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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



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FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended September 30, 2002

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
(Exact name of registrant as specified in its charter)

|                                         |  |                    
|---------------------------------------- |  | -------------------
|Michigan                                 |  | 38-0478040         
|(State or other jurisdiction of          |  | (I.R.S. Employer   
|incorporation or organization)           |  | Identification No.)
|                                         |  |                    
|2000 2nd Avenue, Detroit, Michigan       |  | 48226-1279         
|(Address of principal executive offices) |  | (Zip Code)         

313-965-2430
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 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                     No     o



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TABLE OF CONTENTS



|                                                                     |                                              |  |  |  |  |  |  | 
|-------------------------------------------------------------------- | -------------------------------------------- |  |  |  |  |  |  | 
|Part I  Financial Information                                      
|Definitions                                                         
|Item 2. Managements Narrative Analysis of the Results of Operations
|Item 4. Controls and Procedures                                     
|Item 1. Financial Statements                                        
|                                                                     | Consolidated Statement of Operations        
|                                                                     | Consolidated Statement of Financial Position
|                                                                     | Consolidated Statement of Cash Flows        
|                                                                     | Consolidated Statement of Retained Earnings 
|                                                                     | Notes to Consolidated Financial Statements  
|                                                                     | Independent Accountants Report             
|PART II  OTHER INFORMATION                                         
|Item 6. Exhibits and Reports on Form 8-K                            
|SIGNATURE                                                           
|CERTIFICATIONS                                                      
|Awareness Letter of Deloitte & Touche LLP                           
|364-Day Credit Agreement                                            
|Three-Year Credit Agreement                                         
|Chief Executive Officer Certification                               
|Chief Financial Officer Certification                               



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MICHIGAN CONSOLIDATED GAS COMPANY

QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 2002

TABLE OF CONTENTS

|                                                                     |                                              |  |        |    | 
|-------------------------------------------------------------------- | -------------------------------------------- |  | ------ | -- | 
|                                                                     |                                              |  | PAGE   |   
|                                                                     |                                              |  | NUMBER |   
|                                                                     |                                              |  |        |   
|DEFINITIONS                                                          |                                              |  | 1      |   
|                                                                     |                                              |  |        |   
|PART I   FINANCIAL INFORMATION                                      |                                              |  |        |   
|Item 1. Financial Statements                                         |                                              |  |        |   
|                                                                     | Consolidated Statement of Operations         |  |        | 8  | 
|                                                                     | Consolidated Statement of Financial Position |  |        | 9  | 
|                                                                     | Consolidated Statement of Cash Flows         |  |        | 10 | 
|                                                                     | Consolidated Statement of Retained Earnings  |  |        | 11 | 
|                                                                     | Notes to Consolidated Financial Statements   |  |        | 12 | 
|                                                                     | Independent Accountants Report              |  |        | 17 | 
|                                                                     |                                              |  |        |   
|Item 2.
Managements Narrative Analysis of the Results
of Operations |                                              |  | 2      |   
|                                                                     |                                              |  |        |   
|Item 4. Controls and Procedures                                      |                                              |  | 7      |   
|                                                                     |                                              |  |        |   
|PART II  OTHER INFORMATION                                          |                                              |  |        |   
|Item 6. Exhibits and Reports on Form 8-K                             |                                              |  | 18     |   
|                                                                     |                                              |  |        |   
|SIGNATURE                                                            |                                              |  | 19     |   
|                                                                     |                                              |  |        |   
|CERTIFICATIONS                                                       |                                              |  | 20     |   





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Definitions

|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|--------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Bcf                         |  | Billion cubic feet of gas.                                                                                                                                                                                                                                                                                                                        
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|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 its 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. (formerly MCN Energy), a
wholly owned subsidiary of DTE Energy.                                                                                                                                                                                                                                                              
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|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.                                                                                                                                                                                         
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|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 that was
reinstated by MichCon in January 2002 that
permits 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.                                                                                                                                                                                                       
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|Mcf                         |  | Thousand cubic feet of gas.                                                                                                                                                                                                                                                                                                                       
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|MCN Energy                  |  | MCN Energy Group Inc. and its subsidiaries.                                                                                                                                                                                                                                                                                                       
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|MichCon                     |  | Michigan Consolidated Gas Company; an
indirect, wholly owned natural gas
distribution and intrastate transmission
subsidiary of Enterprises.                                                                                                                                                                                                      
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|MPSC                        |  | Michigan Public Service Commission                                                                                                                                                                                                                                                                                                                
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|Normal Weather              |  | The average daily temperature within MichCons
service area during a recent 30-year period.                                                                                                                                                                                                                                                       

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Michigan Consolidated Gas Company

FORWARD-LOOKING STATEMENTS

Certain information presented herein includes forward-looking statements.
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. Factors
that may impact forward-looking statements include, but are not limited to, the
following: the effects of weather and other natural phenomena on operations;
the effects of competition, including the gas Customer Choice Program; the
capital intensive nature of MichCons business; the economic climate and growth
in the geographic areas in which MichCon does business; the timing and extent
of changes in commodity prices for natural gas, electricity and crude oil;
access to capital and equity markets; the effects of changes in governmental
policies and regulatory actions, including income taxes, environmental
compliance and authorized rates; and the timing of the accretive effects of DTE
Energys merger with MCN Energy.

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 a net loss of $19.9 million and net income of $.6 million for
the 2002 third quarter and nine-month period, respectively, compared with net
losses of $43.3 million and $66.0 million for the comparable 2001 periods.
MichCon typically records third quarter losses due to seasonally lower demand
for natural gas during the summer months. The earnings comparability is
affected by $103.4 million ($67.2 million net of taxes) of merger and
restructuring charges that were recorded in the nine-month period of 2001. The
earnings comparison also reflects negative margins in the 2001 third quarter
and nine-month period from selling gas under MichCons Gas Sales Program, which
ended in December 2001. In 2002, MichCon had no profit or loss on the sale of
gas to customers compared to $20 million ($13 million net of tax) and $49
million ($32 million net of tax) in margin losses in the 2001 third quarter and
nine-month period, respectively.

