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SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




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FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 1999

or

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

OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from
                  to

Commission file number 1-7310

MICHIGAN CONSOLIDATED GAS COMPANY

(Exact name of registrant as specified in its
charter)


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

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by
 Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past 90 days.



Number of shares outstanding of
each of the registrants classes of common stock, as of
November 12, 1999:

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



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TABLE OF CONTENTS



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



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Index to Form 10-Q

For Quarter Ended September 30, 1999

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

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Michigan Consolidated Gas Company and Subsidiaries


Managements Discussion and Analysis


Results of Operations

Results reflect seasonal loss and higher operating costs
  MichCon reported a net loss of $13.5 million
for the 1999 third quarter compared to a net loss of
$18.3 million for the same 1998 period. MichCon typically
records third quarter losses due to seasonally lower demand for
natural gas during the summer months. Earnings in the 1999 nine-
and twelve-month periods increased by $32.3 million and
$31.0 million, respectively, over the comparable 1998
periods. Earnings in all three 1998 periods were unfavorably
affected by a $24.8 million write-down ($11.2 million
net of taxes and minority interest) of certain gas gathering
properties (Note 4). Excluding the write-down, MichCons
earnings declined by $6.4 million for the 1999 quarter, and
improved by $21.1 million and $19.8 million in the 1999
nine- and twelve-month periods, respectively. The 1999 quarter
reflects higher operating costs. The earnings improvements for
the 1999 nine- and twelve-month periods reflect contributions
from the new gas sales program as subsequently discussed.
Additionally, all 1999 periods reflect the impact of more
favorable weather.

Earnings Components (Dollars in Millions)

Comparing 1999 to 1998


|                                            |  |         |       |             |  |               |       |        |  |        |       |        |  |  |      |  |  |  |       |   |  |  |      |  
|------------------------------------------- |  | ------- | ----- | ----------- |  | ------------- | ----- | ------ |  | ------ | ----- | ------ |  |  | ---- |  |  |  | ----- | - |  |  | ---- | -
|                                            |  |         |       |             |  |              
|                                            |  | Quarter |       | Nine Months |  | Twelve Months
|                                            |  |         |       |             |  |              
|                                            |  | $       |       | %           |  | $             |       | %      |  | $      |       | %     
|                                            |  | Change  |       | Change      |  | Change        |       | Change |  | Change |       | Change
|                                            |  |         |       |             |  |               |       |        |  |        |       |       
|Operating Revenues                          |  |         | .2    |             |  |               | .2    |        |  |        | 81.8  |        |  |  | 11.3 |  |  |  | (6.3  | ) |  |  | (.6  | )
|                                           
|                                           
|                                           
|                                           
|Cost of Gas                                 |  |         | (3.0  | )           |  |               | (9.5  | )      |  |        | 30.7  |        |  |  | 10.0 |  |  |  | (42.1 | ) |  |  | (8.0 | )
|                                           
|                                           
|                                           
|                                           
|Gross Margin                                |  |         | 3.2   |             |  |               | 3.5   |        |  |        | 51.1  |        |  |  | 12.2 |  |  |  | 35.8  |   |  |  | 6.0  |  
|                                           
|                                           
|                                           
|                                           
|Operation and Maintenance                   |  |         | 5.1   |             |  |               | 8.8   |        |  |        | 12.5  |        |  |  | 6.9  |  |  |  | 8.0   |   |  |  | 3.1  |  
|                                           
|                                           
|                                           
|                                           
|Depreciation and Depletion                  |  |         | 1.2   |             |  |               | 5.3   |        |  |        | 4.6   |        |  |  | 6.7  |  |  |  | 3.0   |   |  |  | 3.2  |  
|                                           
|                                           
|                                           
|                                           
|Property and Other Taxes                    |  |         | .1    |             |  |               | .7    |        |  |        |      |        |  |  |     |  |  |  | (2.1  | ) |  |  | (3.6 | )
|                                           
|                                           
|                                           
|                                           
|Write-down of Gathering Properties (Note 4) |  |         | (24.8 | )           |  |               | N/A   |        |  |        | (24.8 | )      |  |  | N/A  |  |  |  | (24.8 | ) |  |  | N/A  |  
|                                           
|                                           
|                                           
|                                           
|Other Income and Deductions                 |  |         | 10.0  |             |  |               | 307.5 |        |  |        | 8.1   |        |  |  | 28.5 |  |  |  | 9.7   |   |  |  | 23.0 |  
|                                           
|                                           
|                                           
|                                           
|Income Before Income Taxes                  |  |         | 11.6  |             |  |               | 39.7  |        |  |        | 50.7  |        |  |  | 71.4 |  |  |  | 42.0  |   |  |  | 34.5 |  
|                                           
|                                           
|                                           
|                                           
|Income Tax Provision                        |  |         | 6.8   |             |  |               | 62.4  |        |  |        | 18.4  |        |  |  | 74.7 |  |  |  | 11.0  |   |  |  | 25.4 |  
|                                           
|                                           
|                                           
|                                           
|Net Income or Loss                          |  |         | 4.8   |             |  |               | 26.2  |        |  |        | 32.3  |        |  |  | 69.6 |  |  |  | 31.0  |   |  |  | 39.6 |  

Gross Margin

Gross margin (operating revenues less cost of gas) increased
$3.2 million, $51.1 million and $35.8 million in the
1999 quarter, nine- and twelve-month periods, respectively. The
increase is due primarily to margins generated under
MichCons new three-year gas sales program, which is part of
 its Regulatory Reform Plan (Note 3a). Under the gas sales
program

1



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##### Table of Contents



Managements Discussion and Analysis (Continued)

that began in January 1999, MichCons gas sales rates
include a gas commodity component that is fixed at $2.95 per
thousand cubic feet (Mcf). As part of its gas acquisition
strategy, MichCon has entered into fixed-price contracts at costs
 below $2.95 per Mcf for a substantial portion of its expected
gas supply requirements through 2001. This strategy is likely to
continue producing favorable margins in each of the three years.

Gross margins for all three 1999 periods also reflect higher gas
sales resulting from more normal weather, especially the 1999
nine-month period that was 13.1% colder than the same 1998
period. Additionally, gross margins for all 1999 periods reflect
revenues from the continued growth in other gas-related services.

