TABLE OF CONTENTS




|                                                                                      |  |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|Table of Contents                                                                    
|Definitions                                                                          
|Managements Discussion and Analysis of Financial Condition and Results of Operations
|Quantitative and Qualitative Disclosures About Market Risk                           
|Consolidated Statement of Cash Flows (Unaudited)                                     
|Notes to the Consolidated Financial Statements                                       
|Other Information                                                                    
|Independent Accountants Report                                                      
|Signature                                                                            
|Computation of Ratio of Earnings to Fixed Charges                                    
|Unaudited Interim Financial Information                                              
|Credit Agreement                                                                     



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##### Table of Contents






UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




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FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended June 30, 2001

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)                                

313-965-2430

(Registrants telephone number, including
area code)


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.  Yes  X  No



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##### Table of Contents



MICHIGAN CONSOLIDATED GAS COMPANY

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED JUNE 30, 2001







TABLE OF CONTENTS


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|------------------------------- | ---------------------------------------------------------------------------------------------- | -------------------------------------------- | -- | -- | -- | 
|                                |                                                                                                | PAGE                                        
|                                |                                                                                                | NUMBER                                      
|                                |                                                                                                |                                             
|DEFINITIONS                     |                                                                                                |                                              | 1  |   
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|PART I  FINANCIAL
	INFORMATION |                                                                                                |                                              |    |   
|                                | Item 1. Financial Statements                                                                   |                                              |    |    |   
|                               
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|                                |                                                                                                | Consolidated Statement of Operations         |    |    | 11 | 
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|                                |                                                                                                | Consolidated Statement of Financial Position |    |    | 12 | 
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|                                |                                                                                                | Consolidated Statement of Cash Flows         |    |    | 13 | 
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|                                |                                                                                                | Notes to Consolidated Financial Statements   |    |    | 14 | 
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|                                |                                                                                                | Independent Accountants Report              |    |    | 19 | 
|                               
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|                                | Item 2. Managements Discussion and
	Analysis of Financial Condition and Results of Operations |                                              |    | 3  |   
|                               
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|                                | Item 3. Quantitative and Qualitative
	Disclosures About Market Risk                            |                                              |    | 10 |   
|                               
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|PART II  OTHER
	INFORMATION    |                                                                                                |                                              |    |   
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|                                | Item 6. Exhibits and Reports on Form 8-K                                                       |                                              |    | 18 |   
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|SIGNATURE                       |                                                                                                |                                              | 20 |   



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##### Table of Contents








DEFINITIONS




|                            |  |                                                                                                                                                                                                                                                                                                                                                        
|--------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Customer Choice Program     |  | A three-year program that began in April  1999 which allows
	a limited number of customers to purchase gas from suppliers
	other than MichCon.                                                                                                                                                                                                         
|                           
|DTE                         |  | DTE Energy Company and subsidiaries. Indirectly, the parent
	company for MichCon.                                                                                                                                                                                                                                                                      
|                           
|End User Transportation     |  | A gas delivery service historically provided to large-volume
	commercial and industrial customers who purchase natural gas
	directly from producers or brokerage companies. Under
	MichCons Customer Choice Program that began in 1999, this
	service is also provided to residential customers and
	small-volume commercial and industrial customers.
|                           
|Gas Sales Program           |  | A three-year program that began in January  1999 under
	which MichCons gas sales rate includes a gas commodity
	component that is fixed at $2.95 per Mcf.                                                                                                                                                                                             
|                           
|Gas Storage                 |  | For MichCon, the process of injecting, storing and withdrawing
	natural gas from a depleted underground natural gas field.                                                                                                                                                                                                                             
|                           
|GCR                         |  | Gas Cost Recovery; a process by which MichCon, through annual
	gas cost proceedings before the Michigan Public Service
	Commission, is allowed to recover its reasonable and prudent
	cost of gas sold. The GCR was suspended under the Regulatory
	Reform Plan for the three-year period ending on
	December 31, 2001.                                
|                           
|Intermediate Transportation |  | A gas delivery service provided to producers, brokers and other
	gas companies that own the natural gas, but are not the ultimate
	consumers.                                                                                                                                                                                                          
|                           
|MCN                         |  | MCN Energy Group Inc. and its subsidiaries.                                                                                                                                                                                                                                                                                                            
|                           
|MichCon                     |  | Michigan Consolidated Gas Company; an indirect, wholly owned
	natural gas distribution and intrastate transmission subsidiary
	of DTE.                                                                                                                                                                                                                 
|                           
|MPSC                        |  | Michigan Public Service Commission; a state agency that
	regulates, among other things, the intrastate aspects of the
	natural gas industry within Michigan.                                                                                                                                                                                           
|                           
|Normal Weather              |  | The average annual degree days in MichCons service area
	during a recent 30-year period.                                                                                                                                                                                                                                                              

1



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##### Table of Contents



DEFINITIONS




|                       |  |                                                                                                                                                                                                                                                                                                       
|---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Regulatory Reform Plan |  | The plan approved by the MPSC in April  1998 that provided
	for: (i) the Gas Sales Program, (ii) the Customer
	Choice Program and (iii) an income sharing provision that
	allows customers to share in profits when actual returns on
	equity from utility operations exceed predetermined thresholds.

2



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##### Table of Contents








MANAGEMENTS DISCUSSION AND
ANALYSIS


OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


RESULTS OF OPERATIONS

Results reflect merger and restructuring charges, and losses
from Gas Sales Program  MichCon reported losses
of $120.1 million and $22.8 million for the 2001
second quarter and six-month period, respectively, compared with
earnings of $4.0 million and $70.9 million for the
comparable 2000 periods. The earnings declines reflect
nonrecurring charges recorded in connection with completing the
merger with DTE Energy Company (DTE) in May 2001. The
earnings comparisons also reflect lower gross margins resulting
from losses under the Gas Sales Program in 2001, attributable to
higher gas cost.




|                                              |  |         |        |          |  |        |       |         |  |   |       |   |  |  |        |  
|--------------------------------------------- |  | ------- | ------ | -------- |  | ------ | ----- | ------- |  | - | ----- | - |  |  | ------ | -
|                                              |  |         |        |         
|                                              |  | Quarter |        | 6 Months
|                                              |  |         |        |         
|                                              |  | Dollar  |        | Percent  |  | Dollar |       | Percent
|Earnings Components(Dollars in Millions)      |  | Change  |        | Change   |  | Change |       | Change 
|Increases (Decreases) Comparing 2001 to 2000  |  |         |        |          |  |        |       |        
|Operating Revenues                            |  | $       | (5.6   | )        |  |        | (3.0  | )%      |  | $ | 28.2  |   |  |  | 4.5    | %
|                                             
|                                             
|                                             
|                                             
|Cost of Gas                                   |  |         | 74.7   |          |  |        | 106.5 |         |  |   | 66.5  |   |  |  | 23.2   |  
|                                             
|                                             
|                                             
|                                             
|Gross Margin                                  |  |         | (80.2  | )        |  |        | (68.4 | )       |  |   | (38.3 | ) |  |  | (11.2  | )
|                                             
|                                             
|                                             
|                                             
|Operation and Maintenance                     |  |         | 7.6    |          |  |        | 13.1  |         |  |   | 8.1   |   |  |  | 6.6    |  
|                                             
|                                             
|                                             
|                                             
|Depreciation and Depletion                    |  |         | .5     |          |  |        | 1.8   |         |  |   | .9    |   |  |  | 1.7    |  
|                                             
|                                             
|                                             
|                                             
|Property and Other Taxes                      |  |         | (3.1   | )        |  |        | (23.0 | )       |  |   | (6.0  | ) |  |  | (18.3  | )
|                                             
|                                             
|                                             
|                                             
|Merger & Restructuring Charges
	(Notes 2 & 3) |  |         | 99.9   |          |  |        | N/M   |         |  |   | 100.5 |   |  |  | N/M    |  
|                                             
|                                             
|                                             
|                                             
|Other Income and Deductions                   |  |         | 5.2    |          |  |        | 41.3  |         |  |   | 1.8   |   |  |  | 6.8    |  
|                                             
|                                             
|                                             
|                                             
|Income Tax Provision                          |  |         | (66.1  | )        |  |        | N/M   |         |  |   | (49.9 | ) |  |  | (131.8 | )
|                                             
|                                             
|                                             
|                                             
|Net Income or Loss                            |  |         | (124.1 | )        |  |        | N/M   |         |  |   | (93.7 | ) |  |  | (132.1 | )