|                                                     |  |         |       |   |          |   |        |  
|---------------------------------------------------- |  | ------- | ----- | - | -------- | - | ------ | -
|Increase (Decrease) in Income Compared to Prior Year |  |         |       |   |          |   |        |  
|(in Millions)                                        |  | Quarter |       |   | 9 Months |  
|                                                     |  |         |       |   |          |  
|Operating revenues                                   |  | $       | (4.4  | ) |          | $ | 162.2  |  
|Cost of gas                                          |  |         | 25.7  |   |          |   | (121.7 | )
|                                                     |  |         |       |   |          |  
|Gross margin                                         |  |         | 21.3  |   |          |   | 40.5   |  
|Operation and maintenance                            |  |         | .4    |   |          |   | (8.7   | )
|Depreciation and depletion                           |  |         | (.4   | ) |          |   | (.6    | )
|Taxes other than income                              |  |         | 7.8   |   |          |   | 7.2    |  
|Merger and restructuring costs                       |  |         | 1.4   |   |          |   | 103.4  |  
|Property write-down and contract losses              |  |         |      |   |          |   | (47.8  | )
|Other income and deductions                          |  |         | 3.9   |   |          |   | 8.1    |  
|Income tax provision                                 |  |         | (11.0 | ) |          |   | (35.4  | )
|                                                     |  |         |       |   |          |  
|Net income                                           |  | $       | 23.4  |   |          | $ | 66.7   |  
|                                                     |  |         |       |   |          |  

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Managements Narrative Analysis of the Results of Operations

Operating revenues decreased $4.4 million and increased $162.2 million in the
2002 third quarter and nine-month period, respectively, reflecting varying
contributions from selling gas, providing end user and intermediate
transportation services and other services.

|                            |  |         |       |  |          |   |       |      |  |   |       |  |  |   |       | 
|--------------------------- |  | ------- | ----- |  | -------- | - | ----- | ---- |  | - | ----- |  |  | - | ----- | 
|                            |  | Quarter |       |  | 9 Months |  
|                            |  |         |       |  |          |  
|                            |  | 2002    |       |  | 2001     |   |       | 2002 |  |   | 2001  | 
|                            |  |         |       |  |          |   |       |      |  |   |       | 
|Gas Markets (in Millions)   |  |         |       |  |          |   |       |      |  |   |       |  |  |   |       | 
|Gas Sales                   |  | $       | 71.8  |  |          | $ | 81.5  |      |  | $ | 782.9 |  |  | $ | 624.5 | 
|End User Transportation     |  |         | 22.4  |  |          |   | 18.3  |      |  |   | 80.0  |  |  |   | 77.3  | 
|                            |  |         |       |  |          |   |       |      |  |   |       | 
|                            |  |         | 94.2  |  |          |   | 99.8  |      |  |   | 862.9 |  |  |   | 701.8 | 
|Intermediate Transportation |  |         | 12.1  |  |          |   | 10.2  |      |  |   | 35.9  |  |  |   | 34.0  | 
|Other                       |  |         | 11.1  |  |          |   | 11.9  |      |  |   | 43.6  |  |  |   | 44.5  | 
|                            |  |         |       |  |          |   |       |      |  |   |       | 
|                            |  | $       | 117.4 |  |          | $ | 121.9 |      |  |   | 942.4 |  |  |   | 780.3 | 
|                            |  |         |       |  |          |   |       |      |  |   |       | 
|Gas Markets (in Bcf)        |  |         |       |  |          |   |       |      |  |   |       |  |  |   |       | 
|Gas Sales                   |  |         | 11.0  |  |          |   | 11.9  |      |  |   | 116.9 |  |  |   | 120.6 | 
|End User Transportation     |  |         | 35.8  |  |          |   | 32.1  |      |  |   | 121.7 |  |  |   | 110.6 | 
|                            |  |         |       |  |          |   |       |      |  |   |       | 
|                            |  |         | 46.8  |  |          |   | 44.0  |      |  |   | 238.6 |  |  |   | 231.2 | 
|Intermediate Transportation |  |         | 100.7 |  |          |   | 153.7 |      |  |   | 348.8 |  |  |   | 473.9 | 
|                            |  |         |       |  |          |   |       |      |  |   |       | 
|                            |  |         | 147.5 |  |          |   | 197.7 |      |  |   | 587.4 |  |  |   | 705.1 | 
|                            |  |         |       |  |          |   |       |      |  |   |       | 

|                                       |                          |  |         |      |   |          |     |    |      |  |        |       |   |  |      |       |  
|-------------------------------------- | ------------------------ |  | ------- | ---- | - | -------- | --- | -- | ---- |  | ------ | ----- | - |  | ---- | ----- | -
|                                       |                          |  | Quarter |      |   | 9 Months |    
|                                       |                          |  |         |      |   |          |    
|                                       |                          |  | 2002    |      |   | 2001     |     |    | 2002 |  |        | 2001  |  
|                                       |                          |  |         |      |   |          |     |    |      |  |        |       |  
|Percentage Colder (Warmer) Than
Normal |                          |  | N/M     |      |   |          | N/M |    |      |  | (11.1) | %     |   |  | (8.1 | )%   
|Increase (Decrease) From Normal in:    |                          |  |         |      |   |          |     |    |      |  |        |       |   |  |      |      
|                                       | Gas markets (in Bcf)     |  |         | (1.8 | ) |          |     | .6 |      |  |        | (15.6 | ) |  |      | (11.6 | )
|                                       | Net income (in Millions) |  | $       | (1.5 | ) |          | $   | .5 |      |  | $      | (13.7 | ) |  | $    | (10.2 | )
|                                      
|N/M  Not meaningful                  

Gas sales and end user transportation revenuesin total decreased $5.6 million
and increased $161.1 million in the 2002 third quarter and nine-month period,
respectively. Revenues in the 2002 nine-month period reflect an increase in
the gas commodity component of sales rates. During 2001, MichCon operated under
the Gas Sales Program in which the gas commodity component of its sales rates
was fixed at $2.95 per thousand cubic feet (Mcf). In January 2002, the Gas
Sales Program ended and MichCon returned to a gas cost recovery mechanism (GCR)
that allows for the recovery of reasonably and prudently incurred gas costs.
MichCons sales rates included a gas commodity component of $3.62 per Mcf for
January 2002 and $4.38 per Mcf for the remainder of the 2002 nine-month period
compared to $2.95 per Mcf in 2001. End user transportation volumes and revenues
also reflect 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. Upon returning to the GCR mechanism in
January 2002, MichCon has no commodity price risk associated with its prudently
incurred gas costs. Accordingly, margins earned

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Managements Narrative Analysis of the Results of Operations

from selling gas and margins generated from providing end user transportation
services are the same. Revenues were also negatively impacted by weather that
was 69.6% warmer in the 2002 third quarter and 3% warmer in the 2002 nine-month
period as compared to the same 2001 periods.

Intermediate transportation revenuesincreased $1.9 million in the 2002 third
quarter and intermediate transportation deliveries decreased 53.0 billion cubic
feet (Bcf) for the same period. Intermediate transportation revenues increased
$1.9 million in the 2002 nine-month period and intermediate transportation
deliveries decreased 125.1 Bcf. A significant portion of the volume decrease
was due to lower storage requirements slightly offset by a volume increase
attributable to 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.

