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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, 2004 Commission file number 1-7310 The registrant meets the conditions set forth in General Instructions 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
(State or other jurisdiction of
incorporation or organization)
    
    38-0478040
(I.R.S. Employer
Identification No.)2000 2nd Avenue, Detroit, Michigan
(Address of principal executive offices)
    
    48226-1279
(Zip Code)
 313-235-4000
Registrants telephone number, including area code Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 (Exchange Act) during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes x Noo Indicate by check mark whether the registrant is an accelerated filer as
defined in Rule 12b-2 of the Exchange Act. Yes o Nox




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MICHIGAN CONSOLIDATED GAS COMPANY QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED MARCH 31, 2004 TABLE OF CONTENTS PAGENUMBERDEFINITIONS
    
    
    3FORWARD-LOOKING STATEMENTS
    
    
    4PART I   FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Statement of Operations
    
    
    8Consolidated Statement of Financial Position
    
    
    9Consolidated Statement of Cash Flows
    
    
    10Consolidated Statement of Retained Earnings
    
    
    11Notes to Consolidated Financial Statements
    
    
    12Independent Accountants Report
    
    
    15Item 2. Managements Narrative Analysis of the Results
of Operations
    
    
    5Item 4. Controls and Procedures
    
    
    7PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    16Item 6. Exhibits and Reports on Form 8-K
    
    
    16SIGNATURE
    
    
    17Awareness Letter of Deloitte & Touche LLPSection 302 Certification of CEOSection 302 Certification of CFOSection 906 Certification of CEOSection 906 Certification of CFO
  2




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DEFINITIONS Customer Choice
    
    The choice program is a statewide initiative
giving customers in Michigan the option to
choose alternative suppliers for gas.DTE Energy
    
    DTE Energy Company and subsidiary companies.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. (successor to MCN Energy)
and subsidiaries.Gas Sales Program
    
    A three-year program that ended in December
2001 under which MichCons gas sales rate
included a gas commodity component that was
fixed at $2.95 per Mcf.GCR
    
    A gas cost recovery mechanism authorized by
the MPSC that was reinstated by MichCon in
January 2002 permitting MichCon to pass on the
cost of natural gas to its customers.Intermediate Transportation
    
    A gas delivery service provided to producers,
brokers and other gas companies that own the
natural gas, but are not the ultimate
consumers.MichCon
    
    Michigan Consolidated Gas Company, an
indirect, wholly-owned natural gas
distribution and intrastate transmission
subsidiary of Enterprises.MPSC
    
    Michigan Public Service Commission.SFAS
    
    Statement of Financial Accounting Standards.Units of Measurement:Bcf
    
    Billion cubic feet of gas.Mcf
    
    Thousand cubic feet of gas.MMcf
    
    Million cubic feet of gas.
 3




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FORWARD-LOOKING STATEMENTS Certain information presented herein includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve certain risks and uncertainties that may
cause actual future results to differ materially from those contemplated,
projected, estimated or budgeted in such forward-looking statements. There are
many factors that may impact forward-looking statements including, but not
limited to, the following:  
    
    the effects of weather and other natural phenomena on operations and sales to, and purchases by, customers;
    
    economic climate and growth or decline in the geographic areas where we do business;
    
    environmental issues, laws and regulations, and the cost of remediation and compliance associated therewith;
    
    implementation of gas Customer Choice programs;
    
    impact of gas utility restructuring in Michigan, including legislative amendments;
    
    employee relations and the impact of collective bargaining agreements;
    
    access to capital markets and capital market conditions and the results of other financing efforts which can be affected by
credit agency ratings;
    
    the timing and extent of changes in interest rates;
    
    the level of borrowings;
    
    changes in the cost and availability of natural gas;
    
    effects of competition;
    
    impacts of MPSC and other applicable governmental proceedings and regulations;
    
    changes in federal, state and local tax laws and their interpretations, including the code, regulations, rulings, court
proceedings and audits;
    
    the ability to recover costs through rate increases;
    
    the availability, cost, coverage and terms of insurance;
    
    the cost of protecting assets against or damage due to terrorism;
    
    changes in accounting standards and financial reporting regulations;
    
    changes in federal or state laws and their interpretation with respect to regulation, energy policy and other business
issues; and
    
    changes in the economic and financial viability of our suppliers and customers, and the continued ability of such parties
to perform their obligations to the Company. New factors emerge from time to time. We cannot predict what factors may arise
or how such factors may cause our results to differ materially from those
contained in any forward-looking statement. Any forward-looking statements
speak only as of the date on which such statements are made. We undertake no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or to reflect the
occurrence of unanticipated events. 4




