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SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

For the Quarter Ended March 31, 2000

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

At April 30, 2000, 142,660,170 shares of DTE Energy’s Common Stock, substantially all held by non-affiliates, were outstanding.

DTE ENERGY COMPANY

      This document contains the Quarterly Reports on Form 10-Q for the quarter ended March 31, 2000 for each of DTE Energy Company and The Detroit Edison Company. Information contained herein relating to an individual registrant is filed by such registrant on its own behalf. Accordingly, except for its subsidiaries, The Detroit Edison Company makes no representation as to information relating to any other companies affiliated with DTE Energy Company.

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      The following condensed consolidated financial statements (unaudited) are included herein.

Note:	Detroit Edison’s Condensed Consolidated Financial Statements are presented here for ease of reference and are not considered to be part of Item I of the Company’s report.

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DTE Energy Company

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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DTE Energy Company

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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See Notes to Condensed Consolidated Financial Statements (Unaudited).

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DTE Energy Company

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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DTE Energy Company

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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The Detroit Edison Company

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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The Detroit Edison Company

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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See Notes to Condensed Consolidated Financial Statements (Unaudited).

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The Detroit Edison Company

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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The Detroit Edison Company

See Notes to Condensed Consolidated Financial Statements (Unaudited).

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DTE Energy Company and The Detroit Edison Company

NOTE 1 — ANNUAL REPORT NOTES

      These condensed consolidated financial statements (unaudited) should be read in conjunction with the Annual Report Notes. The Notes contained herein update and supplement matters discussed in the Annual Report Notes.

      The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

      The condensed consolidated financial statements are unaudited, but in the opinion of the Company and Detroit Edison, with respect to its own financial statements, include all adjustments necessary for a fair statement of the results for the interim periods. Financial results for this interim period are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year.

      Certain prior year balances have been reclassified to conform to the current year’s presentation.

NOTE 2 — MERGER AGREEMENT

      On October 4, 1999, the Company entered into a definitive merger agreement with MCN. MCN, a Michigan corporation, is primarily involved in natural gas production, gathering, processing, transmission, storage and distribution, electric power generation and energy marketing. MCN’s largest subsidiary is Michigan Consolidated Gas Company, a natural gas utility serving 1.2 million customers in more than 500 communities throughout Michigan. Shareholders of the Company have approved the issuance of the necessary shares of common stock to complete the merger and shareholders of MCN have approved the Agreement and Plan of Merger. The merger is also subject to a number of regulatory approvals and other agreed upon conditions. Discussions continue with the Federal Trade Commission and a final closing date cannot be determined with certainty.

NOTE 3 — SHAREHOLDERS’ EQUITY

      The Company’s board of directors has authorized the repurchase of up to 10 million common shares, with the current program tentatively set to not exceed $100 million. Stock purchases are made from time to time on the open market or through negotiated transactions. All common stock repurchased will be canceled. During the first quarter of 2000, the Company repurchased approximately 2.3 million shares at an aggregate cost of approximately $70 million.

NOTE 4 — SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

      At March 31, 2000, Detroit Edison had total short-term credit arrangements of approximately $496 million under which $116 million of commercial paper was outstanding. Additionally, Detroit Edison had a $200 million trade receivables sales agreement under which $200 million was outstanding at March 31, 2000.

      At March 31, 2000, DTE Capital had $185 million of commercial paper outstanding. A $400 million short-term credit arrangement, backed by a Support Agreement from the Company, provided credit support for this commercial paper.

      During the first quarter, plans were announced to discontinue DTE Capital’s operations. At March 31, 2000, the Company had assumed all $165 million of DTE Capital’s outstanding guarantees of various affiliate obligations. The remainder of DTE Capital’s financial obligations are expected to be assumed by the Company.

NOTE 5 — FINANCIAL INSTRUMENTS

      The Company has entered into a series of forward starting interest rate swaps and Treasury locks in order to limit the Company’s sensitivity to interest rate fluctuations associated with its anticipated issuance of long-term debt to be used to finance the merger with MCN. The Company expects to issue this debt

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NOTE 6 — CONTINGENCIES

      As discussed in the Company’s Annual Report, in July 1999, the ABATE made a filing with the MPSC indicating that Detroit Edison’s retail rates produce approximately $333 million of excess revenues. Of this amount, approximately $202 million is related to ABATE’s proposed reversal of the December 28, 1998 MPSC Order authorizing the accelerated amortization of Fermi 2. On March 17, 2000, the Administrative Law Judge issued his Proposal for Decision (PFD) recommending that Detroit Edison’s rates be reduced by $101.6 million. Of this amount, $14.9 million is associated with the expiration of the storm damage amortization which has already been reflected in rates effective January 1, 2000. The PFD recommended lowering Detroit Edison’s authorized return on equity to 10.5% from 11.0%. The PFD rejected ABATE’s proposal, also supported by the Michigan Attorney General, to reverse the December 28, 1998 Fermi 2 Amortization Order. A final order has yet to be issued by the MPSC. The Company is unable to predict the outcome of this proceeding.