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

Effect of Weather on Gas Markets and Earnings

|                           |                       |         |     |             |   |               |     |      |   |      |      |       |   |  |       |       |   |  |       |       |   |  |       |       |  
|-------------------------- | --------------------- | ------- | --- | ----------- | - | ------------- | --- | ---- | - | ---- | ---- | ----- | - |  | ----- | ----- | - |  | ----- | ----- | - |  | ----- | ----- | -
|                           |                       |         |     |             |   |              
|                           |                       | Quarter |     | Nine Months |   | Twelve Months
|                           |                       |         |     |             |   |              
|                           |                       | 1999    |     | 1998        |   | 1999          |     | 1998 |   | 1999 |      | 1998 
|                           |                       |         |     |             |   |               |     |      |   |      |      |      
|Percent Warmer Than Normal |                       |         | N/M |             |   |               | N/M |      |   |      | (8.5 | )%    |   |  | (21.6 | )%    |   |  | (10.7 | )%    |   |  | (14.5 | )%   
|                          
|                          
|                          
|                          
|Decrease From Normal in:   |                       |         |     |             |   |               |     |      |   |      |      |       |   |  |       |       |   |  |       |       |   |  |       |      
|                          
|                          
|                          
|                          
|                           | Gas Markets (Bcf)     |         |     | (.7         | ) |               |     | (1.5 | ) |      |      | (11.1 | ) |  |       | (26.7 | ) |  |       | (24.6 | ) |  |       | (27.4 | )
|                          
|                          
|                          
|                          
|                           | Net Income (Millions) |         | $   | (.7         | ) |               | $   | (1.1 | ) |      | $    | (11.0 | ) |  | $     | (23.1 | ) |  | $     | (23.2 | ) |  | $     | (23.7 | )






Gas sales and end user transportation revenues in total
increased by $.2 million and $85.2 million for the 1999
 quarter and nine-month period, respectively, and decreased by
$6.0 million for the 1999 twelve-month period. Revenues were
 affected by fluctuations in gas sales and end user
transportation deliveries that increased in total by
1.8 billion cubic feet (Bcf), 14.5 Bcf and 2.7 Bcf in the
current quarter, nine- and twelve-month periods, respectively.
The higher gas sales and end user transportation deliveries were
due primarily to weather, which was colder in all the 1999
periods compared to the corresponding 1998 periods.

Revenues were also impacted by variations in the cost of the gas
commodity component of gas sales rates. As previously discussed,
this gas commodity component was fixed under MichCons new
gas sales program at $2.95 per Mcf beginning in
January 1999. Prior to 1999, MichCons sales rates were
 set to recover all of its reasonably and prudently incurred gas
costs. The gas commodity component of MichCons sales rate
increased $.58 per Mcf

2



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##### Table of Contents





Managements Discussion and Analysis (Continued)

(24%) and $.23 per Mcf (8%) for the 1999 quarter and nine-month
period, respectively, and decreased $.08 per Mcf (3%) for the
1999 twelve-month period.

|                       |                             |         |       |             |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |       | 
|---------------------- | --------------------------- | ------- | ----- | ----------- |  | ------------- | ----- | ----- |  | ---- | ----- | ----- |  | - | ----- | ----- |  | - | ------- | ----- |  | - | ------- | ----- | 
|                       |                             |         |       |             |  |              
|                       |                             | Quarter |       | Nine Months |  | Twelve Months
|                       |                             |         |       |             |  |              
|                       |                             | 1999    |       | 1998        |  | 1999          |       | 1998  |  | 1999 |       | 1998 
|                       |                             |         |       |             |  |               |       |       |  |      |       |      
|Gas Markets (Millions) |                             |         |       |             |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      
|                       | Gas Sales                   |         | $     | 73.0        |  |               | $     | 78.6  |  |      | $     | 641.6 |  |   | $     | 569.0 |  |   | $       | 896.4 |  |   | $       | 914.1 | 
|                       | End User Transportation     |         |       | 22.4        |  |               |       | 16.6  |  |      |       | 72.4  |  |   |       | 59.8  |  |   |         | 94.6  |  |   |         | 82.9  | 
|                       | Intermediate Transportation |         |       | 14.1        |  |               |       | 14.5  |  |      |       | 42.8  |  |   |       | 48.4  |  |   |         | 57.6  |  |   |         | 62.6  | 
|                       | Other                       |         |       | 13.1        |  |               |       | 12.7  |  |      |       | 49.5  |  |   |       | 47.2  |  |   |         | 66.9  |  |   |         | 62.2  | 
|                       |                             |         |       |             |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      
|                       |                             | $       | 122.6 |             |  | $             | 122.4 |       |  | $    | 806.3 |       |  | $ | 724.4 |       |  | $ | 1,115.5 |       |  | $ | 1,121.8 |      
|                       |                             |         |       |             |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      
|Gas Markets (Bcf)      |                             |         |       |             |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      
|                       | Gas Sales                   |         |       | 10.2        |  |               |       | 12.4  |  |      |       | 124.8 |  |   |       | 115.1 |  |   |         | 178.5 |  |   |         | 179.2 | 
|                       | End User Transportation     |         |       | 32.7        |  |               |       | 28.7  |  |      |       | 106.9 |  |   |       | 102.1 |  |   |         | 144.8 |  |   |         | 141.4 | 
|                       |                             |         |       |             |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      
|                       |                             |         | 42.9  |             |  |               | 41.1  |       |  |      | 231.7 |       |  |   | 217.2 |       |  |   | 323.3   |       |  |   | 320.6   |      
|                       | Intermediate Transportation |         |       | 128.3       |  |               |       | 133.9 |  |      |       | 390.7 |  |   |       | 430.8 |  |   |         | 497.5 |  |   |         | 570.2 | 
|                       |                             |         |       |             |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      
|                       |                             |         | 171.2 |             |  |               | 175.0 |       |  |      | 622.4 |       |  |   | 648.0 |       |  |   | 820.8   |       |  |   | 890.8   |      
|                       |                             |         |       |             |  |               |       |       |  |      |       |       |  |   |       |       |  |   |         |       |  |   |         |      

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

Intermediate transportation revenues decreased
$.4 million, $5.6 million and $5.0 million in the
1999 quarter, nine- and twelve-month periods, respectively.
Intermediate transportation revenues reflect lower off-system
volumes of 5.6 Bcf, 40.1 Bcf and 72.7 Bcf in the 1999 quarter,
nine- and twelve-month periods, respectively. A significant
portion of the volume decrease was for customers who pay a fixed
fee for intermediate transportation capacity regardless of actual
 usage. Although volumes associated with these fixed-fee
customers may vary, the related revenues are not affected. The
decrease for all 1999 periods is due to customers shifting
volumes from a higher rate to a lower rate transportation route.
The decrease in intermediate transportation revenues for the 1999
 nine- and twelve-month periods is also due in part to an
adjustment in 1998 of revenues related to fees generated from
tracking the transfer of gas title on MichCons
transportation system.

