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SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




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FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 1999,

or

[   ]TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from
                  to

Commission File Number 1-7310

MICHIGAN CONSOLIDATED GAS COMPANY

(Exact name of registrant as specified in its
charter)


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|Michigan                                                                            |  | 38-0478040         
|(State or other jurisdiction                                                        |  | (I.R.S. Employer   
|of incorporation or organization)                                                   |  | Identification No.)
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|500 Griswold Street, Detroit, Michigan                                              |  | 48226              
|(Address of principal executive offices)                                            |  | (Zip Code)         
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|Registrants telephone number, including area code 313-965-2430                    
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|NO CHANGES                                                                         
|(Former name, former address and former fiscal year, if changed since last report.)

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
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.



Number of shares outstanding of
each of the registrants classes of common stock, as of
July  30, 1999:

Common Stock, par value $1.00 per share: 10,300,000



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TABLE OF CONTENTS



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|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|Cover                                                                                        
|Index                                                                                        
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|Part I  Financial Information                                                               
|Item 1. Financial Statements                                                                 
|Part II  Other Information                                                                  
|Item 6. Exhibits and Reports on Form 8-K                                                     
|Signature                                                                                    



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Index to Form 10-Q

For Quarter Ended June 30, 1999

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|COVER                          |  |                                                                                        | i  |       
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|INDEX                          |  |                                                                                        | ii |       
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|PART I  FINANCIAL INFORMATION |  |                                                                                        |    |       
|Item  1.                       |  | Financial Statements                                                                   |    |        | 11 | 
|Item  2.                       |  | Managements Discussion and Analysis of Financial Condition
	and Results of Operations |    |        | 1  | 
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|PART II  OTHER INFORMATION    |  |                                                                                        |    |       
|Item  6.                       |  | Exhibits and Reports on Form 8-K                                                       |    |        | 17 | 
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|SIGNATURE                      |  |                                                                                        | 18 |       

ii



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##### Table of Contents










Michigan Consolidated Gas Company and Subsidiaries


Managements Discussion and Analysis


Results of Operations

Results reflect earnings from new gas sales program
  MichCons earnings were $8.2 million and
$92.1 million for the 1999 second quarter and six-month
period, respectively, resulting in increases of $5.2 million
 and $27.5 million from the comparable 1998 periods.
Earnings for the 1999 twelve-month period were $104.4 million,
which included an $11.2 million write-down (net of taxes and
 minority interest) of a gas gathering pipeline (Note 3).
Excluding the write-down, earnings for the 1999 twelve-month
period were $115.6 million, an increase of
$35.1 million over the corresponding 1998 period. The
earnings improvement for all 1999 periods reflects contributions
from the new gas sales program as subsequently discussed. The
1999 six-month period also reflects the impact of more favorable
weather.

Earnings Components (Dollars in Millions)

Comparing 1999 to 1998


|                                          |  |         |      |            |  |               |       |        |  |        |      |        |  |  |      |   |  |  |       |   |  |  |       |  
|----------------------------------------- |  | ------- | ---- | ---------- |  | ------------- | ----- | ------ |  | ------ | ---- | ------ |  |  | ---- | - |  |  | ----- | - |  |  | ----- | -
|                                          |  |         |      |            |  |              
|                                          |  | Quarter |      | Six Months |  | Twelve Months
|                                          |  |         |      |            |  |              
|                                          |  | $       |      | %          |  | $             |       | %      |  | $      |      | %     
|                                          |  | Change  |      | Change     |  | Change        |       | Change |  | Change |      | Change
|                                          |  |         |      |            |  |               |       |        |  |        |      |       
|Operating Revenues                        |  |         | 12.8 |            |  |               | 7.4   |        |  |        | 81.6 |        |  |  | 13.6 |   |  |  | (3.2  | ) |  |  | (.3   | )
|Cost of Gas                               |  |         | 2.9  |            |  |               | 5.0   |        |  |        | 33.7 |        |  |  | 12.2 |   |  |  | (35.8 | ) |  |  | (6.9  | )
|Gross Margin                              |  |         | 9.9  |            |  |               | 8.6   |        |  |        | 47.9 |        |  |  | 14.7 |   |  |  | 32.6  |   |  |  | 5.5   |  
|Operation and Maintenance                 |  |         | 2.1  |            |  |               | 3.4   |        |  |        | 7.4  |        |  |  | 6.0  |   |  |  | (3.4  | ) |  |  | (1.3  | )
|Depreciation and Depletion                |  |         | 1.3  |            |  |               | 5.4   |        |  |        | 3.4  |        |  |  | 7.5  |   |  |  | (1.4  | ) |  |  | (1.4  | )
|Property and Other Taxes                  |  |         | (1.3 | )          |  |               | (9.0  | )      |  |        | (.1  | )      |  |  | (.2  | ) |  |  | (2.8  | ) |  |  | (4.7  | )
|Write-down of Gathering Property (Note 3) |  |         |     |            |  |               |      |        |  |        |     |        |  |  |     |   |  |  | 24.8  |   |  |  |      |  
|Other Income and Deductions               |  |         | .6   |            |  |               | 5.4   |        |  |        | (1.8 | )      |  |  | (7.1 | ) |  |  | (8.1  | ) |  |  | (16.2 | )
|Income Before Income Taxes                |  |         | 7.2  |            |  |               | 145.8 |        |  |        | 39.1 |        |  |  | 39.0 |   |  |  | 23.6  |   |  |  | 18.4  |  
|Income Tax Provision                      |  |         | 2.0  |            |  |               | 106.3 |        |  |        | 11.6 |        |  |  | 32.6 |   |  |  | (.3   | ) |  |  | (.6   | )
|Net Income                                |  |         | 5.2  |            |  |               | 171.0 |        |  |        | 27.5 |        |  |  | 42.5 |   |  |  | 23.9  |   |  |  | 29.6  |  

Gross Margin

Gross margin (operating revenues less cost of gas) increased
$9.9 million, $47.9 million and $32.6 million in the
1999 quarter, six- and twelve-month periods, respectively. The
increase is due primarily to margins generated under
MichCons new three-year gas sales program, which is part of
 its Regulatory Reform Plan (Note 2a). Under the gas sales
program that began in January 1999, MichCons gas sales
rates include a gas commodity component that is fixed at $2.95
per thousand cubic feet (Mcf). As part of its gas acquisition
strategy, MichCon has entered into fixed-price contracts at costs
 below $2.95 per Mcf for a substantial portion of its expected
gas supply requirements through 2001. This strategy is likely to
continue producing favorable margins in each of the three years.

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##### Table of Contents



Managements Discussion and Analysis (Continued)

Gross margins for the 1999 six-month period also reflect higher
gas sales resulting from colder weather compared to the same 1998
 period. Additionally, gross margins for all 1999 periods reflect
 revenues from the continued growth in other gas-related
services.

MichCons operations are seasonal, with gross margins and
earnings concentrated in the first and fourth quarters of each
calendar year. By the end of the first quarter, the heating
season is largely over, and MichCon typically incurs
substantially reduced gross margins and earnings in the second
quarter and losses in the third quarter. The seasonal nature of
MichCons operations is expected to be more pronounced as a
result of its new gas sales program.

