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SECURITIES AND EXCHANGE COMMISSION

FORM S-3

The Detroit Edison

The Detroit Edison Securitization Funding LLC

Susan M. Beale

Copies to:

Frances B. Rohlman

    Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

    If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.  

    If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  

    If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  

    If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  

    If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.  

CALCULATION OF REGISTRATION FEE

(1)	Estimated solely for the purpose of calculating the registration fee.

    The registrant hereby amends this Registration Statement on any date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on a date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this prospectus supplement is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus supplement is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, Dated December 1, 2000

Prospectus Supplement

Issuer

The Detroit Edison Company

	The total price to the public is $       . The total amount of the underwriting discounts is $       . The total amount of proceeds before deduction of expenses is $       .

     The securitization bonds are highly structured. Consider carefully the risk factors beginning on page S-18 of this prospectus supplement and page 15 of the accompanying prospectus before buying the securitization bonds.

     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or passed on the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.

     The securitization bonds represent obligations of The Detroit Edison Securitization Funding LLC only, which is the issuer, and are backed only by the assets of the issuer, consisting principally of the securitization property. Securitization property consists of the right to recover from The Detroit Edison Company’s electric customers a non-bypassable usage based securitization charge in amounts sufficient to make payments on the securitization bonds.

     Neither The Detroit Edison Company, its parent, DTE Energy Company, nor any of their respective affiliates, other than the issuer, are liable for payments on the securitization bonds. The securitization bonds are not obligations of the State of Michigan, the Michigan Public Service Commission or any other governmental agency or instrumentality.

     We will apply to have any class of series 2001-1 securitization bonds paying interest at a floating rate listed on the Luxembourg Stock Exchange. We will not apply to have any other class of the series 2001-1 securitization bonds listed on any stock exchange.

     This prospectus supplement and the accompanying prospectus together constitute the prospectus for the series 2001-1 securitization bonds. You are urged to read both this prospectus supplement and the accompanying prospectus in full.

Salomon Smith Barney

             , 2001

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Prospectus Supplement

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       This prospectus supplement and the accompanying prospectus provide information about the issuer and Detroit Edison, including terms and conditions that apply to the securitization bonds. The specific terms of this series of securitization bonds, the series 2001-1 securitization bonds, are contained in this prospectus supplement. The terms that apply to all series of securitization bonds appear in the accompanying prospectus which follows this prospectus supplement. You should read both of these documents in full before buying the securitization bonds.

      We have included cross-references to captions in these materials where you can find further related discussions. Cross-references may be contained in the introductory sections which will direct you elsewhere in this prospectus supplement or the accompanying prospectus for more detailed description of a particular topic. You can also find references to key topics in the Table of Contents on the preceding page.

      You should rely only on information on the securitization bonds provided in this prospectus supplement and the accompanying prospectus. We have not authorized anyone to provide you with different information.

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The Collateral

      The securitization bonds will be secured by securitization property, a property right created under Michigan state legislation and a MPSC financing order. In general terms, the securitization property represents, among other things, the irrevocable right to recover an amount sufficient to:

	•	pay principal of and interest on the securitization bonds;
	•	pay transaction fees, expenses, and costs associated with the securitization bonds; and
	•	fund or replenish the subaccounts, including the capital subaccount and the overcollateralization subaccount, to their required levels.

      This amount is to be recovered through a non-bypassable, usage based securitization charge payable by Detroit Edison’s electric customers taking delivery from Detroit Edison or its successor on its MPSC-approved rate schedules and under special contracts, referred to as customers. See “The Act — Detroit Edison and Other Utilities May Securitize Qualified Costs — Customers Cannot Avoid Paying the Securitization Charge” in the prospectus. The proceeds of the securitization bonds will be used to purchase the securitization property, thereby reimbursing Detroit Edison for a portion of Detroit Edison’s qualified costs. Qualified costs include the electric utility’s regulatory assets as determined by the MPSC plus any costs that the MPSC determines the electric utility would be unlikely to collect in a competitive market. Qualified costs are described in more detail under “The Act” and the securitization property is described in more detail under “The Sale Agreement — Detroit Edison’s Sale and Assignment of Securitization Property” in the prospectus.

      In connection with the issuance of the securitization bonds, Detroit Edison will sell its securitization property to the issuer. Detroit Edison, as servicer of the securitization property, will collect the securitization charge from customers on behalf of the issuer. The securitization charge is non-bypassable, as described in the prospectus. See “The Act — Detroit Edison and Other Utilities May Securitize Qualified Costs” in the prospectus. Since the amount of securitization charge collections will depend in part on the amount of electricity delivered by Detroit Edison to its customers, the amount of collections may vary substantially from period to period. See “The Seller and Servicer of the Securitization Property” in the prospectus.

Payment Sources

      On each payment date, the trustee will pay amounts scheduled to be paid on the securitization bonds from amounts available for withdrawal from a trust account held by the trustee, including collections received from the servicer with respect to the securitization charge. All series of securitization bonds, including the series 2001-1 securitization bonds, which are issued under the MPSC financing order, will be payable from the same securitization property. If additional series of bonds are issued under another financing order, the principal source of payment for those series will be the securitization charge collections received by the servicer pursuant to such other financing order. The issuance of such other series of securitization bonds is not expected to adversely affect the sufficiency of securitization charge collections to make payments on the series 2001-1 securitization bonds. This is because the securitization charge and adjustments thereof are generally based on the total outstanding principal balance of all securitization bonds. Moreover, any additional series of securitization bonds will be issued only if it will

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       The securitization bonds will be issued under and secured pursuant to the indenture between the issuer and the trustee, as supplemented for each series of securitization bonds.

      The series 2001-1 securitization bonds will be issued in minimum denominations of $1,000 and in integral multiples of $1 above that amount, with an exception for one securitization bond in each class which may have a smaller denomination. The series 2001-1 securitization bonds will consist of [seven] classes, in the initial class principal balances, bearing the interest rates and having the expected final payment dates and final maturity dates set forth below:

Table 1

      The expected final payment date for each class of the series 2001-1 securitization bonds is the date on which there is expected to be no further outstanding principal balance of that class in accordance with the expected amortization schedule for that class. The final maturity date for each class of the series 2001-1 securitization bonds is the date on which the issuer is required to pay any outstanding principal balance of that class. So long as the securitization bonds are in book-entry form, on each payment date, the issuer will make payments to the persons that are the holders of record as of the business day before that payment date, which is referred to as the record date. If we issue certificated securitization bonds to beneficial owners of the securitization bonds as described in “The Securitization Bonds — Certificated Securitization Bonds” in the prospectus, the record date will be the last business day of the calendar month preceding the payment date.

Principal Payments

      On each payment date, the issuer will distribute principal of the series 2001-1 securitization bonds to the series 2001-1 securitization bondholders, in accordance with the expected amortization schedule and to the extent funds are available, in the following order:

	1.	to the holders of the class A-1 series 2001-1 securitization bonds, until the principal balance of that class has been reduced to zero;
	2.	to the holders of the class A-2 series 2001-1 securitization bonds, until the principal balance of that class has been reduced to zero;

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	3.	to the holders of the class A-3 series 2001-1 securitization bonds, until the principal balance of that class has been reduced to zero;
	4.	to the holders of the class A-4 series 2001-1 securitization bonds, until the principal balance of that class has been reduced to zero;
	5.	to the holders of the class A-5 series 2001-1 securitization bonds, until the principal balance of that class has been reduced to zero;
	6.	to the holders of the class A-6 series 2001-1 securitization bonds, until the principal balance of that class has been reduced to zero; and
	7.	to the holders of the class A-7 series 2001-1 securitization bonds, until the principal balance of that class has been reduced to zero.

      The issuer will not, however, pay principal on a payment date of any class of series 2001-1 securitization bonds if making that payment would reduce the principal balance of a class to an amount lower than that specified in the expected amortization schedule in Table 2 below, referred to as the expected amortization schedule, for that class on that payment date. The entire unpaid principal balance of each class of series 2001-1 securitization bonds will be due and payable on the final maturity date for the class. If an event of default under the indenture has occurred and is continuing, the trustee may declare the unpaid principal balance of all outstanding securitization bonds together with accrued interest to be due and payable.

