Document:

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                                                                    EXHIBIT 10.1

                     SECURITIZATION PROPERTY SALE AGREEMENT

                                     between

                  THE DETROIT EDISON SECURITIZATION FUNDING LLC
                                     Issuer

                                       and

                           THE DETROIT EDISON COMPANY
                                     Seller

                               Dated as of [   ]
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                                Table of Contents

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                                    ARTICLE I
                                   Definitions

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

                                   ARTICLE II
                      Conveyance of Securitization Property

SECTION 2.01  Conveyance of Initial Securitization Property...........................................       2
SECTION 2.02  Conditions to Conveyance of Securitization Property.....................................       3

                                   ARTICLE III
                    Representations and Warranties of Seller

SECTION 3.01  Organization and Good Standing..........................................................       4
SECTION 3.02  Due Qualification.......................................................................       4
SECTION 3.03  Power and Authority.....................................................................       5
SECTION 3.04  Binding Obligation......................................................................       5
SECTION 3.05  No Violation............................................................................       5
SECTION 3.06  No Proceedings..........................................................................       5
SECTION 3.07  Approvals...............................................................................       6
SECTION 3.08  The Securitization Property.............................................................       6
SECTION 3.09  Solvency................................................................................       8

                                   ARTICLE IV
                             Covenants of the Seller

SECTION 4.01  Seller's Existence......................................................................       9
SECTION 4.02  No Liens or Conveyances.................................................................       9
SECTION 4.03  Use of Proceeds.........................................................................       9
SECTION 4.04  Delivery of Collections.................................................................       9
SECTION 4.05  Notice of Liens.........................................................................       9
SECTION 4.06  Compliance with Law.....................................................................       9
SECTION 4.07  Covenants Related to Securitization Property............................................       9
SECTION 4.08  Protection of Title.....................................................................      10
SECTION 4.09  Taxes...................................................................................      11
SECTION 4.10  Alternative Electric Suppliers..........................................................      11
SECTION 4.11  Filings Pursuant to Financing Order.....................................................      11

                                    ARTICLE V
                      Additional Undertakings of the Seller

SECTION 5.01  Liability of the Seller; Indemnities....................................................      12
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SECTION 5.02  Merger or Consolidation of, or Assumption of the Obligations of, the Seller.............      13
SECTION 5.03  Limitation on Liability of the Seller and Others........................................      14

                                   ARTICLE VI
                            Miscellaneous Provisions

SECTION 6.01  Amendment...............................................................................      14
SECTION 6.02  Notices.................................................................................      15
SECTION 6.03  Assignment by Seller....................................................................      15
SECTION 6.04  Assignment to Trustee...................................................................      15
SECTION 6.05  Limitations on Rights of Others.........................................................      16
SECTION 6.06  Severability............................................................................      16
SECTION 6.07  Separate Counterparts...................................................................      16
SECTION 6.08  Headings................................................................................      16
SECTION 6.09  Governing Law...........................................................................      16
SECTION 6.10  Nonpetition Covenant....................................................................      16

EXHIBIT A - Bill of Sale..............................................................................     A-1
EXHIBIT B - Opinion of Counsel........................................................................     B-1
EXHIBIT C - Opinion of Counsel........................................................................     C-1

APPENDIX A - Master Definitions
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                  SECURITIZATION PROPERTY SALE AGREEMENT, dated as of [    ], by
and between THE DETROIT EDISON SECURITIZATION FUNDING LLC, a Michigan limited
liability company, as issuer (the "Issuer"), and THE DETROIT EDISON COMPANY, a
Michigan corporation, as seller hereunder (in such capacity, the "Seller").

                              W I T N E S S E T H:

                  WHEREAS the Issuer desires to purchase from time to time
Securitization Property created pursuant to the Statute and the Financing Order;

                  WHEREAS the Seller is willing to sell Securitization Property
to the Issuer;

                  WHEREAS the Issuer, in order to finance the purchase of the
Securitization Property, will from time to time issue Securitization Bonds under
the Indenture; and

                  WHEREAS the Issuer, to secure its obligations under the
Securitization Bonds and the Indenture, will pledge its right, title and
interest and grant a security interest in, to and under the Securitization
Property to the Trustee for the benefit of the Securitization Bondholders.

                  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 herein and
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 Sale
Agreement, 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 refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section, Schedule and
Exhibit references contained in this Agreement are
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references to Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" means "including without
limitation".

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

                                   ARTICLE II

                      CONVEYANCE OF SECURITIZATION PROPERTY

                  SECTION 2.01 CONVEYANCE OF INITIAL SECURITIZATION PROPERTY.

                  (a) In consideration of the Issuer's payment to or upon the
order of the Seller of $[   ] (the "Initial Purchase Price") by wire transfer of
funds immediately available on the date hereof to Seller's account no.
[________] at [________], routing transit # [________], subject to the
conditions specified in Section 2.02, the Seller does hereby irrevocably sell,
transfer, assign and otherwise convey to the Issuer, without recourse (subject
to the obligations of the Seller herein), all right, title and interest of the
Seller in, to and under the Initial Securitization Property identified in the
Bill of Sale delivered pursuant to Section 2.02(a) on or prior to the Initial
Transfer Date (such sale, transfer, assignment and conveyance of the Initial
Securitization Property to include, to the fullest extent permitted by the
Statute and the Michigan UCC, the assignment of all revenues, collections,
claims, rights, payments, money or proceeds of or arising from the SB Charges
related to the Initial Securitization Property, as the same may be adjusted from
time to time). Such sale, transfer, assignment and conveyance of the Initial
Securitization Property is hereby expressly stated to be a sale or other
absolute transfer and, pursuant to Section 10l of the Statute and the Financing
Order, shall constitute a true sale of all of the Seller's right, title and
interest, in, to and under, and not a borrowing secured by, the Initial
Securitization Property. The preceding sentence is the statement referred to in
Section 10l of the Statute. The Seller agrees and confirms that upon payment of
the Initial Purchase Price and the execution and delivery of this Agreement and
the related Bill of Sale, the Seller shall have no right, title or interest in,
to or under the Initial Securitization Property.

