitization Bond, as reflected on the books of the
         Clearing Agency, or on the books of a Person maintaining an account
         with such Clearing Agency (directly as a Clearing Agency Participant or
         as an indirect participant, in each case in accordance with the rules
         of such Clearing Agency).

         Securitization Bond Register has the meaning specified in Section
         2.05(a) of the Indenture.

         Securitization Bond Registrar has the meaning specified in Section
         2.05(a) of the Indenture.

         Securitization Charge means the Securitization Charge authorized by the
         MPSC to be imposed on all Customers by Detroit Edison to recover
         Qualified Costs pursuant to the Financing Order.

         Securitization Property means the Securitization Property that exists
         under the Financing Order and is sold by the Seller to the Issuer under
         the Sale Agreement.

         Securitization Property Records has the meaning assigned to that term
         in Section 5.01 of the Servicing Agreement.

         Seller means Detroit Edison, in its capacity as seller of the
         Securitization Property to the Issuer pursuant to the Sale Agreement.

         Semiannual Servicer Certificate has the meaning assigned to that term
         in Section 4.01(d)(iii) of the Servicing Agreement.

         Series means any series of Securitization Bonds issued by the Issuer
         and authenticated by the Trustee pursuant to the Indenture and the
         Financing Order, as specified in the Series Supplement therefor.

         Series Capital Subaccount has the meaning set forth in Section 8.02(a)
         of the Indenture.

                                      A-17
<PAGE>   61

         Series Final Maturity Date means the Final Maturity Date for a Series.

         Series Issuance Date means, with respect to the first Series of
         Securitization Bonds, March 9, 2001, and with respect to any other
         Series, the date on which the Securitization Bonds of such Series are
         to be issued in accordance with Section 2.10 of the Indenture and the
         Series Supplement for such Series.

         Series Overcollateralization Subaccount has the meaning specified in
         Section 8.02(a) of the Indenture.

         Series Subaccount has the meaning specified in Section 8.02(a) of the
         Indenture.

         Series Supplement means an indenture supplemental to the Indenture that
         authorizes a particular Series of Securitization Bonds, as the same may
         be amended or supplemented from time to time.

         Servicer means Detroit Edison, as the servicer of the Securitization
         Property, and each successor to Detroit Edison (in the same capacity)
         pursuant to Section 6.03 or 7.04 of the Servicing Agreement.

         Servicer Business Day means any Business Day on which the Servicer's
         offices in the State of Michigan are open for business.

         Servicer Default means an event specified in Section 7.01 of the
         Servicing Agreement.

         Servicer Policies and Practices means, with respect to the Servicer's
         duties under Annex I to the Servicing Agreement, the policies and
         practices of the Servicer applicable to such duties that the Servicer
         follows with respect to comparable assets that it services for itself
         or others, as in effect from time to time and in accordance with MPSC
         Regulations. The Servicer shall provide ten days' prior written notice
         to the Rating Agencies of any amendment to the Servicer Policies and
         Practices that would adversely affect in any material respect the
         Securitization Bondholders.

         Servicing Agreement means the Servicing Agreement dated as of March 9,
         2001, between the Issuer and the Servicer, as the same may be amended
         and supplemented from time to time.

         Servicing Fee means the fee payable to the Servicer for services
         rendered, in accordance with Section 6.07 of the Servicing Agreement.

         Special Member has the meaning set forth in the Issuer LLC Agreement.

         Standard & Poor's, or S&P, means Standard & Poor's Ratings Services, a
         division of The McGraw-Hill Companies, or its successor.

         Statute means, collectively, Enrolled Senate Bill No. 937, 2000 PA 141
         and Enrolled Senate Bill No. 1253, 2000 PA 142, both of which became
         effective June 5, 2000.

                                      A-18
<PAGE>   62

         Subaccount means any of the subaccounts of the Collection Account
         specified in Section 8.02 of the Indenture.

         Subsequent Sale means the sale of additional Securitization Property by
         the Seller to the Issuer after the Initial Transfer Date, subject to
         the satisfaction of the applicable conditions specified in the Sale
         Agreement and the Indenture.

         Subsequent Securitization Property means Securitization Property sold
         by the Seller to the Issuer as of a Subsequent Transfer Date pursuant
         to the Sale Agreement and the Bill of Sale delivered on or prior to the
         Subsequent Transfer Date, as identified in such Bill of Sale.

         Subsequent Transfer Date means the date that a sale of Subsequent
         Securitization Property will be effective, as specified in a written
         notice provided by the Seller to the Issuer pursuant to the Sale
         Agreement.

         Successor Servicer means a successor Servicer appointed by the Trustee
         pursuant to Section 7.04 of the Servicing Agreement which succeeds to
         all the rights and duties of the Servicer under the Servicing
         Agreement.

         Supplemental Indenture means a supplemental indenture entered into by
         the Issuer and the Trustee pursuant to Article IX of the Indenture.

         Swap Counterparty means, with respect to any Interest Rate Swap
         Agreement, the swap counterparty under that Interest Rate Swap
         Agreement.

         Termination Notice has the meaning assigned to that term in Section
         7.01 of the Servicing Agreement.

         Transfer Date means the Initial Transfer Date or any Subsequent
         Transfer Date, as applicable.

         Trust Indenture Act or TIA means the Trust Indenture Act of 1939, as in
         force on the date hereof, unless otherwise specifically provided.

         Trustee means The Bank of New York, a New York banking corporation or
         its successor, as trustee under the Indenture, or any successor Trustee
         under the Indenture.

         Underwriting Agreement means the Underwriting Agreement dated as of
         March 2, 2001, among the Seller, the Issuer and Salomon Smith Barney,
         Inc., on behalf of itself and as the representative of the several
         underwriters named therein.

         U.S. Government Obligations means direct obligations (or certificates
         representing an ownership interest in such obligations) of the United
         States of America (including any agency or instrumentality thereof) for
         the timely payment of which the full faith and credit of the United
         States of America is pledged and which are not callable at the issuer's
         option.

                                      A-19
<PAGE>   63

         Weighted Average Days Outstanding means the weighted average number of
         days Detroit Edison's monthly retail customer bills remain outstanding
         during the calendar year immediately preceding the calculation thereof
         pursuant to Section 4.01(b)(i) of the Servicing Agreement. The
         calculation of Weighted Average Days Outstanding pursuant to Section
         4.01(b)(i) of the Servicing Agreement shall become effective on March 1
         of each year. The initial Weighted Average Days Outstanding shall be 45
         days until updated pursuant to Section 4.01(b)(i) of the Servicing
         Agreement.

                                      A-20<PAGE>   1

                                                                   EXHIBIT 10.01
                             LONG TERM GAS AGREEMENT

This Agreement is made this 22nd day of March 2001, between Midland Cogeneration
Venture Limited Partnership ("MCV" or "Buyer") and Engage Energy America LLC
("Seller") for the purpose of entering into a long-term gas supply arrangement
on the terms and conditions that follow. In this Agreement, Seller and Buyer may
also be referred to individually as "Party" or collectively as "Parties."

1.   Definitions. The following terms when used in this Agreement shall have the
     following meanings:

     1.1.  "Agreement" shall mean this Agreement and all Exhibits hereto.

     1.2.  "Btu" shall mean one (1) British Thermal Unit, the amount of heat
           required to raise the temperature of one (1) pound of water one (1)
           degree Fahrenheit at sixty (60) degrees Fahrenheit. BTU is measured
           on a dry basis.

     1.3.  "Business Day" shall mean any Day other than a Day on which banks in
           the U.S.A. are allowed by law to be closed.

     1.4.  "Contract Year" shall mean any calendar year during the term of this
           Agreement.

     1.5.  "Cubic Foot of Gas" shall mean the volume of Gas contained in one
           (1) cubic foot of space at a pressure of fourteen and seventy-three
           hundredths (14.73) dry Psia, at a temperature of sixty degrees
           (60(K176)) Fahrenheit.

     1.6.  "Day" shall mean a period of twenty-four (24) consecutive hours (23
           hours when changing from Standard to Daylight time and 25 hours when
           changing back to Standard time) beginning and ending at 9:00 a.m.
           Central clock time.

