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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended June 30, 2003

Commission file number 1-11607

DTE ENERGY COMPANY
(Exact name of registrant as specified in its charter)

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

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

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

At July 31, 2003, 168,247,689 shares of DTE Energy’s Common Stock, substantially all held by non-affiliates, were outstanding.

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DTE ENERGY COMPANY

QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED JUNE 30, 2003

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DEFINITIONS

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FORWARD-LOOKING STATEMENTS

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

•		the effects of weather and other natural phenomena on operations and sales to customers;
•		economic climate and growth in the geographic areas where we do business;
•		environmental issues, including changes in the climate, and regulations;
•		nuclear regulations and risks associated with nuclear operations;
•		ability to utilize Section 29 tax credits, sell interests in facilities producing such credits or the resolution of the IRS review of chemical change at synthetic fuel facilities;
•		implementation of Customer Choice programs;
•		implementation of electric and gas utility restructuring in Michigan;
•		employee relations;
•		unplanned outages;
•		capital market conditions and access to capital markets and other financing efforts which can be affected by credit agency ratings;
•		the timing and extent of changes in interest rates;
•		the level of borrowings;
•		changes in the cost of fuel, purchased power and natural gas;
•		effects of competition;
•		impact of FERC and MPSC proceedings and regulations;
•		contributions to earnings by non-regulated businesses;
•		changes in federal or state tax laws and their interpretations, including the code, regulations, rulings, court proceedings and audits;
•		ability to recover costs through rate increases;
•		property insurance;
•		the cost of protecting assets against or damage due to terrorism; and
•		changes in accounting standards and financial reporting regulations.

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

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DTE ENERGY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

We had a loss of $39 million in the 2003 second quarter, or $.23 per diluted share, compared to income of $68 million, or $.42 per diluted share, for the 2002 second quarter. For the six-month period, our income was $116 million, or $.69 per diluted share, compared to income of $268 million, or $1.66 per diluted share, for the comparable 2002 period. The comparability of earnings was impacted by the sale of our transmission business, International Transmission Company (ITC), and the adoption of two new accounting rules in the 2003 first quarter. Upon selling ITC in February 2003, we classified this business as a discontinued operation. Earnings from this discontinued business for the 2003 six-month period include a $67 million net of tax gain recorded on the sale. As required by generally accepted accounting principles, on January 1, 2003 we adopted new accounting rules for asset retirement obligations and energy trading activities as discussed in Note 2. The cumulative effect of adopting these new accounting rules reduced earnings for the 2003 six-month period by $27 million.

Excluding discontinued operations and the cumulative effect of accounting changes, our loss from continuing operations for the 2003 second quarter was $37 million or $.22 per diluted share, compared to income of $61 million, or $.38 per diluted share, in the 2002 second quarter. For the 2003 six-month period, we had income from continuing operations of $71 million, or $.42 per diluted share, compared to income of $253 million, or $1.57 per diluted share, for the comparable 2002 period. The table below details several significant items impacting comparability, which reduced earnings by $107 million, or $.64 per diluted share, and $25 million, or $.15 per diluted share, for the second quarter of 2003 and 2002, respectively. Significant items also impacted the 2003 and 2002 six-month periods reducing earnings by $177 million, or $1.05 per diluted share, and $14 million, or $.08 per diluted share, respectively. Also impacting the comparison were higher non-regulated earnings, effects of weather, higher pension and health care costs, and increased fuel, purchased power and gas costs.

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As discussed in DTE Energy’s 2002 Annual Report on Form 10-K, we operate our business through nine reportable segments. The following tables and related discussion depict the operations of each of these segments.

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ENERGY RESOURCES

Power Generation

The power generation plants of Detroit Edison comprise our regulated power generation business. Detroit Edison’s numerous fossil plants, hydroelectric pumped storage plant and its nuclear plant generate electricity that is sold principally throughout Michigan and the Midwest to residential, commercial, industrial and wholesale customers.

