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 ~~September~~March 3031, ~~2004~~ 2007

Commission file number 1-7310

~~The~~Michigan ~~registrant~~Consolidated Gas Company meets the conditions set forth in General ~~Instructions~~Instruction H (1) (a) and (b) of Form 10-Q and is, therefore, filing this Form with the reduced disclosure format.

MICHIGAN CONSOLIDATED GAS COMPANY

(Exact name of registrant as specified in its charter)


Michigan		38-0478040
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

2000 2^nd Avenue, Detroit, Michigan		48226-1279
(Address of principal executive offices)		(Zip Code)

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.

Yes ~~[X]~~ þ No ~~[ ]~~ o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. ~~(as~~See definition of “accelerated filer and large accelerated ~~defined~~filer” in Rule 12b-2 of the Exchange Act). (Check one):

~~Yes [ ] No~~Large ~~[X]~~accelerated filer o Accelerated filer o Non-accelerated filer þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

All of the registrant’s 10,300,000 outstanding shares of common stock, par value $1 per share, are indirectly owned by DTE Energy Company.

Michigan Consolidated Gas Company

Quarterly Report on Form 10-Q Quarter Ended ~~September~~March 3031, ~~2004~~2007

Table of Contents

	~~Page~~		Page
	~~Number~~		Number
DEFINITIONS		3		1
FORWARD-LOOKING STATEMENTS		4		2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
~~Consolidated Statement of Operations~~	Consolidated Statement of Operations	8		6
~~Consolidated Statement of Financial Position~~	Consolidated Statement of Financial Position	9		7
~~Consolidated Statement of Cash Flows~~	Consolidated Statement of Cash Flows	10		9
Consolidated Statement of Retained Earnings and Comprehensive Income		11
	Consolidated Statement of Changes in Shareholder’s Equity and Comprehensive Income			10
~~Notes to Consolidated Financial Statements~~	Notes to Consolidated Financial Statements	12		11
Report of Independent Registered Public Accounting Firm		17
Item 2. Management’s Narrative Analysis of Results of Operations				3
Item 2. Management’s Narrative Analysis of the Results of Operations		5
Item 4. Controls and Procedures				5
Item 4. Controls and Procedures		7
PART II — OTHER INFORMATION
PART II - OTHER INFORMATION
Item 6. Exhibits				18
Item 1. Legal Proceedings		18
SIGNATURE				19
Item 6. Exhibits		18
Chief Executive Officer Section 302 Form 10-Q Certification
SIGNATURE		19
Chief Financial Officer Section 302 Form 10-Q Certification
EXHIBIT INDEX		20
Chief Executive Officer Section 906 Form 10-Q Certification
Thirty-eighth Supplemental Indenture, dated as of October 1, 2004
Chief Financial Officer Section 906 Form 10-Q Certification
Fifth Supplemental Indenture, dated as of October 1, 2004
Chief Executive Officer Section 302 Certification
Chief Financial Officer Section 302 Certification
Chief Executive Officer Section 906 Certification
Chief Financial Officer Section 906 Certification

Definitions

Customer Choice		The choice program is a statewide initiative giving customers in Michigan the option to choose alternative suppliers for gas.
CTA		Costs to achieve, consisting of project management, consultant support and employee severance, related to the Performance Excellence Process
DTE Energy		DTE Energy Company, directly or indirectly the parent of The Detroit Edison Company and MichCon
Customer Choice		Statewide initiative giving customers in Michigan the option to choose alternative suppliers for gas.
End User Transportation		A gas delivery service historically provided to large-volume commercial and industrial customers who purchase natural gas directly from producers or brokerage companies. Under MichCon’s Customer Choice program that began in 1999, this service is also provided to residential customers and small-volume commercial and industrial customers.
DTE Energy		DTE Energy Company, directly or indirectly, the parent of The Detroit Edison Company, MichCon and numerous non-utility subsidiaries.
Enterprises		DTE Enterprises Inc. (successor to MCN Energy) and subsidiaries.
End User Transportation		A gas delivery service historically provided to large-volume commercial and industrial customers who purchase natural gas directly from producers or brokerage companies. Under MichCon’s Customer Choice Program that began in 1999, this service is also provided to residential customers and small-volume commercial and industrial customers.
Gas Sales Program		A three-year program that ended in December 2001 under which MichCon’s gas sales rate included a gas commodity component that was fixed at $2.95 per Mcf.
Enterprises		DTE Enterprises Inc., a wholly-owned subsidiary of DTE Energy and indirectly the parent of MichCon.
GCR		A gas cost recovery mechanism authorized by the MPSC that was reinstated by MichCon in January 2002 permitting MichCon to pass on the cost of natural gas to its customers.
Gas Storage		For MichCon, the process of injecting, storing and withdrawing natural gas from a depleted underground natural gas field.
GCR		A gas cost recovery mechanism authorized by the MPSC, permitting MichCon to pass the cost of natural gas to its customers.
Intermediate Transportation		A gas delivery service provided to producers, brokers and other gas companies that own the natural gas, but are not the ultimate consumers.
MichCon		Michigan Consolidated Gas Company, an indirect, wholly-owned natural gas distribution and intrastate transmission subsidiary of Enterprises.
MGP		Manufactured Gas Plant
MPSC		Michigan Public Service Commission.
MichCon		Michigan Consolidated Gas Company, an indirect, wholly owned natural gas distribution and intrastate transmission subsidiary of Enterprises.
SFAS		Statement of Financial Accounting Standards.
MPSC		Michigan Public Service Commission
Units of Measurement:
SFAS		Statement of Financial Accounting Standards
Bcf		Billion cubic feet of gas.
Units of Measurement
Mcf		Thousand cubic feet of gas.
Bcf		Billion cubic feet of gas
Mcf		Thousand cubic feet of gas
MMcf		Million cubic feet of gas

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 presently contemplated, projected, estimated or budgeted ~~in such forward-looking statements~~. ~~There~~Many ~~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, and purchases from suppliers; • economic climate and population growth or decline in the geographic areas where we do business; • environmental issues, laws, regulations, and the cost of remediation and compliance; • implementation of the gas Customer Choice program; • impact of gas utility restructuring in Michigan, including legislative amendments; • employee relations and the negotiation and impacts of collective bargaining agreements; • access to capital markets and capital market conditions and the results of other financing efforts which can be affected by credit agency ratings; • the timing and extent of changes in interest rates; • the level of borrowing; • changes in the cost and availability of natural gas; • effects of competition; • impact of regulation by the MPSC and other applicable governmental proceedings and regulations, including any associated impact on rate structures; • changes in and application of federal, state and local tax laws or their interpretations, including the Internal Revenue Code, regulations, rulings, court proceedings and audits; • the ability to recover costs through rate increases; • the availability, cost, coverage and terms of insurance; • the cost of protecting assets against, or damage due to, terrorism; • changes in and application of accounting standards and financial reporting regulations; • changes in federal or state laws or their interpretation with respect to regulation, energy policy and other business issues; • uncollectible accounts receivable; • binding arbitration, litigation and related appeals; • changes in the economic and financial viability of our suppliers and customers, and the continued ability of such parties to perform their obligations to the Company; and • implementation of new processes and new core information systems.

• economic climate and growth or decline in the geographic areas where we do business;

• environmental issues, laws and regulations, and the cost of remediation and compliance associated therewith;

• implementation of gas Customer Choice programs;

• impact of gas utility restructuring in Michigan, including legislative amendments;

• employee relations and the impact of collective bargaining agreements;

• access to capital markets and capital market conditions and the results of 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 and availability of natural gas;

• effects of competition;

• impacts of regulations by the MPSC and other applicable governmental proceedings and regulations;

• changes in federal, state and local tax laws and their interpretations, including the Internal Revenue Code, regulations, rulings, court proceedings and audits;

• the ability to recover costs through rate increases;

• the availability, cost, coverage and terms of insurance;

• the cost of protecting assets against, or damage due to, terrorism;

• changes in accounting standards and financial reporting regulations;

• changes in federal or state laws and their interpretation with respect to regulation, energy policy and other business issues; and

• changes in the economic and financial viability of our suppliers and customers, and the continued ability of such parties to perform their obligations to MichCon.

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 statements speak only as of the date on which such statements are 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.

Michigan Consolidated Gas Company Management’s Narrative Analysis of Results of Operations

The Management’s Narrative Analysis of ~~the~~ Results of Operations discussion for MichCon is presented in accordance with General Instruction H(2)(a) of Form 10-Q.

~~The~~Factors ~~Results~~impacting ofincome: ~~Operations~~Net ~~discussion~~income ~~for~~increased ~~MichCon~~$17 million isin ~~presented~~the infirst ~~accordance~~quarter of 2007 due ~~with~~primarily ~~General~~to ~~Instruction~~higher ~~H(2)(a)~~gross ofmargin ~~Form~~and ~~10-Q~~lower operation and maintenance expenses.

