Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

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. Yes No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

At January 31, 2001, 142,649,172 shares of DTE Energy’s Common Stock, substantially all held by non-affiliates, were outstanding, with an aggregate market value of approximately $5.034 billion based upon the closing price on the New York Stock Exchange.

Certain information in DTE Energy Company’s definitive Proxy Statement for its 2001 Annual Meeting of Common Shareholders to be held April 25, 2001, which will be filed with the Securities and Exchange Commission pursuant to Regulation 14A, not later than 120 days after the end of the Registrants’ fiscal year covered by this report on Form 10-K, is incorporated herein by reference to Part III (Items 10, 11, 12 and 13) of this Form 10-K.

This document contains the Annual Reports on Form 10-K for the fiscal year ended December 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 DTE Energy Company or any other companies affiliated with DTE Energy Company.

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Item 1 – Business.

GENERAL

The Company, a Michigan corporation incorporated in 1995, is an exempt holding company under the Public Utility Holding Company Act of 1935, as amended. The Company has no operations of its own, holding instead directly or indirectly, the stock of Detroit Edison and other subsidiaries engaged in energy-related businesses. Detroit Edison is the Company’s principal operating subsidiary, representing approximately 87% and 74% of the Company’s assets and revenues, respectively, at December 31, 2000. The Company has no employees. Detroit Edison has 8,691 employees and other Company affiliates have 453 employees.

See Note 2 for information regarding the Company’s proposed merger with MCN.

NON-REGULATED OPERATIONS

Affiliates of the Company are engaged in non-regulated businesses, including energy-related services and products. Such services and products include the operation of pulverized coal facilities and coke oven batteries, coal sourcing, blending and transportation, landfill gas-to-energy facilities, providing expertise in the application of new energy technologies, real estate development and power marketing and trading. Another affiliate, DTE Capital, has approximately $400 million of outstanding debt. DTE Capital will transfer all of its assets and liabilities to the Company and merge its operations into the Company. See Note 9 for further discussion.

Non-regulated operating revenues of $1.468 billion for 2000 were earned primarily from projects related to the steel industry and from energy trading activities.

UTILITY OPERATIONS

Detroit Edison, incorporated in Michigan since 1967, is a public utility subject to regulation by the MPSC and FERC and is engaged in the generation, purchase, transmission, distribution and sale of electric energy in a 7,600 square mile area in Southeastern Michigan. Detroit Edison’s service area includes about 13% of Michigan’s total land area and about half of its population (approximately five million people). Detroit Edison’s residential customers reside in urban and rural areas, including an extensive shoreline along the Great Lakes and connecting waters. 4,287 of Detroit Edison’s 8,691 employees are represented by unions under two collective bargaining agreements. One agreement expires in June 2004 for 3,719 employees and the other agreement expires in September 2005 for 568 employees.

Effective January 2001, the transmission assets of Detroit Edison were transferred to ITC, a wholly owned subsidiary of Detroit Edison.

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Operating revenues, sales and customer data by rate class are as follows:

Detroit Edison generally experiences its peak load and highest total system sales during the third quarter of the year as a result of air conditioning and cooling-related loads.

During 2000, sales to automotive and automotive-related customers accounted for approximately 9% of total Detroit Edison operating revenues. Detroit Edison’s 30 largest industrial customers accounted for approximately 17% of total operating revenues in 2000, 1999 and 1998, and no one customer accounted for more than 5% of total operating revenues.

Detroit Edison’s generating capability is primarily dependent upon coal. Detroit Edison expects to obtain the majority of its coal requirements through long-term contracts and the balance through short-term agreements and spot purchases. Detroit Edison has contracts with three coal suppliers for a total purchase of up to 39 million tons of low-sulfur western coal to be delivered during the period from 2001 through 2005. It also has one contract for the purchase of approximately 11.9 million tons of Appalachian coal to be delivered during the period from 2001 through 2007. These existing long-term coal contracts include provisions for price escalation as well as de-escalation.

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Certain Factors Affecting Public Utilities

The electric utility industry is changing as the transition to competition occurs. The implementation of electric utility restructuring creates uncertainty as Electric Choice and the unbundling of utility products and services continues. Restructuring presents serious issues, such as planning for peak sales and defining the scope of the public utility obligation. The introduction of Electric Choice has created uncertainty regarding the timing and level of customer load that may move to other suppliers.

Detroit Edison is subject to extensive environmental regulation. Additional costs may result as the effects of various chemicals on the environment (including nuclear waste) are studied and governmental regulations are developed and implemented. The costs of future nuclear decommissioning activities are the subject of increased regulatory attention, and recovery of environmental costs through traditional ratemaking is the subject of considerable uncertainty.

Regulation and Rates

Michigan Public Service Commission. 

Detroit Edison is subject to the general regulatory jurisdiction of the MPSC, which, from time to time, issues its orders pertaining to Detroit Edison’s conditions of service, rates and recovery of certain costs, accounting and various other matters.

See Notes 1 and 3 for a discussion of June 2000 Michigan restructuring legislation and related MPSC orders. Other regulatory matters are discussed below.

In July 1998, Detroit Edison filed a required review of its current depreciation rates with the MPSC. The application requested an effective increase in annual depreciation expenses of $66 million; an adjustment in customer rates was not requested. Detroit Edison has not implemented the revised depreciation rates and is unable to predict the timing or final outcome of this request.

