38th Annual Edison Electric Institute

Financial Conference

October 28, 2003

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Safe Harbor Statement

The information contained in this document is as of the date of this press release. DTE Energy expressly disclaims any current intention to update any forward-looking statements contained in this document as a result of new information or future events or developments. Words such as “anticipate,” “believe,” “expect,” “projected” and “goals” signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various assumptions, risks and uncertainties. This press release contains forward-looking statements about DTE Energy’s financial results and estimates of future prospects, and actual results may differ materially. Factors that may impact forward-looking statements include, but are not limited to, timing and extent of changes in interest rates; access to the capital markets and capital market conditions and other financing efforts which can be affected by credit agency ratings required; resolution of the IRS review of chemical change at synthetic fuel facilities; ability to utilize Section 29 tax credits or sell interest in facilities producing such credits; the level of borrowings; the effects of weather and other natural phenomena on operations and actual sales; economic climate and growth in the geographic areas in which DTE Energy does business; unplanned outages; the cost of protecting assets against or damage due to terrorism; nuclear regulations and risks associated with nuclear operations; the grant of rate relief by the MPSC for the utilities; changes in the cost of fuel, purchased power and natural gas; the effects of competition; the implementation of electric and gas customer choice programs; the implementation of electric and gas utility restructuring in Michigan; environmental issues, including changes in the climate, and regulations, and the contributions to earnings by non-regulated businesses. This press release should also be read in conjunction with the forward-looking statements in DTE Energy’s, MichCon’s and Detroit Edison’s 2002 Form 10-K Item 1, and in conjunction with other SEC reports filed by DTE Energy, MichCon and Detroit Edison.

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Outline

• Business Issues Update – Rate Cases: Detroit Edison and MichCon– Synfuels

• Looking Ahead

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Highlights of Detroit Edison Rate Case Filing

• Facts: – Filed on June 20, 2003– Base rate increase for both full service and Electric Choice customers

totaling $416 million (~12% increase) in 2006– Interim relief of $274 million effective 1/1/04– Surcharge to recover accumulated regulatory assets – 11.5% ROE, 50/50 capital structure– Proposed ROE sharing provision to align incentives– Reinstates power supply cost recovery mechanism concurrent with

rate increase

• Goals and Objectives: – Provide a long-term rate structure that addresses cost pressures

facing the company – Maintain cash stability and balance sheet strength

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Review of Detroit Edison Rate Case

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1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

¢/KWh• Last rate case was in

1992 – 93 time period

• Residential customers pay 11% less for power now than in 1992

• Costs, especially healthcare and pension, have risen dramatically in recent years

• Proposed rates are phased in through 2006

Detroit Edison Residential Rates

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Review of Detroit Edison Rate Case

Company Date Authorized ROE

Entergy Louisiana

07/02 10.5%

Detroit Edison (Proposed)

06/03 11.5%

OGE Electric 12/02 11.55%

Entergy Mississippi

12/02 11.75%

Wisconsin Power & Light

09/02 12.3%

• Recently authorized ROE’s for electric utilities have ranged from 10.5% – 12.3%

• Detroit Edison’s requested ROE of 11.5% is reasonable, and reflective of the company’s business risks

• Proposed ROE sharing mechanism benefits both customers and shareholders

Requested ROE in-line with other recent regulatory outcomes

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Detroit Edison Rate Case:Current Status

• Normal rate case activity is well underway

• No ruling yet on our appeal for accelerated schedule– Current schedule calls for:

• MPSC staff report on interim relief to be filed on December 12• Interim rate order in March 2004

– Detroit Edison’s request calls for:• MPSC staff report on interim relief to be filed on November 19• Interim rate order in February 2004

• Detroit Edison and other parties currently submitting briefs regarding the restart of the power supply cost recovery factor (PSCR)

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Rate Case Timing Issues are Important for Detroit Edison

• Even with the resolution of the Detroit Edison rate case, full benefits will not be realized immediately

• Residential rates will remain frozen through 2005, delaying the full benefit of a rate increase

• In 2004, we have requested interim rate relief of $274 million

• The timing and level of interim and permanent rates will directly affect earnings– One month change in January interim rate increase affects 2004

earnings $13 million

• Expect both net income and cash to improve significantly in 2005 and thereafter

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Review of Michigan’s Electric Choice Program

• Program became effective on January 1, 2002 for all electric customers

• No deregulation or required divestiture of generating assets, and Michigan utilities retained the obligation to serve

• Current hybrid structure in Michigan complicates traditional regulatory mechanisms such as the PSCR

• Full recovery of all costs associated with implementing the Choice program is required by law – Net stranded costs from customers choosing an alternate supplier– Development of methodology for calculating net stranded costs

was delegated to the MPSC– Choice program implementation costs

• Legislation calls for financially healthy and competitive Michigan utilities

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Fair Implementation of Electric Choice Has Not Occurred