      The expected amortization schedule sets forth the principal balance from the issuance date to the expected final payment date that is scheduled to remain outstanding for each class of the series 2001-1 securitization bonds. The table reflects the principal balance for each class at each payment date after taking into account principal payments scheduled to be made on that date. In establishing the expected amortization schedule, we have assumed, among other things, that:

	•	the series 2001-1 securitization bonds are issued on            , 2001;
	•	principal and interest payments on the series 2001-1 securitization bonds are made on each payment date, commencing on                 ;
	•	the total servicing fee per annum for the series 2001-1 securitization bonds equals 0.05% of their outstanding principal amount;
	•	there are no net earnings on amounts on deposit in the account where securitization charge collections are held, referred to as the collection account;
	•	operating expenses, including all fees, costs and charges of the issuer and the trustee, are paid in the amount of $        in the aggregate for all series on or before each payment date in arrears; and
	•	all securitization charge collections are received in accordance with Detroit Edison’s forecasts and deposited in the collection account.

      We cannot assure you that the principal balance of any class of the series 2001-1 securitization bonds will be reduced at the rate indicated in the expected amortization schedule. The actual rates of reduction in class principal balances may be slower, except in the case of optional redemption or acceleration due to the events of default specified in the indenture, but not faster than those indicated in Table 2. The series 2001-1 securitization

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Table 2

Expected Amortization Schedule

Distribution Following Acceleration

      Upon an acceleration of the maturity of the securitization bonds, the total outstanding principal balance of and interest accrued on the series 2001-1 securitization bonds will be payable without priority of interest over principal or principal over interest and without regard to series or class, in the proportion that the total outstanding principal balance of, and accrued interest on, the series 2001-1 securitization bonds bears to the total outstanding principal balances of and interest accrued on all securitization bonds. For purposes of the preceding sentence, interest includes net swap payments with respect to any class of series 2001-1 floating rate securitization bonds.

Optional Redemption

      The issuer may redeem all of the outstanding series 2001-1 securitization bonds, at its option, on any payment date if (1) the outstanding principal balance of the series 2001-1 securitization bonds, after giving effect to payments to be made on that payment date, is less than 5% of the total initial principal balance of the series 2001-1 securitization bonds, and (2) no interest rate swap agreement remains in effect. In the case of redemption, the redemption price will be the outstanding principal balance of the series 2001-1 securitization bonds plus interest accrued and unpaid up to the redemption date. The trustee will give notice of the redemption to securitization bondholders not less than five days nor more than 45 days prior to the redemption date. If any class of series 2001-1 floating rate securitization bonds remains listed on the Luxembourg Stock Exchange, this notice also will be given by publication in a daily newspaper in Luxembourg, which is expected to be the Luxemburger Wort, at least 10 days prior to the redemption date.

      The issuer will not redeem the series 2001-1 securitization bonds before the expected final payment date in any other circumstances, except in the case of acceleration due to those events of default specified in the indenture.

Interest Payments

      Holders of securitization bonds in each class of series 2001-1 securitization bonds will receive interest at the rate for that class as set forth in Table 1 above.

      Interest on each class of series 2001-1 securitization bonds will accrue from and including the date of issuance to but excluding the first payment date, and thereafter from

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      On each payment date, the issuer will pay interest on each class of the series 2001-1 securitization bonds as follows:

	•	if there has been a payment default, any interest payable but unpaid on any prior payment dates, together with any accrued interest on that unpaid interest; and
	•	accrued interest on the principal balance of each class of series 2001-1 securitization bonds from and including the preceding payment date, or the date of issuance of the class of series 2001-1 securitization bonds, as applicable, after giving effect to all payments of principal made on the preceding payment date.

      The issuer will pay interest on the series 2001-1 securitization bonds prior to paying principal of the series 2001-1 securitization bonds. See “The Securitization Bonds — Payments of Interest on and Principal of the Securitization Bonds” in the prospectus. If there is a shortfall in the amount necessary to make interest payments from the amount available to pay interest on the series 2001-1 securitization bonds, the trustee will distribute interest to each class of the series 2001-1 securitization bonds in the manner described in “The Indenture — How Funds in the Collection Account Will Be Allocated” in the prospectus.

      Interest on all classes of series 2001-1 securitization bonds paying interest at a fixed rate will be calculated by the trustee on the basis of a 360-day year of twelve 30-day months.

Interest Payments on Floating Rate Securitization Bonds

      We will pay interest on each class of series 2001-1 securitization bonds paying interest at a floating rate, each referred to as a floating rate class, for all interest accrual periods other than the first interest accrual period, at the rate equal to the London interbank offered rate for three-month United States dollar deposits, referred to as LIBOR, determined on the applicable floating rate interest determination date, as described below, plus the percentage spread above LIBOR applicable to that class. The spread above LIBOR for any floating rate class is referred to as the floating rate spread. LIBOR plus the floating rate spread payable on each floating rate class is referred to as the floating rate.

      The floating rate spread for the series 2001-1 class A-[  ] securitization bonds will be [  ] percent per annum and for the series 2001-1 class A-[  ] securitization bonds will be [  ] percent per annum.

      We will calculate interest on each floating rate class on the basis of the actual number of days from and including the preceding payment date, or, for the first payment date, from and including the date of issuance of that class, to but excluding the next payment date, divided by 360. We will advise the Luxembourg Stock Exchange of the floating rate and the amount of the interest payment on any floating rate class listed on that exchange for each payment date.

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      For the first interest accrual period ending on                 , interest on each floating rate class will be paid based on (1) for the period from and including the date of issuance of that class until and including                 , LIBOR determined two London banking days before the date of issuance of that class, plus (2) for the period from and including                 until and including                 , LIBOR determined on                 .

      On or prior to each payment date, the trustee, using LIBOR as determined by the swap counterparty, will calculate the amount of interest payable on each floating rate class for the relevant interest accrual period.

      There will be no minimum or maximum interest rate on any floating rate class.

      With respect to any floating rate class, if the interest rate swap agreement relating to that class is terminated for any reason, we will pay interest on that class at the gross fixed rate for that class, as described below, until we can make alternate arrangements to pay the floating rate for that class. If the swap counterparty defaults in its obligation to make floating rate payments due under an interest rate swap agreement, the interest rate swap agreement may terminate automatically under the circumstances described below. See “— Interest Rate Swap Agreements — Amounts Payable under Interest Rate Swap Agreements” and “— Interest Rate Swap Agreement Events of Default and Termination Events” below and “Risk Factors Relating to Series 2001-1 Floating Rate Securitization Bonds” in this prospectus supplement.

Floating Rate Interest Determination

      The interest determination date for each floating rate class and each payment date will be the day two London banking days prior to (1) the preceding payment date or (2) in the case of the first payment date, the dates specified below. A London banking day is a day on which dealings in United States dollars are transacted in the London interbank market.

      Interest payable on the first interest payment date of [               ], 2001 for each floating rate class will be determined as follows: From and including the date of issuance until and including [               ], 2001, interest on each floating rate class will be based on LIBOR as determined two London business days prior to the date of issuance. From and including [               ], 2001 until but excluding the first payment date, interest on each floating rate class will be based on LIBOR as determined on [               ], 2001. Payment of the sum of the amounts calculated for these two periods will be made on [               ], 2001, the first payment date.

      After the first payment date, interest on each floating rate class will be paid at the rate equal to LIBOR as determined on each interest determination date, plus the floating rate spread for that class.

      The swap counterparty under the interest rate swap agreement relating to each floating rate class will determine LIBOR for that class in accordance with the following provisions:

	1.	On each interest determination date, the swap counterparty will determine LIBOR based on the offered rate for deposits in United States dollars commencing on the first day of that period that appears on the page, USD-LIBOR-BBA, or any page as may replace such page, of Bridge Telerate, Inc. or any successor service as of 11:00 a.m., London time, on that interest determination date. That display page is

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		referred to as the Telerate page. If no offered rate appears on the Telerate page, LIBOR for that period will be determined as described in clause 2. below.
	2.	With respect to an interest determination date on which no offered rate appears on the Telerate page, the swap counterparty will request the principal London office of each of four major banks in the London interbank market, selected by the swap counterparty, to provide the swap counterparty with that bank’s offered quotation for deposits in United States dollars for the applicable period, commencing on the second London banking day immediately following that interest determination date, to prime banks in the London interbank market at approximately 11:00 a.m., London time, on that interest determination date and in a principal amount that is representative for a single transaction in United States dollars in that market at that time. If at least two such quotations are provided, LIBOR will be the arithmetic mean of those quotations. If fewer than two quotations are provided, LIBOR for that period will be the arithmetic mean of the rates quoted at approximately 11:00 a.m. in The City of New York on that interest determination date by major banks in The City of New York selected by the swap counterparty for loans in United States dollars to leading European banks, for the period commencing on the second London banking day immediately following that interest determination date and in a principal amount that is representative for a single transaction in United States dollars in that market at that time.