3



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##### Table of Contents



Managements Discussion and Analysis (Continued)

Other operating revenues increased $.4 million,
$2.3 million and $4.7 million in the 1999 quarter,
nine- and twelve-month periods, respectively. The improvements
are due to an increase in facility development and appliance
maintenance services, late payment fees and other gas-related
services.

Cost of Gas

Cost of gas is affected by variations in sales volumes and the
cost of purchased gas as well as related transportation costs.
Under the Gas Cost Recovery (GCR) mechanism that was in effect
through December 1998 (Note 3b), MichCons sales
rates were set to recover all of its reasonably and prudently
incurred gas costs. Therefore, fluctuations in cost of gas sold
had little effect on gross margins. Under MichCons new gas
sales program, the gas commodity component of its sales rates is
fixed. Accordingly, beginning in January 1999, changes in
cost of gas sold directly impact gross margins and earnings.

Cost of gas sold decreased $3.0 million and
$42.1 million in the 1999 quarter and twelve-month period,
respectively, and increased $30.7 million in the 1999
nine-month period. Cost of gas sold for all 1999 periods was
affected by a reduction in gas sales volumes as a result of
customers who have chosen to purchase their gas from other
suppliers under MichCons customer choice program. As
previously discussed, MichCon maintains its previously existing
sales margins on these services by continuing to transport and
deliver the gas to the customers premises.

The increase in the current nine-month period was due primarily
to higher weather-driven sales volumes. Cost of gas sold was also
 impacted by average prices paid, which increased $.42 per Mcf
(18%) in the current quarter and decreased $.25 per Mcf (8%) in
the current twelve-month period. Prices paid for gas sold in the
1999 nine-month period were flat compared to the same 1998
period.

Operation and Maintenance

Operation and maintenance expenses increased $5.1 million,
$12.5 million and $8.0 million in the 1999 quarter,
nine- and twelve-month periods, respectively. The increase in the
 1999 quarter and nine-month period is due to higher employee
benefit costs. The increase in all 1999 periods also reflects
additional computer system support costs associated with
MichCons new customer information system as well as
advertising costs associated with MichCons new gas sales
program. The 1998 nine- and twelve-month periods benefited from
an interstate pipeline company refund.

4



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##### Table of Contents



Managements Discussion and Analysis (Continued)

Depreciation and Depletion

Depreciation and depletion increased $1.2 million,
$4.6 million and $3.0 million in the 1999 quarter,
nine- and twelve-month periods, respectively. Depreciation on
higher plant balances impacted all 1999 periods. The increase in
all 1999 periods was tempered by the effect of lower depreciation
 rates for MichCons utility property, plant and equipment
that became effective in January 1998.

Property and Other Taxes

Property and other taxes increased $.1 million in the 1999
quarter and decreased $2.1 million in the 1999 twelve-month
period. The improvement in the 1999 twelve-month period is
attributable to lower Michigan Single Business Taxes resulting
from an increase in capital acquisition deductions.

Write-down of Gathering Properties

The properties write-down of $24.8 million in the 1998
periods represents the impairment of a Michigan gas gathering
system (Note 4).

Other Income and Deductions

Other income and deductions increased $10.0 million,
$8.1 million and $9.7 million in the 1999 quarter, nine-and
twelve-month periods, respectively. All 1998 periods include a
change in minority interest reflecting the joint venture
partners share of the write-down of the gas gathering
system (Note 4). The 1998 nine- and twelve-month periods were
also impacted by gains from the sale of property. The 1999
quarter and twelve-month periods include slightly higher interest
 costs.

Income Taxes

Income taxes increased $6.8 million, $18.4 million and
$11.0 million in the 1999 quarter, nine- and twelve-month
periods, respectively, reflecting an increase in pre-tax
earnings. The increase for all 1999 periods is also due to the
flow-through effect of certain book-to-tax temporary differences.
 Additionally, income tax comparisons for the 1999 nine- and
twelve-month periods were affected by the favorable resolution of
 prior years tax issues.

5



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##### Table of Contents



Managements Discussion and Analysis (Continued)

Capital Resources and Liquidity

|                                                     |                      |             |     |       |   |   |      |        |  
|---------------------------------------------------- | -------------------- | ----------- | --- | ----- | - | - | ---- | ------ | -
|                                                     |                      |            
|                                                     |                      | Nine Months
|                                                     |                      |            
|                                                     |                      | 1999        |     | 1998 
|                                                     |                      |             |     |      
|Cash and Cash Equivalents (in Millions)              |                      |             |     |       |   |   |      |       
|                                                    
|                                                    
|                                                    
|                                                    
|Cash Flow Provided From (Used For):                  |                      |             |     |       |   |   |      |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Operating activities |             | $   | 177.3 |   |   | $    | 218.0  |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Financing activities |             |     | (76.1 | ) |   |      | (8.9   | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Investing activities |             |     | (95.9 | ) |   |      | (212.8 | )
|                                                     |                      |             |     |       |   |   |      |       
|Net Increase (Decrease) in Cash and Cash Equivalents |                      | $           | 5.3 |       |   | $ | (3.7 | )     
|                                                     |                      |             |     |       |   |   |      |       

Operating Activities

MichCons cash flow from operating activities decreased
$40.7 million during the 1999 nine-month period as compared
to the same 1998 period. The decrease was due primarily to higher
 working capital requirements, partially offset by higher
earnings, after adjusting for non-cash items (depreciation,
deferred taxes and the properties write-down).

Financing Activities

MichCons cash used for financing activities increased
$67.2 million in the 1999 nine-month period as compared to
the same 1998 period due primarily to less debt being issued in
1999.

MichCon maintains a relatively consistent amount of cash and cash
 equivalents through the use of short-term borrowings. Short-term
 borrowings are normally reduced in the first part of each year
as gas inventories are depleted and funds are received from
winter heating sales. During the latter part of the year,
MichCons short-term borrowings normally increase as funds
are used to finance increases in gas inventories and customer
accounts receivable. To meet its seasonal short-term borrowing
needs, MichCon normally issues commercial paper that is backed by
 credit lines with several banks. MichCon has established credit
lines to allow for borrowings of up to $150 million under a
364-day revolving credit facility and up to $150 million
under a three-year revolving credit facility. The 364-day
facility was renewed in July 1999. During the first nine
months of 1999, MichCon repaid $88.7 million of commercial
paper, leaving borrowings of $129.6 million outstanding
under this program at September 30, 1999.

During 1999, MichCon issued $110 million of senior debt
(Note 6) and repaid $68 million of first mortgage bonds.