     1.7.  "Disputed Amount" shall have the meaning set forth in Section 5.1.2.

     1.8.  "Gas" shall mean any mixture of hydrocarbon and noncombustible gases
           in a gaseous form consisting primarily of methane and includes
           natural Gas produced from gas wells (gas well gas), Gas which
           immediately prior to being produced from a reservoir is in solution
           with crude oil or dispersed in an intimate association with crude
           oil or in contact with crude oil across a gas-oil contact
           (casinghead gas), or residue gas resulting from the processing of
           either or both casinghead gas and gas well gas.

     1.9.  "Material Adverse Change" shall mean: (i) with respect to Guarantor,
           having consolidated net worth of less than $800,000,000 ($US) as
           presented in its financial statements and having a Standard & Poor's
           rating lower than BBB-; (ii) with respect to MCV having less than
           $60 million Cash Reserves as reported in the Liquidity Section of
           Midland Cogeneration Venture's annual 10K report and quarterly 10Q
           report; and (iii) with respect to Midland Funding Corp. 1 having a
           Standard & Poor's rating lower than BBB-. Cash Reserves equal the
           total Cash Reserves as reported less the funds restricted for rental
           payments (presently $137,000,000) and funds restricted for
           management nonqualified plans (presently $1,800,000).

     1.10. "Mcf" shall mean one thousand (1,000) cubic feet of Gas.

     1.11. "MMBtu" shall mean a quantity of Gas equal to one million
           (1,000,000) Btu, which is equivalent to one (1) dekatherm.

     1.12. "Month" shall mean the period beginning at 9 a.m. Central clock time
           on the first Day of any calendar month and ending at 9 a.m. Central
           clock time on the first Day of the next succeeding calendar month.

     1.13. "NYMEX last day settlement" shall mean the last day settlement price
           on the New York Mercantile Exchange for natural gas for delivery at
           the Henry Hub in the month of delivery on which futures contracts
           for gas in such month were traded.

     1.14. "Point of Delivery" shall mean the point where Seller delivers Gas
           to Buyer as set forth in Exhibit A of this Agreement.
     1.15. "Prime Rate" shall mean the fluctuating per annum lending rate of

           interest from time to time published by CITIBANK, N.A., or its
           successor, for its best commercial customers.
     1.16. "Psia" shall mean pounds per square inch absolute.

                                     Page 1

<PAGE>   2

     1.17. "Transporter" shall mean any pipeline transporting Gas subject to
           this Agreement as referenced in Exhibit A.

     1.18. "Undisputed Amount" shall have the meaning set forth in Section
           5.1.2.

2.   Quantity. Seller agrees to deliver and sell and MCV agrees to receive and
     purchase 10,000 MMBtu/Day, on a firm basis, in accordance with the terms
     and conditions of this Agreement.

3.   Price.

     3.1.  The price to be paid by Buyer to Seller for all quantities of Gas
           delivered hereunder inclusive of all taxes and other adjustments or
           costs not provided for herein shall be NYMEX last day settlement
           plus $0.205 per MMBtu for all Gas delivered to the Point of
           Delivery.

     3.2.  Seller shall be responsible for all taxes prior to the Point of
           Delivery. MCV shall be responsible for all taxes at and after the
           Point of Delivery.

4.   Term. Deliveries of Gas shall commence on November 1, 2002, and continue
     through October 31, 2010.

5.   Billing, Payments and Audit.

     5.1.  Billing and payment procedures are as follows:

           5.1.1.  After the delivery of Gas has commenced hereunder, Seller
                   shall, on or about the fifteenth (15) Day of each month,
                   render to Buyer a statement showing the estimated (or
                   actual if available) quantity of Gas delivered at each
                   Point of Delivery during the prior month and the amounts
                   due Seller hereunder. Seller shall also render to Buyer, if
                   necessary, a separate statement showing the adjustment, if
                   any, required to conform the prior month's estimated and
                   actual deliveries and prices. Payment of the amount due
                   based on such statements shall be made by Buyer to Seller
                   by wire transfer with immediately available funds the later
                   of (a) ten (10) Days following receipt of such statement or
                   (b) the twenty-fifth (25th) Day of the month. If the due
                   date falls on a Day that is not a Business Day, then
                   payment shall be made on the next Business Day. If Buyer
                   bills Seller, the same procedure shall be followed as set
                   forth in this Section 5.1.1.

           5.1.2.  In the event that either Party shall in good faith dispute
                   any portion of the amount shown in the other Party's
                   statement (hereinafter called the "Disputed Amount"), the
                   disputing Party shall (a) notify the other Party in writing
                   as to the Disputed Amount, and (b) pay the remaining
                   undisputed portion of the other Party's statement when due
                   (hereinafter, the "Undisputed Amount").

           5.1.3.  If it is determined that the failure to pay any Disputed
                   Amount of any statement was not justifiable, interest on
                   such Disputed Amount shall accrue at a rate per annum equal
                   to the Prime Rate plus one percent (1.0%) from the time
                   payment would have been due until the time payment is made,
                   but in no event shall the interest on such unpaid portion
                   exceed the applicable lawful nonusurious rate of interest.
                   Payment of any previously unpaid Disputed Amount shall be
                   credited first to all interest accrued and then to
                   principle.

     5.2.  Each Party hereto shall have the right, upon reasonable written
           notice, during normal business hours and at its own expense to
           examine and to obtain copies of the relevant portion of the books
           and records of the other Party to the extent necessary to verify
           the accuracy of any statement, charge, computation, or demand made
           under or pursuant to this Agreement. Such examination shall be
           conducted no more than once in a twelve-month period. Any error or
           discrepancy in statements furnished pursuant to this Agreement
           shall be promptly reported to Seller or Buyer, as applicable, and
           proper adjustment thereof shall be made within thirty (30) Days
           after final determination of the correct volumes or amounts
           involved; provided, however, that if no such errors or
           discrepancies are reported to Seller or Buyer, as applicable,
           within two (2) years from the end of the calendar year in which
           such errors or discrepancies occurred, the same shall be
           conclusively deemed to be correct.

                                     Page 2

<PAGE>   3

6.    Deliveries.
      6.1.  Exhibit A hereto sets forth the Point of Delivery under this
            Agreement. Seller shall not use any other point to deliver Gas
            without Buyer's written consent, which Buyer may grant or withhold
            in its sole discretion.

      6.2.  To the extent that the procedures for the delivery of Gas set forth
            herein conflict with the rules and tariffs of any Transporter, the
            Transporter's rules and tariffs will control and the Parties shall
            cooperate fully with each other in complying with such rules and
            tariffs.

7.    Third Party Gas. Buyer understands and agrees the Gas delivered hereunder
      may be supplied either from Seller's Gas or from Gas purchased by Seller
      from third parties; provided however, if such Gas is purchased from third
      parties, Seller shall be solely responsible for the payment of the
      purchase price of Gas to such third parties.

8.    Title. Title and risk of loss to Gas delivered hereunder shall pass from
      Seller to Buyer at the Point of Delivery.

9.    Delivery Pressure. Seller shall be required to deliver or cause delivery
      of the Gas to the Point of Delivery and for delivering such Gas at a
      pressure sufficient to effect such delivery. Notwithstanding anything to
      the contrary herein, Seller shall have the right but not the obligation to
      install compression to effect deliveries of Gas hereunder.

10.   Quality of Gas. The Gas to be delivered by Seller hereunder at the Point
      of Delivery shall comply with the quality, heat, and pressure requirements
      of the receiving Transporter.

11.   Measurement and Tests of Gas. The quantity and quality of Gas delivered to
      the Buyer's account at the Point of Delivery shall be determined in
      accordance with the established standard terms and conditions applicable
      to the Transporter's gas transportation contracts.

12.   Warranty of Title. Seller hereby warrants (i) title to all Gas sold
      hereunder or the right to sell such Gas, (ii) that it has the right to
      sell same to Buyer, and (iii) that all such Gas shall be free from any and
      all liens and adverse claims of any nature whatsoever. Seller agrees to
      indemnify and hold Buyer harmless, including but not limited to, all
      costs, damages, and expenses (including Buyer's reasonable attorney fees)
      incurred by Buyer in defending against any liens or adverse claims of any
      nature whatsoever, including but not limited to, third parties from whom
      Seller purchased Gas as permitted in Section 7, in addition to any other
      remedies Buyer may have hereunder or at law.