      If LIBOR cannot be determined in accordance with clauses 1. or 2. above, then that rate will be determined to be the same as the rate which applied (a) during the previous period or (b) on the date of issuance in the case of a failure to determine LIBOR for the first payment date.

      On each interest determination date, each swap counterparty will notify the servicer, the issuer and the trustee of LIBOR for the applicable period as determined by the swap counterparty, and the issuer will notify the Luxembourg Stock Exchange of that rate to the extent any series 2001-1 securitization bonds are listed on that exchange and the rules of that exchange so require.

Interest Rate Swap Agreements

      The issuer will enter into an interest rate swap agreement with a swap counterparty for each floating rate class, on or before the date of issuance of that class. The purpose of each interest rate swap agreement is to convert the cash flows allocable to each floating rate class, which for purposes of the securitization charge are determined based on the gross fixed rate for each floating rate class, into cash flows that are based on a floating rate of interest.

      Amounts Payable under Interest Rate Swap Agreements. Under each interest rate swap agreement, the issuer will be obligated to pay the related swap counterparty a fixed rate of interest, referred to as the gross fixed rate for the related floating rate class, and the swap counterparty will be obligated to pay the issuer interest at the floating rate for that class. Those obligations will then be netted on the business day before each payment date. Therefore, for each interest period, either the issuer will pay the swap counterparty only the amount, if any, by which interest at the gross fixed rate exceeds interest at the floating rate, referred to as the net swap payment, or the swap counterparty will pay the issuer only the amount, if any, by which interest at the floating rate exceeds interest at the gross fixed rate, referred to as the net swap receipt, as discussed below.

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      For each payment date with respect to each floating rate class, the trustee will allocate to the subaccount established for that class, referred to as a class subaccount, an amount equal to the gross fixed rate for that class times the outstanding principal amount of that class as of the close of business on the preceding payment date, referred to as the gross fixed amount for that class and that payment date. See “The Indenture — How Funds in the Collection Account Will be Allocated” in the prospectus. In addition, any net swap receipt under the related interest rate swap agreement will be deposited in that class subaccount, and will be available, together with the gross fixed amount for that class, to pay interest due on that class on that payment date. We will pay any net swap payment to the related swap counterparty only out of funds on deposit in that class subaccount. Any remaining amount in that class subaccount will be available to pay interest due on that class.

      Specifically, for the first payment date, the issuer will pay a net swap payment equal to the amount, if positive, equal to (1) the interest calculated on the notional amount of the related floating rate class at the applicable gross fixed rate for the period from and including the issuance date of the series 2001-1 securitization bonds to and including                 minus (2) the sum of (a) the interest calculated on the notional amount of that class at the applicable floating rate for the period from and including that issuance date to and including                 , plus (b) the interest calculated on that notional amount at the applicable floating rate for the period from and including                 to and including                 . If this amount is a negative number, the swap counterparty will pay a net swap receipt in this amount to the issuer.

      For each payment date after the first payment date, the issuer will pay a net swap payment equal to the amount, if positive, equal to (1) the interest calculated on the notional amount of the related floating rate class at the applicable gross fixed rate for the period from and including the previous payment date to but excluding that payment date minus (2) the interest calculated on the notional amount of that class at the applicable floating rate for that period. If this amount is a negative number, the swap counterparty will pay a net swap receipt in this amount to the issuer.

      With respect to any payment date, the notional amount in effect under each interest rate swap agreement prior to that payment date will equal the principal balance of the related floating rate class as of the close of business on the preceding payment date. With respect to the first payment date, the notional amount in effect under each interest rate swap agreement prior to that payment date will be equal to the initial outstanding principal balance of the related floating rate class.

      The gross fixed rate for the floating rate class A-[  ] securitization bonds will be [  ] percent per annum, and for the floating rate class A-[  ] securitization bonds will be [  ] percent per annum.

      Each interest rate swap agreement will terminate automatically under limited circumstances, including a default by the swap counterparty in the payment of net swap payments after the applicable cure period expires unless holders representing 66 2/3% of the total outstanding principal amount of the related class vote to waive such default. In other circumstances, each interest rate swap agreement may terminate at the election of the issuer, but only as directed by the holders representing 66 2/3% of the total outstanding principal amount of the applicable floating rate class. See “— Interest Rate Swap Agreement Events of Default and Termination Events” below. In the event an interest rate swap agreement terminates, the interest payable on the related floating rate class will

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      Swap Counterparty Ratings. The required long-term senior unsecured or financial program ratings of each swap counterparty under each interest rate swap agreement will be at least “Aa3” by Moody’s Investors Service, Inc., referred to as Moody’s, and either at least “A+” or, for short-term obligations, “A-1” by Standard & Poor’s Ratings Services, referred to as S&P. These ratings are referred to as the swap counterparty minimum ratings.

      Swap Counterparty Downgrade Event. An event referred to as a swap counterparty downgrade event will occur if:

	•	the swap counterparty no longer meets the swap counterparty minimum ratings or
	•	the swap counterparty fails to maintain in effect any alternative arrangements sufficient to maintain the ratings of the related floating rate class.

      If a swap counterparty downgrade event occurs, the swap counterparty will be required, within 30 days following that event, to either:

      •  re-establish the swap counterparty minimum ratings, or

	•	establish alternative arrangements to maintain or restore the ratings of the affected floating rate class that were in effect prior to the swap counterparty downgrade event. These alternative arrangements by the swap counterparty may include:

	(1)	posting collateral, arranging for a guaranty or taking similar action to maintain or restore the ratings, or
	(2)	assigning its rights and obligations under the interest rate swap agreement to a replacement swap counterparty that meets the swap counterparty minimum rating, or that has itself made arrangements which will maintain or restore the ratings.

      Posting collateral, arranging for a guaranty and other arrangements as described in clauses (1) or (2) above are referred to in this prospectus supplement as satisfactory arrangements to maintain or restore the ratings prior to the swap counterparty downgrade event.

      At the end of that 30-day period, if the swap counterparty has failed to take steps to maintain or restore the ratings of that floating rate class that were in effect prior to the swap counterparty downgrade event, the issuer will appoint a recognized swap dealer that is a member of the International Swaps and Derivatives Association, Inc. with capital and surplus of at least $50 million, referred to as the swap agent, to, within an additional 30 days, either:

	•	find a replacement swap counterparty that meets the swap counterparty minimum ratings or that has made satisfactory arrangements to maintain or restore the ratings of the related floating rate class, referred to as a qualified replacement counterparty, or
	•	if a qualified replacement counterparty cannot be found, find the available replacement swap counterparty with the highest available long-term senior

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		unsecured or financial program credit rating assigned by Moody’s or S&P that is higher than that of the existing swap counterparty and which is approved by the holders of at least 66 2/3% of the total outstanding principal amount of the related floating rate class, referred to as an approved replacement counterparty.

      In case of a qualified replacement counterparty or an approved replacement counterparty, if there is more than one available replacement swap counterparty with the same credit rating, the issuer will select the counterparty offering the interest rate swap terms with the lowest overall cost to the issuer as the replacement swap counterparty. That replacement swap counterparty must be willing to intermediate between the issuer and the prior swap counterparty by entering into an interest rate swap agreement with the prior swap counterparty that is substantially the same as the prior interest rate swap agreement to hedge or offset the risk that the replacement swap counterparty has to the issuer.

      If the swap agent has found a qualified replacement counterparty or an approved replacement counterparty, the prior swap counterparty will be required to assign its rights and obligations under the interest rate swap agreement to that replacement swap counterparty, and the replacement swap counterparty will enter into a new interest rate swap agreement with substantially the same terms as the terminated agreement. If a replacement swap counterparty satisfying the above criteria has not been found within that second 30 day period, a termination event will occur under the interest rate swap agreement and the interest rate swap agreement will terminate unless holders representing 66 2/3% of the total outstanding principal amount of the related floating rate class vote to continue the interest rate swap agreement with the existing swap counterparty.

