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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K

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

For the fiscal year ended December 31, 2003

Commission file number 1-7310

Michigan Consolidated Gas Company, a Michigan corporation, meets the conditions
set forth in General Instruction I (1) (a) and (b) of Form 10-K and is,
therefore, filing this form with the reduced disclosure format.

MICHIGAN CONSOLIDATED GAS COMPANY

(Exact name of registrant as specified in its charter)


|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Michigan
(State or other jurisdiction of
incorporation or organization) |  | 38-0478040
(I.R.S. Employer
Identification No.)

|                                                                            |  |                      
|--------------------------------------------------------------------------- |  | ---------------------
|2000
2nd Avenue, Detroit, Michigan
(Address of principal executive offices) |  | 48226-1279
(Zip Code)

313-235-4000
(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

|                                             |  |                                          
|-------------------------------------------- |  | -----------------------------------------
|Title of each class                          |  | Name of each exchange on which registered
|                                             |  |                                          
|6.85% Senior Secured Insured Quarterly Notes |  | New York Stock Exchange                  
|6 1/8% Senior Notes                          |  | New York Stock Exchange                  

Securities registered pursuant to Section 12(g) of the Act:

None

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 [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. [  ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [  ] No [X]

All of the registrants 10,300,000 outstanding shares of common stock, par
value $1 per share, are indirectly owned by DTE Energy Company.

DOCUMENTS INCORPORATED BY REFERENCE

None



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TABLE OF CONTENTS



|                                                  |                                                                                              |  |  |  |  |  |  | 
|------------------------------------------------- | -------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|Definitions                                      
|Forward-Looking Statements                       
|Part I                                           
|                                                  | Items 1. & 2. Business & Properties                                                         
|                                                  | Item 3. Legal Proceedings                                                                   
|                                                  | Item 4. Submission of Matters to a Vote of Security Holders                                 
|Part II                                          
|                                                  | Item 5. Market for Registrants Common Equity and Related Stockholder Matters               
|                                                  | Item 6. Selected Financial Data                                                             
|                                                  | Item 7. Managements Narrative Analysis of Results of Operations                            
|                                                  | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                         
|                                                  | Item 8. Financial Statements and Supplementary Data                                         
|                                                  | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|                                                  | Item 9A. Controls and Procedures                                                            
|Part III                                         
|                                                  | Item 10. Directors and Executive Officers of the Registrant                                 
|                                                  | Item 11. Executive Compensation                                                             
|                                                  | Item 12. Security Ownership of Certain Beneficial Owners and Management                     
|                                                  | Item 13. Certain Relationships and Related Transactions                                     
|                                                  | Item 14. Principal Accountant Fees and Services                                             
|Part IV                                          
|                                                  | Item 15. Exhibits, Financial Statement Schedule, and Reports on Form 8-K                    
|SIGNATURES                                       
|EXHIBIT INDEX                                    
|Computation of Ratio of Earnings to Fixed Charges
|Consent of Deloitte & Touche LLP                 
|Chief Executive Officer Section 302 Certification
|Chief Financial Officer Section 302 Certification
|Chief Executive Officer Section 906 Certification
|Chief Financial Officer Section 906 Certification



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Michigan Consolidated Gas Company

Annual Report on Form 10-K
Year Ended December 31, 2003

Table of Contents

|                           |                                                                                                         |  |      |    | 
|-------------------------- | ------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                           |                                                                                                         |  | Page
|                           |                                                                                                         |  |     
|Definitions                |                                                                                                         |  | 1    |   
|Forward-Looking Statements |                                                                                                         |  | 3    |   
|Part I                     |                                                                                                         |  |      |   
|                           | Items 1. & 2. Business & Properties                                                                     |  |      | 4  | 
|                           | Item 3. Legal Proceedings                                                                               |  |      | 11 | 
|                           | Item 4. Submission of Matters to a Vote of Security Holders                                             |  |      | 12 | 
|Part II                    |                                                                                                         |  |      |   
|                           | Item 5. Market for Registrants Common Equity and Related Stockholder
Matters                           |  |      | 12 | 
|                           | Item 6. Selected Financial Data                                                                         |  |      | 12 | 
|                           | Item 7. Managements Narrative Analysis of Results of Operations                                        |  |      | 13 | 
|                           | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                                     |  |      | 16 | 
|                           | Item 8. Financial Statements and Supplementary Data                                                     |  |      | 18 | 
|                           | Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure            |  |      | 47 | 
|                           | Item 9A. Controls and Procedures                                                                        |  |      | 47 | 
|Part III                   |                                                                                                         |  |      |   
|                           | Item 10. Directors and Executive Officers of the Registrant                                             |  |      | 47 | 
|                           | Item 11. Executive Compensation                                                                         |  |      | 47 | 
|                           | Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters |  |      | 47 | 
|                           | Item 13. Certain Relationships and Related Transactions                                                 |  |      | 47 | 
|                           | Item 14. Principal Accountant Fees and Services                                                         |  |      | 47 | 
|Part IV                    |                                                                                                         |  |      |   
|                           | Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                               |  |      | 48 | 
|Signatures                 |                                                                                                         |  | 51   |   





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Definitions

|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|--------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Customer Choice             |  | The choice program is a statewide initiative
giving customers in Michigan the option to
choose alternative suppliers for gas.                                                                                                                                                                                                                     
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|DTE Energy                  |  | DTE Energy Company and subsidiary companies.                                                                                                                                                                                                                                                                                                      
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|End User Transportation     |  | A gas delivery service historically provided
to large-volume commercial and industrial
customers who purchase natural gas directly
from producers or brokerage companies. Under
MichCons Customer Choice Program that began
in 1999, this service is also provided to
residential customers and small-volume
commercial and industrial customers.
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|Enterprises                 |  | DTE Enterprises Inc. (successor to MCN Energy)
and subsidiary companies, a wholly owned
subsidiary of DTE Energy.                                                                                                                                                                                                                                 
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|Gas Sales Program           |  | A three-year program that ended in December
2001 under which MichCons gas sales rate
included a gas commodity component that was
fixed at $2.95 per Mcf.                                                                                                                                                                                         
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|Gas Storage                 |  | For MichCon, the process of injecting, storing
and withdrawing natural gas from a depleted
underground natural gas field.                                                                                                                                                                                                                         
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|GCR                         |  | A gas cost recovery mechanism authorized by
the MPSC that was reinstated by MichCon in
January 2002, permitting MichCon to pass the
cost of natural gas to its customers.                                                                                                                                                                         
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|Intermediate Transportation |  | A gas delivery service provided to producers,
brokers and other gas companies that own the
natural gas, but are not the ultimate
consumers.                                                                                                                                                                                                       
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|MCN Energy                  |  | MCN Energy Group Inc. and subsidiary companies
that were merged into Enterprises.                                                                                                                                                                                                                                                                 
|                            |  |                                                                                                                                                                                                                                                                                                                                                   
|MichCon                     |  | Michigan Consolidated Gas Company and
subsidiary companies; an indirect,
wholly-owned natural gas distribution and
intrastate transmission subsidiary of
Enterprises.                                                                                                                                                                             

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|                     |  |                                                                                            
|-------------------- |  | -------------------------------------------------------------------------------------------
|MPSC                 |  | Michigan Public Service Commission.                                                        
|                     |  |                                                                                            
|Normal Weather       |  | The average daily temperature within MichCons
service area during a recent 30-year period.
|                     |  |                                                                                            
|SFAS                 |  | Statement of Financial Accounting Standards.                                               
|                     |  |                                                                                            
|Spot Market          |  | The buying and selling of natural gas on a short-term
basis, typically month-to-month.     
|                     |  |                                                                                            
|Units of Measurement |  |                                                                                            
|                     |  |                                                                                            
|Bcf                  |  | Billion cubic feet of gas.                                                                 
|                     |  |                                                                                            
|Mcf                  |  | Thousand cubic feet of gas.                                                                
|                     |  |                                                                                            
|MMcf                 |  | Million cubic feet of gas.                                                                 
|                     |  |                                                                                            
|/d                   |  | Added to various units of measure to denote units per
day.                                 

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Forward-Looking Statements

Certain information presented herein includes forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve certain risks and uncertainties that may
cause actual future results to differ materially from those contemplated,
projected, estimated or budgeted in such forward-looking statements. There are
many factors that may impact forward-looking statements including, but not
limited to, the following:



| |  | the effects of weather and other natural phenomena on operations and sales to customers;                                               
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | economic climate and growth in the geographic areas where we do business;                                                              
| 
| |  | environmental issues including changes in the climate and regulations;                                                                 
| 
| |  | implementation of gas Customer Choice programs;                                                                                        
| 
| |  | implementation of gas utility restructuring in Michigan;                                                                               
| 
| |  | employee relations;                                                                                                                    
| 
| |  | access to capital markets and capital market conditions and other financing efforts that can be affected by credit agency
ratings;     
| 
| |  | the timing and extent of changes in interest rates;                                                                                    
| 
| |  | the level of borrowings;                                                                                                               
| 
| |  | changes in the cost of natural gas;                                                                                                    
| 
| |  | effects of competition;                                                                                                                
| 
| |  | impact of MPSC proceedings and regulations;                                                                                            
| 
| |  | changes in federal or state tax laws and their interpretations, including the code, regulations, rulings, court proceedings
and audits;
| 
| |  | ability to recover costs through rate increases;                                                                                       
| 
| |  | insurance;                                                                                                                             
| 
| |  | the cost of protecting assets against or damage due to terrorism; and                                                                  
| 
| |  | changes in accounting standards and financial reporting regulations.                                                                   

New factors emerge from time to time. We cannot predict what factors may arise
or how such factors may cause our results to differ materially from those
contained in any forward-looking statement. Any forward-looking statement
speaks only as of the date on which such statement is made. We undertake no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made or to reflect the
occurrence of unanticipated events.

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Part I




Items 1. & 2. Business & Properties

DESCRIPTION

Michigan Consolidated Gas Company (MichCon or the Company) is a Michigan
corporation organized in 1898. MichCon is an indirect, wholly-owned subsidiary
of Enterprises, an exempt holding company under the Public Utility Holding
Company Act of 1935, successor to MCN Energy. MichCon is a natural gas utility
subject to regulation by the MPSC. MichCon is engaged in the purchase,
storage, transmission, distribution and sale of natural gas in the State of
Michigan. MichCon also has subsidiaries involved in the gathering and
transmission of natural gas in northern Michigan. MichCon operates one of the
largest natural gas distribution and transmission systems in the United States
and the largest in Michigan.

MichCon serves approximately 1.2 million residential, commercial and industrial
customers located in a 14,700 square mile area throughout Michigan. MichCon
had approximately $3 billion in assets at December 31, 2003 and revenues of
approximately $1.5 billion in 2003.

On May 31, 2001, DTE Energy completed the acquisition of MCN Energy. At that
time, MCN Energy merged with Enterprises, with Enterprises being the surviving
corporation. See Note 3 for a further discussion of the MCN Energy merger.

References in this report to we, us, and our are to MichCon.

A discussion of the services we provide, and the amount and percentage of
revenue contributed from such services follows:

|                            |  |      |       |      |  |      |     |   |  |   |       |  |  |  |     |   |  |   |       |  |  |  |     |  
|--------------------------- |  | ---- | ----- | ---- |  | ---- | --- | - |  | - | ----- |  |  |  | --- | - |  | - | ----- |  |  |  | --- | -
|Revenue by Service          |  |      |       |      |  |      |     |   |  |   |       |  |  |  |     |   |  |   |       |  |  |  |     |  
|(in Millions)               |  | 2003 |       | 2002 |  | 2001
|                            |  |      |       |      |  |     
|Gas Sales                   |  | $    | 1,237 |      |  |      | 83  | % |  | $ | 1,078 |  |  |  | 82  | % |  | $ | 1,006 |  |  |  | 83  | %
|End User Transportation     |  |      | 135   |      |  |      | 9   |   |  |   | 122   |  |  |  | 9   |   |  |   | 102   |  |  |  | 8   |  
|Intermediate Transportation |  |      | 51    |      |  |      | 3   |   |  |   | 48    |  |  |  | 4   |   |  |   | 46    |  |  |  | 4   |  
|Other                       |  |      | 69    |      |  |      | 5   |   |  |   | 64    |  |  |  | 5   |   |  |   | 64    |  |  |  | 5   |  
|                            |  |      |       |      |  |      |     |   |  |   |       |  |  |  |     |   |  |   |       |  |  |  |     |  
|                            |  | $    | 1,492 |      |  |      | 100 | % |  | $ | 1,312 |  |  |  | 100 | % |  | $ | 1,218 |  |  |  | 100 | %
|                            |  |      |       |      |  |      |     |   |  |   |       |  |  |  |     |   |  |   |       |  |  |  |     |  



| |  | Gas SalesIncludes the sale and delivery of natural gas primarily to
residential and small-volume commercial and industrial customers.                                                                                                                                                                                                                                                                                                                                                               
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | End User TransportationA gas delivery service provided primarily to
large-volume commercial and industrial customers. Additionally, the
service is provided to residential customers, and small-volume
commercial and industrial customers who have elected to participate in
our Customer Choice program. End user transportation customers
purchase natural gas directly from producers or brokerage companies
and utilize our pipeline network to transport the gas to their
facilities or homes.

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| |  | 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. Intermediate transportation
customers utilize our gathering and high-pressure transmission system
to transport the gas to storage fields, processing plants, pipeline
interconnections or other locations.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | OtherIncludes revenues from providing appliance maintenance, facility
development and other energy-related services.                                                                                                                                                                                                                                                             

We expect to achieve modest revenue growth, net of changes in weather and
purchased gas costs, through initiatives to expand our gas markets and our
residential, commercial and industrial customer base, as well as by continuing
to provide energy-related services that capitalize on our expertise,
capabilities and efficient systems. We also anticipate increased revenues
through increased rates as a result of our rate case, which was filed in
September 2003 (see Note 4).

Our operations are not dependent upon a limited number of customers, and the
loss of any one or a few customers is not reasonably likely to have a material
adverse effect on MichCon.

Our gas sales, end user transportation and intermediate transportation volumes,
revenues and net income are impacted by weather. Given the seasonal nature of
the business, revenues and net income are concentrated in the first and fourth
quarters of the calendar year. By the end of the first quarter, the heating
season is largely over, and we typically realize substantially reduced revenues
and earnings in the second quarter and losses in the third quarter.

We obtain our natural gas supply from various sources in different geographic
areas (the Gulf Coast, the Mid-Continent, Canada and Michigan) under agreements
that vary in both pricing and terms. Because of our geographic diversity of
supply and our 124 billion cubic feet (Bcf) of storage capacity, we are able to
reliably meet our supply requirements.

We have purchase commitments of approximately 133 Bcf, or 76% of our normal
2004 gas supply requirement. We have entered into fixed-price contracts for
approximately 44 Bcf or 25% of our expected 2004 supply requirements. The
balance of the gas supply requirement is expected to be met by purchasing gas
at market prices. At December 31, 2003, we owned and operated four natural gas
storage fields in Michigan with a working storage capacity of approximately 124
Bcf. These facilities play an important role in providing reliable and
cost-effective service to our customers. Generally, we use our storage
capacity to supplement our supply during the winter months, replacing the gas
in April through October when demand and prices are historically at lower
levels. The use of storage capacity also allows us to lower our peak-day
entitlements, thereby reducing interstate pipeline charges. Our gas
distribution system has a planned maximum daily send-out capacity of 3.0 Bcf,
with approximately 68% of the volume coming from underground storage for 2003.
Gas costs are recovered through the gas cost recovery (GCR) mechanism.

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Following is a listing of our sources of gas supply:

|                                   |                               |      |       |      |  |      |       |      |  |  |       |      | 
|---------------------------------- | ----------------------------- | ---- | ----- | ---- |  | ---- | ----- | ---- |  |  | ----- | ---- | 
|Gas Supply (Bcf)                   |                               | 2003 |       | 2002 |  | 2001
|                                   |                               |      |       |      |  |     
|Long Term                          |                               |      |       |      |  |      |       |      |  |  |       |     
|                                   | Citygate suppliers            |      |       | 61.0 |  |      |       | 70.8 |  |  |       | 76.5 | 
|                                   | Interstate pipeline suppliers |      |       | 82.3 |  |      |       | 80.1 |  |  |       | 77.6 | 
|                                   | Canadian pipeline suppliers   |      |       | 28.5 |  |      |       | 28.5 |  |  |       | 28.2 | 
|Spot Market                        |                               |      | 21.6  |      |  |      | 8.5   |      |  |  | 1.7   |     
|Exchange Gas Receipts (Deliveries) |                               |      | .5    |      |  |      | .8    |      |  |  | (0.6  | )   
|Gas From (To) Storage              |                               |      | (12.6 | )    |  |      | (11.1 | )    |  |  | 19.6  |     
|                                   |                               |      |       |      |  |      |       |      |  |  |       |      | 
|                                   |                               |      | 181.3 |      |  |      | 177.6 |      |  |  | 203.0 |     
|                                   |                               |      |       |      |  |      |       |      |  |  |       |     

We have long-term firm transportation agreements expiring on various dates
through 2011 with ANR Pipeline Company (ANR), Panhandle Eastern Pipeline
Company (Panhandle), Trunkline Gas Company (Trunkline), Viking Gas Transmission
Company (Viking), Vector Pipeline L.P. (Vector) and Great Lakes Gas
Transmission Limited Partnership (Great Lakes). The ANR capacity delivers 120
MMcf/d of supply sourced from the Gulf Coast, 75 MMcf/d sourced from the
Midcontinent and 50 MMcf/d from Canada. Viking transports the 50 MMcf/d of
Canadian supply to the ANR system for delivery to us. Trunkline transports 10
MMcf/d of Gulf Coast supply into the Panhandle system. Panhandle transports
the 10 MMcf/d of Gulf Coast supply from the Trunkline system and 65 MMcf/d from
the Mid-Continent production area to us. Additional Canadian supplies of 30
MMcf/d are delivered through firm transport agreements with Great Lakes.
Vector transports up to 50 MMcf/d from the Chicago hub.