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MANAGEMENTS NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS The Results of Operations discussion for MichCon is presented in accordance
with General Instruction H(2)(a) of Form 10-Q. MichCon reported earnings of $69 million for the first quarter of 2004 compared
to earnings of $75 million for the 2003 first quarter. Results for the first
quarter of 2004 were primarily impacted by increases in operation and
maintenance expenses due to higher uncollectible accounts expense offset by a
lower effective tax rate. QuarterIncrease (Decrease) in Income Compared to Prior Year(in Millions)Operating revenues
    
    $
    63Cost of gas
    
    
    (67
    )Gross margin
    
    
    (4
    )Operation and maintenance
    
    
    (18
    )Depreciation, depletion and amortization
    
    
    (2
    )Taxes other than income
    
    
    5Other (income) and deductions
    
    
    (2
    )Income tax provision
    
    
    15Net income
    
    $
    (6
    )
 Operating revenues increased $63 million in the first quarter of 2004,
reflecting increased gas sales and reduced end user transportation revenues. Quarter2004
    
    2003Gas Markets (in Millions)Gas sales
    
    $
    640
    
    
    $
    561End user transportation
    
    
    42
    
    
    
    57682
    
    
    
    618Intermediate transportation
    
    
    15
    
    
    
    14Other
    
    
    18
    
    
    
    20$
    715
    
    
    $
    652Gas Markets (in Bcf)Gas sales
    
    
    83
    
    
    
    80End user transportation
    
    
    50
    
    
    
    61133
    
    
    
    141Intermediate transportation
    
    
    174
    
    
    
    174307
    
    
    
    315
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Gas sales and end user transportation revenues in total increased $64 million
in the first quarter of 2004. The increase is due primarily to an increase in
Gas Cost Recovery (GCR) revenues of $73 million for the first quarter of 2004.
This portion of revenues is offset by similar gas costs subject to collection
through the GCR. End user transportation revenues for the three-month period
reflect lower volumes for deliveries associated with a varying number of
customers participating in the Customer Choice program. Customers participating
in this program purchase gas from suppliers other than MichCon, while MichCon
continues to deliver the gas to their premises. Accordingly, margins earned
from selling gas and margins generated from providing end user transportation
services to Customer Choice participants are the same. There were approximately
119,000 customers participating in the Customer Choice program at March 31,
2004, compared with approximately 129,000 customers at December 31, 2003. Cost of gas is affected by variations in sales volumes, cost of purchased gas
and related transportation costs. Cost of gas sold increased by $67 million in
the first quarter of 2004. The average cost of gas sold increased $.71 per Mcf
(14%) for the first quarter from the comparable 2003 period. Operation and maintenance expenses increased $18 million for the 2004 first
quarter from the comparable 2003 period primarily due to higher uncollectible
accounts expense, reflecting higher past due amounts attributable to current economic conditions. Income taxes decreased $15 million for the 2004 first quarter due to a lower
effective tax rate in 2004 driven by lower estimated annual earnings. 6




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CONTROLS AND PROCEDURES  (a)
    
    Evaluation of disclosure controls and proceduresThe Companys Chief Executive Officer and Chief Financial Officer have
evaluated the effectiveness of the Companys disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
as of March 31, 2004, which is the end of the period covered by this report,
and have concluded that such controls and procedures are effectively
designed to ensure that required information disclosed by the Company in
reports that it files or submits under the Act is recorded, processed,
summarized and timely reported in accordance with Commissions rules and
forms. 7




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MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) Three Months EndedMarch 31(in Millions)
    
    2004
    
    2003Operating Revenues
    
    $
    715
    
    
    $
    652Operating ExpensesCost of gas
    
    
    488
    
    
    
    421Operation and maintenance
    
    
    96
    
    
    
    78Depreciation, depletion and amortization
    
    
    27
    
    
    
    25Taxes other than income
    
    
    12
    
    
    
    17623
    
    
    
    541Operating Income
    
    
    92
    
    
    
