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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period ended March 31, 2007
 Commission file number 1-7310
 Michigan Consolidated Gas Company meets the conditions set forth in General Instruction H (1) (a)
and (b) of Form 10-Q and is, therefore, filing this Form with the reduced disclosure format.
 MICHIGAN CONSOLIDATED GAS COMPANY
  Michigan
    
    38-0478040(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)2000 2nd Avenue, Detroit, Michigan
    
    48226-1279(Address of principal executive offices)
    
    (Zip Code)
 313-235-4000
  Yes þ No o
  Large accelerated filer o Accelerated filer o Non-accelerated filer þ
  Yes o No þ




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##### 



Michigan Consolidated Gas Company
 Quarterly Report on Form 10-Q  Quarter Ended March 31, 2007
 Table of Contents
 PageNumberDEFINITIONS
    
    
    1FORWARD-LOOKING STATEMENTS
    
    
    2PART I - FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Statement of Operations
    
    
    6Consolidated Statement of Financial Position
    
    
    7Consolidated Statement of Cash Flows
    
    
    9Consolidated
Statement of Changes in Shareholders Equity and Comprehensive Income
    
    
    10Notes to Consolidated Financial Statements
    
    
    11Item 2. Managements Narrative Analysis of Results of Operations
    
    
    3Item 4. Controls and Procedures
    
    
    5PART II  OTHER INFORMATIONItem 6. Exhibits
    
    
    18SIGNATURE
    
    
    19Chief Executive Officer Section 302 Form 10-Q CertificationChief Financial Officer Section 302 Form 10-Q CertificationChief Executive Officer Section 906 Form 10-Q CertificationChief Financial Officer Section 906 Form 10-Q Certification




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Definitions
 CTA
    
    Costs to achieve, consisting of project
management, consultant support and employee
severance, related to the Performance
Excellence ProcessCustomer Choice
    
    Statewide initiative giving customers in
Michigan the option to choose alternative
suppliers for gas.DTE Energy
    
    DTE Energy Company, directly or indirectly,
the parent of The Detroit Edison Company,
MichCon and numerous non-utility subsidiaries.End User Transportation
    
    A gas delivery service historically provided
to large-volume commercial and industrial
customers who purchase natural gas directly
from producers or brokerage companies. Under
MichCons Customer Choice Program that began
in 1999, this service is also provided to
residential customers and small-volume
commercial and industrial customers.Enterprises
    
    DTE Enterprises Inc., a wholly-owned
subsidiary of DTE Energy and indirectly the
parent of MichCon.Gas Storage
    
    For MichCon, the process of injecting, storing
and withdrawing natural gas from a depleted
underground natural gas field.GCR
    
    A gas cost recovery mechanism authorized by
the MPSC, permitting MichCon to pass the cost
of natural gas to its customers.Intermediate Transportation
    
    A gas delivery service provided to producers,
brokers and other gas companies that own the
natural gas, but are not the ultimate
consumers.MGP
    
    Manufactured Gas PlantMichCon
    
    Michigan Consolidated Gas Company, an
indirect, wholly owned natural gas
distribution and intrastate transmission
subsidiary of Enterprises.MPSC
    
    Michigan Public Service CommissionSFAS
    
    Statement of Financial Accounting StandardsUnits of MeasurementBcf
    
    Billion cubic feet of gasMcf
    
    Thousand cubic feet of gasMMcf
    
    Million cubic feet of gas
 1




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##### Table of Contents



Forward-Looking Statements
  
    
    the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers;
    
    economic climate and population growth or decline in the geographic areas where we do business;
    
    environmental issues, laws, regulations, and the cost of remediation and compliance;
    
    implementation of the gas Customer Choice program;
    
    impact of gas utility restructuring in Michigan, including legislative amendments;
    
    employee relations and the negotiation and impacts of collective bargaining agreements;
    
    access to capital markets and capital market conditions and the results of other financing efforts which can be
affected by credit agency ratings;
    
    the timing and extent of changes in interest rates;
    
    the level of borrowing;
    
    changes in the cost and availability of natural gas;
    
    effects of competition;
    
    impact of regulation by the MPSC and other applicable governmental proceedings and regulations, including any
associated impact on rate structures;
    
    changes in and application of federal, state and local tax laws or their interpretations, including the Internal
Revenue Code, regulations, rulings, court proceedings and audits;
    
    the ability to recover costs through rate increases;
    
    the availability, cost, coverage and terms of insurance;
    