      If the interest rate swap agreement is not terminated as described above, the swap agent will be obligated every three months thereafter to renew the search for a qualified replacement counterparty or an approved replacement counterparty according to the above procedures. However, the replacement counterparty will not be required to intermediate between the prior swap counterparty and the issuer, as described above. At the end of each of these three- month periods, if a swap counterparty meeting the above criteria has not been found, the interest rate swap agreement will terminate unless holders representing 66 2/3% of the total outstanding principal amount of the related floating rate class vote to continue the interest rate swap agreement with the existing swap counterparty.

      All searches for replacement swap counterparties will be at the reasonable cost of the swap counterparty being replaced.

      Interest Rate Swap Agreement Events of Default and Termination Events. The events referred to as swap events of default under each interest rate swap agreement are:

	•	the failure of the issuer or the swap counterparty to pay any amount when due under the interest rate swap agreement if that failure is not remedied on or before the fifth business day after that failure,
	•	the failure of the swap counterparty to comply with the swap agreement, other than as regards payments or the provision of specified information,
	•	any misrepresentation made by the swap counterparty,
	•	certain events of bankruptcy of the issuer or the swap counterparty, or
	•	a merger of the issuer or the swap counterparty without an assumption of its obligations under the interest rate swap agreement.

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      The events referred to as termination events under the interest rate swap agreement are:

	•	illegality, as described below,
	•	an acceleration of the related floating rate class, effective upon the final date of payment for that class, or
	•	a swap counterparty downgrade event, as described above, that is not cured within the applicable time periods.

      Each interest rate swap agreement will terminate automatically upon an illegality, as described below. The interest rate swap agreement will be deemed to terminate automatically upon a failure by the swap counterparty to pay any amount when due under the interest rate swap agreement, which failure is not cured within five business days, unless the holders of 66 2/3% of the total outstanding principal amount of the related floating rate class vote to waive that default within 30 days.

      Upon acceleration of the series 2001-1 securitization bonds, either party may elect to terminate, effective upon the final date of payment for that series. In addition, any other swap event of default or a termination event can lead to a termination of the interest rate swap agreement by the party not responsible for that event. Moreover, as described above, the interest rate swap agreement will terminate following a swap counterparty downgrade event if that event is not cured, there is no replacement swap counterparty and the holders of the related floating rate class do not vote to continue with the existing swap counterparty. Except in the case of an automatic termination or a swap counterparty downgrade event, the issuer may terminate only at the direction of the holders of 66 2/3% of the total outstanding principal amount of the related floating rate class.

      The issuer will not be obligated to pay any termination payment or any other breakage amounts to the swap counterparty under any interest rate swap agreement as a result of any termination event, any swap event of default, any swap counterparty downgrade event or for any other reason. Any payment made by a replacement swap counterparty to enter into a replacement interest rate swap agreement will be paid to the terminated swap counterparty.

      Upon a termination of an interest rate swap agreement resulting from a swap event of default, swap counterparty downgrade event or other termination event, the swap counterparty may be liable to pay a termination payment to the issuer, based on the market value of the interest rate swap agreement determined in accordance with specified procedures set forth therein. Any termination payment paid by the swap counterparty, including interest thereon, will first be used to make any payment required to be paid to any replacement swap counterparty and to the extent not so used will be deposited into the applicable class subaccount as described under “Credit Enhancement — Collection Account and Subaccount — The Class Subaccounts” in this prospectus supplement. Any termination payment by the swap counterparty as a result of an acceleration of the series 2001-1 securitization bonds will be payable only upon termination, and the proceeds of the termination payment will be available to pay the amount due on the related floating rate class.

      Illegality means that due to the adoption of, or any change in, any applicable law after the date on which a swap transaction is entered into, or due to the promulgation of, or any change in, the interpretation by any court, tribunal or regulatory authority with competent

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	•	to perform any absolute or contingent obligation to make a payment or delivery or to receive a payment or delivery in respect of that swap transaction or to comply with any other material provision of the interest rate swap agreement; or
	•	to perform, or for any credit support provider of that party to perform, any contingent or other obligation which the party or that credit support provider has under any credit support document relating to that swap transaction.

      Replacement of Interest Rate Swap Agreement. Upon a termination or a swap event of default under an interest rate swap agreement, the issuer is required to appoint a swap agent. Upon its appointment, the swap agent will either:

	1.	find a replacement swap counterparty who meets the swap counterparty minimum rating or who has made such other arrangements as will result in the related floating rate class receiving ratings from the rating agencies not less than the ratings that would be received if such replacement swap counterparty met the swap counterparty minimum rating, or
	2.	if a replacement swap counterparty satisfying clause 1. above cannot be found, find the available replacement swap counterparty with the highest available long- term senior unsecured or financial program credit rating which is approved by the holders of at least 66 2/3% of the total outstanding principal amount of the related floating rate class.

      In case of clause 1. or 2. above, if there is more than one available replacement swap counterparty with the same credit rating, the counterparty offering the interest rate swap terms with the lowest overall cost to the issuer will be selected by the issuer as the replacement swap counterparty. If a replacement swap counterparty satisfying the above criteria has been found, upon the termination of the interest rate swap agreement, the replacement swap counterparty will enter into an interest rate swap agreement with the issuer having terms substantially the same as the original interest rate swap agreement.

      Assignment of Interest Rate Swap Agreements. Any swap counterparty may assign its obligations under any interest rate swap agreement with the prior written consent of the issuer or, without that consent, either:

	•	in a consolidation or amalgamation with or merger with or into, or transfer of all or substantially all of its assets to another entity which expressly assumes in a written agreement the obligations of the swap counterparty under the interest rate swap agreement, so long as, upon that consolidation, amalgamation or merger, a swap counterparty downgrade event has not occurred, or
	•	to a replacement swap counterparty following a swap counterparty downgrade event as described above.

      Enforcement, Amendment, Modification or Waiver of Interest Rate Swap Agreements. If a swap event of default or termination event occurs and is continuing, the trustee may, and at the direction of at least 66 2/3% of the total outstanding principal amount of the related floating rate class shall, exercise all rights, remedies, powers, privileges and claims of the issuer against the related swap counterparty, and any right of the issuer to take this action shall be suspended.

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      An interest rate swap agreement may be amended with the consent of the trustee and the related swap counterparty, as long as each of Moody’s, S&P, and Fitch, Inc., referred to as Fitch, confirm that the amendment will not result in the reduction or withdrawal of its then current rating of the related floating rate class, which confirmation is referred to as satisfaction of the rating agency condition. However, this amendment may not adversely affect in any material respect the interests of the securitization bondholders of the related floating rate class unless the holders of at least 66 2/3% of the total outstanding principal amount of that class direct the trustee to consent to the amendment. Moreover, that amendment may not adversely affect in any material respect the interests of any other securitization bondholders or the counterparty to any other hedge or other interest rate swap agreement without the consent of the holders of at least 66 2/3% of the total outstanding principal balance of the securitization bonds of all of those other series or classes, and each counterparty to any other hedge or other interest rate swap agreement, materially and adversely affected thereby.

      Except as set forth above under “— Swap Counterparty Downgrade Event” or “— Interest Rate Swap Agreement Events of Default and Termination Events,” with respect to any action proposed by the issuer to amend, modify, waive, supplement or surrender the terms of any interest rate swap agreement, or waive timely performance or observance by the swap counterparty under any interest rate swap agreement, in a way which would materially and adversely affect the interests of securitization bondholders of the related class, the issuer must satisfy the rating agency condition. Thereafter, the trustee will consent to this proposed action only with the consent of (1) 66 2/3% of the total outstanding principal amount of the securitization bonds of the related class, and (2) the consent of the holders of at least 66 2/3% of the total outstanding principal balance of each other series or class, and each counterparty to any other hedge or interest rate swap agreement, materially and adversely affected thereby.

Swap Counterparties

      Each initial swap counterparty shall be required to have at least the swap counterparty minimum rating and will be selected by the issuer upon the pricing by the underwriters of the series 2001-1 floating rate securitization bonds and identified in the final prospectus supplement.