~~MichCon~~Increase ~~reported~~(Decrease) ~~losses~~in ofStatement ~~$53 million and $20 million for the third quarter and nine-month period~~ of ~~2004,~~Operations ~~respectively, compared with losses of $37~~Components ~~million~~Compared and earnings of $27 million for comparable 2003 periods. Results for the third quarter and nine-month period of 2004 were adversely impacted by a negative effective income tax rate. Results for the nine-month period of 2004 were primarily impacted by increases in operation and maintenance expenses due to ~~higher~~Prior ~~uncollectable accounts expense, increased employee benefit costs and~~Year ~~higher injuries and damages accruals. Additionally, results for the nine-month~~ ~~period of 2004 were impacted by lower gross margins.~~

Increase (Decrease) in Income Statement
	Three
Components Compared to Prior Year
(in Millions)	Months
(in Millions)	Quarter			Nine Months
Operating revenues	$	(2	)
Operating revenues	$	13		$	63
Cost of gas		(11	)
Cost of gas		8			76
Gross margin		9
Gross margin		5			(13	)
Operation and maintenance		(10	)
Operation and maintenance		—			42
Depreciation and amortization		(2	)
Depreciation, depletion and amortization		2			2
Taxes other than income		(1	)
Taxes other than income		—			(5	)
Asset losses		3
Property write-down		—			(5	)
Other (income) and deductions		(3	)
Other (income) and deductions		3			5
Income tax provision		5
Income tax provision		16			(5	)
Net income	$	17
Net income	$	(16	)	$	(47	)

~~Operating~~Gross ~~revenues~~margin increased $139 million in the ~~third~~first quarter of ~~2004, reflecting~~2007. ~~increased~~The ~~gas~~increase ~~sales~~is ~~and~~due ~~end~~to ~~user~~$17 million ~~transportation~~representing ~~revenues.~~the ~~Operating revenues~~impacts ~~increased~~of colder weather in 2007, $6311 million related to an increase in midstream ~~the~~services ~~nine-month~~including ~~period~~storage ofand ~~2004~~transportation, ~~reflecting~~partially offset by a $16 million ~~increased~~unfavorable impact in lost gas ~~sales~~recognized and ~~reduced~~$3 million ~~end~~related ~~user~~to ~~transportation~~customer ~~revenues~~conservation. Revenues include a component for the cost of gas sold that is recoverable through the GCR mechanism.

	Quarter				Nine Months
	Three Months Ended
	2004		2003		2004		2003
	March 31
Gas Markets (in Millions)
	2007		2006
Gas sales	$	107	$	97	$	963	$	885
Gas Markets (in Millions)
End user transportation		20		19		88		104
Gas sales	$	759	$	782
		127		116		1,051		989
End user transportation		52		45
Intermediate transportation		11		12		38		38
		811		827
Other		17		14		52		51
Intermediate transportation		19		15
	$	155	$	142	$	1,141	$	1,078
Other		31		21
Gas Markets (in Bcf)
	$	861	$	863
Gas sales		12		12		117		124
Gas Markets (in Bcf)
End user transportation		27		27		107		113
Gas sales		68		65
		39		39		224		237
End user transportation		49		44
Intermediate transportation		128		139		431		443
		117		109
		167		178		655		680
Intermediate transportation		128		163
		245		272

5Operation and maintenance expense was lower by $10 million due to lower uncollectible accounts receivable expense primarily due to improved customer payment trends resulting from increased collection efforts.

Depreciation and amortization expenses were lower by $2 million due to an adjustment resulting from an MPSC order related to pipeline assets.

~~Gas~~Asset ~~sales~~losses ~~and end user transportation revenues in total~~ increased $113 million ~~and~~ ~~increased~~attributable ~~$62 million in the third quarter and nine-month period of 2004, respectively. The increase in the third quarter of 2004 is primarily attributed~~ to a $10 million increase in Gas Cost Recovery (GCR) revenue due to higher average gas purchase rates and a $1 million increase in end-user transportation due to higher average rates. The increase for the nine-month period of 2004 is due primarily to an ~~increase~~MPSC indisallowance ~~GCR revenues~~ of ~~$78 million, partially~~certain ~~offset~~costs ~~by $18 million in weather~~ related ~~demand. End user~~to ~~transportation revenues for~~ the ~~nine-month~~acquisition ~~period~~ of ~~2004~~pipeline ~~reflect lower volumes for deliveries associated with a varying number of customers participating in the Customer Choice program~~assets. ~~Customers participating in this program purchase~~ gas from suppliers other than MichCon, while MichCon continues to deliver the gas to their premises. Accordingly, margins earned from selling gas and margins generated from providing end-user transportation services to Customer Choice participants are the same. There were approximately 111,000 customers participating in the Customer Choice program at September 30, 2004, compared with approximately 129,000 customers at December 31, 2003.

~~Cost~~Outlook of– ~~gas~~Operating isresults ~~affected~~are byexpected ~~variations~~to invary ~~sales~~due ~~volumes,~~to ~~cost~~regulatory ofproceedings, ~~purchased~~weather, ~~gas~~changes in ~~and~~economic ~~related~~conditions, ~~transportation~~customer ~~costs.~~conservation ~~Cost~~and ofprocess ~~gas~~improvements. ~~sold~~Higher ~~increased~~gas byprices ~~$8 million~~ and ~~$76 million~~ ~~in the third quarter and nine-month period of 2004, respectively.~~economic ~~The~~conditions ~~average~~have ~~cost~~resulted ofin ~~gas~~continued ~~sold~~pressure ~~increased~~on ~~$1.04~~receivables ~~per~~and ~~Mcf~~working ~~(25%)~~capital ~~and~~requirements ~~$.97~~that are ~~per~~partially ~~Mcf (19%)~~mitigated ~~for~~by the ~~third~~MPSC’s ~~quarter~~uncollectible ~~and nine~~true-~~month~~up ~~period,~~mechanism ~~respectively,~~and ~~from~~GCR ~~the comparable 2003 periods~~mechanism.

~~Operation~~We ~~and~~will ~~maintenance~~utilize ~~expense~~the ~~was~~DTE ~~unchanged~~Energy ~~and~~Operating ~~increased~~System ~~$42 million for the third quarter~~ and ~~nine-month period of 2004, respectively, from~~ the ~~comparable~~ ~~2003~~Performance ~~period~~Excellence ~~primarily~~Process ~~due~~ to ~~higher uncollectable accounts expense,~~seek ~~reflecting~~opportunities ~~higher past due amounts attributable~~ to animprove ~~increase in gas prices~~productivity, ~~continued~~ ~~weak~~remove ~~economic~~waste ~~conditions~~ and adecrease ~~lack~~our ~~of adequate assistance for low-income customers. Higher employee benefit~~ costs ~~and~~while ~~accruals~~improving ~~for injuries~~customer ~~and damages also contributed to the increase~~satisfaction.

~~Property~~ENTERPRISE ~~write-down~~BUSINESS ~~declined $5 million for the nine-month period of 2004 due~~SYSTEMS ~~to a charge in 2003 for the planned sale of our former headquarters.~~

~~Income~~In ~~taxes~~2003, ~~increased~~we ~~$16 million~~began ~~and~~the ~~decreased~~development $5of our Enterprise Business Systems (EBS) ~~million~~project, ~~for~~an enterprise ~~the~~resource ~~2004~~planning ~~third~~system initiative to improve existing processes and to implement new ~~quarter~~core information systems, relating to finance, human resources, supply chain and ~~nine-month~~work ~~period~~management. As part of this initiative, ~~respectively~~we are implementing EBS software including, ~~attributed~~among toothers, aproducts developed ~~negative~~by ~~effective~~SAP AG and MRO Software, Inc. The first phase of implementation occurred in 2005 in ~~income~~the ~~tax~~DTE ~~rate~~Energy’s regulated electric fossil generation unit. The second phase of implementation, including MichCon, began in ~~2004~~April 2007. ~~driven~~The byconversion ~~lower~~of ~~estimated~~data ~~annual~~and ~~earnings~~the implementation and operation of EBS will be continuously monitored and reviewed and should ultimately strengthen our internal control structure and lead to increased cost efficiencies. Although our implementation plan includes detailed testing and contingency arrangements to ensure a smooth and successful transition, we can provide no assurance that complications will not arise that could interrupt our operations.

~~ENVIRONMENTAL MATTERS~~4

See Note 7 – Contingencies for discussion of environmental matters.

REPRESENTED EMPLOYEES

Approximately 1,100 of the company’s employees were under a contract that expired in October 2004. A new three-year contract was ratified in August 2004.

CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures

Management of the Company carried out an evaluation, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 (Exchange Act) Rules 13a-15(e) and 15d-15(e)) as of ~~September~~March 3031, ~~2004~~2007, which is the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures are ~~effectively~~ ~~designed~~effective toin ~~ensure~~ensuring that information required to be disclosed by the ~~Company~~ Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported ~~timely~~within ~~reported~~the intime ~~accordance~~periods ~~with~~specified ~~Commission~~in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations in the effectiveness of any disclosure controls and procedures, management cannot provide absolute assurance that the objectives of its disclosure controls and procedures will be attained.

(b) Changes in internal control over financial reporting

~~The~~There ~~Company~~ has ~~established~~been ano ~~formal~~change ~~assessment~~in ~~process and related procedures to evaluate~~ the ~~effectiveness~~Company’s of internal control over financial reporting ~~using~~ ~~criteria~~during ~~specified by Internal Control — Integrated Framework issued by~~ the quarter ~~Committee~~ended ~~of Sponsoring Organizations (COSO)~~March of31, ~~the~~2007 ~~Treadway~~that ~~Commission. The~~has ~~assessment~~materially ~~process is comprehensive in scope~~affected, ~~utilizes~~or ~~internal~~is ~~and external~~reasonably ~~resources~~likely ~~and~~to ~~involves many individuals at various levels of the~~materially ~~Company~~affect, in the ~~design,~~Company’s ~~testing~~internal ~~and~~control ~~evaluation~~over offinancial ~~internal control~~reporting.