Effect of Weather on Gas Markets and Earnings

|                           |                       |         |       |            |   |               |       |      |   |      |      |       |   |  |       |       |   |  |       |       |   |  |       |       |  
|-------------------------- | --------------------- | ------- | ----- | ---------- | - | ------------- | ----- | ---- | - | ---- | ---- | ----- | - |  | ----- | ----- | - |  | ----- | ----- | - |  | ----- | ----- | -
|                           |                       |         |       |            |   |              
|                           |                       | Quarter |       | Six Months |   | Twelve Months
|                           |                       |         |       |            |   |              
|                           |                       | 1999    |       | 1998       |   | 1999          |       | 1998 |   | 1999 |      | 1998 
|                           |                       |         |       |            |   |               |       |      |   |      |      |      
|Percent Warmer Than Normal |                       |         | (21.4 | )%         |   |               | (24.8 | )%   |   |      | (7.8 | )%    |   |  | (20.1 | )%    |   |  | (11.6 | )%    |   |  | (12.9 | )%   
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|Decrease From Normal in:   |                       |         |       |            |   |               |       |      |   |      |      |       |   |  |       |       |   |  |       |       |   |  |       |      
|                           | Gas Markets (Bcf)     |         |       | (5.3       | ) |               |       | (6.1 | ) |      |      | (10.4 | ) |  |       | (25.3 | ) |  |       | (25.4 | ) |  |       | (26.2 | )
|                           | Net Income (Millions) |         | $     | (5.1       | ) |               | $     | (5.3 | ) |      | $    | (10.3 | ) |  | $     | (22.0 | ) |  | $     | (23.7 | ) |  | $     | (22.8 | )

Gas Sales and End User Transportation revenues in total
increased by $14.5 million and $85.0 million for the 1999
quarter and six-month period, respectively, and decreased by
$4.9 million for the 1999 twelve-month period. Revenues were
 affected by fluctuations in gas sales and end user
transportation deliveries that increased by .2 billion cubic
 feet (Bcf) and 12.6 Bcf in the current quarter and
six-month period, respectively, and decreased by .5 Bcf in
the 1999 twelve-month period. The fluctuations in gas sales and
end user transportation deliveries were due primarily to weather,
 which was colder in all the 1999 periods compared to the
corresponding 1998 periods. The effect of more favorable weather
on deliveries in the 1999 twelve-month period was more than
offset by a decrease in end user transportation deliveries as a
result of the temporary shutdown of an industrial customers
 plant.

Revenues were also impacted by variations in the cost of the gas
commodity component of gas sales rates. As previously discussed,
this gas commodity component was fixed under MichCons new
gas sales program at $2.95 per Mcf beginning in January 1999.
Prior to 1999, MichCons sales rates were set to recover all
 of its reasonably and prudently incurred gas costs. The gas
commodity component of MichCons sales increased $.20 per
Mcf (7%) and $.18 per Mcf (6%) for the 1999 quarter and six-month
 period, respectively, and decreased $.12 per Mcf (4%) for the
1999 twelve-month period.

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##### Table of Contents



Managements Discussion and Analysis (Continued)

|                       |                             |         |       |            |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |       | 
|---------------------- | --------------------------- | ------- | ----- | ---------- |  | ------------- | ----- | ----- |  | ---- | ----- | ----- |  | - | ----- | ----- |  | - | ------- | ----- |  | - | ------- | ----- | 
|                       |                             |         |       |            |  |              
|                       |                             | Quarter |       | Six Months |  | Twelve Months
|                       |                             |         |       |            |  |              
|                       |                             | 1999    |       | 1998       |  | 1999          |       | 1998  |  | 1999 |       | 1998 
|                       |                             |         |       |            |  |               |       |       |  |      |       |      
|Gas Markets (Millions) |                             |         |       |            |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      
|                       | Gas Sales                   |         | $     | 133.0      |  |               | $     | 123.6 |  |      | $     | 568.7 |  |   | $     | 490.5 |  |   | $       | 902.0 |  |   | $       | 913.2 | 
|                       | End User Transportation     |         |       | 23.3       |  |               |       | 18.2  |  |      |       | 50.0  |  |   |       | 43.2  |  |   |         | 88.8  |  |   |         | 82.5  | 
|                       | Intermediate Transportation |         |       | 13.9       |  |               |       | 15.9  |  |      |       | 28.6  |  |   |       | 33.8  |  |   |         | 58.0  |  |   |         | 60.9  | 
|                       | Other                       |         |       | 15.4       |  |               |       | 15.1  |  |      |       | 36.3  |  |   |       | 34.5  |  |   |         | 66.5  |  |   |         | 61.8  | 
|                       |                             |         |       |            |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      
|                       |                             | $       | 185.6 |            |  | $             | 172.8 |       |  | $    | 683.6 |       |  | $ | 602.0 |       |  | $ | 1,115.3 |       |  | $ | 1,118.4 |      
|                       |                             |         |       |            |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      
|Gas Markets (Bcf)      |                             |         |       |            |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      
|                       | Gas Sales                   |         |       | 23.6       |  |               |       | 24.2  |  |      |       | 114.6 |  |   |       | 102.8 |  |   |         | 180.7 |  |   |         | 180.6 | 
|                       | End User Transportation     |         |       | 31.8       |  |               |       | 31.0  |  |      |       | 74.2  |  |   |       | 73.4  |  |   |         | 140.8 |  |   |         | 141.4 | 
|                       |                             |         |       |            |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      
|                       |                             |         | 55.4  |            |  |               | 55.2  |       |  |      | 188.8 |       |  |   | 176.2 |       |  |   | 321.5   |       |  |   | 322.0   |      
|                       | Intermediate Transportation |         |       | 135.0      |  |               |       | 148.4 |  |      |       | 262.3 |  |   |       | 296.9 |  |   |         | 503.0 |  |   |         | 601.1 | 
|                       |                             |         |       |            |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      
|                       |                             |         | 190.4 |            |  |               | 203.6 |       |  |      | 451.1 |       |  |   | 473.1 |       |  |   | 824.5   |       |  |   | 923.1   |      
|                       |                             |         |       |            |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      

Additionally, gas sales and end user transportation revenues in
total were impacted by MichCons three-year customer choice
program, which is also part of its Regulatory Reform Plan. Under
the customer choice program that began in April 1999,
approximately 70,000 or 6% of its customers are purchasing
natural gas from suppliers other than MichCon. However, MichCon
continues to transport and deliver the gas to the customers
 premises at prices that maintain its previously existing sales
margins on these services. MichCons customers who have
chosen to purchase their gas from other suppliers are reflected
as end user transportation customers rather than gas sales
customers. Accordingly, gas sales revenues have decreased,
partially offset by an increase in end user transportation
revenues, resulting in a net decrease in total operating revenues
 due to the gas commodity component included in gas sales rates.

Intermediate Transportation revenues decreased
$2.0 million, $5.2 million and $2.9 million in the
 1999 quarter, six- and twelve-month periods, respectively.
Intermediate transportation revenues reflect lower off-system
volumes of 13.4 Bcf, 34.6 Bcf and 98.1 Bcf in the
1999 quarter, six- and twelve-month periods, respectively. A
significant portion of the volume decrease was for customers who
pay a fixed fee for intermediate transportation capacity
regardless of actual usage. Although volumes associated with
these fixed-fee customers may vary, the related revenues are not
affected. The decrease in intermediate transportation revenues
for all 1999 periods is due in part to an adjustment in 1998 of
revenues related to fees generated from tracking the transfer of
gas title on MichCons transportation system. The decrease
for all 1999 periods is also due to customers shifting volumes
from a higher rate to a lower rate transportation route.

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##### Table of Contents



Managements Discussion and Analysis (Continued)

Other Operating Revenues increased $.3 million,
$1.8 million and $4.7 million in the 1999 quarter, six-
 and twelve-month periods, respectively. The improvements are due
 to an increase in facility development and appliance maintenance
 services, late payment fees and other gas-related services.

Cost of Gas

Cost of gas is affected by variations in sales volumes and cost
of purchased gas as well as related transportation costs. Under
the Gas Cost Recovery (GCR) mechanism that was in effect through
December 1998 (Note 2b), MichCons sales rates were set
 to recover all of its reasonably and prudently incurred gas
costs. Therefore, fluctuations in cost of gas sold had little
effect on gross margins. Under MichCons new gas sales
program, the gas commodity component of its sales rates is fixed.
 Accordingly, beginning in January 1999, changes in cost of gas
sold directly impact gross margins and earnings.

