##### Table of Contents



UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 ANNUAL
REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2006
 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
  Michigan
(State or other jurisdiction of 
incorporation or organization)
    
    38-0478040
(I.R.S. Employer
Identification No.)2000 2ndAvenue, Detroit, Michigan
(Address of principal executive offices)
    
    48226-1279
(Zip Code)
 313-235-4000   Securities registered pursuant to Section 12(b) of the Act:   Securities registered pursuant to Section 12(g) of the Act:
 Yes o No þ
 Yes o No þ
 Yes þ No o
 o
  Large accelerated filer o Accelerated filer o Non-accelerated filer þ
 Yes o No þ
  DOCUMENTS INCORPORATED BY REFERENCE




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##### 



Michigan Consolidated Gas Company
 Annual Report on Form 10-K  Year Ended December 31, 2006
 Table of Contents
 PageDefinitions
    
    
    1Forward-Looking Statements
    
    
    3Part IItems 1., 1A., 1B. &2. Business, Risk Factors, Unresolved Staff Comments and Properties
    
    
    4Item 3.
    
    Legal Proceedings
    
    
    9Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    10Part IIItem 5.
    
    Market for
Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    10Item 6.
    
    Selected Financial Data
    
    
    10Item 7.
    
    Managements Narrative Analysis of Results of Operations
    
    
    11Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    13Item 8.
    
    Financial Statements and Supplementary Data
    
    
    14Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    49Item 9A.
    
    Controls and Procedures
    
    
    49Item 9B.
    
    Other Information
    
    
    49Part IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    49Item 11.
    
    Executive Compensation
    
    
    49Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    49Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    49Item 14.
    
    Principal Accountant Fees and Services
    
    
    50Part IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    51Signatures
    
    
    55Computation of Ratio of Earnings to Fixed ChargesConset of Deloitte & Touche LLPSection 302 Certification of Chief Executive OfficerSection 302 Certification of Chief Financial OfficerSection 906 Certification of Chief Executive OfficerSection 906 Certification of Chief Financial Officer




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Definitions
 Customer Choice
    
    Statewide initiative giving customers in
Michigan the option to choose alternative
suppliers for gas.CTA
    
    Costs to achieve, consisting of project
management, consultant support and employee
severance, related to the Performance
Excellence Process.DTE Energy
    
    DTE Energy Company, directly or indirectly,
the parent of The Detroit Edison Company,
MichCon and numerous non-utility subsidiaries.End User Transportation
    
    A gas delivery service historically provided
to large-volume commercial and industrial
customers who purchase natural gas directly
from producers or brokerage companies. Under
MichCons Customer Choice Program that began
in 1999, this service is also provided to
residential customers and small-volume
commercial and industrial customers.Enterprises
    
    DTE Enterprises Inc., a wholly-owned
subsidiary of DTE Energy and indirectly the
parent of MichCon.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, 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.MGP
    
    Manufactured Gas PlantMichCon
    
    Michigan Consolidated Gas Company, an
indirect, wholly-owned natural gas
distribution and intrastate transmission
subsidiary of Enterprises.MPSC
    
    Michigan Public Service CommissionSFAS
    
    Statement of Financial Accounting Standards
 1




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Bcf
    
    Billion cubic feet of gasMcf
    
    Thousand cubic feet of gasMMcf
    
    Million cubic feet of gas/d
    
    Added to various units of measure to denote
units per day
 2




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Forward-Looking Statements
  
    
    the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers;
    
    economic climate and population growth or decline in the geographic areas where we do business;
    
    environmental issues, laws, regulations, and the cost of remediation and compliance;
    
    implementation of the gas Customer Choice program;
    
    impact of gas utility restructuring in Michigan, including legislative amendments;
    
    employee relations and the impact of collective bargaining agreements;
    
    access to capital markets and capital market conditions and the results of other financing efforts which can be
affected by credit agency ratings;
    
    the timing and extent of changes in interest rates;
    
    the level of borrowing;
    
    changes in the cost and availability of natural gas;
    
    effects of competition;
    
    impact of regulation by the MPSC and other applicable governmental proceedings and regulations, including any
associated impact on rate structures;
    
    changes in and application of federal, state and local tax laws or their interpretations, including the Internal
Revenue Code, regulations, rulings, court proceedings and audits;
    
    the ability to recover costs through rate increases;
    
    the availability, cost, coverage and terms of insurance;
    
    the cost of protecting assets against, or damage due to, terrorism;
    
    changes in and application of accounting standards and financial reporting regulations;
    
    changes in federal or state laws or their interpretation with respect to regulation, energy policy and other business
issues;
    
    uncollectible accounts receivable;
    
    binding arbitration, litigation and related appeals; and
    
    changes in the economic and financial viability of our suppliers and customers, and the continued ability of such
parties to perform their obligations to the Company.
  3




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##### Table of Contents



Part I
 
 Items 1., 1A. & 2. Business, Company Risk Factors and Properties
 Description
    Revenue by Service(in Millions)
    
    2006
    
    
    2005
    
    
    2004Gas Sales
    
    $
    1,509
    
    
    $
    1,823
    
    
    $
    1,401End User Transportation
    
    
    135
    
    
    
    134
    
    
    
    119Intermediate Transportation
    
    
    64
    
    
    
    56
    
    
    
    55Other
    
    
    103
    
    
    
    85
    
    
    
    70$
    1,811
    
    
    $
    2,098
    
    
    $
    1,645
 
    
    Gas sales Includes the sale and delivery of natural gas
primarily to residential and small-volume commercial and
industrial customers.
    