Cost of gasis affected by variations in sales volumes, cost of purchased gas
and related transportation costs, and the effects of any permanent liquidation
of inventory gas. Cost of gas sold decreased by $25.7 million and increased
$121.7 million in the 2002 third quarter and nine-month period, respectively,
primarily due to prices paid for gas supply and the impact in 2001 of a
reduction in inventory gas. The average cost of gas sold decreased $2.38 per
Mcf (52%) and increased $1.10 per Mcf (33%) for the 2002 third quarter and nine
month period, respectively, from the comparable 2001 periods. MichCon recorded
the benefits of a 17.5 Bcf inventory liquidation in the first half of 2001. The
inventory liquidation was priced at $.38 per Mcf compared to an average gas
purchase rate in 2001 of $3.64 per Mcf. Cost of gas was also affected by a
decline in sales volumes due to warmer weather and the number of customers who
have chosen to purchase gas from suppliers other than MichCon under the
Customer Choice program.

Operation and maintenanceexpenses decreased $.4 million and increased $8.7
million for the 2002 third quarter and nine-month period. The nine-month
period variance is primarily due to allocated expenses from DTE Energy,
partially offset by lower accruals for injuries and damages. The allocation of
expenses from DTE Energy is based upon an estimate of the costs incurred to
support MichCon and is periodically reviewed and adjusted. Additionally, the
comparison was affected by lost gas from storage fields resulting in a $5
million charge in the 2002 second quarter.

Taxes other than incomedecreased $7.8 million and $7.2 million for the 2002
third quarter and nine-month period, respectively, primarily due to a charge in
the 2001 third quarter for the probable unfavorable resolution of pending tax
appeals filed with various governments in 1996 and 1997.

Merger and restructuring costswere not incurred in the 2002 third quarter and
nine-month period compared to $1.4 million and $103.4 million incurred in the
comparable 2001 periods. Merger costs associated with the DTE Energy
acquisition of MCN Energy consist primarily of system integration, relocation,
legal, accounting and

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Managements Narrative Analysis of the Results of Operations

consulting costs. Restructuring charges were primarily associated with a work
force reduction plan.

Property write-down and contract losstotaled $47.8 million for the 2002
nine-month period, due to a $33.2 million loss from the planned sale of
MichCons former headquarters and a $14.6 million charge related to the
termination of a contract for computer services.

Other income and deductionsdecreased $3.9 million and $8.1 million for the
2002 third quarter and nine-month period, respectively. The variance is
primarily due to a $2.6 million loss and $9.3 million loss in the 2001 quarter
and nine-month period, respectively, from its 33% to 50% interests in a series
of partnerships that own a residential community on the Detroit riverfront
(Harbortown). Partially offsetting the decreases for the 2002 nine-month
period were higher interest costs.

Income taxesincreased $11.0 million and $35.4 million for the 2002 third
quarter and nine-month period, respectively, due to an increase in pre-tax
earnings.

CAPITAL RESOURCES AND LIQUIDITY

|                                                     |                      |   |              |     |   |      |    |     |  
|---------------------------------------------------- | -------------------- | - | ------------ | --- | - | ---- | -- | --- | -
|                                                     |                      |   | Nine Months  |    
|                                                     |                      |   | September 30 |    
|                                                     |                      |   |              |    
|                                                     |                      |   | 2002         |     |   | 2001 |   
|                                                     |                      |   |              |     |   |      |   
|Cash and Cash Equivalents                            |                      |   |              |     |   |      |    |    
|(in Millions)                                        |                      |   |              |     |   |      |    |    
|Cash Flow From (Used For)                            |                      |   |              |     |   |      |    |    
|                                                     | Operating activities |   | $            | 34  |   |      | $  | 85  |  
|                                                     | Investing activities |   |              | (58 | ) |      |    | (72 | )
|                                                     | Financing activities |   |              | 43  |   |      |    | (19 | )
|                                                     |                      |   |              |     |   |      |   
|Net Increase (Decrease) in Cash and Cash Equivalents |                      | $ | 19           |     |   | $    | (6 | )  
|                                                     |                      |   |              |     |   |     

Operating Activities

Net cash from operating activities decreased $51 million due to higher working
capital requirements partially offset by higher net income, after adjusting for
noncash items (depreciation, amortization, property write-down and contract
losses and deferred taxes). The higher working capital requirements primarily
reflect a significant increase in gas inventories due to managements decision
to utilize storage gas during 2001 that resulted in a gas inventory decrement
during the 2001 calendar year. The decline in cash flow is also due to the
under-recovery of gas costs incurred totaling $19 million. With the
implementation of the GCR mechanism in January 2002, MichCon is allowed to
recover its actual gas costs from gas customers. Any remaining under-recovery
at year-end will be trued-up as part of 2002s GCR reconciliation process.

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Managements Narrative Analysis of the Results of Operations

Investing Activities

Net cash used for investing activities declined $14 million reflecting declines
in plant and equipment expenditures.

Financing Activities

Net cash related to financing activities increased $62 million reflecting the
payment of $75 million in dividends in the 2001 nine-month period. Partially
offsetting this increase was the issuance of less long- and short-term debt
during the 2002 period, net of debt repayments.

PENSION AND POSTRETIREMENT COSTS

MichCons costs of providing pension and postretirement benefits are
dependent upon a number of factors, such as the rates of return on plan assets,
the discount rate and the rate of increase in health care costs. The market
value of plan assets has been affected by sharp declines in the equity market
since 2000. As a result, pension and postretirement costs could increase in future years without a
substantial recovery in the equity markets. It is estimated that the
increase in 2003 pension and postretirement costs could range from
$20 million-$40
million, pre-tax, depending on actual plan asset returns, the discount
rate and other actuarial assumptions that will not be determined
until December 31, 2002. MichCon will initiate cost saving strategies to significantly
offset the earnings impact of higher pension and postretirement costs.

NEW ACCOUNTING PRONOUNCEMENTS

During 2001, the Financial Accounting Standards Board (FASB) issued new
accounting pronouncements concerning goodwill and other intangible assets,
asset retirement obligations and impairment or disposal of long-lived assets.
See Note 8 for a discussion of MichCons evaluation of the adoption of these
new accounting pronouncements.