Investing Activities

MichCons cash used for investing activities decreased
$116.9 million in the 1999 nine-month period as compared to
the same 1998 period. The comparison reflects a
$107.4 million loan in the third quarter of 1998 to MCN
Energy Group Inc., MichCons parent company, that was
subsequently collected in the 1998 fourth quarter. Also affecting
 the

6



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##### Table of Contents



Managements Discussion and Analysis (Continued)

comparison were higher capital expenditures in the 1998 period
which included the purchase of an office building previously
leased. Capital expenditures primarily represent the construction
 of new distribution lines to attach new customers, new computer
systems and improvements to existing storage, distribution, and
transmission systems.

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

Outlook

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

MichCon has begun and plans to continue capitalizing on
opportunities resulting from the gas industry restructuring.
MichCon is currently implementing its Regulatory Reform Plan,
which includes a comprehensive experimental three-year customer
choice program designed to offer all sales customers added
choices and greater price certainty. The customer choice program
began in April 1999, with approximately 70,000 customers
choosing to purchase natural gas from suppliers other than
MichCon. Plan years begin April 1 of each year, and the number of
 customers allowed to participate in the plan is limited to
75,000 in 1999, 150,000 in 2000 and 225,000 in 2001. There is
also a volume limitation on commercial and industrial
participants of 10 Bcf in 1999, 20 Bcf in 2000 and 30 Bcf in
2001. MichCon continues to transport and deliver the gas to the
customers premises at prices that maintain its previously
existing sales margins on these services.

The Plan also suspended the GCR mechanism for customers who
continue to purchase gas from MichCon and fixed the gas commodity
 component of MichCons sales rates at $2.95 per Mcf for the
 three-year period that began in January 1999. The
suspension of the GCR mechanism allows MichCon to profit from its
 ability to purchase gas at less than $2.95 per Mcf. As part of
its gas acquisition strategy, MichCon has entered into
fixed-price contracts at costs below $2.95 per Mcf for a
substantial portion of its expected gas supply requirements
through 2001. This strategy has produced favorable margins
through September 1999 and is likely to continue producing
favorable margins through 2001. The level of margins generated
from selling gas will be affected by the number of customers
choosing to purchase gas from suppliers other than MichCon under
the three-year customer choice program.

Also beginning in 1999, an income sharing mechanism allows
customers to share in profits when actual returns on equity from
utility operations exceed predetermined thresholds. The impact of
 weather and expenses incurred in the fourth quarter of 1999 will
 determine the actual amount of profit, if any, to be shared with
 customers.

7



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##### Table of Contents



Managements Discussion and Analysis (Continued)

Year 2000

As discussed in MichCons 1998 Annual Report on
Form 10-K, MichCon has implemented a corporate-wide,
four-phase Year 2000 approach consisting of: i)
inventory  identification of the components of
MichCons systems, equipment and facilities; ii)
assessment  assessing Year 2000 readiness and
prioritizing the risks of items identified in the inventory
phase; iii) remediation  upgrading, repairing and
replacing non-compliant systems, equipment and facilities; and
iv) testing  verifying items remediated. MichCon has
completed the Year 2000 implementation plan for its mission
critical business systems and measurement and control systems
(including embedded microprocessors), and therefore considers
these systems Year 2000 ready. The completion status of these
systems follows:

|                                 |                    |           |  |            |  |             |  |         |  |  |  |      |  |  |  |      | 
|-------------------------------- | ------------------ | --------- |  | ---------- |  | ----------- |  | ------- |  |  |  | ---- |  |  |  | ---- | 
|                                 |                    | Inventory |  | Assessment |  | Remediation |  | Testing
|                                 |                    |           |  |            |  |             |  |        
|Business Systems:                |                    |           |  |            |  |             |  |         |  |  |  |      |  |  |  |     
|                                 | September 30, 1999 |           |  | 100%       |  |             |  | 100%    |  |  |  | 100% |  |  |  | 99%  | 
|                                 | October 31, 1999   |           |  | 100%       |  |             |  | 100%    |  |  |  | 100% |  |  |  | 100% | 
|                                
|                                
|                                
|                                
|Measurement and Control Systems: |                    |           |  |            |  |             |  |         |  |  |  |      |  |  |  |     
|                                 | September 30, 1999 |           |  | 100%       |  |             |  | 100%    |  |  |  | 100% |  |  |  | 100% | 

Costs associated with the Year 2000 issue are not expected to
have a material adverse effect on MichCons results of
operations, liquidity and financial condition. The total costs
are estimated to be between $3 million and $4 million, of
which approximately $3.1 million was incurred through
September 1999. The anticipated costs are not higher due in part
to the ongoing replacement of significant old systems. MichCon
has made a substantial investment in new systems that were
installed over the past few years that are Year 2000 ready,
particularly its customer information system which was installed
and functional in April 1999. The replacement of these
systems and the customer information system, in particular, was
necessary to maintain a high level of customer satisfaction and
to respond to changes in regulation and increased competition
within the energy industry.

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

In order to reduce its Year 2000 risk, MichCon has completed the
development of contingency plans for mission-critical processes
in the event of a Year 2000 complication. Contingency plans for
several essential gas transmission facilities were tested under a
 power outage scenario and have achieved excellent
results. Completed contingency plans will continue to be enhanced

8



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##### Table of Contents



Managements Discussion and Analysis (Continued)

throughout the remainder of 1999 as MichCon works with operators,
 suppliers and governmental agencies.

Market Risk Information

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

Natural Gas Price Risk

MichCon closely monitors and manages its exposure to natural gas
price risk through a variety of risk management techniques.
MichCon primarily manages natural gas price risk by entering into
 fixed-price contracts for a substantial portion of its expected
gas supply requirements. Natural gas swap agreements are used to
manage MichCons exposure to the risk of market price
fluctuations on market-based natural gas purchase contracts.
During the 1999 nine-month period, there were no significant
changes to MichCons natural gas price risk.