       In addition to the following risk factors applicable to the floating rate classes, additional risk factors apply to all of the securitization bonds of any series. See “Risk Factors” in the prospectus. The disclosure set forth below and under “Risk Factors” in the prospectus describes the principal risk factors of an investment in the securitization bonds.

Termination of Swap Could Cause a Loss

      Termination events, swap events of default or swap counterparty downgrade events under any interest rate swap agreement may result in termination of that interest rate swap agreement. Each interest rate swap agreement may terminate automatically if the related swap counterparty defaults in its obligation to make payments under the interest rate swap agreement and the holders representing 66 2/3% of the total outstanding principal amount of the related floating rate class do not vote to waive that default. If any interest rate swap

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Ratings Downgrade of Any Floating Rate Class of Securitization Bonds Could

      If a swap counterparty downgrade event occurs, and (1) the swap counterparty fails to make satisfactory arrangements to maintain or restore the prior ratings and (2) holders representing 66 2/3% of the total outstanding principal amount of the related floating rate class either approve a replacement swap counterparty that does not maintain or restore the prior ratings or such holders vote to continue the existing interest rate swap agreement, that class of securitization bonds may be downgraded by the rating agencies. See “The Series 2001-1 Securitization Bonds — Interest Rate Swap Agreements” in this prospectus supplement. In that event, the trading price of these securitization bonds may be reduced, and holders of these securitization bonds could suffer a loss on their investment.

Interest Payments on Series 2001-1 Securitization Bonds at Floating Rates Are

      If any swap counterparty defaults in its obligation to make any net swap payment, the related interest rate swap agreement may terminate automatically in the absence of the required waiver by the holders of the related class, and the holders of the related class of series 2001-1 floating rate securitization bonds will receive interest at the gross fixed rate for that class until alternate arrangements can be made to pay the floating rate for that class. We cannot assure you that any alternate arrangements will be made to obtain a suitable replacement swap counterparty or otherwise to obtain payment of the floating rate for that class. The gross fixed rate for that class could be substantially less than the floating rate for that class at the time of that failure to pay, and holders of that class of securitization bonds could suffer a loss on their investment. See “The Series 2001-1 Securitization Bonds — Interest Rate Swap Agreements” in this prospectus supplement.

       Credit enhancement for the series 2001-1 securitization bonds is intended to protect you against losses or delays in scheduled payments on your securitization bonds. See “Risk Factors — Securitization Bondholders May Experience Payment Delays or Losses as a Result of the Limited Sources of Payment for the Securitization Bonds and Limited Credit Enhancement” in the prospectus.

Periodic Adjustment of the Securitization Bond Charge

      Credit enhancement for the securitization bonds includes mandatory periodic adjustments to the securitization charge upon notification by Detroit Edison, as servicer, to the MPSC. Under the MPSC financing order, Detroit Edison will implement an annual adjustment to the securitization charge until 12 months prior to the last expected final

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	•	pay principal of and interest on the securitization bonds;
	•	pay transaction fees, expenses, and costs associated with the securitization bonds; and
	•	fund or replenish the subaccounts, including the capital subaccount and the overcollateralization subaccount, to their required levels.

Collection Account and Subaccounts

      The trustee will establish a collection account to hold the capital contribution from Detroit Edison to the issuer and the securitization charge collections remitted by the servicer from time to time. The collection account will contain the funds available to pay the securitization bonds. The collection account will consist of subaccounts including the following:

	•	the general subaccount;
	•	one or more series subaccounts;
	•	one or more class subaccounts;
	•	one or more series capital subaccounts, as discussed below;
	•	one or more series overcollateralization subaccounts; and
	•	the reserve subaccount.

      Withdrawals from and deposits to all of these subaccounts will be made as described under “The Indenture — The Collection Account for the Securitization Bonds” and “— How Funds in the Collection Account Will Be Allocated” in the prospectus.

      The General Subaccount. Securitization charge collections remitted by the servicer to the trustee will be deposited into the general subaccount. On each payment date, the trustee will allocate amounts in the general subaccount as described under “The Indenture — How Funds in the Collection Account Will Be Allocated” in the prospectus.

      The Series Subaccount. Upon the issuance of the series 2001-1 securitization bonds, a series subaccount will be established with respect to that series. On each payment date, or the day before the payment date, in the case of interest allocated to the applicable class subaccounts as described below, the trustee will allocate from amounts on deposit in the

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	•	interest payable on that series on that payment date to each class on a pro rata basis based on the amount of interest payable to that class, or in the case of any floating rate class, based on the gross fixed amount for that class, which gross fixed amount will in turn be allocated to the related class subaccount;

	•	the principal of that series due on any class or series on the final maturity date of that class or series, on a redemption date or upon acceleration; and
	•	principal scheduled to be paid on that series on that payment date, as set forth in the expected amortization schedule, excluding amounts provided for in the immediately preceding clause above.

      On each payment date, allocations will be made to each series subaccount as described under “The Indenture — How Funds in the Collection Account Will Be Allocated” in the prospectus. On each payment date, the trustee will withdraw funds from each series subaccount to make payments on the related series of securitization bonds.

      The Series Capital Subaccount. Upon the issuance of the series 2001-1 securitization bonds, a capital subaccount will be established for that series, into which Detroit Edison will deposit $            , which represents 0.50% of the initial outstanding principal balance of the series. If amounts available in the general subaccount, the series subaccount, the reserve subaccount and the series overcollateralization subaccount are not sufficient on any payment date to make scheduled payments of principal and interest to the series 2001-1 securitization bondholders and to pay the fees, expenses, and costs specified in the indenture, the trustee will draw on amounts in the series capital subaccount to make those payments. The required capital amount has been set at a level sufficient to obtain the ratings on the series 2001-1 securitization bonds described below under “Ratings for the Series 2001-1 Securitization Bonds” in this prospectus supplement.

      The Class Subaccounts. Upon the issuance of any floating rate class, a subaccount, referred to as the class subaccount, will be established for that floating rate class. On the business day preceding each payment date, the trustee will allocate to each class subaccount from the related series subaccount an amount equal to the gross fixed amount for the related floating rate class and that payment date. On that day, any net swap payment will be paid to the related swap counterparty from that class subaccount, or any net swap receipt from the related swap counterparty will be deposited into that class subaccount. On the related payment date, amounts in each class subaccount will be paid as interest to the holders of the related floating rate class. See “The Indenture — How Funds in the Collection Account Will Be Allocated” in the prospectus. In the event of a shortfall of funds in a class subaccount to make a net swap payment due to the related swap counterparty and to pay interest on the related floating rate class of securitization bonds, those amounts will be paid on a pro rata basis based on the relative amounts due in respect of the net swap payment and the interest on the class of securitization bonds. Any balance remaining in any class subaccount after payments have been made to the holders of the related floating rate class on a payment date will be transferred to the collection account for allocation in connection with the next payment date.

      The Series Overcollateralization Subaccount. Upon the issuance of the series 2001-1 securitization bonds, an overcollateralization subaccount will be established for the series 2001-1 securitization bonds. The required overcollateralization amount for the

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      If amounts available in the general subaccount, the series subaccount and the reserve subaccount are not sufficient on any payment date to make scheduled payments of principal and interest to the series 2001-1 securitization bondholders and to pay the fees, expenses, and costs specified in the indenture, the trustee will draw on amounts in the series 2001-1 overcollateralization subaccount to make those payments.

Table 3

Scheduled Overcollateralization Levels

      The Reserve Subaccount. The reserve subaccount will be funded with any securitization charge collections and earnings on amounts in the collection account, other than the capital subaccount, in excess of the amount necessary to pay on any payment date:

	1.	fees and expenses of the trustee and the servicer and other transaction fees, expenses, costs and charges,
	2.	scheduled principal of and interest on the securitization bonds, which in the case of interest on any floating rate class will be the gross fixed amount for that class and that payment date, of each series payable on that payment date,
	3.	any amount required to replenish the capital subaccount for each series, and
	4.	the amounts required to fund or replenish the overcollateralization subaccount for each series to the specified levels for that payment date.

      The securitization charge adjustments will be calculated to, among other things, eliminate any amounts on deposit in the reserve subaccount. See also “The Securitization Bonds — Credit Enhancement for the Securitization Bonds” and “The MPSC Financing Order and the Securitization Charge — The MPSC’s Securitization Charge Adjustment Process” in the prospectus.