N/M  not meaningful


Gross Margin

Gross margin (operating revenues less cost of gas) decreased
$80.2 million and $38.3 million in the 2001 second
quarter and six-month period, respectively. As subsequently
discussed, gross margins primarily reflect the operations of
MichCons Gas Sales Program and the impact of weather.

MichCons three-year Gas Sales Program is part of its
Regulatory Reform Plan (Note 5a) which was implemented in
January 1999. Under the Gas Sales Program, MichCons
gas sales rates include a gas commodity component that is fixed
at $2.95 per thousand cubic feet (Mcf). MichCon had negative
margins from selling gas in the 2001 second quarter, more than
offsetting the positive margins generated in the 2001 first
quarter. Margins generated under the Gas Sales Program were
approximately $75 million lower in the 2001 second quarter,
and $43 million lower in the 2001 six-month period compared
to the corresponding 2000 periods, primarily as a result of
higher cost gas supply. The average cost of gas sold during the
2001 second quarter and six-month period was $6.06 per Mcf
and $3.22 per Mcf, respectively, representing increases of
$3.21 per Mcf and $.39 per Mcf from the same 2000
periods. As discussed in the Cost of Gas section
that follows, the average cost of gas sold reflects higher
prices for gas purchased and the partial liquidation of
inventory gas

3



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##### Table of Contents



MANAGEMENTS DISCUSSION AND
ANALYSIS


that was priced at $.38 per Mcf (Note 4). The inventory
liquidation was estimated at 25 billion cubic feet (Bcf) in
the 2001 first quarter, but was subsequently adjusted to 17.5
Bcf in the 2001 second quarter due to warmer than normal
weather. The effect of the inventory adjustment increased cost
of gas in the 2001 second quarter by $1.03 per Mcf, and the
inventory liquidation decreased cost of gas in the 2001
six-month period by $.52 per Mcf.

Margins generated under the Gas Sales Program for the 2001
second quarter and six-month period were affected by the number
of customers choosing to purchase gas from MichCon rather than
other suppliers under MichCons three-year Customer Choice
Program. Year three of this program commenced in April 2001
with approximately 30,000 customers choosing to participate, as
compared to approximately 55,000 customers participating in year
two and 70,000 customers in year one. Distribution margins were
retained from participating customers as MichCon continued to
transport and deliver the gas to the customers premises.

Gross margins were also impacted by weather which was 13.6%
warmer in the 2001 second quarter and 4.2% colder in the 2001
six-month period as compared to the same 2000 periods.
Additionally, both 2001 periods reflect declines in end user and
intermediate transportation revenues, as well as revenues from
other gas-related services.




|                                              |                          |         |       |          |   |      |      |      |   |  |      |       |   |  |       |       |  
|--------------------------------------------- | ------------------------ | ------- | ----- | -------- | - | ---- | ---- | ---- | - |  | ---- | ----- | - |  | ----- | ----- | -
|                                              |                          |         |       |         
|                                              |                          | Quarter |       | 6 Months
|                                              |                          |         |       |         
|                                              |                          | 2001    |       | 2000     |   | 2001 |      | 2000
|Effect of Weather on Gas Markets and Earnings |                          |         |       |          |   |      |      |     
|Percentage Warmer Than Normal                 |                          |         | (21.7 | )%       |   |      | (8.1 | )%   |   |  | (8.8 | )%    |   |  | (13.0 | )%   
|                                             
|                                             
|                                             
|                                             
|Decrease From Normal in:                      |                          |         |       |          |   |      |      |      |   |  |      |       |   |  |       |      
|                                             
|                                             
|                                             
|                                             
|                                              | Gas markets (in Bcf)     |         |       | (5.9     | ) |      |      | (1.9 | ) |  |      | (12.2 | ) |  |       | (18.0 | )
|                                             
|                                             
|                                             
|                                             
|                                              | Net income (in Millions) |         | $     | (5.8     | ) |      | $    | (1.7 | ) |  | $    | (10.7 | ) |  | $     | (16.7 | )




Gas sales and end user transportation revenues in
total decreased $3.3 million in the 2001 second quarter and
increased $32.8 million in the 2001 six-month period.
Revenues reflect varying gas sales volumes and a decline in end
user transportation deliveries. Gas sales volumes decreased .6
Bcf in the 2001 second quarter and rose 7.7 Bcf in the 2001
six-month period, due primarily to weather. Gas sales volumes
were also impacted by an increase in the number of customers who
chose to purchase their gas from MichCon rather than other
suppliers under MichCons Customer Choice Program. End user
transportation deliveries decreased 5.4 Bcf in the 2001 second
quarter and 10.4 Bcf in the six-month period, reflecting the
impact of a slowing economy as well as volumes associated with
fewer customers participating in the Customer Choice Program.
Customers participating in this program are classified as end
user transportation customers rather than gas sales customers.
Accordingly, gas sales revenues have increased, partially offset
by a decrease in end user transportation revenues, resulting in
a net increase in total operating revenues from these customers
due to the gas commodity component included in gas sales rates.
The gas sales comparison was also impacted by a
$2.4 million provision for customer refunds recorded in the
2000 second quarter.