                  (b) Subject to the conditions specified in Section 2.02, the
Issuer does hereby purchase the Initial Securitization Property from the Seller
for the consideration set forth in paragraph (a) above.

                  (c) The Seller and the Issuer each acknowledge and agree that
the purchase price for the Initial Securitization Property sold pursuant to this
Agreement is equal to its fair market value at the time of sale.

                  (d) The Seller and the Issuer further agree that from time to
time the Seller may offer to sell, and the Issuer may purchase, Subsequent
Securitization Property as of Subsequent Transfer Dates, subject to the
conditions specified in Section 2.02, in exchange for consideration to be agreed
upon (in each case, the "Subsequent Purchase Price"). The Seller and the Issuer
hereby agree that each such sale, transfer, assignment and conveyance of any
Subsequent Securitization Property shall include, to the fullest extent
permitted by the Statute and the Michigan UCC, the assignment of all revenues,
collections, claims, rights, payments, money or

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proceeds of or arising from the SB Charges related to the Subsequent
Securitization Property, as the same may be adjusted from time to time. Such
sale, transfer, assignment and conveyance of the Subsequent Securitization
Property is hereby expressly stated to be a sale or other absolute transfer and,
pursuant to Section 10l of the Statute and the Financing Order, shall constitute
a true sale of all of the Seller's right, title and interest, in, to and under,
and not a borrowing secured by, the Subsequent Securitization Property. The
preceding sentence is the statement referred to in Section 10l of the Statute.
The Seller agrees and confirms that after giving effect to any sale contemplated
by this paragraph (d) and the execution and delivery of the related Bill of
Sale, it shall have no right, title or interest in, to or under the Subsequent
Securitization Property.

                  (e) Notwithstanding the foregoing, if but only if, contrary to
the agreement and intent of the parties and the Financing Order, any sale,
transfer, assignment and conveyance of any Securitization Property is
determined by a court not to be a true sale as contemplated by the parties
hereto and by the Statue, then

                           (i)(A) the Seller hereby appoints the Issuer as the
                           agent of the Seller ("Seller's Agent") for purposes
                           of this clause(e)(i), (B) the Issuer shall be deemed
                           to have issued and sold the Securitization Bonds for
                           and on behalf of the Seller as Seller's Agent
                           pursuant to the Statute, the Financing Order, the
                           Indenture and the Underwriting Agreement, and (C) the
                           Issuer shall be deemed to have granted and does
                           hereby grant, as of the date hereof, for and on
                           behalf of the Seller as Seller's Agent, a valid and
                           enforceable lien and security interest in the
                           Securitization Property to the Trustee for the
                           benefit of the Securitization Bondholders, pursuant
                           to the Statue, the Financing Order and the Indenture
                           in connection with the issuance of the Securitization
                           Bonds; provided, however, that if a court of
                           competent jurisdiction determines that the provision
                           in this clause(e)(i) does not create a valid and
                           enforceable lien then

                           (ii) such sale, transfer, assignment and conveyance
                           shall be treated as a pledge of such Securitization
                           Property and the Seller shall be deemed to have
                           granted, and does hereby grant, as of the date hereof
                           a security interest to the Issuer in such
                           Securitization Property to secure a payment
                           obligation incurred by the Seller in the amount paid
                           by the Issuer for the Securitization Property.

                  SECTION 2.02 CONDITIONS TO CONVEYANCE OF SECURITIZATION
PROPERTY. The obligation of the Seller to sell, and the obligation of the
Issuer, to purchase Securitization Property upon any Transfer Date shall be
subject to and conditioned upon the satisfaction or waiver of each of the
following conditions:

                  (a) on or prior to the Transfer Date, the Seller shall deliver
to the Issuer a duly executed Bill of Sale identifying the Securitization
Property to be conveyed as of that date, substantially in the form of Exhibit A
hereto;

                  (b) as of the Transfer Date, no breach by the Seller of its
representations, warranties or covenants in this Agreement shall exist and the
Seller shall have delivered to the Issuer and the Trustee an Officer's
Certificate to such effect and no Servicer Default shall have occurred and be
continuing;

                  (c) as of the Transfer Date:

                           (i) the Issuer shall have sufficient funds available
          to pay the purchase price for the Securitization Property to be
          conveyed on such date, and

                           (ii) all conditions set forth in the Indenture to the
          issuance of one or more Series of Securitization Bonds intended to
          provide such funds shall have been satisfied or waived;

                  (d) on or prior to the Transfer Date, the Seller shall have
taken all actions required under the Statute, the Financing Order and the
Michigan UCC, including, without limitation, filings under the Michigan UCC to
transfer to the Issuer ownership of the Securitization Property

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to be conveyed on such date, free and clear of all Liens other than Liens
created by the Issuer pursuant to the Indenture, and the Issuer shall have taken
any action required for the Issuer to grant to the Trustee a first priority
perfected security interest in the Collateral and maintain such security
interest as of such date;