      On any payment date, if amounts available in the general subaccount and the series subaccount are not sufficient to make scheduled payments of principal and interest to the

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      No amounts in the series overcollateralization subaccount, the series capital subaccount or the reserve subaccount may be used to cover any shortfalls in interest on a floating rate class to the extent that shortfall is due to the swap counterparty’s failure to pay any net swap receipt due under the related interest rate swap agreement. However, amounts in those subaccounts will be available to pay the applicable gross fixed amount with respect to each floating rate class.

       Securitization property is a property right authorized by Michigan state legislation and created under a financing order. Securitization property represents, among other things, the irrevocable right of a Michigan electric utility to impose, collect and receive the securitization charges in an amount sufficient, in general terms, to make payments on the securitization bonds. See “The Act” in the prospectus. Securitization property also includes the right of an electric utility to obtain periodic adjustments of securitization charges and all revenues, collections, payments, money and proceeds with respect to the above.

       The qualified costs authorized in the MPSC financing order are to be recovered from customers of Detroit Edison through the securitization charge. Detroit Edison, in its capacity as servicer of the securitization property under the servicing agreement, will bill or arrange for the billing of the securitization charge to each customer. Detroit Edison will charge, collect and retain for its own benefit a separate tax charge which pursuant to the MPSC financing order will not constitute securitization property for purposes of the Act. See “The MPSC Financing Order and the Securitization Charge” in the prospectus. In accordance with the MPSC financing order, references to the securitization charge in this prospectus supplement and in the prospectus do not include the tax charge.

      Detroit Edison Will Assess the Securitization Charge on Customers. Detroit Edison, in its capacity as servicer of the securitization property under the servicing agreement, will assess the securitization charge on the bills of each customer. A customer is a person that is an electric customer taking delivery of electricity from Detroit Edison or its successor on its MPSC-approved rate schedules or under special contracts. Special contracts are contracts for the supply of power and energy with large industrial customers which are approved by the MPSC. Each customer who is physically connected to Detroit Edison’s facilities must pay the securitization charge on all electricity delivered over those facilities, even if that customer elects to purchase electricity from another supplier. In certain limited circumstances, however, customers who self-generate or transmit energy for an affiliate will be able to avoid the securitization charge. See “The Act — Detroit Edison and Other Utilities May Securitize Qualified Costs — Customers Cannot Avoid Paying the Securitization Charge” in the prospectus. The securitization charge is assessed as a uniform per kilowatthour charge against all customers of all rate classes and under all special contracts, subject to the maximum lawful energy charges which may be in effect from time to time for any of those rate classes or special contracts. The amount of the securitization charge billed to a customer depends on the amount of electricity delivered to

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      Detroit Edison Will Calculate the Securitization Charge. Detroit Edison, as servicer, will calculate the securitization charge based on the total amount required to be billed to customers to generate securitization charge collections sufficient, in general terms, for the issuer to (i) pay principal of and interest on the securitization bonds; (ii) pay transaction fees, expenses, and costs associated with the securitization bonds; and (iii) fund or replenish the subaccounts, including the capital subaccount and the overcollateralization subaccount, to their required levels. The securitization charge will be reflected in each customer’s bill. Securitization charge collections will vary from projections because total electricity deliveries are affected by changes in usage, number of customers, rates of payment delinquencies and write-offs or other factors. See Tables 1 through 9 under “The Seller and Servicer of the Securitization Property” in the prospectus. Detroit Edison, as servicer, is required to seek adjustments to the securitization charge as described under “The MPSC Financing Order and the Securitization Charge” in the prospectus, in order to adjust for these variations.

      The initial securitization charge will be calculated on the basis of:

	•	the issuance of approximately $1,774,202,000 of series 2001-1 securitization bonds,
	•	the projected total payments required in relation to the securitization bonds during the twelve-month period commencing on the date of issuance of the series 2001-1 securitization bonds, and
	•	the forecasted amount of electricity delivered, and for which Detroit Edison bills and collects, during that period.

      Initially, the securitization charge will be an amount not in excess of $0.004239 per kilowatthour for all customers, beginning with Detroit Edison’s first billing cycle after the issuance date of the series 2001-1 securitization bonds. See “The Act” and “The MPSC Financing Order and the Securitization Charge” in the prospectus.

      The MPSC’s Securitization Charge Adjustment Process. Under the MPSC financing order, Detroit Edison will implement annual (and commencing 12 months prior to the last expected final payment date of the series 2001-1 securitization bonds, quarterly) adjustments to the securitization charge which are calculated to generate securitization charge collections sufficient, in general terms, for the issuer to (i) pay principal of and interest on the securitization bonds; (ii) pay transaction fees, expenses, and costs associated with the securitization bonds; and (iii) fund or replenish the subaccounts, including the capital subaccount and the overcollateralization subaccount, to their required levels. See “The MPSC Financing Order and the Securitization Charge — The MPSC’s Securitization Charge Adjustment Process” in the prospectus.

       For a discussion of Detroit Edison, you should review the information under “The Detroit Edison Company” and “The Seller and Servicer of the Securitization Property” in the prospectus.

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       Subject to the terms and conditions set forth in the underwriting agreement among the issuer, Detroit Edison and the underwriters (for whom Salomon Smith Barney Inc. is acting as the representative), the issuer has agreed to sell to the underwriters, and the underwriters have severally agreed to purchase, the principal balance of series 2001-1 securitization bonds set forth opposite each underwriter’s name below:

      Under the underwriting agreement, the underwriters will take and pay for all of the series 2001-1 securitization bonds offered hereby, if any are taken.

The Underwriters’ Sales Price for the Series 2001-1 Securitization Bonds

      Series 2001-1 securitization bonds sold by the underwriters to the public will be initially offered at the prices set forth on the cover of this prospectus supplement. The underwriters propose initially to offer the securitization bonds to dealers at such prices, less a selling concession not to exceed the percentage set forth below, and the underwriters may allow and dealers may reallow a discount not to exceed the percentage set forth below.

      After the initial public offering, the public offering prices, selling concessions and reallowance discounts may change.

No Assurance as to Resale Price or Resale Liquidity for the Securitization Bonds

      The series 2001-1 securitization bonds are a new issue of securities with no established trading market. They will not be listed on any securities exchange, with the exception of any floating rate class which may be listed on the Luxembourg Stock Exchange. The underwriters have advised the issuer that they intend to make a market in the securitization bonds but they are not obligated to do so and may discontinue market making at any time without notice. No assurance can be given as to the liquidity of the trading market for the securitization bonds.

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United Kingdom Offering

      Each underwriter has represented and agreed that (a) it only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of any floating rate class to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or who is a person to whom the document may otherwise lawfully be issued or passed on, (b) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 of Great Britain with respect to anything done by it in relation to any floating rate class of in, from or otherwise involving the United Kingdom and (c) if that underwriter is an authorized person under the Financial Services Act 1986, it has only promoted and will only promote (as that term is defined in Regulation 1.02 of the Financial Services (Promotion of Unregulated Schemes) Regulations 1991) to any person in the United Kingdom the scheme described herein if that person is of a kind described either in Section 76(2) of the Financial Services Act 1986 or in Regulation 1.04 of the Financial Services (Promotion of Unregulated Schemes) Regulations 1991.

Various Types of Underwriter Transactions Which May Affect the Price of the Securitization Bonds

      In connection with the offering, Salomon Smith Barney Inc., on behalf of the underwriters, may purchase and sell securitization bonds in the open market. These transactions may include over-allotment, syndicate covering transactions and stabilizing transactions. Over-allotment involves syndicate sales of securitization bonds in excess of the principal amount of securitization bonds to be purchased by the underwriters in the offering, which creates a syndicate short position. Syndicate covering transactions involve purchases of the securitization bonds in the open market after the distribution has been completed in order to cover syndicate short positions. Stabilizing transactions consist of certain bids or purchases of securitization bonds made for the purpose of preventing or retarding a decline in the market price of the securitization bonds while the offering is in progress.

      The underwriters also may impose a penalty bid. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when Salomon Smith Barney Inc., in covering syndicate short positions or making stabilizing purchases, repurchases securitization bonds originally sold by that syndicate member.