In March 1999, the MPSC initiated new dockets to 1) evaluate the need to expedite the supplier licensing program as an alternative for suppliers to obtain local franchises and Certificates of Public Convenience and Necessity from the MPSC, and 2) to establish guidelines for transactions between affiliates. The MPSC approved a licensing procedure for alternative electric suppliers in June 2000. The MPSC issued guidelines for transactions between affiliates in May 2000. These guidelines require accounting separation, annual reporting of transactions, and internal audits to ensure that Detroit Edison is complying with the guidelines. Detroit Edison, in conjunction with other parties, has appealed certain aspects of the order.

In September 1999, the MPSC approved an interim code of conduct filed by Detroit Edison. The interim code allows DTE Energy affiliated companies to participate in the Electric Choice program. The MPSC also opened a proceeding to develop a permanent code of conduct. In December 2000, the MPSC issued an order that expanded the application of the code of conduct broadly to any activities between Detroit Edison and any affiliates. Detroit Edison has filed a petition for rehearing of the

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order and is to file a compliance plan outlining how it will comply with the code of conduct 60 days after the MPSC issues a rehearing order. Detroit Edison cannot determine the timing or outcome of the proceeding.

Detroit Edison is under an obligation to solicit capacity from external suppliers whenever it determines that additional capacity is required. In April 2000, the MPSC approved Detroit Edison’s plan to use an alternative capacity solicitation process. If Detroit Edison decides to meet its capacity requirements by executing contracts with a term longer than one year, it will utilize a Request for Proposal (RFP) to solicit offers. Otherwise, as long as Detroit Edison has a need to procure summer capacity to serve native load customers, Detroit Edison will file an annual report with the MPSC outlining its expected summer generating needs and the method by which it expects to meet those needs. In December 2000, Detroit Edison filed with the MPSC its plan to meet customers’ needs in the summer of 2001. An update filed in February 2001 indicates that Detroit Edison expects a peak demand of 12,283 MW, which could be lowered by about 451 MW as customers participate in the Electric Choice program. Detroit Edison anticipates it will need to purchase 2,147 MW, of which 1,880 MW of firm transmission into Michigan has already been reserved. Detroit Edison expects to purchase power from Canada and merchant suppliers within Michigan, as well as from customer-owned generation.

Proceedings were held before the MPSC concerning claims that Detroit Edison’s service is lacking in reliability in certain aspects. In one proceeding the MPSC approved a settlement agreement that provides for a program of system improvements designed to address areas in Detroit Edison’s service territory that have been subject to severe storm damage and multiple outages. In another proceeding, the MPSC Staff issued a report proposing electric distribution performance standards that would apply to Michigan utilities including Detroit Edison. The Staff proposed that quarterly reports be filed with the MPSC and that a twelve-month rolling average of data will be used to determine compliance with the standards. If the rolling average is not met, Staff recommends, after notice and hearing, that reductions in rates be imposed for a period of time equal to the time of non-compliance or until the non-compliance is corrected. The amount of reductions would be equal to 1 mill/kwh for all energy sold, or a minimum of $1 per customer per month. Detroit Edison is unable to predict whether the MPSC will take further action in this matter.

In April 2000, Energy Michigan, an intervenor group, filed with the MPSC to reopen the Fermi 2 amortization case, raising similar issues that Nordic Electric raised in a complaint filed at the FERC. Energy Michigan alleges that Detroit Edison has violated its commitment to implement Electric Choice, and requests that a hearing is conducted before the MPSC. Energy Michigan also alleges that Detroit Edison is monopolizing available electric import capability from other utilities within the United States, and is refusing to allow Nordic Electric to import electric supplies from Ontario Hydro Services Company. Detroit Edison believes that the allegations are without merit.

The MPSC initiated a contested case hearing in February 2001, to address the August 2000 request by ABATE to consider the consequences of the proposed transfer of transmission assets from Detroit Edison to ITC. ABATE alleges that Electric Choice customers may overpay for the use of transmission assets, and that Detroit Edison has circumvented the rate freeze provisions in PA141. The Company believes the allegations are without merit. The Company is unable to determine the timing or outcome of the proceedings.

Nuclear Regulatory Commission

The NRC has regulatory jurisdiction over all phases of the operation, construction (including plant modifications), licensing and decommissioning of Fermi 2.

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Federal Energy Regulatory Commission

In 1996, the FERC issued Order 888, which requires public utilities to file open access transmission tariffs for wholesale transmission services in accordance with non-discriminatory terms and conditions, and Order 889, which requires public utilities and others to obtain transmission information for wholesale transactions through a system on the Internet. In addition, Order 889 requires public utilities to separate transmission operations from wholesale marketing functions.

Detroit Edison has a power pooling agreement with Consumers. In March 1997, a joint transmission tariff, filed by Detroit Edison and Consumers, became effective. In compliance with FERC Order 888, the tariff modified the pooling agreement to permit third-party access to transmission facilities utilized for pooled operations under non-discriminatory terms and conditions. As Detroit Edison and Consumers were unable to agree on other modifications to the pooling agreement, Detroit Edison requested that the FERC approve its termination. In February 2001, Detroit Edison and Consumers filed with the FERC to terminate the pooling agreement effective March 31, 2001, with a new agreement between ITC and Consumers to be effective April 1, 2001. ITC and Consumers will jointly operate the transmission system and will still be the control area operator; however, there will no longer be joint-dispatch of the respective companies’ units.