We have supply contracts with independent Michigan producers, for less than 1%
of our supply, which expire on various dates through 2006. Many of these
contracts tie prices to spot market indices coupled with transportation rates.

REGULATION

We are subject to the regulatory jurisdiction of the MPSC, which issues orders
pertaining to rates, recovery of certain costs, including the costs of
regulatory assets, conditions of service, accounting and other
operating-related matters. We are subject to the requirements of other
regulatory agencies with respect to safety, the environment and health.

In the late 1990s, the MPSC began an initiative 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 1999, the MPSC approved a
comprehensive, experimental three-year gas Customer Choice program that allowed
an increasing number of customers to purchase natural gas from suppliers other
than their local utility. The local utility would continue to transport the
natural gas supply to the customers facilities, thereby retaining distribution
margins. In December 2001, the MPSC issued an order that continues the gas
Customer Choice program on a permanent and expanding basis beginning with the
conclusion of the three-year temporary program on March 31, 2002. Under the
expanded program, which began April 1, 2002, up to approximately 40% of our
customers could elect to purchase gas from suppliers other than MichCon.
Beginning in April 2003, up to approximately 60% of customers could participate
and beginning April 2004, all 1.2 million of our gas customers could choose to
participate. Since we continue to transport and
deliver the gas to the participating customer premises at prices comparable to
margins earned on gas sales, customers switching to other suppliers have little
impact on our earnings.

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Under the December 2001 MPSC order, we returned to a GCR mechanism effective
January 2002. Under this mechanism, our gas sales rates include a gas commodity
component designed to recover our actual gas cost and therefore does not have a
commodity price risk for prudently incurred gas costs. During 2001, MichCon
was under a Gas Sales Program and incurred commodity price risk associated with
its ability to secure gas supplies at prices less than $2.95 per Mcf.

In September 2003, we filed an application with the MPSC for an increase in
service and distribution charges (base rates) for our gas sales and
transportation customers. The filing requests an overall increase in base
rates of $194 million per year (approximately 7% increase, inclusive of gas
costs), beginning January 1, 2005. MichCon has requested that the MPSC
increase base rates by $154 million per year on an interim basis by April 1,
2004. The interim request is based on a projected revenue deficiency for the
test year 2004.

For additional information regarding our regulatory environment, see Note 4 -
Regulatory Matters.

ENERGY ASSISTANCE PROGRAMS

Energy assistance programs funded by the federal government and the State of
Michigan, remain
critical to MichCons ability to control its uncollectable accounts receivable
and collections expenses.

Our uncollectible accounts receivable expense is directly affected by the level
of government funded assistance our qualifying customers receive. We are
working with the State of Michigan and others to increase the share of funding
allocated to our customers to be representative of the number of low-income
individuals in our service territory.

PROPERTIES

We own distribution, transmission and storage properties and facilities that
are all located in the state of Michigan.

At December 31, 2003, our distribution system included approximately 18,000
miles of distribution mains, approximately 1,148,000 service lines and
approximately 1,279,000 active meters. We own approximately 2,600 miles of
transmission lines that deliver natural gas to the distribution districts and
interconnect our storage fields with the sources of supply and the market
areas. We own properties relating to four underground natural gas storage
fields with an aggregate working gas storage capacity of approximately 124 Bcf.

Substantially all of our property is subject to the lien of our Indenture of
Mortgage and Deed of Trust under which our First Mortgage Bonds are issued.

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Some properties are being fully utilized, and new properties are being added to
meet the expansion requirements of existing areas. Our capital investments for
2003 totaled $98 million, which compares with $90 million in 2002 and $111
million in 2001.

Our subsidiaries own a 67-mile gathering pipeline that transports natural gas
and natural gas liquids from reserves in east-central Michigan to natural gas
processing plants in northern Michigan and 132 miles of gathering lines and a
2,400 horsepower compressor station located in northern Michigan. Other MichCon
subsidiaries have a 46% interest in a partnership that owns lateral lines
related to the 67-mile gathering pipeline and an 83% interest in an additional
32-miles of gathering pipelines in northern Michigan. We lease a portion of
our pipeline system to the Vector Pipeline Partnership through a capital lease
arrangement (Note 8).

STRATEGY & COMPETITION

We generate approximately 95% of our revenues from providing gas sales and
transportation and distribution services to end user and intermediate
transportation service customers. As a result of MichCon returning to a GCR
mechanism in January 2002, we do not profit from selling gas. Our strategy is
to expand our role as the preferred provider of natural gas in Michigan. As a
result of more efficient furnaces and appliances, we expect future revenues to
remain at current levels or slightly decline. To partially offset these
factors, we plan initiatives to expand our gas markets, as well as by
continuing to provide energy-related services that capitalize on our expertise,
capabilities and efficient systems. We also anticipate increased revenues
through increased rates as a result of our rate case, which was filed on
September 30, 2003 (see Note 4).

Competition in the gas business primarily involves other natural gas providers,
alternative fuels and energy sources. Developers select natural gas in new
construction because of the convenience, cleanliness and relative price
advantage compared to propane, fuel oil and other alternative fuels.

Other natural gas providers -As previously discussed,we are operating under
the gas Customer Choice program that allows our customers to purchase natural
gas from other suppliers. We continue to transport and deliver gas to customers
who choose to purchase gas from other suppliers thereby retaining favorable
distribution margins.

Alternative fuels -Natural gas continues to be the preferred space and
water-heating fuel for Michigan residences and businesses. Developers in our
service territories select natural gas in new construction because of the
convenience, cleanliness and relative price advantage compared to propane, fuel
oil and other alternative fuels.

The primary focus of competition in the end user transportation market is cost
and reliability. Some large commercial and industrial customers have the
ability to switch to alternative fuel sources such as coal, electricity, oil
and steam. If these customers were to choose an alternative fuel source, they
would not have a need for our end user transportation service. In addition,
some of these customers could bypass our pipeline system and have their gas
delivered directly from an interstate pipeline. However, price differentials
must be sufficient to offset the costs, risks and loss of service flexibility
associated with fuel switching or bypass. Since 1988, only one MichCon
industrial customer has bypassed our distribution
system. We compete against alternative fuel sources by providing competitive
pricing and reliable service, supported by our extensive storage capacity.

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Our extensive transmission pipeline system has enabled us to develop a 500 to
600 Bcf annual market for transportation services for Michigan gas producers,
marketers, distribution companies and other pipeline companies. We operate in a
pivotal geographic location with links to major interstate pipelines that reach
markets elsewhere in the Midwest, the eastern United States and eastern Canada.

ENVIRONMENTAL MATTERS

We are subject to extensive environmental regulation. Additional costs may
result as the effects of various chemicals on the environment are studied and
governmental regulations are developed and implemented. We expect to continue
recovering environmental costs related to utility operations through rates
charged to our customers. Greater details on environmental issues are provided
in the following Notes to the Consolidated Financial Statements:

|     |  |                              
|---- |  | -----------------------------
|Note |  | Title                        
|     |  |                              
|4    |  | Regulatory Matters           
|10   |  | Commitments and Contingencies

Prior to the construction of major natural gas pipelines, gas for heating and
other uses was manufactured from processes involving coal, coke or oil. We
own, or previously owned, 17 such former manufactured gas plant (MGP) sites.
Investigations have revealed contamination related to the by-products of gas
manufacturing at each site. We are remediating seven of the former MGP sites
and conducting more extensive investigations at five other former
MGP sites.  We received MDEQ closure of one site and a determination
that we are not a responsible party for three other sites. We
received closure from the EPA in 2002 for one site. While we cannot
make any assurances, we believe that a cost deferral and rate recovery
mechanism approved by the MPSC will prevent these costs from having a material
adverse impact on our results of operations.

RISK FACTORS

There are various risks associated with the operations of our business. To
provide a framework to understand our operating environment, we are providing a
brief explanation of the more significant risks associated with our business.
Although we have tried to identify and discuss key risk factors, others could
emerge in the future. Each of the following risks could affect our
performance.

Weather Weather significantly affects our operations. Deviations from normal
hot and cold weather conditions affect our earnings and cash flow. Mild
temperatures can result in decreased utilization of our assets, lowering income
and cash flow.

Competition Deregulation and restructuring in the gas industry, could result
in increased competition and unrecovered costs that could affect the financial
condition, results of operations or cash flows of our regulated business.

Rate regulation We operate in a regulated industry. Our rates are set by the
MPSC and cannot be increased without their authorization. We may be impacted
by new regulations or interpretations by the MPSC or other regulatory bodies.
New legislation, regulations or interpretations could change how our business
operates, impact our ability to recover costs through rate increases or require us to incur
additional expenses. There is no assurance that our currently pending gas rate
increases will be granted.

Credit ratings Increased scrutiny of the energy industry and regulatory
changes, as well as changes in our economic performance could result in credit
agencies reexamining our credit rating. Several of the

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credit agencies have
placed a negative outlook on our ratings or are currently
reviewing us for a possible downgrade due primarily to the uncertainty
regarding our gas rate cases. A downgrade in our rating could restrict or
discontinue our ability to access capital markets at attractive rates and
increase our borrowing costs.

Regional and national economic conditions Our businesses follow the economic
cycles of the customers we serve. Should national or regional economic
conditions decline, reduced volumes of gas we supply will result in decreased
earnings and cash flow. Economic conditions in our service territory also
impact our collections of accounts receivable.

Environmental laws and liability We are subject to numerous environmental
regulations. Compliance with these regulations can significantly increase
capital spending and operating expenses. These laws and regulations require us
to seek a variety of environmental licenses, permits, inspections, and other
regulatory approvals. The regulatory environment is
subject to significant change, and therefore we cannot predict future issues.

Additionally, we may become a responsible party for environmental clean up at
sites identified by a regulatory body. We cannot predict with certainty the
amount and timing of future expenditures related to environmental matters
because of the difficulty of estimating clean up costs. There is also
uncertainty in quantifying liabilities under environmental laws that impose
joint and several liability on all potentially responsible parties.

Supply and price of raw materials Our access to natural gas supplies is
critical to ensure reliability of service for our regulated gas customers.

Labor relations Unions represent a majority of our employees. A union
choosing to strike as a negotiating tactic would have an impact on our
business.

Access to capital markets and interest rates Our ability to access capital
markets is important to operate our business. Heightened concerns about the
energy industry, the level of borrowing by other energy companies and the
market as a whole could limit our access to capital markets. Changes in
interest rates could increase our borrowing costs.

Property tax reform We are one of the largest payers of property taxes in the
state of Michigan. Should the legislature change how schools are financed, we
could face increased property taxes on our Michigan facilities.

Insurance While we have a comprehensive insurance program in place to provide
coverage for various types of risks, catastrophic damage as a result of acts of
God, terrorism, war or a combination of significant unforeseen events could
impact our operations and economic losses might not be covered in full by
insurance.

Terrorism Damage to downstream infrastructure or our own assets by terrorist
groups would impact our operations.

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EMPLOYEES

We had 2,301 employees at December 31, 2003, of which 1,514 were represented by
unions. Of the represented employees, 1,080 are under contracts that expire in
October 2004. The contracts of the remaining represented employees expire in
2005.




Item 3. Legal Proceedings

We are involved in certain legal, regulatory, administrative and environmental
proceedings before various courts, arbitration panels and governmental agencies
concerning matters arising in the ordinary course of business. These
proceedings include certain contract disputes, environmental reviews and
investigations, audits, inquiries from various regulators, and pending judicial
matters. We cannot predict the final disposition of such proceedings. We
regularly review legal matters and record provisions for claims that are
considered probable of loss. The resolution of pending proceedings is not
expected to have a material effect on our operations or financial statements in
the period they are resolved. For additional discussion on legal matters, see
the following Notes to the Consolidated Financial Statements:

|     |  |                              
|---- |  | -----------------------------
|Note |  | Title                        
|     |  |                              
|4    |  | Regulatory Matters           
|10   |  | Commitments and Contingencies

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Item 4. Submission of Matters to a Vote of Security Holders

Omitted per general instruction I (2) (c) of Form 10-K for wholly owned
subsidiaries (reduced disclosure format).




Part II




Item 5. Market for Registrants Common Equity and Related Stockholder Matters

All of the 10,300,000 issued and outstanding shares of common stock of MichCon,
par value $1 per share, are indirectly owned by DTE Energy, and constitute 100%
of the voting securities of MichCon. Therefore, no market exists for our common
stock.

We paid cash dividends on our common stock of $50 million in 2003 and $75
million in 2001. We did not pay cash dividends in 2002.




Item 6. Selected Financial Data

Omitted per general instruction I (2) (a) of Form 10-K for wholly owned
subsidiaries (reduced disclosure format).

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Item 7. Managements Narrative Analysis of Results of Operations

The Results of Operations discussion for MichCon is presented in accordance
with General Instruction I (2) (a) of Form 10-K for wholly owned subsidiaries
(reduced disclosure format).

Certain losses reflected in the accompanying consolidated financial statements
have been eliminated at DTE Energy as a result of purchase accounting
adjustments.

We had earnings of $45 million and $20 million in 2003 and 2002, respectively.
Results for 2003 were impacted by increases in operation and maintenance
expenses due to higher employee pension and health care benefit costs, higher
uncollectible accounts expense and increased costs associated with customer
service process improvements. Higher earnings for 2003 were primarily due to
improved gross margins, as well as charges recorded in the second quarter of
2002 from the planned sale of our former headquarters and the termination of a
contract for computer services. The comparison for 2002 was impacted by $103
million ($67 million net of taxes) of merger and restructuring charges recorded
in 2001.

Increase (Decrease) in Income Compared to Prior Year

|                                         |  |      |      |      |  |   |     |  
|---------------------------------------- |  | ---- | ---- | ---- |  | - | --- | -
|(in Millions)                            |  | 2003 |      | 2002
|                                         |  |      |      |     
|Operating revenues                       |  | $    | 180  |      |  | $ | 94  |  
|Cost of gas                              |  |      | (134 | )    |  |   | (91 | )
|                                         |  |      |      |      |  |   |     |  
|Gross margin                             |  |      | 46   |      |  |   | 3   |  
|Operation and maintenance                |  |      | (72  | )    |  |   | 21  |  
|Depreciation, depletion and amortization |  |      | 2    |      |  |   | 6   |  
|Taxes other than income                  |  |      | (1   | )    |  |   | 5   |  
|Merger and restructuring charges         |  |      |     |      |  |   | 103 |  
|Property write-down and contract loss    |  |      | 43   |      |  |   | (48 | )
|Loss on sale of assets                   |  |      | (3   | )    |  |   |    |  
|Other income and deductions              |  |      | 7    |      |  |   | 9   |  
|Income tax provision                     |  |      | 3    |      |  |   | (38 | )
|                                         |  |      |      |      |  |   |     |  
|Net income                               |  | $    | 25   |      |  | $ | 61  |  
|                                         |  |      |      |      |  |   |     |  

Operating revenues increased $180 million in 2003 and increased $94 million in
2002, reflecting increased gas sales and end user transportation revenues.
Operating revenues reflect the favorable impact of weather, which was 11%
colder in 2003 and 6% colder in 2002.