Cost of gas sold increased $2.9 million and
$33.7 million in the 1999 quarter and six-month period,
respectively, and decreased $35.8 million in the 1999
twelve-month period. The increase in the current quarter and
six-month period was due primarily to higher weather-driven sales
 volumes. Cost of gas sold was also impacted by a decrease in
average prices paid of $.05 per Mcf (2%) in the 1999 six-month
period and $.27 per Mcf (9%) in the current twelve-month period.
Prices paid for gas sold in the 1999 second quarter increased by
$.01 per Mcf.

Operation and Maintenance

Operation and maintenance expenses increased $2.1 million
and $7.4 million in the 1999 quarter and six-month period,
respectively, and decreased $3.4 million in the 1999
twelve-month period. The increase in the 1999 quarter and
six-month period is due in part to additional computer system
support costs associated with MichCons new customer
information system as well as advertising costs associated with
MichCons new gas sales program. Additionally, the 1999
quarter increase reflects higher uncollectible gas accounts
expense due to higher gas sales revenues. The decrease in the
1999 twelve-month period is due to lower employee benefit costs,
primarily pension and retiree healthcare costs, as well as lower
uncollectible gas accounts expense. The 1998 six-and twelve-month
 periods benefited from an interstate pipeline company refund.

Depreciation and Depletion

Depreciation and depletion increased $1.3 million and
$3.4 million in the 1999 quarter and six-month period,
respectively, and decreased $1.4 million in the 1999
twelve-month period. Depreciation on higher plant balances
impacted all 1999 periods. Additionally, the twelve-

4



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##### Table of Contents



Managements Discussion and Analysis (Continued)

month period comparison reflects the effect of lower depreciation
 rates for MichCons utility property, plant and equipment
that became effective in January 1998.

Property and Other Taxes

Property and other taxes decreased $1.3 million,
$.1 million and $2.8 million in the 1999 quarter, six-
and twelve-month periods, respectively. The improvement in all
1999 periods is attributable to lower property taxes. The 1999
quarter and twelve-month periods were also impacted by lower
Michigan Single Business Tax resulting from an increase in
capital acquisition deductions.

Write-Down of Gathering Property

The property write-down of $24.8 million in the 1999
twelve-month period represents the impairment of a Michigan gas
gathering system (Note 3).

Other Income and Deductions

Other income and deductions increased $.6 million in the
1999 quarter, and decreased $1.8 million and
$8.1 million in the current six- and twelve-month periods,
respectively. All 1998 periods were impacted by gains from the
sale of property. The 1999 quarter and twelve-month period
include slightly higher interest costs. Other income and
deductions in the 1999 twelve-month period also include a change
in minority interest reflecting the joint venture partners
share of the write-down of the gas gathering properties
(Note 3).

Income Taxes

Income taxes for all 1999 periods were impacted by an increase in
 pre-tax earnings. Income tax comparisons for the 1999 six- and
twelve-month periods were also affected by the favorable
resolution of prior years tax issues as well as the
flow-through effect of certain book-to-tax temporary differences.
 The 1998 six- and twelve-month periods include stock-related tax
 benefits.

Capital Resources and Liquidity

|                                          |                      |            |     |        |   |   |     |        |  
|----------------------------------------- | -------------------- | ---------- | --- | ------ | - | - | --- | ------ | -
|                                          |                      |           
|                                          |                      | Six Months
|                                          |                      |           
|                                          |                      | 1999       |     | 1998  
|                                          |                      |            |     |       
|                                          |                      |            |     |       
|                                          |                      |            |     |       
|                                          |                      |            |     |       
|                                          |                      |            |     |       
|                                          |                      |            |     |       
|                                          |                      |            |     |       
|                                          |                      |            |     |       
|                                          |                      |            |     |       
|                                          |                      |            |     |       
|                                          |                      |            |     |       
|                                          |                      |            |     |       
|                                          |                      |            |     |       
|                                         
|                                         
|                                         
|                                         
|Cash and Cash Equivalents (in Millions)   |                      |            |     |        |   |   |     |       
|                                         
|                                         
|                                         
|                                         
|Cash Flow Provided From (Used For):       |                      |            |     |        |   |   |     |       
|                                          | Operating activities |            | $   | 222.6  |   |   | $   | 286.6  |  
|                                          | Financing activities |            |     | (159.7 | ) |   |     | (206.8 | )
|                                          | Investing activities |            |     | (58.7  | ) |   |     | (74.1  | )
|                                          |                      |            |     |        |   |   |     |       
|Net Increase in Cash and Cash Equivalents |                      | $          | 4.2 |        |   | $ | 5.7 |       
|                                          |                      |            |     |        |   |   |     |       

5



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##### Table of Contents



Managements Discussion and Analysis (Continued)

Operating Activities

MichCons cash flow from operating activities decreased
$64.0 million during the 1999 six-month period as compared
to the same 1998 period. The decrease was due primarily to higher
 working capital requirements, partially offset by higher
earnings, after adjusting for non-cash items (depreciation and
deferred taxes).

Financing Activities

MichCons cash used for financing activities decreased
$47.1 million in the 1999 six-month period as compared to
the same 1998 period due primarily to less short-term and
long-term debt being repaid in 1999.

MichCon maintains a relatively consistent amount of cash and cash
 equivalents through the use of short-term borrowings. Short-term
 borrowings are normally reduced in the first part of each year
as gas inventories are depleted and funds are received from
winter heating sales. During the latter part of the year,
MichCons short-term borrowings normally increase as funds
are used to finance increases in gas inventories and customer
accounts receivable. To meet its seasonal short-term borrowing
needs, MichCon normally issues commercial paper that is backed by
 credit lines with several banks. MichCon has established credit
lines to allow for borrowings of up to $150 million under a
364-day revolving credit facility and up to $150 million
under a three-year revolving credit facility. The 364-day
facility was renewed in July 1999. During the first six months of
 1999, MichCon repaid $194.1 million of commercial paper,
leaving borrowings of $24.3 million outstanding under this
program at June 30, 1999.

During the 1999 quarter, MichCon issued $110 million of
senior debt (Note 6) and repaid $50 million of first
mortgage bonds.

Investing Activities

MichCons cash used for investing activities decreased
$15.4 million in the 1999 six-month period as compared to
the same 1998 period. The decrease was due to lower capital
expenditures, primarily related to the 1998 period including the
purchase of an office building previously leased. Capital
expenditures primarily represent the construction of new
distribution lines to attach new customers, new computer systems
and improvements to existing storage, distribution, and
transmission systems.

It is managements opinion that MichCon will have sufficient
 capital resources, both internal and external, to meet
anticipated capital requirements.

6



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##### Table of Contents



Managements Discussion and Analysis (Continued)

Outlook

MichCons strategy is to aggressively expand its role as the
 preferred provider of natural gas and high-value energy services
 within Michigan. Accordingly, MichCons objectives are to
increase revenues and control costs in order to deliver strong
shareholder returns and provide customers with high-quality
service at competitive prices.

MichCon has begun, and plans to continue capitalizing on
opportunities resulting from the gas industry restructuring.
MichCon is currently implementing its Regulatory Reform Plan,
which includes a comprehensive experimental three-year customer
choice program which is designed to offer all sales customers
added choices and greater price certainty. Beginning
April 1, 1999, a limited number of customers have the option
 of purchasing natural gas from suppliers other than MichCon.
However, MichCon will continue to transport and deliver the gas
to the customers premises at prices that maintain its
previously existing sales margins on these services. The Plan
also suspended the GCR mechanism for customers who continue
to purchase gas from MichCon and fixed the gas commodity
component of MichCons sales rates at $2.95 per Mcf for the
three-year period that began in January 1999. The suspension of
the GCR mechanism allows MichCon to profit from its ability
to purchase gas at less than $2.95 per Mcf. Also beginning in
1999, an income sharing mechanism allows customers to share in
profits when actual returns on equity from utility operations
exceed predetermined thresholds. The impact of weather and
expenses incurred in the second half of 1999 will determine the
actual amount of profit, if any, to be shared with customers.