Interest Rate Risk

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

New Accounting Pronouncements

Derivative and Hedging Activities

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

9



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##### Table of Contents



Managements Discussion and Analysis (Concluded)

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

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

Forward-Looking Statements

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

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

10



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##### Table of Contents








Michigan Consolidated Gas Company and Subsidiaries


Consolidated Statement of Income (Unaudited)


(Thousands of Dollars)


|                                             |                                             |                                     |                          |                   |         |                     |         |         |        |         |         |         |         |         |         |         |         |         |           |         |         |         |           |         |         |         | 
|-------------------------------------------- | ------------------------------------------- | ----------------------------------- | ------------------------ | ----------------- | ------- | ------------------- | ------- | ------- | ------ | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | ------- | --------- | ------- | ------- | ------- | --------- | ------- | ------- | ------- | 
|                                             |                                             |                                     |                          |                   |         |                    
|                                             |                                             | Three Months Ended                  |                          | Nine Months Ended |         | Twelve Months Ended
|                                             |                                             | September 30,                       |                          | September 30,     |         | September 30,      
|                                             |                                             |                                     |                          |                   |         |                    
|                                             |                                             | 1999                                |                          | 1998              |         | 1999                |         | 1998    |        | 1999    |         | 1998   
|                                             |                                             |                                     |                          |                   |         |                     |         |         |        |         |         |        
|Operating Revenues                           |                                             | $                                   | 122,635                  |                   |         | $                   | 122,428 |         |        | $       | 806,280 |         |         | $       | 724,442 |         |         | $       | 1,115,496 |         |         | $       | 1,121,762 |        
|                                             |                                             |                                     |                          |                   |         |                     |         |         |        |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|Operating Expenses                           |                                             |                                     |                          |                   |         |                     |         |         |        |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|                                             | Cost of gas                                 |                                     |                          | 28,187            |         |                     |         | 31,143  |        |         |         | 336,948 |         |         |         | 306,244 |         |         |           | 482,233 |         |         |           | 524,321 |        
|                                             | Operation and maintenance                   |                                     |                          | 62,486            |         |                     |         | 57,422  |        |         |         | 193,974 |         |         |         | 181,512 |         |         |           | 264,859 |         |         |           | 256,844 |        
|                                             | Depreciation and depletion                  |                                     |                          | 24,192            |         |                     |         | 22,973  |        |         |         | 73,558  |         |         |         | 68,910  |         |         |           | 97,531  |         |         |           | 94,529  |        
|                                             | Property and other taxes                    |                                     |                          | 12,175            |         |                     |         | 12,087  |        |         |         | 43,337  |         |         |         | 43,342  |         |         |           | 55,433  |         |         |           | 57,484  |        
|                                             | Write-down of gathering properties (Note 4) |                                     |                          |                  |         |                     |         | 24,800  |        |         |         |        |         |         |         | 24,800  |         |         |           |        |         |         |           | 24,800  |        
|                                             |                                             |                                     |                          |                   |         |                     |         |         |        |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|                                             |                                             |                                     | Total operating expenses |                   |         | 127,040             |         |         |        | 148,425 |         |         |         | 647,817 |         |         |         | 624,808 |           |         |         | 900,056 |           |         |         | 957,978 | 
|                                             |                                             |                                     |                          |                   |         |                     |         |         |        |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|Operating Income (Loss)                      |                                             |                                     | (4,405                   | )                 |         |                     | (25,997 | )       |        |         | 158,463 |         |         |         | 99,634  |         |         |         | 215,440   |         |         |         | 163,784   |        
|                                             |                                             |                                     |                          |                   |         |                     |         |         |        |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|Other Income and (Deductions)                |                                             |                                     |                          |                   |         |                     |         |         |        |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|                                             | Interest income                             |                                     |                          | 916               |         |                     |         | 1,639   |        |         |         | 2,861   |         |         |         | 3,573   |         |         |           | 4,976   |         |         |           | 4,602   |        
|                                             | Interest on long-term debt                  |                                     |                          | (12,537           | )       |                     |         | (10,975 | )      |         |         | (35,028 | )       |         |         | (33,694 | )       |         |           | (46,218 | )       |         |           | (45,247 | )      
|                                             | Other interest expense                      |                                     |                          | (1,184            | )       |                     |         | (2,001  | )      |         |         | (5,020  | )       |         |         | (7,149  | )       |         |           | (9,984  | )       |         |           | (10,031 | )      
|                                             | Minority interest (Note 4)                  |                                     |                          | (282              | )       |                     |         | 7,050   |        |         |         | (805    | )       |         |         | 5,907   |         |         |           | (985    | )       |         |           | 5,481   |        
|                                             | Equity in earnings of joint ventures        |                                     |                          | 444               |         |                     |         | 511     |        |         |         | 1,457   |         |         |         | 1,461   |         |         |           | 1,942   |         |         |           | 1,807   |        
|                                             | Other                                       |                                     |                          | (590              | )       |                     |         | 529     |        |         |         | (303    | )       |         |         | 1,235   |         |         |           | (1,720  | )       |         |           | 1,108   |        
|                                             |                                             |                                     |                          |                   |         |                     |         |         |        |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|                                             |                                             | Total other income and (deductions) |                          |                   | (13,233 | )                   |         |         | (3,247 | )       |         |         | (36,838 | )       |         |         | (28,667 | )       |           |         | (51,989 | )       |           |         | (42,280 | )      
|                                             |                                             |                                     |                          |                   |         |                     |         |         |        |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|Income (Loss) Before Income Taxes            |                                             |                                     | (17,638                  | )                 |         |                     | (29,244 | )       |        |         | 121,625 |         |         |         | 70,967  |         |         |         | 163,451   |         |         |         | 121,504   |        
|                                            
|                                            
|                                            
|                                            
|Income Tax Provision (Benefit)               |                                             |                                     | (4,098                   | )                 |         |                     | (10,906 | )       |        |         | 43,027  |         |         |         | 24,627  |         |         |         | 54,217    |         |         |         | 43,232    |        
|                                             |                                             |                                     |                          |                   |         |                     |         |         |        |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        
|Net Income (Loss) Available for Common Stock |                                             | $                                   | (13,540                  | )                 |         | $                   | (18,338 | )       |        | $       | 78,598  |         |         | $       | 46,340  |         |         | $       | 109,234   |         |         | $       | 78,272    |        
|                                             |                                             |                                     |                          |                   |         |                     |         |         |        |         |         |         |         |         |         |         |         |         |           |         |         |         |           |        

Consolidated Statement of Retained Earnings (Unaudited)

(Thousands of Dollars)