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CONTROLS AND PROCEDURES



|(a) |  | Evaluation of disclosure controls and procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | MichCons Chief Executive Officer and Chief Financial Officer have evaluated
the effectiveness of MichCons disclosure controls and procedures (as
defined in Exchange Act Rules 13a  14(c) and 15d  14(d)) as of a date
within 90 days before the filing of this quarterly report,
and have concluded that, as of the evaluation date, such controls and
procedures were effective at ensuring that required information will be
disclosed on a timely basis in reports filed under the Exchange Act.
|   
|(b) |  | Changes in internal controls                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|    |  | There have been no significant changes (including corrective actions with
regard to significant deficiencies or material weaknesses) in MichCons
internal controls or in other factors that could significantly affect these
controls subsequent to the evaluation date referenced in paragraph (a)
above.                                                                                                                                                                                             

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MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

|                                  |                                         |                                     |         |                    |         |   |                   |         |         |      |         |         |         |   |          |         |         |  
|--------------------------------- | --------------------------------------- | ----------------------------------- | ------- | ------------------ | ------- | - | ----------------- | ------- | ------- | ---- | ------- | ------- | ------- | - | -------- | ------- | ------- | -
|                                  |                                         |                                     |         | Three Months Ended |         |   | Nine Months Ended |        
|                                  |                                         |                                     |         | September 30       |         |   | September 30      |        
|                                  |                                         |                                     |         |                    |         |   |                   |        
|                                  |                                         |                                     |         | 2002               |         |   | 2001              |         |         | 2002 |         |         | 2001    |  
|                                  |                                         |                                     |         |                    |         |   |                   |         |         |      |         |         |         |  
|(in Thousands)                    |                                         |                                     |         |                    |         |   |                   |         |         |      |         |         |         |   |          |        
|Operating Revenues                |                                         | $                                   | 117,440 |                    |         | $ | 121,876           |         |         | $    | 942,418 |         |         | $ | 780,266  |        
|                                  |                                         |                                     |         |                    |         |   |                   |         |         |      |         |        
|Operating Expenses                |                                         |                                     |         |                    |         |   |                   |         |         |      |         |         |         |   |          |        
|                                  | Cost of gas                             |                                     |         | 30,169             |         |   |                   | 55,894  |         |      |         | 530,686 |         |   |          | 408,996 |        
|                                  | Operation and maintenance               |                                     |         | 73,311             |         |   |                   | 73,648  |         |      |         | 212,950 |         |   |          | 204,227 |        
|                                  | Depreciation and depletion              |                                     |         | 26,505             |         |   |                   | 26,146  |         |      |         | 79,566  |         |   |          | 79,017  |        
|                                  | Taxes other than income                 |                                     |         | 11,278             |         |   |                   | 19,142  |         |      |         | 38,522  |         |   |          | 45,759  |        
|                                  | Merger and restructuring costs          |                                     |         |                   |         |   |                   | 1,412   |         |      |         |        |         |   |          | 103,376 |        
|                                  | Property write-down and contract losses |                                     |         |                   |         |   |                   |        |         |      |         | 47,844  |         |   |          |        |        
|                                  |                                         |                                     |         |                    |         |   |                   |         |         |      |         |        
|                                  |                                         | Total operating expenses            |         |                    | 141,263 |   |                   |         | 176,242 |      |         |         | 909,568 |   |          |         | 841,375 |  
|                                  |                                         |                                     |         |                    |         |   |                   |         |         |      |         |        
|Operating Income (Loss)           |                                         |                                     | (23,823 | )                  |         |   | (54,366           | )       |         |      | 32,850  |         |         |   | (61,109  | )      
|                                  |                                         |                                     |         |                    |         |   |                   |         |         |      |         |        
|Other Income and (Deductions)     |                                         |                                     |         |                    |         |   |                   |         |         |      |         |         |         |   |          |        
|                                  | Interest income                         |                                     |         | 2,314              |         |   |                   | 2,426   |         |      |         | 8,122   |         |   |          | 7,360   |        
|                                  | Interest on long-term debt              |                                     |         | (11,510            | )       |   |                   | (12,129 | )       |      |         | (37,015 | )       |   |          | (33,294 | )      
|                                  | Other interest expense                  |                                     |         | (1,533             | )       |   |                   | (2,460  | )       |      |         | (7,388  | )       |   |          | (8,915  | )      
|                                  | Loss on investment in joint venture     |                                     |         |                   |         |   |                   | (2,640  | )       |      |         |        |         |   |          | (9,342  | )      
|                                  | Equity in earnings of joint ventures    |                                     |         | 575                |         |   |                   | 566     |         |      |         | 1,677   |         |   |          | 1,894   |        
|                                  | Other                                   |                                     |         | 2,036              |         |   |                   | 2,291   |         |      |         | 2,752   |         |   |          | 2,261   |        
|                                  |                                         |                                     |         |                    |         |   |                   |         |         |      |         |        
|                                  |                                         | Total other income and (deductions) |         |                    | (8,118  | ) |                   |         | (11,946 | )    |         |         | (31,852 | ) |          |         | (40,036 | )
|                                  |                                         |                                     |         |                    |         |   |                   |         |         |      |         |        
|Income (Loss) Before Income Taxes |                                         |                                     | (31,941 | )                  |         |   | (66,312           | )       |         |      | 998     |         |         |   | (101,145 | )      
|Income Tax Provision (Benefit)    |                                         |                                     | (12,043 | )                  |         |   | (23,057           | )       |         |      | 360     |         |         |   | (35,096  | )      
|                                  |                                         |                                     |         |                    |         |   |                   |         |         |      |         |        
|Net Income (Loss)                 |                                         | $                                   | (19,898 | )                  |         | $ | (43,255           | )       |         | $    | 638     |         |         | $ | (66,049  | )      
|                                  |                                         |                                     |         |                    |         |   |                   |         |         |      |         |        

See Notes to Consolidated Financial Statements (Unaudited)