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|                   |                             |      |       |       |  |      |       |       |  |   |       |       | 
|------------------ | --------------------------- | ---- | ----- | ----- |  | ---- | ----- | ----- |  | - | ----- | ----- | 
|(in Millions)      |                             | 2003 |       | 2002  |  | 2001
|                   |                             |      |       |       |  |     
|Operating Revenues |                             |      |       |       |  |      |       |       |  |   |       |      
|                   | Gas Sales                   |      | $     | 1,237 |  |      | $     | 1,078 |  |   | $     | 1,006 | 
|                   | End User Transportation     |      |       | 135   |  |      |       | 122   |  |   |       | 102   | 
|                   |                             |      |       |       |  |      |       |       |  |   |       |      
|                   |                             |      | 1,372 |       |  |      | 1,200 |       |  |   | 1,108 |      
|                   | Intermediate Transportation |      |       | 51    |  |      |       | 48    |  |   |       | 46    | 
|                   | Other                       |      |       | 69    |  |      |       | 64    |  |   |       | 64    | 
|                   |                             |      |       |       |  |      |       |       |  |   |       |       | 
|                   |                             | $    | 1,492 |       |  | $    | 1,312 |       |  | $ | 1,218 |      
|                   |                             |      |       |       |  |      |       |       |  |   |       |      
|Gas Markets (Bcf)  |                             |      |       |       |  |      |       |       |  |   |       |      
|                   | Gas Sales                   |      |       | 177   |  |      |       | 170   |  |   |       | 200   | 
|                   | End User Transportation     |      |       | 151   |  |      |       | 170   |  |   |       | 149   | 
|                   |                             |      |       |       |  |      |       |       |  |   |       |      
|                   |                             |      | 328   |       |  |      | 340   |       |  |   | 349   |      
|                   | Intermediate Transportation |      |       | 576   |  |      |       | 492   |  |   |       | 565   | 
|                   |                             |      |       |       |  |      |       |       |  |   |       |       | 
|                   |                             |      | 904   |       |  |      | 832   |       |  |   | 914   |      
|                   |                             |      |       |       |  |      |       |       |  |   |       |      

|                                              |                          |      |   |      |  |      |    |     |   |  |     |     |  
|--------------------------------------------- | ------------------------ | ---- | - | ---- |  | ---- | -- | --- | - |  | --- | --- | -
|Effect of Weather on Gas Markets and Earnings |                          | 2003 |   | 2002 |  | 2001
|                                              |                          |      |   |      |  |     
|Percentage Colder (Warmer) Than Normal        |                          |      | 5 | %    |  |      | (6 | )%  |   |  | (12 | )% 
|Decrease From Normal in:                      |                          |      |   |      |  |      |    |     |   |  |     |    
|                                              | Gas markets (in Bcf)     |      |   | 6    |  |      |    | (13 | ) |  |     | (26 | )
|                                              | Net income (in Millions) |      | $ | 6    |  |      | $  | (11 | ) |  | $   | (23 | )

Gas sales and end user transportation revenues in total increased $172 million
in 2003 and $92 million in 2002. The increase in revenues for both 2003 and
2002 is due primarily to an increase in the gas commodity component of sales
rates. This portion of revenues is offset by similar gas costs subject to
collection through the GCR. During 2001 we operated under the Gas Sales
Program in which the gas commodity component of our sales rates was fixed at
$2.95 per thousand cubic feet (Mcf). In January 2002, the Gas Sales Program
ended and we returned to a gas cost recovery mechanism (GCR) that allows for
the recovery of reasonably and prudently incurred gas costs. Our sales rates
included a gas commodity component of $3.62 per Mcf for January 2002 and $4.38
per Mcf for the remainder of 2002 compared to $2.95 per Mcf in 2001 which was
the primary reason for increased revenues. Revenues in 2002 were also
adversely affected by a $26 million accrual for the possible disallowance of
gas cost in the 2002 GCR reconciliation case.

End user transportation revenues for 2003 reflect higher rates and lower
volumes for deliveries associated with a varying number of customers
participating in the Customer Choice program. Customers participating in this
program purchase gas from suppliers other than MichCon, while MichCon continues
to deliver the gas to their premises. Accordingly, margins earned from selling
gas and margins generated from providing end user transportation services to
Customer Choice participants are the same. There were approximately 129,000
customers participating in the gas Customer Choice program at December 31,
2003, compared to approximately 190,000 customers at December 31, 2002.

Intermediate transportation revenues increased $3 million in 2003 and increased
$2 million in 2002. Intermediate transportation deliveries increased 84 Bcf in
2003 and decreased 73 Bcf in 2002. A significant portion of the volume
increase in 2003 was due to storage requirements. In 2002, a significant

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portion of the volume decrease was due to weather. Both 2003 and 2002 had a
volume increase attributable to customers who pay a fixed fee for intermediate
transportation capacity regardless of actual usage. Although volumes associated
with these fixed-fee customers may vary, the related revenues are not affected.

Cost of 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 $134 million in 2003 and $91
million in 2002 primarily due to prices paid for gas supply. The average cost
of gas sold increased $.57 per Mcf (13%) and increased $1.05 per Mcf (32%) for
2003 and 2002, respectively. We recorded the benefits of a 19.6 Bcf inventory
liquidation in 2001. The inventory liquidation was priced at $0.38 per Mcf
compared to an average gas purchase rate in 2001 of $3.61 per Mcf. The effect
of the inventory liquidation lowered cost of gas for 2001 by $63.2 million.

Operation and maintenance expenses increased $72 million in 2003 and decreased
$21 million in 2002. The 2003 increase was due to higher employee pension and
health care benefit costs, higher uncollectible accounts expense and increased
costs associated with customer service process improvements. Operation and
maintenance expenses benefited from our Company-wide initiative to reduce or
defer costs and enhance operating performance. The DTE Operating System
involves the application of tools and operating practices,
which have resulted in improvements in technology
systems, among other enhancements. As a result of the continued increase in
operating costs, MichCon filed a rate case in September of 2003 requesting a
$194 million increase in annual service and distribution charges (Note 4). The
2002 decrease was due primarily to lower accruals for injuries and damages and
costs allocated from DTE Energy corporate for corporate support services,
partially offset by higher uncollectible accounts expense.

Merger and restructuring charges were incurred in 2001. Merger costs associated
with the DTE Energy acquisition of MCN Energy consist primarily of system
integration, relocation, legal, accounting and consulting costs (Note 3). Restructuring charges consist of charges associated with a work force
reduction plan.

Property write-down and contract losses declined $43 million in 2003. During
the 2002 second quarter, we recorded a $33 million charge for an anticipated
loss from the planned sale of our former headquarters and a $15 million charge
related to the termination of a contract for computer services. During the
2003 second quarter, we recorded an additional $5 million charge for the
planned sale of our former headquarters (Note 13).

Loss on sale of assets increased $3 million from the sale in the 2003 fourth
quarter of our former headquarters.

Other income and deductions decreased $7 million and $9 million in 2003 and
2002, respectively. The 2003 decrease was primarily due to a $6 million gain
from the sale of our interests in a series of partnerships. The variance
in 2002 is primarily due to a $9 million estimated impairment of our investment
in 2001 in Harbortown, a residential community on the Detroit
riverfront. Partially offsetting the decrease for the 2002 period
were higher interest costs.

Income taxes decreased $3 million in 2003 and increased $38 million in 2002
(Note 5). Income tax comparisons were affected by variations in pre-tax
earnings. Income taxes in 2003 were favorably affected by an increase in the
amortization of tax benefits previously deferred in accordance with MPSC
regulations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk

Prior to the reinstatement of the GCR mechanism in January 2002, our primary
market risk arose from fluctuations in natural gas prices. We managed such
natural gas price risk by entering into fixed-price contracts for a large
portion of our expected supply requirements. If we did not enter into these
fixed-price supply contracts, our exposure to such risk would have been
substantially higher. See Note 9  Financial and Other Derivative
Instruments.

Interest Rate Risk

We currently have market risk from fluctuations in interest rates. We manage
interest rate risk through the use of various derivative instruments and limit
the use of such instruments to hedging activities. If we did not use
derivative instruments, our exposure to such risk would be higher. We are
subject to interest rate risk in connection with the issuance of fixed- and
variable-rate debt. In order to manage interest costs, we use interest rate
swap agreements to exchange fixed- and variable-rate interest payment
obligations over the life of the agreements without exchange of the underlying
principal amounts. Our exposure to interest rate risk arises primarily from
changes in U.S. Treasury rates, commercial paper rates and London Inter-Bank
Offered Rates (LIBOR).

At December 31, 2002, we had interest rate swap agreements with notional
principal amounts totaling $40 million. This swap was terminated in August
2003. The notional principal amounts are used solely to calculate amounts to be
paid or received under the interest rate swap agreements and approximate the
principal amount of the underlying debt being hedged.

A sensitivity analysis model was used to calculate the fair values of our debt
and interest rate swaps, utilizing applicable forward interest rates in effect
at December 31, 2003. The sensitivity analysis involved increasing and
decreasing the forward rates by a hypothetical 10% and calculating the
resulting change in the fair values or cash flows of the interest rate
sensitive instruments.

The results of the sensitivity model calculations follow:

|                                  |  |              |       |              |  |              |      |              |  |   |       |   |  |   |      | 
|--------------------------------- |  | ------------ | ----- | ------------ |  | ------------ | ---- | ------------ |  | - | ----- | - |  | - | ---- | 
|                                  |  | 2003         |       | 2002        
|                                  |  |              |       |             
|                                  |  | Assuming     |       | Assuming     |  | Assuming     |      | Assuming    
|                                  |  | a 10%        |       | a 10%        |  | a 10%        |      | a 10%       
|                                  |  | Increase in  |       | Decrease in  |  | Increase in  |      | Decrease in 
|Market Risk (in Millions)         |  | Prices/Rates |       | Prices/Rates |  | Prices/Rates |      | Prices/Rates
|                                  |  |              |       |              |  |              |      |             
|Interest Rate Sensitive           |  |              |       |              |  |              |      |              |  |   |       |   |  |   |      | 
|Debt: Fixed rate                  |  | $            | (34.1 | )            |  | $            | 37.9 |              |  | $ | (27.7 | ) |  | $ | 30.3 | 
|Swaps: Pay variable/receive
fixed |  | $            |      |              |  | $            |     |              |  | $ | (0.2  | ) |  | $ | 0.2  | 

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Credit Risk

We sell gas to numerous companies operating in the steel, automotive, energy
and retail industries. A number of customers have filed for bankruptcy
protection under Chapter 11 of the U.S. Bankruptcy Code. We have negotiated or
are currently involved in negotiations with each of the companies, or their
successor companies, that have filed for bankruptcy protection. We regularly
review contingent matters relating to sale contracts and record provisions for
amounts considered probable of loss. We believe our accrued amounts are
adequate for probable losses. The final resolution of these matters is not
expected to have a material effect on our financial statements in the period
they are resolved.

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Item 8. Financial Statements and Supplementary Data

|                                             |                                                 |  |      |    | 
|-------------------------------------------- | ----------------------------------------------- |  | ---- | -- | 
|                                             |                                                 |  | Page
|                                             |                                                 |  |     
|Independent Auditors Report                 |                                                 |  | 19   |   
|Consolidated Statement of Operations         |                                                 |  | 20   |   
|Consolidated Statement of Financial Position |                                                 |  | 21   |   
|Consolidated Statement of Cash Flows         |                                                 |  | 22   |   
|Consolidated Statement of Retained Earnings  |                                                 |  | 23   |   
|Notes to Consolidated Financial Statements   |                                                 |  | 24   |   
|Financial Statement Schedule                |                                                 |  |      |   
|                                             | Schedule II  Valuation and Qualifying Accounts |  |      | 50 | 

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Independent Auditors Report

To the Board of Directors and Shareholder of
Michigan Consolidated Gas Company

We have audited the consolidated statement of financial position of Michigan
Consolidated Gas Company and subsidiaries (the Company) as of December 31,
2003 and 2002 and the related consolidated statements of operations, cash
flows, and retained earnings for each of the three years in the period ended
December 31, 2003. Our audits also included the consolidated financial
statement schedule listed in the Index at Item 15. These financial statements
and the financial statement schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on the consolidated
financial statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Michigan Consolidated Gas Company
and subsidiaries at December 31, 2003 and 2002, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2003 in conformity with accounting principles generally accepted
in the United States of America. Also, in our opinion, such financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.

As discussed in Note 2 to the
consolidated financial statements, in connection with the required
adoption of a new accounting principle, in 2003 the Company
changed its method of accounting for asset retirement obligations.

/s/ DELOITTE & TOUCHE LLP

Detroit, Michigan
March 1, 2004

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MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS

|                                        |                                          |      |                        |      |   |      |       |     |   |   |       |     |  
|--------------------------------------- | ---------------------------------------- | ---- | ---------------------- | ---- | - | ---- | ----- | --- | - | - | ----- | --- | -
|                                        |                                          |      | Year Ended December 31
|                                        |                                          |      |                       
|(in Millions)                           |                                          | 2003 |                        | 2002 |   | 2001
|                                        |                                          |      |                        |      |   |     
|Operating Revenues                      |                                          | $    | 1,492                  |      |   | $    | 1,312 |     |   | $ | 1,218 |    
|                                        |                                          |      |                        |      |   |      |       |     |   |   |       |    
|Operating Expenses                      |                                          |      |                        |      |   |      |       |     |   |   |       |    
|                                        | Cost of gas                              |      |                        | 888  |   |      |       | 754 |   |   |       | 663 |  
|                                        | Operation and maintenance                |      |                        | 349  |   |      |       | 277 |   |   |       | 298 |  
|                                        | Depreciation, depletion and amortization |      |                        | 105  |   |      |       | 107 |   |   |       | 113 |  
|                                        | Taxes other than income                  |      |                        | 52   |   |      |       | 51  |   |   |       | 56  |  
|                                        | Merger and restructuring charges         |      |                        |     |   |      |       |    |   |   |       | 103 |  
|                                        | Property write-down and contract losses  |      |                        | 5    |   |      |       | 48  |   |   |       |    |  
|                                        | Loss on sale of assets                   |      |                        | 3    |   |      |       |    |   |   |       |    |  
|                                        |                                          |      |                        |      |   |      |       |     |   |   |       |    
|                                        |                                          |      | 1,402                  |      |   |      | 1,237 |     |   |   | 1,233 |    
|                                        |                                          |      |                        |      |   |      |       |     |   |   |       |    
|Operating Income (Loss)                 |                                          |      | 90                     |      |   |      | 75    |     |   |   | (15   | )  
|                                        |                                          |      |                        |      |   |      |       |     |   |   |       |    
|Other (Income) and Deductions           |                                          |      |                        |      |   |      |       |     |   |   |       |    
|                                        | Interest expense                         |      |                        | 57   |   |      |       | 59  |   |   |       | 57  |  
|                                        | Interest income                          |      |                        | (10  | ) |      |       | (10 | ) |   |       | (10 | )
|                                        | Loss on investment in joint venture      |      |                        |     |   |      |       |    |   |   |       | 9   |  
|                                        | Gain on sale of joint venture            |      |                        | (6   | ) |      |       |    |   |   |       |    |  
|                                        | Other                                    |      |                        | (5   | ) |      |       | (6  | ) |   |       | (4  | )
|                                        |                                          |      |                        |      |   |      |       |     |   |   |       |    
|                                        |                                          |      | 36                     |      |   |      | 43    |     |   |   | 52    |    
|                                        |                                          |      |                        |      |   |      |       |     |   |   |       |    
|Income (Loss) Before Income Taxes       |                                          |      | 54                     |      |   |      | 32    |     |   |   | (67   | )  
|Income Tax Provision (Benefit) (Note 5) |                                          |      | 9                      |      |   |      | 12    |     |   |   | (26   | )  
|                                        |                                          |      |                        |      |   |      |       |     |   |   |       |    
|Net Income (Loss)                       |                                          | $    | 45                     |      |   | $    | 20    |     |   | $ | (41   | )  
|                                        |                                          |      |                        |      |   |      |       |     |   |   |       |    

See Notes to Consolidated Financial Statements

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MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION

|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |       |        |     | 
|------------------------------------ | --------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ----- | ----------- | --- | ----------- | ----- | ------ | --- | 
|                                     |                                                     |                                                                                                    |                                                                              |       | December 31 |     | December 31
|(in Millions)                        |                                                     | 2003                                                                                               |                                                                              | 2002 
|                                     |                                                     |                                                                                                    |                                                                              |      
|ASSETS                               |                                                     |                                                                                                    |                                                                              |       |             |     |             |      
|                                     | Current Assets                                      |                                                                                                    |                                                                              |       |             |     |             |       |       
|                                     |                                                     | Cash and cash equivalents                                                                          |                                                                              | $     | 1           |     |             | $     | 7      |    
|                                     |                                                     | Accounts receivable                                                                                |                                                                              |       |             |     |             |       |        |    
|                                     |                                                     |                                                                                                    | Customer (less allowance for doubtful accounts of $43 and
$27, respectively) |       |             | 178 |             |       |        | 157 | 
|                                     |                                                     |                                                                                                    | Accrued unbilled revenues                                                    |       |             | 117 |             |       |        | 116 | 
|                                     |                                                     |                                                                                                    | Other                                                                        |       |             | 100 |             |       |        | 73  | 
|                                     |                                                     | Accrued gas cost recovery revenue                                                                  |                                                                              |       | 19          |     |             |       | 22     |    
|                                     |                                                     | Inventories                                                                                        |                                                                              |       |             |     |             |       |        |    
|                                     |                                                     |                                                                                                    | Gas                                                                          |       |             | 117 |             |       |        | 55  | 
|                                     |                                                     |                                                                                                    | Material and supplies                                                        |       |             | 14  |             |       |        | 14  | 
|                                     |                                                     | Other                                                                                              |                                                                              |       | 67          |     |             |       | 53     |    
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |      
|                                     |                                                     |                                                                                                    | 613                                                                          |       |             |     | 497         |      
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |      
|                                     | Property, Plant and Equipment                       |                                                                                                    |                                                                              | 3,124 |             |     |             | 3,108 |       
|                                     |                                                     | Less
accumulated depreciation, depletion and amortization (Note 2)                                 |                                                                              |       | (1,344      | )   |             |       | (1,319 | )  
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |       |        |    
|                                     |                                                     |                                                                                                    | 1,780                                                                        |       |             |     | 1,789       |      
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |      
|                                     | Other Assets                                        |                                                                                                    |                                                                              |       |             |     |             |       |       
|                                     |                                                     | Other investments                                                                                  |                                                                              |       | 87          |     |             |       | 79     |    
|                                     |                                                     | Notes receivable                                                                                   |                                                                              |       | 83          |     |             |       | 84     |    
|                                     |                                                     | Regulatory
assets (Note 4)                                                                         |                                                                              |       | 61          |     |             |       | 43     |    
|                                     |                                                     | Prepaid benefit costs and due from affiliate                                                       |                                                                              |       | 333         |     |             |       | 292    |    
|                                     |                                                     | Other                                                                                              |                                                                              |       | 20          |     |             |       | 31     |    
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |       |        |    
|                                     |                                                     |                                                                                                    | 584                                                                          |       |             |     | 529         |      
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |       |        |    
|                                     |                                                     | $                                                                                                  | 2,977                                                                        |       |             | $   | 2,815       |      
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |      
|LIABILITIES AND SHAREHOLDERS EQUITY |                                                     |                                                                                                    |                                                                              |       |             |     |             |      
|                                     | Current Liabilities                                 |                                                                                                    |                                                                              |       |             |     |             |       |       
|                                     |                                                     | Accounts payable                                                                                   |                                                                              | $     | 131         |     |             | $     | 104    |    
|                                     |                                                     | Dividends payable                                                                                  |                                                                              |       | 13          |     |             |       |       |    
|                                     |                                                     | Short-term borrowings                                                                              |                                                                              |       | 235         |     |             |       | 123    |    
|                                     |                                                     | Current portion of long-term debt, including capital leases                                        |                                                                              |       | 3           |     |             |       | 99     |    
|                                     |                                                     | Federal income, property and other taxes payable                                                   |                                                                              |       | 14          |     |             |       | 32     |    
|                                     |                                                     | Regulatory liabilities                                                                             |                                                                              |       | 26          |     |             |       | 26     |    
|                                     |                                                     | Other                                                                                              |                                                                              |       | 73          |     |             |       | 86     |    
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |       |        |    
|                                     |                                                     |                                                                                                    | 495                                                                          |       |             |     | 470         |      
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |      
|                                     | Other Liabilities                                   |                                                                                                    |                                                                              |       |             |     |             |       |       
|                                     |                                                     | Deferred income taxes                                                                              |                                                                              |       | 134         |     |             |       | 130    |    
|                                     |                                                     | Regulatory
liabilities (Notes 2 and 4)                                                             |                                                                              |       | 563         |     |             |       | 142    |    
|                                     |                                                     | Asset
removal costs (Note 2)                                                                       |                                                                              |       |            |     |             |       | 404    |    
|                                     |                                                     | Unamortized investment tax credit                                                                  |                                                                              |       | 20          |     |             |       | 22     |    
|                                     |                                                     | Accrued postretirement benefit costs                                                               |                                                                              |       | 96          |     |             |       | 77     |    
|                                     |                                                     | Accrued environmental costs                                                                        |                                                                              |       | 16          |     |             |       | 18     |    
|                                     |                                                     | Other                                                                                              |                                                                              |       | 55          |     |             |       | 35     |    
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |      
|                                     |                                                     |                                                                                                    | 884                                                                          |       |             |     | 828         |      
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |      
|                                     | Long-Term debt, including capital lease obligations |                                                                                                    |                                                                              | 775   |             |     |             | 678   |       
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |      
|                                     | Commitments and Contingencies (Notes 4 and 10)      |                                                                                                    |                                                                              |       |             |     |             |       |       
|                                     | Shareholders Equity                                |                                                                                                    |                                                                              |       |             |     |             |       |       
|                                     |                                                     | Common stock, $1 par value, 15,100,000 shares authorized,
10,300,000 shares issued and outstanding |                                                                              |       | 10          |     |             |       | 10     |    
|                                     |                                                     | Additional paid in capital                                                                         |                                                                              |       | 432         |     |             |       | 431    |    
|                                     |                                                     | Retained earnings                                                                                  |                                                                              |       | 381         |     |             |       | 398    |    
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |      
|                                     |                                                     |                                                                                                    | 823                                                                          |       |             |     | 839         |      
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |       |        |    
|                                     |                                                     | $                                                                                                  | 2,977                                                                        |       |             | $   | 2,815       |      
|                                     |                                                     |                                                                                                    |                                                                              |       |             |     |             |      

See Notes to Consolidated Financial Statements

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MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS

|                                                     |                                                                            |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |      |      |     |     |  
|---------------------------------------------------- | -------------------------------------------------------------------------- | -------------------------------------- | ---------------------------------------------------- | ------------------------------------------------ | --- | ---------------------- | --- | ---- | --- | --- | --- | ---- | ---- | --- | --- | -
|                                                     |                                                                            |                                        |                                                      |                                                  |     | Year Ended December 31
|                                                     |                                                                            |                                        |                                                      |                                                  |     |                       
|(in Millions)                                        |                                                                            | 2003                                   |                                                      | 2002                                             |     | 2001                  
|                                                     |                                                                            |                                        |                                                      |                                                  |     |                       
|Operating Activities                                 |                                                                            |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |     
|                                                     | Net income (loss)                                                          |                                        | $                                                    | 45                                               |     |                        | $   | 20   |     |     | $   | (41  | )   
|                                                     | Adjustments to reconcile net income to net cash from
operating activities: |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |      |     
|                                                     |                                                                            |                                        | Depreciation, depletion and amortization             |                                                  |     | 105                    |     |      |     | 107 |     |      |      | 113 |    
|                                                     |                                                                            |                                        | Property write-down and contract losses              |                                                  |     | 5                      |     |      |     | 35  |     |      |      |    |    
|                                                     |                                                                            |                                        | Deferred income taxes and investment tax credit, net |                                                  |     | (23                    | )   |      |     | 5   |     |      |      | (26 | )  
|                                                     |                                                                            |                                        | Gain on sale of assets                               |                                                  |     | (3                     | )   |      |     |    |     |      |      |    |    
|                                                     |                                                                            |                                        | Changes in assets and liabilities:                   |                                                  |     |                        |     |      |     |     |     |      |      |     |    
|                                                     |                                                                            |                                        |                                                      | Accounts receivable, net                         |     |                        | (48 | )    |     |     | 13  |      |      |     | (86 | )
|                                                     |                                                                            |                                        |                                                      | Accrued unbilled revenues                        |     |                        | (1  | )    |     |     | (6  | )    |      |     | 25  |  
|                                                     |                                                                            |                                        |                                                      | Inventories                                      |     |                        | (62 | )    |     |     | (48 | )    |      |     | 7   |  
|                                                     |                                                                            |                                        |                                                      | Prepaid benefit costs and due from affiliate     |     |                        | (41 | )    |     |     | (62 | )    |      |     | (15 | )
|                                                     |                                                                            |                                        |                                                      | Accrued gas cost recovery                        |     |                        | 3   |      |     |     | (7  | )    |      |     | (14 | )
|                                                     |                                                                            |                                        |                                                      | Accounts payable                                 |     |                        | 27  |      |     |     | (33 | )    |      |     | 39  |  
|                                                     |                                                                            |                                        |                                                      | Federal income, property and other taxes payable |     |                        | (18 | )    |     |     | 32  |      |      |     | (15 | )
|                                                     |                                                                            |                                        |                                                      | Other                                            |     |                        | 27  |      |     |     | (11 | )    |      |     | 71  |  
|                                                     |                                                                            |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |      |     
|                                                     |                                                                            | Net cash from operating activities     |                                                      |                                                  | 16  |                        |     |      | 45  |     |     |      | 58   |    
|                                                     |                                                                            |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |     
|Investing Activities                                 |                                                                            |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |     
|                                                     | Capital expenditures                                                       |                                        |                                                      | (98                                              | )   |                        |     | (90  | )   |     |     | (111 | )   
|                                                     | Proceeds from sale of assets                                               |                                        |                                                      | 11                                               |     |                        |     |     |     |     |     |     |     
|                                                     | Other                                                                      |                                        |                                                      | (2                                               | )   |                        |     | 5    |     |     |     | 8    |     
|                                                     |                                                                            |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |      |     
|                                                     |                                                                            | Net cash used for investing activities |                                                      |                                                  | (89 | )                      |     |      | (85 | )   |     |      | (103 | )  
|                                                     |                                                                            |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |     
|Financing Activities                                 |                                                                            |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |     
|                                                     | Capital contribution by parent company                                     |                                        |                                                      |                                                 |     |                        |     | 200  |     |     |     |     |     
|                                                     | Issuance of long-term debt                                                 |                                        |                                                      | 199                                              |     |                        |     |     |     |     |     | 198  |     
|                                                     | Redemption of long-term debt                                               |                                        |                                                      | (194                                             | )   |                        |     | (23  | )   |     |     | (65  | )   
|                                                     | Short-term borrowings, net                                                 |                                        |                                                      | 112                                              |     |                        |     | (134 | )   |     |     | (22  | )   
|                                                     | Dividends paid                                                             |                                        |                                                      | (50                                              | )   |                        |     |     |     |     |     | (75  | )   
|                                                     |                                                                            |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |      |     
|                                                     |                                                                            | Net cash from financing activities     |                                                      |                                                  | 67  |                        |     |      | 43  |     |     |      | 36   |    
|                                                     |                                                                            |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |     
|Net Increase (Decrease) in Cash and Cash Equivalents |                                                                            |                                        | (6                                                   | )                                                |     |                        | 3   |      |     |     | (9  | )   
|Cash and Cash Equivalents at Beginning of Period     |                                                                            |                                        | 7                                                    |                                                  |     |                        | 4   |      |     |     | 13  |     
|                                                     |                                                                            |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |     
|Cash and Cash Equivalents at End of Period           |                                                                            | $                                      | 1                                                    |                                                  |     | $                      | 7   |      |     | $   | 4   |     
|                                                     |                                                                            |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |     
|Supplementary Cash Flow Information                  |                                                                            |                                        |                                                      |                                                  |     |                        |     |      |     |     |     |     
|                                                     |                                                                            |                                        |                                                      | Interest paid (excluding interest capitalized)   |     | $                      | 57  |      |     | $   | 59  |      |      | $   | 58  |  
|                                                     |                                                                            |                                        |                                                      | Income taxes paid                                |     |                        | 34  |      |     |     |    |      |      |     | (3  | )

See Notes to Consolidated Financial Statements

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MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF RETAINED EARNINGS

|                                |  |                        |     |      |  |      |     |  |  |   |     |  
|------------------------------- |  | ---------------------- | --- | ---- |  | ---- | --- |  |  | - | --- | -
|                                |  | Year Ended December 31
|                                |  |                       
|(in Millions)                   |  | 2003                   |     | 2002 |  | 2001
|                                |  |                        |     |      |  |     
|Balance  beginning of period   |  | $                      | 398 |      |  | $    | 378 |  |  | $ | 494 |  
|Net income (loss)               |  |                        | 45  |      |  |      | 20  |  |  |   | (41 | )
|Common stock dividends declared |  |                        | (62 | )    |  |      |    |  |  |   | (75 | )
|                                |  |                        |     |      |  |      |     |  |  |   |     |  
|Balance  end of period         |  | $                      | 381 |      |  | $    | 398 |  |  | $ | 378 |  
|                                |  |                        |     |      |  |      |     |  |  |   |     |  

See Notes to Consolidated Financial Statements

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MICHIGAN CONSOLIDATED GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1   SIGNIFICANT ACCOUNTING POLICIES

Corporate Structure

Michigan Consolidated Gas Company (MichCon) is a public utility engaged in the
purchase, storage, transmission, distribution and sale of natural gas in the
state of Michigan. MichCon is subject to the accounting requirements of and
rate regulation by the Michigan Public Service Commission (MPSC) with respect
to the distribution and intrastate transportation of natural gas. The major
services provided by MichCon are gas sales, end user transportation and
intermediate transportation. MichCon serves more than 1.2 million residential,
commercial and industrial customers throughout Michigan. MichCons
non-regulated operations are not significant. MichCon is an indirect, wholly
owned subsidiary of DTE Enterprises Inc. (Enterprises), an exempt holding
company under the Public Utility Holding Company Act of 1935. Enterprises is a
wholly owned subsidiary of DTE Energy Company (DTE Energy).

References in this report to we, us, and our are to MichCon.

Principles of Consolidation

We consolidate all majority owned subsidiaries and investments in entities in
which we have controlling influence. Non-majority owned investments are
accounted for using the equity method when the company is able to influence the
operating policies of the investee. Non-majority owned investments include
investments in limited liability companies, partnerships or joint ventures.
When we do not influence the operating policies of an investee, the cost method
is used.

For entities that are considered variable interest entities we apply the
provisions of FASB Interpretation No. (FIN) 46-R, Consolidation of Variable
Interest Entities, an Interpretation of ARB No. 51.For a detailed discussion
of FIN 46-R see Note 2  New Accounting Pronouncements.

Basis of Presentation

The accompanying consolidated financial statements are prepared using
accounting principles generally accepted in the United States of America.
These generally accepted accounting principles require us to use estimates and
assumptions that impact reported amounts of assets, liabilities, revenues,
expenses and the disclosure of contingent assets and liabilities. Actual
results may differ from our estimates.

We reclassified certain prior year balances to match the current years
financial statement presentation.

Revenues and Cost of Gas

Revenues from the transportation and storage of natural gas are recognized as
services are provided. We record revenues for gas services provided but
unbilled at the end of each month. Through December 2001, our rates included a
component for cost of gas sold that was fixed at $2.95 per thousand cubic feet
(Mcf). In 2002, we implemented a gas cost recovery (GCR) mechanism that will
recover the prudent and reasonable cost of gas sold subject to annual
proceedings before the MPSC. See Note 4.

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Inventories

Materials and supplies are valued at average cost. Gas inventory is determined
using the last-in, first-out (LIFO) method. At December 31, 2003, the
replacement cost of gas remaining in storage exceeded the $117 million LIFO
cost by $251 million. At December 31, 2002, the replacement cost exceeded the
$55 million LIFO cost by $187 million. During 2001, we liquidated 19.6 Bcf of
prior years LIFO layers at an average cost of $0.38 per thousand cubic feet.
Our average purchase rate in 2001 was $3.23 per Mcf higher than the average
LIFO liquidation rate. Applying LIFO cost in valuing the liquidation, as
opposed to using the average gas purchase rate, decreased 2001 cost of gas by
$63.2 million and increased earnings by $41.1 million, net of taxes.

Property, Retirement and Maintenance, and Depreciation and Depletion

Property is stated at cost and includes construction-related labor, materials
and overheads. The cost of properties retired, less salvage
are charged to accumulated depreciation. Expenditures for maintenance and
repairs are charged to expense when incurred.

We base depreciation provisions on straight-line and units of production rates
approved by the MPSC. Unit of production depreciation and depletion is used
for certain production and transmission property. Our composite depreciation
rate was 3.5% in 2003, 3.6% in 2002 and 3.9% in 2001.

The average estimated useful life for gas distribution and transmission
property was 26 years and 28 years, respectively, at December 31, 2003.

Allowance for Funds Used during Construction

We capitalize an allowance for both debt and equity funds used during
construction in the cost of major additions to utility plant. The total amount
capitalized was $2 million, $2 million and $1 million in 2003, 2002 and 2001,
respectively.

Long-Lived Assets

Long-lived assets that we own are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. If the carrying amount of the asset exceeds the expected
future cash flows generated by the asset, an impairment loss is recognized
resulting in the asset being written down to its estimated fair value. Assets
to be disposed of are reported at the lower of the carrying amount or fair
value less cost to sell.

Software Costs

We capitalize the costs associated with computer software we develop or obtain
for use in our business. We amortize computer software costs on a
straight-line basis over expected periods of benefit once the installed
software is ready for its intended use.

Excise and Sales Taxes

We record the billing of excise and sales taxes as receivables with an
offsetting payable to the applicable taxing authority, with no impact on the
statement of operations.

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Deferred Debt Costs

The costs related to the issuance of long-term debt are deferred and amortized
over the life of each debt issue. In accordance with MPSC regulations, the
unamortized discount, premium and expense related to debt redeemed with a
refinancing are amortized over the life of the replacement issue.

Investments in Debt and Securities

We generally classify investments in debt
and equity securities as either trading or available-for-sale and
have recorded such investments at market value with unrealized gains
or losses included in the Consolidated Statement of Operations or in
other comprehensive income or loss, respectively.

Cash Equivalents

For purposes of the Consolidated Statement of Cash Flows, we consider
investments purchased with a maturity of three months or less to be cash
equivalents.

See the following notes for other accounting policies impacting our financial
statements:

|     |  |                                           
|---- |  | ------------------------------------------
|Note |  | Title                                     
|     |  |                                           
|2    |  | New Accounting Pronouncements             
|4    |  | Regulatory Matters                        
|5    |  | Income Taxes                              
|10   |  | Financial and Other Derivative Instruments
|12   |  | Retirement Benefits and Trusteed Assets   

NOTE 2  NEW ACCOUNTING PRONOUNCEMENTS

Derivative Instruments and Hedging Activities

Effective January 1, 2001, we adopted SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended. SFAS No. 133 establishes
accounting and reporting standards for derivative instruments and for hedging
activities. SFAS No. 133 required that as of the date of initial
adoption, the difference between the fair value of derivative
instruments and the previous carrying amount of those derivatives to
be reported in net income or other comprehensive income as the
cumulative effect of a change in accounting principle.  The
cumulative effect of adopting SFAS No. 133 was not material.

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Effective July 1, 2003, we adopted SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities.The statement amends and
clarifies financial accounting and reporting for derivative instruments,
including derivative instruments embedded in other contracts and for hedging
activities. Our financial statements were not impacted by the adoption of SFAS
No. 149.

See Note 9  Financial and Other Derivative Instruments for additional
information.