13.   Credit Worthiness.

      13.1. This Agreement is subject to Seller providing, for the term of this
            Agreement, a parental guaranty to Buyer in the form attached hereto
            as Exhibit "B." Such guaranty shall be effective as of the date of
            this Agreement.

      13.2. At any time, and from time to time during the term of this Agreement
            (and notwithstanding whether an Event of Default has occurred as
            defined in Section 21) but not more than once in any seven (7) Day
            period, if the Termination Payment (as such term is defined in
            Section 13.5) should exceed $10 million with respect to Buyer and
            $10 million with respect to Seller (the "Security Threshold"), then
            either Party may request the other Party to provide additional
            Performance Assurance in an amount equal to the amount by which the
            Termination Payment exceeds the Security Threshold (rounding upwards
            for any fractional amount to the next $100,000). The Performance
            Assurance shall be delivered within fourteen (14) calendar days of
            the date of the request. If such additional Performance Assurance is
            not received by the requesting Party within fourteen (14) calendar
            days, then the requesting Party, in addition to any other remedy
            available, may immediately suspend performance with respect to the
            quantities associated with the amount in excess of the Security
            Threshold, plus any Performance Assurance already in place, and
            cover such lost supply or market, as the case may be. Incremental
            gas costs (as referenced in Section 17 with respect to either Buyer
            or Seller, as applicable) incurred by the covering Party shall be
            recoverable from the other Party. Such suspension will be
            implemented on a pro rata basis to a level at which assurances have

                                     Page 3

<PAGE>   4

            been provided. In addition, a failure to provide Performance
            Assurance as requested shall constitute an Event of Default under
            Section 21.

      13.3. Either Party, at its sole expense, may request the other Party to
            reduce its Performance Assurance then in place if the Termination
            Payment (with respect to this Agreement) reverts back to an amount
            less than or equal to the sum of the Performance Assurance and the
            Security Threshold then in place (rounding upwards for any
            fractional amount to the next $100,000). Such request for reduction
            shall be no more frequently than weekly, with respect to Letters of
            Credit and guaranties, and daily, with respect to cash. The consent
            to such request(s) shall not be unreasonably withheld.

      13.4. Either Party may at any time make a calculation of the Termination
            Payment and submit same to the other Party for review. If within
            thirty (30) Days of the submission of the value of the Termination
            Payment from one Party to the other, agreement has not been reached
            by the Parties as to the amount of the Termination Payment, the
            determination of the amount of the Termination Payment shall be
            submitted to arbitration as provided for in Section 18 of this
            Agreement. Notwithstanding the submission of the determination of
            the amount of the Termination Payment to arbitration, all
            requirements in Section 13 of this Agreement shall remain in effect.

      13.5. With respect to this Section 13: (a) "Performance Assurance" means
            collateral in the form of either cash or Letters of Credit. The
            requesting Party may also accept a parental guaranty or other
            collateral deemed sufficient by the requesting Party. If the
            collateral is in the form of cash, then such cash shall be placed in
            a segregated, interest-bearing escrow account on deposit with a
            major U.S. commercial bank having a credit rating of at least "A-"
            from Standard and Poor's or "A3" from Moody's (interest to accrue to
            the Party posting the collateral); (b) "Letter of Credit" means one
            or more irrevocable, transferable standby letters of credit from a
            major U.S. commercial bank or foreign bank with a U.S. office having
            a credit rating of at least "A-" from Standard & Poor's or "A3" from
            Moody's; (c) "Termination Payment" means the amount by which the
            requesting Party shall aggregate Gains, Losses, and Costs (as those
            terms are defined in Section 21.2.5 with respect to this Agreement)
            into a single net amount. The Termination Payment shall include all
            amounts owed but not yet paid by one Party to the other Party,
            whether or not such amounts are then due, for performance already
            performed pursuant to this Agreement.

14.   Right to Terminate Agreement.
      14.1. In addition to any other remedy of Buyer under law or provided under
            this Agreement, Buyer shall have the right at its election to
            terminate this Agreement upon twenty (20) Days written notice to
            Seller if Seller for any reason other than: (i) Force Majeure with a
            duration of less than six (6) months, (ii) Buyer's failure to take,
            or (iii) failure by Buyer to pay any Undisputed Amounts, fails, over
            a period of at least sixty (60) Days, to deliver an average of
            ninety percent (90%) of the agreed quantity, and provided further,
            that such failure occurred not more than one hundred forty (140)
            Days immediately preceding the giving of such notice of termination.
            Seller shall have twenty (20) Days after receipt of such
            cancellation notice to cure any failure, in which case Buyer's
            cancellation is null and void, and this Agreement shall remain in
            full force and effect.

      14.2. In addition to the other remedies of Seller under law or provided
            under this Agreement, Seller shall have the right at its election to
            terminate this Agreement upon twenty (20) Days written notice to
            Buyer if Buyer for any reason other than: (i) Force Majeure with a
            duration of less than six (6) months, (ii) Seller's failure to
            deliver, or (iii) failure by Seller to pay any Undisputed Amounts,
            fails, over a period of at least sixty (60) Days, to take a volume
            of Gas not less than an average of ninety percent (90%) of the
            agreed quantity, and provided further, that such failure occurred
            not more than one hundred forty (140) Days immediately preceding the
            giving of such notice of termination. Buyer shall have twenty (20)
            Days after receipt of such cancellation notice to cure any failure,
            in which case Seller's cancellation is null and void, and this
            Agreement shall remain in full force and effect.

      14.3. Notwithstanding Section 21.1.3, in the event of an on-going Force
            Majeure continuing six (6) months or longer, in addition to any
            other remedy under law or provided under this

                                     Page 4

<PAGE>   5

            Agreement, then such event of Force Majeure may be treated as an
            Event of Default, and the Party who did not claim such Force Majeure
            shall have the additional rights of a Non-Defaulting Party as
            enumerated under Section 21.2.

15.   Assignment.

      15.1. The terms, covenants and conditions hereof shall be binding on the
            Parties hereto and on their successors and permitted assignees.

      15.2. Either Party may assign its interest under this Agreement with the
            consent of the other Party, which consent shall not be unreasonably
            withheld, to an affiliate or any company that shall succeed, by
            merger or consolidation, to substantially all of its assets. In the
            event of any such assignment, such successor shall be entitled to
            the rights and shall be subject to the obligations of its
            predecessor. Seller acknowledges that pursuant to a certain Gas
            Backup Agreement among Consumers Energy Company (formerly Consumers
            Power Company), The Dow Chemical Company ("Dow"), and Midland
            Cogeneration Venture Limited Partnership dated January 27, 1987,
            Buyer may be required to make an assignment to Dow of certain rights
            under this Agreement. Seller specifically agrees to accept such
            assignments, if any, made by Buyer to Dow in accordance with the
            aforementioned Gas Backup Agreement; provided, however, that such
            assignment shall not relieve Buyer of its obligations under this
            Agreement absent Seller's written consent.

      15.3. Except as provided above, neither Party shall assign this Agreement
            without the prior consent of the other Party, which consent shall
            not be unreasonably withheld. Nothing herein contained shall prevent
            or restrict either Party from pledging, granting a security interest
            in, or assigning as collateral all or any portion of such Party's
            interest to secure any debt or obligation of such Party under any
            mortgage, deed of trust, security agreement, or similar instrument.

      15.4. Either Party desiring to make an assignment for which it has the
            right pursuant to the foregoing may upon request obtain a written
            consent within sixty (60) Days to such assignment from the other
            Party evidencing its consent.