    111Other (Income) and DeductionsInterest expense
    
    
    14
    
    
    
    15Interest income
    
    
    (2
    )
    
    
    (3
    )Other
    
    
    1
    
    
    
    (1
    )13
    
    
    
    11Income Before Income Taxes
    
    
    79
    
    
    
    100Income Tax Provision
    
    
    10
    
    
    
    25Net Income
    
    $
    69
    
    
    $
    75
 See Notes to Consolidated Financial Statements (Unaudited) 8




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MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION March 312004
    
    December 31(in Millions)
    
    (Unaudited)
    
    2003ASSETSCurrent AssetsCash and cash equivalents
    
    $
    7
    
    
    $
    1Accounts receivableCustomer (less allowance for doubtful accounts of $57 and
$43, respectively)
    
    
    290
    
    
    
    178Accrued unbilled revenues
    
    
    74
    
    
    
    117Other
    
    
    72
    
    
    
    100Accrued gas cost recovery revenue
    
    
    57
    
    
    
    19Notes receivable from affiliate
    
    
    12
    
    
    
    InventoriesGas
    
    
    30
    
    
    
    117Material and supplies
    
    
    15
    
    
    
    14Other
    
    
    57
    
    
    
    67614
    
    
    
    613Property, Plant and Equipment
    
    
    3,128
    
    
    
    3,124Less accumulated depreciation, depletion and amortization
    
    
    (1,361
    )
    
    
    (1,344
    )1,767
    
    
    
    1,780Other AssetsOther investments
    
    
    88
    
    
    
    87Notes receivable
    
    
    82
    
    
    
    83Regulatory assets
    
    
    60
    
    
    
    61Prepaid benefit costs and due from affiliate
    
    
    342
    
    
    
    333Other
    
    
    21
    
    
    
    20593
    
    
    
    584$
    2,974
    
    
    $
    2,977LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    128
    
    
    $
    131Dividends payable
    
    
    13
    
    
    
    13Short-term borrowings
    
    
    3
    
    
    
    235Current portion of long-term debt, including capital leases
    
    
    3
    
    
    
    3Federal income, property and other taxes payable
    
    
    37
    
    
    
    14Regulatory liabilities
    
    
    26
    
    
    
    26Gas inventory equalization
    
    
    167
    
    
    
    Other
    
    
    54
    
    
    
    73431
    
    
    
    495Other LiabilitiesDeferred income taxes
    
    
    130
    
    
    
    134Regulatory liabilities
    
    
    564
    
    
    
    563Unamortized investment tax credit
    
    
    20
    
    
    
    20Accrued postretirement benefit costs
    
    
    100
    
    
    
    96Accrued environmental costs
    
    
    15
    
    
    
    16Other
    
    
    60
    
    
    
    55889
    
    
    
    884Long-term debt, including capital lease obligations
    
    
    774
    
    
    
    775Contingencies (Note 3)Shareholders EquityCommon stock, $1 par value, 15,100,000 shares authorized,
10,300,000 shares issued and outstanding
    
    
    10
    
    
    
    10Additional paid in capital
    
    
    433
    
    
    
    432Retained earnings
    
    
    437
    
    
    
    381880
    
    
    
    823$
    2,974
    
    
    $
    2,977
 See Notes to Consolidated Financial Statements (Unaudited) 9




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MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Three Months EndedMarch 312004
    
    2003(in Millions)Operating ActivitiesNet income
    
    $
    69
    
    
    $
    75Adjustments to reconcile net income to net cash
from operating activities:Depreciation, depletion and amortization
    
    
    27
    
    
    
    25Deferred income taxes and investment tax credit, net
    
    
    (7
    )
    
    
    (2
    )Gain on sale of assets
    
    
    (2
    )Changes in assets and liabilities:Accounts receivable, net
    
    
    (84
    )
    
    
    (132
    )Accrued unbilled revenues
    
    
    43
    
    
    
    43Inventories
    
    
    86
    
    
    
    45Property taxes assessed applicable to future periods
    
    
    (9
    )
    
    
    (8
    )Prepaid benefit costs and due from affiliate
    
    
    (9
    )
    
    
    (8
    )Accrued gas cost recovery
    
    
    (38
    )
    
    
    (48
    )Accounts payable
    
    
    (3
    )
    