Goodwill and Other Intangible Assets

Effective January 1, 2002, we adopted
SFAS No. 142 Goodwill and Other Intangible Assets.
which addresses the financial accounting and reporting standards for
the acquisition of intangible assets outside of a business combination
and for goodwill and other intangible assets subsequent to their
acquisition.  As of the date of adoption, we had no recorded
goodwill.

In connection with the adoption of
SFAS No. 142, we also reassessed the useful lives and the
classification of identifiable intangible assets and determined that
they continue to be appropriate.  Our intangible assets consist
primarily of software and are subject to amortization.  Intangible
assets amortization expense was $9  million in 2003, $10  million in
2002 and $9  million in 2001.  There were no material acquisitions of
intangible assets during 2003 and 2002.  The gross carrying amount
and accumulated amortization of intangible assets at December 31,
2003 were $161  million and $50  million, respectively.  The gross
carrying amount and accumulated amortization of intangible assets at
December 31, 2002 were $160  million and $45  million, respectively.
Amortization expense of intangible assets is estimated to be $10 
million annually for 2004 through 2008.

Asset Retirement Obligations

On January 1, 2003, we adopted SFAS No. 143, Accounting for Asset Retirement
Obligations, which requires the fair value of an asset retirement obligation
be recognized in the period in which it is incurred. It applies to legal
obligations associated with the retirement of long-lived assets resulting from
the acquisition, construction, development and (or) the normal operation of a
long-lived asset. When a new liability is recorded, an entity capitalizes the
costs of the liability by increasing the carrying amount of the related
long-lived asset. The liability is accreted to its present value each period,
and the capitalized cost is depreciated over the useful life of the related
asset. Upon settlement of the liability, an entity settles the obligation for
its recorded amount or incurs a gain or loss upon settlement.

If a reasonable estimate of fair value cannot be made in the period the asset
retirement obligation is incurred, such as assets with an indeterminate life,
the liability is to be recognized when a reasonable estimate of fair value can
be made. Generally, distribution assets have an indeterminate life, retirement
cash flows cannot be determined and there is a low probability of retirement,
therefore no liability has been recorded for these assets. The adoption of
SFAS No. 143 had an immaterial impact on the consolidated financial statements.

SFAS No. 143 also requires the quantification of the estimated cost of removal
obligations, arising from other than legal obligations, which have been accrued
through depreciation charges. At December 31, 2002, we reclassified
approximately $404 million of previously
accrued asset removal costs related to our regulated operations,
which had been
previously netted against accumulated depreciation, to an asset
removal cost liability.  At December 31, 2003, we reclassified
approximately $417 million of these accrued asset removal obligations to regulatory liabilities.

Exit and Disposal Activities

Effective January 1, 2003, SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities, which requires that the liability for costs
associated with exit or disposal activities be recognized when incurred, rather
than at the date of a commitment to an exit or disposal plan. The adoption of
this statement had no impact on our consolidated financial statements.

Consolidation of Variable Interest Entities

In January 2003, FASB Interpretation No. (FIN) 46, Consolidation of Variable
Interest Entities, an Interpretation of ARB No. 51,was issued and requires an
investor with a majority of the variable interests (primary beneficiary) in a
variable interest entity to consolidate the assets, liabilities and results of
operations of the entity. A variable interest entity is an entity in which the
equity investors do not have controlling interests, the equity investment at
risk is insufficient to finance the entitys activities without receiving
additional subordinated financial support from other parties, or equity
investors do not share proportionally in gains or losses. FIN 46 was
applicable (i) immediately for all variable interest entities created after
January 31, 2003; or (ii) in the first fiscal year or interim period beginning
after June 15, 2003 for variable interest entities created before February 1,
2003.

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In October 2003, the FASB issued Staff Position No. FIN 46-6, which allowed for
the deferral of the effective date for applying the provisions of
Interpretation No. 46 for all interests in variable interest entities created
before February 1, 2003, until the end of the first interim or annual period
ending after December 15, 2003.

In December 2003, the FASB issued FIN 46-Revised (FIN 46-R) which clarified and
replaced FIN 46. FIN 46-R again deferred the adoption of its provisions until
periods ending after March 15, 2004, however, application is required for
periods ended after December 15, 2003 for public entities that have interests
in special-purpose entities. FIN 46-R defines special purpose entities as any
entity whose activities are primarily related to securitizations or other forms
of asset-backed financings or single-lessee leasing arrangements. In addition,
FIN 46-R provides for further scope exceptions, including an exception for
entities that are deemed to be a business, provided certain conditions are met.

We continue to evaluate all of our cost and equity method investments created
prior to February 1, 2003 to determine whether those entities are variable
interest entities that require consolidation. The effects of adopting the
provisions of FIN 46-R to those entities are not expected to have a material
effect on our financial statements.

Financial Instruments with Characteristics of Liabilities and Equity

Effective July 1, 2003, we adopted SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity,
which establishes standards for classifying and measuring as liabilities
certain financial instruments that embody obligations of the issuer and have
characteristics of both liabilities and equity. The adoption of this statement
had no impact on our financial statements.

NOTE 3 - MCN ENERGY ACQUISITION

On May 31, 2001, DTE Energy completed the acquisition of MCN Energy, our parent
company, by acquiring all of its outstanding shares of common stock for a
combination of cash and shares of DTE Energy common stock. MCN Energy was
merged with and into Enterprises, the surviving corporation in the merger and a
wholly-owned subsidiary of DTE Energy. The acquisition by DTE Energy was
accounted for using the purchase method. The assets and liabilities included
in our accompanying consolidated financial statements have not been adjusted to
allocate the purchase price to their fair values. Certain losses reflected in
the accompanying consolidated financial statements have been eliminated at DTE
Energy as a result of purchase accounting adjustments.

We incurred merger related costs of $22 million ($14 million, net of tax) and
restructuring costs of $81 million ($53 million, net of tax) during 2001.
Merger related charges represent systems integration, relocation, legal,
accounting and consulting costs. Restructuring charges were primarily
associated with a work force reduction plan. The plan included early retirement
incentives and voluntary separation agreements for 273 employees, primarily in
overlapping corporate support areas. Approximately $25 million of the merger
and restructuring charges were paid as of December 31, 2001 and remaining
benefit payments have been or will be paid from retirement plans.

NOTE 4 - REGULATORY MATTERS

Regulation

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We are subject to the regulatory jurisdiction of the MPSC, which issues orders
pertaining to rates, recovery of certain costs, including the costs of
regulatory assets, conditions of service, accounting and operating-related
matters.

Our operations meet the criteria of SFAS No. 71, Accounting for the Effects of
Certain Types of Regulation. This accounting standard recognizes the
cost-based ratemaking process, which results in differences in the application
of generally accepted accounting principles between regulated and non-regulated
businesses. SFAS No. 71 requires the recording of regulatory assets and
liabilities for certain transactions that would have been treated as revenue
and expense in non-regulated businesses. Continued applicability of SFAS No. 71
requires that rates be designed to recover specific costs of providing
regulated services and be charged to and collected from customers. Future
regulatory changes or changes in the competitive environment could result in
the company discontinuing the application of SFAS No. 71 for some or all of its
business and require the write-off of the portion of any regulatory asset or
liability that was no longer probable of recovery through regulated rates.
Management believes that currently available facts support the continued
application of SFAS No. 71.

Regulatory Assets and Liabilities

The following are the balances of the regulatory assets and liabilities as of
December 31:

|              |                                                                   |      |     |      |   |   |     |     |  
|------------- | ----------------------------------------------------------------- | ---- | --- | ---- | - | - | --- | --- | -
|(in Millions) |                                                                   | 2003 |     | 2002
|              |                                                                   |      |     |     
|Assets:       |                                                                   |      |     |      |   |   |     |    
|              | Deferred environmental costs                                      |      | $   | 27   |   |   | $   | 27  |  
|              | Unamortized loss on reacquired debt                               |      |     | 32   |   |   |     | 16  |  
|              | Accrued gas cost recovery                                         |      |     | 19   |   |   |     | 22  |  
|              | Recoverable minimum pension liability                             |      |     | 2    |   |   |     |    |  
|              |                                                                   |      |     |      |   |   |     |     |  
|              |                                                                   |      | 80  |      |   |   | 65  |    
|              | Less amount included in current assets                            |      |     | (19  | ) |   |     | (22 | )
|              |                                                                   |      |     |      |   |   |     |     |  
|              |                                                                   | $    | 61  |      |   | $ | 43  |    
|              |                                                                   |      |     |      |   |   |     |     |  
|Liabilities:  |                                                                   |      |     |      |   |   |     |    
|              | Asset removal costs                                               |      | $   | 417  |   |   | $   |    |  
|              | Refundable income taxes                                           |      |     | 146  |   |   |     | 142 |  
|              | Accrued GCR potential disallowance                                |      |     | 26   |   |   |     | 26  |  
|              | Other                                                             |      |     | 3    |   |   |     | 3   |  
|              |                                                                   |      |     |      |   |   |     |     |  
|              |                                                                   |      | 592 |      |   |   | 171 |    
|              | Less amount included in current liabilities and other liabilities |      |     | (29  | ) |   |     | (29 | )
|              |                                                                   |      |     |      |   |   |     |     |  
|              |                                                                   | $    | 563 |      |   | $ | 142 |    
|              |                                                                   |      |     |      |   |   |     |     |  

Deferred environmental costs The MPSC approved recovery of costs for
investigation and remediation incurred at former manufactured gas plant sites.

Unamortized loss on reacquired debt The unamortized discount, premium and
expense related to debt redeemed with a refinancing are amortized and recovered
over the life of the replacement issue.

Accrued gas cost recovery The amount of under-recovered gas costs incurred
by MichCon recoverable through the GCR mechanism. A deferred return
computed using MichCons short-term borrowing rate is also being
accrued on the under-recovered balance.

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Recoverable minimum pension liability An additional minimum pension
liability was recorded in 2003. The traditional rate setting process allows for
the recovery of pension costs as measured by generally accepted
accounting principles. Accordingly, the
minimum pension liability associated with regulated operations is recoverable.

Asset removal costs The amount collected from customers for the funding of
future asset removal activities.

Refundable income taxes Income taxes refundable to MichCons customers
representing the difference in property-related deferred income taxes payable
and amounts recognized pursuant to MPSC authorization.

Accrued GCR potential disallowance A March 2003 MPSC Order in MichCons 2002
GCR plan case required MichCon to reduce revenues in calculation of its 2002
GCR expense.

Gas Rate Plan

In September 2003, MichCon filed an application with the MPSC for an increase
in service and distribution charges (base rates) for its gas sales and
transportation customers. The filing requests an overall increase in base rates
of $194 million per year (approximately 7% increase, inclusive of gas costs),
beginning January 1, 2005. MichCon has requested that the MPSC increase base
rates by $154 million per year on an interim basis by April 1, 2004. The
interim request is based on a projected revenue deficiency for the test year
2004. Based on the procedural calendar established in this case, MichCon
expects an interim order in the third quarter of 2004 and a final order
relating to the $194 million base rate increase in the first quarter of 2005.

Primary factors that necessitate MichCons request for increased base rates
include significant increases in routine and mandated infrastructure
improvements, increased operation and maintenance expenses, including employee
pension and health care costs, and a decline in customer consumption. The
filing also requests a permanent capital structure based on 50% debt and 50%
equity, and a proposed ROE of 11.5%. MichCon is also proposing a symmetrical
ROE sharing mechanism which would provide that shareholders retain all earnings
within a 1% band above and below the authorized ROE. If the actual ROE falls
outside of the band, customers would share between 20% and 80% of the excess or
shortfall of earnings, depending on actual ROE.

In September 2003, MichCon also filed an application with the MPSC for the
approval of depreciation rates, which will result in a modest increase in its
composite depreciation rate. The Company anticipates that any depreciation
change will be implemented contemporaneously with a MPSC order in MichCons
base rate case.

Gas Industry Restructuring

In December 2001, the MPSC approved MichCons application for a voluntary,
expanded permanent gas Customer Choice program, which replaced the experimental
program that expired in March 2002. Effective April 2002, up to 40% of
MichCons customers could elect to purchase gas from suppliers other than
MichCon. Effective April 2003, up to 60% of customers were eligible and by
April 2004, all of MichCons 1.2 million customers may participate in the
program. The MPSC also approved the use of deferred accounting for the recovery
of implementation costs of the gas Customer Choice program. As of December
2003, approximately 129,000 customers are participating in the gas Customer
Choice program.

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Gas Cost Recovery Proceedings

2002 Plan Year- In December 2001, the MPSC issued an order that permitted
MichCon to implement GCR factors up to $3.62 per Mcf for January 2002 billings
and up to $4.38 per Mcf for the remainder of 2002. The order also allowed
MichCon to recognize a regulatory asset of approximately $14 million
representing the difference between the $4.38 factor and the $3.62 factor for
volumes that were unbilled at December 31, 2001. The regulatory asset is
subject to the 2002 GCR reconciliation process. In March 2003, the MPSC issued
an order in MichCons 2002 GCR plan case. The MPSC ordered MichCon to reduce
its gas cost recovery expenses by $26.5 million for purposes of calculating the
2002 GCR factor due to MichCons decision to utilize storage gas during 2001
that resulted in a gas inventory decrement for the 2001 calendar year.

Although we recorded a $26.5 million reserve in 2002 to reflect the impact of
this order, a final determination of actual 2002 revenue and expenses including
any disallowances or adjustment will be decided in MichCons 2002 GCR
reconciliation case which was filed with the MPSC in February 2003. Intervening
parties in this proceeding are seeking to have the MPSC disallow an additional
$26 million, representing unbilled revenues at December 2001. One party has
proposed that half of the $8 million related to the settlement of the Enron
bankruptcy also be disallowed. The other two parties to the case have
recommended that the Enron bankruptcy settlement be addressed in the 2003 GCR
reconciliation case. A final order in this proceeding is expected in 2004. In
addition, we filed an appeal of the March 2003 MPSC order with the Michigan
Court of Appeals.

2003 Plan Year- In July 2003, the MPSC approved an increase in MichCons 2003
GCR rate to a maximum of $5.75 per Mcf for the billing months of August 2003
through December 2003. As of December 31, 2003, MichCon has accrued a $19
million regulatory asset representing the under-recovery of actual gas costs
incurred.

2004 Plan Year- In September 2003, MichCon filed its 2004 GCR plan case
proposing a maximum GCR factor of $5.36 per Mcf. MichCon agreed to switch from
a calendar year to an operational year as a condition of its settlement in the
2003 GCR Plan Case. The operational GCR year would run from April to March of
the following year. To accomplish the switch, the 2004 GCR Plan Case reflects
a 15-month transitional period, January 2004 through March 2005. Under the
transition proposal, MichCon would file two reconciliations pertaining to the
transition period; one addressing the January 2004 to March 2004 period, the
other addressing the remaining April 2004 to March 2005 period. The plan also
proposes a quarterly GCR ceiling price adjustment mechanism. This mechanism
allows MichCon to increase the maximum GCR factor to compensate for increases
in market prices thereby minimizing the possibility of a GCR under recovery.

We are unable to predict the outcome of the regulatory matters discussed
herein. Resolution of these matters is dependent upon future MPSC orders,
which may materially impact our financial position, results of operations and
cash flows.

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NOTE 5 - INCOME TAXES

We are part of the consolidated federal income tax return of DTE Energy. Our
federal income tax expense is determined on an individual company basis with no
allocation of tax benefits or expenses from other affiliates of DTE Energy.

Total income tax expense (benefit) varied from the statutory federal income tax rate for
the following reasons:

|                                                |  |      |      |      |  |      |      |   |  |   |      |  
|----------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|(Dollars in Millions)                           |  | 2003 |      | 2002 |  | 2001
|                                                |  |      |      |      |  |     
|Statutory federal income taxes at a rate of 35% |  | $    | 19   |      |  | $    | 11   |   |  | $ | (23  | )
|Investment tax credit                           |  |      | (1   | )    |  |      | (2   | ) |  |   | (2   | )
|Depreciation                                    |  |      | (7   | )    |  |      | (1   | ) |  |   | 3    |  
|Grantor Trust                                   |  |      | (1   | )    |  |      | (1   | ) |  |   | (1   | )
|Employee Stock Ownership Plan Dividends         |  |      | (2   | )    |  |      | (1   | ) |  |   | (2   | )
|Other-net                                       |  |      | 1    |      |  |      | 6    |   |  |   | (1   | )
|                                                |  |      |      |      |  |      |      |   |  |   |      |  
|Total                                           |  | $    | 9    |      |  | $    | 12   |   |  | $ | (26  | )
|                                                |  |      |      |      |  |      |      |   |  |   |      |  
|Effective Tax                                   |  |      | 16.5 | %    |  |      | 37.2 | % |  |   | 38.9 | %

Components of income tax expense (benefit) were as follows:

|                                                        |  |      |   |      |  |      |    |  |  |   |     |  
|------------------------------------------------------- |  | ---- | - | ---- |  | ---- | -- |  |  | - | --- | -
|(in Millions)                                           |  | 2003 |   | 2002 |  | 2001
|                                                        |  |      |   |      |  |     
|Current federal and other income tax expense (benefit)  |  | $    | 8 |      |  | $    | 9  |  |  | $ | (6  | )
|Deferred federal and other income tax expense (benefit) |  |      | 1 |      |  |      | 3  |  |  |   | (20 | )
|                                                        |  |      |   |      |  |      |    |  |  |   |     |  
|Total                                                   |  | $    | 9 |      |  | $    | 12 |  |  | $ | (26 | )
|                                                        |  |      |   |      |  |      |    |  |  |   |     |  

Deferred tax assets and liabilities are recognized for the estimated future tax
effect of temporary differences between the tax basis of assets or liabilities
and the reported amounts in the financial statements. Deferred tax assets and
liabilities are classified as current or noncurrent according to the
classification of the related assets or liabilities. Deferred tax assets and
liabilities not related to assets or liabilities are classified according to
the expected reversal date of the temporary differences.