AsIn ~~part of the evaluation and assessment process~~April 2007, ~~the~~we ~~Company~~began ~~has~~implementing ~~been improving~~ the ~~design~~second ~~and~~phase ~~operating effectiveness~~ of ~~many~~our ~~entity-level~~Enterprise ~~and process-level~~Business ~~controls.~~Systems ~~Control testing and remediation activities provide~~(EBS) ~~reasonable, but not absolute, assurance that a material weakness in internal control over financial reporting will be avoided~~project. ~~The~~EBS ~~inherent~~is ~~limitations~~an ~~of our~~enterprise ~~current~~resource ~~internal~~planning ~~controls,~~system ainitiative ~~portion of which are manual by their nature, contribute~~ to ~~the~~improve ~~potential~~existing ~~for control deficiencies. Although management has~~processes ~~not yet completed its assessment~~ and ~~continues~~ to implement ~~control improvements,~~new ~~management~~core ~~does~~information ~~not~~systems, ~~believe~~relating ~~any~~to ~~areas~~finance, ~~requiring~~human ~~further improvement~~resources, ~~will~~supply ~~constitute a material weakness in internal control over~~chain ~~financial~~and ~~reporting~~work ~~as of December 31, 2004~~management.

~~There has been no change in the Company’s internal control over financial~~5 ~~reporting during the quarter ended September 30, 2004 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.~~

MICHIGAN CONSOLIDATED GAS COMPANY

CONSOLIDATED STATEMENT OF OPERATIONS (~~Unaudited~~UNAUDITED)

	Three Months Ended						~~Nine Months Ended~~
	September 30						September 30
	March 31
(in Millions)	~~2004~~2007			~~2003~~2006			~~2004~~			~~2003~~
Operating Revenues	$	~~155~~861		$	~~142~~863		$	~~1,141~~		$	~~1,078~~
Operating Expenses
Cost of gas		64613			56624			~~713~~			~~637~~
Operation and maintenance		90109			90119			~~293~~			~~251~~
Depreciation, depletion and amortization		28			26			81			79
Depreciation and amortization		21			23
Taxes other than income		1214			1215			37			42
Property write-down (Note 4)		—			—			—			5
Asset losses		3			—
		194			184			1,124			1,014
		760			781
Operating Income (Loss)		(39	)		(42	)		17			64
Operating Income		101			82
Other (Income) and Deductions
Interest expense		1415			1317			41			42
Interest income		(2	)		(2	)		(7	)		(8	)
Other		—			(2	)		1			(4	)
Other income		(3	)		(2	)
		12			9			35			30
Other expenses		1			1
Income (Loss) Before Income Taxes		(51	)		(51	)		(18	)		34
		11			14
Income Tax Provision (Benefit)		2			(14	)		2			7
Income Before Income Taxes		90			68
Net Income (Loss)	$	(53	)	$	(37	)	$	(20	)	$	27
Income Tax Provision		23			18
Net Income	$	67		$	50

See Notes to Consolidated Financial Statements (Unaudited)

MICHIGAN CONSOLIDATED GAS COMPANY

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)


	March 31			December 31
(in Millions)	2007			2006

ASSETS
Current Assets
Cash and cash equivalents	$	2		$	1
Accounts Receivable (less allowance for doubtful accounts of $104 and $96, respectively
Customer		495			364
Other		71			101
Accrued gas cost recovery revenue		25			—
Inventories
Gas		21			77
Material and supplies		18			17
Gas customer choice deferred asset		40			101
Other		52			37

		724			698


Investments		96			94


Property
Property, Plant and Equipment		3,423			3,391
Less accumulated depreciation		(1,558	)		(1,539	)

		1,865			1,852


Other Assets
Regulatory assets		370			362
Notes receivable		78			79
Prepaid benefit costs and due from affiliate		374			365
Other		20			20

		842			826

Total Assets	$	3,527		$	3,470

See Notes to Consolidated Financial Statements (Unaudited)

MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)


	March 31			December 31
(in Millions, Except Shares)	2007			2006

LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Accounts payable	$	212		$	211
Dividends payable		13			13
Short-term borrowings		123			342
Current portion of long-term debt		30			30
Federal income, property and other taxes payable		47			14
Gas inventory equalization		278			—
Accrued gas cost recovery refund		7			81
Other		63			74

		773			765


Long-Term debt, (net of current portion)		715			715


Other Liabilities
Deferred income taxes		179			181
Regulatory liabilities		517			510
Accrued postretirement benefit costs		348			347
Other		185			196

		1,229			1,234


Commitments and Contingencies (Notes 4 and 5)

Shareholder’s Equity
Common stock, $1 par value, 15,100,000 shares authorized, 10,300,000 shares issued and outstanding		10			10
Additional paid in capital		432			432
Retained earnings		369			315
Accumulated other comprehensive loss		(1	)		(1	)

		810			756

Total Liabilities and Shareholder’s Equity	$	3,527		$	3,470

See Notes to Consolidated Financial Statements (Unaudited)

MICHIGAN CONSOLIDATED GAS COMPANY

CONSOLIDATED STATEMENT OF ~~FINANCIAL~~CASH ~~POSITION~~FLOWS (UNAUDITED)

	September 30
	Three Months Ended
	2004			December 31
	March 31
(in Millions)	~~(Unaudited)~~2007			~~2003~~2006
ASSETS
Operating Activities
Current Assets
Net income	$	67		$	50
Cash and cash equivalents	$	1		$	1
Adjustments to reconcile net income to net cash from operating activities:
Accounts receivable
Depreciation and amortization		21			23
Customer (less allowance for doubtful accounts of $65 and $43, respectively)		109			178
Deferred income taxes and investment tax credit, net		(8	)		(19	)
Accrued unbilled revenues		27			117
Asset losses		3			—
Other		79			100
Changes in assets and liabilities:
Accrued gas cost recovery revenue		71			19
Accounts receivable, net		(101	)		(26	)
Inventories Gas		182			117
Inventories		55			50
Material and supplies		14			14
Postretirement obligation		1			(14	)
Other		78			67
Property taxes assessed applicable to future periods		(6	)		(7	)
		561			613
Prepaid benefit costs and due from affiliate		(9	)		(8	)
Property, Plant and Equipment		3,180			3,124
Accrued gas cost recovery		(98	)		51
Less accumulated depreciation, depletion and amortization		(1,403	)		(1,344	)
Accounts payable		17			(36	)
		1,777			1,780
Gas inventory equalization		278			158
Other Assets
Federal income, property and other taxes payable		33			33
Other investments		90			87
Other assets		49			38
Notes receivable		82			83
Other liabilities		(18	)		(1	)
Regulatory assets		59			61
Net cash from operating activities		284			292
Prepaid benefit costs and due from affiliate		359			333
Investing Activities
Other		9			20
Capital expenditures		(53	)		(32	)
		599			584
Proceeds from sale of assets		1			—
	$	2,937		$	2,977
Other		1			—
LIABILITIES AND SHAREHOLDER’S EQUITY
Net cash used for investing activities		(51	)		(32	)
Current Liabilities
Financing Activities
Accounts payable	$	145		$	131
Short-term borrowings, net		(219	)		(254	)
Dividends payable		13			13
Dividends paid		(13	)		(12	)
Short-term borrowings		212			235
Net cash used for financing activities		(232	)		(266	)
Current portion of long-term debt, including capital leases		—			3
Net Increase (Decrease) in Cash and Cash Equivalents		1			(6	)
Federal income, property and other taxes payable		4			14
Cash and Cash Equivalents at Beginning of Period		1			7
Regulatory liabilities		27			26
Cash and Cash Equivalents at End of Period	$	2		$	1
Other		60			73
Supplementary Cash Flow Information
		461			495
Interest paid (excluding interest capitalized)	$	24		$	21
Other Liabilities
Income taxes paid		—			—
Deferred income taxes		168			134
Regulatory liabilities		564			563
Unamortized investment tax credit		19			20
Accrued postretirement benefit costs		107			96
Accrued environmental costs		15			16
Other		66			55
		939			884
Long-term debt, including capital lease obligations		773			775
Contingencies (Note 7)
Shareholder’s Equity
Common stock, $1 par value, 15,100,000 shares authorized, 10,300,000 shares issued and outstanding		10			10
Additional paid in capital		432			432
Retained earnings		323			381
Accumulated other comprehensive loss		(1	)		—
		764			823
	$	2,937		$	2,977

See Notes to Consolidated Financial Statements (Unaudited)