• The MPSC has failed to implement critical provisions of Michigan’s restructuring legislation:• No recovery of net stranded costs has been authorized to date

– $165 million estimated Choice lost margin through year-end 2003• No recovery of Choice program implementation costs authorized to date

– $100 million estimated regulatory asset balance at year-end 2003

• The structure of the Choice program is flawed• MPSC has required subsidies for Choice customers, giving them incentives

to leave Detroit Edison to enter an artificially attractive market – As a result, Choice penetration continues to rise beyond original

estimates• Michigan utilities are prohibited from competing to retain their current

customers

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The Financial Impact is Growing

2000 2001 2002

$0$15

$50

$80-100 *

Detroit EdisonPre-Tax Loss ($ Millions)

$140-200 *

2003E 2004E2000 2001 2002 2003E

210

1,085

2,990

5,300 - 6,400 *

Detroit EdisonCustomer Choice Penetration(GWh)

8,940 - 11,200 *

2004E

* Low end of range is estimate contained in Detroit Edison rate case. High end of range is based on current company estimates.

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DTE is Pursuing Two Paths to Resolution

DTE’s proposal includes the following:

– Limit choice to customers with electric demand of 1MW or greater

– Customers who return to regulated service do so at market prices for generation

– Legislative mandate for a 5-year surcharge to be collected from all Choice customers

DTE included a proposed fix for the program in Detroit Edison’s rate case and other filings:

– Eliminate transition credits for Choice customers

– Establish appropriate customer transition charges to recover net stranded costs

– Implement 5-year surcharge to recover Choice program implementation costs

– Modify PSCR mechanism to reflect impact of Choice program

Regulatory Legislative

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DTE is Aggressively Pursuing Resolution

• DTE is focused on bringing a timely resolution to the problems with the structure and implementation of the Choice program

• Our regulatory and legislative proposals: – Bring clarity to and resolve net stranded cost and Choice program

implementation cost recovery issues

– Maintain a structure for an Electric Choice program in Michigan that resolves the economic distortions and regulatory challenges

– Provide the ability for Michigan utilities to compete

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Highlights of MichCon Rate Case and GCR Filing

• Facts: – Filed on September 30, 2003– Requested $194 million in total relief; $154 million interim relief,

effective no later than April 1, 2004– 11.5% ROE, 50/50 capital structure– Proposed ROE sharing provision to align incentives– Gas Cost Recovery factor (GCR) reduced to $5.36 per Mcf effective

January 1, 2004

• Goals and Objectives: – Restore earnings and ROE to level that reflects current authorized

11.5% ROE– Restore cash flow to fund capital expenditure and dividend

requirements

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Review of MichCon Rate Filing

• Last rate case was in 1992 – 93 time period

• Customers pay the same base rate charges for natural gas service that they did in 1994

• MichCon is the last Michigan utility to file for a base rate increase

• No negative political or media attention

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004est

2005est

$/Ccf

MichCon Gas Distribution Rates Residential Customers

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Review of MichCon Rate Filing

Requested ROE in-line with other recent regulatory outcomes

• Recently authorized ROE’s for gas utilities have ranged from 11.3% – 11.5%

• Proposed ROE sharing mechanism benefits both customers and shareholders

Company Date Authorized ROE

Piedmont Natural Gas

2002 11.3%

Semco Energy 2002 11.4%

Aquila (MGU) 2002 11.4%

MichCon (Requested)

09/03 11.5%

Consolidated Edison

2002 11.5%

Consumers Energy (Requested)

2003 12.75%

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Synfuel Update

• Nature of the issue: – The IRS is assessing the scientific validity of tests used to determine chemical change in the production of synthetic fuel– The IRS focus is highly technical in nature, and focuses on the testing protocols utilized by independent testing

laboratories

• Clarification from the Treasury indicated that:– The degree of feedstock beneficiation is not the issue– The government relied upon independent experts’ reports, not taxpayer representation, to conclude that chemical change

occurred – This is broadly viewed as making retroactive revocation difficult to sustain

• DTE Energy and other taxpayers have retained a number of the foremost experts on chemical change in North America– Our team of chemical change experts has been very active in assessing the government experts alleged concerns– We believe the concerns can be addressed, and that the procedures used by the testing laboratories are scientifically

supportable

•

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Outline

• Business Issues Update – Rate Cases: Detroit Edison and MichCon– Synfuels

• Looking Ahead

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Business Vision

• We continue to prefer a business mix of regulated and non-regulated businesses:– Stability provided by regulated business – Growth provided by non-regulated business

• Short Term Priorities:– Regulated Business: Achieve success in pending rate cases and fix Electric

Choice Program– Non Regulated Business: Positive outcome on synfuels (PLRs and

monetizations)