4



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##### Table of Contents



MANAGEMENTS DISCUSSION AND
ANALYSIS




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|                          |                             |         |       |          |  |      |       |       |  |   |       |       |  |   |       |       | 
|------------------------- | --------------------------- | ------- | ----- | -------- |  | ---- | ----- | ----- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                          |                             |         |       |         
|                          |                             | Quarter |       | 6 Months
|                          |                             |         |       |         
|                          |                             | 2001    |       | 2000     |  | 2001 |       | 2000 
|                          |                             |         |       |          |  |      |       |      
|Gas Markets(in
	Millions) |                             |         |       |          |  |      |       |       |  |   |       |       |  |   |       |      
|                         
|                         
|                         
|                         
|                          | Gas Sales                   |         | $     | 134.7    |  |      | $     | 134.1 |  |   | $     | 543.0 |  |   | $     | 504.8 | 
|                         
|                         
|                         
|                         
|                          | End User Transportation     |         |       | 21.7     |  |      |       | 25.6  |  |   |       | 59.0  |  |   |       | 64.4  | 
|                          |                             |         |       |          |  |      |       |       |  |   |       |       |  |   |       |      
|                          |                             |         | 156.4 |          |  |      | 159.7 |       |  |   | 602.0 |       |  |   | 569.2 |      
|                         
|                         
|                         
|                         
|                          | Intermediate Transportation |         |       | 11.3     |  |      |       | 12.7  |  |   |       | 23.8  |  |   |       | 27.2  | 
|                         
|                         
|                         
|                         
|                          | Other                       |         |       | 14.2     |  |      |       | 15.0  |  |   |       | 32.6  |  |   |       | 33.8  | 
|                          |                             |         |       |          |  |      |       |       |  |   |       |       |  |   |       |      
|                          |                             | $       | 181.9 |          |  | $    | 187.4 |       |  | $ | 658.4 |       |  | $ | 630.2 |      
|                          |                             |         |       |          |  |      |       |       |  |   |       |       |  |   |       |      
|Gas Markets(in Bcf)       |                             |         |       |          |  |      |       |       |  |   |       |       |  |   |       |      
|                         
|                         
|                         
|                         
|                          | Gas Sales                   |         |       | 23.7     |  |      |       | 24.3  |  |   |       | 108.7 |  |   |       | 101.0 | 
|                         
|                         
|                         
|                         
|                          | End User Transportation     |         |       | 31.9     |  |      |       | 37.3  |  |   |       | 78.5  |  |   |       | 88.9  | 
|                          |                             |         |       |          |  |      |       |       |  |   |       |       |  |   |       |      
|                          |                             |         | 55.6  |          |  |      | 61.6  |       |  |   | 187.2 |       |  |   | 189.9 |      
|                         
|                         
|                         
|                         
|                          | Intermediate Transportation |         |       | 148.3    |  |      |       | 111.7 |  |   |       | 320.2 |  |   |       | 294.6 | 
|                          |                             |         |       |          |  |      |       |       |  |   |       |       |  |   |       |      
|                          |                             |         | 203.9 |          |  |      | 173.3 |       |  |   | 507.4 |       |  |   | 484.5 |      
|                          |                             |         |       |          |  |      |       |       |  |   |       |       |  |   |       |      




Intermediate transportation revenues decreased
$1.4 million and $3.4 million in the 2001 second
quarter and six-month period, respectively, whereas intermediate
transportation deliveries increased 36.6 Bcf and
25.6 Bcf for the same periods. A significant portion of the
volume increase was due to customers who pay a fixed fee for
intermediate transportation capacity regardless of actual usage.
Although volumes associated with these fixed-fee customers may
vary, the related revenues are not affected. The decrease in
intermediate transportation revenues is attributable to the
expiration of some fixed-fee contracts and the dissolution of a
partnership that owned a 126-mile northern Michigan natural gas
gathering system. MichCon held a 66% interest in the
partnership that was dissolved in June 2000. Under the terms of
the dissolution, MichCon received the 67-mile northern portion
of the gathering system in return for its partnership interest.
Although there are lower revenues attributable to the gathering
system, such decline represents the joint venture partners
share of revenues. Accordingly, the decline in revenues was
offset by a reduction in minority interest expense.

Other operating revenues decreased $.8 million
and $1.2 million in the 2001 second quarter and six-month
period, respectively, due to a decline in revenues from
providing appliance maintenance and other gas-related services,
and was partially offset by an increase in late payment fees.

Cost of Gas

Cost of gas is affected by variations in sales volumes, cost of
purchased gas and related transportation costs, and the effects
of any permanent liquidation of inventory gas. Cost of gas sold
increased $74.7 million in the 2001 second quarter and
$66.5 million for the six-month period, primarily due to
higher prices paid for fixed-price supply. The average price
paid for gas purchased in the 2001 second quarter and six-month
period increased $.34 per Mcf (12%) and $.93 per Mcf
(33%), respectively, from the comparable 2000 periods. As
previously discussed, MichCon recorded

5



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##### Table of Contents



MANAGEMENTS DISCUSSION AND
ANALYSIS


the benefits of an inventory liquidation that was estimated at
25 Bcf in the 2001 first quarter, which was subsequently
adjusted to 17.5 Bcf in the 2001 second quarter due to
warmer than normal weather (Note 4). The effect of the
inventory liquidation and adjustment lowered cost of gas for the
2001 six-month period but increased cost of gas for the 2001
second quarter. Cost of gas was also affected by variations in
sales volumes due to weather and the number of customers who
have chosen to purchase gas from MichCon rather than other
suppliers.

Other Operating Expenses

Operation and maintenance expenses increased
$7.6 million and $8.1 million for the 2001 second
quarter and six-month period, respectively, primarily due to
higher employee medical costs as well as accruals for injuries
and damages. Additionally, the six-month comparison was affected
by a benefit recorded in the 2000 first quarter for insurance
proceeds resulting from the settlement of environmental claims
with certain insurance carriers. Partially offsetting the
increases were lower pension and retiree healthcare costs.

Depreciation and depletion increased
$.5 million and $.9 million in the 2001 second quarter
and six-month period, respectively, reflecting depreciation on
higher plant balances.

Property and other taxes decreased $3.1 million
and $6.0 million in the 2001 second quarter and six-month
period, respectively, reflecting a change in the taxable value
of personal property subject to taxation by local taxing
jurisdictions. New valuation tables approved by the Michigan
State Tax Commission more accurately recognize the impact of
regulation on the value of a utilitys personal property
based on the propertys age. The new tables impacted
property tax expense beginning in mid-2000.

Merger and restructuring charges increased
$99.9 million and $100.5 million in the 2001 second
quarter and six-month period, respectively (Notes 2 and 3).
MichCon recorded in the 2001 second quarter a $79.3 million
restructuring charge in connection with the merger between MCN
and DTE. The restructuring charge reflects the costs associated
with 273 employees electing to retire early under a program
designed to reduce the workforce in overlapping corporate
support functions. Merger costs represent legal, consulting,
accounting, employee benefit and other expenses associated with
the merger.

Other Income and Deductions

Other income and deductions increased $5.2 million and
$1.8 million in the 2001 second quarter and six-month
period, respectively. The increase is attributable to a
$6.7 million loss associated with the expected sale of
MichCons 33% to 50% interests in a series of partnerships
that own a residential community on the Detroit riverfront
(Harbortown). Partially offsetting the increases from the
Harbortown loss were lower interest costs and higher interest
income. The increase in interest income results from MichCon
leasing a portion of its pipeline system to the Vector Pipeline
Partnership through a capital lease arrangement that began in
December 2000.

6



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##### Table of Contents



MANAGEMENTS DISCUSSION AND
ANALYSIS


Income Taxes

Income taxes decreased $66.1 million in the 2001 second
quarter and $49.9 million in the 2001 six-month period due
to a decline in pre-tax earnings.

Outlook

Strategy  MichCons strategy is to
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.
Management expects to improve MichCons cost
competitiveness as a result of the May 2001 merger between
MCN and DTE. Approximately 60% of MichCons
1.2 million customers are also customers of The Detroit
Edison Company, a wholly-owned electric utility of DTE. MichCon
and Detroit Edison expect to realize synergies from integrating
common, duplicative functions, including corporate support,
billing and customer service.

Regulatory Reform Plan  MichCon is
currently operating under 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 and allows a limited number of customers to
purchase their gas from suppliers other than MichCon. Year three
of the program began in April 2001, with approximately
30,000 customers choosing to participate. MichCon will continue
to transport and deliver the gas to the participating
customers premises at prices that generate favorable
margins.

The Regulatory Reform Plan also includes the Gas Sales Program,
which suspended the gas cost recovery (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 ending in
December 2001. The suspension of the GCR mechanism
increases MichCons risk associated with gas margins.