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##### Table of Contents






MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

|                                     |                                                     |                                                                                                   |                                                                                      |           |              |         |           |             |           |         | 
|------------------------------------ | --------------------------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | --------- | ------------ | ------- | --------- | ----------- | --------- | ------- | 
|                                     |                                                     |                                                                                                   |                                                                                      |           | September 30 |         |           |             |           |        
|                                     |                                                     |                                                                                                   |                                                                                      |           | 2002         |         |           | December 31 |          
|                                     |                                                     |                                                                                                   |                                                                                      |           | (Unaudited)  |         |           | 2001        |          
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |         |           |             |          
|(in Thousands)                       |                                                     |                                                                                                   |                                                                                      |           |              |         |           |            
|ASSETS                               |                                                     |                                                                                                   |                                                                                      |           |              |         |           |            
|                                     | Current Assets                                      |                                                                                                   |                                                                                      |           |              |         |           |             |          
|                                     |                                                     | Cash and cash equivalents                                                                         |                                                                                      | $         | 22,753       |         |           | $           | 3,929     |        
|                                     |                                                     | Accounts receivable                                                                               |                                                                                      |           |              |         |           |             |           |        
|                                     |                                                     |                                                                                                   | Customer (less allowance for doubtful accounts of $14,452 and $21,428, respectively) |           |              | 94,350  |           |             |           | 143,660 | 
|                                     |                                                     |                                                                                                   | Accrued unbilled revenues                                                            |           |              | 32,203  |           |             |           | 110,300 | 
|                                     |                                                     |                                                                                                   | Other                                                                                |           |              | 51,503  |           |             |           | 99,458  | 
|                                     |                                                     | Accrued gas cost recovery revenue                                                                 |                                                                                      |           | 33,389       |         |           |             | 14,401    |        
|                                     |                                                     | Inventories                                                                                       |                                                                                      |           |              |         |           |             |           |        
|                                     |                                                     |                                                                                                   | Gas                                                                                  |           |              | 156,802 |           |             |           | 6,178   | 
|                                     |                                                     |                                                                                                   | Material and supplies                                                                |           |              | 14,703  |           |             |           | 15,013  | 
|                                     |                                                     | Property taxes assessed applicable to future periods                                              |                                                                                      |           | 30,224       |         |           |             | 52,289    |        
|                                     |                                                     | Other                                                                                             |                                                                                      |           | 59,552       |         |           |             | 16,053    |        
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |        
|                                     |                                                     |                                                                                                   | 495,479                                                                              |           |              |         | 461,281   |            
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |        
|                                     | Property, Plant and Equipment                       |                                                                                                   |                                                                                      | 3,083,887 |              |         |           | 3,065,415   |          
|                                     |                                                     | Less accumulated depreciation and depletion                                                       |                                                                                      |           | 1,701,414    |         |           |             | 1,626,015 |        
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |         |           |            
|                                     |                                                     |                                                                                                   | 1,382,473                                                                            |           |              |         | 1,439,400 |            
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |        
|                                     | Other Assets                                        |                                                                                                   |                                                                                      |           |              |         |           |             |          
|                                     |                                                     | Other investments                                                                                 |                                                                                      |           | 78,983       |         |           |             | 76,231    |        
|                                     |                                                     | Notes receivable                                                                                  |                                                                                      |           | 84,468       |         |           |             | 85,176    |        
|                                     |                                                     | Regulatory assets                                                                                 |                                                                                      |           | 42,683       |         |           |             | 43,356    |        
|                                     |                                                     | Prepaid benefit costs and due from affiliate                                                      |                                                                                      |           | 276,258      |         |           |             | 229,530   |        
|                                     |                                                     | Other                                                                                             |                                                                                      |           | 20,052       |         |           |             | 30,108    |        
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |         |           |            
|                                     |                                                     |                                                                                                   | 502,444                                                                              |           |              |         | 464,401   |            
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |         |           |            
|                                     |                                                     | $                                                                                                 | 2,380,396                                                                            |           |              | $       | 2,365,082 |            
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |        
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                     |                                                                                                   |                                                                                      |           |              |         |           |            
|                                     | Current Liabilities                                 |                                                                                                   |                                                                                      |           |              |         |           |             |          
|                                     |                                                     | Accounts payable                                                                                  |                                                                                      | $         | 131,008      |         |           | $           | 137,181   |        
|                                     |                                                     | Short-term borrowings                                                                             |                                                                                      |           | 320,347      |         |           |             | 256,862   |        
|                                     |                                                     | Current portion of long-term debt, including capital leases                                       |                                                                                      |           | 23,644       |         |           |             | 21,130    |        
|                                     |                                                     | Federal income, property and other taxes payable                                                  |                                                                                      |           | 19,568       |         |           |             | 52,461    |        
|                                     |                                                     | Other                                                                                             |                                                                                      |           | 79,946       |         |           |             | 74,772    |        
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |         |           |            
|                                     |                                                     |                                                                                                   | 574,513                                                                              |           |              |         | 542,406   |            
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |        
|                                     | Long-term debt, including capital lease obligations |                                                                                                   |                                                                                      | 754,661   |              |         |           | 778,577     |          
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |        
|                                     | Other Liabilities                                   |                                                                                                   |                                                                                      |           |              |         |           |             |          
|                                     |                                                     | Deferred income taxes                                                                             |                                                                                      |           | 145,687      |         |           |             | 124,828   |        
|                                     |                                                     | Unamortized investment tax credits                                                                |                                                                                      |           | 22,725       |         |           |             | 24,129    |        
|                                     |                                                     | Regulatory liabilities                                                                            |                                                                                      |           | 142,852      |         |           |             | 144,172   |        
|                                     |                                                     | Accrued postretirement benefit costs                                                              |                                                                                      |           | 63,795       |         |           |             | 70,805    |        
|                                     |                                                     | Accrued environmental costs                                                                       |                                                                                      |           | 17,341       |         |           |             | 20,743    |        
|                                     |                                                     | Other                                                                                             |                                                                                      |           | 38,252       |         |           |             | 39,238    |        
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |        
|                                     |                                                     |                                                                                                   | 430,652                                                                              |           |              |         | 423,915   |            
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |        
|Contingencies (Note 5)               |                                                     |                                                                                                   |                                                                                      |           |              |         |           |            
|                                     | Shareholders Equity                                |                                                                                                   |                                                                                      |           |              |         |           |             |          
|                                     |                                                     | Common stock $1 par value, 15,100,000 shares authorized,
10,300,000 shares issued and outstanding |                                                                                      |           | 10,300       |         |           |             | 10,300    |        
|                                     |                                                     | Additional paid in capital                                                                        |                                                                                      |           | 231,476      |         |           |             | 231,728   |        
|                                     |                                                     | Retained earnings                                                                                 |                                                                                      |           | 378,794      |         |           |             | 378,156   |        
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |        
|                                     |                                                     |                                                                                                   | 620,570                                                                              |           |              |         | 620,184   |            
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |         |           |            
|                                     |                                                     | $                                                                                                 | 2,380,396                                                                            |           |              | $       | 2,365,082 |            
|                                     |                                                     |                                                                                                   |                                                                                      |           |              |        

See Notes to Consolidated Financial Statements (Unaudited)