16.   Notices. All Notices required hereunder may be sent by facsimile or
      mutually acceptable electronic means, a nationally recognized overnight
      courier service, first class mail, or hand delivered to the addressee as
      provided below or at such other address as either Party may from time to
      time specify in writing to the other Party. Any notice, request, demand,
      or statement given in writing or required to be given in writing by the
      terms of this Agreement shall be deemed given when received on a Business
      Day by the addressee. In the absence of proof of the actual receipt date,
      the following presumptions will apply. Notices sent by facsimile shall be
      deemed to have been received upon the sending party's receipt of its
      facsimile machine confirmation of successful transmission, if the day on
      which such facsimile is received is not a Business Day or is after five
      p.m., recipient's time, on a Business Day, then such facsimile shall be
      deemed to have been received on the next following Business Day. Notice by
      overnight mail or courier shall be deemed to have been received on the
      next Business Day after it was sent or such earlier time as is confirmed
      by the receiving party. Notice via first class mail shall be considered
      delivered two Business Days after mailing.

      TO SELLER:

              Invoices:      Engage Energy America LLC
                             Attn: Vice President Structured Gas, Midwest
                             3000 Town Center Suite 2800; Southfield MI 48075
                             Telephone: 248-304-3218    Facsimile: 248-304-8747

              Other Notices: Engage Energy America LLC
                             Attn: Vice President Structured Gas, Midwest
                             3000 Town Center Suite 2800; Southfield MI 48075
                             Telephone: 248-304-3218    Facsimile: 248-304-8747

              Wire Transfer: BANK: BankOne N.A., Chicago, IL
                             ACCT: 10-51051
                             ABA: 071000013

                                     Page 5

<PAGE>   6

      TO BUYER:

              Invoices:      Midland Cogeneration Venture Limited Partnership
                             Attn: Gas Accounting
                             100 Progress Place; Midland MI 48640
                             Telephone: 517-633-7854    Facsimile: 517-633-7857

              Other Notices: Midland Cogeneration Venture Limited Partnership
                             Attn: Contract Administration
                             100 Progress Place; Midland MI 48640
                             Telephone: 517-633-7852    Facsimile: 517-633-7857

              Wire Transfer: BANK: U.S. Bank Trust, N.A., Minneapolis, MN
                             ACCT: 180121167365
                             ABA: 091000022
                             DETAILS: MI Clearing 47300196 - FBO MCV 76608640

      Gas nomination notices will be in accordance with the terms and conditions
      applicable to Transporter.

17.   Remedies. In the event Seller fails to deliver the daily quantities for
      reasons not otherwise excused by Force Majeure, Seller shall be
      responsible for any incremental gas costs incurred by MCV in replacing
      such Gas. MCV agrees to use commercially reasonable efforts to purchase
      replacement Gas at the lowest available price. Seller's obligation to pay
      MCV for incremental replacement Gas costs (and any transportation
      penalties or transportation demand charges resulting from unused
      transportation) shall be MCV's sole and exclusive remedy for Seller's
      failure to deliver except as provided in Section 14. In the event that MCV
      fails to take Gas for reasons not otherwise excused by Force Majeure, MCV
      shall pay Seller for any incremental decrease in the resale price of such
      Gas. Seller agrees to use commercially reasonable efforts to resell such
      deficiency Gas at the highest achievable price. MCV's obligation to pay
      Seller for such decrease (and any transportation penalties or
      transportation demand charges resulting from unused transportation) shall
      be Seller's sole and exclusive remedy for MCV's failure to take Gas except
      as provided in Section 14.

18.   Arbitration.

      18.1. If the Parties are unable to resolve a disagreement arising under
            this Agreement, such disagreement shall be settled by arbitration.
            Either Party may then commence arbitration by serving written notice
            thereof on the other Party designating the issue to be arbitrated.

      18.2. The Parties shall each appoint one (1) arbitrator and the two (2)
            arbitrators so appointed will select a third arbitrator, all of such
            arbitrators to be qualified by education, knowledge, and experience
            to resolve the dispute or controversy. If either Party fails to
            appoint an arbitrator within ten (10) Days after a request for such
            appointment is made by the other Party in writing, or if the two (2)
            appointed fail to agree on a third arbitrator within ten (10) Days
            after the appointment of the second, the arbitrator or arbitrators
            necessary to complete a board of three (3) arbitrators will be
            appointed upon application by either Party therefore to the American
            Arbitration Association ("AAA").

      18.3. The jurisdiction of the arbitrators will be limited to the single
            issue referred to arbitration and the arbitration shall be conducted
            pursuant to the guidelines set forth by the AAA; provided however,
            that should there be any conflict between such guidelines and the
            procedures set forth in this Agreement, the terms of this Agreement
            shall control.

      18.4. Within fifteen (15) Days following selection of the third
            arbitrator, each Party shall furnish the arbitrators in writing its
            position regarding the issue being arbitrated. The arbitrators may,
            if they deem necessary, convene a hearing regarding the issue being
            arbitrated. Within thirty (30) Days following the later of the
            appointment of the third arbitrator or of the hearing, if one is
            held, the arbitrators shall notify the Parties in writing as to
            which of the two (2) positions submitted is most consistent with the
            meaning of this Agreement with respect to the issue being
            arbitrated. No other position may be selected. Such decision shall
            be binding on the Parties hereto and shall remain in effect until
            and unless changed in accordance with the provisions of this
            Agreement.

                                     Page 6

<PAGE>   7
      18.5. Enforcement of the award may be entered in any court having
            jurisdiction over the Parties.

      18.6. Each Party will pay the expenses of the arbitrator selected by or
            for it, and its counsel, witnesses, and employees. All other costs
            of arbitration will be equally divided between the Parties.

 19.  Force Majeure. The term "Force Majeure" as employed herein for all
      purposes relating hereto, shall mean acts of God, strikes, lockouts, or
      other industrial disturbances, acts of public enemy, wars, blockades,
      insurrections, riots, epidemics, landslides, lightning, earthquakes,
      hurricanes, explosions, fires, arrests and restraints of governments and
      people, civil disturbance, freeze-up of Seller's wells or wells from which
      Seller is furnishing Gas hereunder, or other temporary inability of
      Seller's wells or wells from which Seller is furnishing Gas hereunder to
      produce, mechanical breakdowns or repairs of MCV's plant or pipeline
      facilities or those of any Transporter used to transport Gas hereunder,
      inability of any Party hereto to obtain necessary materials, supplies, or
      permits due to existing or future rules, regulations, orders, laws, or
      proclamations of governmental authorities (federal, state, or local),
      including both civil and military, and any other causes whether of the
      kind herein enumerated or otherwise not within the control of the Party
      claiming suspension and that by the exercise of due diligence such Party
      is unable to prevent or overcome. Neither party shall be entitled to the
      benefit of the provisions of Force Majeure to the extent performance is
      affected by any or all of the following circumstances: (i) the curtailment
      of interruptible or secondary firm transportation unless primary, in-path,
      firm transportation is also curtailed; (ii) the party claiming excuse
      failed to remedy the condition and to resume the performance of such
      covenants or obligations with reasonable dispatch; or (iii) economic
      hardship, to include, without limitation, Seller's ability to sell Gas at
      a higher or more advantageous price than the Contract Price, Buyer's
      ability to purchase Gas at a lower or more advantageous price than the
      Contract Price, or a regulatory agency disallowing, in whole or in part,
      the pass through of costs resulting from this Agreement; (iv) the loss of
      Buyer's market(s) or Buyer's inability to use or resell Gas purchased
      hereunder

 20.  Transportation. Both Parties shall cooperate in an effort to eliminate
      imbalances on either Party's transporting pipeline(s). The Parties further
      agree that if any imbalance penalties or charges (including cash out
      charges) are imposed on a Party as a result of the other Party's failure
      to deliver or accept the required quantities then the failing Party shall
      reimburse the nonfailing Party for such charges or penalties.