MICHIGAN CONSOLIDATED GAS COMPANY

CONSOLIDATED STATEMENT OF ~~CASH~~CHANGES ~~FLOWS~~IN ~~(Unaudited)~~SHAREHOLDER’S EQUITY AND COMPREHENSIVE INCOME

	Nine Months Ended
												Accumulated
	September 30
							Additional					Other
(in Millions)	2004			2003
(Dollars in Millions,	Common Stock						Paid in		Retained			Comprehensive
Operating Activities
Shares in Thousands)	Shares			Amount			Capital		Earnings			Loss			Total
Net income (loss)	$	(20	)	$	27
Balance, December 31, 2006		10,300		$	10		$	432	$	315		$	(1	)	$	756
Adjustments to reconcile net income to net cash from operating activities:
Net income		—			—			—		67			—			67
Depreciation, depletion and amortization		81			79
Dividends declared on common stock		—			—			—		(13	)		—			(13	)
Property write-down		—			5
Balance, March 31, 2007		10,300		$	10		$	432		369			(1	)	$	810
Deferred income taxes and investment tax credit, net		22			12
Gain on sale of assets		(2	)		—
Changes in assets and liabilities:
Accounts receivable, net		90			45
Accrued unbilled revenues		90			87
Inventories		(65	)		(103	)
Property taxes assessed applicable to future periods		(10	)		(5	)
Prepaid benefit costs and due from affiliate		(26	)		(29	)
Accrued gas cost recovery		(52	)		(42	)
Accounts payable		14			24
Federal income, property and other taxes payable		(18	)		(28	)
Other		26			(20	)
Net cash from operating activities		130			52
Investing Activities
Capital expenditures		(72	)		(67	)
Proceeds from sale of assets		5			—
Other		1			(2	)
Net cash used for investing activities		(66	)		(69	)
Financing Activities
Issuance of long-term debt		—			199
Redemption of long-term debt		(3	)		(194	)
Short-term borrowings, net		(23	)		44
Dividends paid		(38	)		(37	)
Net cash (used for) from financing activities		(64	)		12
Net Decrease in Cash and Cash Equivalents		—			(5	)
Cash and Cash Equivalents at Beginning of Period		1			7
Cash and Cash Equivalents at End of Period	$	1		$	2
Supplementary Cash Flow Information
Interest paid (excluding interest capitalized)	$	46		$	47
Income taxes paid		—			14

The following table displays other comprehensive income for the three-month periods ended March 31:


(in Millions)	2007		2006

Net income	$	67	$	50


Comprehensive income	$	67	$	50

See Notes to Consolidated Financial Statements (Unaudited)

~~MICHIGAN~~Michigan ~~CONSOLIDATED~~Consolidated ~~GAS~~Gas ~~COMPANY~~Company

~~CONSOLIDATED~~Notes ~~STATEMENT~~to OFConsolidated ~~RETAINED~~Financial ~~EARNINGS AND~~Statements ~~COMPREHENSIVE INCOME~~ (Unaudited)

	Nine Months Ended
	September 30
(in Millions)	2004			2003
Balance – beginning of period	$	381		$	398
Net income (loss)		(20	)		27
Common stock dividends declared		(38	)		(37	)
Balance – end of period	$	323		$	388

NOTE 1 — GENERAL

~~The~~These ~~following~~Consolidated ~~table~~Financial ~~displays~~Statements ~~other~~should ~~comprehensive~~be ~~loss~~read ~~for~~in conjunction with the ~~nine-month~~Notes to ~~periods~~Consolidated ~~ended~~Financial ~~September 30:~~Statements included in the 2006 Annual Report on Form 10-K.

(in Millions)	2004			2003
Net income (loss)	$	(20	)	$	27
Other comprehensive loss, net of tax:
Net unrealized losses on derivatives:
Losses arising during the period, net of taxes of $(1) and $-, respectively		(1	)		—
		(1	)		—
Comprehensive income (loss)	$	(21	)	$	27

The accompanying Consolidated Financial Statements are prepared using accounting principles generally accepted in the United States of America. These accounting principles require us to use estimates and assumptions that impact reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results may differ from our estimates.

~~See~~The Consolidated Financial Statements are unaudited, but in our opinion include all adjustments necessary for a fair statement of the results for the interim periods presented. All adjustments are of a normal recurring nature, except as otherwise disclosed in these Consolidated Financial Statements and Notes to Consolidated Financial Statements. ~~(Unaudited)~~Financial results for this interim period are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year.

References in this report to “we,” “us,” “our” or “Company” are to Michigan Consolidated Gas Company and its subsidiaries, collectively.

Asset Retirement Obligations

We have conditional asset retirement obligations for gas pipeline retirement costs. To a lesser extent, we have conditional asset retirement obligations at certain service centers and compressor and gate stations. We recognize such obligations as liabilities at fair market value at the time the associated assets are placed in service. Fair value is measured using expected cash outflows discounted at our credit-adjusted risk-free rate.

Timing differences arise in the expense recognition of legal asset retirement costs that we are currently recovering in rates. We defer such differences under SFAS No. 71, Accounting for the Effects of Certain Types of Regulation.

A reconciliation of the asset retirement obligations for the first quarter of 2007 follows:


(in Millions)
Asset retirement obligations at January 1, 2007	$	103
Accretion		2
Liabilities settled		(1	)

Asset retirement obligations at March 31, 2007	$	104

Retirement Benefits and Trusteed Assets

MichCon sponsors a defined benefit retirement plan for eligible MichCon represented employees. MichCon also participates in a defined benefit retirement plan sponsored by Detroit Edison for its non-represented employees, which is treated as a plan covering

~~MICHIGAN~~ ~~CONSOLIDATED~~employees ~~GAS~~of various ~~COMPANY~~affiliates of DTE Energy from the affiliates’ perspective. We are allocated income or an expense each year as a result of our participation in the DTE Energy Company Retirement Plan. Income was approximately $8 million and $7 million for the three months ended March 31, 2007 and 2006 and is not reflected in the following table.

~~NOTES~~In TOits ~~CONSOLIDATED~~April 2005 ~~FINANCIAL~~final ~~STATEMENTS~~rate ~~(UNAUDITED)~~order, the MPSC approved the deferral of the non-capitalized portion of our negative pension expense. At March 31, 2007 and 2006, we recorded a $47 million and a $19 million regulatory liability, respectively.

~~NOTE~~The 1components of net periodic benefit costs (credit) ~~- GENERAL~~for pension benefits and other postretirement benefits follow:

These consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements included in our 2003 Annual Report on Form 10-K.


							Other Postretirement
(in Millions)	Pension Benefits						Benefits
Three Months Ended March 31	2007			2006			2007			2006

Service cost	$	2		$	2		$	4		$	4
Interest cost		4			4			7			6
Expected return on plan assets		(8	)		(7	)		(3	)		(2	)
Net loss		—			—			2			2
Prior service cost		1			—			1			1
Net transition liability		—			—			1			1

Net periodic benefit cost (credit)	$	(1	)	$	(1	)	$	12		$	12

~~The~~During ~~accompanying~~the ~~consolidated~~first ~~financial~~quarter ~~statements~~of ~~are~~2006, ~~prepared~~we ~~using accounting~~made ~~principles~~a ~~generally~~cash ~~accepted~~contribution inof ~~the~~$20 million ~~United~~to ~~States~~our postretirement ofbenefit ~~America~~plans. ~~These~~ ~~accounting~~We ~~principles~~made ~~require~~no uscash contributions to ~~use~~our ~~estimates~~postretirement ~~and~~benefit ~~assumptions~~plans ~~that~~in ~~impact~~ the ~~reported~~first ~~amounts~~quarter of ~~assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities~~2007. ~~Actual results could~~ ~~differ from those estimates.~~

~~The~~Income ~~consolidated financial statements are unaudited, but in our opinion,~~Taxes include all adjustments necessary for a fair statement of the results for the interim periods. Financial results for this interim period are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year.

We ~~reclassified~~adopted ~~some~~the ~~prior~~provisions ~~year~~of ~~balances~~FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109 (FIN 48) on January 1, 2007. This interpretation prescribes a recognition threshold and a measurement attribute for the financial statement reporting of tax positions taken or expected to ~~match~~be taken on a tax return. As a result of the ~~current~~implementation ~~year’s~~of FIN 48, we recognized a $0.2 million increase in liabilities which was ~~presentation~~accounted for as a reduction to the January 1, 2007 balance of retained earnings. The total amount of unrecognized tax benefits amounted to $0.2 million at January 1, 2007, all of which would impact our effective tax rate if recognized. We had no unrecognized tax benefits at March 31, 2007. The decline in unrecognized tax benefits during the three months ended March 31, 2007 was attributable to settlements with the Internal Revenue Service (IRS) for the 2002 and 2003 tax years.

~~Retirement~~We ~~Benefits~~recognize interest and ~~Trusteed~~penalties ~~Assets~~pertaining to income taxes in Interest expense and Other expenses, respectively, on our Consolidated Statement of Operations. We had no accrued interest pertaining to income taxes and no accrued penalties at January 1, 2007 and March 31, 2007. We had no interest expense in relation to income taxes for the three months ended March 31, 2007 and 2006.

~~MichCon~~Our ~~sponsors a defined benefit retirement plan for eligible MichCon represented employees~~U. MichCon also participates in a defined benefit retirement plan sponsored by Detroit Edison for its other nonrepresented employees, which is treated as a plan covering employees of various affiliates of DTE Energy from the affiliates’ perspectiveS. Wefederal ~~are allocated~~ income ortax ~~an expense~~returns ~~each year as a result of our participation in the DTE Energy Company Retirement Plan. Income was approximately $7 million and $8 million~~ for ~~the three~~years ~~months ended September 30,~~ 2004 and ~~2003,~~beyond ~~respectively,~~remain ~~and~~subject ~~was approximately~~to ~~$21 million~~examination ~~and~~by ~~$23 million for~~ the ~~nine months ended September 30, 2004 and 2003, respectively, and is not reflected in the table below~~ IRS.