Power Generation earnings declined $10 million during the 2003 second quarter and $46 million in the 2003 six-month period reflecting lower gross margins driven by decreased cooling demand due to mild weather and lost margins from customers participating in the electric Customer Choice program. As a result of the electric Customer Choice program, Detroit Edison lost 12% of retail sales in 2003. To partially offset the impact of these lost margins, Detroit Edison recorded a $6 million increase in regulatory assets in both the 2003 first and second quarters representing stranded costs that are recoverable under Michigan legislation. The lower earnings were also attributed to higher fuel unit costs, higher employee pension and health care benefit costs and expenses due to the timing of planned reliability and maintenance work done to improve the production and availability of the generation fleet. Operation and maintenance expense in the 2003 second quarter was favorably affected by adjustments recorded that reduced accruals for employee incentive awards due to expected lower 2003 operating performance. Depreciation and amortization expenses reflect the income effect of recording regulatory assets representing net stranded costs and the deferral of other costs recoverable under Public Act 141.

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System output and average fuel and purchased power costs were as follows:

Outlook — We expect electric restructuring to continue resulting in increased customer choice in the retail electric generation business. As a result of customers choosing to participate in the electric Customer Choice program, Detroit Edison lost 6% of retail sales in 2002 and estimates losing up to 13% of such sales in 2003. Unrecovered generation-related fixed costs due to electric Customer Choice are recoverable under Michigan legislation as determined by the MPSC. As a result, Detroit Edison recorded an increased regulatory asset relating to stranded costs during the first half of 2003. There are a number of variables and estimates that impact the level of recoverable stranded costs, including weather, sales mix and wholesale prices. As a result, our estimate of stranded costs could increase or decrease in future periods. The regulatory asset will be subject to review by the MPSC in future regulatory proceedings, and we cannot predict the outcome of this matter. See Note 4 — Regulatory Matters.

The June 2000 Michigan legislation imposed a rate freeze for all classes of customers through 2003. In addition, the MPSC determined that adjusting rates for changes in fuel and purchased power through continuance of the Power Supply Cost Recovery (PSCR) clause would be inconsistent with the rate freeze, therefore the MPSC suspended the PSCR clause. It is unclear at this time whether the PSCR clause will remain suspended beyond 2003. Detroit Edison filed a rate case in June 2003 addressing this and other issues. We cannot predict the outcome of this matter. See Note 4 — Regulatory Matters.

Future operating results are expected to vary as a result of factors such as regulatory proceedings, weather, changes in economic conditions and the level of customer participation in the electric Customer Choice program.

Energy Services

Energy Services is comprised of Coal-Based Fuels, On-Site Energy Projects and Merchant Generation. Coal-Based Fuels operations include producing synthetic fuel from nine synfuel plants and producing coke from three coke battery plants. Both processes generate tax credits under Section 29 of the Internal Revenue Code. Synfuel-related Section 29 tax credits expire in 2007. Section 29 tax credits for two of our three coke batteries expired at the end of 2002 with the third expiring in 2007. On-Site Energy Projects include pulverized coal injection, generation, steam production, chilled water production, wastewater treatment and compressed air. Merchant Generation owns and operates four gas-fired peaking electric generating plants and develops and acquires gas and coal-fired generation.

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Energy Services earnings increased $46 million for the 2003 second quarter and $65 million in the 2003 six-month period reflecting higher synfuel production and a $19 million net of tax gain from the settlement of a tolling agreement at one of our generation facilities. This synfuel production increase and tolling gain were partially offset by a $10 million net of tax reserve established for receivables associated with a large customer that filed for bankruptcy. During 2002, four synfuel facilities became fully operational and interests in two facilities were sold. These two events resulted in significantly higher operating revenues and expenses in the first half of 2003 relative to the same period in 2002. Synfuel projects generate operating losses, which are more than offset by the resulting tax credits. The income tax benefit includes tax credits actually earned based on synfuel production and sales. The level of tax credits has been adjusted at the Corporate & Other segment in order that the DTE Energy consolidated income tax expense during the quarter reflects the estimated calendar year effective rate. See Notes 5 and 8.