 21.  Defaults and Remedies.

      21.1. Event of Default. A Party shall be deemed in default under this
            Agreement upon the occurrence of any one or more of the following
            events ("Events of Default"):

            21.1.1.  The unexcused failure by a Party (the "Defaulting Party")
                     to make, when due, any payment required pursuant to this
                     Agreement if such failure is not remedied within three (3)
                     Business Days after written notice of such failure is given
                     to the Defaulting Party by the other Party (the
                     "Non-Defaulting Party") and provided the payment is not a
                     Disputed Amount as described in Section 5.1.2;

            21.1.2.  Any representation or warranty made by a Party herein shall
                     at any time during the term of this Agreement prove to be
                     false or misleading in any material respect;

            21.1.3.  The failure by a Party to perform, in any material respect,
                     any material covenant or provision set forth in this
                     Agreement (other than (i) the events that are otherwise
                     specifically covered in this Section 21.1 as a separate
                     Event of Default and (ii) the events that are covered in
                     Sections 14 and 17) and such failure is not cured within
                     five (5) Business Days (or such longer period of time if
                     reasonably necessary to cure the failure and the Defaulting
                     Party is making continuous and diligent efforts to cure)
                     after written notice thereof to the Defaulting Party unless
                     such failure is excused by Force Majeure;

            21.1.4.  A Party (i) makes an assignment or any general arrangement
                     for the benefit of creditors; (ii) files a petition or
                     otherwise commences, authorizes, or acquiesces in the
                     commencement of a proceeding or cause under any bankruptcy
                     or similar law for the protection of creditors or have such
                     petition filed or proceeding commenced against it;

                                     Page 7

<PAGE>   8

               or (iii) has a receiver, provisional liquidator, conservator,
               custodian, trustee or other similar official appointed with
               respect to it or substantially all of its assets; or

      21.1.5.  The failure of a Party, upon the occurrence of a Material Adverse
               Change, to provide, for so long as the Material Adverse Change is
               occurring, adequate assurance as reasonably determined by the
               Non-Defaulting Party but not to exceed the Termination Amount (in
               the form of cash or a Letter of Credit to be provided at the
               election of the Defaulting Party or a guaranty deemed acceptable
               by the Non-Defaulting Party, which such acceptance of such
               guaranty may not be unreasonably withheld) of its ability to
               perform all of its outstanding obligations to the Non-Defaulting
               Party under this Agreement within a period not to exceed three
               (3) Business Days of the Defaulting Party's receipt, in
               accordance with the notice provisions of Section 16, of a demand
               therefore by the Non-Defaulting Party.

      21.1.6.  If a party to this Agreement becomes subject to Bankruptcy Code
               proceedings, it is understood and agreed that the other Party
               shall be entitled to exercise its contractual right to liquidate
               as a forward contract merchant under Section 556 of the U.S.
               Bankruptcy Code.

21.2. Remedies Upon an Event of Default.

      21.2.1.  If an Event of Default occurs with respect to a Defaulting Party
               at any time during the term of this Agreement, the Non-Defaulting
               Party shall have the right at its sole discretion for so long as
               the Event of Default is continuing to (i) establish a date (which
               date shall be between 5 and 10 Business Days after the
               Non-Defaulting Party delivers written notice to the Defaulting
               Party of its intent to exercise the remedy described herein)
               ("Early Termination Date") on which this Agreement shall
               terminate, and (ii) withhold any payments due; provided however,
               upon the occurrence of any Event of Default listed in Section
               21.1, as it may apply to any Party, this Agreement in respect
               thereof shall automatically terminate, without notice, and
               without any other action by either Party as if an Early
               Termination Date had been declared immediately prior to such
               event.

      21.2.2.  If an Early Termination Date has been designated, the
               Non-Defaulting Party shall in good faith calculate its Gains,
               Losses, and Costs resulting from the termination of this
               Agreement. The Gains, Losses, and Costs shall be determined by
               comparing the value of the remaining term, contract quantities,
               and contract prices under this Agreement, had it not been
               terminated, to the equivalent quantities and relevant market
               prices for the remaining term either quoted by a bona fide
               third-party offer or that are reasonably expected to be available
               in the market under a replacement contract for the balance of
               this Agreement. To ascertain the market prices of a replacement
               contract, the Non-Defaulting Party may consider, among other
               valuations, settlement prices of NYMEX natural gas futures
               contracts, quotations from leading dealers in natural gas swap
               contracts, and other bona fide third party offers, all adjusted
               for the length of the remaining term and differences in
               transportation. It is expressly agreed that a Party shall not be
               required to enter into replacement transactions in order to
               determine the Termination Amount (as hereinafter defined.)

      21.2.3.  The Non-Defaulting Party shall aggregate such Gains, Losses, and
               Costs with respect to the balance of this Agreement into a single
               net amount ("Termination Amount"). The Non-Defaulting Party shall
               provide the Defaulting Party with a notice and statement
               containing a clear identification and calculation of the
               Termination Amount owed by or due to the Defaulting Party and
               shall be accompanied by sufficient information to enable the
               Defaulting Party to determine the basis upon which the
               calculation was made and the accuracy thereof. If the
               Non-Defaulting Party's aggregate Losses and Costs exceed its
               aggregate Gains, the Defaulting Party shall, within five (5)
               Business Days of receipt of such statement, pay the Termination
               Amount to the Non-Defaulting Party, which amount shall bear
               interest at the interest rate as set forth in Section 5.1.3
               above, from the Early Termination Date until paid. If the
               Non-Defaulting Party's aggregate Gains exceed its aggregate
               Losses and Costs, if any, resulting from the termination of this
               Agreement, the Non-Defaulting Party shall

                                     Page 8

<PAGE>   9

               pay such excess to the Defaulting Party on or before the latter
               of: (i) twenty (20) Days after the end of the month ending on or
               after the Early Termination Date, and (ii) five (5) Business Days
               after receipt by the Defaulting Party of the Non-Defaulting
               Party's notice of the Termination Amount, which amount shall bear
               interest at the interest rate as set forth in Section 5.1.3
               above, from the Early Termination Date until paid.

      21.2.4.  If the Defaulting Party disputes the Non-Defaulting Party's right
               to terminate this Agreement or disagrees with its calculation of
               the Termination Amount, in whole or in part, the Defaulting Party
               shall, within three (3) Business Days of receipt of the
               Non-Defaulting Party's calculation of the Termination Amount,
               provide to the Non-Defaulting Party a detailed written
               explanation of the basis for such dispute or disagreement and, if
               the Termination Amount is due from the Defaulting Party, shall
               promptly pay to the Non-Defaulting Party such portion thereof as
               is conceded to be correct. Upon receipt of the Defaulting Party's
               explanation, the Parties shall seek to resolve the issues in
               accordance with mutually agreeable dispute resolution procedures.

      21.2.5.  As used herein in this Section 21.2, with respect to each Party:
               (i) "Costs" shall mean reasonable brokerage fees, commissions,
               and other similar transaction costs and expenses reasonably
               incurred by a Party either in terminating or entering into new
               arrangements which replace this Agreement, and reasonable
               attorney's fees, if any, reasonably incurred in connection with
               enforcing its rights under this Agreement; (ii) "Gains" shall
               mean an amount equal to the present value (calculated using the
               interest rate as set forth in Section 5.1.3 above as the
               prevailing discount rate) of the economic benefit (exclusive of
               Costs), if any, to a Party resulting from the termination of its
               obligations with respect to this Agreement, determined in a
               commercially reasonable manner; and (iii) "Losses" shall mean an
               amount equal to the present value (calculated using the interest
               rate as set forth in Section 5.1.3 above as the prevailing
               discount rate) of the economic loss (exclusive of Costs), if any,
               to a Party from the termination of its obligations, with respect
               to this Agreement, determined in a commercially reasonable
               manner. In no event, however, shall a Party's Costs, Gains, or
               Losses include any costs or expenses incurred by a Party in
               terminating or reestablishing any arrangement pursuant to which
               it has hedged its obligations under this Agreement.

22.   Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUCTED ACCORDING TO THE
      LAWS OF THE STATE OF MICHIGAN.

23.   Miscellaneous.

      23.1. No waiver by either Seller or Buyer of any default by the other
            under this Agreement shall operate as a waiver of any future
            default, whether of like or different character or nature.

      23.2. The descriptive headings of particular provisions of this Agreement
            are for the purpose of facilitating administration and shall not be
            construed as having any substantive effect on the terms of this
            Agreement.

      23.3. The Parties agree to proceed with due diligence and make good faith
            effort to obtain such governmental authorizations as may be
            necessary to enable performance of this Agreement.

      23.4. This Agreement is subject to the January 27, 1987, Gas Supply Option
            between Buyer and Dow and to Dow's rights under a certain Gas Backup
            Agreement with Buyer and Consumers Energy Company (formerly
            Consumers Power Company) dated January 27, 1987.