The components of net periodic benefit costs for qualified and non-qualified pension benefits and other postretirement benefits follow:

							Other Postretirement
(in Millions)	Pension Benefits						Benefits
Three Months Ended September 30	2004			2003			2004			2003
Service Cost	$	1		$	1		$	2		$	1
Interest Cost		4			3			6			4
Expected Return on Plan Assets		(7	)		(7	)		(3	)		(2	)
Amortization of:
Net loss (gain)		—			—			1			(1	)
Prior service cost		—			—			—			—
Net transition liability		—			—			2			2
Net Periodic Benefit Cost (Credit)	$	(2	)	$	(3	)	$	8		$	4

							Other Postretirement
(in Millions)	Pension Benefits						Benefits
Nine Months Ended September 30	2004			2003			2004			2003
Service Cost	$	4		$	3		$	6		$	5
Interest Cost		11			10			17			15
Expected Return on Plan Assets		(21	)		(22	)		(8	)		(10	)
Amortization of:
Net loss (gain)		—			—			2			(1	)
Prior service cost		1			1			—			—
Net transition liability		—			—			6			6
Net Periodic Benefit Cost (Credit)	$	(5	)	$	(8	)	$	23		$	15

Stock-Based Compensation

InEffective ~~June~~January ~~2004~~1, we2006, ~~retroactively~~our ~~adopted~~parent ~~Financial~~company, ~~Accounting~~DTE ~~Standards~~Energy, ~~Board (FASB) Staff~~adopted ~~Position~~SFAS ~~(FSP)~~ No. ~~106~~123(R), Share-2.Based ~~This~~Payment, ~~FSP~~using ~~provides~~the ~~guidance~~modified onprospective ~~the accounting~~transition ~~for~~method. ~~the~~We ~~Medicare~~receive ~~Prescription~~an ~~Drug,~~allocation ~~Improvement~~of costs associated with stock compensation and ~~Modernization Act~~the ofrelated ~~2003~~impact ~~(Medicare~~of ~~Act)~~cumulative accounting adjustments. AsOur aallocation ~~result~~for of the ~~retroactive~~three ~~adoption~~months ended March 31, ~~our~~2007 ~~other postretirement~~and ~~benefit~~2006 ~~costs~~for ~~were~~stock-based compensation ~~reduced~~expense bywas approximately $1 million ~~and~~in ~~$2 million~~each ~~for~~period. ~~the quarter~~The ~~and~~cumulative ~~nine-months~~effect ~~ended~~of ~~September 30,~~the adoption ~~2004,~~of ~~respectively.~~SFAS ~~See~~123(R) ~~Note~~was 2immaterial.

Gas in Inventory

Gas inventory is priced on a last-in, first-out (LIFO) basis. In anticipation that interim inventory reductions will be replaced prior to year end, the cost of gas of net withdrawals from inventory is recorded at the estimated average purchase rate for the calendar year. The excess of these charges over the weighted average cost of the LIFO pool is credited to the gas inventory equalization account. During interim periods when there are net injections to inventory, the equalization account is reversed.

Asset losses

Asset losses were $3 million in the first quarter of 2007 representing a disallowance of certain costs related to the acquisition of pipeline assets.

NOTE 2 – NEW ACCOUNTING PRONOUNCEMENTS

~~Medicare~~Fair ~~Act~~Value Accounting

In ~~December~~September ~~2003~~2006, the ~~Medicare~~FASB ~~Act~~issued ~~was~~SFAS ~~signed~~No. 157, ~~into~~Fair ~~law~~Value Measurements. ~~This~~SFAS ~~Act~~157 ~~provides~~defines fair ~~for~~value, establishes a framework for measuring fair value in generally accepted accounting ~~non-taxable~~principles, ~~federal~~and ~~subsidy~~expands todisclosures ~~sponsors~~about offair ~~retiree~~value ~~health~~measurements. ~~care~~It ~~benefit~~emphasizes ~~plans~~that fair value ~~providing~~is a ~~benefit~~market-based ~~that~~measurement, isnot atan ~~“least~~entity-specific ~~actuarially”~~measurement. ~~equivalent~~Fair tovalue ~~the~~measurement ~~benefit~~should ~~established~~be bydetermined ~~law.~~based Weon ~~elected~~the atassumptions that ~~time~~market toparticipants ~~defer~~would ~~the~~use ~~provisions~~in ofpricing ~~the~~an asset or ~~Medicare~~liability. ~~Act~~SFAS 157 is effective for fiscal years beginning after November 15, 2007, and ~~its~~interim periods ~~impact~~within onthose ~~our~~fiscal ~~accumulated~~years. ~~postretirement~~We ~~benefit obligation~~plan ~~and~~to ~~net~~adopt ~~periodic~~SFAS ~~postretirement~~157 ~~benefit~~on ~~cost~~January 1, ~~pending~~2008. We are currently assessing the ~~issuance~~effects of ~~specific~~ ~~authoritative~~this ~~accounting~~statement, ~~guidance~~and byhave not yet determined the ~~FASB~~impact on the consolidated financial statements.

In ~~May~~February ~~2004~~2007, ~~FSP~~the FASB issued SFAS No. ~~106-2~~159, ~~was~~The ~~issued~~Fair onValue ~~accounting~~Option for ~~the~~Financial ~~effects~~Assets and Financial Liabilities — Including an Amendment of ~~the Medicare~~FASB ~~Act~~Statement No. 115. ~~The~~This ~~FSP~~standard ispermits ~~effective~~an entity ~~for~~to ~~the~~choose ~~first~~to ~~interim~~measure ~~period~~many ~~beginning~~financial ~~after June 15,~~instruments ~~2004,~~and ~~with~~certain ~~earlier~~other ~~application~~items ~~encouraged~~at fair-value. The fair ~~guidance~~value inoption ~~this~~established ~~FSP~~by ~~is applicable~~SFAS to159 ~~sponsors~~permits ofall ~~single-employer~~entities ~~defined~~to ~~benefit~~choose ~~postretirement~~to ~~health~~measure eligible items ~~care~~at ~~plans~~fair ~~for~~value ~~which~~at ~~(a) the~~specified ~~employer~~election ~~has~~dates. ~~concluded~~An ~~the~~entity ~~prescription~~will ~~drug~~report unrealized gains and losses on ~~benefits~~items ~~available~~for ~~under~~which the ~~plan~~fair tovalue ~~some~~option orhas ~~all~~been ~~participants~~elected ~~are~~in ~~“actuarially~~earnings at each subsequent reporting ~~equivalent”~~date. toThe ~~Medicare~~fair ~~Part~~value option: (a) Dmay ~~and~~be ~~thus~~applied ~~qualify~~instrument ~~for~~by ~~the~~instrument, ~~subsidy~~with ~~under~~a ~~the~~few exceptions, ~~Medicare~~such ~~Act~~as ~~and~~investments otherwise accounted for by the equity method; (b) ~~the~~is ~~expected~~irrevocable ~~subsidy~~(unless ~~will~~a ~~offset~~new election ordate ~~reduce~~occurs); ~~the~~and ~~employer’s share~~(c) is ofapplied ~~the~~only ~~cost~~to ofentire ~~the~~instruments ~~underlying~~and ~~postretirement~~not ~~prescription~~to ~~drug~~portions ~~coverage~~of oninstruments. ~~which~~SFAS ~~the~~159 ~~subsidy~~ is ~~based.~~effective Weas ~~believe~~of wethe ~~qualify~~beginning ~~for~~of ~~the~~an ~~subsidy~~entity’s ~~under~~first ~~the Medicare~~fiscal ~~Act~~year ~~and~~that begins ~~the~~after ~~expected~~November 15, ~~subsidy~~2007. ~~will~~We ~~partially~~are ~~offset~~currently ~~our~~assessing ~~share~~the effects of ~~the~~this statement, and have ~~cost~~not ofyet determined the ~~postretirement~~impact ~~prescription~~on ~~drug~~the ~~coverage~~consolidated financial statements.

Accounting for Defined Benefit Pension and Other Postretirement Plans

In September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an Amendment of FASB Statements No. 87, 88, 106, and 132(R). SFAS 158 requires companies to (1) recognize the overfunded or underfunded status of defined benefit pension and defined benefit other postretirement plans in its financial statements, (2) recognize as a component of other comprehensive income, net of tax, the actuarial gains or losses and the prior service costs or credits that arise during the period but are not immediately recognized as components of net periodic benefit cost, (3) recognize adjustments to other comprehensive income when the actuarial gains or losses, prior service costs or credits, and transition assets or obligations are recognized as components of

~~The~~net periodic ~~reduction~~benefit incost, ~~the~~(4) measure ~~accumulated~~ postretirement benefit ~~obligation~~plan ~~for~~assets ~~the subsidy~~and ~~related~~plan toobligations ~~benefits~~as ~~attributed~~of tothe ~~past~~date ~~service is approximately $24~~of ~~million~~the ~~and~~employer’s isstatement ~~accounted~~of ~~for~~financial asposition, anand ~~actuarial~~(5) disclose ~~gain~~additional asinformation ~~required~~in ~~under~~ the ~~FSP.~~ ~~The~~notes ~~effects~~to offinancial ~~the~~statements ~~subsidy~~about oncertain ~~the~~effects ~~measurement~~on of net periodic ~~postretirement~~ benefit ~~costs~~cost isin ~~expected~~the toupcoming fiscal ~~reduce~~year ~~cost~~that byarise ~~$3 million~~from indelayed ~~2004.~~recognition ~~The impact~~ of ~~the~~ ~~Medicare Act on~~ the ~~components~~actuarial ofgains ~~other~~and ~~postretirement~~losses ~~benefit~~and ~~costs~~the isprior service ascost credits. ~~follows:~~

	Three		Nine
	Months Ended		Months Ended
	September 30,		September 30,
(in Millions)	2004		2004
Reduction in service cost	$	—	$	—
Reduction in interest cost		1		2
Amortization of actuarial gain		—		—
Decrease in postretirement benefit cost	$	1	$	2

The requirement to recognize the funded status of a defined benefit pension or defined benefit other postretirement plan and the related disclosure requirements was effective for fiscal years ending after December 15, 2006, and we adopted this portion of the standard on December 31, 2006. We requested and received agreement from the MPSC to record the additional liability amounts for Detroit Edison and MichCon on the balance sheet as a regulatory asset.