|                              |                                  |                    |         |                   |   |                     |         |         |   |      |         |        |  |   |         |        |  |   |         |         |  |   |         |        | 
|----------------------------- | -------------------------------- | ------------------ | ------- | ----------------- | - | ------------------- | ------- | ------- | - | ---- | ------- | ------ |  | - | ------- | ------ |  | - | ------- | ------- |  | - | ------- | ------ | 
|                              |                                  |                    |         |                   |   |                    
|                              |                                  | Three Months Ended |         | Nine Months Ended |   | Twelve Months Ended
|                              |                                  | September 30,      |         | September 30,     |   | September 30,      
|                              |                                  |                    |         |                   |   |                    
|                              |                                  | 1999               |         | 1998              |   | 1999                |         | 1998    |   | 1999 |         | 1998  
|                              |                                  |                    |         |                   |   |                     |         |         |   |      |         |       
|Balance  Beginning of Period |                                  | $                  | 480,605 |                   |   | $                   | 440,003 |         |   | $    | 406,144 |        |  | $ | 375,325 |        |  | $ | 421,665 |         |  | $ | 343,393 |       
|                              | Add  Net income (loss)          |                    |         | (13,540           | ) |                     |         | (18,338 | ) |      |         | 78,598 |  |   |         | 46,340 |  |   |         | 109,234 |  |   |         | 78,272 | 
|                              |                                  |                    |         |                   |   |                     |         |         |   |      |         |        |  |   |         |        |  |   |         |         |  |   |         |       
|                              |                                  |                    | 467,065 |                   |   |                     | 421,665 |         |   |      | 484,742 |        |  |   | 421,665 |        |  |   | 530,899 |         |  |   | 421,665 |       
|                              | Deduct  Cash dividends declared |                    |         |                  |   |                     |         |        |   |      |         | 17,500 |  |   |         |       |  |   |         | 63,584  |  |   |         |       | 
|                              |  Other                          |                    |         |                  |   |                     |         |        |   |      |         | 177    |  |   |         |       |  |   |         | 250     |  |   |         |       | 
|                              |                                  |                    |         |                   |   |                     |         |         |   |      |         |        |  |   |         |        |  |   |         |         |  |   |         |       
|Balance  End of Period       |                                  | $                  | 467,065 |                   |   | $                   | 421,665 |         |   | $    | 467,065 |        |  | $ | 421,665 |        |  | $ | 467,065 |         |  | $ | 421,665 |       
|                              |                                  |                    |         |                   |   |                     |         |         |   |      |         |        |  |   |         |        |  |   |         |         |  |   |         |       

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

11



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##### Table of Contents



Michigan Consolidated Gas Company and Subsidiaries

Consolidated Statement of Financial Position (Unaudited)


(Thousands of Dollars)


|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |           |           | 
|------------------------------------ | ------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | --------- | ------------ | --------- | ---- | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                     |                                                               |                                                                                                        |           |             
|                                     |                                                               | September 30,                                                                                          |           | December 31,
|                                     |                                                               |                                                                                                        |           |             
|                                     |                                                               | 1999                                                                                                   |           | 1998         |           | 1998
|                                     |                                                               |                                                                                                        |           |              |           |     
|Assets                               |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                    
|                                    
|                                    
|                                    
|                                     | Current Assets                                                |                                                                                                        |           |              |           |      |           |           |           |   |           |           |          
|                                     |                                                               | Cash and cash equivalents                                                                              |           | $            | 11,880    |      |           | $         | 10,611    |   |           | $         | 6,603     | 
|                                     |                                                               | Accounts receivable, less allowance for doubtful accounts of
	$14,396, $8,912 and $8,928, respectively |           |              | 97,038    |      |           |           | 99,223    |   |           |           | 142,818   | 
|                                     |                                                               | Accrued unbilled revenues                                                                              |           |              | 21,178    |      |           |           | 17,145    |   |           |           | 86,767    | 
|                                     |                                                               | Gas in inventory                                                                                       |           |              | 110,170   |      |           |           | 96,465    |   |           |           | 56,969    | 
|                                     |                                                               | Property taxes assessed applicable to future periods                                                   |           |              | 37,692    |      |           |           | 31,401    |   |           |           | 71,165    | 
|                                     |                                                               | Notes receivable  affiliate                                                                           |           |              |          |      |           |           | 107,440   |   |           |           |          | 
|                                     |                                                               | Other                                                                                                  |           |              | 38,609    |      |           |           | 29,296    |   |           |           | 30,169    | 
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               |                                                                                                        | 316,567   |              |           |      | 391,581   |           |           |   | 394,491   |          
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                     | Deferred Charges and Other Assets                             |                                                                                                        |           |              |           |      |           |           |           |   |           |           |          
|                                     |                                                               | Investment in and advances to joint ventures                                                           |           |              | 19,766    |      |           |           | 20,458    |   |           |           | 19,343    | 
|                                     |                                                               | Long term investments                                                                                  |           |              | 66,653    |      |           |           | 37,171    |   |           |           | 65,556    | 
|                                     |                                                               | Deferred environmental costs                                                                           |           |              | 28,522    |      |           |           | 28,052    |   |           |           | 28,169    | 
|                                     |                                                               | Prepaid benefit costs                                                                                  |           |              | 146,534   |      |           |           | 103,814   |   |           |           | 113,879   | 
|                                     |                                                               | Other                                                                                                  |           |              | 64,528    |      |           |           | 58,429    |   |           |           | 59,007    | 
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               |                                                                                                        | 326,003   |              |           |      | 247,924   |           |           |   | 285,954   |          
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                     | Property, Plant and Equipment                                 |                                                                                                        |           | 2,973,747    |           |      |           | 2,845,717 |           |   |           | 2,889,020 |          
|                                     |                                                               | Less  Accumulated depreciation and depletion                                                          |           |              | 1,464,931 |      |           |           | 1,377,164 |   |           |           | 1,396,940 | 
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               |                                                                                                        | 1,508,816 |              |           |      | 1,468,553 |           |           |   | 1,492,080 |          
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               | $                                                                                                      | 2,151,386 |              |           | $    | 2,108,058 |           |           | $ | 2,172,525 |          
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|Liabilities and Shareholders Equity |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                    
|                                    
|                                    
|                                    
|                                     | Current Liabilities                                           |                                                                                                        |           |              |           |      |           |           |           |   |           |           |          
|                                     |                                                               | Accounts payable                                                                                       |           | $            | 112,090   |      |           | $         | 67,591    |   |           | $         | 98,891    | 
|                                     |                                                               | Notes payable (Note 5)                                                                                 |           |              | 132,465   |      |           |           | 204,313   |   |           |           | 221,169   | 
|                                     |                                                               | Current portion of long-term debt and capital lease obligations                                        |           |              | 28,059    |      |           |           | 58,066    |   |           |           | 58,288    | 
|                                     |                                                               | Federal income, property and other taxes payable                                                       |           |              | 51,591    |      |           |           | 41,223    |   |           |           | 61,059    | 
|                                     |                                                               | Deferred gas cost recovery revenues                                                                    |           |              |          |      |           |           | 23,899    |   |           |           | 14,980    | 
|                                     |                                                               | Exchange gas payable                                                                                   |           |              | 5,763     |      |           |           | 28,520    |   |           |           | 25,337    | 
|                                     |                                                               | Customer deposits                                                                                      |           |              | 15,762    |      |           |           | 16,803    |   |           |           | 18,769    | 
|                                     |                                                               | Other                                                                                                  |           |              | 59,764    |      |           |           | 51,637    |   |           |           | 67,222    | 
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               |                                                                                                        | 405,494   |              |           |      | 492,052   |           |           |   | 565,715   |          
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                     | Deferred Credits and Other Liabilities                        |                                                                                                        |           |              |           |      |           |           |           |   |           |           |          
|                                     |                                                               | Deferred income taxes                                                                                  |           |              | 104,778   |      |           |           | 84,652    |   |           |           | 88,567    | 
|                                     |                                                               | Unamortized investment tax credit                                                                      |           |              | 28,258    |      |           |           | 31,362    |   |           |           | 29,784    | 
|                                     |                                                               | Tax benefits amortizable to customers                                                                  |           |              | 136,906   |      |           |           | 132,676   |   |           |           | 130,120   | 
|                                     |                                                               | Accrued environmental costs                                                                            |           |              | 27,373    |      |           |           | 32,000    |   |           |           | 32,000    | 
|                                     |                                                               | Minority interest                                                                                      |           |              | 8,570     |      |           |           | 9,349     |   |           |           | 8,201     | 
|                                     |                                                               | Other                                                                                                  |           |              | 48,757    |      |           |           | 41,858    |   |           |           | 51,460    | 
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               |                                                                                                        | 354,642   |              |           |      | 331,897   |           |           |   | 340,132   |          
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                     | Long-Term Debt, including capital lease obligations
	(Note 6) |                                                                                                        |           | 683,486      |           |      |           | 621,745   |           |   |           | 619,835   |          
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                     | Contingencies (Note 7)                                        |                                                                                                        |           |              |           |      |           |           |           |   |           |           |          
|                                    
|                                    
|                                    
|                                    
|                                     | Common Shareholders Equity                                   |                                                                                                        |           |              |           |      |           |           |           |   |           |           |          
|                                     |                                                               | Common stock                                                                                           |           |              | 10,300    |      |           |           | 10,300    |   |           |           | 10,300    | 
|                                     |                                                               | Additional paid-in capital                                                                             |           |              | 230,399   |      |           |           | 230,399   |   |           |           | 230,399   | 
|                                     |                                                               | Retained earnings                                                                                      |           |              | 467,065   |      |           |           | 421,665   |   |           |           | 406,144   | 
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               |                                                                                                        | 707,764   |              |           |      | 662,364   |           |           |   | 646,843   |          
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          
|                                    
|                                     |                                                               | $                                                                                                      | 2,151,386 |              |           | $    | 2,108,058 |           |           | $ | 2,172,525 |          
|                                     |                                                               |                                                                                                        |           |              |           |      |           |           |           |   |           |          