As part of its gas acquisition strategy, MichCon has entered
into fixed-price contracts for nearly all of its remaining 2001
gas supply requirements assuming normal weather. MichCon does
not expect to generate profits from the Gas Sales Program in
2001 as the average cost of its fixed-price supplies for the
remainder of 2001 is significantly higher than $2.95 per Mcf.
However, the level of margins ultimately generated from selling
gas will be affected by: (i) the actual level of gas sales
volumes; and (ii) the level of gas consumed in
December 2001 that will be billed at GCR rates. The actual
level of gas sales volumes will fluctuate with changes in
weather and the number of customers who ultimately choose to
purchase gas from suppliers other than MichCon. Sales volumes
delivered in December 2001 that remain unbilled at
December 31, 2001 will be billed at the January 2002
GCR rate. Therefore, actual gas margins in 2001 will be impacted
by the level of unbilled volumes. Assuming normal weather and no
significant changes in customers and existing supply contracts,
MichCon estimates any additional losses from the Gas Sales
Program over the third and fourth quarters of 2001 would not be
material.

7



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##### Table of Contents



MANAGEMENTS DISCUSSION AND
ANALYSIS


The plan also encompasses an income sharing mechanism that
allows customers to share in profits when actual returns on
equity from utility operations exceed predetermined thresholds.
Based on the MPSC approved formula, management believes that no
income sharing was required in 1999 and 2000, and does not
expect income sharing will be required in 2001.

Proposed Regulatory Changes  The MPSC
is continuing its initiatives designed to give all of
Michigans natural gas customers added choices and the
opportunity to benefit from lower gas costs resulting from
competition. In October 2000, the MPSC issued an order that
provides uniform terms and conditions for a new voluntary
customer choice program in Michigan. Key aspects of the order
include: (i) continuing customer choice on a permanent and
expanding basis; (ii) eliminating fixed commodity rates in
favor of GCR rates that reflect market prices; and (iii)
investigating the potential unbundling of additional services
offered by Michigan gas utilities.

As discussed in MichCons 2000 Annual Report on
Form 10-K, MichCon filed applications with the MPSC in
December 2000 to modify the experimental Customer Choice
and Gas Sales Programs as outlined in the MPSCs
October 2000 order. MichCon had proposed the modifications
to become effective in April 2001. On March 22, 2001,
MichCon withdrew its applications with the MPSC. MichCon will
return to a GCR mechanism in January 2002 when the current
Regulatory Reform Plan expires.

Merger  As a condition of the Federal
Trade Commission approving MCNs merger with DTE
(Note 2), MichCon agreed to transfer a property interest to
a unit of Exelon Corporation allowing for the utilization of
natural gas transportation capacity on its system. The contract
will allow for increased competition for end user transportation
and gas sales services that could reduce earnings by an
estimated $5 million annually.

CAPITAL RESOURCES AND LIQUIDITY




|                                          |                      |          |      |        |   |   |      |        |  
|----------------------------------------- | -------------------- | -------- | ---- | ------ | - | - | ---- | ------ | -
|                                          |                      |         
|                                          |                      | 6 Months
|                                          |                      |         
|                                          |                      | 2001     |      | 2000  
|                                          |                      |          |      |       
|Cash and Cash Equivalents(in Millions)    |                      |          |      |        |   |   |      |       
|                                         
|                                         
|                                         
|                                         
|Cash Flow Provided From (Used For):       |                      |          |      |        |   |   |      |       
|                                         
|                                         
|                                         
|                                         
|                                          | Operating activities |          | $    | 225.0  |   |   | $    | 275.0  |  
|                                         
|                                         
|                                         
|                                         
|                                          | Investing activities |          |      | (39.5  | ) |   |      | (46.6  | )
|                                         
|                                         
|                                         
|                                         
|                                          | Financing activities |          |      | (192.5 | ) |   |      | (235.1 | )
|                                          |                      |          |      |        |   |   |      |       
|Net Decrease in Cash and Cash Equivalents |                      | $        | (7.0 | )      |   | $ | (6.7 | )     
|                                          |                      |          |      |        |   |   |      |       




Operating Activities

Cash flow from operating activities decreased $50.0 million
during the 2001 six-month period from the comparable 2000
period. The decrease was due primarily to higher working capital
requirements

8



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##### Table of Contents



MANAGEMENTS DISCUSSION AND
ANALYSIS


and lower earnings, after adjusting for non-cash items
(restructuring charge, depreciation and deferred taxes).

Investing Activities

MichCons cash used for investing activities decreased
$7.1 million in the 2001 six-month period as compared to
the same 2000 period. The change reflects capital expenditures.

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

Financing Activities

Cash flow used for financing activities decreased
$42.6 million during the 2001 six-month period as compared
to the same 2000 period. Financing activities reflect the
repayment of less short- and long-term debt, and an increase in
dividends paid to MCN. A summary of MichCons financing
strategies and its significant financing activities follows.

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s credit lines
that allowed for borrowings of up to $200 million under a
364-day revolving credit facility and up to $150 million
under a three-year revolving credit facility expired in
July 2001. During July 2001, MichCon established a
$300 million bridge facility through November 2001
that temporarily replaces the expired credit lines until a new
debt facility is negotiated. During the first six months of
2001, MichCon repaid $97.8 million of commercial paper,
leaving borrowings of $182.9 million outstanding under this
program at June 30, 2001.

In May 2001, MichCon repaid $20 million of maturing
long-term debt.

In June 2001, MichCon filed a shelf registration that
allows for the issuance of $360 million of debt securities.
This registration coupled with $140 million available under
a previous outstanding registration allows MichCon to issue a
total of $500 million of new debt securities. MichCon
expects to issue $200 million of senior notes under its
outstanding shelf registration in August 2001.

FORWARD-LOOKING STATEMENTS

This 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 2000 Annual Report on Form 10-K.

9



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##### Table of Contents








QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK


MichCon has market risk arising from fluctuations in natural gas
prices and manages such price risk by entering into fixed-price
contracts for a substantial portion of its expected supply
requirements. If MichCon did not enter into these fixed-price
supply contracts, its exposure to such risk would be
substantially higher. See the Outlook section for a
further discussion of MichCons market risks.

As discussed in MichCons 2000 Annual Report on
Form 10-K, MichCon also has market risk arising from
fluctuations in interest rates. MichCon manages interest rate
risk through the use of various derivative instruments.

MichCon is subject to interest rate risk in connection with the
issuance of variable and fixed-rate debt. In order to manage
interest costs, MichCon uses interest rate swap agreements to
exchange fixed and variable-rate interest payment obligations
without exchange of the underlying principal amounts. During the
2001 six-month period, there were no material changes to
MichCons interest rate risk.