      23.5. If any provision of this Agreement is determined to be invalid,
            void, or unenforceable by any court having jurisdiction, such
            determination shall not invalidate, void, or make unenforceable any
            other provision of this Agreement.

      23.6. Neither Buyer nor Seller shall disclose to any third Party (other
            than its partners, parents, affiliates, directors, officers,
            employees, consultants, representatives, agents, prospective
            purchasers, or those third parties providing financing to it
            provided such persons have agreed to keep such terms confidential)
            any information received from the other Party that is explicitly

                                     Page 9

<PAGE>   10

            marked "Confidential" (such information hereinafter referred to as
            "Confidential Information"); provided however, that nothing shall be
            deemed Confidential Information that:

            23.6.1.  is part of the public domain;

            23.6.2.  becomes publicly known otherwise than through an action or
                     inaction of the receiving Party;

            23.6.3.  is independently developed by the receiving Party; or

            23.6.4.  is required to be disclosed pursuant to any law, rule, or
                     regulation, or pursuant to any order of a governmental
                     instrumentality, provided that the Party receiving the
                     order shall, if feasible, notify the other Party of any
                     such requirement at least ten (10) Days before compliance
                     is required, and if so requested by the other Party, shall
                     use reasonable efforts to oppose the required disclosure,
                     as appropriate under the circumstances, or to otherwise
                     make such disclosure pursuant to a protective order or
                     other similar arrangement for confidentiality.

      23.7. This Agreement may be amended only by a written instrument executed
            by the Parties hereto. This Agreement, the Guaranty (Exhibit B
            attached hereto), and the Consent and Agreement (Exhibit C attached
            hereto) contain the entire understanding of the Parties with respect
            to the matter contained in said documents. There are no promises,
            covenants, or undertakings other than those expressly set forth in
            said documents.

      23.8. Buyer represents and warrants that it has full and complete
            authority to enter into and to perform this Agreement. Seller
            represents and warrants that it has full and complete authority to
            enter into and to perform this Agreement. Each person who executes
            this Agreement on behalf of Buyer represents and warrants that he or
            she has full and complete authority to do so, and that Buyer will be
            bound thereby. Each person who executes this Agreement on behalf of
            Seller represents and warrants that he or she has full and complete
            authority to do so, and that Seller will be bound thereby.

      23.9. Notwithstanding anything to the contrary contained in this
            Agreement, the liabilities and obligations of MCV arising out of, or
            in connection with, this Agreement or any other agreements entered
            into pursuant hereto shall not be enforced by any action or
            proceeding wherein damages or any money judgment or specific
            performance of any covenant in any such document and whether based
            upon contract, warranty, negligence, indemnity, strict liability, or
            otherwise, shall be sought against the assets of the partners of
            MCV. By entering into this Agreement, Seller waives any and all
            right to sue for, seek, or demand any judgment against such partners
            and their affiliates, other than MCV by reason of the performance by
            MCV of its obligations under this Agreement or any other agreements
            entered into pursuant hereto, except to the extent such partners are
            legally required to be named in any action to be brought against
            MCV.

24.   Limitations: NEITHER PARTY HERETO SHALL BE LIABLE TO THE OTHER PARTY FOR
      ANY CONSEQUENTIAL, INCIDENTAL, OR PUNITIVE DAMAGES ARISING OUT OF, OR
      RELATED TO, A BREACH OF THIS AGREEMENT.

IN WITNESS WHEREOF, this Agreement is executed in multiple originals effective
as of the day and year first herein above written.

Midland Cogeneration Venture Limited Partnership       Engage Energy America LLC

LeRoy W. Smith                                         Mike Broadfoot
--------------                                         --------------
Name:   LeRoy W. Smith                                 Name:  Mike Broadfoot
Title: Vice President Energy Supply and Marketing      Title: Vice Chairman

                                    Page 10

<PAGE>   11

                                                                       EXHIBIT A

                                POINT OF DELIVERY

         Delivery point on the pipeline of Great Lakes Gas Transmission
                 Limited Partnership commonly known as Midland

                                    Page 11

<PAGE>   12

                                                                       EXHIBIT B

                                    GUARANTY

Guaranty dated effective as of the 22nd day of March 2001, by Westcoast Energy
Inc., a Canadian Federal corporation (hereinafter referred to as the
"Guarantor"), in favour of Midland Cogeneration Venture Limited Partnership, a
Michigan limited partnership (hereinafter referred to as "Creditor").

         WHEREAS, Creditor and Engage Energy Canada, L.P. and/or Engage Energy
America LLC (hereinafter referred to as "Debtor") have entered into a certain
Long Term Gas Agreement dated March 22, 2001, as may be amended from time to
time (hereinafter referred to as the "Contract"); and

         WHEREAS, as a condition precedent to Creditor's entering into the
Contract, Guarantor has agreed to provide this Guaranty as provided herein;

         NOW THEREFORE, for and in consideration of the premises, Guarantor
hereby agrees as follows:

1)       Guaranty. With respect to the period from November 1, 2002 to October
         31, 2010 during which Obligations (as defined below) are to be
         performed (the "Guarantee Period"), Guarantor unconditionally
         guarantees to Creditor the payment of amounts due and payable by Debtor
         pursuant to the Contract (such obligations being hereinafter referred
         to as the "Obligations"); provided however, that as to Obligations
         which Guarantor is called upon to honor, Guarantor is and shall be
         entitled to assert any and all claims, counterclaims, defenses,
         offsets, and other rights which Debtor could assert against Creditor
         with respect to the Obligations, except as provided in paragraph 8
         below. In the event Debtor defaults in the payment of any of the
         Obligations, after thirty days written notice to Guarantor at the
         address provided below, Guarantor shall make such payment or otherwise
         cause same to be paid. Guarantor's Obligations are subject to its
         receiving from Creditor copies of any and all notices of defaults and
         events of default given by Creditor to Debtor pursuant to the Contract
         in the same manner and at the same time as such notices are given by
         Creditor to Debtor, except to Guarantor's address for notice set forth
         in this Guaranty.

2)       Guaranty Maximum Amount. The Obligations so guaranteed will be for a
         dollar amount up to, but in no event in excess of, ten million United
         States Dollars (US $10,000,000) (the "Guarantee Maximum Amount"). The
         Guarantor has the unconditional right to satisfy all performance
         obligations by means of payment of a dollar amount necessary to satisfy
         in full the Obligations in question.

3)       Termination. This Guaranty is continuing and irrevocable at all times
         during the Guarantee Period, unless terminated earlier in accordance
         with the terms and conditions of the Contract; provided that,
         notwithstanding such termination, the Guarantor shall remain liable for
         and this Guaranty shall remain in full force and effect until all
         Obligations with respect to transactions entered into prior to the
         effective date of such termination, have been fully satisfied.

4)       Waiver. Except as is otherwise provided in this Guaranty, Guarantor
         waives notice of acceptance of the guaranty contained herein,
         presentment, demand, notice of dishonor, protest and notice of protest,
         and prosecution of litigation in connection with the Obligations.

5)       Assignment. Neither Guarantor nor Creditor may assign its respective
         rights or obligations under this Guaranty without the other's written
         consent. Subject to the foregoing, this Guaranty shall be binding upon
         and inure to the benefit of the parties hereto and their respective
         successors, permitted assigns and legal representatives.

6)       Notices. Any notice or other communication required or permitted to be
         given to Guarantor or Creditor under this Guaranty shall be deemed to
         have been given when delivered personally or otherwise actually
         received if registered or certified, postage prepaid, or one (1) day
         after delivery

                                    Page 12

<PAGE>   13

         to a nationally recognized overnight courier service, fee prepaid,
         return receipt requested, if in writing and addressed as follows:

             Guarantor:  Westcoast Energy Inc.
                         1333 West Georgia Street
                         Vancouver, B.C.
                         V6E 3K9

                         Attention: Assistant Treasurer
                         Telephone: (604) 488-8058
                         Fax: (604) 488-8070

             Creditor:   Midland Cogeneration Venture Limited Partnership
                         100 Progress Place
                         Midland, Michigan
                         48640

                         Attention: Vice-President, Energy, Supply and Marketing
                         Telephone: (517) 633-7850
                         Fax: (517) 633-7857

7)    Applicable Law. This Guaranty shall in all respects be governed by,
      enforced under and construed in accordance with the laws of the State of
      Michigan.