                  (e) in the case of any sale of Subsequent Securitization
Property only, the Seller shall have provided the Issuer and each Rating Agency
with a notice specifying the Subsequent Transfer Date for the Subsequent
Securitization Property not later than 10 days prior to the Subsequent Transfer
Date;

                  (f) the Seller shall have delivered to each Rating Agency and
to the Issuer:

                           (i) an Opinion of Counsel to the Seller with respect
          to the transfer of the Securitization Property then being conveyed to
          the Issuer substantially in the form of Exhibit B hereto, and

                           (ii) an Opinion of Counsel to the Seller,
          substantially in the form of Exhibit C hereto;

                  (g) the Seller shall have delivered to the Trustee and the
Issuer an Officer's Certificate confirming the satisfaction of each condition
precedent specified in this Section 2.02;

                  (h) with respect to any Subsequent Sale, the Seller shall have
taken any action necessary in order for the Rating Agency Condition to have been
satisfied; and

                  (i) the Seller shall have received the Initial Purchase Price
or the Subsequent Purchase Price, as applicable, in funds immediately available
on the applicable Transfer Date.

                                  ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF SELLER

                  As of the Transfer Date, the Seller makes the following
representations and warranties on which the Issuer has relied and will rely in
acquiring Securitization Property. The following representations and warranties
are made under existing law as in effect as of the Transfer Date. The Seller
shall not be in breach of any representation or warranty herein as a result of a
change in law occurring after the Transfer Date. The representations and
warranties shall survive the sale of Securitization Property to the Issuer and
the pledge thereof to the Trustee pursuant to the Indenture.

                  SECTION 3.01 ORGANIZATION AND GOOD STANDING. The Seller is a
corporation duly organized and in good standing under the laws of the State of
Michigan, with corporate power and authority to own its properties and conduct
its business as currently owned or conducted.

                  SECTION 3.02 DUE QUALIFICATION. The Seller 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

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conduct of its business requires such qualifications, licenses or approvals
(except where the failure to so qualify and to obtain such licenses and
approvals would not be reasonably likely to have a material adverse effect on
the Seller's business, operations, assets, revenues, properties or prospects).

                  SECTION 3.03 POWER AND AUTHORITY. The Seller has the corporate
power and authority to execute and deliver this Agreement and to carry out its
terms; the Seller has full corporate power and authority to own the
Securitization Property and sell and assign the Securitization Property to the
Issuer, and the Seller has duly authorized such sale and assignment to the
Issuer by all necessary corporate action; and the execution, delivery and
performance of this Agreement has been duly authorized by the Seller by all
necessary corporate action.

                  SECTION 3.04 BINDING OBLIGATION. This Agreement constitutes a
legal, valid and binding obligation of the Seller enforceable against the Seller
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).

                  SECTION 3.05 NO VIOLATION. The consummation of the
transactions contemplated by this Agreement and the fulfillment of the terms
hereof do 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 Seller, or any indenture,
agreement or other instrument to which the Seller is a party or by which it is
bound; nor 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 (except as contemplated in the Indenture and as set forth in Section
2.01(e) hereof); nor violate any law or any order, rule or regulation applicable
to the Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Seller or its properties. The Securitization Property is not subject to
any Lien thereon, including under the Mortgage and Deed of Trust, dated October
1, 1924 (as amended and supplemented), of The Detroit Edison Company to First
Chicago Trust Company of New York, as successor trustee, other than the Liens
created pursuant to the Indenture and the Statute.

                  SECTION 3.06 NO PROCEEDINGS. Except as disclosed in writing by
the Seller to the Issuer, there are no proceedings or investigations pending or,
to the Seller's best knowledge, threatened, before any court, federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Seller or its properties:

                  (a) asserting the invalidity of any of the Basic Documents,
the Securitization Bonds, the Statute or the Financing Order;

                  (b) seeking to prevent the issuance of the Securitization
Bonds or the consummation of any of the transactions contemplated by the Basic
Documents or the Securitization Bonds;

                  (c) challenging the Seller's treatment of the Securitization
Bonds as debt of the Seller for federal and state tax purposes; or

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                  (d) seeking any determination or ruling that could reasonably
be expected to materially and adversely affect the performance by the Seller of
its obligations under, or the validity or enforceability of, the Basic Documents
or the Securitization Bonds.

                  SECTION 3.07 APPROVALS. Except for the filing of financing
statements and continuation statements under the Michigan UCC, 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
Seller of this Agreement, the performance by the Seller of the transactions
contemplated hereby or the fulfillment by the Seller of the terms hereof, except
those that have been obtained or made and those that the Seller, in its capacity
as Servicer under the Servicing Agreement, is required to make in the future
pursuant to the Servicing Agreement and post closing filings required in
connection therewith.

                  SECTION 3.08 THE SECURITIZATION PROPERTY.

                  (a) Information. All information provided by the Seller to the
Issuer with respect to the Securitization Property is correct in all material
respects.

                  (b) Effect of Transfer. Each sale, transfer, assignment and
conveyance herein contemplated constitutes a sale or other absolute transfer, of
all right, title and interest of the Seller in, to and under the Securitization
Property from the Seller to the Issuer; upon execution and delivery of this
Agreement and the related Bill of Sale, the Seller will have no right, title or
interest in, to or under the Securitization Property; and the Securitization
Property would not be part of the estate of the Seller as debtor in the event of
the filing of a bankruptcy petition by or against the Seller under any
bankruptcy law.