    
    40Gas inventory equalization
    
    
    167
    
    
    
    150Federal income, property and other taxes payable
    
    
    23
    
    
    
    14Other
    
    
    9
    
    
    
    21Net cash from operating activities
    
    
    272
    
    
    
    215Investing ActivitiesCapital expenditures
    
    
    (14
    )
    
    
    (15
    )Proceeds from sale of assets
    
    
    5
    
    
    
    Notes receivable from affiliate
    
    
    (12
    )
    
    
    (269
    )Other
    
    
    
    
    
    
    (3
    )Net cash used for investing activities
    
    
    (21
    )
    
    
    (287
    )Financing ActivitiesIssuance of long-term debt
    
    
    
    
    
    
    199Redemption of long-term debt
    
    
    (1
    )
    
    
    (30
    )Short-term borrowings, net
    
    
    (232
    )
    
    
    (90
    )Dividends paid
    
    
    (12
    )
    
    
    (12
    )Net cash from (used for) financing activities
    
    
    (245
    )
    
    
    67Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    6
    
    
    
    (5
    )Cash and Cash Equivalents at Beginning of Period
    
    
    1
    
    
    
    7Cash and Cash Equivalents at End of Period
    
    $
    7
    
    
    $
    2Supplementary Cash Flow InformationInterest paid (excluding interest capitalized)
    
    $
    19
    
    
    $
    14Income taxes paid
    
    
    
    
    
    
    14
 See Notes to Consolidated Financial Statements (Unaudited) 10




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MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF RETAINED EARNINGS (Unaudited) Three Months EndedMarch 312004
    
    2003(in Millions)Balance  beginning of period.
    
    $
    381
    
    
    $
    399Net income
    
    
    69
    
    
    
    75Common stock dividends declared
    
    
    (13
    )
    
    
    (13
    )Balance  end of period
    
    $
    437
    
    
    $
    461
 See Notes to Consolidated Financial Statements (Unaudited) 11




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MICHIGAN CONSOLIDATED GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1  GENERAL These consolidated financial statements should be read in conjunction with the
notes to the consolidated financial statements included in our 2003 Annual
Report on Form 10-K. The accompanying consolidated financial statements are prepared using
accounting principles generally accepted in the United States of America.
These accounting principles require us to use estimates and assumptions that
impact the reported amounts of assets, liabilities, revenues and expenses, and
the disclosure of contingent assets and liabilities. Actual results could
differ from those estimates. The consolidated financial statements are unaudited, but in our opinion,
include all adjustments necessary for a fair statement of the results for the
interim periods. Financial results for this interim period are not necessarily
indicative of the results that may be expected for any other interim period or
for the fiscal year. We reclassified some prior year balances to match the current years
presentation. Retirement Benefits and Trusteed Assets The MCN Energy Group Retirement Plan, that covered nonrepresented employees,
merged into the DTE Energy Company Retirement Plan. Detroit Edison operates as
the sponsor of the merged DTE Energy represented and nonrepresented plan, which
is treated as a plan covering employees of various affiliates of DTE Energy
from the affiliates perspective. We are allocated income or an expense each
year as a result of our participation in the DTE Energy Retirement Plan.
Income was approximately $7 million and $8 million for the three months ended
March 31, 2004 and 2003, respectively and is not reflected in the table below. The components of net periodic benefit costs for qualified and non-qualified
pension benefits and other postretirement benefits follow: Other Postretirement(in Millions)
    
    Pension Benefits
    
    BenefitsThree Months Ended March 31
    
    2004
    
    2003
    
    2004
    
    2003Service Cost
    
    $
    2
    
    
    $
    1
    
    
    $
    2
    
    
    $
    2Interest Cost
    
    
    4
    
    
    
    4
    
    
    
    6
    
    
    
    5Expected Return on Plan Assets
    
    
    (7
    )
    
    
    (7
    )
    
    
    (3
    )
    
    
    (4
    )Amortization ofNet loss
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    Prior service cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net transition liability
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Net Periodic Benefit Cost (Credit)
    
    $
    (1
    )
    
    $
    (2
    )
    