8)    Effect of Certain Events. Guarantor agrees that Guarantor's liability
      hereunder will not be released, reduced, impaired, or affected by the
      occurrence of any one or more of the following events:

         a)  The insolvency, bankruptcy, reorganization or disability of
             Debtor;

         b)  The renewal, consolidation, extension, modification, or
             amendment from time to time of the Contract;

         c)  The failure, delay, waiver or refusal by Creditor to exercise
             any right or remedy held by Creditor with respect to the
             Contract;

         d)  The sale, encumbrance, transfer or other modification of the
             ownership of Debtor or the change in the financial condition
             or management of Debtor.

         IN WITNESS WHEREOF, Guarantor and Creditor have duly executed this
Guaranty effective as of the date first written above.

                             WESTCOAST ENERGY INC.

                             David G. Unruh
                             --------------------------------------------------
                             Name: David G. Unruh
                             Title: Senior VP, Law & Corporate Secretary

                             Joachim W. Castelsky
                             --------------------------------------------------
                             Name: Joachim W. Castelsky
                             Title: Assistant Treasurer

                             MIDLAND COGENERATION VENTURE LIMITED PARTNERSHIP

                             LeRoy W. Smith
                             --------------------------------------------------
                             Name:  LeRoy W. Smith
                             Title:  Vice President Energy Supply and Marketing

                                    Page 13

<PAGE>   14

                                                                       EXHIBIT C

                              CONSENT AND AGREEMENT

         CONSENT AND AGREEMENT, dated as of March 22, 2001, made by Engage
Energy America LLC, a Delaware limited liability company, (the "undersigned") to
the parties whose names appear on Schedule A attached hereto (the "Transaction
Parties"), provides as follows:

         1. Midland Cogeneration Venture Limited Partnership ("MCV"), and the
undersigned entered into the Long Term Gas Agreement dated March 22, 2001, as
the same may be amended, modified or supplemented from time to time in
accordance with the provisions thereof and of this Consent and Agreement (the
"Contract"). MCV was the owner of an approximately 1370 MW gas-fired
cogeneration facility in Midland, Michigan (the "Facility"). Pursuant to several
separate Participation Agreements, each dated as of June 1, 1990, MCV sold and
leased-back several separate Undivided Interests in the Facility under several
separate Leases each having a basic term of 25 years. The general structure of
the sale and lease-back transactions is described in more detail in Schedule B
attached hereto.

         2. The undersigned hereby acknowledges notice of the sale and
lease-back transactions described in Schedule B and receipt of a photocopy of
each Participation Agreement (including Appendix A thereto but excluding other
Appendices, Exhibits and Schedules referenced therein unless specifically
requested). Photocopies of the related Transaction Documents will be made
available by MCV to the undersigned at its request for inspection. The
undersigned further acknowledges and consents to the assignments of and Liens on
the Contract pursuant to the Transaction Documents related to each sale and
lease-back transaction, and hereby agrees with each of the Transaction Parties
(provided, however, that each of the Indenture Trustees will have the rights set
forth herein only until the undersigned receives written notice from such
Indenture Trustee that the related Undivided Interest in the Facility is no
longer subject to the Lien of the Indenture to which such Indenture Trustee is a
party and the Secured Notes issued pursuant to such Indenture have been paid in
full) that:

                  (a) Each Owner Trustee and each related Indenture Trustee
shall be entitled, after a Lease Event of Default or an Indenture Event of
Default under the Lease or the Indenture, as the case may be, to which such
Person is a party, to exercise any and all rights of MCV under the Contract in
accordance with the terms of the related Lease, the related Lessee Security
Agreement, the related Indentures and this Consent and Agreement, and the
undersigned will comply in all respects with such exercise by any of such
Persons.

                  (b) The undersigned will give each owner Trustee and Indenture
Trustee prompt written notice of any default of which it has knowledge under the
Contract which, if not cured, would give the undersigned the right to suspend
its performance under, or to terminate, the Contract. Each Owner Trustee and
Indenture Trustee (and their respective designee(s)) shall have the right,
within 10 days (or such longer period, to the extent a longer period is provided
to cure such default under the terms of the Long Term Gas Agreement dated March
22, 2001, other than defaults in respect to the nonpayment of money by MCV) of
receipt by each such Person of such written notice, to cure such default.

                  (c) In the event any Owner Trustee or Indenture Trustee
succeeds to MCV's rights or interests under the Contract after a Lease Event of
Default or an Indenture Event of

                                    Page 14

<PAGE>   15

Default under the Lease or the Indenture, as the case may be, to which such
Person is a party, whether by foreclosure or otherwise, such Person shall have
the right to exercise all rights of MCV under such Contract, and the undersigned
will comply in all respects with such exercise by such Person.

                  (d) The exercise of remedies under any Lease or foreclosure of
any Indenture, whether by judicial proceedings or under power of sale contained
in such Indenture or otherwise or any conveyance from MCV or any Owner Trustee
to either related Indenture Trustee in lieu thereof, following a Lease Event of
Default or Indenture Event of Default under the Lease or the Indenture, as the
case may be, to which such Person is a party, shall not require the further
consent of the undersigned.

         3. It is understood and agreed that the Contract and this Consent and
Agreement are subject to all tariffs and all Applicable Laws relating to such
services. Except as required, in the undersigned's reasonable opinion or by any
Applicable Law, the undersigned will not, without the prior written consent of
each Owner Trustee and Indenture Trustee (unless MCV delivers to the undersigned
a certificate stating that such consent is not required by the terms of the
related Transaction Documents), cancel, amend, modify or terminate or accept any
cancellation, amendment, modification or termination thereof, except if such
cancellation or termination is in accordance with the express terms of the
Contract, but subject to the rights of each Owner Trustee and Indenture Trustee
to cure any defaults and to keep the Contract in full force and effect as
provided in Section 2(b) above.

         4. In the event that any Owner Trustee or Indenture Trustee (or their
respective designee(s)) assumes the Contract or otherwise elects to perform the
duties of MCV under the Contract, such Person shall not have any personal
liability to the undersigned for the performance of MCV's obligations under the
Contract, it being understood that the sole recourse of the undersigned seeking
enforcement of such obligations shall be to such Person's interest in the
Facility and the related rights and Revenues therefrom.

         5. If the Contract is rejected by a trustee or debtor-in-possession in
any bankruptcy, insolvency or similar proceeding involving any Persons other
than the undersigned, or is terminated for any other reason (except as a result
of a default which was not appropriately cured as provided herein and in the
Contract), and if, (i) within 30 days thereafter, MCV (in the case of a
bankruptcy, insolvency or similar proceeding involving any Owner Trustee or
Owner Participant), any Owner Trustee, Indenture Trustee or their respective
successors or assigns so request and (ii) all payment defaults under the
Contract have been cured, the undersigned will execute and deliver to the Person
or Persons making such request in proportion to their respective interests in
the Contract a new Contract for the services remaining to be performed under the
original Contract and containing the same terms and conditions as the original
Contract (except for any requirements which have been fulfilled prior to such
termination). Such new Contract also shall be subject to the terms of this
Consent and Agreement.

         6. The undersigned acknowledges that after the end of the respective
Lease Terms and during the respective Residual Terms, each Owner Trustee, as the
assignee of an Undivided Interest in the Contract pursuant to the related
Facility Agreements Assignment, shall have all of the rights and shall be liable
for all of the obligations (to the extent of its respective Undivided Interest
Percentage) on a non-recourse basis of MCV under the Contract. The undersigned
further acknowledges that MCV shall be the initial Operator of the Facility
under the Operating Agreement and further agree that the Owner Trustees may
appoint any Person to

                                    Page 15

<PAGE>   16

serve as a successor Operator thereunder so long as such
Person satisfies the requirements set forth in the Operating Agreement.

         7. No termination, amendment or waiver of any provision of this Consent
and Agreement or consent to any departure by the undersigned from any provision
of this Consent and Agreement shall be effective unless the same shall be in
writing and signed by the Owner Trustees, the Indenture Trustees and MCV and
then such waiver or consent shall be effective only in a specified instance for
the specific purpose for which it was given.