    End user transportation 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 brokers and
utilize our pipeline network to transport the gas to their
facilities or homes.
    
    Intermediate transportation 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 gas storage, providing
appliance maintenance, facility development and other
energy-related services.
  4




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Natural Gas Supply
   Properties
    5




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##### Table of Contents



Availability (MMcf/d)
    
    Contract expirationPanhandle Eastern Pipeline Company
    
    
    75
    
    
    
    2009Trunkline Gas Company
    
    
    10
    
    
    
    2009Viking Gas Transmission Company
    
    
    50
    
    
    
    2010TransCanada PipeLines Limited
    
    
    50
    
    
    
    2010Great Lakes Gas Transmission L.P.
    
    
    30
    
    
    
    2011ANR Pipeline Company
    
    
    245
    
    
    
    2011Vector Pipeline L.P.
    
    
    50
    
    
    
    2012
  Regulation
     Energy Assistance Program
  Strategy and Competition
  6




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ENVIRONMENTAL MATTERS
   ( in Millions)MGP Sites
    
    $
    38Other Clean Up Sites
    
    
    1Estimated total expenditures
    
    $
    39Estimated 2007 expenditures
    
    $
    4
   Note
    
    Title4
    
    
    Regulatory Matters10
    
    
    Commitments and Contingencies
 7




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EMPLOYEES
  Item 1A. Company Risk Factors
  Weather significantly affects operations .
 We are subject to rate regulation
 Adverse changes in our credit ratings may negatively affect us.
 Our ability to access capital markets at attractive interest rates is important.
 Regional and national economic conditions can have an unfavorable impact on us.
 Environmental laws and liability may be costly.
  8




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The supply of natural gas may impact our financial results.
 A work interruption may adversely affect us.
 Michigan tax reform may be costly
 We may not be fully covered by insurance.
 Terrorism could affect our business
 Failure to successfully implement new processes and information systems could interrupt our
operations.
 Benefits of the Performance Excellence Process to the Company could be less than the Company has
projected.
 Item 1B. Unresolved Staff Comments
  
 Item 3. Legal Proceedings
  9




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Note
    
    Title4
    
    
    Regulatory Matters10
    
    
    Commitments and Contingencies
 
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Part II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
   
 Item 6. Selected Financial Data
  10




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Item 7. Managements Narrative Analysis of Results of Operations
   Factors impacting income:
  Increase (Decrease) in Income Statement Components Compared to Prior Year
 (in Millions)
    
    2006
    
    
    2005Operating revenues
    
    $
    (287
    )
    
    $
    453Cost of gas
    
    
    (328
    )
    
    
    407Gross margin
    
    
    41
    
    
    
    46Operation and maintenance
    
    
    10
    
    
    
    24Depreciation and amortization
    
    
    (2
    )
    
    
    (11
    )Taxes other than income
    
    
    11
    
    
    
    (6
    )Asset (gains) and losses, net
    
    
    (48
    )
    
    
    50Other (income) and deductions
    
    
    5
    
    
    
    Income tax provision (benefit)
    
    
    26
    
    
    
    (5
    )Net income
    
    $
    39
    
    
    $
    (6
    )
 Gross margins
 11




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##### Table of Contents



(in Millions)
    
    2006
    
    
    2005
    
    
    2004Operating RevenuesGas Sales
    
    $
    1,509
    
    
    $
    1,823
    
    
    $
    1,401End User Transportation
    
    
    135
    
    
    
    134
    
    
    
    1191,644
    
    
    
    1,957
    
    
    
    1,520Intermediate Transportation
    
    
    64
    
    
    
    56
    
    
    
    55Other
    
    
    103
    
    
    
    85
    
    
    
    70$
    1,811
    
    
    $
    2,098
    
    
    $
    1,645Gas Markets (Bcf)Gas Sales
    
    
    135
    
    
    
    164
    
    
    
    169End User Transportation
    
    
    136
    
    
    
    157
    
    
    
    145271
    
    
    
    321
    
    
    
    314Intermediate Transportation
    
    
    372
    
    
    
    432
    
    
    
    536643
    
    
    
    753
    
    
    
    850
  Operation and maintenance
 Asset (gains) and losses, net
 Income taxes expense
 Other
income and deductions
 Outlook
 12




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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Commodity Price Risk
   Credit Risk
 Bankruptcies
  Other
  Interest Rate Risk
  13