      Any of these activities may have the effect of preventing or retarding a decline in the market price of the securitization bonds. They may also cause the price of the securitization bonds to be higher than the price that otherwise would exist in the open market in the absence of these transactions. The underwriters may conduct these transactions in the over-the-counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.

      In the ordinary course of business, each underwriter and its affiliates have engaged and may engage in transactions with the issuer and its affiliates, including Detroit Edison. In addition, each underwriter may from time to time take positions in the securitization bonds.

      Under the terms of the underwriting agreement, the issuer and Detroit Edison have agreed to reimburse the underwriters for some expenses. The issuer and Detroit Edison

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       It is a condition of any underwriter’s obligation to purchase the series 2001-1 securitization bonds that each class of the series 2001-1 securitization bonds be rated “     ” by S&P, “     ” by Moody’s and “     ” by Fitch.

      A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the rating agency. No person is obligated to maintain the rating on the securitization bonds, and, accordingly, there can be no assurance that the ratings assigned to any class of the securitization bonds upon initial issuance will not be revised or withdrawn by a rating agency at any time thereafter. If a rating of any class of the securitization bonds is revised or withdrawn, the liquidity of that class may be adversely affected. In general, ratings address credit risk and do not represent any assessment of any particular rate of principal payments on the securitization bonds other than payment in full of each class of the securitization bonds by the applicable final maturity date, as well as the timely payment of interest.

      For so long as any floating rate class is listed on the Luxembourg Stock Exchange and the rules of that exchange so require, the issuer will notify the Luxembourg Stock Exchange if any rating assigned to those securitization bonds is reduced or withdrawn and will cause this notice to be published in a daily newspaper published in Luxembourg, which is expected to be the Luxemburger Wort.

       Application will be made to list each floating rate class on the Luxembourg Stock Exchange. There can be no assurance that any floating rate class will be listed on the Luxembourg Stock Exchange or any other stock exchange. Purchasers of any class of series 2001-1 securitization bonds should not rely on these securitization bonds being listed on the Luxembourg Stock Exchange or any other stock exchange. You should consult with [          ], the Luxembourg listing agent for each floating rate class, [          ], Luxembourg, phone number [          ], referred to as the listing agent, to determine whether or not a particular floating rate class is listed on the Luxembourg Stock Exchange.

      In connection with the listing application, the articles of incorporation and by- laws of Detroit Edison, the amended and restated articles of organization and amended and restated limited liability company agreement of the issuer, as well as legal notice relating to the issuance of the series 2001-1 securitization bonds, will be deposited prior to listing with the Chief Registrar of the District Court of Luxembourg, where copies thereof may be obtained, free of charge, upon request. Once any floating rate class has been so listed, trading of those securitization bonds may be effected on the Luxembourg Stock Exchange. Each floating rate class will be submitted for clearing through the facilities of DTC, Clearstream and Euroclear. See “The Securitization Bonds — Securitization Bonds Will Be Issued in Book-Entry Form” in the prospectus.

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      The International Securities Identification Number (ISIN), Common Code number and the CUSIP number for each floating rate class are as follows:

      The issuer represents that, as of the date of this prospectus supplement, there has been no material adverse change in its financial position since the date of its creation. The issuer is not involved in litigation or arbitration proceedings relating to claims on amounts which are material in relation to the issuance of any floating rate class nor, so far as the issuer is aware, is any litigation or arbitration of this type involving it pending or threatened. Except as disclosed in this prospectus supplement or the prospectus, as of the date of this prospectus supplement, the issuer has no outstanding loan capital, borrowings, indebtedness or contingent liabilities, nor has the issuer created any mortgages, charges or guarantees.

      The transactions contemplated in this prospectus supplement have been authorized by resolutions adopted by Detroit Edison’s Board of Directors on or about November 29, 2000 and by the issuer’s managers on or about November 30, 2000.

      If any floating rate class is listed on the Luxembourg Stock Exchange, copies of the indenture, the series 2001-1 supplemental indenture, the sale agreement, the servicing agreement, the administration agreement, the reports of independent certified public accountants described in “The Servicing Agreement — Detroit Edison, as Servicer, Will Provide Statements to the Issuer and to the Trustee” and “— Detroit Edison to Provide Compliance Reports Concerning the Servicing Agreement” in the prospectus, the documents listed under “The Detroit Edison Company” and “Information Available to the Securitization Bondholders” and the reports to securitization bondholders referred to under “Reports to Securitization Bondholders” and “The Indenture — Reports to Holders of the Securitization Bonds” and “— The Trustee Must Provide a Report to All Securitization Bondholders” in the prospectus, will be available free of charge at the offices of the trustee in The City of New York and the listing agent in Luxembourg. Financial information regarding Detroit Edison is included in its annual report on Form 10-K for the fiscal year ended December 31, 1999 and in its quarterly reports on Form 10-Q for the first three fiscal quarters of fiscal year 2000, and is also available at the offices of the trustee in The City of New York and the listing agent in Luxembourg. For so long as any floating rate class is outstanding and listed on the Luxembourg Stock Exchange, copies of each annual report on Form 10-K and each quarterly report on Form 10-Q for subsequent fiscal years and quarters will also be available at the offices of the trustee in The City of New York and the listing agent in Luxembourg.

      In the event that any floating rate class is listed on the Luxembourg Stock Exchange, certificated securitization bonds are issued and the rules of the Luxembourg Stock Exchange require a Luxembourg transfer agent, the Luxembourg paying agent will be appointed as a transfer agent.

      The indenture provides that the trustee and the paying agent shall pay to the issuer upon request any amounts held by them for the payment of principal of and interest on any class of securitization bonds, including without limitation, any floating rate class, which

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      According to Chapter VI, Article 3, point A/II/2 of the Rules and Regulations of the Luxembourg Stock Exchange, the floating rate securitization bonds will be freely transferable and therefore no transaction made on the Luxembourg Stock Exchange will be cancelled.

      The indenture, the series 2001-1 supplemental indenture, the sale agreement, the servicing agreement and the administration agreement are governed by the laws of the State of Michigan. Similarly, the amended and restated articles of organization and the amended and restated limited liability company agreement are governed by the laws of the State of Michigan.

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion, Dated December 1, 2000

Prospectus

The Detroit Edison Securitization Funding LLC

Issuer

The Detroit Edison Company

Seller and Servicer

       Up to $              of Securitization Bonds Issuable in Series

     Consider carefully the risk factors beginning on page 15 of this prospectus before buying the securitization bonds.

       Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

     The securitization bonds represent obligations of The Detroit Edison Securitization Funding LLC only, which is the issuer, and are backed only by the assets of the issuer. Neither The Detroit Edison Company, its parent, DTE Energy Company, nor any of their respective affiliates, other than the issuer, is liable for payments on the securitization bonds. The securitization bonds are not obligations of the State of Michigan, the Michigan Public Service Commission or any other governmental agency or instrumentality.

     This prospectus, together with the applicable prospectus supplement, constitutes a summary of material terms of the offering of a series of securitization bonds. Prospective investors are urged to read both this prospectus and the prospectus supplement in full. Sales of the securitization bonds may not be consummated unless the purchaser has received both this prospectus and the prospectus supplement.

[               ], 2001

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       You should rely only on information related to the securitization bonds provided in this prospectus and in the related prospectus supplement. No dealer, salesperson or other person has been authorized to give any information or to make any representations other than those contained in this prospectus and the prospectus supplement and, if given or made, the information or representations must not be relied upon as having been authorized by the issuer, Detroit Edison, the underwriters or any dealer, salesperson or other person.

      This prospectus and the related prospectus supplement do not constitute an offer to sell, or a solicitation of an offer to buy, any security in any jurisdiction in which it is unlawful to make any similar offer or solicitation.

      We include cross-references to sections where you can find additional information. Check the table of contents to locate these sections.

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       This summary contains a brief description of the securitization bonds that applies to all series of securitization bonds issued under this prospectus. Information that relates to a specific series of securitization bonds can be found in the prospectus supplement related to that series. You will find a detailed description of the terms of the offering of the securitization bonds in “The Securitization Bonds” in this prospectus.

      Consider carefully the risk factors beginning on page 15 of this prospectus.