NOTE 7 — SEGMENT AND RELATED INFORMATION

      The Company’s reportable business segment is its electric utility, Detroit Edison, which is engaged in the generation, purchase, transmission, distribution and sale of electric energy in a 7,600 square mile area in Southeastern Michigan. All Other includes non-regulated energy-related businesses and services, which develop and manage electricity and other energy-related projects, and engage in domestic energy trading and marketing. Inter-segment revenues are not material. Income taxes are allocated based on intercompany tax sharing agreements, which generally allocate the tax benefit of alternative fuels tax credits and accelerated depreciation to the respective subsidiary, without regard to the subsidiary’s own net income or whether such tax benefits are realized by the Company. Financial data for business segments are as follows:

      This Quarterly Report on Form 10-Q, including the report of Deloitte & Touche LLP (on page 18) will automatically be incorporated by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (Registration Nos. 33-53207, 33-64296 and 333-65765) of The Detroit Edison Company and Form S-8 (Registration No. 333-00023), Form S-4 (Registration No. 333-89175) and Form S-3 (Registration No. 33-57545) of DTE Energy Company, filed under the Securities Act of 1933. Such report of Deloitte & Touche LLP, however, is not a “report” or “part of the Registration Statement” within the meaning of Sections 7 and 11 of the Securities Act of 1933 and the liability provisions of Section 11(a) of such Act do not apply.

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Independent Accountants’ Report

To the Board of Directors and Shareholders of DTE Energy Company and

      We have reviewed the accompanying condensed consolidated balance sheets of DTE Energy Company and subsidiaries and of The Detroit Edison Company and subsidiaries as of March 31, 2000, and the related condensed consolidated statements of income and cash flows for the three-month periods ended March 31, 2000 and 1999, and the condensed consolidated statements of changes in shareholders’ equity for the three-month period ended March 31, 2000. These financial statements are the responsibility of DTE Energy Company’s management and of The Detroit Edison Company’s management.

      We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

      Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

      We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheets of DTE Energy Company and subsidiaries and of The Detroit Edison Company and subsidiaries as of December 31, 1999, and the related consolidated statements of income, changes in shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated January 26, 2000, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheets as of December 31, 1999 is fairly stated, in all material respects, in relation to the consolidated balance sheets from which it has been derived.

DELOITTE & TOUCHE LLP

Detroit, Michigan
May 12, 2000

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      This analysis for the three months ended March 31, 2000, as compared to the same period in 1999, should be read in conjunction with the condensed consolidated financial statements (unaudited), the accompanying Notes, and the Annual Report Notes.

      Detroit Edison is the principal operating subsidiary of the Company and, as such, unless otherwise identified, this discussion explains material changes in results of operations of both the Company and Detroit Edison and identifies recent trends and events affecting both the Company and Detroit Edison.

GROWTH

      As discussed in the Annual Report, in order to sustain earnings growth with an objective of 6% growth annually, the Company and Detroit Edison have developed a business strategy focused on core competencies, consisting of expertise in developing, managing and operating energy assets, including coal sourcing, blending and transportation skills.

      As discussed in Note 2, the Company and MCN have entered into a merger agreement. The Company expects that completion of the merger will result in the issuance of approximately 30 million shares of its common stock and approximately $1.4 billion in external financing. The merger is expected to create a fully integrated electric and natural gas company that is expected to strongly support the Company’s commitment to a long-term earnings growth rate of 6%. The merger is expected to permit the Company to be responsive to competitive pressures. The external financing needs of the merger may create a sensitivity to interest rate changes; and the Company will need to successfully integrate the two operations in order to be able to service the expected debt requirements and achieve aggregate operating cost reductions. See Note 5 for further discussion of the financial instruments used to hedge the interest rate risk associated with financing the merger.

ELECTRIC INDUSTRY RESTRUCTURING

      Various bills have been introduced and proposed for introduction at the federal level and in the Michigan Legislature addressing competition in the electric markets. The Company and Detroit Edison are reviewing these bills and continue to work with the parties involved to develop proposals that are fair for the Company and its shareholders. While the impacts of the adoption and implementation of one or more of these legislative proposals are unknown, they may include generation divestiture, securitization, and possible reductions in rates and earnings. In the meantime, Detroit Edison is voluntarily proceeding with the implementation of Electric Choice as provided for in MPSC Orders and pursuing the recovery of stranded costs.