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

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##### Table of Contents



Michigan Consolidated Gas Company and Subsidiaries

Consolidated Statement of Cash Flows (Unaudited)


(Thousands of Dollars)


|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |         |          |         |        |          |  
|------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | ------------------------- | ------------------------------------------- | ------- | ------ | ------- | -------- | ------- | ------ | -------- | -
|                                                                          |                                                                                           |                                                                          
|                                                                          |                                                                                           | Nine Months Ended                                                        
|                                                                          |                                                                                           | September 30,                                                            
|                                                                          |                                                                                           |                                                                          
|                                                                          |                                                                                           | 1999                                                                      |                           | 1998                                       
|                                                                          |                                                                                           |                                                                           |                           |                                            
|Cash Flow from Operating Activities                                       |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|                                                                          | Net income                                                                                |                                                                           | $                         | 78,598                                      |         |        | $       | 46,340   |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Adjustments to reconcile net income to net cash flow provided
	from operating activities: |                                                                           |                           |                                             |         |        |         |          |        
|                                                                          |                                                                                           | Depreciation and depletion                                                |                           |                                             |         |        |         |          |         |       
|                                                                          |                                                                                           |                                                                           | Per statement of income   |                                             |         | 73,558 |         |          |         | 68,910 |         
|                                                                          |                                                                                           |                                                                           | Charged to other accounts |                                             |         | 6,627  |         |          |         | 5,948  |         
|                                                                          |                                                                                           | Write-down of gathering properties, net (Note 4)                          |                           |                                             |        |        |         |          | 11,200  |       
|                                                                          |                                                                                           | Deferred income taxes  current                                           |                           |                                             | (19,284 | )      |         |          | (11,889 | )     
|                                                                          |                                                                                           | Deferred income taxes and investment tax credit  net                     |                           |                                             | 21,471  |        |         |          | 15,218  |       
|                                                                          |                                                                                           | Other                                                                     |                           |                                             | (1,273  | )      |         |          | (3,509  | )     
|                                                                          |                                                                                           | Changes in assets and liabilities, exclusive of changes shown
	separately |                           |                                             | 17,646  |        |         |          | 85,817  |       
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|                                                                          |                                                                                           |                                                                           |                           | Net cash provided from operating activities |         |        | 177,343 |          |         |        | 218,035  |  
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|Cash Flow from Financing Activities                                       |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|                                                                          | Notes payable  net                                                                       |                                                                           |                           | (88,704                                     | )       |        |         | (37,378  | )      
|                                                                          | Issuance of long-term debt (Note 6)                                                       |                                                                           |                           | 106,535                                     |         |        |         | 153,052  |        
|                                                                          | Cash dividend paid applicable to common stock                                             |                                                                           |                           | (17,500                                     | )       |        |         |         |        
|                                                                          | Retirement of long-term debt (Note 6)                                                     |                                                                           |                           | (76,479                                     | )       |        |         | (124,637 | )      
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|                                                                          |                                                                                           |                                                                           |                           | Net cash used for financing activities      |         |        | (76,148 | )        |         |        | (8,963   | )
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|Cash Flow from Investing Activities                                       |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|                                                                          | Notes receivable  affiliate  net                                                        |                                                                           |                           | (430                                        | )       |        |         | (107,440 | )      
|                                                                          | Capital expenditures                                                                      |                                                                           |                           | (94,296                                     | )       |        |         | (105,179 | )      
|                                                                          | Other  net                                                                               |                                                                           |                           | (1,192                                      | )       |        |         | (195     | )      
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|                                                                          |                                                                                           |                                                                           |                           | Net cash used for investing activities      |         |        | (95,918 | )        |         |        | (212,814 | )
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|Net Increase (Decrease) in Cash and Cash Equivalents                      |                                                                                           |                                                                           | 5,277                     |                                             |         |        | (3,742  | )       
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Cash and Cash Equivalents, January 1                                      |                                                                                           |                                                                           | 6,603                     |                                             |         |        | 14,353  |         
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|Cash and Cash Equivalents, September 30                                   |                                                                                           | $                                                                         | 11,880                    |                                             |         | $      | 10,611  |         
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|Changes in Assets and Liabilities, Exclusive of Changes Shown
	Separately |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|                                                                          | Accounts receivable  net                                                                 |                                                                           | $                         | 44,197                                      |         |        | $       | 94,274   |        
|                                                                          | Accrued/deferred gas cost recovery revenues                                               |                                                                           |                           | (15,153                                     | )       |        |         | 36,761   |        
|                                                                          | Accrued unbilled revenues                                                                 |                                                                           |                           | 65,589                                      |         |        |         | 74,751   |        
|                                                                          | Gas in inventory                                                                          |                                                                           |                           | (53,201                                     | )       |        |         | (56,264  | )      
|                                                                          | Property taxes assessed applicable to future periods                                      |                                                                           |                           | 33,473                                      |         |        |         | 33,426   |        
|                                                                          | Accounts payable                                                                          |                                                                           |                           | 13,199                                      |         |        |         | (62,666  | )      
|                                                                          | Federal income, property and other taxes payable                                          |                                                                           |                           | (9,468                                      | )       |        |         | (37,407  | )      
|                                                                          | Exchange gas payable                                                                      |                                                                           |                           | (19,574                                     | )       |        |         | 26,457   |        
|                                                                          | Other current assets and liabilities                                                      |                                                                           |                           | 869                                         |         |        |         | 2,314    |        
|                                                                          | Prepaid benefit costs                                                                     |                                                                           |                           | (32,655                                     | )       |        |         | (18,024  | )      
|                                                                          | Deferred assets and liabilities                                                           |                                                                           |                           | (9,630                                      | )       |        |         | (7,805   | )      
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|                                                                          |                                                                                           | $                                                                         | 17,646                    |                                             |         | $      | 85,817  |         
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|Supplemental Disclosures                                                  |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Cash paid for:                                                                            |                                                                           |                           |                                             |         |        |         |          |        
|                                                                          |                                                                                           | Interest, net of amounts capitalized                                      |                           | $                                           | 41,265  |        |         | $        | 38,164  |       
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |         |         
|                                                                          |                                                                                           | Federal income taxes                                                      |                           | $                                           | 23,543  |        |         | $        | 17,181  |       
|                                                                          |                                                                                           |                                                                           |                           |                                             |         |        |         |         