ENVIRONMENTAL MATTERS

Detroit Edison

Detroit Edison, in common with other electric utilities, is subject to applicable permit and associated record keeping requirements, and to increasingly stringent federal, state and local standards covering, among other things, particulate and gaseous stack emission limitations, the discharge of effluents (including heated cooling water) into lakes and streams and the handling and disposal of waste material.

Air

During 1997 and 1998, the EPA issued ozone transport regulations and final new air quality standards relating to ozone and particulate air pollution. The new rules will lead to additional controls on fossil-fueled power plants to reduce nitrogen oxides, sulfur dioxide, carbon dioxide and particulate emissions. See “Item 7 – Environmental Matters” for further discussion.

The EPA has initiated enforcement actions against several major electric utilities citing violations of new source provisions of the Clean Air Act. Detroit Edison has received and responded to information requests from the EPA on this subject. It is impossible at this time to predict the future impact of this issue upon Detroit Edison.

Water

Detroit Edison is required to demonstrate that the cooling water intake structures at all of its facilities reflect the “best technology available for minimizing adverse environmental impact.” Detroit Edison filed such demonstrations and the MDEQ Staff accepted all of them except those relating to the St. Clair and Monroe Power Plants for which it requested further information. Detroit Edison subsequently submitted the

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information. In the event of a final adverse decision, Detroit Edison may be required to install additional control technologies to further minimize the impact.

Wastes and Toxic Substances 

The Michigan Solid Waste and Hazardous Waste Management Acts, the Michigan Environmental Response Act, the Federal Resource Conservation and Recovery Act, Toxic Substances Control Act, and the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 regulate Detroit Edison’s handling, storage and disposal of its waste materials.

The EPA and the MDEQ have aggressive programs regarding the clean-up of contaminated property. Detroit Edison has extensive land holdings and, from time to time, must investigate claims of improperly disposed of contaminants. Detroit Edison anticipates that it will be periodically included in these types of environmental proceedings.

Conners Creek

The Conners Creek Power Plant was in reserve status from 1988 to 1998. In April, 1998 the MPSC issued an order granting Detroit Edison’s request to waive competitive bidding for Conners Creek and restart the plant to meet increased electricity demand. Although Detroit Edison believed that the plant complied with all applicable environmental requirements, the Michigan Department of Natural Resources and the Wayne County Air Quality Management Division issued notices of violation contending that Detroit Edison was required to obtain a series of new permits prior to plant operation. Subsequently the EPA issued a similar notice of violation. Detroit Edison converted the plant and began operating it as a gas-fired facility in 1999. In January 2001, Detroit Edison agreed to pay $450,000 to settle all matters related to the operation of the plant.

Non-Regulated

The Company’s non-regulated affiliates are subject to a number of environmental laws and regulations dealing with the protection of the environment from various pollutants. These non-regulated affiliates are in substantial compliance with all environmental requirements.

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EXECUTIVE OFFICERS OF THE REGISTRANT

Under the Company’s By-Laws, the officers of the Company are elected annually by the Board of Directors at a meeting held for such purpose, each to serve until the next annual meeting of directors or until their respective successors are chosen and qualified. With the exception of Messrs. Peterson and Meador, all of the above officers have been employed by the Company in one or more management capacities during the past five years.

Eric H. Peterson was with Worsham Forsythe Wooldridge LLP of Dallas, Texas for 15 years. He was a partner for seven years prior to joining the Company. Effective September 5, 2000, he was elected Senior Vice President and General Counsel.

David E. Meador was Controller, Mopar Parts Division, at Chrysler Corporation, an international automotive manufacturer, from November 1996 until February 1997. From 1986 to 1996, he held a variety of executive financial positions at Chrysler. Effective February 28, 1997, he was elected Vice President and effective March 29, 1997, he assumed the duties of Controller. Effective April 28, 1999, he was elected Vice President — Finance and Accounting and effective May 15, 2000, he was elected Senior Vice President and Treasurer.

Pursuant to Article VI of the Company’s Articles of Incorporation, directors of the Company will not be personally liable to the Company or its shareholders in the performance of their duties to the full extent permitted by law.

Article VII of the Company’s Articles of Incorporation provides that each person who is or was or had agreed to become a director or officer of the Company, or each such person who is or was serving or who had agreed to serve at the request of the Board of Directors as an employee or agent of the Company or as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executors, administrators or estate of such person), shall be indemnified by the Company to the full extent permitted by the Michigan Business Corporation Act or any other applicable laws as presently or hereafter in effect. In addition, the Company has entered into indemnification agreements with all of its officers and directors, which agreements set forth procedures for claims for indemnification as well as contractually obligating the Company to provide indemnification to the maximum extent permissible by law.

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The Company and its directors and officers in their capacities as such are insured against liability for alleged wrongful acts (to the extent defined) under three insurance policies providing aggregate coverage in the amount of $100 million.

Other Information

Pursuant to the provisions of the Company’s By-Laws, the Board of Directors has by resolution set the number of directors comprising the full Board at 11.