Deferred income tax assets (liabilities) were comprised of the following at
December 31:

|                                |  |      |      |      |  |   |      |  
|------------------------------- |  | ---- | ---- | ---- |  | - | ---- | -
|(in Millions)                   |  | 2003 |      | 2002
|                                |  |      |      |     
|Property                        |  | $    | (63  | )    |  | $ | (79  | )
|Employee benefits               |  |      | (53  | )    |  |   | (47  | )
|Other                           |  |      | (8   | )    |  |   | (4   | )
|                                |  |      |      |      |  |   |      |  
|                                |  | $    | (124 | )    |  | $ | (130 | )
|                                |  |      |      |      |  |   |      |  
|Deferred income tax liabilities |  | $    | (398 | )    |  | $ | (383 | )
|Deferred income tax assets      |  |      | 274  |      |  |   | 253  |  
|                                |  |      |      |      |  |   |      |  
|                                |  | $    | (124 | )    |  | $ | (130 | )
|                                |  |      |      |      |  |   |      |  

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The federal income tax returns of MichCon as a component of the MCN Energy
federal income tax returns are under audit by the Internal Revenue Service for
the years 1999 through May 31, 2001. MichCon
as a component of the DTE Energy federal income tax return for the period June
1, 2001 through December 31, 2001 is under audit.

NOTE 6  LONG-TERM DEBT AND PREFERRED SECURITIES

Long-Term Debt

Our long-term debt outstanding and weighted average interest rates of debt
outstanding at December 31 was:

|                                                        |                        |      |   |      |  |  |   |     | 
|------------------------------------------------------- | ---------------------- | ---- | - | ---- |  |  | - | --- | 
|(in Millions)                                           |                        | 2003 |   | 2002
|                                                        |                        |      |   |     
|First Mortgage Bonds, interest payable semi-annually    |                        |      |   |      |  |  |   |    
|                                                        | 7.15% series due 2006  |      | $ | 40   |  |  | $ | 40  | 
|                                                        | 7.21% series due 2007  |      |   | 30   |  |  |   | 30  | 
|                                                        | 7.06% series due 2012  |      |   | 40   |  |  |   | 40  | 
|                                                        | 8.25% series due 2014  |      |   | 80   |  |  |   | 80  | 
|                                                        | 7.6% series due 2017   |      |   |     |  |  |   | 15  | 
|                                                        | 7.5% series due 2020   |      |   |     |  |  |   | 28  | 
|                                                        | 6.75% series due 2023  |      |   |     |  |  |   | 14  | 
|                                                        | 7% series due 2025     |      |   |     |  |  |   | 40  | 
|Remarketable securities, interest payable semi-annually |                        |      |   |      |  |  |   |    
|                                                        | 6.45% series due 2038  |      |   | 75   |  |  |   | 75  | 
|Senior notes, interest payable semi-annually            |                        |      |   |      |  |  |   |    
|                                                        | 6.125% series due 2008 |      |   | 200  |  |  |   | 200 | 
|                                                        | 5.7% series due 2033   |      |   | 200  |  |  |   |    | 
|Senior notes, interest payable quarterly                |                        |      |   |      |  |  |   |    
|                                                        | 6.85% series due 2038  |      |   | 52   |  |  |   | 52  | 
|                                                        | 6.85% series due 2039  |      |   | 55   |  |  |   | 55  | 
|Other long-term debt                                    |                        |      | 2 |      |  |  | 5 |    
|Net unamortized premium                                 |                        |      |  |      |  |  | 2 |    
|Long-term capital lease obligations                     |                        |      | 1 |      |  |  | 2 |    
|                                                        |                        |      |   |      |  |  |   |     | 
|                                                        | Total                  |      | $ | 775  |  |  | $ | 678 | 
|                                                        |                        |      |   |      |  |  |   |     | 

In 2003, we redeemed various issues of long-term debt totaling $192 million.
The redeemed debt securities had an average interest rate of 6.8% and were due
in 2003 - 2038. We issued $200 million of 5.7% senior secured notes due 2033.

In 2002, we repaid $17.3 million of first mortgage bonds that matured in May
2002.

In 1998, we issued a total of $150 million of remarketable debt securities with
various interest rates. These securities are structured such that the interest
rates of the issues can be reset at various remarketing dates over the life of
the debt. In June 2003, we redeemed $75 million of the remarketable securities.
The remarketing date on the remaining $75 million is in June 2008. In the
event that a remarketing fails, we would be required to purchase these
securities.

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Our remarketable securities and senior notes are secured by fall-away
mortgage debt and, as such, are secured debt as long as our other first
mortgage bonds are outstanding and become senior unsecured debt thereafter.

Our non-utility subsidiaries have amounts outstanding under a nonrecourse
credit agreement. Under the terms of the agreement, certain alternative
variable interest rates are available at the borrowers option during the life
of the agreement. Quarterly principal payments are made, with a final
installment due November 2005. The loan is secured by a pledge of stock of the
borrowers and a security interest in certain of their assets. We may be
required to support the credit agreement through limited capital contributions
to the subsidiaries if certain cash flow and operating targets are not met. At
December 31, 2003 and 2002, $4 million and $7 million were outstanding at
weighted average interest rates of 1.6% and 2.1%, respectively.

In 2003, we terminated a variable interest rate swap agreement with notional
principal amount of $40 million issued in connection with our first mortgage
bonds.

Substantially all of the net utility property of MichCon is subject to the lien
of a Mortgage and Deed of Trust (Mortgage). Should we fail to timely pay our
indebtedness under the Mortgage, such failure will create cross defaults in the
indebtedness of DTE Energy.

Maturities and sinking fund requirements during the next five years for
long-term debt outstanding at December 31, 2003 are $3 million in 2004, $2
million in 2005, $40 million in 2006, $30 million in 2007, and $275 million in
2008.

Preferred and Preference Securities
 Authorized and Unissued

At December 31, 2003, MichCon had 7 million shares of preferred stock with a
par value of $1 per share and 4 million shares of preference stock with a par
value of $1 per share authorized, with no shares issued.

NOTE 7  SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

In October 2003, we entered into a
$162.5 million 364-day unsecured revolving facility
and a $162.5 million three-year unsecured revolving facility. These credit facilities
can be used for general corporate purposes, but are primarily intended to
provide liquidity support for our commercial paper program. These agreements
require us to maintain a debt to total capitalization ratio of no more than .65
to 1, and an earnings before interest, taxes, depreciation and amortization
to interest ratio of no less than 2 to 1. We are currently in compliance with
these financial covenants.

As of December 31, 2003, we had outstanding commercial paper of $232 million
and other short-term borrowings of $3 million. At December 31, 2002, we had
outstanding commercial paper of $120 million and other short-term borrowings of
$3 million.

The weighted average interest rates for short-term borrowings were 1.1% and
1.5% at December 31, 2003 and 2002, respectively.

NOTE 8  CAPITAL AND OPERATING LEASES

Lessee- We lease certain property under capital lease arrangements expiring at
various dates to 2008, with renewal options extending beyond that date.

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Rental expense for operating leases was $2 million in
2003, 2002 and 2001.

Lessor- We lease a portion of our pipeline system to the Vector Pipeline
Partnership through a capital lease contract that expires in 2020, with renewal
options extending for five years. The components of the net investment in the
capital lease at December 31, 2003 were as follows:

|                                         |  |   |      |  
|---------------------------------------- |  | - | ---- | -
|(in Millions)                            |  |   |      |  
|2004                                     |  | $ | 9    |  
|2005                                     |  |   | 9    |  
|2006                                     |  |   | 9    |  
|2007                                     |  |   | 9    |  
|2008                                     |  |   | 9    |  
|Thereafter                               |  |   | 107  |  
|                                         |  |   |      |  
|Total minimum future lease receipts      |  |   | 152  |  
|Residual value of leased pipeline        |  |   | 40   |  
|Less - unearned income                   |  |   | (109 | )
|                                         |  |   |      |  
|Net investment in direct financing lease |  |   | 83   |  
|Less -  current portion                  |  |   | (1   | )
|                                         |  |   |      |  
|                                         |  | $ | 82   |  
|                                         |  |   |      |  

NOTE 9  FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS

We comply with SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 133, established accounting and reporting
standards for derivative instruments and hedging activities.

Listed below are important SFAS No.
133 requirements:

|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | All derivative instruments must be recognized as assets or
liabilities and measured at fair value, unless they meet the normal
purchases and sales exemption.                                                                                                                                                                                                                                                                                                                       
| 
| |  | The accounting for changes in fair value depends
upon the purpose of the derivative instrument and whether it is
designated as a hedge and qualifies for hedge accounting.                                                                                                                                                                                                                                                                                                          
| 
| |  | Special accounting is allowed for a derivative
instrument qualifying as a hedge and designated as a hedge for the
variability of cash flow associated with a forecasted transaction.
Gain or loss associated with the effective portion of the hedge is
recorded in other comprehensive income. The ineffective portion is
recorded to earnings. Amounts recorded in other comprehensive income
will be reclassified to net income when the forecasted transaction
affects earnings.
| 
| |  | If a cash flow hedge is discontinued because  it
is likely the forecasted transaction will not occur, net gains or
losses are immediately recorded into earnings.                                                                                                                                                                                                                                                                                                                   
| 
| |  | Special accounting is allowed for a derivative
instrument qualifying as a hedge and designated as a hedge of the
changes in fair value of an existing asset, liability or firm
commitment. Gain or loss on the hedging instrument is recorded into
earnings. The gain or loss on the underlying asset, liability or firm
commitment is also recorded into earnings.                                                                                                                 



Our primary market risk exposure is associated with commodity prices and
interest rates. We have risk management policies to monitor and decrease
market risks. We use derivative instruments to manage some of the exposure.

Commodity Price Risk

We have firm-priced contracts for a substantial portion of our expected gas
supply requirements through 2004. These contracts qualify for the normal
purchases exception under SFAS No.133. Accordingly, we do not account for
such contracts as derivatives.

Credit Risk

We are exposed to credit risk if customers or counterparties do not comply with
their contractual obligations. We maintain credit policies that significantly
minimize overall credit risk. These policies include an evaluation of
potential customers and counterparties financial condition, credit rating,
collateral requirements or other credit enhancements such as letters of credit
or guarantees. We use

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standardized agreements that allow the netting of
positive and negative transactions associated with a single counterparty.

Interest Rate Risk

At December 31, 2002, we had interest rate swap agreements with notional
principal amounts totaling $40 million. This swap was terminated in August
2003. The notional principal amounts are used solely to calculate amounts to be
paid or received under the interest rate swap agreements and approximate the
principal amount of the underlying debt being hedged.

Fair Value of Financial Instruments

The fair value of financial instruments is determined by using various market
data and other valuation techniques. The estimated fair value of total
long-term debt at December 31, 2003 and 2002 was $835 million and $858 million,
respectively, compared to the carrying amount of $777 million and $775 million,
respectively.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

Personal Property Taxes

MichCon and other Michigan utilities have asserted that Michigans valuation
tables result in the substantial overvaluation of utility personal property.
Valuation tables established by the Michigan State Tax Commission (STC) are
used to determine the taxable value of personal property based on the
propertys age. In November 1999, the STC approved new valuation tables that
more accurately recognize the value of a utilitys personal property. The new
tables became effective in 2000 and are currently used to calculate property
tax expense. However, several local taxing jurisdictions have taken legal
action attempting to prevent the STC from implementing the new valuation tables
and have continued to prepare assessments based on the superseded tables. The
legal actions regarding the appropriateness of the new tables were before the
Michigan Tax Tribunal (MTT) which, in April 2002, issued its decision
essentially affirming the validity of the STCs new tables. In June 2002,
petitioners in the case filed an appeal of the MTTs decision with the Michigan
Court of Appeals. On January 20, 2004, the Michigan Court of Appeals upheld
the validity of the new tables.

We record property tax expense based on the new tables. We will seek to apply
the new tables retroactively and to ultimately settle the pending tax appeals
related to 1997 through 1999. This is a solution supported by the STC in the
past.

Environmental Matters

Former manufactured gas plant sites Prior to the construction of major
natural gas pipelines, gas for heating and other uses was manufactured from
processes involving coal, coke or oil. We own, or previously owned, 17 such
former manufactured gas plant (MGP) sites.

During the mid-1980s, we conducted preliminary environmental investigations at
former MGP sites, and some contamination related to the by-products of gas
manufacturing was discovered at each site. The existence of these sites and the
results of the environmental investigations have been reported to the Michigan
Department of Environmental Quality (MDEQ). None of these former MGP sites is
on the National Priorities List prepared by the U.S. Environmental Protection
Agency (EPA).

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We are
remediating seven of the former MGP sites and
conducting more extensive investigations at five other former MGP
sites. We received MDEQ closure of one site and a determination that we
are not a responsible party for three other sites. We received
closure from the EPA in 2002 for one site.

In 1984, we established a $12 million reserve for environmental investigation
and remediation. During 1993, we received MPSC approval of a cost deferral and
rate recovery mechanism for investigation and remediation costs incurred at
former MGP sites in excess of this reserve.

We employed outside consultants to evaluate remediation alternatives for these
sites, to assist in estimating its potential liabilities and to review its
archived insurance policies. The findings of these investigations indicate
that the estimated total expenditures for investigation and remediation
activities for these sites could range from $30 million to $170 million based
on undiscounted 1995 costs. As a result of these studies, we recorded an
additional liability and a corresponding regulatory asset of $32 million during
1995.

During 2003, 2002 and 2001, we spent
$1.5 million, $3.2 million and $4.8
million, respectively, investigating and remediating these former MGP sites.
At December 31, 2003, the reserve balance was $21.5 million,
of which $4.7 million
was classified as current. Any significant change in assumptions, such as
remediation techniques, nature and extent of contamination and regulatory
requirements, could impact the estimate of remedial action costs for the sites
and, therefore, have an effect on our financial position and cash flows.
However, we believe the cost deferral and rate recovery mechanism approved by
the MPSC will prevent environmental costs from having a material adverse impact
on our results of operations.

Formerly owned storage field In 1998, we received written notification from
ANR Pipeline Company (ANR), alleging that we have responsibility for a portion
of the costs associated with responding to environmental conditions present at
a natural gas storage field in Michigan currently owned and operated by an
affiliate of ANR. We formerly owned at least some portion of the natural gas
storage field. ANRs allegations are being evaluated to determine whether and
to what extent, if any, we may have legal responsibility for these costs.
Management does not believe this matter will have a material adverse impact on
our financial statements.

Commitments

To ensure a reliable supply of natural gas at competitive prices, we have
entered into long-term purchase and transportation contracts with various
suppliers and producers. In general, purchases are for a fixed volume at prices
that are either fixed or formulas based on market prices. We have firm purchase
commitments through 2006 for approximately 147 Bcf of gas. We expect that
sales, based on warmer-than-normal weather, will exceed our minimum purchase
commitments. We have long-term transportation contracts with various pipeline
companies expiring on various dates through the year 2011. We are committed to
pay demand charges of approximately $36 million during 2004 related to firm
transportation agreements.

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We estimate that our 2004 capital expenditures will be $139 million. We have
made certain commitments in connection with such expected capital expenditures.

Bankruptcies

We sell gas to numerous companies operating in the steel, automotive, energy
and retail industries. A number of customers have filed for bankruptcy
protection under Chapter 11 of the U.S. Bankruptcy Code. We have negotiated or
are currently involved in negotiations with each of the companies, or their
successor companies, that have filed for bankruptcy protection. We regularly
review contingent matters relating to sale contracts and record provisions for
amounts considered probable of loss. We believe our previously accrued amounts
are adequate for probable losses. The final resolution of these matters is not
expected to have a material effect on our financial statements in the period
they are resolved.

Other

We are involved in certain legal, regulatory, administrative and environmental
proceedings before various courts, arbitration panels and governmental agencies
concerning matters arising in the ordinary course of business. These
proceedings include certain contract disputes, environmental reviews and
investigations, audits, inquiries from various regulators, and pending judicial
matters. We cannot predict the final disposition of such proceedings. We
regularly review legal matters and record provisions for claims that are
considered probable of loss. The resolution of pending proceedings is not
expected to have a material effect on our operations or financial statements in
the period they are resolved.

See Note 4 for a discussion of contingencies related to Regulatory Matters.

NOTE 11  RETIREMENT BENEFITS AND TRUSTEED ASSETS

Pension Plan Benefits

We have a defined benefit retirement plan for MichCon represented employees and
participate in a defined benefit retirement plan for other DTE Energy
represented and nonrepresented employees. The plans are noncontributory, cover
substantially all employees and provide retirement benefits to MichCon
employees based on the employees years of benefit service, average final
compensation and age at retirement. Certain nonrepresented employees are
covered under cash balance benefits based on annual employer contributions and
interest credits. Currently these plans meet the full funding requirements of
the Internal Revenue Code. Accordingly, no contributions for the 2003, 2002 or
2001 plan years were made.