    the cost of protecting assets against, or damage due to, terrorism;
    
    changes in and application of accounting standards and financial reporting regulations;
    
    changes in federal or state laws or their interpretation with respect to regulation, energy policy and other business
issues;
    
    uncollectible accounts receivable;
    
    binding arbitration, litigation and related appeals;
    
    changes in the economic and financial viability of our suppliers and customers, and the continued ability of such
parties to perform their obligations to the Company; and
    
    implementation of new processes and new core information systems.
  2




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Michigan Consolidated Gas Company  Managements Narrative Analysis of Results of Operations
  Factors impacting income:
 Increase (Decrease) in Statement of Operations Components
Compared to Prior Year
 Three(in Millions)
    
    MonthsOperating revenues
    
    $
    (2
    )Cost of gas
    
    
    (11
    )Gross margin
    
    
    9Operation and maintenance
    
    
    (10
    )Depreciation and amortization
    
    
    (2
    )Taxes other than income
    
    
    (1
    )Asset losses
    
    
    3Other (income) and deductions
    
    
    (3
    )Income tax provision
    
    
    5Net income
    
    $
    17
 Gross margin
 Three Months EndedMarch 312007
    
    
    2006Gas Markets (in Millions)Gas sales
    
    $
    759
    
    
    $
    782End user transportation
    
    
    52
    
    
    
    45811
    
    
    
    827Intermediate transportation
    
    
    19
    
    
    
    15Other
    
    
    31
    
    
    
    21$
    861
    
    
    $
    863Gas Markets (in Bcf)Gas sales
    
    
    68
    
    
    
    65End user transportation
    
    
    49
    
    
    
    44117
    
    
    
    109Intermediate transportation
    
    
    128
    
    
    
    163245
    
    
    
    272
 Operation and maintenance expense
 Depreciation and amortization expenses
 3




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Asset losses
 Outlook
  ENTERPRISE BUSINESS SYSTEMS
  4




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CONTROLS AND PROCEDURES
 (a) Evaluation of disclosure controls and procedures
  (b) Changes in internal control over financial reporting
   5




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MICHIGAN CONSOLIDATED GAS COMPANY
 
 CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
 Three Months EndedMarch 31(in Millions)
    
    2007
    
    
    2006Operating Revenues
    
    $
    861
    
    
    $
    863Operating ExpensesCost of gas
    
    
    613
    
    
    
    624Operation and maintenance
    
    
    109
    
    
    
    119Depreciation and amortization
    
    
    21
    
    
    
    23Taxes other than income
    
    
    14
    
    
    
    15Asset losses
    
    
    3
    
    
    
    760
    
    
    
    781Operating Income
    
    
    101
    
    
    
    82Other (Income) and DeductionsInterest expense
    
    
    15
    
    
    
    17Interest income
    
    
    (2
    )
    
    
    (2
    )Other income
    
    
    (3
    )
    
    
    (2
    )Other expenses
    
    
    1
    
    
    
    111
    
    
    
    14Income Before Income Taxes
    
    
    90
    
    
    
    68Income Tax Provision
    
    
    23
    
    
    
    18Net Income
    
    $
    67
    
    
    $
    50
  6




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MICHIGAN CONSOLIDATED GAS COMPANY
 
 CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
 March 31
    
    
    December 31(in Millions)
    
    2007
    
    
    2006ASSETSCurrent AssetsCash and cash equivalents
    
    $
    2
    
    
    $
    1Accounts Receivable (less allowance for
doubtful accounts
of $104 and $96, respectivelyCustomer
    
    
    495
    
    
    
    364Other
    
    
    71
    
    
    
    101Accrued gas cost recovery revenue
    
    
    25
    
    
    
    InventoriesGas
    
    
    21
    
    
    
    77Material and supplies
    
    
    18
    
    
    
    17Gas customer choice deferred asset
    
    
    40
    
    
    
    101Other
    
    
    52
    
    
    
    37724
    
    
    
    698Investments
    
    
    96
    
    
    
    94PropertyProperty, Plant and Equipment
    
    
    3,423
    
    
    
    3,391Less accumulated depreciation
    
    
    (1,558
    )
    
    
    (1,539
    )1,865
    
    
    
    1,852Other AssetsRegulatory assets
    
    
    370
    
    
    
    362Notes receivable
    
    
    78
    
    
    
    79Prepaid benefit costs and due from affiliate
    
    
    374
    
    
    
    365Other
    
    
    20
    
    
    