Year 2000

As discussed in MichCons 1998 Annual Report on
Form 10-K, MichCon has implemented a corporate-wide,
four-phase Year 2000 approach consisting of:
i) inventory  identification of the components of
 MichCons systems, equipment and facilities;
ii) assessment  assessing Year 2000 readiness and
 prioritizing the risks of items identified in the inventory
phase; iii) remediation  upgrading, repairing and
 replacing non-compliant systems, equipment and facilities; and
iv) testing  verifying items remediated. MichCon
is on schedule to have its mission critical business systems, and
 measurement and control systems (including embedded
microprocessors) Year 2000 ready as detailed below. The extension
 of the program to September 1999 reflects MichCons
determination that additional testing and remediation is
appropriate for some critical business and control systems for
both MichCon

7



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##### Table of Contents



Managements Discussion and Analysis (Continued)

and its vendors. The estimated completion status of these systems
 and the projected status for the future follows:

|                                 |                    |           |  |            |  |             |  |         |  |  |  |      |  |  |  |      | 
|-------------------------------- | ------------------ | --------- |  | ---------- |  | ----------- |  | ------- |  |  |  | ---- |  |  |  | ---- | 
|                                 |                    | Inventory |  | Assessment |  | Remediation |  | Testing
|                                 |                    |           |  |            |  |             |  |        
|                                 |                    |           |  |            |  |             |  |        
|                                 |                    |           |  |            |  |             |  |        
|                                 |                    |           |  |            |  |             |  |        
|                                 |                    |           |  |            |  |             |  |        
|                                 |                    |           |  |            |  |             |  |        
|                                 |                    |           |  |            |  |             |  |        
|                                 |                    |           |  |            |  |             |  |        
|                                 |                    |           |  |            |  |             |  |        
|                                 |                    |           |  |            |  |             |  |        
|                                 |                    |           |  |            |  |             |  |        
|                                 |                    |           |  |            |  |             |  |        
|                                 |                    |           |  |            |  |             |  |        
|                                
|                                
|                                
|                                
|Business Systems:                |                    |           |  |            |  |             |  |         |  |  |  |      |  |  |  |     
|                                 | June 30, 1999      |           |  | 100%       |  |             |  | 100%    |  |  |  | 90%  |  |  |  | 80%  | 
|                                 | September 30, 1999 |           |  | 100%       |  |             |  | 100%    |  |  |  | 100% |  |  |  | 100% | 
|                                
|                                
|                                
|                                
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|                                
|                                
|                                
|                                
|                                
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|                                
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|                                
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|                                
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|                                
|Measurement and Control Systems: |                    |           |  |            |  |             |  |         |  |  |  |      |  |  |  |     
|                                 | June 30, 1999      |           |  | 100%       |  |             |  | 100%    |  |  |  | 98%  |  |  |  | 98%  | 
|                                 | September 30, 1999 |           |  | 100%       |  |             |  | 100%    |  |  |  | 100% |  |  |  | 100% | 

Costs associated with the Year 2000 issue are not expected to
have a material adverse effect on MichCons results of
operation, liquidity and financial condition. The total costs are
 estimated to be between $3 million and $4 million, of
which approximately $2.8 million was incurred through June
1999. The anticipated costs are not higher due in part to the
ongoing replacement of significant old systems. New systems in
process of being installed, as well as those installed over the
past few years, are Year 2000 ready. These systems were necessary
 to maintain a high level of customer satisfaction and to respond
 to changes in regulation and increased competition within the
energy industry.

MichCon anticipates a smooth transition to the Year 2000.
However, the failure to correct a material Year 2000 problem
could result in an interruption in or a failure of certain
business activities and operations. Such interruptions or
failures could have a material adverse effect on MichCons
results of operations, liquidity and financial condition. Due to
the uncertainty inherent in the Year 2000 issue, resulting in
part from the uncertainty of the Year 2000 readiness of key
operators, suppliers and government agencies, MichCon cannot
certify that it will be unaffected by Year 2000 complications.

In order to reduce its Year 2000 risk, MichCon is developing
contingency plans for mission-critical processes in the event of
a Year 2000 complication. Contingency plans for several essential
 gas transmission facilities continue to be tested under a
power outage scenario and have achieved excellent
results. Contingency plans will continue to be refined throughout
 1999 as MichCon works with operators, suppliers and governmental
 agencies.

Market Risk Information

As discussed in MichCons 1998 Annual Report on
Form 10-K, MichCons primary market risk arises from
fluctuations in natural gas prices and interest rates. MichCon
manages natural gas price and interest rate risk through the use
of derivative instruments and limits the use of such instruments
to hedging activities.

8



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##### Table of Contents



Managements Discussion and Analysis (Continued)

Natural Gas Price Risk

MichCon closely monitors and manages its exposure to natural gas
price risk through a variety of risk management techniques.
Natural gas swap agreements are used to manage MichCons
exposure to the risk of market price fluctuations on natural gas
purchase contracts. During the 1999 six-month period, there were
no significant changes to MichCons natural gas price risk.

Interest Rate Risk

MichCon is subject to interest rate risk in connection with the
issuance of variable and fixed-rate debt. In order to manage
interest costs and risk, MichCon uses interest rate swap
agreements to exchange fixed and variable-rate interest payment
obligations over the life of the agreements without exchange of
the underlying principal amounts. During the 1999 six-month
period, there were no significant changes to MichCons
interest rate risk.

New Accounting Pronouncements

Derivative and Hedging Activities

In June 1998, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS)
No. 133, Accounting for Derivative Instruments and
Hedging Activitieseffective for fiscal years beginning
 after June 15, 1999. In June 1999, the FASB issued SFAS
No. 137, Accounting for Derivative Instruments and
Hedging Activities  Deferral of the Effective Date of
FASB Statement No. 133.SFAS No. 137 changes
the effective date of SFAS No. 133 to fiscal years beginning
 after June 15, 2000.

SFAS No. 133 requires all derivatives to be recognized in
the balance sheet as either assets or liabilities measured at
their fair value, and sets forth conditions in which a derivative
 instrument may be designated as a hedge. The Statement requires
that changes in the fair value of derivatives be recognized
currently in earnings unless specific hedge accounting criteria
are met. Special accounting for qualifying hedges allows a
derivatives gains and losses to be recorded to other
comprehensive income or to offset related results on the hedged
item in earnings.

MichCon manages gas price risk and interest rate risk through the
 use of various derivative instruments and limits the use of such
 instruments to hedging activities. The effects of SFAS
No. 133 on MichCons financial statements are subject
to fluctuations in the market value of hedging contracts, which
are, in turn, affected by variations in gas prices and in
interest rates. Accordingly, management cannot quantify the
effects of adopting SFAS No. 133 at this time.

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##### Table of Contents



Managements Discussion and Analysis (Concluded)

Forward-Looking Statements

The Quarterly Report on Form 10-Q includes forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve
 certain risks and uncertainties as set forth in MichCons
1998 Annual Report on Form 10-K.

The Year 2000 disclosure is a Year 2000 Readiness Disclosure
under the Year 2000 Information and Readiness Disclosure Act.
Therefore, MichCon claims the full protections established by the
 Act.