The MCN merger agreement provides that at the completion of the proposed merger, the Company will promptly increase the size of its board of directors or exercise its best efforts to secure the resignation of its present directors in order to cause Mr. Alfred R. Glancy III and two additional persons selected by MCN after consultation with the Company from among MCN’s directors as of the date of the merger agreement to be appointed to the Company’s board of directors.

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Item 2 – Properties.

DETROIT EDISON

The summer net rated capability of Detroit Edison’s generating units is as follows:

(1)		Summer net rated capabilities of generating units in service are based on periodic load tests and are changed depending on operating experience, the physical condition of units, environmental control limitations and customer requirements for steam, which otherwise would be used for electric generation.
(2)		Excludes one oil-fueled unit, St. Clair Unit No. 5 (250 MW), in economy reserve status.
(3)		The Belle River capability represents Detroit Edison’s entitlement to 81.39% of the capacity and energy of the plant. See Note 5.
(4)		The Monroe Power Plant provided 35.56% of Detroit Edison’s total 2000 power plant generation.
(5)		Fermi 2 has a design electrical rating (net) of 1,150 MW.
(6)		Represents Detroit Edison’s 49% interest in Ludington with a total capability of 1,872 MW. Detroit Edison is leasing 306 MW to First Energy for the six-year period June 1, 1996 through May 31, 2002.

Detroit Edison and Consumers interchange energy through nine interconnections. Detroit Edison and Consumers also have interchange agreements to exchange electric energy through 12 interconnections with FirstEnergy, Indiana Michigan Power Company, Northern Indiana Public Service Company and Ontario Hydro Services Company. In addition, Detroit Edison has interchange agreements for the exchange of electric energy with Michigan South Central Power Agency, Rouge Steel Company and the City of Wyandotte.

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Detroit Edison also purchases energy from cogeneration facilities and other small power producers. Energy purchased from cogeneration facilities and small power producers amounted to $37 million, $34 million and $31 million for 2000, 1999 and 1998, respectively, and is currently estimated at $39 million for 2001.

Detroit Edison’s electric generating plants are interconnected by a transmission system operating at up to 345 kilovolts through 41 transmission stations. As of December 31, 2000, electric energy was being distributed in Detroit Edison’s service area through 618 substations over 3,700 distribution circuits.

Because Detroit Edison must currently import power to meet peak loads in the summer, transmission capacity is a necessary requirement to serve customers reliably during peak load periods. As a result of certain transmission procedures, there continues to be uncertainty surrounding the ability of Detroit Edison to import power reliably into Michigan. To relieve this uncertainty, additional efforts to secure firm transmission rights continue to be necessary, as well as additional in-state generating capability. Detroit Edison has acquired significant additional commitments from other utilities, and modified operating practices to provide flexibility to respond to increasing uncertainties of load and market conditions.

See Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 1 for a discussion of the transfer of transmission assets from Detroit Edison to International Transmission Company.

NON-REGULATED

Non-regulated property consists primarily of coke oven battery facilities in Michigan and Indiana, coal processing facilities in Michigan and Maryland, merchant natural gas turbine facilities in Indiana and Michigan, and numerous landfill gas projects located throughout the United States.

Item 3 – Legal Proceedings.

Detroit Edison, in the ordinary course of its business, is involved in a number of suits and controversies including claims for personal injuries and property damage and matters involving zoning ordinances and other regulatory matters. As of December 31, 2000, Detroit Edison was named as defendant in 149 lawsuits involving claims for personal injuries and property damage and had been advised of 29 other potential claims not evidenced by lawsuits.

From time to time, Detroit Edison has paid nominal penalties which were administratively assessed by the United States Coast Guard and United States Department of Transportation under the Federal Water Pollution Control Act, as amended, with respect to minor accidental oil spills at Detroit Edison’s power plants into navigable waters of the United States. Payment of such penalties represents full disposition of these matters.

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See “Note 12 – Commitments and Contingencies” and “Environmental Matters, Detroit Edison, Conners Creek” herein for additional information.

Item 4 – Submission of Matters to a Vote of Security Holders.

None during the fourth quarter of 2000.

Item 5 – Market for Registrant’s Common Equity and Related Stockholder Matters.

The Company’s Common Stock is listed on the New York Stock Exchange, which is the principal market for such stock, and the Chicago Stock Exchange. The following table indicates the reported high and low sales prices of the Company’s Common Stock on the Composite Tape of the New York Stock Exchange and dividends paid per share for each quarterly period during the past two years:

At December 31, 2000, there were 142,651,172 shares of the Company’s Common Stock outstanding. These shares were held by a total of 96,153 shareholders of record.

The Company’s By-Laws provide that Chapter 7B of the Michigan Business Corporation Act (“Act”) does not apply to the Company. The Act regulates shareholder rights when an individual’s stock ownership reaches at least 20 percent of a Michigan corporation’s outstanding shares. A shareholder seeking control of the Company cannot require the Company’s Board of Directors to call a meeting to vote on issues related to corporate control within 10 days, as stipulated by the Act. See “Note 7 — Shareholders’ Equity” for additional information, including information concerning the Rights Agreement, dated as of September 23, 1997.