10



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##### Table of Contents



CONSOLIDATED STATEMENT OF OPERATIONS(UNAUDITED)




|                                  |                                                  |                                     |          |                  |         |      |         |         |         |   |         |         |         |   |         |         |         |  
|--------------------------------- | ------------------------------------------------ | ----------------------------------- | -------- | ---------------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | -
|                                  |                                                  |                                     |          |                 
|                                  |                                                  | Three Months Ended                  |          | Six Months Ended
|                                  |                                                  | June 30                             |          | June 30         
|                                  |                                                  |                                     |          |                 
|                                  |                                                  | 2001                                |          | 2000             |         | 2001 |         | 2000   
|(in Thousands)                    |                                                  |                                     |          |                  |         |      |         |        
|                                  |                                                  |                                     |          |                  |         |      |         |        
|                                 
|                                 
|                                 
|                                 
|Operating Revenues                |                                                  | $                                   | 181,931  |                  |         | $    | 187,488 |         |         | $ | 658,390 |         |         | $ | 630,235 |        
|                                  |                                                  |                                     |          |                  |         |      |         |         |         |   |         |         |         |   |         |        
|Operating Expenses                |                                                  |                                     |          |                  |         |      |         |         |         |   |         |         |         |   |         |        
|                                 
|                                 
|                                 
|                                 
|                                  | Cost of gas (Note 4)                             |                                     |          | 144,785          |         |      |         | 70,108  |         |   |         | 353,102 |         |   |         | 286,628 |        
|                                 
|                                 
|                                 
|                                 
|                                  | Operation and maintenance                        |                                     |          | 66,059           |         |      |         | 58,412  |         |   |         | 130,579 |         |   |         | 122,475 |        
|                                 
|                                 
|                                 
|                                 
|                                  | Depreciation and depletion                       |                                     |          | 26,532           |         |      |         | 26,063  |         |   |         | 52,871  |         |   |         | 52,007  |        
|                                 
|                                 
|                                 
|                                 
|                                  | Property and other taxes                         |                                     |          | 10,467           |         |      |         | 13,591  |         |   |         | 26,617  |         |   |         | 32,581  |        
|                                 
|                                 
|                                 
|                                 
|                                  | Merger and restructuring charges (Notes 2 and 3) |                                     |          | 100,935          |         |      |         | 1,079   |         |   |         | 101,964 |         |   |         | 1,426   |        
|                                  |                                                  |                                     |          |                  |         |      |         |         |         |   |         |         |         |   |         |        
|                                  |                                                  | Total operating expenses            |          |                  | 348,778 |      |         |         | 169,253 |   |         |         | 665,133 |   |         |         | 495,117 |  
|                                  |                                                  |                                     |          |                  |         |      |         |         |         |   |         |         |         |   |         |        
|Operating Income (Loss)           |                                                  |                                     | (166,847 | )                |         |      | 18,235  |         |         |   | (6,743  | )       |         |   | 135,118 |        
|                                  |                                                  |                                     |          |                  |         |      |         |         |         |   |         |         |         |   |         |        
|Other Income and (Deductions)     |                                                  |                                     |          |                  |         |      |         |         |         |   |         |         |         |   |         |        
|                                 
|                                 
|                                 
|                                 
|                                  | Interest income                                  |                                     |          | 2,401            |         |      |         | 846     |         |   |         | 4,934   |         |   |         | 1,572   |        
|                                 
|                                 
|                                 
|                                 
|                                  | Interest on long-term debt                       |                                     |          | (10,971          | )       |      |         | (12,111 | )       |   |         | (21,165 | )       |   |         | (24,384 | )      
|                                 
|                                 
|                                 
|                                 
|                                  | Other interest expense                           |                                     |          | (2,275           | )       |      |         | (1,860  | )       |   |         | (6,455  | )       |   |         | (4,869  | )      
|                                 
|                                 
|                                 
|                                 
|                                  | Loss on joint venture held for sale (Note 6)     |                                     |          | (6,702           | )       |      |         |        |         |   |         | (6,702  | )       |   |         |        |        
|                                 
|                                 
|                                 
|                                 
|                                  | Equity in earnings of joint ventures             |                                     |          | 615              |         |      |         | 599     |         |   |         | 1,328   |         |   |         | 1,186   |        
|                                 
|                                 
|                                 
|                                 
|                                  | Other                                            |                                     |          | (743             | )       |      |         | 13      |         |   |         | (30     | )       |   |         | 194     |        
|                                  |                                                  |                                     |          |                  |         |      |         |         |         |   |         |         |         |   |         |        
|                                  |                                                  | Total other income and (deductions) |          |                  | (17,675 | )    |         |         | (12,513 | ) |         |         | (28,090 | ) |         |         | (26,301 | )
|                                  |                                                  |                                     |          |                  |         |      |         |         |         |   |         |         |         |   |         |        
|Income (Loss) Before Income Taxes |                                                  |                                     | (184,522 | )                |         |      | 5,722   |         |         |   | (34,833 | )       |         |   | 108,817 |        
|                                 
|                                 
|                                 
|                                 
|Income Tax Provision (Benefit)    |                                                  |                                     | (64,378  | )                |         |      | 1,735   |         |         |   | (12,039 | )       |         |   | 37,890  |        
|                                  |                                                  |                                     |          |                  |         |      |         |         |         |   |         |         |         |   |         |        
|Net Income (Loss)                 |                                                  | $                                   | (120,144 | )                |         | $    | 3,987   |         |         | $ | (22,794 | )       |         | $ | 70,927  |        
|                                  |                                                  |                                     |          |                  |         |      |         |         |         |   |         |         |         |   |         |        




CONSOLIDATED STATEMENT OF RETAINED EARNINGS(UNAUDITED)




|                               |                             |                    |         |                  |   |      |         |       |  |   |         |         |   |   |         |        | 
|------------------------------ | --------------------------- | ------------------ | ------- | ---------------- | - | ---- | ------- | ----- |  | - | ------- | ------- | - | - | ------- | ------ | 
|                               |                             |                    |         |                 
|                               |                             | Three Months Ended |         | Six Months Ended
|                               |                             | June 30            |         | June 30         
|                               |                             |                    |         |                 
|                               |                             | 2001               |         | 2000             |   | 2001 |         | 2000 
|(in Thousands)                 |                             |                    |         |                  |   |      |         |      
|                               |                             |                    |         |                  |   |      |         |      
|                              
|                              
|                              
|                              
|Balance  Beginning of
	Period |                             | $                  | 516,630 |                  |   | $    | 561,743 |       |  | $ | 494,648 |         |   | $ | 494,803 |       
|                              
|                              
|                              
|                              
|                               | Add  Net income (loss)     |                    |         | (120,144         | ) |      |         | 3,987 |  |   |         | (22,794 | ) |   |         | 70,927 | 
|                               |                             |                    |         |                  |   |      |         |       |  |   |         |         |   |   |         |       
|                               |                             |                    | 396,486 |                  |   |      | 565,730 |       |  |   | 471,854 |         |   |   | 565,730 |       
|                              
|                              
|                              
|                              
|                               | Deduct  Dividends declared |                    |         |                 |   |      |         |      |  |   |         | 75,368  |   |   |         |       | 
|                               |                             |                    |         |                  |   |      |         |       |  |   |         |         |   |   |         |       
|Balance  End of Period        |                             | $                  | 396,486 |                  |   | $    | 565,730 |       |  | $ | 396,486 |         |   | $ | 565,730 |       
|                               |                             |                    |         |                  |   |      |         |       |  |   |         |         |   |   |         |       