    $
    8
    
    
    $
    5
 12




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NOTE 2  REGULATORY MATTERS Gas Rate Plan Rate Request  In September 2003, MichCon filed an application with the MPSC for an increase
in service and distribution charges (base rates) for its gas sales and
transportation customers. The filing requests an overall increase in base rates
of $194 million per year (approximately 7% increase, inclusive of gas costs),
beginning January 1, 2005. MichCon has requested that the MPSC increase base
rates by $154 million per year on an interim basis by April 1, 2004. The
interim request is based on a projected revenue deficiency for the test year
2004. MPSC Staff Report on Interim Rate Relief  The MPSC Staff report on MichCons interim rate request was filed on May 3,
2004. After adjusting for several items that it will address in its final rate
relief recommendation, the MPSC Staff recommended a $25 million interim rate
increase. This compares with MichCons requested total interim base rate relief
of $154 million. In addition, the MPSC Staff proposed a 50% debt and 50% equity capital structure utilizing MichCon's current allowed rate of return of 11.5%. An interim order is
expected in the third quarter of 2004 and a final order in the first quarter of
2005. Gas Cost Recovery Proceedings 2002 Plan Year In December 2001, the MPSC issued an order that permitted
MichCon to implement GCR factors up to $3.62 per Mcf for January 2002 billings
and up to $4.38 per Mcf for the remainder of 2002. The order also allowed
MichCon to recognize a regulatory asset of approximately $14 million
representing the difference between the $4.38 factor and the $3.62 factor for
volumes that were unbilled at December 31, 2001. The regulatory asset is
subject to the 2002 GCR reconciliation process. In March 2003, the MPSC issued
an order in MichCons 2002 GCR plan case. The MPSC ordered MichCon to reduce
its gas cost recovery expenses by $26.5 million for purposes of calculating the
2002 GCR factor due to MichCons decision to utilize storage gas during 2001
that resulted in a gas inventory decrement for the 2001 calendar year. Although we recorded a $26.5 million reserve in 2002 to reflect the impact of
this order, a final determination of actual 2002 revenue and expenses including
any disallowances or adjustment will be decided in MichCons 2002 GCR
reconciliation case that was filed with the MPSC in February 2003. The MPSC
Staff and various intervening parties in this proceeding are seeking to have
the MPSC disallow an additional $26 million, representing unbilled revenues at
December 2001. One party has proposed that half of the $8 million related to
the settlement of the Enron bankruptcy also be disallowed. The other parties to
the case have recommended that the Enron bankruptcy settlement be addressed in
the 2003 GCR reconciliation case. An MPSC administrative law judge has
recommended disallowances of $26.5 million related to the use of storage gas
in 2001 and $26 million related to the December 2001 unbilled issue, and
recommended that the $8 million related to the Enron issue be addressed in the
2003 GCR reconciliation case. We have included this item in our testimony in
the 2003 GCR reconciliation filed in February 2004. A final order in this
proceeding is expected in 2004. In addition, we filed an appeal of the March
2003 MPSC order with the Michigan Court of Appeals. 2003 Plan Year In July 2003, the MPSC approved an increase in MichCons 2003
GCR rate to a maximum of $5.75 per Mcf for the billing months of August 2003
through December 2003. As of December 31, 2003, MichCon has accrued a $19
million regulatory asset representing the under-recovery of actual gas costs
incurred. 2004 Plan Year In September 2003, MichCon filed its 2004 GCR plan case
proposing a maximum GCR factor of $5.36 per Mcf. MichCon agreed to switch from
a calendar year to an 13




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operational year as a condition of its settlement in the 2003 GCR Plan Case.
The operational GCR year would run from April to March of the following year.
To accomplish the switch, the 2004 GCR Plan Case reflects a 15-month
transitional period, January 2004 through March 2005. Under the transition
proposal, MichCon would file two reconciliations pertaining to the transition
period; one addressing the January 2004 to March 2004 period, the other
addressing the remaining April 2004 to March 2005 period. The plan also
proposes a quarterly GCR ceiling price adjustment mechanism. This mechanism
allows MichCon to increase the maximum GCR factor to compensate for increases
in market prices thereby minimizing the possibility of a GCR under recovery.
Due to sustained increase in market prices for natural gas, in March 2004,
MichCon filed updated GCR testimony requesting an increased maximum GCR factor
of $6.15 per Mcf. We are unable to predict the outcome of the regulatory matters discussed
herein. Resolution of these matters is dependent upon future MPSC orders,
which may materially impact our financial position, results of operations and
cash flows. NOTE 3  CONTINGENCIES We are involved in certain legal, regulatory and administrative proceedings
before various courts, arbitration panels and governmental agencies concerning
claims arising in the ordinary course of business. These proceedings include
certain contract disputes, environmental reviews and investigations, audits,
inquiries from various regulators, and pending judicial matters. We cannot
predict the final disposition of such proceedings. We regularly review legal
matters and record provisions for claims that are considered probable of loss.
The resolution of pending proceedings is not expected to have a material effect
on our financial statements in the period they are resolved. See Note 2 for a discussion of contingencies related to Regulatory Matters. 14