The amount of future dividends will depend on the Company’s earnings, financial condition and other factors, including the effects of utility restructuring and the transition to competition, each of which is periodically reviewed by the Company’s Board of Directors, and the successful completion of the proposed merger with MCN.

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Pursuant to Article I, Section 8. (c) and Article II, Section 3.(c) of the Company’s By-laws, as amended through September 1, 1999, notice is given that the 2002 Annual Meeting of the Company’s Common Shareholders will be held on Wednesday, April 24, 2002.

Item 6 – Selected Financial Data.

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Item 7 – Management’s Discussion and Analysis of Financial Condition and Results
of Operations.

GROWTH

DTE Energy Company (Company) is focused on prudently growing its earnings base. For the past three years, it has articulated a growth strategy that has consistently achieved its 6% growth objective (after adjustment in 2000 for one-time legislative and merger items). Given its prior successes, depth of management team and strategic asset base, the Company has increased its growth objective up to 8% over the next several years. The new anticipated growth rate is expected to be achieved by strengthening our core electric and gas (after the proposed merger with MCN Energy Group Inc. (MCN)) utility businesses in the short term, building our non-regulated businesses in the mid term and leveraging investments in energy technology over the long term. The growth strategy, focused on the greater Midwest region, leverages and expands existing assets and skills.

We will strengthen our core electric and gas (after the proposed merger with MCN) utility businesses through continuous improvement actions, balancing cost, reliability and customer satisfaction, and leveraging opportunities to create value with the non-regulated businesses.

We have established a portfolio of non-regulated businesses, with approximately $1.7 billion in assets that contributed approximately $84 million to net income in 2000 and is expected to provide the greatest growth potential for the Company in the next five years. These non-regulated businesses are expected to provide approximately $125 million in net income in 2001. Our merchant energy business will include optimizing fuel supply and plant operations, broadening coal marketing and coal tolling efforts, rapidly expanding power marketing and trading operations, growing an emerging base of non-regulated generation assets in the Midwest region and capitalizing on MCN’s storage and pipeline assets to serve the rapidly expanding generation sector.

The Company’s long-term growth strategy recognizes the fact that competition, new technologies and environmental concerns will reshape the electric utility industry and the manner in which power is delivered. As a result, the Company has started a distributed generation business, DTE Energy Technologies, a wholly owned subsidiary, which will provide one-stop sales and service to energy customers using a variety of new technology products, including backup generation, micro-turbines, fuel cells and control equipment. Additionally, the Company continues to make strategic technology investments in companies like Plug Power, a developer and manufacturer of fuel cell systems.

As discussed in Note 2, the Company and MCN have entered into a merger agreement. The Company expects that completion of the proposed merger will result in the issuance of approximately 30 million shares of its common stock and approximately $1.4 billion in external financing. The proposed merger is expected to create a fully integrated electric and natural gas company that is anticipated to support the

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Company’s commitment to a long-term earnings growth rate of up to 8%. The proposed merger is expected to permit the Company to be responsive to competitive pressures. The external financing needs of the proposed merger may create a sensitivity to interest rate changes. The Company will need to successfully integrate the two operations to service the expected debt requirements and achieve aggregate operating cost reductions. The delay in the receipt of regulatory approvals will negatively impact the effect on earnings in 2001 resulting from the proposed merger, as will the escalation in the price of natural gas. The Company believes that the proposed merger is strategic for the Company and has and will continue to fulfill all of its obligations under the merger agreement. The Company continues to approach this proposed merger with the best interests of the Company’s shareholders in mind. See Notes 2 and 11 for further discussion of the proposed DTE/MCN merger and the financial instruments used to hedge the interest rate risk associated with financing the proposed merger.

See Note 17 for discussion of subsequent events concerning the merger.

The Company projects that 2001 earnings will be approximately $3.60 to $3.70 per share. In addition, 2002 earnings are expected to grow at least 6%, consistent with the Company’s growth objective. These earnings estimates exclude the impact of the Company’s proposed merger with MCN.

The Company’s earnings are largely dependent on the earnings of The Detroit Edison Company (Detroit Edison), the principal operating subsidiary of the Company, and the use of alternate fuels tax credits generated from certain non-regulated businesses. Securitization, discussed in Note 3, is expected to reduce Detroit Edison’s earnings, which may impact the Company’s ability to use all future available alternate fuels tax credits. However, if that is the case, a portion of the tax credits may be monetized through sale of interests in projects that generate the credits.

ELECTRIC INDUSTRY RESTRUCTURING

Detroit Edison is subject to regulation by the Michigan Public Service Commission (MPSC) and the Federal Energy Regulatory Commission (FERC). Michigan legislators and regulators have focused on competition and Electric Choice in the Michigan electric public utility industry and are committed to opening the electric generation market in Michigan to competition while providing for the right of electric utilities to recover stranded costs. Electric Choice will give all retail customers the opportunity to access alternative generation resources.

Michigan’s Customer Choice and Electricity Reliability Act

See Note 3 for a discussion of Public Acts 141 and 142 of 2000 (PA 141 and PA 142), new legislation signed into effect on June 3, 2000, by Michigan Governor John Engler.