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


11



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##### Table of Contents



CONSOLIDATED STATEMENT OF FINANCIAL POSITION(UNAUDITED)




|                                                     |                                                                                                 |         |           |             |  |   |           |           | 
|---------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ------- | --------- | ----------- |  | - | --------- | --------- | 
|                                                     |                                                                                                 | June 30 |           | December 31
|                                                     |                                                                                                 | 2001    |           | 2000       
|(in Thousands)                                       |                                                                                                 |         |           |            
|ASSETS                                               |                                                                                                 |         |           |             |  |   |           |          
|                                                    
|                                                    
|                                                    
|                                                    
|Current Assets                                       |                                                                                                 |         |           |             |  |   |           |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Cash and cash equivalents                                                                       |         | $         | 5,634       |  |   | $         | 12,673    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Accounts receivable, less allowance for doubtful
	accounts of $15,765 and $18,912, respectively |         |           | 159,459     |  |   |           | 157,793   | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Accrued unbilled revenues                                                                       |         |           | 23,182      |  |   |           | 135,465   | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Gas in inventory (Note 4)                                                                       |         |           | 14,142      |  |   |           | 13,586    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Materials and supplies                                                                          |         |           | 15,787      |  |   |           | 14,173    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Property taxes assessed applicable to future
	periods                                           |         |           | 38,449      |  |   |           | 54,767    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Other                                                                                           |         |           | 9,452       |  |   |           | 21,295    | 
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|                                                     |                                                                                                 |         | 266,105   |             |  |   | 409,752   |          
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|Deferred Charges and Other Assets                    |                                                                                                 |         |           |             |  |   |           |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Investment in and advances to joint ventures                                                    |         |           | 13,908      |  |   |           | 20,068    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Long-term investments                                                                           |         |           | 66,534      |  |   |           | 70,643    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Investment in capital lease                                                                     |         |           | 84,185      |  |   |           | 76,395    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Deferred environmental costs                                                                    |         |           | 26,646      |  |   |           | 26,372    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Prepaid benefit costs                                                                           |         |           | 199,251     |  |   |           | 214,068   | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Other                                                                                           |         |           | 55,746      |  |   |           | 52,324    | 
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|                                                     |                                                                                                 |         | 446,270   |             |  |   | 459,870   |          
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|Property, Plant and Equipment, at
	cost              |                                                                                                 |         | 3,013,747 |             |  |   | 2,980,627 |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Less  Accumulated depreciation and
	depletion                                                  |         |           | 1,578,137   |  |   |           | 1,538,311 | 
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|                                                     |                                                                                                 |         | 1,435,610 |             |  |   | 1,442,316 |          
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|                                                     |                                                                                                 | $       | 2,147,985 |             |  | $ | 2,311,938 |          
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|LIABILITIES AND SHAREHOLDERS
	EQUITY                |                                                                                                 |         |           |             |  |   |           |          
|                                                    
|                                                    
|                                                    
|                                                    
|Current Liabilities                                  |                                                                                                 |         |           |             |  |   |           |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Accounts payable                                                                                |         | $         | 148,368     |  |   | $         | 98,357    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Notes payable                                                                                   |         |           | 184,724     |  |   |           | 278,762   | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Current portion of long-term debt and capital
	lease obligations                                |         |           | 21,185      |  |   |           | 24,652    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Federal income, property and other taxes payable                                                |         |           | 40,698      |  |   |           | 67,636    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Customer deposits                                                                               |         |           | 17,338      |  |   |           | 17,696    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Other                                                                                           |         |           | 55,852      |  |   |           | 59,366    | 
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|                                                     |                                                                                                 |         | 468,165   |             |  |   | 546,469   |          
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|Deferred Credits and Other
	Liabilities              |                                                                                                 |         |           |             |  |   |           |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Deferred income taxes                                                                           |         |           | 129,748     |  |   |           | 141,552   | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Unamortized investment tax credit                                                               |         |           | 25,077      |  |   |           | 25,867    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Tax benefits amortizable to customers                                                           |         |           | 137,754     |  |   |           | 138,161   | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Accrued environmental costs                                                                     |         |           | 24,199      |  |   |           | 25,608    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Minority interest                                                                               |         |           | 600         |  |   |           | 635       | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Other                                                                                           |         |           | 101,597     |  |   |           | 55,380    | 
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|                                                     |                                                                                                 |         | 418,975   |             |  |   | 387,203   |          
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|Long-Term Debt, including capital lease
	obligations |                                                                                                 |         | 622,713   |             |  |   | 641,369   |          
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|                                                    
|Contingencies (Notes 5a and 8)                       |                                                                                                 |         |           |             |  |   |           |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                    
|Common Shareholders Equity                          |                                                                                                 |         |           |             |  |   |           |          
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Common stock                                                                                    |         |           | 10,300      |  |   |           | 10,300    | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Additional paid-in capital                                                                      |         |           | 231,346     |  |   |           | 231,949   | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Retained earnings                                                                               |         |           | 396,486     |  |   |           | 494,648   | 
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|                                                     |                                                                                                 |         | 638,132   |             |  |   | 736,897   |          
|                                                     |                                                                                                 |         |           |             |  |   |           |          
|                                                     |                                                                                                 | $       | 2,147,985 |             |  | $ | 2,311,938 |          
|                                                     |                                                                                                 |         |           |             |  |   |           |          




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


12



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##### Table of Contents








CONSOLIDATED STATEMENT OF CASH FLOWS(UNAUDITED)