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

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##### Table of Contents



Michigan Consolidated Gas Company and Subsidiaries

Notes to the Consolidated Financial Statements


1.  General

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

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

2.  MCN Merger Agreement with DTE Energy Company

MCN Energy Group Inc. (MCN), parent company of MichCon, and DTE
Energy Company (DTE) have signed a definitive merger agreement,
dated October 4, 1999, under which DTE will acquire all
outstanding shares of MCN common stock. The boards of directors
of both companies have unanimously approved the merger agreement.
 The transaction is subject to the approval of the shareholders
of both companies, regulatory approvals and other customary
merger conditions. The transaction is expected to close in six to
 nine months from the date of the merger agreement and will be
accounted for as a purchase by DTE. The combined company, which
will be named DTE Energy Company and headquartered in Detroit,
will be the largest electric and gas utility in Michigan.

3.  Regulatory Matters

a.  Regulatory Reform Plan



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As discussed in MichCons 1998 Annual Report on
	Form 10-K, MichCon implemented its Regulatory Reform Plan in
	 January 1999. The plan includes a new three-year gas sales
	program under which MichCons gas sales rates include a gas
	commodity component that is fixed at $2.95 per thousand cubic
	feet (Mcf). As part of its gas acquisition strategy, MichCon has
	entered into fixed-price contracts at costs below $2.95 per Mcf
	for a substantial portion of its expected gas supply requirements
	 through 2001.                                                                                                                                                                                                                                          
|
| | The plan also includes a comprehensive experimental three-year
	customer choice program, which is subject to annual caps on the
	level of participation. The customer choice program began in
	April 1999, with approximately 70,000 customers choosing to
	purchase natural gas from suppliers other than MichCon. Plan
	years begin April 1 of each year, and the number of customers
	allowed to participate in the plan is limited to 75,000 in 1999,
	150,000 in 2000 and 225,000 in 2001. There is also a volume
	limitation on commercial and industrial participants. The volume
	limitation for these participants is 10 billion cubic feet
	(Bcf) in 1999, 20 Bcf in 2000 and 30 Bcf in 2001. MichCon will
	continue to transport and deliver the gas to the

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##### Table of Contents



Notes to the Consolidated Financial Statements (Continued)



| |                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | customers premises at prices that maintain its previously
	existing sales margins on these services. Various parties have
	appealed the Michigan Public Service Commissions
	(MPSC) approval of the plan. While management believes the
	plan will be upheld on appeal, there can be no assurance as to
	the outcome.

b.  Gas Cost Recovery
Proceedings



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Prior to January 1999, the Gas Cost Recovery (GCR) process
	allowed MichCon to recover its cost of gas sold if the MPSC
	determined that such costs were reasonable and prudent. An annual
	 GCR reconciliation proceeding provided a review of gas costs
	incurred during the previous year and determined whether gas
	costs had been overcollected or undercollected, and as a result,
	whether a refund or surcharge, including interest, was required
	to be returned to or collected from GCR customers. The GCR
	process was suspended with the implementation of MichCons
	Regulatory Reform Plan in January 1999.
|
| | In February 1999, MichCon filed its final GCR reconciliation
	 case covering gas costs incurred during 1998 which indicates an
	overrecovery of $18,000,000, including interest. Management
	believes that 1998 gas costs were reasonable and prudent and that
	 the MPSC will approve the gas costs incurred. However,
	management cannot predict the outcome of this proceeding. During
	the first quarter of 1999, MichCon refunded the overrecovery to
	customers as a reduction in gas sales rates.                                                                                                                   

4.  Property Write-Down

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

5.  Lines of Credit

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

6.  Long-Term Debt

In June 1999, MichCon issued $55,000,000 of 6.85% senior
secured notes, due June 2038, and $55,000,000 of 6.85% senior
secured notes, due June 2039. The notes are insured by a
financial

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##### Table of Contents



Notes to the Consolidated Financial Statements (Concluded)

guaranty insurance policy and are rated AAA or its equivalent by
the major rating agencies. The notes are redeemable at par on or
after June 1, 2004.

In September 1999, MichCon redeemed $18,000,000 of 9.125%
first mortgage bonds which were due September 2004.

7.  Contingencies

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

16



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##### Table of Contents











Other Information


Exhibits and Reports on Form 8-K

(a)  Exhibits

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

(b)  Reports on Form 8-K



| |     
| | ----
| | None

17



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##### Table of Contents








Signature


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



| |                                  
| | ---------------------------------
| | MICHIGAN CONSOLIDATED GAS COMPANY



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

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

Date: November 12, 1999

18



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##### Table of Contents



Index to Exhibits

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