Michigan Public Service Commission

Restructuring Orders

Detroit Edison expects that a limited liability corporation, wholly owned by Detroit Edison, will issue approximately $1.751 billion of securitization bonds in the first quarter

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of 2001. The bonds may not exceed 15 years in term to recover Detroit Edison’s qualified costs, as approved by the MPSC. Detroit Edison will use the proceeds of the bonds to retire debt and equity as required by Michigan restructuring legislation in a manner that will maintain its debt/equity ratio at approximately 50%. See Note 3 for additional discussion of the November 2, 2000 and January 4, 2001 MPSC orders regarding securitization of Detroit Edison’s qualified costs.

On October 24, 2000, the MPSC initiated a case to determine the methodology of calculating net stranded costs, as required by PA 141. Methods to be considered include: (1) the relationship of market value to net book value of generation assets and purchase power contracts, (2) evaluations based on the market price of power in relation to the price assumed by the MPSC in prior orders and (3) any other method the MPSC considers appropriate. It is expected that the MPSC will issue an order by the end of 2001. Detroit Edison is unable to predict the outcome of these proceedings.

Electric Choice

The Electric Choice program began in December 1999, when Detroit Edison delivered energy from an alternate supplier in a MPSC-directed 90 megawatt (MW) voluntary portion of the program. As of December 31, 2000, Detroit Edison has made available 1,125 MW, or more than 12% of its capacity, for Electric Choice. Detroit Edison has spent approximately $57 million through December 31, 2000, and estimates that additional expenditures of up to $25 million may be required through 2001 to fully implement the program on January 1, 2002. Securitization proceeds will recover $28 million of this amount, with recovery of the remaining balance determined in current and future MPSC net stranded cost proceedings.

Detroit Edison anticipates that Electric Choice will result in a decrease in its annual sales as well as a decrease in its peak demand beginning in 2002. These decreases are not expected to have a significant impact on the Company’s net income due to effective load management techniques, which are expected to reduce high-cost sales during peak periods and increase non-regulated sales outside of Detroit Edison’s service territory at other times.

Federal Energy Regulatory Commission

Detroit Edison is regulated at the federal level by the FERC with respect to accounting, sales for resale in interstate commerce, transmission services, issuances of securities, licensing of hydro and pumping stations and other matters. The FERC, as a policy matter, believes that transmission should be made available on a non-discriminatory basis.

On September 28, 2000, the FERC conditionally approved an open access transmission tariff designed to allow for the collection of $138 million in annual revenues for transmission services provided by the International Transmission Company (ITC), a wholly owned subsidiary of Detroit Edison. The level of tariff represents an increase of $45 million over current tariffs. These revenues may not be collected until such time as ITC notifies FERC that the Company’s Board of Directors

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has approved a sale or spin-off of the transmission business to a fully independent transmission company that has no active or passive ownership interests by the Company, Detroit Edison or any other market participant. The ITC must become independent within 24 months of the September 28, 2000 order and join a FERC-approved Regional Transmission Organization (RTO) by December 15, 2001; otherwise the innovative transmission rates will revert back to present tariff rates, and revenue collected under the new transmission tariff will be refunded back to ITC customers. If ITC becomes independent, but has not joined an RTO in the required time frame, FERC has the authority to assign ITC to an RTO. The Company and Detroit Edison intend to comply with the FERC requirements. Effective January 1, 2001, Detroit Edison transferred approximately $390 million of property and other assets to ITC. This transfer began the process of establishing the transmission business as an independent company.

In June 1999, Detroit Edison, along with Consumers Energy Co., the American Electric Power Service Corp., FirstEnergy Corp., and Virginia Electric and Power Co., filed applications with FERC requesting approval of the Alliance RTO (Alliance). The Alliance would operate more than 43,000 miles of transmission lines in nine states. In December 1999, FERC issued an order approving the Alliance proposal, but indicated that certain elements needed modification or further development. In January 2001, FERC approved key aspects of Alliance’s compliance filing, including independence, scope and configuration and rate design, but directed Alliance to make certain additional modifications in the areas of ancillary services, market monitoring and inter-regional coordination. Alliance was directed to make a further compliance filing by May 15, 2001, and file actual tariffs rates, terms and conditions no later than 120 days prior to commencement of operation.

LIQUIDITY AND CAPITAL RESOURCES

Cash From Operating Activities

Net cash from operating activities, which is the Company’s primary source of liquidity, was $1,088 million in 2000, $1,097 million in 1999 and $834 million in 1998. Net cash from operating activities decreased in 2000, due primarily to lower net income, partially offset by higher non-cash items. Net cash from operating activities increased in 1999, due primarily to higher net income and non-cash items and lower cash used for current assets and liabilities.

Cash Used for Investing Activities

Net cash used for investing activities was lower in 2000, due primarily to decreased plant and equipment expenditures by Detroit Edison, partially offset by higher non-regulated plant and equipment expenditures. Net cash used for investing activities was lower in 1999 due to lower investments in non-regulated businesses, partially offset by increased plant and equipment expenditures by Detroit Edison.

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Cash requirements for 2000 Detroit Edison capital expenditures were $587 million. Detroit Edison’s cash requirements for capital expenditures are expected to be approximately $2.5 billion for the period 2001 through 2005.

Cash requirements for 2000 non-regulated investments and capital expenditures were $162 million. Excluding the effects of the proposed merger with MCN, cash requirements for non-regulated investments and capital expenditures are expected to be approximately $1.2 billion for the period 2001 through 2005.