    20842
    
    
    
    826Total Assets
    
    $
    3,527
    
    
    $
    3,470
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MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
 March 31
    
    
    December 31(in Millions, Except Shares)
    
    2007
    
    
    2006LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    212
    
    
    $
    211Dividends payable
    
    
    13
    
    
    
    13Short-term borrowings
    
    
    123
    
    
    
    342Current portion of long-term debt
    
    
    30
    
    
    
    30Federal income, property and other taxes payable
    
    
    47
    
    
    
    14Gas inventory equalization
    
    
    278
    
    
    
    Accrued gas cost recovery refund
    
    
    7
    
    
    
    81Other
    
    
    63
    
    
    
    74773
    
    
    
    765Long-Term debt, (net of current portion)
    
    
    715
    
    
    
    715Other LiabilitiesDeferred income taxes
    
    
    179
    
    
    
    181Regulatory liabilities
    
    
    517
    
    
    
    510Accrued postretirement benefit costs
    
    
    348
    
    
    
    347Other
    
    
    185
    
    
    
    1961,229
    
    
    
    1,234Commitments and Contingencies (Notes 4 and 5)Shareholders EquityCommon stock, $1 par value, 15,100,000 shares authorized,
10,300,000 shares issued and outstanding
    
    
    10
    
    
    
    10Additional paid in capital
    
    
    432
    
    
    
    432Retained earnings
    
    
    369
    
    
    
    315Accumulated other comprehensive loss
    
    
    (1
    )
    
    
    (1
    )810
    
    
    
    756Total Liabilities and Shareholders Equity
    
    $
    3,527
    
    
    $
    3,470
  8




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MICHIGAN CONSOLIDATED GAS COMPANY
 
 CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
 Three Months EndedMarch 31(in Millions)
    
    2007
    
    
    2006Operating ActivitiesNet income
    
    $
    67
    
    
    $
    50Adjustments to reconcile net income to net cash
from operating activities:Depreciation and amortization
    
    
    21
    
    
    
    23Deferred income taxes and investment tax credit, net
    
    
    (8
    )
    
    
    (19
    )Asset losses
    
    
    3
    
    
    
    Changes in assets and liabilities:Accounts receivable, net
    
    
    (101
    )
    
    
    (26
    )Inventories
    
    
    55
    
    
    
    50Postretirement obligation
    
    
    1
    
    
    
    (14
    )Property taxes assessed applicable to future periods
    
    
    (6
    )
    
    
    (7
    )Prepaid benefit costs and due from affiliate
    
    
    (9
    )
    
    
    (8
    )Accrued gas cost recovery
    
    
    (98
    )
    
    
    51Accounts payable
    
    
    17
    
    
    
    (36
    )Gas inventory equalization
    
    
    278
    
    
    
    158Federal income, property and other taxes payable
    
    
    33
    
    
    
    33Other assets
    
    
    49
    
    
    
    38Other liabilities
    
    
    (18
    )
    
    
    (1
    )Net cash from operating activities
    
    
    284
    
    
    
    292Investing ActivitiesCapital expenditures
    
    
    (53
    )
    
    
    (32
    )Proceeds from sale of assets
    
    
    1
    
    
    
    Other
    
    
    1
    
    
    
    Net cash used for investing activities
    
    
    (51
    )
    
    
    (32
    )Financing ActivitiesShort-term borrowings, net
    
    
    (219
    )
    
    
    (254
    )Dividends paid
    
    
    (13
    )
    
    
    (12
    )Net cash used for financing activities
    
    
    (232
    )
    
    
    (266
    )Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    1
    
    
    
    (6
    )Cash and Cash Equivalents at Beginning of Period
    
    
    1
    
    
    
    7Cash and Cash Equivalents at End of Period
    
    $
    2
    
    
    $
    1Supplementary Cash Flow InformationInterest paid (excluding interest capitalized)
    
    $
    24
    
    
    $
    21Income taxes paid
    
    
    
    
    
    
    
  9




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MICHIGAN
CONSOLIDATED GAS COMPANY
 
 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS
EQUITY AND COMPREHENSIVE INCOME
 AccumulatedAdditional
    
    
    
    
    
    Other(Dollars in Millions,
    
    Common Stock
    
    Paid in
    
    Retained
    
    ComprehensiveShares in Thousands)
    