~~NOTE~~The 3requirement to measure plan assets and benefit obligations as of the date of the employer’s fiscal year-end ~~REGULATORY~~statement ~~MATTERS~~of financial position is effective for fiscal years ending after December 15, 2008. The Statement provides two options for the transition to a fiscal year end measurement date. We have not yet determined which of the available transition measurement options we will use.

~~Gas~~NOTE ~~Rate~~3 ~~Case~~— RESTRUCTURING

~~Rate~~Performance ~~Request - In~~Excellence ~~September 2003, MichCon filed an application with the MPSC~~Process for an increase in service and distribution charges (base rates) for its gas sales and transportation customers. The filing requests an overall increase in base rates of $194 million per year (approximately 7% increase, inclusive of gas costs), beginning January 1, 2005. MichCon requested that the MPSC increase base rates by $154 million per year on an interim basis by April 1, 2004. The interim request was based on a projected revenue deficiency for the test year 2004.

~~MPSC Interim Rate Order –~~ In ~~September 2004~~mid-2005, ~~the~~we ~~MPSC~~initiated ~~issued~~a ancompany-wide ~~order~~review ~~granting interim~~of ~~rate~~our ~~relief~~operations tocalled ~~MichCon in~~ the ~~amount~~Performance Excellence ~~of $35 million~~Process. ~~The~~We ~~interim~~began ~~rate order was based on~~ a ~~50%~~series ~~debt~~of ~~and~~focused ~~50%~~improvement ~~equity~~initiatives ~~capital structure,~~ and anexpect ~~11.5%~~this process ~~rate~~will ofbe ~~return.~~carried ~~Amounts~~out ~~collected~~over ~~are~~a ~~subject~~ two-to athree- ~~potential~~year ~~refund~~period ~~pending~~that ~~a final~~began ~~order~~ in ~~this rate case~~2005.

~~MPSC~~We ~~Staff~~have ~~Recommendation~~incurred onCTA ~~Final~~for ~~Rate~~employee ~~Relief~~severance –and ~~The~~other ~~Staff has recommended a $76 million increase in base rates compared to MichCon’s requested base rate relief of $194 million. The Staff also supports a provision~~costs, ~~proposed~~consisting ~~by MichCon,~~primarily ~~that would allow MichCon to recover or refund 90%~~ of ~~uncollectable~~project ~~accounts~~management ~~receivables~~and ~~expense~~consultant ~~above or below the amount that is reflected in base rates~~support. InWe ~~addition,~~cannot ~~the~~defer ~~Staff~~CTA ~~proposed~~costs aat ~~50%~~this ~~debt~~time ~~and~~because ~~50% equity capital structure utilizing~~ a ~~reduced rate of return of 11%. MichCon’s current allowed~~recovery ~~rate~~mechanism ofhas ~~return~~not isbeen 11established.~~5%. MichCon expects a final order in the first quarter of~~ ~~2005.~~

~~Gas~~Amounts ~~Cost~~expensed ~~Recovery~~are ~~Proceedings~~recorded within the Operation and maintenance line in the Consolidated Statement of Operations. Expenses incurred for the three months ended March 31, 2007 and 2006 are as follows:

2002 Plan Year - In December 2001, the MPSC issued an order that permitted MichCon to implement GCR factors up to $3.62 per Mcf for January 2002 billings and up to $4.38 per Mcf for the remainder of 2002. The order also allowed MichCon to recognize a regulatory asset of approximately $14 million representing the difference between the $4.38 factor and the $3.62 factor for volumes that were unbilled at December 31, 2001. The regulatory asset is subject to the 2002 GCR reconciliation process. In March 2003, the MPSC issued an order in MichCon’s 2002 GCR plan case. The MPSC ordered MichCon to reduce its gas cost recovery expenses by $26.5


	Employee Severance Costs (1)				Other Costs				Total Cost
(in Millions)	2007		2006		2007		2006		2007		2006

Costs incurred:	$	2	$	—	$	—	$	3	$	2	$	3


(1)		Includes corporate allocations.

A liability for future CTA associated with the Performance Excellence Process has not been recognized because we have not met the recognition criteria of SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities.

NOTE 4 — REGULATORY MATTERS

Regulation

We are subject to the regulatory jurisdiction of the MPSC, which issues orders pertaining to rates, recovery of certain costs, including the costs of regulatory assets, conditions of service, accounting and operating-related matters.

~~million~~Regulatory ~~for~~Accounting ~~purposes~~Treatment ~~of calculating the 2002 GCR factor due to MichCon’s decision to utilize storage gas during 2001 that resulted in a gas inventory decrement~~ for ~~the~~Performance ~~2001~~Excellence ~~calendar year.~~Process

~~Although~~In May 2006, we ~~recorded~~filed aan ~~$26.5 million~~application ~~reserve~~with inthe ~~2002~~MPSC to ~~reflect~~allow ~~the~~deferral ~~impact~~ of ~~this~~ ~~order,~~costs aassociated ~~final~~with the ~~determination~~implementation of ~~actual~~the ~~2002~~Performance ~~revenue~~Excellence ~~and~~Process, ~~expenses~~a ~~including any~~company-wide ~~disallowances~~cost-savings orand performance ~~adjustment,~~improvement ~~will~~program. beImplementation ~~decided~~costs ininclude ~~MichCon’s~~project ~~2002~~management, ~~GCR~~consultant ~~reconciliation~~support ~~case~~and ~~that~~employee ~~was~~severance ~~filed~~expenses. ~~with~~We ~~the~~sought MPSC inauthorization ~~February 2003.~~to ~~The~~defer ~~Staff~~ and ~~various~~amortize Performance ~~intervening~~Excellence ~~parties~~Process inimplementation ~~this~~costs ~~proceeding~~for ~~are~~accounting ~~seeking~~purposes to ~~have~~match the ~~MPSC~~expected ~~disallow~~savings anfrom ~~additional~~the ~~$26 million,~~Performance ~~representing~~Excellence ~~unbilled~~Process ~~revenues~~program atwith ~~December 2001. One party has proposed that half of~~ the ~~$8 million~~ related ~~to the settlement of the Enron bankruptcy also be disallowed~~CTA. ~~The~~We ~~other~~anticipate ~~parties to the case have recommended~~ that the ~~Enron~~Performance ~~bankruptcy~~Excellence ~~settlement~~Process will be ~~addressed~~carried inout ~~the 2003~~over ~~GCR~~a ~~reconciliation~~two- ~~case.~~to Anthree-year ~~MPSC~~period ~~Administrative Law Judge has recommended~~beginning ~~disallowances~~in ~~of $26~~2005.~~5 million~~ ~~related~~MichCon’s toCTA ~~the~~is ~~use~~estimated ofto ~~storage~~total ~~gas~~between ~~in 2001 and~~ $2655 million ~~related to the December 2001 unbilled issue,~~ and ~~recommended that the~~ $860 million. ~~related~~In toSeptember 2006, the ~~Enron~~MPSC ~~issue~~issued bean ~~addressed~~order inapproving ~~the~~a ~~2003~~settlement ~~GCR reconciliation~~agreement ~~case.~~that Weallows ~~have~~MichCon, ~~included~~commencing ~~this item~~ in 2006, ~~our~~to ~~testimony~~defer in the ~~2003 GCR~~incremental ~~reconciliation filed in February 2004~~CTA. ~~The~~Further, ~~Staff~~the ~~has~~order ~~recommended~~provides ~~that~~ for MichCon ~~be allowed~~ to ~~recover~~amortize the ~~entire~~CTA deferrals ~~$8 million~~over ~~related~~a toten-year ~~the~~period ~~Enron~~beginning ~~issue. A~~with ~~final~~the ~~order~~year insubsequent ~~this~~to ~~proceeding~~the isyear ~~expected~~the inCTA ~~2004~~was deferred. InMichCon ~~addition,~~cannot wedefer ~~filed~~CTA ~~an appeal~~costs ofat ~~the~~this ~~March 2003~~time ~~MPSC~~because ~~order~~a ~~with~~recovery ~~the~~mechanism ~~Michigan~~has ~~Court~~not ~~of Appeals~~been established.