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##### Table of Contents






MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

|                                                     |                                                                            |                                                  |        |                   |          |   |        |         |          |  
|---------------------------------------------------- | -------------------------------------------------------------------------- | ------------------------------------------------ | ------ | ----------------- | -------- | - | ------ | ------- | -------- | -
|                                                     |                                                                            |                                                  |        | Nine Months Ended |         
|                                                     |                                                                            |                                                  |        | September 30      |         
|                                                     |                                                                            |                                                  |        |                   |         
|                                                     |                                                                            |                                                  |        | 2002              |          |   | 2001   |        
|                                                     |                                                                            |                                                  |        |                   |          |   |        |        
|(in Thousands)                                       |                                                                            |                                                  |        |                   |          |   |        |        
|Operating Activities                                 |                                                                            |                                                  |        |                   |          |   |        |        
|                                                     | Net income (loss)                                                          |                                                  | $      | 638               |          |   | $      | (66,049 | )       
|                                                     | Adjustments to reconcile net income to net cash from
operating activities:
|                                                     | Depreciation, depletion and amortization                                   |                                                  |        | 86,317            |          |   |        | 86,511  |         
|                                                     | Property write-down and contract losses                                    |                                                  |        | 40,943            |          |   |        | 9,342   |         
|                                                     | Deferred income taxes and investment tax credit, net                       |                                                  |        | 9,404             |          |   |        | (12,205 | )       
|                                                     | Changes in assets and liabilities:                                         |                                                  |        |                   |          |   |        |         |         
|                                                     |                                                                            | Accounts receivable, net                         |        |                   | 97,265   |   |        |         | 58,259   |  
|                                                     |                                                                            | Accrued unbilled revenues                        |        |                   | 78,097   |   |        |         | 109,339  |  
|                                                     |                                                                            | Accrued gas cost recovery revenue                |        |                   | (18,989  | ) |        |         | (92      | )
|                                                     |                                                                            | Inventories                                      |        |                   | (150,315 | ) |        |         | (110,955 | )
|                                                     |                                                                            | Prepaid property tax                             |        |                   | 22,064   |   |        |         | 24,608   |  
|                                                     |                                                                            | Prepaid benefit costs and due from affiliate     |        |                   | (46,728  | ) |        |         | (956     | )
|                                                     |                                                                            | Accounts payable                                 |        |                   | (6,173   | ) |        |         | 25,088   |  
|                                                     |                                                                            | Federal income, property and other taxes payable |        |                   | (32,893  | ) |        |         | (72,193  | )
|                                                     |                                                                            | Other                                            |        |                   | (45,109  | ) |        |         | 35,040   |  
|                                                     |                                                                            |                                                  |        |                   |          |  
|                                                     | Net cash from operating activities                                         |                                                  |        | 34,521            |          |   |        | 85,737  |         
|                                                     |                                                                            |                                                  |        |                   |          |  
|Investing Activities                                 |                                                                            |                                                  |        |                   |          |   |        |        
|                                                     | Capital expenditures                                                       |                                                  |        | (59,049           | )        |   |        | (76,948 | )       
|                                                     | Other                                                                      |                                                  |        | 848               |          |   |        | 4,866   |         
|                                                     |                                                                            |                                                  |        |                   |          |  
|                                                     | Net cash used for investing activities                                     |                                                  |        | (58,201           | )        |   |        | (72,082 | )       
|                                                     |                                                                            |                                                  |        |                   |          |  
|Financing Activities                                 |                                                                            |                                                  |        |                   |          |   |        |        
|                                                     | Issuance of long-term debt                                                 |                                                  |        |                  |          |   |        | 198,382 |         
|                                                     | Short-term borrowings, net                                                 |                                                  |        | 63,485            |          |   |        | (79,376 | )       
|                                                     | Retirement of long-term debt                                               |                                                  |        | (20,981           | )        |   |        | (63,329 | )       
|                                                     | Dividends paid                                                             |                                                  |        |                  |          |   |        | (75,000 | )       
|                                                     |                                                                            |                                                  |        |                   |          |  
|                                                     |                                                                            | Net cash from (used for) financing activities    |        |                   | 42,504   |   |        |         | (19,323  | )
|                                                     |                                                                            |                                                  |        |                   |          |  
|Net Increase (Decrease) in Cash and Cash Equivalents |                                                                            |                                                  | 18,824 |                   |          |   | (5,668 | )      
|Cash and Cash Equivalents at Beginning of Period     |                                                                            |                                                  | 3,929  |                   |          |   | 12,673 |        
|                                                     |                                                                            |                                                  |        |                   |          |  
|Cash and Cash Equivalents at End of Period           |                                                                            | $                                                | 22,753 |                   |          | $ | 7,005  |        
|                                                     |                                                                            |                                                  |        |                   |          |  
|Supplementary Cash Flow Information                  |                                                                            |                                                  |        |                   |          |   |        |        
|                                                     |                                                                            | Interest paid (excluding interest capitalized)   |        | $                 | 44,757   |   |        | $       | 33,066   |  
|                                                     |                                                                            | Income taxes paid                                |        |                   |         |   |        |         | 11,156   |  

See Notes to Consolidated Financial Statements (Unaudited)

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MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF RETAINED EARNINGS (Unaudited)

|                                |  |                   |         |  |      |   |         |  
|------------------------------- |  | ----------------- | ------- |  | ---- | - | ------- | -
|                                |  | Nine Months Ended |        
|                                |  | September 30      |        
|                                |  |                   |        
|                                |  | 2002              |         |  | 2001 |  
|                                |  |                   |         |  |      |  
|(in Thousands)                  |  |                   |         |  |      |   |         |  
|Balance  beginning of period   |  | $                 | 378,156 |  |      | $ | 494,648 |  
|Net income (loss)               |  |                   | 638     |  |      |   | (66,049 | )
|Common stock dividends declared |  |                   |        |  |      |   | (75,368 | )
|                                |  |                   |         |  |      |  
|Balance  end of period         |  | $                 | 378,794 |  |      | $ | 353,231 |  
|                                |  |                   |         |  |      |  

See Notes to Consolidated Financial Statements (Unaudited)

11



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##### Table of Contents






MICHIGAN CONSOLIDATED GAS COMPANY
Notes to the Consolidated Financial Statements (Unaudited)

NOTE 1  GENERAL

The consolidated financial statements should be read in conjunction with the
notes to the consolidated financial statements included in the 2001 Annual
Report to the Securities and Exchange Commission on Form 10-K.

The accompanying consolidated financial statements were prepared in conformity
with accounting principles generally accepted in the United States of America.
In connection with their preparation, management makes estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses, and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.

The consolidated financial statements are unaudited, but in the opinion of
MichCons management, 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.

Certain prior year balances have been reclassified to conform to the current
years presentation.

NOTE 2  MERGER AND RESTRUCTURING CHARGES

On May 31, 2001, DTE Energy completed the acquisition of MCN Energy, the parent
company of MichCon. The acquisition by DTE Energy was accounted for using the
purchase method. MichCons assets and liabilities included in the accompanying
consolidated financial statements have not been adjusted to allocate the
purchase price to their fair values. Certain losses reflected in the
accompanying consolidated financial statements have been eliminated at DTE
Energy as a result of purchase accounting adjustments.