• Long Term Priorities:– We are committed to maintaining our solid financial position– Regulated Business: Enhance our operational performance through the DTE

Operating System and DTE 2– Non Regulated Business: Continue growth in related businesses utilizing

existing knowledge and competencies

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Maintain Solid Financial Position: Strong Balance Sheet

DTE Energy Leverage*

48%

49%

50%

51%

52%

53%

54%

55%

56%

1999 2000 2001 2002 2003e

Targeted 50-55% Range

• Continued balance sheet strength is a key strategic goal for DTE

• Throughout the industry’s financial turmoil, DTE’s debt/capital has remained within the targeted 50-55% range

* Excludes securitization debt, MichCon seasonal borrowings, and certain hybrid debt

2003 Forecast 51-53%

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Maintain Solid Financial Position: Significant Liquidity

• Liquidity– As of September 30, 2003, total short-term debt outstanding of

$452 million, primarily at Detroit Edison

– Recently completed renewal of $1.3 billion revolver:• Oversubscribed by $360 million• 9 banks increased their commitment• 4 new banks participated

– In total, DTE maintains liquidity of $1.5 billion:• Commercial paper back-up facilities in the amount of $1.3 billion• $200 million Detroit Edison trade receivable facility

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67%62% 61%

54% 54%

63% 64%61%

54%59%

1998 1999 2000 2001 2002

DTE Industry Average

Maintain Solid Financial Position: Dividend is Attractive and Stable

Dividend Payout Ratio

• Dividend of $2.06 per share has been constant for 10 years

• Current dividend yield of 5.8% is attractive

• Recent dividend tax reduction has increased the importance of yield as a component of total return

0%

1%

2%

3%

4%

5%

6%

7%

DTE

AEE

ED TE PEG

PGN

CIN

PNW SO XE

LAEP FE CN

P DFPL

PPL

ETR

EXC

CEG

TXU

AYE

CMS

EIX

PCG

S&P Electrics’ Dividend YieldOctober 16, 2003

Median: 4.4%

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Enhance Operating Performance: DTE Operating System

• How does it work?– Involves the rigorous,

disciplined application of tools and operating practices

• What’s the goal?– To drive sharp performance

improvement

• Top performers in other industries deploy similar strategies

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Enhance Operational Performance: DTE Operating System

• 2003 goal to cut $50 million of expenses– Saved $41 million to date

• Power plant operating efficiency: $14M

• Inventory reductions: $7.5M

• Corporate services improvement: $7.2M

• Technology systems improvement: $5M

• Plant outage management: $4M

• Fuel optimization: $3.5M

– Progress is accelerating across all business units

• Continue to drive efficiencies in 2004

25%

25%10%10%

30%

ProductivityImprovement

Plant Equip. Reliability &Availability

Internal Fuel Usage

Inventory Optimization

Other Savings

Expected Sources of Savings

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Enhance Operational Performance: Implementation of DTE 2

• DTE 2 is a corporate-wide initiative that will create a “new” company from the standpoint of core information systems (finance, human resources, supply chain and work management)

• Benefits:– Low cost structure and faster business cycles– Repeatable and optimized processes– Significant improvement in inventory management– More accurate allocation of support costs to the various

business units– Significant reduction in IT support costs

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Enhance Operational Performance: DTE 2 Best Practice Targets

Best Practice Target Best Practice Leader

Increased inventory turns, reduced reliance on central warehouse with JIT delivery from supply base

FedEx

Ability to close monthly books in 2 days or less

Cisco, DaimlerChrysler

Have financial systems that provide timely, detailed and auditable financial information

Wal-Mart

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Continue Non-Regulated Business Growth

• We have taken a more conservative stance on growth and expenditures

• Near-term focus on transactions that require modest up-front cash and maintain balance sheet stability

• Large asset acquisitions are “off the table” until we have greater clarity on rate cases and synfuels

• Disciplined, strategic growth

• Shareholder value oriented

• Risk adjusted returns

• Don’t use leverage to attain hurdle rates

• Continue to see solid opportunities

DTE’s Non Regulated Business Strategy

What’s Changed… What Hasn’t Changed…

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Continue Non-Regulated Business Growth

Current Activities

• Final stages of closing on outsourcing deal with Fortune 100 manufacturer

• Waste coal recovery business progressing well

• Continue to develop coal bed methane projects

• Increased our ownership stake in the Vector pipeline to 40%

• Divested our ownership interest in the Portland pipeline

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Summary

• Focus on near-term business issues will be ongoing in 2004, with continued emphasis on leaner costs, higher performance

• We have transitioned to a more conservative posture on growth opportunities

• We continue to pursue growth at our non-regulated businesses, utilizing our existing skills

• We are committed to preserving our dividend without sacrificing our balance sheet health