Effective December 31, 2001, the MCN Energy Group Retirement Plan, that covered
nonrepresented employees, merged into the DTE Energy Company Retirement Plan.
Detroit Edison operates as the sponsor of the merged DTE Energy represented and
nonrepresented plan, which is treated as a plan covering employees of various
affiliates of DTE Energy from the affiliates perspective. Accordingly, the
liabilities and assets associated with this Plan are no longer reflected in the
tables below, and the associated prepaid pension asset of $218.9 million is now
reflected as an amount due from affiliate at December 31, 2003. We are
allocated income or an expense each year as a result of our participation in
the DTE Energy Retirement Plan. The annual income for 2003 and 2002 was $30.9
million and $43.5 million, respectively. The annual cost for 2001 was $4.4
million, which included a $52.5 million charge for special termination benefits
and a $6.2 million curtailment gain associated with the early retirement window
offered during the year.

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Net pension credit for the years ended December 31 includes the following
components:

|                               |                      |      |     |      |   |      |     |    |   |   |     |    |  
|------------------------------ | -------------------- | ---- | --- | ---- | - | ---- | --- | -- | - | - | --- | -- | -
|(in Millions)                  |                      | 2003 |     | 2002 |   | 2001
|                               |                      |      |     |      |   |     
|Service Cost                   |                      | $    | 4   |      |   | $    | 3   |    |   | $ | 3   |   
|Interest Cost                  |                      |      | 14  |      |   |      | 14  |    |   |   | 14  |   
|Expected Return on Plan Assets |                      |      | (29 | )    |   |      | (33 | )  |   |   | (33 | ) 
|Amortization of                |                      |      |     |      |   |      |     |    |   |   |     |   
|                               | Net gain             |      |     |     |   |      |     | (4 | ) |   |     | (4 | )
|                               | Prior service cost   |      |     | 2    |   |      |     | 2  |   |   |     | 1  |  
|                               | Net transition asset |      |     | (1   | ) |      |     | (1 | ) |   |     | (1 | )
|                               |                      |      |     |      |   |      |     |    |   |   |     |   
|Net Pension Credit             |                      | $    | (10 | )    |   | $    | (19 | )  |   | $ | (20 | ) 
|                               |                      |      |     |      |   |      |     |    |   |   |     |   

The following table reconciles the obligations, assets and funded status of the
plans as well as the amounts recognized as prepaid pension cost in the
consolidated statement of financial position at December 31:

|                                                            |                      |             |     |             |  |   |     |    |  
|----------------------------------------------------------- | -------------------- | ----------- | --- | ----------- |  | - | --- | -- | -
|(in Millions)                                               |                      | 2003        |     | 2002       
|                                                            |                      |             |     |            
|Measurement Date                                            |                      | December 31 |     | December 31
|Accumulated Benefit Obligation at the End of the Period     |                      | $           | 239 |             |  | $ | 195 |   
|                                                            |                      |             |     |             |  |   |     |   
|Projected Benefit Obligation at the Beginning of the Period |                      | $           | 212 |             |  | $ | 182 |   
|Service Cost                                                |                      |             | 4   |             |  |   | 4   |   
|Interest Cost                                               |                      |             | 14  |             |  |   | 14  |   
|Actuarial Loss                                              |                      |             | 31  |             |  |   | 26  |   
|Benefits Paid                                               |                      |             | (14 | )           |  |   | (14 | ) 
|                                                            |                      |             |     |             |  |   |     |   
|Projected Benefit Obligation at the End of the Period       |                      | $           | 247 |             |  | $ | 212 |   
|                                                            |                      |             |     |             |  |   |     |   
|Plan Assets at Fair Value at the Beginning of the Period    |                      | $           | 274 |             |  | $ | 319 |   
|Actual Return on Plan Assets                                |                      |             | 59  |             |  |   | (32 | ) 
|Benefits Paid                                               |                      |             | (14 | )           |  |   | (13 | ) 
|                                                            |                      |             |     |             |  |   |     |   
|Plan Assets at Fair Value at the End of the Period          |                      | $           | 319 |             |  | $ | 274 |   
|                                                            |                      |             |     |             |  |   |     |   
|Funded Status of the Plans                                  |                      | $           | 72  |             |  | $ | 62  |   
|Unrecognized                                                |                      |             |     |             |  |   |     |   
|                                                            | Net loss             |             |     | 30          |  |   |     | 29 |  
|                                                            | Prior service cost   |             |     | 12          |  |   |     | 14 |  
|                                                            | Net transition asset |             |     |            |  |   |     | (1 | )
|                                                            |                      |             |     |             |  |   |     |   
|Prepaid Pension Cost                                        |                      | $           | 114 |             |  | $ | 104 |   
|                                                            |                      |             |     |             |  |   |     |   

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Assumptions used in determining the projected benefit obligation at December 31
are listed below:

|                                              |  |      |      |      |  |      |      |   |  |  |      |  
|--------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                              |  | 2003 |      | 2002 |  | 2001
|                                              |  |      |      |      |  |     
|Discount rate                                 |  |      | 6.25 | %    |  |      | 6.75 | % |  |  | 7.25 | %
|Annual increase in future compensation levels |  |      | 4.0  | %    |  |      | 4.0  | % |  |  | 4.0  | %

Assumptions used in determining net pension costs at December 31 are listed
below.

|                                                 |  |      |      |      |  |      |      |   |  |  |      |  
|------------------------------------------------ |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                                 |  | 2003 |      | 2002 |  | 2001
|                                                 |  |      |      |      |  |     
|Discount rate                                    |  |      | 6.75 | %    |  |      | 7.25 | % |  |  | 7.50 | %
|Annual increase in future compensation levels    |  |      | 4.0  | %    |  |      | 4.0  | % |  |  | 5.0  | %
|Expected long-term rate of return on Plan assets |  |      | 9.0  | %    |  |      | 9.5  | % |  |  | 9.5  | %

We employ a consistent formal process in determining the long-term rate of
return for various asset classes. We evaluate input from our consultants,
including their review of historic financial market risks and returns
and long-term historic relationships between the asset classes of equities, fixed
income and other assets, consistent with the widely accepted capital market
principle that asset classes with higher volatility generate a greater return
over the long-term. Current market factors such as inflation, interest rates,
asset class risks and asset class returns are evaluated and considered before
long-term capital market assumptions are determined. The long-term portfolio
return is also established employing a consistent formal process, with due
consideration of diversification, active investment management and rebalancing.
Peer data is reviewed to check for reasonability.

We employ a total return investment approach whereby a mix of equities, fixed
income and other investments are used to maximize the long-term return of plan
assets consistent with prudent levels of risk. The intent of this strategy is
to minimize plan expenses over the long term. Risk tolerance is established
through consideration of future plan cash flows, plan funded status, and
corporate financial considerations. The investment portfolio contains a
diversified blend of equity, fixed income and other investments. Furthermore,
equity investments are diversified across U.S. and non-U.S. stocks, growth and
value investment styles, and large and small market capitalizations. Other
assets such as private equity and absolute return funds are used judiciously to
enhance long term returns while improving portfolio diversification.
Derivatives may be used to gain market exposure in an efficient and timely
manner; however, derivatives may not be used to leverage the portfolio beyond
the market value of the underlying investments. Investment risk is measured and
monitored on an ongoing basis through annual liability measurements, periodic
asset/liability studies, and quarterly investment portfolio reviews.

Our Plans weighted-average asset allocations by asset category at December 31
are as follows:

|                  |  |      |     |      |  |  |     |  
|----------------- |  | ---- | --- | ---- |  |  | --- | -
|                  |  | 2003 |     | 2002
|                  |  |      |     |     
|Equity Securities |  |      | 67  | %    |  |  | 62  | %
|Debt Securities   |  |      | 27  |      |  |  | 31  |  
|Other             |  |      | 6   |      |  |  | 7   |  
|                  |  |      |     |      |  |  |     |  
|                  |  |      | 100 | %    |  |  | 100 | %
|                  |  |      |     |      |  |  |     |  

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Our Plans weighted-average asset target allocations by asset category at
December 31, 2003 are as follows:

|                  |  |  |     |  
|----------------- |  |  | --- | -
|Equity Securities |  |  | 65  | %
|Debt Securities   |  |  | 28  |  
|Other             |  |  | 7   |  
|                  |  |  |     |  
|                  |  |  | 100 | %
|                  |  |  |     |  

We also sponsor a defined contribution retirement savings plan for union
employees, the MichCon Investment and Stock Ownership Plan, and participate in
a defined contribution plan for nonunion employees. Effective December 31,
2001, the MCN Energy Group Savings and Stock Ownership Plan, that covered
nonunion employees of MichCon, MCN Energy and MCN Energy Enterprises, merged
into the DTE Energy Company Savings and Stock Ownership Plan. Participation in
one of these plans is available to substantially all union and nonunion
employees. We match employee contributions up to certain predefined limits
based upon the definition of eligible compensation, employee contributions and
years of credited service. The cost of these plans was $4.5 million in 2003,
$4.4 million in 2002, and $4.7 million in 2001.

Other Postretirement Benefits

We provide certain postretirement health care and life insurance benefits for
retired employees who may become eligible for these benefits while working for
us. Our policy is to fund certain trusts to meet our postretirement benefit
obligations. Separate qualified Voluntary Employees Beneficiary Association
(VEBA) trusts exist for union and nonunion employees. No contributions were
made to the VEBA trusts in 2003, 2002 or 2001.

Net postretirement cost for the years ended December 31 includes the following
components:

|                                      |                           |      |     |      |   |      |     |    |   |   |     |    |  
|------------------------------------- | ------------------------- | ---- | --- | ---- | - | ---- | --- | -- | - | - | --- | -- | -
|(in Millions)                         |                           | 2003 |     | 2002 |   | 2001
|                                      |                           |      |     |      |   |      |    
|Service Cost                          |                           | $    | 6   |      |   | $    | 5   |    |   | $ | 3   |   
|Interest Cost                         |                           |      | 20  |      |   |      | 18  |    |   |   | 18  |   
|Expected Return on Plan Assets        |                           |      | (14 | )    |   |      | (17 | )  |   |   | (18 | ) 
|Amortization of                       |                           |      |     |      |   |      |     |    |   |   |     |   
|                                      | Net gain                  |      |     | (2   | ) |      |     | (6 | ) |   |     | (6 | )
|                                      | Prior service cost        |      |     | 1    |   |      |     | 1  |   |   |     |   |  
|                                      | Net transition obligation |      |     | 9    |   |      |     | 10 |   |   |     | 12 |  
|Special Termination Benefits (Note 3) |                           |      |    |      |   |      |    |    |   |   | 23  |   
|Curtailment/Settlement Recognition    |                           |      |    |      |   |      |    |    |   |   | 5   |   
|                                      |                           |      |     |      |   |      |     |    |   |   |     |   
|Net Postretirement Cost               |                           | $    | 20  |      |   | $    | 11  |    |   | $ | 37  |   
|                                      |                           |      |     |      |   |      |     |    |   |   |     |   

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The following table reconciles the obligations, assets and funded status of the
plans including amounts recorded as accrued postretirement cost in the
consolidated statement of financial position at December 31:

|                                                                             |                           |             |      |             |  |   |      |     | 
|---------------------------------------------------------------------------- | ------------------------- | ----------- | ---- | ----------- |  | - | ---- | --- | 
|(in Millions)                                                                |                           | 2003        |      | 2002       
|                                                                             |                           |             |      |             | 
|Measurement Date                                                             |                           | December 31 |      | December 31
|Accumulated Postretirement Benefit Obligation at the Beginning of the Period |                           | $           | 352  |             |  | $ | 255  |    
|Service Cost                                                                 |                           |             | 6    |             |  |   | 4    |    
|Interest Cost                                                                |                           |             | 20   |             |  |   | 18   |    
|Actuarial Loss                                                               |                           |             | 38   |             |  |   | 93   |    
|Benefits Paid                                                                |                           |             | (18  | )           |  |   | (18  | )  
|Plan Amendments                                                              |                           |             | (19  | )           |  |   |     |    
|                                                                             |                           |             |      |             |  |   |      |    
|Accumulated Postretirement Benefit Obligation at the End of the Period       |                           | $           | 379  |             |  | $ | 352  |    
|                                                                             |                           |             |      |             |  |   |      |    
|Plan Assets at Fair Value at the Beginning of the Period                     |                           | $           | 111  |             |  | $ | 149  |    
|Actual Return on Plan Assets                                                 |                           |             | 23   |             |  |   | (22  | )  
|Benefits Paid                                                                |                           |             | (17  | )           |  |   | (16  | )  
|                                                                             |                           |             |      |             |  |   |      |    
|Plan Assets at Fair Value at the End of the Period                           |                           | $           | 117  |             |  | $ | 111  |    
|                                                                             |                           |             |      |             |  |   |      |    
|Funded Status of the Plans                                                   |                           | $           | (262 | )           |  | $ | (241 | )  
|Unrecognized                                                                 |                           |             |      |             |  |   |      |    
|                                                                             | Net loss                  |             |      | 75          |  |   |      | 44  | 
|                                                                             | Prior service cost        |             |      | 7           |  |   |      | 9   | 
|                                                                             | Net transition obligation |             |      | 84          |  |   |      | 111 | 
|                                                                             |                           |             |      |             |  |   |      |    
|Accrued Postretirement Liability                                             |                           | $           | (96  | )           |  | $ | (77  | )  
|                                                                             |                           |             |      |             |  |   |      |    

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Assumptions used in determining the projected benefit obligation at December 31
are listed below:

|              |  |      |      |      |  |      |      |   |  |  |      |  
|------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|              |  | 2003 |      | 2002 |  | 2001
|              |  |      |      |      |  |     
|Discount rate |  |      | 6.25 | %    |  |      | 6.75 | % |  |  | 7.25 | %

Assumptions used in determining benefit costs at December 31 are listed below:

|                                                 |  |      |      |      |  |      |      |   |  |  |      |  
|------------------------------------------------ |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                                 |  | 2003 |      | 2002 |  | 2001
|                                                 |  |      |      |      |  |     
|Discount rate                                    |  |      | 6.75 | %    |  |      | 7.25 | % |  |  | 7.50 | %
|Expected long-term rate of return on Plan assets |  |      | 9.0  | %    |  |      | 9.5  | % |  |  | 9.5  | %

Benefit costs were calculated assuming health care cost trend rates beginning
at 9% for 2004 and decreasing to 5% in 2009 and thereafter for persons under
age 65 and decreasing from 8% to 5% for persons age 65 and over. A one
percentage point increase in the health care cost trend rates would have
increased the aggregate of the service cost and interest cost components of
benefit costs by $4 million. The accumulated benefit obligation would have
increased by $36 million at December 31, 2003. A one percentage point decrease
in the health care cost trend rates would have decreased the total of the
service cost and interest cost components of benefit costs by $3 million and
would have decreased the accumulated benefit obligation by $32 million at
December 31, 2003.

We amended our postretirement health care and life insurance plans to
reduce benefits, modify eligibility criteria and increase retiree
co-pays. The changes reduced the postretirement benefit obligation by
$19 million, the 2003 postretirement costs by $3 million and the
expected 2004 postretirement costs by $5 million.

We employ a consistent formal process in determining the long-term rate of
return for various asset classes. We evaluate input from our consultants,
including their review of historic financial market risks and returns and
long-term historic relationships between the asset classes of equities, fixed
income and other assets, consistent with the widely accepted capital market
principle that asset classes with higher volatility generate a greater return
over the long-term. Current market factors such as inflation, interest rates,
asset class risks and asset class returns are evaluated and considered before
long-term capital market assumptions are determined. The long-term portfolio
return is also established employing a consistent formal process, with due
consideration of diversification, active investment management and rebalancing.
Peer data is reviewed to check for reasonability.

We employ a total return investment approach whereby a mix of equities, fixed
income and other investments are used to maximize the long-term return of plan
assets consistent with a prudent level of risk. The intent of this strategy is
to minimize plan expenses over the long term. Risk tolerance is established
through consideration of future plan cash flows, plan funded status, and
corporate financial considerations. The investment portfolio contains a
diversified blend of equity, fixed income and other investments. Furthermore,
equity investments are diversified across U.S. and non-U.S. stocks, growth and
value investment styles, and large and small market capitalizations. Other
assets such as private equity and absolute return funds are used judiciously to
enhance long term returns while improving portfolio diversification.
Derivatives may be used to gain market exposure in an efficient and timely
manner; however, derivatives may not be used to leverage the portfolio beyond
the market value of the underlying investments. Investment risk is measured and
monitored on an ongoing basis through annual liability measurements, periodic
asset/liability studies, and quarterly investment portfolio reviews.