MichCon incurred merger-related charges and restructuring charges associated
with the acquisition. The merger-related charges consist primarily of system
integration, relocation, legal, accounting and consulting costs that had the
effect of decreasing earnings by $23 million ($15 million after tax) for the
nine-month period ended September 30, 2001. Restructuring charges of $80
million ($52 million after tax) in the 2001 nine-month period, were primarily
associated with a work force reduction plan. The plan included early
retirement incentives along with voluntary separation arrangements for 273
employees, primarily in overlapping corporate support functions. The merger
and restructuring costs had the effect of decreasing MichCons earnings by $103
million ($67 million after tax) for the 2001 nine-month period.

12



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##### Table of Contents



Notes to the Consolidated Financial Statements (Unaudited)

NOTE 3  REGULATORY MATTERS

Gas Industry Restructuring

Through December 2001, MichCon was operating under an MPSC-approved Regulatory
Reform Plan that included a comprehensive experimental three-year Customer
Choice program, a Gas Sales Program and an income sharing mechanism. MichCon
returned to the gas cost recovery (GCR) mechanism in January 2002 when the Gas
Sales Program expired. Under the GCR mechanism, the gas commodity component of
MichCons gas sales rates is designed to recover the actual costs of reasonably
and prudently incurred gas purchases. 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 will be subject to the 2002 GCR reconciliation process. As of September
30, 2002, MichCon has accrued a $33 million regulatory asset representing the
under-recovery of actual gas costs incurred. In July 2002, in response to a
petition for rehearing filed by the Michigan Attorney General, the MPSC
directed the parties to address MichCons implementation of the December 2001
order and the impact of that implementation on rates charged to MichCons
customers. Also, in July 2002, an MPSC Administrative Law Judge (ALJ) issued a
Proposal for Decision on MichCons 2002 GCR plan case. In that decision the
ALJ recommended adoption of the MPSC Staffs proposed $26.5 million reduction
in gas cost due to MichCons decision to utilize storage gas during 2001 that
resulted in a gas inventory decrement for the 2001 calendar year. MichCon
cannot predict the outcome and has not accrued an amount related to this
matter.

On September 27, 2002, MichCon filed for approval of its 2003 GCR Plan.
MichCon is requesting a maximum GCR factor of $4.14 per Mcf to be effective in
monthly bills beginning with the January 2003 billing month. MichCons
proposed 2003 rate is $0.24 per Mcf less than the current maximum 2002 GCR
factor.

In December 2001, the MPSC also approved MichCons application for a voluntary,
expanded permanent Customer Choice program, which would replace the
experimental program that expired in March 2002. Effective April 2002, up to
40% of MichCons customers could elect to purchase gas from suppliers other
than MichCon. Effective April 2003, up to 60% of customers would be eligible
and by April 2004, all of MichCons 1.2 million customers can participate in
the program. The MPSC also approved the use of deferred accounting for the
recovery of implementation costs of the Customer Choice program. As of
September 2002, approximately 187,000 customers are participating in the
Customer Choice program.

Through December 2001, MichCon was operating under an MPSC-approved Regulatory
Reform Plan that included an income sharing mechanism. The income sharing