10



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##### Table of Contents













Michigan Consolidated Gas Company and Subsidiaries


Consolidated Statement of Income (Unaudited)


(Thousands of Dollars)


|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |         |         |         |         |         |         |         |           |         |         |         |           |         |         |         | 
|------------------------------------- | ----------------------------------------- | ----------------------------------- | ------------------------ | ---------------- | ------- | ------------------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | --------- | ------- | ------- | ------- | --------- | ------- | ------- | ------- | 
|                                      |                                           |                                     |                          |                  |         |                    
|                                      |                                           | Three Months Ended                  |                          | Six Months Ended |         | Twelve Months Ended
|                                      |                                           | June 30,                            |                          | June 30,         |         | June 30,           
|                                      |                                           |                                     |                          |                  |         |                    
|                                      |                                           | 1999                                |                          | 1998             |         | 1999                |         | 1998    |         | 1999    |         | 1998   
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |        
|                                     
|                                     
|                                     
|                                     
|Operating Revenues (Note  2)          |                                           | $                                   | 185,555                  |                  |         | $                   | 172,787 |         |         | $       | 683,645 |         |         | $       | 602,014 |         |         | $       | 1,115,289 |         |         | $       | 1,118,448 |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|Operating Expenses                    |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|                                      | Cost of gas                               |                                     |                          | 60,410           |         |                     |         | 57,512  |         |         |         | 308,761 |         |         |         | 275,101 |         |         |           | 485,189 |         |         |           | 521,026 |        
|                                      | Operation and maintenance                 |                                     |                          | 63,942           |         |                     |         | 61,868  |         |         |         | 131,488 |         |         |         | 124,090 |         |         |           | 259,795 |         |         |           | 263,231 |        
|                                      | Depreciation and depletion                |                                     |                          | 24,758           |         |                     |         | 23,492  |         |         |         | 49,366  |         |         |         | 45,937  |         |         |           | 96,312  |         |         |           | 97,715  |        
|                                      | Property and other taxes                  |                                     |                          | 12,700           |         |                     |         | 13,953  |         |         |         | 31,162  |         |         |         | 31,255  |         |         |           | 55,345  |         |         |           | 58,064  |        
|                                      | Write-down of gathering property (Note 4) |                                     |                          |                 |         |                     |         |        |         |         |         |        |         |         |         |        |         |         |           | 24,800  |         |         |           |        |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|                                      |                                           |                                     | Total operating expenses |                  |         | 161,810             |         |         |         | 156,825 |         |         |         | 520,777 |         |         |         | 476,383 |           |         |         | 921,441 |           |         |         | 940,036 | 
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|Operating Income                      |                                           |                                     | 23,745                   |                  |         |                     | 15,962  |         |         |         | 162,868 |         |         |         | 125,631 |         |         |         | 193,848   |         |         |         | 178,412   |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|Other Income and (Deductions)         |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|                                      | Interest income                           |                                     |                          | 946              |         |                     |         | 822     |         |         |         | 1,945   |         |         |         | 1,934   |         |         |           | 5,699   |         |         |           | 4,107   |        
|                                      | Interest on long-term debt                |                                     |                          | (11,525          | )       |                     |         | (10,513 | )       |         |         | (22,491 | )       |         |         | (22,719 | )       |         |           | (44,656 | )       |         |           | (45,931 | )      
|                                      | Other interest expense                    |                                     |                          | (1,181           | )       |                     |         | (1,891  | )       |         |         | (3,836  | )       |         |         | (5,148  | )       |         |           | (10,801 | )       |         |           | (9,063  | )      
|                                      | Minority interest                         |                                     |                          | (266             | )       |                     |         | (398    | )       |         |         | (523    | )       |         |         | (1,143  | )       |         |           | 6,347   |         |         |           | (2,092  | )      
|                                      | Equity in earnings of joint ventures      |                                     |                          | 572              |         |                     |         | 361     |         |         |         | 1,013   |         |         |         | 950     |         |         |           | 2,009   |         |         |           | 1,508   |        
|                                      | Other                                     |                                     |                          | (177             | )       |                     |         | 585     |         |         |         | 287     |         |         |         | 706     |         |         |           | (601    | )       |         |           | 1,345   |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|                                      |                                           | Total other income and (deductions) |                          |                  | (11,631 | )                   |         |         | (11,034 | )       |         |         | (23,605 | )       |         |         | (25,420 | )       |           |         | (42,003 | )       |           |         | (50,126 | )      
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|Income Before Income Taxes            |                                           |                                     | 12,114                   |                  |         |                     | 4,928   |         |         |         | 139,263 |         |         |         | 100,211 |         |         |         | 151,845   |         |         |         | 128,286   |        
|                                     
|                                     
|                                     
|                                     
|Income Tax Provision                  |                                           |                                     | 3,949                    |                  |         |                     | 1,914   |         |         |         | 47,125  |         |         |         | 35,533  |         |         |         | 47,409    |         |         |         | 47,712    |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|Net Income Available for Common Stock |                                           | $                                   | 8,165                    |                  |         | $                   | 3,014   |         |         | $       | 92,138  |         |         | $       | 64,678  |         |         | $       | 104,436   |         |         | $       | 80,574    |        
|                                      |                                           |                                     |                          |                  |         |                     |         |         |         |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        

Consolidated Statement of Retained Earnings (Unaudited)

(Thousands of Dollars)


|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |        |  |   |         |        |  |   |         |         |  |   |         |        | 
|----------------------------- | -------------------------------- | ------------------ | ------- | ---------------- |  | ------------------- | ------- | ----- |  | ---- | ------- | ------ |  | - | ------- | ------ |  | - | ------- | ------- |  | - | ------- | ------ | 
|                              |                                  |                    |         |                  |  |                    
|                              |                                  | Three Months Ended |         | Six Months Ended |  | Twelve Months Ended
|                              |                                  | June 30,           |         | June 30,         |  | June 30,           
|                              |                                  |                    |         |                  |  |                    
|                              |                                  | 1999               |         | 1998             |  | 1999                |         | 1998  |  | 1999 |         | 1998  
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |       
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |       
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |       
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |       
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |       
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |       
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |       
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |       
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |       
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |       
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |       
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |       
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |       
|                             
|                             
|                             
|                             
|Balance  Beginning of Period |                                  | $                  | 472,440 |                  |  | $                   | 436,989 |       |  | $    | 406,144 |        |  | $ | 375,325 |        |  | $ | 440,003 |         |  | $ | 359,429 |       
|                              | Add  Net income                 |                    |         | 8,165            |  |                     |         | 3,014 |  |      |         | 92,138 |  |   |         | 64,678 |  |   |         | 104,436 |  |   |         | 80,574 | 
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |        |  |   |         |        |  |   |         |         |  |   |         |       
|                             
|                              |                                  |                    | 480,605 |                  |  |                     | 440,003 |       |  |      | 498,282 |        |  |   | 440,003 |        |  |   | 544,439 |         |  |   | 440,003 |       
|                              | Deduct  Cash dividends declared |                    |         |                 |  |                     |         |      |  |      |         | 17,500 |  |   |         |       |  |   |         | 63,657  |  |   |         |       | 
|                              |  Other                          |                    |         |                 |  |                     |         |      |  |      |         | 177    |  |   |         |       |  |   |         | 177     |  |   |         |       | 
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |        |  |   |         |        |  |   |         |         |  |   |         |       
|Balance  End of Period       |                                  | $                  | 480,605 |                  |  | $                   | 440,003 |       |  | $    | 480,605 |        |  | $ | 440,003 |        |  | $ | 480,605 |         |  | $ | 440,003 |       
|                              |                                  |                    |         |                  |  |                     |         |       |  |      |         |        |  |   |         |        |  |   |         |         |  |   |         |       

The notes to the consolidated financial statements are an
integral part of these statements.