                  (c) Transfer Filings. The Seller is the sole owner of the
Securitization Property sold to the Issuer on the Transfer Date; and the
Securitization Property will have been validly sold, assigned, transferred and
conveyed to the Issuer free and clear of all Liens other than Liens created by
the Issuer pursuant to the Indenture. All actions or filings, including filings
with the Michigan Secretary of State under the Michigan UCC, necessary in any
jurisdiction to give the Issuer a valid first priority perfected ownership
interest in the Securitization Property and to grant to the Trustee a first
priority perfected security interest in the Securitization Property, free and
clear of all Liens of the Seller or anyone else have been taken or made.

                  (d) Financing Order Irrevocable; Process Valid; No Litigation;
etc.

                           (i) The Financing Order has been issued by the MPSC
          in accordance with the Statute, and such order and the process by
          which it was issued comply with all applicable laws, rules and
          regulations. The Financing Order has become effective pursuant to the
          Statute and is, and as of the date of issuance of any Securitization
          Bonds will be, in full force and effect and final and non-appealable.

                           (ii) As of the Series Issuance Date, the
          Securitization Bonds of the related Series will be entitled to the
          protections provided by the Statute and, in accordance with the
          Statute, the Financing Order and the SB Charge authorized therein,

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          subject to the Periodic Adjustments to the SB Charge provided for in
          the Financing Order, have become irrevocable.

                          (iii) (A) Under the Statute, the State of Michigan
                    may not take or permit any action that would impair the
                    value of Securitization Property, reduce or alter, except
                    for Periodic Adjustments, or impair the SB Charges to be
                    imposed, collected, and remitted to the Issuer, until the
                    principal, interest and premium, and any other charges
                    incurred and contracts to be performed in connection with
                    the Securitization Bonds have been paid and performed in
                    full (subject to the 15 year limitation upon the imposition
                    of SB Charges pursuant to the Statute and the Financing
                    Order); and

                                (B) under the contract clauses of the State
                    of Michigan and the United States constitutions, the State
                    of Michigan, including the MPSC, could not take any action
                    that substantially impairs the rights of the Securitization
                    Bondholders unless such action is a reasonable exercise of
                    the State of Michigan's sovereign powers and of a character
                    reasonable and appropriate to further a legitimate public
                    purpose, and, under the takings clauses of the State of
                    Michigan and the United States constitutions, the State of
                    Michigan could not repeal or amend the Statute or take any
                    other action in contravention of its pledge in Section
                    10n(2) of the Statute if such action constitutes a permanent
                    appropriation of the property interest of Securitization
                    Bondholders in the Securitization Property and deprives the
                    Securitization Bondholders of their reasonable expectations
                    arising from their investments in Securitization Bonds,
                    unless just compensation, as determined by a court of
                    competent jurisdiction, is provided to Securitization
                    Bondholders.

                           (iv) There is no order by any court providing for the
          revocation, alteration, limitation or other impairment of the Statute,
          the Financing Order, the Securitization Property or the SB Charge, or
          any rights arising under any of them, or that seeks to enjoin the
          performance of any obligations under the Financing Order which in any
          way is adverse to the position of the Securitization Bondholders.

                           (v) No other 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 creation or
          transfer of the Securitization Property, except those that have been
          obtained or made and those that the Seller, in its capacity as
          Servicer under the Servicing Agreement, is required to make in the
          future pursuant to the Servicing Agreement and post closing filings
          required in connection therewith.

                           (vi) Except as disclosed in current reports of the
          Seller filed with the Commission, (a) there are no proceedings or
          investigations pending, or to the best of the Seller's knowledge,
          threatened before any court, federal or state regulatory body,
          administrative agency or other governmental instrumentality having
          jurisdiction over the Seller or the Issuer or their respective
          properties challenging the Statute or the Financing Order and (b)
          there is no voter referendum or initiative that has been filed with
          the

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          Michigan Secretary of State or that, to the best of the Seller's
          knowledge, is being circulated among voters which attempts to amend,
          repeal or revoke the Statute in a manner that would impair the
          security of the Securitization Bondholders.

                  (e) Assumptions. The assumptions used in calculating the
initial SB Charge pursuant to the Financing Order are reasonable and made in
good faith.

                  (f) Creation of Securitization Property.

                           (i) For purposes of the Statute and the Michigan UCC,
          the Securitization Property constitutes a present property right;

                           (ii) the Securitization Property consists of (A) the
          irrevocable right of the Seller to impose, collect and receive SB
          Charges in the amount necessary to provide for full recovery of
          principal of and interest on the Securitization Bonds, together with
          Ongoing Other Qualified Costs; (B) the right under the Financing Order
          to obtain Periodic Adjustments of the SB Charges; and (C) all
          revenues, collections, payments, money and proceeds arising out of the
          rights and interests described in (A) and (B); and

                           (iii) the Financing Order, including the right to
          collect the SB Charge, has become irrevocable and not subject to
          reduction, impairment or adjustment by further action of the MPSC,
          except for Period Adjustments.

                  (g) Prospectus. As of the date hereof, the information
describing the Seller under the caption "The Seller and Servicer of the
Securitization Property" in the prospectus dated [ ], 2001 relating to the
Securitization Bonds is correct in all material respects.

                  SECTION 3.09 SOLVENCY. After giving effect to the sale of any
Securitization Property hereunder, the Seller:

                  (a) is solvent and expects to remain solvent;

                  (b) is adequately capitalized to conduct its business and
affairs considering its size and the nature of its business and intended
purposes;

                  (c) is not engaged and does expect to engage in a business for
which its remaining property represents an unreasonably small portion of its
capital;

                  (d) reasonably believes that it will be able to pay its debts
as they become due; and

                  (e) is able to pay its debts as they mature and does not
intend to incur, or believes that it will incur, indebtedness that it will not
be able to repay at its maturity.