~~2003~~Uncollectible ~~Plan~~Expense ~~Year~~ True- InUp ~~July 2003,~~Mechanism ~~the MPSC approved an increase in MichCon’s 2003 GCR rate to a maximum of $5.75 per Mcf for the billing months of August~~(UETM) ~~2003 through~~and ~~December 2003.~~Report As of ~~December 31,~~Safety ~~2003, MichCon has accrued a $19 million regulatory asset representing the under-recovery of actual gas costs incurred in 2003~~ and ~~the 2002 GCR under~~Training-~~recovery.~~Related Expenditures

~~2004~~2005 ~~Plan~~UETM ~~Year -~~ — In ~~September~~March ~~2003~~2006, MichCon filed ~~its~~an ~~2004~~application ~~GCR~~with ~~plan~~the ~~case proposing~~MPSC afor ~~maximum~~approval ~~GCR factor~~ of ~~$5.36 per Mcf. MichCon agreed to switch from~~its auncollectible ~~calendar~~expense ~~year~~true-up tomechanism anfor ~~operational~~2005. ~~year~~This asis athe ~~condition~~first offiling ~~its~~MichCon ~~settlement~~has inmade ~~the~~under ~~2003~~the ~~GCR~~uncollectible ~~plan~~tracking ~~case.~~mechanism, ~~The~~which ~~operational~~was ~~GCR~~approved ~~year~~by ~~would~~the ~~run~~MPSC ~~from~~in April 2005 toas ~~March~~part of ~~the~~MichCon’s ~~following~~last ~~year.~~general Torate ~~accomplish~~case. ~~the~~MichCon’s ~~switch,~~2005 ~~the~~base ~~2004~~rates ~~GCR~~included ~~plan~~$37 million ~~case~~for ~~reflects~~anticipated auncollectible ~~15-month~~expenses. ~~transitional~~Actual ~~period,~~2005 ~~January 2004~~uncollectible ~~through~~expenses ~~March~~totaled $60 ~~2005~~million. ~~Under~~The ~~the~~true-up ~~transition~~mechanism ~~proposal,~~allows MichCon ~~would~~to ~~file~~recover ~~two~~ninety ~~reconciliations~~percent ~~pertaining~~of touncollectibles ~~the transition~~that ~~period;~~exceeded ~~one~~that ~~addressing the January~~$37 ~~2004~~million base. toUnder ~~March 2004~~the ~~period,~~formula ~~the other~~prescribed ~~addressing~~by the ~~remaining~~MPSC, ~~April 2004~~MichCon torecorded ~~March 2005~~an ~~period.~~underrecovery ~~The~~of ~~plan also~~approximately ~~proposes~~$11 million afor ~~quarterly~~uncollectible ~~GCR~~expenses ~~ceiling~~from ~~price~~May 2005 ~~adjustment~~(when ~~mechanism.~~the ~~This~~ mechanism ~~allows~~ ~~MichCon~~took toeffect) ~~increase~~through the ~~maximum GCR factor to compensate for increases~~ inend ~~market prices, thereby reducing the possibility~~ of ~~a GCR under recovery~~2005. ~~Due to~~In ~~sustained increase in market prices for natural gas, in June~~December ~~2004~~2006, the MPSC ~~approved~~ aissued ~~temporary~~an ~~increase~~order inauthorizing ~~the~~MichCon ~~maximum~~to ~~GCR~~implement ~~factor~~the ~~and a contingent factor~~UETM ~~which~~monthly ~~resulted~~surcharge infor aservice ~~new~~rendered ~~temporary~~on ~~maximum~~and ~~factor~~after ~~of $6.62 per Mcf, effective from July~~January 1, ~~2004 until the MPSC issues its final order in this case~~2007.

WeAs ~~are~~part ~~unable~~of tothe ~~predict~~March 2006 application with the ~~outcome~~MPSC, ofMichCon ~~the~~filed ~~regulatory~~a ~~matters~~review ~~discussed~~of its 2005 annual ~~herein~~safety and training — related expenditures. ~~Resolution~~MichCon ofreported ~~these~~that ~~matters~~actual issafety ~~dependent~~and training-related ~~upon~~expenditures ~~future~~for ~~MPSC~~the ~~orders,~~initial period exceeded the pro-rata amounts included in base ~~which~~rates ~~may~~and ~~materially~~based ~~impact~~on the ~~financial~~under-recovered position, ~~results~~recommended ofno ~~operations~~refund ~~and cash~~at ~~flows~~this oftime. In the December 2006 ~~company~~order, the MPSC also approved MichCon’s 2005 safety and training report.

~~NOTE~~2006 4UETM — In March 2007, MichCon filed an application with the MPSC for approval of its uncollectible expense true-up mechanism for 2006 requesting $33 ~~UNUSUAL~~million ~~CHARGES~~of underrecovery plus applicable carrying costs of $3 million. The March 2007 application included a report of MichCon’s 2006 annual safety and training — related expenditures, which shows a $2 million over-recovery.

~~Property~~Gas ~~Write-down~~Cost Recovery Proceedings

2005-2006 Plan Year — In ~~June~~December ~~2003~~2004, weMichCon ~~recorded~~filed anits ~~additional~~2005-2006 ~~$5 million~~GCR ~~pre-tax~~plan ~~($4 million~~case ~~net~~proposing a maximum GCR factor of $7.99 per Mcf. The plan includes quarterly contingent GCR factors. These ~~taxes)~~contingent ~~charge~~factors ~~from~~allow ~~the~~MichCon ~~planned~~to ~~sale~~increase ofthe ~~our~~maximum ~~former~~GCR ~~headquarters~~factor to ~~further~~compensate for increases in ~~reduce~~gas ~~the~~market ~~carrying~~prices, ~~value~~thereby reducing the possibility of a GCR under-recovery. In April 2005, the ~~property~~MPSC issued an order recognizing that Michigan law allows MichCon to ~~fair~~self-implement ~~value~~its ~~based~~quarterly oncontingent ~~the~~factors. ~~estimated~~MichCon self-implemented quarterly ~~selling~~contingent ~~price~~GCR ~~less~~factors ~~cost~~of to$8.54 ~~sell~~per Mcf in July 2005 and $10.09 ~~The~~per ~~sale~~Mcf ~~was~~in ~~completed~~October 2005. In response to market price increases in the ~~fourth~~fall ~~quarter~~ of ~~2003.~~2005, MichCon filed a petition to

~~NOTE~~reopen 5the record –in ~~LONG~~the case during September 2005. MichCon proposed a revised maximum GCR factor of $13.10 per Mcf and a revised contingent factor matrix. In October 2005, the MPSC approved an increase in the GCR factor to a cap of $11.3851 per Mcf for the period November 2005 through March 2006. In June 2006, MichCon filed its GCR reconciliation for the 2005-~~TERM~~2006 ~~DEBT~~GCR year. The filing supported a total over-recovery, including interest through March 2006, of $13 million. MPSC Staff and other interveners filed testimony regarding the reconciliation in December 2006 in which they recommended disallowances related to MichCon’s implementation of its dollar cost averaging fixed price program and its use of fixed basis in contracting purchases. In January 2007, MichCon filed testimony rebutting these recommendations. The 2005-2006 GCR reconciliation case is still in the regulatory review and approval process, and the final resolution is uncertain. Based on available information, MichCon is unable to assess the range of a reasonably possible loss related to the proposed disallowances. An MPSC order is expected in 2007.

In2007-2008 ~~October 2004,~~Plan weYear ~~issued~~/ ~~$120 million~~Native ofBase ~~5.0%~~Gas ~~senior~~Sale ~~notes~~Consolidated ~~due~~– inIn ~~2019.~~August 2006, ~~The~~MichCon filed an ~~proceeds~~application ~~will~~with bethe ~~principally~~MPSC ~~used~~requesting permission to ~~redeem~~sell ~~the~~native ~~following~~base ~~two~~gas ~~issues:~~that ~~$52~~would become ~~million~~accessible ofwith 6storage facilities upgrades.~~85%~~ ~~senior~~MichCon’s ~~notes~~estimated ~~due~~sale ~~2038~~of ~~and~~this base gas would be worth $5534 million. ofIn ~~6.85%~~December 2006, ~~senior~~the ~~notes~~administrative law judge in the case approved a motion ~~due~~made ~~2039.~~by ~~These~~the ~~securities~~Residential ~~are~~Ratepayer ~~expected~~Consortium to beconsolidate ~~called~~this ~~for~~case ~~redemption~~with inMichCon’s 2007-2008 GCR ~~November~~plan case. In December ~~2004~~2006, atMichCon filed its 2007-2008 GCR plan case proposing a ~~price~~maximum GCR factor of ~~100 percent~~$8.49 ofper Mcf. An MPSC Order in the ~~principal~~consolidated ~~amount~~cases ~~plus~~is ~~accrued and~~expected ~~unpaid~~by ~~interest~~the ~~from~~end ~~September 1,~~of ~~2004~~2007.

NOTE 6 – SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

On October 15, 2004, we entered into a $243.75 million, five-year unsecured revolving credit facility and lowered our existing three-year revolving credit facility from $162.5 million to $81.25 million. The five-year facility replaces the October 2003 364-day facility, which expired. The three-year revolving credit facility expires in October 2006. The five- and three-year credit facilities are with a syndicate of banks and may be utilized for general corporate borrowings, but primarily are intended to provide liquidity support for our commercial paper program. Borrowings under the facilities will be available at prevailing short-term interest rates. The agreements require us to maintain a debt to total capitalization ratio of no more than .65 to l and an “earnings before interest, taxes, depreciation and amortization” (EBITDA) to interest ratio of no less than 2 to 1. We currently are in compliance with these financial covenants.

NOTE 7 – CONTINGENCIES

Environmental

Prior to the construction of major natural gas pipelines, gas for heating and other uses was manufactured from processes involving coal, coke or oil. We own, or previously owned, 17 such former manufactured gas plant (MGP) sites. During the mid-1980’s, we conducted preliminary environmental investigations at former MGP sites, and some contamination related to the by-products of gas manufacturing was discovered at each site. We employed outside consultants to evaluate remediation alternatives for these sites, to assist in estimating its potential liabilities and to review its archived insurance policies. The findings of these investigations indicated that the estimated total expenditures for investigation and remediation activities for these sites could range from $30 million to $170 million based on undiscounted 1995 costs. As a result of these studies, we accrued a liability and a corresponding regulatory asset of $32 million during 1995. At December 31, 2003, the reserve balance was $21.5 million of which $ 4.7 million was classified as current. Our current estimates indicate that the previously accrued amounts are adequate to cover the costs of required remedial actions, and therefore no additional accrual will be required.