    Shares
    
    Amount
    
    Capital
    
    Earnings
    
    Loss
    
    TotalBalance, December
31, 2006
    
    
    10,300
    
    
    $
    10
    
    
    $
    432
    
    
    $
    315
    
    
    $
    (1
    )
    
    $
    756Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    67Dividends declared on
common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13
    )
    
    
    
    
    
    
    (13
    )Balance, March
31, 2007
    
    
    10,300
    
    
    $
    10
    
    
    $
    432
    
    
    
    369
    
    
    
    (1
    )
    
    $
    810
  (in Millions)
    
    2007
    
    
    2006Net income
    
    $
    67
    
    
    $
    50Comprehensive income
    
    $
    67
    
    
    $
    50
  10




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Michigan Consolidated Gas Company
 
 Notes to Consolidated Financial Statements (Unaudited)
 NOTE 1  GENERAL
     Asset Retirement Obligations
  Accounting for the
Effects of Certain Types of Regulation
  (in Millions)Asset retirement obligations at January 1, 2007
    
    $
    103Accretion
    
    
    2Liabilities settled
    
    
    (1
    )Asset retirement obligations at March 31, 2007
    
    $
    104
 Retirement Benefits and Trusteed Assets
  11




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Other Postretirement(in Millions)
    
    Pension Benefits
    
    
    BenefitsThree Months Ended March 31
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Service cost
    
    $
    2
    
    
    $
    2
    
    
    $
    4
    
    
    $
    4Interest cost
    
    
    4
    
    
    
    4
    
    
    
    7
    
    
    
    6Expected return on plan assets
    
    
    (8
    )
    
    
    (7
    )
    
    
    (3
    )
    
    
    (2
    )Net loss
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Prior service cost
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    1Net transition liability
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1Net periodic benefit cost (credit)
    
    $
    (1
    )
    
    $
    (1
    )
    
    $
    12
    
    
    $
    12
  Income Taxes
 Accounting for Uncertainty in Income
Taxes  an interpretation of FASB Statement No. 109 (FIN 48)
   12




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Stock-Based Compensation
 Share-Based Payment,
 Gas in Inventory
  Asset losses
  NOTE 2  NEW ACCOUNTING PRONOUNCEMENTS
 Fair Value Accounting
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of FASB Statement No. 115
 Accounting for Defined Benefit Pension and Other Postretirement Plans
 Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans  an Amendment of FASB Statements No. 87, 88, 106, and
132(R).
 13




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NOTE 3  RESTRUCTURING
 Performance Excellence Process
    Employee Severance Costs (1)
    
    
    Other Costs
    
    
    Total Cost(in Millions)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Costs incurred:
    
    $
    2
    
    
    $
    
    
    
    $
    
    
    
    $
    3
    
    
    $
    2
    
    
    $
    3
 
 (1)
    
    Includes corporate allocations. Accounting for Costs
Associated with Exit or Disposal Activities
 NOTE 4  REGULATORY MATTERS
 Regulation
  14




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Regulatory Accounting Treatment for Performance Excellence Process
  Uncollectible Expense True-Up Mechanism (UETM) and Report of Safety and Training-Related
Expenditures
 2005 UETM 
  2006 UETM 
 Gas Cost Recovery Proceedings
 2005-2006 Plan Year 
 15




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2007-2008 Plan Year / Native Base Gas Sale Consolidated
 Other
  NOTE 5  COMMITMENTS AND CONTINGENCIES
 Environmental Matters
   16




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Labor Contracts
  Purchase Commitments
  Bankruptcies
  Other
   17




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PART II  OTHER INFORMATION
 EXHIBITS
 ExhibitNumber
    
    DescriptionFiled:31-31
    
    Chief Executive Officer Section 302 Form 10-Q Certification31-32
    
    Chief Financial Officer Section 302 Form 10-Q CertificationFurnished:32-31
    
    Chief Executive Officer Section 906 Form 10-Q Certification32-32
    
    Chief Financial Officer Section 906 Form 10-Q Certification
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Signature
  MICHIGAN CONSOLIDATEDGAS COMPANYDate: May 9, 2007
    
    /s/ PETER B. OLEKSIAKPeter B. OleksiakVice President and Controller and ChiefAccounting Officer
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ExhibitNumber
    
    Description31-31
    
    Chief Executive Officer Section 302 Form 10-Q Certification31-32
    
    Chief Financial Officer Section 302 Form 10-Q Certification32-31
    
    Chief Executive Officer Section 906 Form 10-Q Certification32-32
    
    Chief Financial Officer Section 906 Form 10-Q Certification