11



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##### Table of Contents



Michigan Consolidated Gas Company and Subsidiaries

Consolidated Statement of Financial Position (Unaudited)


(Thousands of Dollars)


|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |           |           | 
|------------------------------------ | ------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | --------- | ------------ | --------- | ---- | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                     |                                                               |                                                                                                         |           |             
|                                     |                                                               | June 30,                                                                                                |           |             
|                                     |                                                               |                                                                                                         |           | December 31,
|                                     |                                                               | 1999                                                                                                    |           | 1998         |           | 1998
|                                     |                                                               |                                                                                                         |           |              |           |     
|                                     |                                                               |                                                                                                         |           |              |           |     
|                                     |                                                               |                                                                                                         |           |              |           |     
|                                     |                                                               |                                                                                                         |           |              |           |     
|                                     |                                                               |                                                                                                         |           |              |           |     
|                                     |                                                               |                                                                                                         |           |              |           |     
|                                     |                                                               |                                                                                                         |           |              |           |     
|                                     |                                                               |                                                                                                         |           |              |           |     
|                                     |                                                               |                                                                                                         |           |              |           |     
|                                     |                                                               |                                                                                                         |           |              |           |     
|                                     |                                                               |                                                                                                         |           |              |           |     
|                                     |                                                               |                                                                                                         |           |              |           |     
|                                     |                                                               |                                                                                                         |           |              |           |     
|                                    
|                                    
|                                    
|                                    
|Assets                               |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                    
|                                    
|                                    
|                                    
|                                     | Current Assets                                                |                                                                                                         |           |              |           |      |           |           |           |   |           |           |          
|                                     |                                                               | Cash and cash equivalents                                                                               |           | $            | 10,823    |      |           | $         | 20,032    |   |           | $         | 6,603     | 
|                                     |                                                               | Accounts receivable, less allowance for doubtful accounts of
	$13,492, $14,132 and $8,928, respectively |           |              | 142,017   |      |           |           | 136,248   |   |           |           | 142,818   | 
|                                     |                                                               | Accrued unbilled revenues                                                                               |           |              | 20,302    |      |           |           | 15,500    |   |           |           | 86,767    | 
|                                     |                                                               | Gas in inventory                                                                                        |           |              | 43,892    |      |           |           | 35,617    |   |           |           | 56,969    | 
|                                     |                                                               | Property taxes assessed applicable to future periods                                                    |           |              | 48,473    |      |           |           | 43,152    |   |           |           | 71,165    | 
|                                     |                                                               | Other                                                                                                   |           |              | 34,512    |      |           |           | 28,408    |   |           |           | 30,169    | 
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               |                                                                                                         | 300,019   |              |           |      | 278,957   |           |           |   | 394,491   |          
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                     | Deferred Charges and Other Assets                             |                                                                                                         |           |              |           |      |           |           |           |   |           |           |          
|                                     |                                                               | Investment in and advances to joint ventures                                                            |           |              | 19,853    |      |           |           | 20,436    |   |           |           | 19,343    | 
|                                     |                                                               | Long term investments                                                                                   |           |              | 66,202    |      |           |           | 36,532    |   |           |           | 65,556    | 
|                                     |                                                               | Deferred environmental costs                                                                            |           |              | 28,404    |      |           |           | 27,934    |   |           |           | 28,169    | 
|                                     |                                                               | Prepaid benefit costs                                                                                   |           |              | 134,590   |      |           |           | 95,008    |   |           |           | 113,879   | 
|                                     |                                                               | Other                                                                                                   |           |              | 66,758    |      |           |           | 52,612    |   |           |           | 59,007    | 
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               |                                                                                                         | 315,807   |              |           |      | 232,522   |           |           |   | 285,954   |          
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                     | Property, Plant and Equipment (Note 4)                        |                                                                                                         |           | 2,942,856    |           |      |           | 2,843,708 |           |   |           | 2,889,020 |          
|                                     |                                                               | Less  Accumulated depreciation and depletion                                                           |           |              | 1,445,967 |      |           |           | 1,356,842 |   |           |           | 1,396,940 | 
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               |                                                                                                         | 1,496,889 |              |           |      | 1,486,866 |           |           |   | 1,492,080 |          
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               | $                                                                                                       | 2,112,715 |              |           | $    | 1,998,345 |           |           | $ | 2,172,525 |          
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|Liabilities and Shareholders Equity |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                    
|                                    
|                                    
|                                    
|                                     | Current Liabilities                                           |                                                                                                         |           |              |           |      |           |           |           |   |           |           |          
|                                     |                                                               | Accounts payable                                                                                        |           | $            | 89,662    |      |           | $         | 89,329    |   |           | $         | 98,891    | 
|                                     |                                                               | Notes payable                                                                                           |           |              | 28,319    |      |           |           | 4,067     |   |           |           | 221,169   | 
|                                     |                                                               | Current portion of long-term debt and capital lease obligations                                         |           |              | 46,135    |      |           |           | 58,204    |   |           |           | 58,288    | 
|                                     |                                                               | Gas inventory equalization (Note 1)                                                                     |           |              | 22,774    |      |           |           | 15,478    |   |           |           |          | 
|                                     |                                                               | Federal income, property and other taxes payable                                                        |           |              | 86,097    |      |           |           | 80,931    |   |           |           | 61,059    | 
|                                     |                                                               | Deferred gas cost recovery revenues                                                                     |           |              |          |      |           |           | 29,139    |   |           |           | 14,980    | 
|                                     |                                                               | Exchange gas payable                                                                                    |           |              | 20,845    |      |           |           | 26,998    |   |           |           | 25,337    | 
|                                     |                                                               | Customer deposits                                                                                       |           |              | 15,830    |      |           |           | 14,900    |   |           |           | 18,769    | 
|                                     |                                                               | Other                                                                                                   |           |              | 43,125    |      |           |           | 37,241    |   |           |           | 67,222    | 
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               |                                                                                                         | 352,787   |              |           |      | 356,287   |           |           |   | 565,715   |          
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                     | Deferred Credits and Other Liabilities                        |                                                                                                         |           |              |           |      |           |           |           |   |           |           |          
|                                     |                                                               | Deferred income taxes                                                                                   |           |              | 103,198   |      |           |           | 89,549    |   |           |           | 88,567    | 
|                                     |                                                               | Unamortized investment tax credit                                                                       |           |              | 28,823    |      |           |           | 31,823    |   |           |           | 29,784    | 
|                                     |                                                               | Tax benefits amortizable to customers                                                                   |           |              | 128,869   |      |           |           | 123,444   |   |           |           | 130,120   | 
|                                     |                                                               | Accrued environmental costs                                                                             |           |              | 31,704    |      |           |           | 32,000    |   |           |           | 32,000    | 
|                                     |                                                               | Minority interest                                                                                       |           |              | 8,363     |      |           |           | 16,600    |   |           |           | 8,201     | 
|                                     |                                                               | Other                                                                                                   |           |              | 51,663    |      |           |           | 43,926    |   |           |           | 51,460    | 
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               |                                                                                                         | 352,620   |              |           |      | 337,342   |           |           |   | 340,132   |          
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                     | Long-Term Debt, Including Capital Lease Obligations
	(Note 1) |                                                                                                         |           | 686,004      |           |      |           | 624,014   |           |   |           | 619,835   |          
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                     | Contingencies (Note 6)                                        |                                                                                                         |           |              |           |      |           |           |           |   |           |           |          
|                                    
|                                    
|                                    
|                                    
|                                     | Common Shareholders Equity                                   |                                                                                                         |           |              |           |      |           |           |           |   |           |           |          
|                                     |                                                               | Common stock                                                                                            |           |              | 10,300    |      |           |           | 10,300    |   |           |           | 10,300    | 
|                                     |                                                               | Additional paid-in capital                                                                              |           |              | 230,399   |      |           |           | 230,399   |   |           |           | 230,399   | 
|                                     |                                                               | Retained earnings                                                                                       |           |              | 480,605   |      |           |           | 440,003   |   |           |           | 406,144   | 
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               |                                                                                                         | 721,304   |              |           |      | 680,702   |           |           |   | 646,843   |          
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               | $                                                                                                       | 2,112,715 |              |           | $    | 1,998,345 |           |           | $ | 2,172,525 |          
|                                     |                                                               |                                                                                                         |           |              |           |      |           |           |           |   |           |          

The notes to the consolidated financial statements are an
integral part of this statement.