Other

We are ~~involved~~unable into ~~certain~~predict ~~legal,~~the ~~regulatory~~outcome ~~and~~of ~~administrative~~the ~~proceedings before~~regulatory ~~various~~matters ~~courts,~~discussed ~~arbitration~~herein. ~~panels and governmental agencies concerning~~Resolution ~~claims arising in the ordinary course~~ of ~~business.~~these ~~These~~matters ~~proceedings~~is ~~include certain~~dependent ~~contract~~upon ~~disputes,~~future ~~environmental~~MPSC ~~reviews~~orders and ~~investigations~~appeals, ~~audits, inquiries~~which ~~from~~may ~~various~~materially ~~regulators,~~impact ~~and pending judicial matters. We cannot~~the ~~predict~~financial ~~the~~position, ~~final~~results ~~disposition~~ of ~~such~~operations ~~proceedings. We regularly review legal matters~~ and ~~record~~cash ~~provisions~~flows ~~for claims that are considered probable~~ of ~~loss. The resolution of pending proceedings is not expected to have a material effect on our financial statements in~~ the ~~period they are resolved~~Company.

~~See~~NOTE ~~Note~~5 3– ~~for~~COMMITMENTS aAND ~~discussion of contingencies related to Regulatory Matters.~~CONTINGENCIES

Environmental Matters

Prior to the construction of major interstate natural gas pipelines, gas for heating and other uses was manufactured locally from processes involving coal, coke or oil. We own, or previously owned, 14 such former MGP sites. Investigations have revealed contamination related to the by-products of gas manufacturing at each site. In addition to the MGP sites, we are also in the process of cleaning up other contaminated sites. Cleanup activities associated with these sites will be conducted over the next several years.

In 1993, a cost deferral and rate recovery mechanism was approved by the MPSC for investigation and remediation costs incurred at former MGP sites in excess of a previously established reserve. As a result of a study completed in 1995, we accrued an additional liability and a corresponding regulatory asset of $32 million. During 2006 we spent approximately $2 million investigating and remediating these former MGP sites. In December 2006 we retained multiple environmental consultants to estimate the projected cost to remediate each MGP site. We accrued an additional $7 million in remediation liabilities associated with former MGP holders and additional cleanup cost, to increase the reserve balance to $39 million at December 31, 2006, with a corresponding increase in the regulatory asset. The reserve balance amounted to $37 million at March 31, 2007.

~~REPORT~~Any OFsignificant ~~INDEPENDENT~~change ~~REGISTERED~~in ~~PUBLIC~~assumptions, ~~ACCOUNTING~~such ~~FIRM~~as remediation techniques, nature and extent of contamination and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect the Company’s financial position and cash flows. However, we anticipate the cost deferral and rate recovery mechanism approved by the MPSC will prevent environmental costs from having a material adverse impact on our results of operations.

ToLabor ~~the Board of Directors and Shareholder of~~Contracts ~~Michigan Consolidated Gas Company~~

WeThere ~~have~~are ~~reviewed~~several ~~the~~bargaining ~~accompanying~~units ~~condensed~~for ~~consolidated~~our ~~statement~~represented ofemployees. ~~financial position~~Approximately of970 ~~Michigan Consolidated Gas Company and subsidiaries as~~ of ~~September~~our ~~30,~~represented ~~2004,~~employees ~~and~~are ~~the~~under ~~related~~contracts ~~condensed~~that ~~consolidated~~expire ~~statement~~in ~~of operations for the three-month and nine-month periods ended September~~October ~~30,~~2007. ~~2004~~The ~~and~~contracts ~~2003, and the condensed consolidated statements~~ of ~~cash flows and retained earnings and comprehensive income for~~ the ~~nine-month periods ended September 30, 2004 and~~ ~~2003.~~remaining ~~These~~represented ~~interim~~employees ~~financial~~expire ~~statements~~in ~~are the responsibility of Michigan Consolidated Gas Company’s management~~2008.

WePurchase ~~conducted our reviews in accordance with standards of the Public Company~~Commitments Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

~~Based~~As onof ~~our~~March 31, ~~reviews~~2007, we ~~are~~were ~~not~~party ~~aware~~to numerous long-term purchase commitments relating to a variety of ~~any~~goods ~~material~~and ~~modifications~~services ~~that~~required for our business. These agreements primarily consist of ~~should~~long-term gas purchase and transportation agreements. We estimate that these commitments will be approximately ~~made~~$1.5 billion tofrom ~~such~~2007 ~~condensed~~through ~~consolidated~~2051. ~~interim~~We ~~financial~~also ~~statements~~estimate ~~for~~that 2007 capital ~~them~~expenditures towill be inapproximately ~~conformity~~$215 million. ~~with~~We ~~accounting~~have ~~principles~~made ~~generally~~certain ~~accepted~~commitments in ~~the~~connection ~~United~~with ~~States~~expected ofcapital ~~America~~expenditures.

~~We have previously audited, in accordance with standards of the Public Company~~Bankruptcies Accounting Oversight Board (United States), the consolidated statement of financial position of Michigan Consolidated Gas Company and subsidiaries as of December 31, 2003, and the related consolidated statements of operations, cash flows and retained earnings for the year then ended (not presented herein); and in our report dated March 1, 2004 (which report includes an explanatory paragraph relating to the change in the method of accounting for asset retirement obligations in 2003), we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated statement of financial position as of December 31, 2003 is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived.

/We sell gas and gas transportation and storage services to numerous companies operating in the steel, automotive, energy, retail and other industries. Certain of our customers have filed for bankruptcy protection under Chapter 11 of the U.S/. ~~DELOITTE~~Bankruptcy &Code. ~~TOUCHE~~We ~~LLP~~regularly review contingent matters relating to these customers and our sale contracts and we record provisions for amounts that we can estimate and are considered at risk of probable loss. We believe our previously accrued amounts are adequate for probable losses. The final resolution of these matters is not expected to have a material effect on our financial statements.

~~Detroit, Michigan~~Other ~~November 4, 2004~~

We are involved in certain legal, regulatory, administrative and environmental proceedings before various courts, arbitration panels and governmental agencies concerning matters arising in the ordinary course of business. These proceedings include certain contract disputes, environmental reviews and investigations, audits, inquiries from various regulators, and pending judicial matters. We cannot predict the final disposition of such proceedings. We regularly review legal matters and record provisions for claims that we can estimate and are considered probable of loss. The resolution of pending proceedings is not expected to have a material effect on our operations or financial statements in the periods they are resolved.

See Note 4 for a discussion of contingencies related to Regulatory Matters.

PART II — OTHER INFORMATION

LEGAL PROCEEDINGS

We are involved in certain legal, regulatory and administrative proceedings before various courts, arbitration panels and governmental agencies concerning claims arising in the ordinary course of business. These proceedings include certain contract disputes, environmental reviews and investigations, audits, inquiries from various regulators, and pending judicial matters. We cannot predict the final disposition of such proceedings. We regularly review legal matters and record provisions for claims that are considered probable of loss. The resolution of pending proceedings is not expected to have a material effect on our financial statements in the period they are resolved.

EXHIBITS

Exhibit
Number		Description
Filed:
4-5		Thirty-eighth Supplemental Indenture, dated as of October 1, 2004, establishing the 2004 Series E Collateral Bonds
31-31		Chief Executive Officer Section 302 Form 10-Q Certification
4-6		Fifth Supplemental Indenture, dated as of October 1, 2004, establishing the 5.00% Senior Notes, 2004 Series E due 2019
31-32		Chief Financial Officer Section 302 Form 10-Q Certification
31-11		Chief Executive Officer Section 302 Form 10-Q Certification
31-12		Chief Financial Officer Section 302 Form 10-Q Certification
Furnished:
32-11		Chief Executive Officer Section 906 Certification of Periodic Report
32-31		Chief Executive Officer Section 906 Form 10-Q Certification
32-12		Chief Financial Officer Section 906 Certification of Periodic Report
32-32		Chief Financial Officer Section 906 Form 10-Q Certification

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		MICHIGAN CONSOLIDATED GAS COMPANY
		MICHIGAN CONSOLIDATED
Date: November 4, 2004		/s/ DANIEL G. BRUDZYNSKI
		GAS COMPANY
		Daniel G. Brudzynski
Date: May 9, 2007		/s/ PETER B. OLEKSIAK
		Chief Accounting Officer,
		Peter B. Oleksiak
		Vice President and Controller
		Vice President and Controller and Chief
		Accounting Officer

~~EXHIBIT INDEX~~Exhibit Index

Exhibit
Number		Description
4-5		Thirty-eighth Supplemental Indenture, dated as of October 1, 2004, establishing the 2004 Series E Collateral Bonds
31-31		Chief Executive Officer Section 302 Form 10-Q Certification
4-6		Fifth Supplemental Indenture, dated as of October 1, 2004, establishing the 5.00% Senior Notes, 2004 Series E due 2019
31-32		Chief Financial Officer Section 302 Form 10-Q Certification
31-11		Chief Executive Officer Section 302 Form 10-Q Certification
32-31		Chief Executive Officer Section 906 Form 10-Q Certification
31-12		Chief Financial Officer Section 302 Form 10-Q Certification
32-32		Chief Financial Officer Section 906 Form 10-Q Certification
32-11		Chief Executive Officer Section 906 Certification of Periodic Report
32-12		Chief Financial Officer Section 906 Certification of Periodic Report

Filing Compare · MICHIGAN CONSOLIDATED GAS CO /MI/