|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |          |        |         |          |  
|------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ------------------------------------ | ------------------------------------------------------------------------- | ------------------------------------------- | ------ | ------- | -------- | -------- | ------ | ------- | -------- | -
|                                                                          |                                                                                                 |                                     
|                                                                          |                                                                                                 | Six Months Ended                    
|                                                                          |                                                                                                 | June 30                             
|                                                                          |                                                                                                 |                                     
|                                                                          |                                                                                                 | 2001                                 |                                                                           | 2000                                       
|(in Thousands)                                                            |                                                                                                 |                                      |                                                                           |                                            
|Cash Flow From Operating Activities                                       |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Net (loss) income                                                                               |                                      | $                                                                         | (22,794                                     | )      |         | $        | 70,927   |       
|                                                                          | Adjustments to reconcile net (loss) income to net
	cash flow provided from operating activities |                                      |                                                                           |                                             |        |         |          |          |       
|                                                                          |                                                                                                 | Depreciation and depletion           |                                                                           |                                             |        |         |          |          |        |        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                 |                                      | Per statement of income                                                   |                                             |        | 52,871  |          |          |        | 52,007  |         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                 |                                      | Charged to other accounts                                                 |                                             |        | 5,175   |          |          |        | 4,822   |         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                 |                                      | Deferred income taxes  current                                           |                                             |        | (5,538  | )        |          |        | (8,236  | )       
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                 |                                      | Deferred income taxes and investment tax credit,
	net                     |                                             |        | (13,001 | )        |          |        | 18,418  |         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                 |                                      | Other                                                                     |                                             |        | (3,166  | )        |          |        | (8,769  | )       
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                 |                                      | Changes in assets and liabilities, exclusive of
	changes shown separately |                                             |        | 211,419 |          |          |        | 145,851 |         
|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|                                                                          |                                                                                                 |                                      |                                                                           | Net cash provided from operating activities |        |         | 224,966  |          |        |         | 275,020  |  
|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|Cash Flow From Investing Activities                                       |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Capital expenditures                                                                            |                                      |                                                                           | (45,898                                     | )      |         |          | (49,446  | )     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Other                                                                                           |                                      |                                                                           | 6,370                                       |        |         |          | 2,832    |       
|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|                                                                          |                                                                                                 |                                      |                                                                           | Net cash used for investing activities      |        |         | (39,528  | )        |        |         | (46,614  | )
|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|Cash Flow From Financing Activities                                       |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Notes payable, net                                                                              |                                      |                                                                           | (93,959                                     | )      |         |          | (194,916 | )     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Retirement of long-term debt                                                                    |                                      |                                                                           | (23,518                                     | )      |         |          | (40,156  | )     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Dividends paid                                                                                  |                                      |                                                                           | (75,000                                     | )      |         |          |         |       
|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|                                                                          |                                                                                                 |                                      |                                                                           | Net cash used for financing activities      |        |         | (192,477 | )        |        |         | (235,072 | )
|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|Net Decrease in Cash and Cash
	Equivalents                                |                                                                                                 |                                      | (7,039                                                                    | )                                           |        |         | (6,666   | )       
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Cash and Cash Equivalents,
	January 1                                     |                                                                                                 |                                      | 12,673                                                                    |                                             |        |         | 9,705    |         
|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|Cash and Cash Equivalents,
	June 30                                       |                                                                                                 | $                                    | 5,634                                                                     |                                             |        | $       | 3,039    |         
|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|Changes in Assets and Liabilities, Exclusive
	of Changes Shown Separately |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Accounts receivable, net                                                                        |                                      | $                                                                         | (2,033                                      | )      |         | $        | 1,029    |       
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Accrued unbilled revenues                                                                       |                                      |                                                                           | 112,283                                     |        |         |          | 80,622   |       
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Accrued/deferred gas cost recovery revenues, net                                                |                                      |                                                                           |                                            |        |         |          | 3,229    |       
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Gas in inventory                                                                                |                                      |                                                                           | (556                                        | )      |         |          | 21,354   |       
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Property taxes assessed applicable to future
	periods                                           |                                      |                                                                           | 16,318                                      |        |         |          | 22,129   |       
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Prepaid benefit costs, net                                                                      |                                      |                                                                           | 14,816                                      |        |         |          | (28,545  | )     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Accounts payable                                                                                |                                      |                                                                           | 50,011                                      |        |         |          | (1,158   | )     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Gas inventory equalization                                                                      |                                      |                                                                           |                                            |        |         |          | 43,012   |       
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Federal income, property and other taxes payable                                                |                                      |                                                                           | (26,938                                     | )      |         |          | 1,049    |       
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Other current assets and liabilities, net                                                       |                                      |                                                                           | 2,948                                       |        |         |          | (16,415  | )     
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Other deferred assets and liabilities, net                                                      |                                      |                                                                           | 44,570                                      |        |         |          | 19,545   |       
|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|                                                                          |                                                                                                 | $                                    | 211,419                                                                   |                                             |        | $       | 145,851  |         
|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|Supplemental Disclosures                                                  |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Cash paid (received) for:                                                                       |                                      |                                                                           |                                             |        |         |          |          |       
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                 | Interest, net of amounts capitalized |                                                                           | $                                           | 19,593 |         |          | $        | 13,450 |        
|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|                                                                          | Federal income taxes                                                                            |                                      | $                                                                         | 11,156                                      |        |         | $        | (857     | )     
|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         
|                                                                          | Noncash investing and financing activities:                                                     |                                      |                                                                           |                                             |        |         |          |          |       
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          |                                                                                                 | Dividends in kind and other          |                                                                           | $                                           | 368    |         |          | $        |       |        
|                                                                          |                                                                                                 |                                      |                                                                           |                                             |        |         |          |         




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


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##### Table of Contents








NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS


1.  GENERAL

The accompanying consolidated financial statements should be
read in conjunction with the Michigan Consolidated Gas Company
(MichCon) 2000 Annual Report on Form 10-K. Certain
reclassifications have been made to the prior years
financial statements to conform to the 2001 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) signed a definitive merger agreement dated
October 4, 1999, which was amended on February 28,
2001. The boards of directors of both companies approved the
merger under the October 1999 and the February 2001 merger
agreements. In December 1999, shareholders of both companies
approved the merger under the terms of the October 1999
agreement. The revised merger agreement was approved by MCN
shareholders at a special meeting on May 15, 2001.

Effective May 31, 2001, MCN and DTE completed the merger,
and under the terms of the merger agreement, DTE acquired all
outstanding shares of MCN common stock. MCN was merged with and
into DTE Enterprises, Inc. (DTEE), the surviving
corporation in the merger and a wholly owned subsidiary of DTE.
The acquisition by DTE was accounted for using the purchase
method. MichCons assets and liabilities included in the
accompanying financial statements have not been adjusted to
allocate the purchase price to their fair values.

As a result of the merger, DTEE incurred merger-related
expenses, a portion of which were allocated to MichCon.
Additionally, MichCon incurred merger-related costs. The
merger-related costs include legal, accounting, consulting,
employee benefit and other expenses that had the effect of
decreasing earnings by $21.6 million pre-tax
($14.0 million net of taxes) and $22.6 million pre-tax
($14.7 million net of taxes) for the three- and six-month
periods ended June 30, 2001, respectively, and
$1.1 million pre-tax ($.7 million net of taxes) and
$1.4 million pre-tax ($.9 million net of taxes) for
the three- and six-month periods ended June 30, 2000,
respectively.

3.  RESTRUCTURING CHARGE

In June 2001, DTE offered certain employees the option to retire
early under a program to reduce the workforce in overlapping
corporate support functions. As a result of the program,
approximately 10% of MichCons workforce, or
273 employees retired in July 2001 resulting in a
restructuring charge that decreased earnings by
$79.3 million pre-tax ($51.5 million net of taxes) for
the three- and six-month periods ended June 30, 2001. No
benefit payments have been made as of June 30,

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##### Table of Contents



NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS


2001. Benefit payments will primarily be distributed from assets
of the retirement plan and a trust fund.

4.  GAS IN INVENTORY

Inventory gas is priced using the last-in, first-out (LIFO)
method. During the second quarter of 2001, MichCon revised the
expected permanent decrement from 25 billion cubic feet
(Bcf) to 17.5 Bcf due to warmer than normal weather. The
17.5 Bcf of prior years LIFO layers that are not
expected to be replaced prior to December 31, 2001 were
liquidated at an average cost of $.38 per thousand cubic
feet (Mcf). MichCons estimated average gas purchase rate
in 2001 is $3.26 per Mcf higher than the average LIFO
liquidation rate. Applying LIFO costs in valuing the
liquidation, as opposed to using the estimated average gas
purchase rate, decreased cost of gas for the six-month period
ended June 30, 2001 by $57.1 million and increased
earnings by $37.1 million, net of taxes. The inventory
decrement revision increased cost of gas for the three-month
period ended June 30, 2001 by $24.4 million and
decreased earnings by $15.9 million, net of taxes.

5.  REGULATORY MATTERS

a.  Regulatory Reform Plan



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.
Year two of the program began in April 2000 with
approximately 55,000 customers choosing to participate.
Year three of the program began in April 2001, and the
number of participating customers decreased to approximately
30,000. MichCon will continue to transport and deliver the gas
to the customers premises at prices that generate
favorable margins.

In addition, the Plan encompasses an income sharing mechanism
that allows customers to share profits when actual returns on
equity from utility operations exceed predetermined thresholds.
MichCon filed its income sharing report with the Michigan Public
Service Commission (MPSC) in March 2001, using the MPSC approved
formula, indicating that no income sharing was required for 2000.