Cash Used for Financing Activities

Net cash used for financing activities was lower in 2000 due to decreased redemptions of long-term debt, partially offset by repurchases of common stock.

Net cash used for Company financing activities was $426 million in 1999, due to higher redemptions and reduced issuances of long-term debt.

The following securities were issued and redeemed in 2000:

Due to the securitization of $1.751 billion of Detroit Edison’s qualified costs in the first quarter of 2001, the Company expects that 75% of the proceeds will be used to retire debt and 25% to repurchase the Company’s common stock. In February 2001, the

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Company’s Board of Directors increased the authorization for a stock repurchase program for the purchase of up to 20 million shares. Stock repurchases will be made from time to time on the open market or through negotiated transactions.

ENVIRONMENTAL MATTERS

Protecting the environment from damage, as well as correcting past environmental damage, continues to be a focus of state and federal regulators. Legislation and/or rulemaking could further impact the electric utility industry including Detroit Edison. The U.S. Environmental Protection Agency (EPA) and the Michigan Department of Environmental Quality have aggressive programs regarding the clean-up of contaminated property. Detroit Edison anticipates that it will be periodically included in these types of environmental proceedings. Detroit Edison has spent approximately $50 million and estimates that it will incur approximately $410 million of future capital expenditures, over the next three years, to comply with recent EPA ozone transport regulations and final new air quality standards relating to ozone and particulate air pollution.

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 proposed 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. To limit the sensitivity to interest rate fluctuations, the Company has entered into a series of forward-starting interest rate swaps and Treasury locks and designated such instruments as hedges. See Note 11 for further discussion of these derivative financial instruments.

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

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MARKET RISK

Detroit Edison expects to have adequate supplies of electric capacity in 2001 and plans to meet expected customer demand through its own electric generating capability and purchase of over 2,000 MW from other suppliers. Detroit Edison has secured purchase power contracts for its 2001 requirements, but has not procured its purchase power requirements for 2002 and beyond. Detroit Edison expects that its future electricity demands will be impacted by the Electric Choice program, interruptible contracts with certain customers and weather.

As a result of the June 2000 Michigan restructuring legislation, the MPSC determined that adjusting rates for changes in fuel and purchased power expenses would be inconsistent with the legislation. Therefore, actual fuel and purchased power costs are recorded in the period incurred, without any change in revenue.

Detroit Edison had investments valued at market of $398 million and $361 million in three nuclear decommissioning trust funds at December 31, 2000 and 1999, respectively. At December 31, 2000, these investments consisted of approximately 43% in fixed debt instruments, 53% in publicly traded equity securities and 4% in cash equivalents. At December 31, 1999, these investments consisted of approximately 37% in fixed debt instruments, 59% in publicly traded equity securities and 4% in cash equivalents. A hypothetical 10% increase in interest rates and a 10% decrease in equity prices quoted by stock exchanges would result in a $14 million and $11 million reduction in the fair value of debt and a $21 million reduction in the fair value of equity securities held by the trusts both at December 31, 2000 and 1999, respectively.

A hypothetical 10% decrease in interest rates would increase the fair value of long-term debt from $4.2 billion to $4.7 billion at December 31, 2000, and from $4 billion to $4.5 billion at December 31, 1999.

DTE Energy Trading, Inc. (DTE ET), an indirect wholly owned subsidiary of the Company, provides price risk management services using energy commodity derivative instruments. The Company measures the risk inherent in DTE ET’s portfolio using Value at Risk (VaR) analysis and other methodologies, which simulate forward price curves in electric power markets, to quantify estimates of the magnitude and probability of potential future losses related to open contract positions. DTE ET VaR expresses the potential loss in fair value of its forward contract and option position over a particular period of time, with a specified likelihood of occurrence, due to an adverse market movement. The Company calculates VaR based on a 95% confidence interval, using 10-day holding periods. The VaR model uses the variance-covariance statistical modeling technique, and implied and historical volatilities and correlations over the past 20-day period. The estimated market prices used to value these transactions for VaR purposes reflect the use of established pricing models and various factors including quotations from exchanges and over-the-counter markets, price volatility factors, the time value of money, and location differentials. At December 31, 2000 and 1999, DTE ET’s VaR from its power marketing and trading activities was less than 1% of the Company’s consolidated “Income Before Income Taxes” for the years ended December 31, 2000 and 1999. For further information, see Notes 1 and 11.

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RESULTS OF OPERATIONS

Net income for 2000 was $468 million, down $15 million from 1999 earnings due primarily to the 5% residential rate reduction provided for in the June 2000 Michigan restructuring legislation, and expenses incurred for the proposed merger with MCN, partially offset by lower income taxes resulting from tax credits generated by non-regulated businesses.

Since the MPSC has determined that adjusting rates for changes in fuel and purchased power expenses, through continuance of the PSCR clause, is inconsistent with the June 2000 Michigan restructuring legislation, the Company expects that the distribution of yearly earnings will shift significantly. The first and fourth quarters of the year are expected to show higher earnings, while lower earnings are expected in the second and third quarters. In addition, the fuel clause suspension will have an impact on earnings, since rates will no longer be adjusted for changes in fuel and purchased power expenses.