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                                   ARTICLE IV

                             COVENANTS OF THE SELLER

                  SECTION 4.01 SELLER'S EXISTENCE. So long as any of the
Securitization Bonds are outstanding, the Seller shall keep in full force and
effect its existence as a corporation and remain in good standing under the laws
of the jurisdiction of its organization, and shall obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or will be necessary to protect the validity and enforceability of this
Agreement and each other instrument or agreement to which the Seller is a party
necessary to the proper administration of this Agreement and the transactions
contemplated hereby.

                  SECTION 4.02 NO LIENS OR CONVEYANCES. Except for the
conveyances hereunder, the Seller shall not sell, pledge, assign or transfer to
any other Person, or grant, create, incur, assume or suffer to exist any Lien
on, any of the Securitization Property, whether now existing or hereafter
created, or any interest therein. The Seller shall not at any time assert any
Lien against or with respect to any Securitization Property, and shall defend
the right, title and interest of the Issuer and the Trustee, as assignee of the
Issuer, in, to and under the Securitization Property, whether now existing or
hereafter created, against all claims of third parties claiming through or under
the Seller.

                  SECTION 4.03 USE OF PROCEEDS. The Seller shall use proceeds
from the sale of the Securitization Property in accordance with the Financing
Order.

                  SECTION 4.04 DELIVERY OF COLLECTIONS. If the Seller receives
collections of the SB Charge with respect to the Securitization Property or the
proceeds thereof, the Seller shall pay the Servicer all payments received by the
Seller in respect thereof as soon as practicable after receipt thereof by the
Seller, but in no event later than two Business Days after such receipt.

                  SECTION 4.05 NOTICE OF LIENS. The Seller shall notify the
Issuer and the Trustee promptly after becoming aware of any Lien on any
Securitization Property other than the conveyances hereunder or under the
Indenture.

                  SECTION 4.06 COMPLIANCE WITH LAW. The Seller shall comply with
its organizational or governing documents and all laws, treaties, rules,
regulations and determinations of any governmental instrumentality applicable to
the Seller, except to the extent that failure to so comply would not adversely
affect the Issuer's or the Trustee's interests in the Securitization Property or
under any of the Basic Documents or the Seller's performance of its obligations
hereunder.

                  SECTION 4.07 COVENANTS RELATED TO SECURITIZATION PROPERTY.

                  (a) So long as any of the Securitization Bonds are
outstanding, the Seller shall:

                           (i) treat the Securitization Bonds as debt of the
          Issuer and not the Seller, except for financial accounting or tax
          reporting purposes;

                                       9
<PAGE>   13
                           (ii) disclose in its financial statements that it is
          not the owner of the Securitization Property and that the assets of
          the Issuer are not available to pay creditors of the Seller or any of
          its Affiliates (other than the Issuer);

                           (iii) disclose the effects of all transactions
          between the Seller and the Issuer in accordance with generally
          accepted accounting principles; and

                           (iv) not own or purchase any Securitization Bonds.

                  (b) The Seller agrees that upon the sale by the Seller of the
Securitization Property to the Issuer pursuant to this Agreement:

                           (i) to the fullest extent permitted by law, including
          the Statute and applicable MPSC Regulations, the Issuer shall have all
          of the rights originally held by the Seller with respect to the
          Securitization Property, including the right to collect any amounts
          payable by any Customer in respect of such Securitization Property,
          notwithstanding any objection or direction to the contrary by the
          Seller; and

                           (ii) any payment by any Customer to the Issuer shall
          discharge such Customer's obligations in respect of such
          Securitization Property to the extent of such payment, notwithstanding
          any objection or direction to the contrary by the Seller.

                  (c) So long as any of the Securitization Bonds are
Outstanding,

                           (i) in all proceedings relating directly or
          indirectly to the Securitization Property the Seller shall: (A)
          affirmatively certify and confirm that it has sold the Securitization
          Property to the Issuer (other than for financial accounting or tax
          reporting purposes), and (B) not make any statement or reference in
          respect of the Securitization Property that is inconsistent with the
          ownership thereof by the Issuer (other than as required for financial
          accounting or tax reporting purposes); and

                           (ii) the Seller shall not take any action in respect
          of the Securitization Property except as contemplated by the Basic
          Documents.

                           (iii) the Seller shall not sell securitization
          property under a separate financing order in connection with the
          issuance of additional securitization bonds unless the Rating Agency
          Condition is satisfied.

                  SECTION 4.08 PROTECTION OF TITLE. The Seller shall execute and
file such filings, and cause to be executed and filed such filings, and take all
such actions, all in such manner and in such places as may be required by law
fully to 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 the ownership of the Securitization
Property by the Seller to the Issuer and the pledge of the Securitization
Property by the Issuer to the Trustee. The Seller 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. The Seller shall institute any action or proceeding
necessary to compel the performance by the MPSC or the State of Michigan of any
of their obligations or

                                       10
<PAGE>   14
duties under the Statute or the Financing Order, and the Seller 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:

         (a)      to protect the Issuer and the Securitization Bondholders from
                  claims, state actions or other actions or proceedings of third
                  parties which, if successfully pursued, would result in a
                  breach of any representation set forth in Article III; or

         (b)      to block or overturn any attempts to cause a repeal of,
                  modification of or supplement to the Statute, the Financing
                  Order, or the rights of Securitization Bondholders by
                  legislative enactment or constitutional amendment that would
                  be adverse to the Issuer, the Trustee or the Securitization
                  Bondholders.