Outlook - Energy Services’ strategy is to continue leveraging our extensive energy-related operating experience and project management capability to develop and grow the on-site energy and merchant generating businesses. A significant portion of Energy Services’ earnings consist of synfuel-related Section 29 tax credits. The level of tax credits generated in future periods will be affected by fluctuations in estimated annual taxable earnings and our ability to sell interests in synfuel projects. We continue to evaluate opportunities to sell interests in some or all of our synfuel plants. However, the timing and number of our synfuel sales will depend in part on the resolution of the Internal Revenue Service’s (IRS’s) review of issues concerning chemical change as discussed more fully in the “Synthetic Fuel Operations” section that follows.

Energy Marketing & Trading

Energy Marketing & Trading consists of the electric and gas marketing and trading operations of DTE Energy. Energy Marketing & Trading focuses on physical power marketing and structured transactions, as well as the enhancement of returns from DTE Energy’s power plants, natural gas pipelines and storage assets. To this end, Energy Marketing & Trading enters into forwards, futures, swaps and option contracts as part of its trading strategy.

Energy Marketing & Trading’s loss increased $10 million in the 2003 second quarter from the comparable 2002 period due to unfavorable mark-to-market earnings associated with gas storage activities, partially offset by increased realized margins on the delivery of power and natural gas.

Our year to date earnings increased $16 million and were impacted by the effect of changing our accounting for gas inventory. Through December 2002, our physical gas in storage was marked to the current spot price under fair value accounting rules. To comply with new accounting requirements

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resulting from the rescission of Emerging Issues Task Force (EITF) Issue No. 98-10, “Accounting for Contracts Involved in Energy Trading and Risk Management Activities,” we changed to the average cost method for our gas inventories, effective January 2003. As a result of discontinuing the application of the fair value method to our gas inventories and the effect of the rescission of EITF 98-10 on our energy contracts, we recorded a cumulative effect of accounting change that reduced earnings in January 2003 (Note 2). The effect of the accounting change was offset as a significant portion of the revalued gas inventory was sold in the 2003 first quarter, thereby increasing gross margins.

Outlook — Energy Marketing & Trading will seek to gradually expand its business in a manner consistent with and complementary to the growth of our other business segments. Gas storage and transportation capacity enhances our ability to provide reliable and custom-tailored bundled services to large-volume end users and utilities. This capacity, coupled with the synergies from DTE Energy’s other businesses, positions the segment to capitalize on opportunities for expansion of its market base.

Significant portions of the Energy Marketing & Trading portfolio, although economically hedged, include a combination of derivative financial instruments as well as inventory, owned assets and certain capacity contracts that are not considered derivatives. As a result, Energy Marketing & Trading will experience earnings volatility as derivatives are marked to market without revaluing the underlying non-derivative contracts and assets.

ENERGY DISTRIBUTION

Power Distribution

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

Power Distribution earnings decreased $34 million during the 2003 second quarter and $66 million in the 2003 six-month period. Results were affected by a catastrophic ice storm that resulted in over 400,000 customers losing power. Restoration costs associated with the ice storm reduced after tax earnings by approximately $25 million, net of insurance. Both periods were also impacted by higher operation and maintenance expenses and reduced electric deliveries and operating revenues due to milder weather. The increased operation and maintenance expenses are attributable to higher employee pension and healthcare benefit costs and increased costs associated with customer service process improvements. Results for the 2003 six-month period also reflect a net of tax loss of $14 million on the sale of our unprofitable steam heating business (Note 3).

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Outlook — Regulated electric system deliveries are expected to increase in the remainder of 2003 due to continued territory and economic growth. Operating results are expected to vary as a result of external factors such as weather, changes in economic conditions and the severity and frequency of storms. As previously mentioned, Detroit Edison filed a rate case in June 2003 to address future operating costs and other issues.

In July 2003, a catastrophic windstorm in our service territory resulted in over 190,000 customers losing power. We incurred restoration costs totaling approximately $20 million, and a substantial portion of such costs are covered by storm insurance.

Non-regulated

Non-regulated Energy Distribution operations consist primarily of DTE Energy Technologies that markets and distributes a portfolio of distributed generation products, provides application engineering, and monitors and manages generation system operations.

