The ratings on DTE Energy Co. and its affiliates remain pressured following the resolution of several regulatory issues in 2004. Detroit Edison Co.'s competitive position and cash flow eroded throughout 2004 with the introduction of deregulation in Michigan, but the recent Michigan Public Service Commission (MPSC) decision attempts to rectify the landscape. Still, sustained financial improvement from depressed levels for the consolidated entity is not likely until the 2006-2007 time frame. Importantly, the current ratings and stable outlook on DTE and its affiliates reflect the expected successful resolution of future regulatory proceedings, including recovery of ongoing environmental costs, recognition of stranded costs, realization of cash flow from the nonregulated ventures, and a reduction in debt leverage to about 55%. The