The costs of any such actions or proceedings shall be reimbursed by the Issuer
to the Seller from amounts on deposit in the Collection Account as an Operating
Expense. The Seller's obligations pursuant to this Section 4.08 shall survive
and continue notwithstanding that the payment of Operating Expenses pursuant to
the Indenture may be delayed (it being understood and agreed that the Seller may
be required to temporarily advance its own funds to satisfy its obligations
hereunder). The Seller designates the Issuer as its agent and attorney-in-fact
to execute any filings of financing statements, continuation statements or other
instruments required of the Issuer pursuant to this Section, it being understood
that the Issuer shall have no obligation to execute any such instruments.

                  SECTION 4.09 TAXES. So long as any of the Securitization Bonds
are outstanding, the Seller shall, and shall cause each of its subsidiaries to,
pay all material taxes, assessments and governmental charges imposed upon it or
any of its properties or assets or with respect to any of its franchises,
business, income or property before any penalty accrues thereon if the failure
to pay any such taxes, assessments and governmental charges would, after any
applicable grace periods, notices or other similar requirements, result in a
Lien on the Securitization Property; provided that no such tax need be paid if
the Seller or one of its Affiliates is contesting the same in good faith by
appropriate proceedings promptly instituted and diligently conducted and if the
Seller or such Affiliate has established appropriate reserves as shall be
required in conformity with generally accepted accounting principles.

                  SECTION 4.10 ALTERNATIVE ELECTRIC SUPPLIERS. So long as any of
the Securitization Bonds are outstanding, the Seller 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 4.11 FILINGS PURSUANT TO FINANCING ORDER. The Seller
shall comply with all filing requirements, including any making post closing
filings, in accordance with the Financing Order.

                                       11
<PAGE>   15
                                   ARTICLE V

                      ADDITIONAL UNDERTAKINGS OF THE SELLER

                  The Seller hereby undertakes the obligations contained in this
Article V and agrees that the Issuer shall have the right to assign its rights
with respect to such obligations to the Trustee for the benefit of the
Securitization Bondholders.

                  SECTION 5.01 LIABILITY OF THE SELLER; INDEMNITIES.

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

                  (b) The Seller shall indemnify the Issuer and the Trustee, for
itself and on behalf of the Securitization Bondholders, and each of the Issuer's
and the Trustee's respective officers, directors, managers, employees and agents
for, and defend and hold harmless each such Person from and against, any and all
taxes (other than any taxes imposed on Securitization Bondholders solely as a
result of their ownership of Securitization Bonds) that may at any time be
imposed on or asserted against any such Person under existing law as of any
Transfer Date as a result of the sale and assignment of the Securitization
Property by the Seller to the Issuer, the acquisition or holding of the
Securitization Property by the Issuer or the issuance and sale by the Issuer of
the Securitization Bonds, including any sales, gross receipts, general
corporation, single business, personal property, privilege, franchise or
license taxes, but excluding any taxes imposed as a result of a failure of such
person to properly withhold or remit taxes imposed with respect to payments on
any Securitization Bond, it being understood that the Securitization Bondholders
shall be entitled to enforce their rights against the Seller under this Section
5.01(b) solely through a cause of action brought for their benefit by the
Trustee.

                  (c) The Seller shall indemnify the Issuer and the Trustee, for
itself and on behalf of the Securitization Bondholders, and each of the Issuer's
and the Trustee's respective officers, directors, managers, employees and agents
for, and defend and hold harmless each such Person from and against, (i) any and
all amounts of principal of and interest on the Securitization Bonds not paid
when due or when scheduled to be paid in accordance with their terms and the
amount of any deposits to the Issuer required to have been made in accordance
with the terms of the Basic Documents which are not made when so required, in
each case as a result of the Seller's breach of any of its representations,
warranties or covenants contained in this Agreement, and (ii) any and all
liabilities, obligations, claims, actions, suits or payments of any kind
whatsoever that may be imposed on or asserted against any such Person, other
than any liabilities, obligations or claims for or payments of principal of or
interest on the Securitization Bonds, together with any reasonable costs and
expenses incurred by such Person, as a result of the Seller's breach of any of
its representations, warranties or covenants contained in this Agreement.

                  (d) The Seller shall pay any and all taxes levied or assessed
upon all or any part of the Issuer's property or assets based on existing law as
of the Transfer Date.

                                       12
<PAGE>   16
                  (e) Notwithstanding Section 5.01(b) and (c) above, the Seller
shall not be liable for any consequential damages, including any loss of market
value of the Securitization Bonds, resulting from any downgrade of the ratings
of the Securitization Bonds.

                  (f) Indemnification under this Section 5.01 shall survive the
resignation or removal of the Trustee and the termination of this Agreement and
shall include reasonable fees and expenses of investigation and litigation
(including reasonable attorneys' fees and expenses). The Seller shall not
indemnify any party under this Section 5.01 for any changes in law after the
Transfer Date.

                  (g) The indemnification obligation of the Seller under this
Section 5.01 shall be pari passu with all other general unsecured obligations of
the Seller.