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INDEPENDENT ACCOUNTANTS REPORT To the Board of Directors and Shareholder of
Michigan Consolidated Gas Company We have reviewed the accompanying condensed consolidated statement of financial
position of Michigan Consolidated Gas Company and subsidiaries as of March 31,
2004, and the related condensed consolidated statements of operations, cash
flows and retained earnings for the three-month periods ended March 31, 2004
and 2003, respectively. These interim financial statements are the
responsibility of Michigan Consolidated Gas Companys management. We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion. Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated interim financial statements for them to
be in conformity with accounting principles generally accepted in the United
States of America. We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated statement of
financial position of Michigan Consolidated Gas Company and subsidiaries as of
December 31, 2003, and the related consolidated statements of operations, cash
flows and retained earnings for the year then ended (not presented herein); and
in our report dated March 1, 2004 (which report includes an explanatory
paragraph relating to the change in the method of accounting for asset
retirement obligations in 2003), we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying condensed consolidated statement of financial position as
of December 31, 2003 is fairly stated, in all material respects, in relation to
the consolidated statement of financial position from which it has been
derived.  /s/ DELOITTE & TOUCHE LLP Detroit, Michigan
May 5, 2004 15




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OTHER INFORMATION 
 LEGAL PROCEEDINGS
We are involved in certain legal, regulatory and administrative proceedings
before various courts, arbitration panels and governmental agencies concerning
claims arising in the ordinary course of business. These proceedings include
certain contract disputes, environmental reviews and investigations, audits,
inquiries from various regulators, and pending judicial matters. We cannot
predict the final disposition of such proceedings. We regularly review legal
matters and record provisions for claims that are considered probable of loss.
The resolution of pending proceedings is not expected to have a material effect
on our financial statements in the period they are resolved. 
 EXHIBITS AND REPORTS ON FORM 8-K  (a)
    
    Exhibits ExhibitNumber
    
    DescriptionFiled:15-8
    
    Awareness Letter of Deloitte & Touche LLP31-7
    
    Chief Executive Officer Section 302 Form 10-Q Certification31-8
    
    Chief Financial Officer Section 302 Form 10-Q CertificationFurnished:32-7
    
    Chief Executive Officer Section 906 Certification of Periodic Report32-8
    
    Chief Financial Officer Section 906 Certification of Periodic Report




|(b) |  | Reports on Form 8-K
|--- |  | -------------------

During the quarterly period ended March 31, 2004, we filed or furnished Current Reports on
Forms 8-K covering matters, as follows:

Item 7. Exhibits and Item 9. Regulation FD Disclosure filed and dated February 6,
2004; andItem 7. Exhibits and Item 12. Results of Operations and Financial Conditions dated
February 5, 2004 and filed February 6, 2004.


16



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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 COMPANYDate: May 5, 2004
    
    /s/ DANIEL G. BRUDZYNSKIDaniel G. Brudzynski
Chief Accounting Officer,
Vice President and Controller
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Michigan Consolidated Gas Company
Quarterly Report on Form 10-Q for Quarter Ended March 31,
2004
File No. 1-7310

Exhibit Index

|        |  |                                                                     
|------- |  | --------------------------------------------------------------------
|Exhibit |  |                                                                     
|Number  |  | Description                                                         
|        |  |                                                                     
|15-8    |  | Awareness Letter of Deloitte & Touche LLP                           
|31-7    |  | Chief Executive Officer Section 302 Form 10-Q Certification         
|31-8    |  | Chief Financial Officer Section 302 Form 10-Q Certification         
|32-7    |  | Chief Executive Officer Section 906 Certification of Periodic Report
|32-8    |  | Chief Financial Officer Section 906 Certification of Periodic Report