Non-regulated losses increased $1 million in the 2003 second quarter and $2 million in the 2003 six-month period from the comparable 2002 periods.

Outlook — DTE Energy Technologies expects to continue the expansion of its product portfolios and support capabilities in North America and the development of marketing relationships in other parts of the

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world. We plan to develop and launch new products in 2003 that are critical to our plan to increase revenues and generate operating profits by 2004.

ENERGY GAS

Gas Distribution

Gas Distribution operations include gas distribution services primarily provided by MichCon, our gas utility that purchases, stores and distributes natural gas to 1.2 million residential, commercial and industrial customers located throughout Michigan.

Gas Distribution’s loss increased $7 million during the 2003 second quarter and net income declined $2 million for the 2003 six-month period. Earnings reflect higher operation and maintenance expenses and a $26.5 million reserve recorded in the first quarter of 2003 for the potential disallowance in gas costs pursuant to a March 2003 MPSC order in MichCon’s 2002 GCR plan case (Note 4). The increase in operation and maintenance expenses were due to higher employee pension and healthcare benefit costs and increased costs associated with customer service process improvements. Partially offsetting the decline was higher operating revenues due to colder than normal weather. Also impacting the comparison was increased gas costs which were offset by higher revenues under the gas cost recovery mechanism. The income tax provision was favorably affected by an increase in the amortization of tax benefits previously deferred in accordance with MPSC regulations.

Outlook — We expect gas restructuring to continue resulting in increased customer choice in the gas sales business. In December 2001, the MPSC issued an order that continues the gas Customer Choice program on a permanent and expanding basis beginning with the conclusion of the three-year temporary program in March 2002. Beginning in April 2003, up to approximately 60% of customers can participate and beginning April 2004, all 1.2 million of MichCon’s gas customers could choose to participate. Since MichCon continues to transport and deliver the gas to the participating customer premises at prices comparable to margins earned on gas sales, customers switching to other suppliers have little impact on MichCon’s earnings. As of June 2003, approximately 132,000 customers were participating in the gas Customer Choice program.

As a result of the continued increase in operating costs, MichCon expects to file a rate case in the latter half of 2003.

Future operating results are expected to vary as a result of factors such as regulatory proceedings, weather and changes in economic conditions.

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Non-regulated

Non-regulated operations include the gas and oil production business, and the gas Pipelines & Processing business. Our production business produces gas from proven reserves owned in northern Michigan and sells the gas to the Energy Marketing & Trading segment. Pipelines & Processing has partnership interests in two interstate transmission pipelines, seven carbon dioxide processing facilities and a natural gas storage field, as well as contract rights to another natural gas storage field. The assets of these businesses are primarily supported by the Energy Marketing & Trading segment.

Non-regulated earnings decreased $2 million during the 2003 second quarter from the comparable 2002 period and were unchanged for the 2003 six-month period.

Outlook — We expect to further develop our gas production properties in northern Michigan and our pipelines, processing and storage assets to support other DTE Energy businesses. Additionally, we expect to continue exploring opportunities in the coal bed methane gas production business to leverage our production, coal and low cost operating capabilities.

CORPORATE & OTHER

Corporate & Other losses increased $82 million for the 2003 second quarter and $149 million in the 2003 six-month period due to unfavorable effective income tax rate adjustments. Corporate & Other records necessary adjustments in order that the consolidated income tax expense during the quarter reflects the estimated calendar year effective rate. The higher adjustments were necessary because our estimated annual pre-tax income and ability to utilize synfuel-related Section 29 tax credits generated differed from our first quarter estimates. Due to the suspension of the issuance of private letter rulings (PLRs) by the IRS, we have reduced planned synthetic fuel production for the second half of the year. The suspension and reduced production have resulted in a higher anticipated effective tax rate for the year. The quarterly effective tax rate adjustment does not impact total year earnings (Notes 5 and 8). The 2003 six-month period was also affected by a $15 million cash contribution to the DTE Energy Foundation which was funded with proceeds received from the sale of ITC (Note 3).

CAPITAL RESOURCES AND LIQUIDITY