12



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##### Table of Contents



Michigan Consolidated Gas Company and Subsidiaries

Consolidated Statement of Cash Flows (Unaudited)


(Thousands of Dollars)


|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |          |          |         |        |          |  
|------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ------------------------- | ------------------------------------------- | ------- | ------ | -------- | -------- | ------- | ------ | -------- | -
|                                                                          |                                                                                           |                                                                          
|                                                                          |                                                                                           | Six Months Ended                                                         
|                                                                          |                                                                                           | June 30,                                                                 
|                                                                          |                                                                                           |                                                                          
|                                                                          |                                                                                           | 1999                                                                      |                           | 1998                                       
|                                                                          |                                                                                           |                                                                           |                           |                                            
|                                                                          |                                                                                           |                                                                           |                           |                                            
|                                                                          |                                                                                           |                                                                           |                           |                                            
|                                                                          |                                                                                           |                                                                           |                           |                                            
|                                                                          |                                                                                           |                                                                           |                           |                                            
|                                                                          |                                                                                           |                                                                           |                           |                                            
|                                                                          |                                                                                           |                                                                           |                           |                                            
|                                                                          |                                                                                           |                                                                           |                           |                                            
|                                                                          |                                                                                           |                                                                           |                           |                                            
|                                                                          |                                                                                           |                                                                           |                           |                                            
|                                                                          |                                                                                           |                                                                           |                           |                                            
|                                                                          |                                                                                           |                                                                           |                           |                                            
|                                                                          |                                                                                           |                                                                           |                           |                                            
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Cash Flow From Operating Activities                                       |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|                                                                          | Net income                                                                                |                                                                           | $                         | 92,138                                      |         |        | $        | 64,678   |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Adjustments to reconcile net income to net cash flow provided
	from operating activities: |                                                                           |                           |                                             |         |        |          |          |        
|                                                                          |                                                                                           | Depreciation and depletion                                                |                           |                                             |         |        |          |          |         |       
|                                                                          |                                                                                           |                                                                           | Per statement of income   |                                             |         | 49,366 |          |          |         | 45,937 |         
|                                                                          |                                                                                           |                                                                           | Charged to other accounts |                                             |         | 4,390  |          |          |         | 3,991  |         
|                                                                          |                                                                                           | Deferred income taxes  current                                           |                           |                                             | (11,003 | )      |          |          | (12,096 | )     
|                                                                          |                                                                                           | Deferred income taxes and investment tax credit  net                     |                           |                                             | 12,419  |        |          |          | 5,244   |       
|                                                                          |                                                                                           | Other                                                                     |                           |                                             | (1,388  | )      |          |          | (3,045  | )     
|                                                                          |                                                                                           | Changes in assets and liabilities, exclusive of changes shown
	separately |                           |                                             | 76,700  |        |          |          | 181,909 |       
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|                                                                          |                                                                                           |                                                                           |                           | Net cash provided from operating activities |         |        | 222,622  |          |         |        | 286,618  |  
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|Cash Flow From Financing Activities                                       |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|                                                                          | Notes payable  net                                                                       |                                                                           |                           | (192,850                                    | )       |        |          | (237,624 | )      
|                                                                          | Issuance of long-term debt (Note 6)                                                       |                                                                           |                           | 106,535                                     |         |        |          | 153,052  |        
|                                                                          | Cash dividend paid applicable to common stock                                             |                                                                           |                           | (17,500                                     | )       |        |          |         |        
|                                                                          | Retirement of long-term debt                                                              |                                                                           |                           | (55,918                                     | )       |        |          | (122,263 | )      
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|                                                                          |                                                                                           |                                                                           |                           | Net cash used for financing activities      |         |        | (159,733 | )        |         |        | (206,835 | )
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|Cash Flow From Investing Activities                                       |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|                                                                          | Notes receivable  affiliate  net                                                        |                                                                           |                           | (1,669                                      | )       |        |          |         |        
|                                                                          | Capital expenditures                                                                      |                                                                           |                           | (58,097                                     | )       |        |          | (74,503  | )      
|                                                                          | Other  net                                                                               |                                                                           |                           | 1,097                                       |         |        |          | 399      |        
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|                                                                          |                                                                                           |                                                                           |                           | Net cash used for investing activities      |         |        | (58,669  | )        |         |        | (74,104  | )
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|Net Increase in Cash and Cash Equivalents                                 |                                                                                           |                                                                           | 4,220                     |                                             |         |        | 5,679    |         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Cash and Cash Equivalents, January 1                                      |                                                                                           |                                                                           | 6,603                     |                                             |         |        | 14,353   |         
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|Cash and Cash Equivalents, June 30                                        |                                                                                           | $                                                                         | 10,823                    |                                             |         | $      | 20,032   |         
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|Changes in Assets and Liabilities, Exclusive of Changes Shown
	Separately |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|                                                                          | Accounts receivable  net                                                                 |                                                                           | $                         | (609                                        | )       |        | $        | 57,377   |        
|                                                                          | Gas inventory equalization                                                                |                                                                           |                           | 22,774                                      |         |        |          | 15,478   |        
|                                                                          | Accrued/deferred gas cost recovery revenues                                               |                                                                           |                           | (15,153                                     | )       |        |          | 42,001   |        
|                                                                          | Accrued unbilled revenues                                                                 |                                                                           |                           | 66,465                                      |         |        |          | 76,396   |        
|                                                                          | Gas in inventory                                                                          |                                                                           |                           | 13,077                                      |         |        |          | 4,584    |        
|                                                                          | Property taxes assessed applicable to future periods                                      |                                                                           |                           | 22,692                                      |         |        |          | 21,675   |        
|                                                                          | Accounts payable                                                                          |                                                                           |                           | (9,229                                      | )       |        |          | (40,928  | )      
|                                                                          | Federal income, property and other taxes payable                                          |                                                                           |                           | 25,038                                      |         |        |          | 2,301    |        
|                                                                          | Exchange gas payable                                                                      |                                                                           |                           | (4,492                                      | )       |        |          | 24,935   |        
|                                                                          | Other current assets and liabilities                                                      |                                                                           |                           | (18,647                                     | )       |        |          | (12,890  | )      
|                                                                          | Prepaid benefit costs                                                                     |                                                                           |                           | (20,711                                     | )       |        |          | (9,218   | )      
|                                                                          | Deferred assets and liabilities                                                           |                                                                           |                           | (4,505                                      | )       |        |          | 198      |        
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|                                                                          |                                                                                           | $                                                                         | 76,700                    |                                             |         | $      | 181,909  |         
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|Supplemental Disclosures                                                  |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Cash paid for:                                                                            |                                                                           |                           |                                             |         |        |          |          |        
|                                                                          |                                                                                           | Interest, net of amounts capitalized                                      |                           | $                                           | 30,314  |        |          | $        | 29,174  |       
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |          |         
|                                                                          |                                                                                           | Federal income taxes                                                      |                           | $                                           | 13,224  |        |          | $        | 12,541  |       
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |          |         

The notes to the consolidated financial statements are an
integral part of this statement.