Net income for 1999 was up $40 million over 1998 earnings due primarily to lower income taxes resulting from tax credits generated by non-regulated businesses and the effects of the end of the Fermi 2 phase-in plan in 1998.

Operating Revenues

Operating revenues were $5.6 billion, up 18% from 1999 operating revenues of $4.7 billion. Operating revenues increased (decreased) due to the following:

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Detroit Edison megawatthour (MWh) sales for 2000 and the percentage change by year were as follows:

Residential sales decreased in 2000 due to reduced cooling demand, and increased in 1999 due to more heating demand, increased usage, and growth in the customer base. In both 2000 and 1999, commercial and industrial sales increased due to favorable economic conditions. In addition, industrial sales increased due to sales to the Ford Rouge plant. Wholesale sales decreased due to lower demand for energy and decreased availability of energy for sale.

Non-regulated revenues were higher due to an increased level of operations, primarily at DTE Energy Trading, and the addition of new businesses.

Operating Expenses

Fuel and Purchased Power

Net system output and average fuel and purchased power unit costs per MWh for Detroit Edison were as follows:

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In 2000, fuel and purchased power expense increased due to greater purchases of energy and higher purchased power unit costs. The increase was partially offset by reduced plant generation and lower cost of low sulfur western coal.

In 1999, fuel and purchased power expense increased due to higher purchased power unit costs and a 1.7% increase in net system output. The increase was partially offset by lower fuel unit costs primarily resulting from increased usage of low-cost nuclear fuel.

Non-regulated purchased power expense increased in all periods due to the operations of DTE Energy Trading, with purchased power expenses amounting to $959 million, $227 million and $42 million in 2000, 1999 and 1998, respectively.

Operation and Maintenance

In 2000, operation and maintenance expense remained at the same level as 1999. Higher non-regulated expenses of $50 million were due to an increased level of operations and the addition of new businesses. Lower Detroit Edison expenses resulted primarily from decreased storm activities ($26 million) and elimination of Y2K costs ($46 million). The decrease was partially offset by expenses associated with the proposed DTE/MCN merger ($25 million).

In 1999, operation and maintenance expense increased $192 million. Higher non-regulated expenses of $162 million were due to an increased level of operations and the addition of new businesses. Higher Detroit Edison expenses of $30 million were due to increased system and customer enhancements ($22 million), higher Y2K costs ($10 million), higher employee benefit costs ($9 million), and generation reliability and maintenance work to address unplanned outages ($8 million), partially offset by lower storm expense ($19 million).

Depreciation and Amortization

In 2000, depreciation and amortization expense was higher due to increased levels of plant in service and the accelerated amortization of unamortized nuclear costs, partially offset by a reduction in amortization for the deferral of the effects of the 5% residential rate reduction.

In 1999, depreciation and amortization expense increased due to higher levels of plant in service, the accelerated amortization of unamortized nuclear costs, the adjustment recording one-half of utility earnings in excess of the allowed 11.6% return on equity sharing threshold as additional nuclear cost amortization, and increased Fermi 2 decommissioning funding due to higher revenues.

Interest Expense

In 2000, interest expense decreased due to the redemption of long-term securities and the write-off in 1999 of unamortized bond issuance expense, partially offset in 2000 by increased short-term borrowing costs.

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In 1999, interest expense increased due to the write-off of unamortized bond issuance expense for early redemption of securities and higher short-term borrowing costs.

Income Taxes

Income tax expense for the Company decreased, due primarily to the decrease in pretax income and increased utilization of alternate fuels credits generated from non-regulated businesses. The majority of alternate fuels credits are available through 2002, while others have been extended through 2007.

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, changes in the cost of fuel and purchased power due to the suspension of the PSCR mechanism, (including natural gas subsequent to the proposed merger with MCN), the effects of competition and the phased-in implementation of Electric Choice, the implementation of utility restructuring in Michigan (which involves pending regulatory and related judicial proceedings, the successful recovery of stranded costs, and actual and possible reductions in rates and earnings), environmental and nuclear requirements, the impact of FERC proceedings and regulations, and the contributions to earnings by non-regulated businesses. In addition, expected results will be affected by the Company’s proposed merger with MCN and the timing of the accretive effect of such merger. 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.

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Item 8 – Financial Statements and Supplementary Data.

      The following consolidated financial statements and schedules are included herein.

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INDEPENDENT AUDITORS’ REPORT

To the Boards of Directors and Shareholders of
DTE Energy Company and
The Detroit Edison Company

We have audited the consolidated balance sheets of DTE Energy Company and subsidiaries and of The Detroit Edison Company and subsidiaries (together, the "Companies") as of December 31, 2000 and 1999, and the related consolidated statements of income, cash flows, and changes in shareholders’ equity for each of the three years in the period ended December 31, 2000. Our audits also included the financial statement schedules listed in the Index at Item 8. These financial statements and financial statement schedules are the responsibility of the Companies’ management. Our responsibility is to express an opinion on the consolidated financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements referred to above present fairly, in all material respects, the financial position of DTE Energy Company and subsidiaries and of The Detroit Edison Company and subsidiaries at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements of the Companies taken as a whole, present fairly in all material respects the information set forth therein.

DELOITTE & TOUCHE LLP

Detroit, Michigan
January 24, 2001

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