                  SECTION 5.02 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SELLER. Any Person:

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

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

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

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

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

which Person in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Seller under this Agreement, shall be the
successor to the Seller 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 Article III 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 Seller shall have delivered to the Issuer and the Trustee
                  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 5.02 and that
                  all conditions precedent, if any, provided for in this
                  Agreement relating to such transaction have been complied
                  with,

                                       13
<PAGE>   17
         (iii)    the Seller shall have delivered to the Issuer and the Trustee
                  an Opinion of Counsel either

                           (A) stating that, in the opinion of such counsel, all
                  filings to be made by the Seller, including Michigan UCC
                  filings, that are necessary fully to preserve and protect
                  fully the respective interests of the Issuer and 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 Seller shall have delivered to the Issuer and the Trustee
                  an opinion of independent tax counsel (as selected by, and in
                  form and substance reasonably satisfactory to, the Seller, 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 Seller, the
                  Issuer, the Trustee or the holders of the Outstanding
                  Securitization Bonds.

The Seller shall not consummate any transaction referred to in clauses (a), (b),
(c), (d) or (e) above except upon execution of the above described agreement of
assumption and compliance with clauses (i), (ii), (iii), (iv) and (v) above.
When any Person acquires the properties and assets of the Seller substantially
as a whole and becomes the successor to the Seller in accordance with the terms
of this Section 5.02, then upon the satisfaction of all of the other conditions
of this Section 5.02, the Seller shall automatically and without further notice
be released from its obligations hereunder.

                  SECTION 5.03 LIMITATION ON LIABILITY OF THE SELLER AND OTHERS.
The Seller and any director, officer, employee or agent of the Seller may rely
in good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person, respecting any matters
arising hereunder. Subject to Section 4.08, the Seller shall not be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to its obligations under this Agreement, and that in its opinion may
involve it in any expense or liability.

                                   ARTICLE VI

                            MISCELLANEOUS PROVISIONS

                  SECTION 6.01 AMENDMENT.

                  (a) This Agreement may be amended by the Seller and the
Issuer, with the consent of the Trustee and the satisfaction of the Rating
Agency Condition. Promptly after the

                                       14
<PAGE>   18
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.

                  (b) 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. 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 6.02 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 Seller, 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: Secretary,

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

         (d)      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,

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

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

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

                  SECTION 6.03 ASSIGNMENT BY SELLER. Subject to Section 5.02,
this Agreement may not be assigned by the Seller.

                  SECTION 6.04 ASSIGNMENT TO TRUSTEE. The Seller 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

                                       15
<PAGE>   19
interest of the Issuer in, to and under the Securitization Property and the
proceeds thereof and the assignment of any or all of the Issuer's rights
hereunder to the Trustee.

                  SECTION 6.05 LIMITATIONS ON RIGHTS OF OTHERS. The provisions
of this Agreement are solely for the benefit of the Seller, 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 the Collateral or
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.

                  SECTION 6.06 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
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

                  SECTION 6.07 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 6.08 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 6.09 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 6.10 NONPETITION COVENANT. Notwithstanding any prior
termination of this Agreement or the Indenture, the Seller 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 under any Hedge Agreement or Interest Rate Swap Agreement, acquiesce,
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.

                                       16
<PAGE>   20
                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the date and year first above written.

                                               THE DETROIT EDISON
                                               SECURITIZATION FUNDING LLC,
                                                   as Issuer

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

                                               THE DETROIT EDISON COMPANY,
                                                   as Seller

                                               By:
                                                  ----------------------------
                                                  Name:
                                                  Title:
<PAGE>   21
                                    EXHIBIT A

                                  BILL OF SALE

                  For good and valuable consideration the receipt of which is
hereby acknowledged, THE DETROIT EDISON COMPANY, a Michigan corporation (the
"Seller"), does hereby sell, assign, transfer and convey to THE DETROIT EDISON
SECURITIZATION FUNDING LLC, a Michigan limited liability company (the "Issuer"),
without recourse except as provided in the Sale Agreement referred to below, all
of the Seller's right, title and interest in, to and under the Securitization
Property identified as follows: ______, which sale, assignment, transfer and
conveyance of the Securitization Property shall include, as provided in the
Statute, the sale, assignment, transfer and conveyance of all of the Seller's
right, title and interest in, to and under all revenues, collections, payments,
money or proceeds arising under or with respect to the SB Charge related to the
Securitization Property, as such SB Charge may be adjusted from time to time in
accordance with the Statute and the Financing Order, to have and to hold the
same unto the Issuer and to the successors and assigns of the Issuer, forever.

                  Capitalized terms used herein and not defined shall have the
meanings set forth in the Securitization Property Sale Agreement dated [ ] (the
"Sale Agreement") between the Issuer and the Seller.

                  IN WITNESS WHEREOF, the Seller has duly executed and delivered
this Bill of Sale this [ ]th day of [  ].

                                                   THE DETROIT EDISON COMPANY,
                                                       as Seller

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

Accepted this [ ]th day of [ ].

THE DETROIT EDISON SECURITIZATION FUNDING LLC

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

                                      A-1<PAGE>   1
                                                                    EXHIBIT 10.2

                   SECURITIZATION PROPERTY SERVICING AGREEMENT

                                     between

                  THE DETROIT EDISON SECURITIZATION FUNDING LLC
                                     Issuer

                                       and

                           THE DETROIT EDISON COMPANY
                                    Servicer

                            Dated as of [         ]

<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                  PAGE

<S>                   <C>                                                                                         <C>

                                    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..........................................................................2
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........................................................................5
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
</TABLE>

                                       -i-
<PAGE>   3

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

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......................................................................21
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.         Intercreditor Agreement....................................................................22
</TABLE>
                        EXHIBITS, ANNEXES AND APPENDICES

<TABLE>
<S>                <C>
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

</TABLE>
                                      -ii-

<PAGE>   4

         This SECURITIZATION PROPERTY SERVICING AGREEMENT, dated as of [ ], 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".

