UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

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

For the Quarterly Period ended September 30, 2004March 31, 2005

Commission file number 1-2198

The registrant meets the conditions set forth in General Instruction H (1) (a) and (b) of Form 10-Q and is, therefore, filing this Form with the reduced disclosure format.

THE DETROIT EDISON COMPANY

313-235-4000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrantregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X þNoo

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

YesoNo X þ

THE DETROIT EDISON COMPANYThe Detroit Edison Company

QUARTERLY REPORT ON FORMQuarterly Report on Form 10-Q
QUARTER ENDED SEPTEMBER 30, 2004Quarter Ended March 31, 2005

TABLE OF CONTENTSTable of Contents

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DEFINITIONSDefinitions

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FORWARD-LOOKING STATEMENTSForward-Looking Statements

Certain information presented herein includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve certain risks and uncertainties that may cause actual future results to differ materially from those contemplated, projected, estimated or budgeted in such forward-looking statements. There are many factors that may impact forward-looking statements including, but not limited to, the following:

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

New factors emerge from time to time. We cannot predict what factors may arise or how such factors may cause our results to differ materially from those contained in any forward-looking statement. Any forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

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The Detroit Edison Company

THE DETROIT EDISON COMPANY
MANAGEMENT’S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS

The Management’s Narrative Analysis of Results of Operations discussion for Detroit Edison is presented in accordance with General Instruction H(2) (a) of Form 10-Q.

OVERVIEW

We had income of $62$55 million in the 2004 third2005 first quarter compared to income of $96$44 million for the 2003 third quarter. For the nine-month period, our income was $114 million compared to income of $141 million for the comparable 2003 period. The comparability of earnings for the nine-month period was impacted by the adoption of a new accounting rule in the 20032004 first quarter. As required by generally accepted accounting principles, on January 1, 2003, we adopted a new accounting rule for asset retirement obligations as discussed in Note 2. The cumulative effect of adopting this new accounting rule was to reduce the 2003 nine-month period earnings by $6 million.

Significant items that influenced our 2004 financial performance and/or may affect future results are:

•		Lost revenues from electric Customer Choice penetration;
•		Proposed Michigan legislation to address electric Customer Choice issues; and
•		Interim electric rate orders.

Electric Customer Choice Program— Detroit Edison’s rates are regulated by the Michigan Public Service Commission (MPSC), while alternative suppliers can charge market-based rates. This regulation has hindered Detroit Edison’s ability to retain customers. In addition, the MPSC has maintained regulated rates for certain groups of customers that exceed the cost of service to those customers. This has resulted in high levels of participation in the electric Customer Choice program by those customers that have the highest price relative to their cost of service. As a result, we continue to lose margins. To address this issue, we expect to file a rate case in 2005 designed to adjust rates for each customer class to be reflective of the full costs incurred to service such customers.

Lost margins and electricity volumes associated with electric Customer Choice were approximately $63 million and 2,655 gigawatthours (gWh) in the 2004 third quarter and approximately $172 million and 7,277 gWh in the 2004 nine-month period. This compares with lost electric Customer Choice margins and volumes of approximately $35 million and 2,141 gWh in the 2003 third quarter and $80 million and 5,192 gWh in the 2003 nine-month period. The financial impact of electric Customer Choice was also affected by the issuance of the electric interim rate order that increased base rates, authorized transition charges and reaffirmed the resumption of the power supply cost recovery (PSCR) mechanism, as subsequently discussed. Partially offsetting the impact of lost margins on income, we recorded regulatory assets of approximately $24 million and $67 million in the 2004 third quarter and nine-month period, respectively, and $8 million and $20 million in the 2003 third quarter and nine-month period. The regulatory assets represent an estimate of stranded costs that we believe are recoverable under existing Michigan legislation and MPSC orders. There are a number of variables and estimates that impact the level of recoverable stranded costs, including weather, sales mix, wholesale electric prices and transition charges. As a result, our estimate of stranded costs could increase or decrease. The actual amount of stranded costs to be recovered and the timing of recovery will ultimately be determined by the MPSC.

In February 2004, the MPSC authorized an interim electric rate increase that recognized a revenue deficiency for a portion of the lost electric Customer Choice revenues, and eliminated transition credits and implemented a transition charge for electric Customer Choice customers. Although the interim order, along with changes in wholesale market prices, has stabilized electric Customer Choice sales volumes, current regulation continues to hinder our ability to retain customers. In Detroit Edison’s June 2003 electric rate filing, we addressed numerous issues with the electric Customer Choice program, including stranded costs. The continued delay in addressing the structural problems of the electric Customer Choice program and the timely and full recovery of stranded costs, unfavorably impacts earnings and cash flow.

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Power Distribution operation and maintenance expenses are now reflected in Energy Resources Utility – Power Generation’s purchased power costs is attributable to lower priced purchases and the use of a more favorable power supply mix.expenses. The favorable mix is due to lower purchases, driven by lost sales under the electric Customer Choice program. The 2003 third quarter and nine-month period includes higher costs associated with substitute power purchased to meet customer demand during the August 2003 blackout. We were required to purchase additional power during the 36-day period it tookPSCR mechanism provides related revenues for our generation fleet to return to pre-blackout capacity.      