13Table of ContentsNotes to the Consolidated Financial Statements (Unaudited)mechanism allowed customers to share in profits when actual returns on equity
from utility operations exceed predetermined thresholds. Based on the MPSC
approved formula, MichCon believes that no income sharing is required in 2001.
In July 2002, the MPSC issued an order regarding MichCons 2001 income sharing.
The MPSC ordered a hearing be held to determine the issue of the appropriate
treatment of $766,000 of pipeline refunds received by MichCon during 2001.
MichCon has made a filing regarding this matter and awaits further action by
the MPSC.MichCon is unable to predict the outcome of the regulatory matters discussed
herein. Resolution of these matters is dependent upon future MPSC orders,
which may impact the financial position, results of operations and
cash flows of MichCon.NOTE 4  UNUSUAL CHARGESProperty Write-downIn June 2002, MichCon recorded a $33.2 million pre-tax ($21.6 million net of
taxes) loss from the planned sale of its former headquarters. The carrying
value of the property was reduced to fair value based on the estimated selling
price less cost to sell.Contract LossIn June 2002, MichCon recorded a $14.6 million pre-tax ($9.5 million net of
taxes) charge related to the termination of a contract for computer services
with an unrelated third party.Joint Venture Investment LossIn May 2001, MichCon recorded a $6.7 million pre-tax ($4.4 million net of
taxes) loss from its 33% to 50% interests in a series of partnerships that own
a residential community on the Detroit riverfront (Harbortown). An additional
loss of $2.6 million pre-tax ($1.7 million net of taxes) was recorded in
September 2001.NOTE 5  CONTINGENCIESPersonal Property TaxesMichCon and other Michigan utilities have asserted that Michigans valuation
tables result in the substantial overvaluation of utility personal property.
Valuation tables established by the Michigan State Tax Commission (STC) are
used to determine the taxable value of personal property based on the
propertys age. In November 1999, the STC approved new valuation tables that
more accurately recognize the value of a utilitys personal property. The new
tables became effective in 2000 and are currently used to calculate property
tax expense. However, several local taxing jurisdictions have taken legal
action attempting to prevent the STC from implementing the new14Table of ContentsNotes to the Consolidated Financial Statements (Unaudited)valuation tables and have continued to prepare assessments based on the
superseded tables. The legal actions regarding the appropriateness of the new
tables were before the Michigan Tax Tribunal (MTT) which, in April 2002, issued
its decision essentially affirming the validity of the STCs new tables. In
June 2002, petitioners in the case filed an appeal of the MTTs decision with
the Michigan Court of Appeals.Other ContingenciesGas is purchased and sold to numerous companies, including those operating in
the energy, steel and retail industries. A number of customers filed for
bankruptcy in 2001, including certain Enron Corporation affiliates. MichCon
had open transactions under a variety of agreements with bankrupt Enron
affiliates, and had an aggregate net liability of $15 million to Enron. There
are various netting agreements with Enron affiliates. Internal and external
counsel are working to determine MichCons rights within these agreements.
MichCon has accrued a reserve for its probable exposure in these bankruptcies.
Management cannot predict the ultimate resolution of these matters, but
currently does not believe their resolution will have a material impact to
MichCon.NOTE 6  CROSS DEFAULT PROVISIONSSubstantially all of the net utility property of MichCon is subject to the lien
of a Mortgage and Deed of Trust (Mortgage). Should MichCon fail to timely pay
its indebtedness under the Mortgage, such failure will create cross defaults in
substantially all of MichCons indebtedness.NOTE 7  SHORT TERM CREDIT ARRANGEMENTS AND BORROWINGSOn October 25, 2002, MichCon entered into a $200 million 364-day revolving
credit facility and a $100 million three-year revolving credit facility with a
syndicate of banks. These credit facilities may be utilized for general
corporate borrowings, but primarily are intended to provide liquidity support
for MichCons existing commercial paper program. These agreements require
MichCon to maintain a debt to total capitalization ratio of no more than .65 to
1 and an earnings before interest, taxes, depreciation and amortization
(EBITDA) to interest ratio of no less than 2 to 1. MichCon is currently in
compliance with these financial covenants.NOTE 8  NEW ACCOUNTING PRONOUNCEMENTSGoodwill and Other Intangible Assets Effective January 1, 2002, MichCon
adopted Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill
and Other Intangible Assets, which addresses the financial accounting and
reporting standards for the acquisition of intangible assets outside of a
business combination and for goodwill and other intangible assets subsequent to
their acquisition. As of the date of adoption, MichCon had no recorded
goodwill.15Table of ContentsNotes to the Consolidated Financial Statements (Unaudited)In connection with the adoption of SFAS No. 142, MichCon also reassessed the
useful lives and the classification of identifiable intangible assets and
determined that they continue to be appropriate. MichCons intangible assets
consist primarily of software and are subject to amortization. Intangible
assets amortization expense was approximately $2 million and $7 million in the
2002 third quarter and nine month period, respectively, compared with
approximately $2 million and $6 million for the comparable 2001 periods. There
were no material acquisitions of intangible assets during the nine month period
of 2002. The gross carrying amount of intangible assets and accumulated
amortization at September 30, 2002 were $158 million and $43 million,
respectively. Amortization expense of intangible assets is estimated to be $9
million annually for 2002 through 2006.Asset Retirement Obligations In June 2001, the FASB issued SFAS No. 143,
Accounting for Asset Retirement Obligations. This statement requires that
the fair value of an asset retirement obligation be recognized in the period in
which it is incurred. The associated asset retirement costs would be
capitalized as part of the carrying amount of the long-lived asset. It would
apply to legal obligations associated with the retirement of long-lived assets
that result from the acquisition, construction, development and (or) the normal
operation of a long-lived asset. This statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002. MichCon will
adopt this statement in January 2003 and has not yet determined the impact of
this statement on the consolidated financial statements.Long-Lived Assets On January 1, 2002, MichCon adopted SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No.
144 supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of, but retains the
fundamental provisions for recognizing and measuring impairment of
long-lived assets to be held and used or disposed of by sale. The
statement also supersedes the accounting and reporting provisions for the
disposal of a segment of a business. SFAS No. 144 eliminates the conflict
between accounting models for treating the disposition of long-lived
assets that existed between SFAS No. 121 and the guidance for a segment of
a business accounted for as a discontinued operation by adopting the
methodology established in SFAS No. 121, and also resolves implementation
issues related to SFAS No. 121. The adoption of the statement did not have
an impact on the consolidated financial statements of MichCon.16Table of Contents
INDEPENDENT ACCOUNTANTS REPORTTo 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 September
30, 2002, and the related condensed consolidated statement of operations for
the three-month and nine-month periods ended September 30, 2002 and 2001, and
the condensed consolidated statements of cash flows and retained earnings for
the nine-month periods ended September 30, 2002 and 2001. These 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 to
financial data and of 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 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, 2001, 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 February 26, 2002, 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, 2001 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 LLPDetroit, Michigan
November 4, 200217Table of Contents



OTHER INFORMATIONEXHIBITS AND REPORTS ON FORM 8-K(a)
        
        ExhibitsExhibitNumber
        
        Description15-5
        
        Awareness Letter of Deloitte & Touche LLP.99-3
        
        364-Day Credit Agreement dated as of October 25, 2002 ($200 million).99-4
        
        Three-Year Credit Agreement dated as of October 25, 2002 ($100
million).99-5
        
        Chief Executive Officer Certification of Periodic Report.99-6
        
        Chief Financial Officer Certification of Periodic Report.(b)
        
        Reports on Form 8-KNone.18Table of Contents
SIGNATUREPursuant 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                  
|      |  |                   |  |     |  |                              
|Date: |  | November 13, 2002 |  | By: |  | /s/ DANIEL G. BRUDZYNSKI     
|      |  |                   |  |     |  |                              
|      |  |                   |  |     |  | Daniel G. Brudzynski         
|      |  |                   |  |     |  | Chief Accounting Officer,    
|      |  |                   |  |     |  | Vice President and Controller

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##### Table of Contents






FORM 10-Q CERTIFICATION

I, Anthony F. Earley, Jr., Chairman, President, Chief Executive and Chief
Operating Officer of Michigan Consolidated Gas Company, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Michigan Consolidated
Gas Company;                                                                                                                                                                                                                                      
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | (a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | (c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                         |  |                        
|---------------------------------------- |  | -----------------------
|/s/ ANTHONY F. EARLEY, JR.               |  | Date: November 13, 2002
|Anthony F. Earley, Jr.                   |  |                        
|Chairman, President, Chief Executive and |  |                        
|Chief Operating Officer of               |  |                        
|Michigan Consolidated Gas Company        |  |                        

20



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##### Table of Contents



FORM 10-Q CERTIFICATION

I, David E. Meador, Senior Vice President and Chief Financial Officer of
Michigan Consolidated Gas Company, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Michigan Consolidated
Gas Company;                                                                                                                                                                                                                                      
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | (a) |  | designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
| | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | (c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material
weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                  |  |                        
|--------------------------------- |  | -----------------------
|/s/ DAVID E. MEADOR               |  | Date: November 13, 2002
|David E. Meador                   |  |                        
|Senior Vice President and         |  |                        
|Chief Financial Officer of        |  |                        
|Michigan Consolidated Gas Company |  |                        

21



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##### Table of Contents



Michigan Consolidated Gas Company
Quarterly Report on Form 10-Q for Quarter Ended September 30, 2002
File No. 1-7310

Exhibit Index

|        |  |                                                                        
|------- |  | -----------------------------------------------------------------------
|Exhibit |  |                                                                        
|Number  |  | Description                                                            
|        |  |                                                                        
|15.5    |  | Awareness Letter of Deloitte & Touche LLP.                             
|        |  |                                                                        
|99.3    |  | 364-Day Credit Agreement dated as of October 25, 2002 ($200 million)   
|99.4    |  | Three-Year Credit Agreement dated as of October 25, 2002 ($100 million)
|99.5    |  | Chief Executive Officer Certification of Periodic Report               
|99.6    |  | Chief Financial Officer Certification of Periodic Report