13



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##### Table of Contents



Michigan Consolidated Gas Company and Subsidiaries

Notes to the Consolidated Financial Statements


1.  General

The accompanying consolidated financial statements should be read
 in conjunction with MichCons 1998 Annual Report on
Form 10-K. Certain reclassifications have been made to the
prior years financial statements to conform with the 1999
presentation. In the opinion of management, the unaudited
information furnished herein reflects all adjustments necessary
for a fair presentation of the financial statements for the
periods presented.

Because of seasonal and other factors, revenues, expenses and net
 income for the interim periods should not be construed as
representative of revenues, expenses and net income for all or
any part of the balance of the current year or succeeding
periods.

2.  Regulatory Matters

a.  Regulatory Reform Plan



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As discussed in MichCons 1998 Annual Report on
	Form 10-K, MichCon implemented its Regulatory Reform Plan in
	 January 1999. The plan includes a new three-year gas sales
	program under which MichCons gas sales rates include a gas
	commodity component that is fixed at $2.95 per thousand cubic
	feet (Mcf). As part of its gas acquisition strategy, MichCon has
	entered into fixed-price contracts at costs below $2.95 per Mcf
	for a substantial portion of its expected gas supply requirements
	 through 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | The plan also includes a comprehensive experimental three-year
	customer choice program, which is subject to annual caps on the
	level of participation. The customer choice program began in
	April 1999, with approximately 70,000 customers choosing to
	purchase natural gas from suppliers other than MichCon. Plan
	years begin April 1 of each year, and the number of
	customers allowed to participate in the plan is limited to 75,000
	 in 1999, 150,000 in 2000 and 225,000 in 2001. There is also a
	volume limitation on commercial and industrial participants. The
	volume limitation for these participants is 10 billion cubic
	 feet (Bcf) in 1999, 20 Bcf in 2000 and 30 Bcf in 2001.
	 MichCon will continue to transport and deliver the gas to the
	customers premises at prices that maintain its previously
	existing sales margins on these services. Various parties have
	appealed the Michigan Public Service Commissions (MPSC)
	approval of the plan. While management believes the plan will be
	upheld on appeal, there can be no assurance as to the outcome.

b.  Gas Cost Recovery Proceedings



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Prior to January 1999, the Gas Cost Recovery (GCR) process
	allowed MichCon to recover its cost of gas sold if the MPSC
	determined that such costs were reasonable and prudent. An annual
	 GCR reconciliation proceeding provided a review of gas costs
	incurred during the previous year and determined whether gas
	costs had been overcollected or undercollected, and as a result,
	whether a refund or surcharge, including interest, was

14



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##### Table of Contents



Notes to the Consolidated Financial Statements (Continued)



| |                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | required to be returned to or collected from GCR customers.
	The GCR process was suspended with the implementation of
	MichCons Regulatory Reform Plan in January 1999.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In February 1999, MichCon filed its final GCR reconciliation case
	 covering gas costs incurred during 1998 which indicates an
	overrecovery of $18,000,000, including interest. Management
	believes that 1998 gas costs were reasonable and prudent and that
	 the MPSC will approve the gas costs incurred. However,
	management cannot predict the outcome of this proceeding. During
	the first quarter of 1999, MichCon refunded the overrecovery to
	customers as a reduction in gas sales rates.

3.  Property Write-Down

As discussed in MichCons 1998 Annual Report on
Form 10-K, MichCon recognized a $24,800,000 pre-tax loss
($11,200,000 net of taxes and minority interest) from the
write-down of a gas gathering pipeline system in the third
quarter of 1998. An analysis revealed that projected cash flows
from the gathering system were not sufficient to cover the
systems carrying value. Therefore, an impairment loss was
recorded representing the amount by which the carrying value of
the system exceeded its estimated fair value.

4.  Gas in Inventory

Inventory gas 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 for net withdrawals from
inventory is recorded at the estimated average purchase rate for
the calendar year. The excess of these charges over the LIFO cost
 is credited to the gas inventory equalization account. During
interim periods when there are net injections to inventory, the
equalization account is reversed. Approximately 58.9 Bcf and
 57.8 Bcf of gas was included in inventory at June 30,
1999 and 1998, respectively.

5.  Lines of Credit

MichCon has established credit lines that allow for borrowing of
up to $150,000,000 under a 364-day revolving credit facility and
up to $150,000,000 under a three-year revolving credit facility.
These credit lines totaling $300,000,000 support MichCons
commercial paper program. The 364-day facility was renewed in
July 1999.

6.  Long-Term Debt

In June 1999, MichCon issued $55,000,000 of 6.85% senior secured
notes, due June 2038, and $55,000,000 of 6.85% senior secured
notes, due June 2039. The notes are insured by a financial
guaranty insurance policy and are rated AAA or its equivalent by
the major rating agencies. The notes are redeemable on or after
June 1, 2004.

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Notes to the Consolidated Financial Statements (Concluded)

7.  Contingencies

MichCon is involved in certain legal and administrative
proceedings before various courts and governmental agencies
concerning claims arising in the ordinary course of business.
These proceedings include certain contract disputes between
MichCon and gas producers. Management cannot predict the final
disposition of such proceedings, but believes that adequate
provision has been made for probable losses. It is
managements belief, after discussion with legal counsel,
that the ultimate resolution of those proceedings still pending
will not have a material adverse effect on MichCons
financial statements.

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Other Information


Exhibits and Reports on Form 8-K

(a)  Exhibits

|        |      |             |  |                                                  
|------- | ---- | ----------- |  | -------------------------------------------------
|Exhibit |      |            
|Number  |      | Description
|        |      |            
|        |      |            
|        |      |            
|        |      |            
|        |      |            
|        |      |            
|        |      |            
|        |      |            
|        |      |            
|        |      |            
|        |      |            
|        |      |            
|        |      |            
|        | 12-1 |             |  | Computation of Ratio of Earnings to Fixed Charges
|        | 27-1 |             |  | Financial Data Schedule                          

(b)  Reports on Form 8-K



| |                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Registrant filed a report on Form 8-K dated June 14,
	1999, under Item 5, with respect to the offering of its
	6.85% Senior Secured Insured Quarterly Notes due 2038 and
	its 6.85% Senior Notes due 2039 pursuant to the registration
	 statement on Form S-3 (No. 333-56333) filed with the
	Securities and Exchange Commission under the Securities Act of
	1933. The following documents were filed as exhibits thereto:



| |   |                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Purchase agreement dated June 4, 1999 with respect to the
	Senior Secured Insured Quarterly Notes due 2038                                                     
|
| |  | Purchase agreement dated June 4, 1999 with respect to the
	Senior Notes due 2039                                                                               
|
| |  | Second Supplemental Indenture dated as of June 9, 1999 to
	the Senior Debt Securities Indenture dated as of June 1,
	1998 between registrant and Citibank, N.A.
|
| |  | Consent of PricewaterhouseCoopers LLP with respect to the Senior
	Secured Insured Quarterly Notes due 2038                                                     
|
| |  | Consent of PricewaterhouseCoopers LLP with respect to the Senior
	Notes due 2039                                                                               

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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



| |     |                  
| | --- | -----------------
| | By: | /s/ ROBERT KASLIK

| |              
| | -------------
| |              
| | Robert Kaslik
| | Controller   

Date: August 16, 1999

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Exhibit Index

|             |      |             |  |                                                  
|------------ | ---- | ----------- |  | -------------------------------------------------
|Exhibit  No. |      | Description
|             |      |            
|             |      |            
|             |      |            
|             |      |            
|             |      |            
|             |      |            
|             |      |            
|             |      |            
|             |      |            
|             |      |            
|             |      |            
|             |      |            
|             |      |            
|             | 12.1 |             |  | Computation of Ratio of Earnings to Fixed Changes
|             | 27-1 |             |  | Financial Data Schedule