Fitch: Rate Restructuring Order for Detroit Edison No Effect on Ratings.

CHICAGO -- The recent rate order from the Michigan Public Service Commission (MPSC) on Detroit Edison Company's (DeCo, senior unsecured rating 'BBB+' by Fitch, Stable Outlook) rate deskewing request will not affect the company's ratings or Outlook. Fitch views the order as having an overall slightly positive impact on DeCo.

The MPSC order is in response to DeCo's February 2005 proposal to restructure its electric rates and begin phasing out customer class subsidies that are part of its pricing structure. The proposal sought to adjust rates for each customer class to be reflective of the full costs incurred to service such customers. Under the request, commercial and industrial (C&I) rates would have been lowered, but residential rates would have increased over a five-year period beginning in 2007. DeCo has contended that due to its rate structure and historically low market prices, many of its commercial customers migrated to alternative suppliers under Electric Customer Choice (Choice customers).

The MPSC order resulted in the lowering of some C&I rates and increasing the distribution charge for Choice customers, effectively making the alternate supplier option less attractive for several primary and secondary C&I customers. This will help make the utility more competitive with alternative energy suppliers in its service territory. However, the MPSC did not provide for the phase-out of residential subsidies, which will continue to be funded by full service C&I customers. The new distribution rates will be effective starting February 2006. DeCo was ordered to file a general rate case by July 1, 2007, at which time it is expected that the MPSC will revisit this issue.

DeCo, a wholly owned subsidiary of DTE Energy, is a vertically integrated regulated electric utility serving approximately 2.1 million customers in southeastern Michigan.

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