Operation and maintenanceexpense increased $12decreased $9 million in the 2004 thirdfirst quarter and $19 million inof 2005. Pursuant to the 2004 nine-month period.MPSC final rate order, merger interest is no longer allocated to Detroit Edison. The increases reflect2005 period also experienced lower benefit costs, associated with maintaining our generation fleet and higher allocations for corporate support services. Additionally, the increases are due to costs associated with our DTE2 implementation project, a company-wide initiative to improve existing processes and to implement new core information systems, including finance, human resources, supply chain and work management.partially offset by increased power plant outage expense.

Depreciation and amortizationexpense increased $1 million and decreased $22$39 million in the 2004 thirdfirst quarter and nine-month period, respectively. Depreciation and amortization expense was affected by increased charges resulting from generation-related capital expenditures. Depreciation and amortization expense was reduced byof 2005. The increase reflects the income effect of recording regulatory assets, totaling $29 millionwhich lowers depreciation and $86amortization expenses. The interim and final electric rate orders in 2004 recover PA 141 costs previously deferred as regulatory assets. As a result, the regulatory asset deferrals totaled $13 million in the 2004 thirdfirst quarter and nine-month period, respectively,of 2005 compared to $27 million and $67$42 million in the same 2003 periods. The regulatory assets represent the deferralfirst quarter of net stranded costs and other costs we believe are recoverable under Public Act 141.

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to recover transmission revenues lost as a result of a FERC order modifying the pricing of transmission service in the Midwest. During the first quarter of 2005 Detroit Edison recorded an estimated $9 million of additional expense. Detroit Edison anticipates additional expenses of approximately $1 million per month from April 2005 through March 2006. Detroit Edison is expected to incur an additional $15 million in 2005 for charges related to the implementation of Midwest Independent Transmission System Operator’s open market. Detroit Edison received rate orders in 2004 that allow for the recovery of increased transmission expenses through the PSCR mechanism.

See Note 3 —– Regulatory Matters.

ENERGY DISTRIBUTION

Utility - Power Distribution

Power Distribution operations include the electric distribution services of Detroit Edison. Power Distribution distributes electricity generated and purchased by Energy Resources and alternative electricenergy suppliers to Detroit Edison’s 2.1 million customers.

Factors impacting income: Power Distribution earnings decreased $7increased $15 million induring the 2004 third quarter and increased $48 million in the 2004 nine-month period.2005 first quarter. As subsequently discussed, these results primarily reflect an increase in operating revenues, a non-recurring loss recorded in the 2003 first quarter and higherlower operation and maintenance expenses.

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Operating revenuesdecreased $3 million primarily due to lower electric deliveries as a result of economic conditions, partially offset by higher rates from the November 2004 MPSC final rate order.

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Operating revenuesincreased $23 million in the 2004 third quarter and $83 million in the 2004 nine-month period primarily due to the increase in base rates resulting from the interim order and residential sales growth, partially offset by the effects of milder weather. Additionally, the nine-month period comparison was affected by a revision of estimated unbilled sales in the 2004 second quarter, which reduced revenues by $6 million. As previously discussed, the revision also reduced sales within Energy Resources’ Power Generation — segment.

Operation and maintenanceexpense increased $33 milliondecreased $13 million. Pursuant to the MPSC final electric rate order, transmission expenses previously recorded in Energy Distribution Utility – Power Distribution operation and maintenance expenses are now reflected in Energy Resources Utility – Power Generation’s purchased power expenses with related revenues through the 2004 thirdPSCR mechanism. In addition, pursuant to the MPSC final rate order, merger interest is no longer allocated to Detroit Edison. The 2005 first quarter and $20 million in the 2004 nine-month period. Both 2004 periods were affectedalso benefited from lower uncollectible accounts receivable expense, partially offset by higher reservescosts for uncollectable accounts receivables, reflecting higher past due amounts attributable to economic conditions. Additionally, the increases arefunding of low-income customer assistance fund and system reliability expenses.

Other income and deductionsdecreased $10 million primarily due to higher transmission expenses, resulting fromlower interest expense as a refund in the 2003 third quarter, as well as costs associated with our DTE2 implementation project. The comparison for the nine-month period was also affected by a $22 million loss ($14 million netresult of tax) on the sale of our steam heating business in the 2003 first quarter.adjustments due to settlements related to tax audits.

Outlook—– Operating results are expected to vary as a result of external factors such as weather, changes in economic conditions and the severity and frequency of storms. As previously mentioned, Detroit Edison filed a rate case in June 2003 to address higher operating costs and other issues. Detroit Edison received an interim order in this rate case in February 2004. See Note 3 — Regulatory Matters.

In conjunction with the sale of transmission assets to International Transmission Company (ITC) in February 2003, the Federal Energy Regulatory Commission froze ITC’s transmission rates through December 2004. It is expected that annual rate adjustments pursuant to a formulistic pricing mechanism beginning in January 2005 will result in an estimated increase in Detroit Edison’s annual transmission expense of $40 million. Additionally, several Midwest utilities seek to recover lost transmission revenues associated with the creation of multiple regional transmission organizations in the Midwest. This Federal Energy Regulatory Commission proceeding could require that Detroit Edison and its customers be responsible for increased transmission costs of up to $30 million annually. Included in the electric rate case filing and 2005 PSCR plan case, Detroit Edison has proposed transmission expenses, above the level established in base rates, be recoverable through the PSCR mechanism. See Note 3.

ENVIRONMENTAL MATTERS

See Note 7 — Contingencies for discussion of environmental matters.

REPRESENTED EMPLOYEES

Approximately 3,600 of the company’s employees were under a contract that expired in June 2004. A new three-year contract was ratified in July 2004.

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