<PAGE>   5

                  (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.

                                      -2-
<PAGE>   6

                                   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

                                      -3-
<PAGE>   7

         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,

                                      -4-
<PAGE>   8

         2002 to and including the March 31 succeeding the Retirement of the
         Securitization 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.

                                      -5-
<PAGE>   9

                                   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 in
                  accordance with the 45-day schedule and the methodology
                  approved by the Financing Order to ensure the expected
                  recovery of sufficient amounts to timely provide all payments
                  of debt service and other required amounts and charges in
                  connection with the Securitization Bonds. 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 [ ]
                  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

                                      -6-
<PAGE>   10

                  the MPSC designating the adjustments to such model and/or any
                  corresponding adjustments to the SB Charge (collectively, a
                  "Non-Routine True-Up 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 [ ] 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.

                                      -7-

<PAGE>   11

                           (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
                  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 [    ], 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

                                      -8-
<PAGE>   12

         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 "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.

                                      -9-
<PAGE>   13

                  (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 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

                                      -10-
<PAGE>   14

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.

                                   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

                                      -11-
<PAGE>   15

         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 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.

                                      -12-
<PAGE>   16

                  (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 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

                                      -13-
<PAGE>   17

         notification shall not affect the indemnification provided hereunder
         except to the extent the Servicer has been actually prejudiced as a
         result of such failure.

                  (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

                                      -14-
<PAGE>   18

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

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

                                      -15-
<PAGE>   19

other conditions of this Section 6.03, the Servicer shall
automatically and without further notice be released from its obligations
hereunder.

         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.

                                      -16-
<PAGE>   20

         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, 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; 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, take such actions and 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:
         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 such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

                                      -21-
<PAGE>   25

         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. INTERCREDITOR AGREEMENT. The Issuer and the Servicer are
parties to an intercreditor agreement with the parties referred to in Section
7.01(e). So long as such intercreditor agreement remains in effect, to the
extent of inconsistencies, if any, herewith, the intercreditor agreement shall
govern.

                                      -22-
<PAGE>   26

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

                                  THE DETROIT EDISON COMPANY,
                                  as Servicer

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

                                  Acknowledged and Accepted:

                                  THE BANK OF NEW YORK,
                                    not in its individual capacity but solely as
                                    Trustee on behalf of the Holders of the
                                    Securitization Bonds

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

                                      S-1

<PAGE>   27

                                                                       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>   28

                                                            ANNEX A TO EXHIBIT A

                            LIST OF SERVICER DEFAULTS

<TABLE>
<S>                                                         <C>
Nature of Default                                           Status
</TABLE>

<PAGE>   29

                                                                       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>   30

                                                       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>   31

                                                                       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)   Reserve Subaccount Balance:

b)   Series Overcollateralization Subaccount Balance:

c)   Series Capital Subaccount Balance:

Executed as of this _____________ day of ___________.

                                  THE DETROIT EDISON COMPANY
                                  as Servicer

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

<PAGE>   32
                                                                       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>   33

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>                             <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>                   <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>                         <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
<TABLE>
<S>           <C>
              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:
</TABLE>

<PAGE>   34

     B) SEMIANNUAL INTEREST
<TABLE>
<CAPTION>

                                                                                                           Aggregate
                                                                                                           ---------
<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 SEMIANNUAL INTEREST:
</TABLE>

     C) SEMIANNUAL PRINCIPAL
<TABLE>
<CAPTION>

                                                                                                           Aggregate
                                                                                                           ---------
<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 SEMIANNUAL PRINCIPAL:

</TABLE>
     D) OTHER PAYMENTS

<TABLE>
<S>           <C>
     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:
</TABLE>

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:

<TABLE>
<S>           <C>
     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:
</TABLE>

     B) COLLECTION ACCOUNT BALANCES OUTSTANDING:
<TABLE>
<S>           <C>

     i.       Series Capital Subaccount:
     ii.      Series Overcollateralization Subaccount:
     iii.     Reserve Subaccount:
     IV.      TOTAL SUBACCOUNT AMOUNT:
</TABLE>

<PAGE>   35

6.   SUBACCOUNT BALANCES AS OF CURRENT PAYMENT DATE (IF APPLICABLE, PURSUANT TO
     SECTION 8.02 OF INDENTURE):
<TABLE>
<S>           <C>
     i.       Series Capital Subaccount:
     ii.      Series Overcollateralization Subaccount:
     iii.     Reserve Subaccount:
     IV.      TOTAL SUBACCOUNT BALANCES:
</TABLE>

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

     A) SEMIANNUAL INTEREST SHORTFALL
<TABLE>
<S>           <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 SEMIANNUAL INTEREST SHORTFALL:
</TABLE>

     B) SEMIANNUAL PRINCIPAL SHORTFALL

<TABLE>
<S>           <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 SEMIANNUAL PRINCIPAL SHORTFALL:
</TABLE>

8.   SHORTFALLS IN REQUIRED SUBACCOUNT LEVELS AS OF CURRENT DISTRIBUTION DATE:
<TABLE>
<S>           <C>
     i.       Series Capital Subaccount:
     ii.      Series Overcollateralization Subaccount:
     III.     TOTAL SUBACCOUNT SHORTFALLS:

</TABLE>

<PAGE>   36

         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>   37
                                                                       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>   38

                                                                       EXHIBIT F

                                   PROCEEDINGS

<PAGE>   39

                                                                         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>   40

         (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.

                                       2
<PAGE>   41

         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
Polices and Practices.

             (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.

                                        3
<PAGE>   42

         (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

         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.

                                       4

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