15



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##### Table of Contents



NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS


b.  Proposed Regulatory Changes



In December 2000, MichCon filed applications with the MPSC
to modify the experimental Customer Choice and Gas Sales
Programs as outlined in the MPSCs October 2000 order.
MichCon had proposed the modifications to become effective in
April 2001. On March 22, 2001, MichCon withdrew its
applications with the MPSC. MichCon will return to a gas cost
recovery mechanism in January 2002 when the current
Regulatory Reform Plan expires.

c.  Other Rate Matters



6.  LOSS ON INVESTMENT IN
HARBORTOWN

In May 2001, MichCon recorded a $6.7 million pre-tax
($4.4 million net of taxes) loss from the expected sale of
its 33% to 50% interests in a series of partnerships that own a
residential community on the Detroit riverfront (Harbortown).
The carrying value of the investment was reduced to fair value
based on the estimated selling price less cost to sell. Future
earnings from the Harbortown partnerships will be deferred due
to their expected sale within one year.

7.  CHANGE IN ACCOUNTING FOR
DERIVATIVES

Effective January 1, 2001, MichCon adopted Statement of
Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging
Activities. The Statement, as amended, requires all
derivatives to be recognized in the statement of financial
position 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 identified its interest rate swaps, firm-priced supply
contracts, and options embedded in certain debt instruments as
derivatives. The cumulative effect of adopting SFAS No. 133
was not material.

16



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##### Table of Contents



NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS


In order to manage interest costs, MichCon has interest rate
swap agreements to exchange fixed- and variable-rate interest
payment obligations over the life of the agreements without the
exchange of the underlying principal amounts. While the swaps
are effective in managing MichCons interest costs, they do
not qualify for hedge accounting under SFAS No. 133.
Accordingly, the interest rate swaps are recorded at fair value
and shown within Other Deferred Assets or
Liabilities in the Consolidated Statement of Financial
Position. Unrealized gains or losses resulting from marking to
market these swaps are recognized as an adjustment to interest
expense in the Consolidated Statement of Income. Furthermore,
SFAS No. 133 required adjusting the carrying value of the
related debt that substantially offset the transition adjustment
from marking to market the interest rate swaps. The adjustment
to debt will be accreted to interest expense over the life of
the related swaps.

MichCon has firm-priced contracts for a substantial portion of
its expected gas supply requirements though 2001. These
contracts are designated and qualify for the normal
purchases exception under SFAS No. 133.
Accordingly, MichCon does not account for such contracts as
derivatives. Additionally, MichCon has debt outstanding with
embedded options that will not be accounted for as derivatives
as a result of a grandfather provision in
SFAS No. 133.

8.  CONTINGENCIES

MichCon is involved in certain legal, administrative and
environmental proceedings before various courts, arbitration
panels and governmental agencies concerning claims arising in
the ordinary course of business (including commercial matters).
These proceedings include certain contract disputes,
environmental reviews and investigations, and pending judicial
matters. Management cannot predict the final disposition of such
proceedings. Management regularly reviews legal matters and
records provisions for claims that are considered probable of
loss. An unfavorable resolution of certain proceedings still
pending could have a material effect on the companys
financial statements in the period that they are resolved.

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##### Table of Contents








OTHER INFORMATION


EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

|        |      |             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------- | ---- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|Number  |      | Description
|        |      |            
|        | 4-1  |             |  | Indenture between MichCon and Citibank, N.A.
	related to Senior Debt Securities dated as of June 1, 1998
	(Exhibit  4-1 to Registration Statement
	No. 333-63370); First Supplemental Indenture dated as of
	June 18, 1998 (Exhibit  4-1 to June 18, 1998
	Form 8-K); and Second Supplemental Indenture dated as of
	June 9, 1999 (Exhibit 4-1 to June  4, 1999
	Form 8-K).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       
|        | 4-2  |             |  | Indentures defining the rights of the holders of
	MichCons First Mortgage Bonds: MichCons Indenture of
	Mortgage and Deed of Trust dated as of March 1, 1944
	(Exhibit 7-D to Registration Statement No. 2-5252);
	Twenty-ninth Supplemental Indenture, dated as of July 15,
	1989, providing for the modification and restatement of the
	Indenture of Mortgage and Deed of Trust dated as of March 
	1, 1944; Thirtieth Supplemental Indenture, dated as of
	September 1, 1991 (Exhibit 4-1 to September 27,
	1991 Form 8-K); Thirty-first Supplemental Indenture, dated
	as of December 15, 1991 (Exhibit 4-1 to
	February 28, 1992 Form  8-K); Thirty-second
	Supplemental Indenture, dated as of January 5, 1993
	(Exhibit 4-1 to 1992 Form 10-K); Thirty-third
	Supplemental Indenture, dated as of May 1, 1995
	(Exhibit 4-2 to Registration Statement No. 33-59093);
	Thirty-fourth Supplemental Indenture, dated as of November 
	1, 1996 (Exhibit 4-2 to Registration Statement No. 
	333-16285); and Thirty-fifth Supplemental Indenture, dated as of
	June 18, 1998 (Exhibit 4-2 to June 18, 1998
	Form  8-K).
|       
|        | 12-1 |             |  | Computation of Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|       
|        | 15-1 |             |  | Letter re Unaudited Interim Financial
	Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       
|        | 99-1 |             |  | Credit Agreement, dated as of July 12, 2001
	among Michigan Consolidated Gas Company, as borrower and The
	Initial Lenders Named Herein, as Initial Lenders and Bank One,
	NA, as Administrative Agent and Barclays Bank PLC, as
	Co-Syndication Agent, and Citibank, N.A., as Co-Syndication Agent                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

(b)  Reports on Form 8-K

MichCon filed a report on Form 8-K dated May 15, 2001,
under Item 5, with respect to the issuance of a press
release. The press release, which was included in the
Form 8-K, noted that MCN Energy Groups
shareholders approved the amended merger agreement at a special
meeting of shareholders on May 15, 2001. The press release
also noted that May 31, 2001 was set as the expected date
to complete the merger.

Other Information

On May 31, 2001, Susan M. Beale, Anthony F.
Earley, Jr., and Eric H. Peterson (all employees of DTE
affiliates) were elected to the Companys Board, replacing
the former Board members.

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##### Table of Contents








INDEPENDENT ACCOUNTANTS REPORT


To the Board of Directors of



We have reviewed the accompanying condensed consolidated
statements of financial position of Michigan Consolidated Gas
Company and subsidiaries (the Company) as of
June 30, 2001, the related condensed consolidated
statements of operations and retained earnings for the
three-month and six-month periods ended June 30, 2001 and
2000 and the condensed consolidated statement of cash flows for
the six-month period ended June 30, 2001 and 2000. These
financial statements are the responsibility of the
Companys management.

We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical review procedures to the financial data and
of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with auditing standards generally
accepted in the United States of America, the objective of which
is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such
an opinion.

Based on our review, we are not aware of any material
modifications that should be made to such condensed consolidated
financial statements for them to be in conformity with
accounting principles generally accepted in the United States of
America.

We have previously audited, in accordance with auditing
standards generally accepted in the United States of America,
the consolidated statement of financial position of the Company
as of December 31, 2000, and the related consolidated
statements of income, capitalization, and cash flows for the
year then ended (not presented herein); and in our report dated
March 13, 2001, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated
statement of financial position as of December 31, 2000 is
fairly stated, in all material respects, in relation to the
consolidated statement of financial position from which it has
been derived.

DELOITTE & TOUCHE LLP





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SIGNATURE


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



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



| |     |                         
| | --- | ------------------------
| | By: | /s/ DANIEL G. BRUDZYNSKI

| |                              
| | -----------------------------
| |                              
| | Daniel G. Brudzynski         
| | Vice President and Controller
| | Chief Accounting Officer     

Date: August 14, 2001

20