         8. This Consent and Agreement shall be governed by, and construed in
accordance with, the laws of the State of Michigan, and shall be binding on the
parties hereto and their respective successors and assigns.

         IN WITNESS WHEREOF, the undersigned by its officers thereunto duly
authorized, have duly executed this Agreement as of the day and year first above
written.

                                      Engage Energy America LLC

                                      By:  Mike Broadfoot
                                           ------------------------------------

                                      Title:  Vice Chairman
                                              ---------------------------------

Seen and Agreed to this
22nd Day of March 2001.

MIDLAND COGENERATION VENTURE
  LIMITED PARTNERSHIP, as
  Lessee

By: LeRoy W. Smith
    -----------------------------------------------

Title:  Vice President Energy Supply and Marketing
        -------------------------------------------

                                    Page 16

<PAGE>   17

                                   SCHEDULE A

MIDLAND COGENERATION VENTURE LIMITED PARTNERSHIP,
as Lessee,

FIRST MIDLAND LIMITED PARTNERSHIP,
DCC PROJECT FINANCE ONE, INC.,
EDISON CAPITAL (formerly, Mission Funding Epsilon),
BELL ATLANTIC CREDIT CORPORATION (formerly, NYNEX Credit Company),
RESOURCES CAPITAL MANAGEMENT CORPORATION,
as the several Owner Participants,

STATE STREET BANK AND TRUST COMPANY
(formerly, Fleet National Bank, Shawmut Bank Connecticut, National Association,
and The Connecticut National Bank),
not in its individual capacity but solely as Owner Trustee
under several separate Trust Agreements,

UNITED STATES TRUST COMPANY OF NEW YORK,
not in its individual capacity but solely as Senior Indenture Trustee
under several separate Senior Trust Indenture, Leasehold Mortgage
and Security Agreements for the benefit of the Senior Secured Notes,

FIRST UNION NATIONAL BANK
(formerly, Meridian Trust Company),
not in its individual capacity but solely as Subordinated Indenture Trustee
under several separate Subordinated Trust Indenture,
Leasehold Mortgage and Security Agreements
for the benefit of the Subordinated Secured Notes, and

MIDLAND FUNDING CORPORATION I AND
MIDLAND FUNDING CORPORATION II,
as purchasers of the Secured Notes.

                                    Page 17

<PAGE>   18

                                   SCHEDULE B

                  A. As described below, the Owner Participants named in
Schedule A acquired separate Undivided Interests in the Facility and leased such
Undivided Interests back to MCV through separate Owner Trustees acting on behalf
of separate Owner Trusts. The beneficial interest in each Owner Trust is held by
Owner Participant.

                  B. For purposes of this Schedule B and the Consent and
Agreement, capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in Appendix A to the several separate
Amended and Restated Participation Agreements (the "Participation Agreements"),
each dated as of June 1, 1990, to which MCV, an Owner Participant, the related
Owner Trustee, the related Indenture Trustees, the Funding Corporations, MDC and
the Institutional Senior Bond Purchasers named therein are parties. The rules of
usage set forth in such Appendices also shall apply hereto; provided, that when
the terms defined in Appendix A to a particular Participation Agreement as
relating only to the transaction contemplated therein are used in the plural
herein, such terms are intended to apply to the terms applicable to the
transactions contemplated by all Participation Agreements collectively. In
addition, the word "related", when used with respect to any Person, interest,
instrument, agreement or document, shall denote a Person which is a party to, or
an interest, instrument, agreement or document which is a part of, the
transaction contemplated in a particular Participation Agreement and the
Transaction Documents referred to in such Participation Agreement.

                  C. Pursuant to a related Participation Agreement, MCV sold and
transferred to each Owner Trustee, and each Owner Trustee acquired, subject to
Dow's Prior Rights and Consumers' Prior Rights, an Undivided Interest in the
Facility equal to the respective Undivided Interest Percentage of such Owner
Trustee (with the Undivided Interests in the Initial Assets having been sold and
transferred on the First Closing Date and the Undivided Interests in the Second
Closing Assets being sold and transferred on the Second Closing Date). Each
Owner Trustee leased its Undivided Interest in the Facility back to the Lessee
pursuant to a related Lease, under which MCV has the use, possession and control
of the Undivided Interest in the Facility for the related Lease Term (with the
Undivided Interests in the Initial Assets having been leased on the First
Closing Date and the Undivided Interests in the Second Closing Assets being so
leased on the Second Closing Date).

                  D. On the Second Closing Date, (i) MCV assigned to each Owner
Trustee a separate Undivided Interest in the Facility Agreements and the
Cogeneration Agreements pursuant to a related Facility Agreements Assignment and
a related Cogeneration Agreements Assignment, respectively, (ii) each Owner
Trustee assumed the obligations of MCV under the PPA and the SEPA, to the extent
of its respective Undivided Interest Percentage, pursuant to a related
Cogeneration Agreements Assignment, (iii) pursuant to the related Lease, each
Owner Trustee subassigned its Undivided Interests in the Cogeneration Agreements
and Facility Agreements back to MCV for the respective Lease Term, subject to
the Lien of the related Indentures, and MCV, as lessee, accepted such
subassignment, and (iv) MCV granted to each Owner Trustee a Lien on, without
limitation, MCV's right, title and interest in the related Undivided Interests
in the Cogeneration Agreements and the Facility Agreements (and the Revenues
therefrom) as collateral security for the related Secured Obligations pursuant
to a related Lessee Security Agreement.

                                    Page 18

<PAGE>   19

                  E. Each Owner Trustee, as provided in the related
Participation Agreement, financed a portion of the Purchase Price for its
Undivided Interest in the Facility with the proceeds of Senior Secured Notes
issued by it to Midland Funding Corporation I pursuant to a related Senior Trust
Indenture and related Subordinated Secured Notes issued by it to Midland Funding
Corporation II pursuant to a related Subordinated Trust Indenture, and Midland
Funding Corporation I and Midland Funding Corporation II purchased such Secured
Notes.

                  F. Each Owner Trustee granted to the related Indenture
Trustees Liens on, among other things, the Owner Trustee's Undivided Interests
in the Facility, the Cogeneration Agreements and the Facility Agreements, the
Site Interest and its interest in certain of the related Transaction Documents
as collateral security for the Owner Trustee's obligations under the related
Secured Notes.

                  G. On the Second Closing Date, the Funding Corporations issued
Bonds pursuant to a Senior Collateral Trust Indenture and a Subordinated
Collateral Trust Indenture, respectively, for the purpose of participating in
the payment of the Purchase Price for each Undivided Interest in the Facility
and acquiring the funds necessary to purchase the Senior Secured Notes and the
Subordinated Secured Notes pursuant to a related Participation Agreement. The
Funding Corporations secured their obligations under the Bonds by a pledge to
the related Collateral Trust Trustees of the related Secured Notes (and the
collateral security therefor) held by the Funding Corporations.

                  H. MCV, each Owner Trustee and Indenture Trustee and the
Working Capital Lender, on the Second Closing Date, entered into an
Intercreditor Agreement with the Collateral Agent providing for the deposit with
and disbursement of all Revenues from the Undivided Interests in the Project by
the Collateral Agent.

                  I. MCV and each Owner Trustee also entered into an Operating
Agreement appointing MCV as the initial operator of the Project during the
respective Residual Terms, commencing on the Operation Commencement Date (as
such term is defined in the Operating Agreement).

                  J. On the Second Closing Date, in order to obtain necessary
working capital for the operation of the Facility, MCV obtained the Working
Capital Line from the Working Capital Lender and granted to the Working Capital
Lender first priority Liens on MCV's right, title and interest (as subassignee
of the separate Undivided Interests in the Cogeneration Agreements and the
Facility Agreements during the respective Lease Terms) in and to (i) all Earned
Receivables, (ii) its Natural Gas Inventory and (iii) the Gas Brokering
Contract.

                  K. Each Owner Trustee has agreed to reassign its Undivided
Interest in the Project (including the Undivided Interest in the Facility
Agreements) and the Site Interest back to MCV at the expiration of the related
Support Term.

                                    Page 19

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