      Michigan Governor John Engler has proposed Michigan electric restructuring legislation. If adopted, this legislation would allow for the full and immediate recovery of Detroit Edison’s stranded costs through securitization. The series of bills proposed by the Governor include a rate reduction. The Governor has indicated his intent to seek the adoption of this legislation by June 2000.

LIQUIDITY AND CAPITAL RESOURCES

Cash From Operating Activities

      Net cash from operating activities increased due primarily to decreases in accounts receivable and changes in other current assets and liabilities.

Cash Used for Investing Activities

      Net cash used for investing activities was higher due to increased plant and equipment expenditures.

Cash Used for Financing Activities

      Net cash used for financing activities was lower for the Company due primarily to increased short-term borrowings, partially offset by the redemption of common stock.

      Net cash used for financing activities was higher for Detroit Edison due primarily to decreased short-term borrowings.

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RESULTS OF OPERATIONS

      For the three months ended March 31, 2000, the Company’s net income was $117 million, or $0.81 per common share, compared to $115 million, or $0.79 per common share for the three months ended March 31, 1999.

      The 2000 three-month earnings were higher than 1999 due to increased earnings resulting from increased utilization of tax credits generated by non-regulated businesses and increased electric system sales in the commercial and industrial sectors, partially offset by costs related to the acquisition of MCN.

Operating Revenues

      Operating revenues were $1.18 billion, up approximately 15% from 1999 operating revenues of $1.02 billion. Operating revenues increased (decreased) due to the following:

      Detroit Edison kWh sales increased (decreased) as compared to the prior year as follows:

Operating Expenses

Fuel and Purchased Power

      Fuel and purchased power expense increased for the Company due primarily to non-regulated subsidiary expenses, principally energy trading operations. Detroit Edison fuel and purchased power expense increased due to increased purchases of higher cost power and higher system output. The increased costs are partially offset by lower coal generation due to increased plant maintenance and decreased usage of high cost gas and oil generation units.

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      System output and average fuel and purchased power unit costs for Detroit Edison were as follows:

Operation and Maintenance

      The Company’s operation and maintenance expenses were higher by $30 million. Higher non-regulated expenses of $27 million were due primarily to an increased level of operations. Higher Detroit Edison expenses of $3 million were due primarily to increased system and customer enhancements ($8 million), costs associated with the pending MCN merger ($6 million), generation reliability and maintenance ($3 million), and other expenses ($4 million), partially offset by Year 2000 testing and remediation expenses included last year ($18 million).

Depreciation and Amortization

      Depreciation and amortization expense was higher due to higher levels of plant in service and the accelerated amortization of unamortized nuclear costs.

Income Taxes

      Income tax expense for the Company decreased due primarily to increased utilization of alternate fuels credits generated from non-regulated businesses.

FORWARD-LOOKING STATEMENTS

      Certain information presented herein is based on the expectations of the Company and Detroit Edison, and, as such, is forward-looking. The Private Securities Litigation Reform Act of 1995 encourages reporting companies to provide analyses and estimates of future prospects and also permits reporting companies to point out that actual results may differ from those anticipated.

      Actual results for the Company and Detroit Edison may differ from those expected due to a number of variables including, but not limited to, interest rates, the level of borrowings, weather, actual sales, the effects of competition and the phased-in implementation of Electric Choice, the implementation of utility restructuring in Michigan (which involves pending and proposed regulatory and legislative proceedings, the recovery of stranded costs, and possible reductions in rates and earnings), environmental and nuclear requirements, the impact of FERC proceedings and regulations, and the success of non-regulated lines of business. In addition, expected results will be affected by the Company’s pending merger with MCN. While the Company and Detroit Edison believe that estimates given accurately measure the expected outcome, actual results could vary materially due to the variables mentioned, as well as others.

Item 3 — Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

      The Company is subject to interest rate risk in conjunction with the anticipated issuance of long-term debt to be used to finance the merger with MCN. The Company’s exposure to interest rate risk arises from market fluctuations in interest rates until the date of the anticipated debt issuance. In order to limit the sensitivity to interest rate fluctuations, the Company has entered into a series of forward starting

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      A sensitivity analysis model was used to calculate the fair values of the Company’s derivative financial instruments, utilizing applicable market interest rates in effect at March 31, 2000. The sensitivity analysis involved increasing and decreasing the market rates by a hypothetical 10% and calculating the resulting change in the fair values of the interest rate sensitive instruments. The favorable (unfavorable) changes in fair value are as follows:

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      Effective March 22, 2000 and April 14, 2000, Theodore J. Vogel was elected Vice President and Assistant Controller, respectively, of the Company and Detroit Edison. From 1997 to 2000, he was Vice President — Taxes and Tax Counsel of CMS Energy Corporation. He previously served as Director of Corporate Taxes and Tax Counsel from 1987 to 1997.

      David E. Meador has been elected Senior Vice President and Treasurer effective May 15, 2000.

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