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		administrative affairs of the issuer pursuant to an administrative agreement with the issuer.
Trustee:		[                          ]
Offered Securities:		Up to $1,774,202,000 aggregate principal amount of securitization bonds of The Detroit Edison Securitization Funding LLC. Unless otherwise indicated, when we refer to the securitization bonds, we mean any or all of the securitization bonds issuable under the Act and the MPSC financing order described in this prospectus.
The Assets of the Issuer:		The issuer will own:
		•  the securitization property transferred to the issuer by the seller (see “The Sale Agreement — Detroit Edison’s Sale and Assignment of Securitization Property” in this prospectus);
		•  trust accounts held by the trustee;
		•  other credit enhancement acquired or held to provide for the payment of the securitization bonds; and
		•  rights under any interest rate swap agreements.
Transaction Overview:		The Customer Choice and Electric Reliability Act, Enrolled Senate Bill No. 937, 2000 PA 141 and Enrolled Senate Bill No. 1253, 2000 PA 142, both of which became effective June 5, 2000, and both of which are referred to collectively as the Act, authorizes electric utilities, such as Detroit Edison, to recover qualified costs. Qualified costs are an electric utility’s regulatory assets as determined by the MPSC, plus any costs that the MPSC determines that the electric utility would be unlikely to collect in a competitive market, together with the costs of issuing, supporting and servicing securitization bonds and any costs of retiring and refunding the electric utility’s existing debt and equity securities in connection with the issuance of securitization bonds. Qualified costs include taxes related to the recovery of the securitization charge. An electric utility may recover qualified costs through an irrevocable non- bypassable charge called the securitization charge that is collected from all of its electric customers taking delivery on its MPSC- approved rate schedules and under special contracts. The Act permits special purpose entities

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		formed by electric utilities to issue debt securities secured by the right to receive revenues arising from the securitization charge. The securitization property includes this right. See “The Securitization Bonds” in this prospectus.
		The following sets forth the primary steps of the transaction underlying the offering of the securitization bonds:
		•  Detroit Edison will sell the securitization property to the issuer in exchange for the proceeds from the sale of the securitization bonds after payment of the issuer’s issuance costs.
		•  The issuer, whose primary asset is the securitization property, will sell the securitization bonds to the underwriters named in the prospectus supplement.
		•  Detroit Edison will act as the servicer of the securitization property on behalf of the issuer. Detroit Edison or a third party will act as the administrator of the issuer for an arm’s- length fee, which is expected to be nominal.
		Detroit Edison will also charge, collect and retain for its own benefit a separate tax charge which pursuant to the MPSC financing order will not constitute securitization property for purposes of the Act. See “The MPSC Financing Order and the Securitization Charge” in this prospectus. In accordance with the MPSC financing order, references to the securitization charge in this prospectus do not include the tax charge.
		The securitization bonds and the securitization property securing the securitization bonds are not an obligation of Detroit Edison or any of its affiliates, other than the issuer. The securitization bonds are also not a debt or obligation of the State of Michigan and are not a charge on the full faith and credit or taxing power of the State.
State Pledge:		Under the Act, the State of Michigan pledges, for the benefit and protection of the holders of the securitization bonds and the electric utility, that it will not take or permit any action that would impair the value of securitization property, reduce or alter (except as allowed under the securitization charge adjustment provisions), or impair the securitization charge to be imposed, collected and

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		remitted to the issuer, until the principal, interest and premium, if any, and any other charges incurred and contracts to be performed in connection with the related securitization bonds have been paid and performed in full.
		The State of Michigan’s pledge may be subject to subsequent actions undertaken by the State that are a reasonable exercise of the State’s sovereign powers and of a character reasonable and appropriate to the public purpose justifying such action. However, there is no existing case law addressing such exercise of the State’s sovereign powers with respect to securitization bonds. In addition, the State may not take any action in contravention of its pledge without paying just compensation to the securitization bondholders, as determined by a court of competent jurisdiction, if this action would constitute a permanent appropriation of a substantial property interest of securitization bondholders in the securitization property and deprive the securitization bondholders of their reasonable expectations arising from their investments in the securitization bonds. There is also no existing case law addressing the issue of just compensation in the context of securitization bonds. See “Risk Factors — Future Voter Initiatives, Referenda or Other State Legislative Action May Invalidate the Securitization Bonds or Their Underlying Assets” in this prospectus.

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The Collateral

      The securitization bonds will be secured by securitization property, a property right created under the Act and a financing order issued by the MPSC, dated November 2, 2000, referred to in this prospectus as the MPSC financing order. The MPSC financing order provides, among other things, for the creation of the securitization property and the issuance of the securitization bonds. In general terms, the securitization property represents, among other things, the irrevocable right to recover an amount sufficient to:

	•	pay principal of and interest on the securitization bonds;
	•	pay transaction fees, expenses, and costs associated with the securitization bonds; and
	•	fund or replenish the subaccounts, including the capital subaccount and the overcollateralization subaccount, to their required levels.

This amount is to be recovered through a non-bypassable securitization charge payable by all of Detroit Edison’s electric customers, subject to limited exceptions, taking delivery from Detroit Edison or its successor on its MPSC-approved rate schedules and under special contracts, referred to as customers. See “The Act — Detroit Edison and Other Utilities May Securitize Qualified Costs — Customers Cannot Avoid Paying the Securitization Charge” in this prospectus. The proceeds of the securitization bonds will be used to purchase the securitization property, thereby reimbursing Detroit Edison for a portion of Detroit Edison’s qualified costs. Qualified costs include the electric utility’s regulatory assets as determined by the MPSC plus any costs that the MPSC determines the electric utility would be unlikely to collect in a competitive market. Qualified costs are described in more detail under “The Act” and the securitization property is described in more detail under “The Sale Agreement — Detroit Edison’s Sale and Assignment of Securitization Property” in this prospectus.

      Detroit Edison will sell securitization property to the issuer. The securitization property is described in more detail under “The Sale Agreement — Detroit Edison’s Sale and Assignment of Securitization Property” in this prospectus. Detroit Edison, as servicer of the securitization property, will collect the securitization charge from customers on behalf of the issuer. See “The Seller and Servicer of the Securitization Property” in this prospectus.

Payment Sources

      On each payment date, the trustee will pay amounts due on the securitization bonds from:

	•	securitization charge collections remitted by the servicer to the trustee;
	•	any third party credit enhancement;
	•	investment earnings on amounts held under the indenture;
	•	amounts payable to the trustee under any interest rate swap agreement or cap agreement;
	•	amounts received as payment of any indemnity obligation by Detroit Edison under the sale agreement or the servicing agreement; and

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	•	other amounts available in the collection account held by the trustee. This account is described in greater detail under “The Indenture — The Collection Account for the Securitization Bonds” in this prospectus.

Priority of Distributions

      The trustee will apply securitization charge collections remitted by the servicer together with all investment earnings on the trust accounts, to the extent funds are available in the general subaccount of the collection account, in the following order of priority:

      On each payment date or before, if so specified in the related prospectus supplement, to:

	(i)	payment of the trustee fee, together with any legal fees and other expenses and, so long as payment of any indemnity amounts will not cause an event of default, any indemnity amounts owed to the trustee;
	(ii)	payment of the servicing fee and any unpaid servicing fees;
	(iii)	payment of the administration fee in an amount specified in the administration agreement and payment of the fees of the independent managers of the issuer;
	(iv)	so long as no event of default has occurred and is continuing or would be caused by this payment, payment of any operating expenses of the issuer, excluding items (i) through (iii) above, up to a total of $[100,000] for that payment date for all series;
	(v)	payment of the interest then due on the securitization bonds or the amount payable under any interest rate swap agreement, excluding any termination or similar non-recurring payments;
	(vi)	payment of the principal balance of the securitization bonds then due as follows:

	•	the outstanding principal balance of all series of the securitization bonds upon an acceleration following an event of default; plus
	•	on the final maturity date of any securitization bonds, the outstanding principal balance of those securitization bonds; plus
	•	on the redemption date of any securitization bonds, the outstanding principal balance of those securitization bonds called for redemption;

	(vii)	payment of the principal then scheduled to be paid on the securitization bonds according to the expected amortization schedule and any other scheduled principal unpaid on prior payment dates, other than principal paid under item (vi) above;
	(viii)	payment of any remaining unpaid operating expenses, including indemnity amounts and any amounts payable by the issuer under any hedging arrangement and any termination or similar non-recurring payments under any interest rate swap agreement;

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