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##### Table of Contents



Our Plans weighted-average asset allocations by asset category at December 31
are as follows:

|                  |  |      |     |      |  |  |     |  
|----------------- |  | ---- | --- | ---- |  |  | --- | -
|                  |  | 2003 |     | 2002
|                  |  |      |     |     
|Equity Securities |  |      | 66  | %    |  |  | 67  | %
|Debt Securities   |  |      | 34  |      |  |  | 33  |  
|                  |  |      |     |      |  |  |     |  
|                  |  |      | 100 | %    |  |  | 100 | %
|                  |  |      |     |      |  |  |     |  

Our Plans weighted-average asset target allocations by asset category at
December 31, 2003 are as follows:

|                  |  |  |     |  
|----------------- |  |  | --- | -
|Equity Securities |  |  | 65  | %
|Debt Securities   |  |  | 28  |  
|Other             |  |  | 7   |  
|                  |  |  |     |  
|                  |  |  | 100 | %
|                  |  |  |     |  

In December 2003, the Medicare Prescription Drug, Improvement and Modernization
Act (Act) was signed into law. This law provides for a federal subsidy to
sponsors of retiree health care benefit plans that provide a benefit that is at
least actuarially equivalent to the benefit established by law. We have elected
to defer the provisions of the Act, and our measures of the accumulated
postretirement benefit obligation or net periodic postretirement benefit cost
do not reflect the effects of the Act, if any. Specific authoritative guidance, when
issued by the FASB, could require us to re-determine the impact of the Act and
change previously reported information.

Grantor Trust

We maintain a Grantor Trust which invests in life insurance contracts and
income securities. Employees and retirees have no right, title or interest in
the assets of the Grantor Trust, and we can revoke the trust subject to
providing the MPSC with prior notification. We record our investment
at market value and account for unrealized gains and losses in the
Consolidated Statement of Operations.

NOTE 12- RELATED PARTY TRANSACTIONS

We have transactions with affiliated companies to provide transportation and
storage services and for the purchase of natural gas. Under a service agreement
with DTE Energy, various DTE affiliates, including MichCon provide corporate support services and various financial,
auditing, tax, legal, treasury and cash management, human resources,
information technology, regulatory and other services, which were billed to DTE
Energy corporate. These administrative and general expenses along with
interest and financing costs were then billed down to various subsidiaries of
DTE Energy, including MichCon. The net amount of such expenses included in the
consolidated statement of operations was $106 million in 2003,
$68 million in
2002 and $45 million in 2001. The increase in 2003 corporate expenses is
related primarily to costs incurred by an affiliate to upgrade our customer
service operations and higher benefit costs associated with corporate
support staff.

In addition, we had intercompany
revenue of $14 million, $13 million and $7 million in 2003, 2002 and
2001, respectively. We had intercompany expenses of $29 million, $15
million and $97 million in 2003, 2002 and 2001, respectively. Gas
purchases of approximately $69 million are included in the 2001 amount.

Our accounts receivable from affiliated companies totaled $70 million and $53
million, and accounts payable to affiliated companies totaled $25 million and
$19 million at December 31, 2003 and 2002, respectively.

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We declared dividends of $62.5 million
and paid dividends of $50 million to our parent company in 2003. We declared and
paid dividends of $75 million
in 2001. We received a $200 million capital contribution from our parent
company in 2002.

NOTE 13  UNUSUAL CHARGES

Property Write-down

In June 2002, we recorded a $33 million pre-tax ($22 million net of taxes)
charge from the planned sale of our former headquarters. An additional $5
million pre-tax ($4 million net of taxes) charge was recorded in June 2003 to
further reduce the carrying value of the property to fair value based on the
estimated selling price less cost to sell. The carrying value of the property
was reduced to fair value based on the estimated selling price less cost to
sell.

Contract Loss

In June 2002, we recorded a $15 million pre-tax ($10 million net of taxes)
charge related to the termination of a contract for computer services with an
unrelated third party.

Loss on Sale of Assets

In the 2003 fourth quarter, we recorded a $3 million pre-tax ($2 million net of
taxes) loss from the sale of our former headquarters.

Joint Ventures

During 2001, we recorded a
$9 million pre-tax ($6 million net of taxes) estimated
impairment of our investment in Harbortown, a residential community on the Detroit riverfront. The
carrying value of the investment was reduced to fair value based on the
estimated selling price less cost to sell. In the 2003 fourth quarter, we
recorded a $6 million pre-tax ($4 million net of taxes) gain from the sale of
our interests in a series of partnerships.

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NOTE 14  SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

Due to the seasonal nature of MichCons business, revenues and net income tend
to be higher in the first and fourth quarters of the calendar year.

|                        |  |         |     |         |  |         |     |         |  |      |     |   |  |   |     |  |  |   |       | 
|----------------------- |  | ------- | --- | ------- |  | ------- | --- | ------- |  | ---- | --- | - |  | - | --- |  |  | - | ----- | 
|                        |  | First   |     | Second  |  | Third   |     | Fourth  |  |      |     |  
|(in Millions)           |  | Quarter |     | Quarter |  | Quarter |     | Quarter |  | Year
|                        |  |         |     |         |  |         |     |         |  |     
|2003                    |  |         |     |         |  |         |     |         |  |      |     |   |  |   |     |  |  |   |       | 
|Operating Revenues      |  | $       | 652 |         |  | $       | 284 |         |  | $    | 142 |   |  | $ | 414 |  |  | $ | 1,492 | 
|Operating Income (Loss) |  | $       | 111 |         |  | $       | (5  | )       |  | $    | (42 | ) |  | $ | 26  |  |  | $ | 90    | 
|Net Income (Loss)       |  | $       | 75  |         |  | $       | (11 | )       |  | $    | (37 | ) |  | $ | 18  |  |  | $ | 45    | 
|2002                    |  |         |     |         |  |         |     |         |  |      |     |   |  |   |     |  |  |   |       | 
|Operating Revenues      |  | $       | 590 |         |  | $       | 235 |         |  | $    | 117 |   |  | $ | 370 |  |  | $ | 1,312 | 
|Operating Income (Loss) |  | $       | 97  |         |  | $       | (40 | )       |  | $    | (24 | ) |  | $ | 42  |  |  | $ | 75    | 
|Net Income (Loss)       |  | $       | 54  |         |  | $       | (34 | )       |  | $    | (20 | ) |  | $ | 20  |  |  | $ | 20    | 

46



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##### Table of Contents






Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.




Item 9A. Controls and Procedures

(a) Evaluation of disclosure controls and procedures

The Companys Chief Executive Officer and Chief Financial Officer have
evaluated the effectiveness of the Companys disclosure controls and procedures
(as defined in Exchange Act Rules 13a  15(e) and 15d  15(e)) as of December
31, 2003, which is the end of the period covered by this report, and have
concluded that such controls and procedures are effectively designed to ensure
that required information disclosed by the Company in reports that it files or
submits under the Act is recorded, processed, summarized and reported within
the time periods specified in the Commissions rules and forms.




Part III




Item 10. Directors and Executive Officers of the Registrant




Item 11. Executive Compensation




Item 12. Security Ownership of Certain Beneficial Owners and Management




Item 13. Certain Relationships and Related Transactions

All omitted per general instruction I (2) (c) of Form 10-K for wholly owned
subsidiaries (reduced disclosure format).




Item 14. Principal Accountant Fees and Services

For the years ended December 31, 2003 and 2002, professional services were
performed by Deloitte & Touche LLP, the member firms of Deloitte Touche
Tohmatsu, and their respective affiliates (collectively, Deloitte).
The following table presents fees for professional services rendered by
Deloitte for the audit of MichCons annual financial statements for the years
ended December 31, 2002 and December 31, 2003, and fees billed for other
services rendered by Deloitte during those periods.

2002
    
    2003Audit fees (1)
    
    $
    537,419
    
    
    $
    788,736Audit related fees

    
    
    
    
    
    Tax fees
    
    
    
    
    
    
    All other fees
    
    
    
    
    
    
    Total
    
    $
    537,419
    
    
    $
    788,736




|(1) |  | Represents the aggregate fees billed for the audit of MichCons
annual financial statements and for the reviews of the financial
statements included in MichCons Quarterly Reports on Form 10-Q.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|The above listed fees were pre-approved by the DTE Energy audit
committee.
|--------------------------------------------------------------------------

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##### Table of Contents






Part IV




Item 15. Exhibits, Financial Statement Schedule, and Reports on Form 8-K

(a)  The following documents are filed as part of this Annual Report on Form
10-K.



| | (1) |  | Consolidated financial statements.
See Item 8  Financial Statements
and Supplementary Data.
| | --- |  | ----------------------------------------------------------------------------------------------
|
| | (2) |  | Financial statement schedule. See
Item 8  Financial Statements and
Supplementary Data.     
|
| | (3) |  | Exhibits.                                                                                     

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  | 
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |  |  | 
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  | 
|(i)         |  | Exhibits filed herewith.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|12-4        |  | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|23-4        |  | Consent of Deloitte & Touche LLP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|31-5        |  | Chief Executive Officer Section 302 Form 10-K Certification of Periodic Report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|31-6        |  | Chief Financial Officer Section 302 Form 10-K Certification of Periodic Report.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(ii)        |  | Exhibits incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3-1         |  | Restated Articles of Incorporation (Exhibit 3-1 to Form 10-Q for quarter ended March
31, 1993, file number 1-7310).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3-2         |  | By-Laws (Exhibit 3-2 to Form 10-Q for quarter ended March 31, 1993, file number 1-7310).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|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); Second Supplemental Indenture dated as of June 9, 1999 (Exhibit 4-1 to June 4,
1999 Form 8-K); and Third Supplemental Indenture dated as of August 15, 2001 (Exhibit
4-2 to Form 10-Q for quarter ended September 30, 2001).                                                                                                                                                                                                                                                                                                                                                  
|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|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 dates 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

48



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|            |  |                                                                                                                                                                                                                                                                                                 |  |  |  | 
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | 
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                     |  |  |  | 
|            |  |                                                                                                                                                                                                                                                                                                 |  |  |  | 
|            |  | (Exhibit 4-2 to Registration
Statement No. 333-16285); Thirty-fifth Supplemental Indenture, dated as of June 18,
1998 (Exhibit 4-2 to June 18, 1998 Form 8-K); and Mortgage Supplemental Indenture dated
as of August 15, 2001 (Exhibit 4-3 to Form 10-Q for quarter ended September 30, 2001).
|            |  |                                                                                                                                                                                                                                                                                                
|4-3         |  | Fourth Supplemental Indenture, dated as of February 15, 2003, establishing the 5.7%
Senior Notes, Series A due 2033 (Exhibit 4-3 to Form 10-Q for quarter ended March 31,
2003).                                                                                                               
|            |  |                                                                                                                                                                                                                                                                                                
|4-4         |  | Thirty-seventh Supplemental Indenture, dated as of February 15, 2003, establishing the
5.7% collateral bonds due 2033 (Exhibit 4-4 to Form 10-Q for quarter ended March 31,
2003).                                                                                                             
|            |  |                                                                                                                                                                                                                                                                                                
|10-1        |  | MichCon Investment and Stock Ownership Plan, as amended (Exhibit 10-12 to 1998 Form
10-K).                                                                                                                                                                                                     
|            |  |                                                                                                                                                                                                                                                                                                
|99-1        |  | 364-Day Credit Agreement dated as of October 24, 2003 ($162.5 million) (Exhibit 99-11
to Form 10-Q for quarter ended September 30, 2003).                                                                                                                                                      
|            |  |                                                                                                                                                                                                                                                                                                
|99-2        |  | Three-Year Credit Agreement dated as of October 24, 2003 ($162.5 million) (Exhibit
99-12 to Form 10-Q for quarter ended September 30, 2003).                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                                                
|(iii)       |  | Exhibits furnished herewith.                                                                                                                                                                                                                                                                   
|            |  |                                                                                                                                                                                                                                                                                                
|32-5        |  | Chief Executive Officer Section 906 Form 10-K Certification of Periodic Report.                                                                                                                                                                                                                
|            |  |                                                                                                                                                                                                                                                                                                
|32-6        |  | Chief Financial Officer Section 906 Form 10-K Certification of Periodic Report.                                                                                                                                                                                                                

(b)  Reports on Form 8-K.



| |                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------
| | During the quarterly period ended December 31, 2003, we filed Current
Reports on Form 8-K covering matters, as follows:



| |                                                                                                               
| | --------------------------------------------------------------------------------------------------------------
| | Item 7. Exhibits and Item 12. Results of Operations and Financial
Conditions filed and dated November 7, 2003.

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MICHIGAN CONSOLIDATED GAS
COMPANY  AND SUBSIDIARIES
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

|                                                                                                                                    |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |    | 
|----------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | --------- | ---------- | ------ |  | --------- | --------------------- | -------- | -------------- | --------- | ------------- | - | ------- |  | - | -- |  |  | - | -- | 
|(in Millions)                                                                                                                       |                                 |           |            |        |  | Additions |                       |          |                |           |               |   |         | 
|                                                                                                                                    |                                 |           |            |        |  |           |                       |          |                |           |               |   |         | 
|                                                                                                                                    |                                 |           |            |        |  |           | Provisions charged to |          | Deductions     |           |               |   |        
|                                                                                                                                    |                                 |           |            |        |  |           |                       |          | for Purposes   |           |               |   |        
|                                                                                                                                    |                                 |           | Balance at |        |  |           |                       |          | Utility Plant/ |           | for Which the |   | Balance
|                                                                                                                                    |                                 |           | Beginning  |        |  |           |                       |          | Regulatory     |           | Reserves Were |   | at End 
|Description                                                                                                                         |                                 | of Period |            | Income |  | Asset     |                       | Provided |                | of Period
|                                                                                                                                    |                                 |           |            |        |  |           |                       |          |                |          
|Year Ended December 31, 2003                                                                                                        |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |   
|Reserve deducted from Assets in
Consolidated Statement of Financial Position:                                                       |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |   
|                                                                                                                                    | Allowance for doubtful accounts |           | $          | 27     |  |           | $                     | 39       |                |           | $             |  |         |  | $ | 23 |  |  | $ | 43 | 
|                                                                                                                                    |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |    | 
|Reserve
included in Current Liabilities - Other
and in Accrued Environmental Costs
in Consolidated Statement of Financial Position: |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |   
|                                                                                                                                    | Environmental                   |           | $          | 22     |  |           | $                     |         |                |           | $             |  |         |  | $ | 1  |  |  | $ | 21 | 
|                                                                                                                                    |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |    | 
|Year Ended December 31, 2002                                                                                                        |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |   
|Reserve deducted from Assets in
Consolidated Statement of Financial Position:                                                       |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |   
|                                                                                                                                    | Allowance for doubtful accounts |           | $          | 21     |  |           | $                     | 21       |                |           | $             |  |         |  | $ | 15 |  |  | $ | 27 | 
|                                                                                                                                    |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |    | 
|Reserve
included in Current Liabilities - Other
and in Accrued Environmental Costs
in Consolidated Statement of Financial Position: |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |   
|                                                                                                                                    | Environmental                   |           | $          | 25     |  |           | $                     |         |                |           | $             |  |         |  | $ | 3  |  |  | $ | 22 | 
|                                                                                                                                    |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |    | 
|Year Ended December 31, 2001                                                                                                        |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |   
|Reserve deducted from Assets in
Consolidated Statement of Financial Position:                                                       |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |   
|                                                                                                                                    | Allowance for doubtful accounts |           | $          | 19     |  |           | $                     | 16       |                |           | $             |  |         |  | $ | 14 |  |  | $ | 21 | 
|                                                                                                                                    |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |    | 
|Reserve
included in Current Liabilities - Other
and in Accrued Environmental Costs
in Consolidated Statement of Financial Position: |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |   
|                                                                                                                                    | Environmental                   |           | $          | 30     |  |           | $                     |         |                |           | $             |  |         |  | $ | 5  |  |  | $ | 25 | 
|                                                                                                                                    |                                 |           |            |        |  |           |                       |          |                |           |               |   |         |  |   |    |  |  |   |    | 

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Annual Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

|                    |  |  |                                                |                                                                              |  | 
|------------------- |  |  | ---------------------------------------------- | ---------------------------------------------------------------------------- |  | 
|                    |  |  | MICHIGAN CONSOLIDATED GAS COMPANY
(Registrant) |                                                                             
|Date: March 1, 2004 |  |  | By:                                            | /s/ DANIEL G. BRUDZYNSKI                                                     |  | 
|                    |  |  |                                                |                                                                              | 
|                    |  |  |                                                | Daniel G. Brudzynski
Chief Accounting Officer,
Vice President and Controller |  | 

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

|   |  |                                                                                                                                         
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|By |  | /s/ ANTHONY F. EARLEY, JR.

Anthony F. Earley, Jr.
Chairman of the Board,
Chief Executive Officer, President and
Chief Operating Officer
|   |  |                                                                                                                                         
|By |  | /s/ SUSAN M. BEALE

Susan M. Beale
Director, Vice President and Corporate
Secretary                                                     
|   |  |                                                                                                                                         
|By |  | /s/ DAVID E. MEADOR

David E. Meador
Director                                                                                           

Date March 1, 2004

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EXHIBIT INDEX

|            |  |                                                                                                                       
|----------- |  | ----------------------------------------------------------------------------------------------------------------------
|EXHIBIT NO. |  | DESCRIPTION                                                                                                           
|12-4        |  | Computation of Ratio of Earnings to Fixed Charges.                                                                    
|            |  |                                                                                                                       
|23-4        |  | Consent of Deloitte & Touche LLP.                                                                                     
|            |  |                                                                                                                       
|31.5        |  | Certification of Chief Executive Officer pursuant to Section 302                                                      
|            |  |                                                                                                                       
|31.6        |  | Certification of Chief Financial Officer pursuant to Section 302                                                      
|            |  |                                                                                                                       
|32.5        |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|            |  |                                                                                                                       
|32.6        |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002