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Item 8. Financial Statements and Supplementary Data
 PageReport of Independent Registered Public Accounting Firm
    
    
    15Consolidated Statement of Operations
    
    
    16Consolidated Statement of Financial Position
    
    
    17Consolidated Statement of Cash Flows
    
    
    19Consolidated Statement of Changes in Shareholders Equity and Comprehensive Income
    
    
    20Notes to Consolidated Financial Statements
    
    
    21Schedule II  Valuation and Qualifying Accounts
    
    
    54
 14




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 15




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MICHIGAN CONSOLIDATED GAS COMPANY
 
 CONSOLIDATED STATEMENT OF OPERATIONS
 Year Ended December 31(in Millions)
    
    2006
    
    
    2005
    
    
    2004Operating Revenues
    
    $
    1,811
    
    
    $
    2,098
    
    
    $
    1,645Operating ExpensesCost of gas
    
    
    1,127
    
    
    
    1,455
    
    
    
    1,048Operation and maintenance
    
    
    421
    
    
    
    411
    
    
    
    387Depreciation and amortization
    
    
    95
    
    
    
    97
    
    
    
    108Taxes other than income
    
    
    53
    
    
    
    42
    
    
    
    48Asset (gains) and losses, net
    
    
    
    
    
    
    48
    
    
    
    (2
    )1,696
    
    
    
    2,053
    
    
    
    1,589Operating Income
    
    
    115
    
    
    
    45
    
    
    
    56Other (Income) and DeductionsInterest expense
    
    
    67
    
    
    
    57
    
    
    
    57Interest income
    
    
    (12
    )
    
    
    (10
    )
    
    
    (9
    )Other income
    
    
    (8
    )
    
    
    (4
    )
    
    
    (5
    )Other expenses
    
    
    4
    
    
    
    3
    
    
    
    351
    
    
    
    46
    
    
    
    46Income (Loss) Before Income Taxes
    
    
    64
    
    
    
    (1
    )
    
    
    10Income Tax Provision (Benefit) (Note 5)
    
    
    12
    
    
    
    (14
    )
    
    
    (9
    )Net Income
    
    $
    52
    
    
    $
    13
    
    
    $
    19
  16




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MICHIGAN CONSOLIDATED GAS COMPANY
 
 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
 December 31(in Millions)
    
    2006
    
    
    2005ASSETSCurrent AssetsCash and cash equivalents
    
    $
    1
    
    
    $
    7Accounts
receivable (less allowance for doubtful accounts
of $96 and $78, respectively)Customer
    
    
    364
    
    
    
    552Other
    
    
    101
    
    
    
    79Accrued gas cost recovery revenue
    
    
    
    
    
    
    42InventoriesGas
    
    
    77
    
    
    
    119Material and supplies
    
    
    17
    
    
    
    16Gas customer choice deferred asset
    
    
    101
    
    
    
    65Other
    
    
    37
    
    
    
    30698
    
    
    
    910Investments
    
    
    94
    
    
    
    90PropertyProperty, plant and equipment
    
    
    3,391
    
    
    
    3,252Less accumulated depreciation (Note 1)
    
    
    (1,539
    )
    
    
    (1,468
    )1,852
    
    
    
    1,784Other AssetsRegulatory assets (Note 4)
    
    
    362
    
    
    
    65Notes receivable
    
    
    79
    
    
    
    80Prepaid benefit costs and due from affiliate
    
    
    365
    
    
    
    399Other
    
    
    20
    
    
    
    15826
    
    
    
    559Total Assets
    
    $
    3,470
    
    
    $
    3,343
  17




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MICHIGAN CONSOLIDATED GAS COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
 (in Millions, Except Shares)LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    211
    
    
    $
    246Dividends payable (Note 12)
    
    
    13
    
    
    
    13Short-term borrowings
    
    
    342
    
    
    
    439Current portion of long-term debt
    
    
    30
    
    
    
    40Federal income, property and other taxes payable
    
    
    14
    
    
    
    24Accrued gas cost recovery refund
    
    
    81
    
    
    
    Other
    
    
    74
    
    
    
    70765
    
    
    
    832Other LiabilitiesDeferred income taxes
    
    
    181
    
    
    
    191Regulatory liabilities (Note 4)
    
    
    510
    
    
    
    490Accrued postretirement benefit costs
    
    
    347
    
    
    
    144Other
    
    
    196
    
    
    
    1871,234
    
    
    
    1,012Long-Term debt, (net of current portion) (Note 6)
    
    
    715
    
    
    
    745Commitments and Contingencies (Notes 4 and 10)Shareholders EquityCommon stock, $1 par value, 15,100,000 shares authorized,
10,300,000 shares issued and outstanding
    
    
    10
    
    
    
    10Additional paid in capital
    
    
    432
    
    
    
    432Retained earnings
    
    
    315
    
    
    
    313Accumulated other comprehensive loss
    
    
    (1
    )
    
    
    (1
    )756
    
    
    
    754Total Liabilities and Shareholders Equity
    
    $
    3,470
    
    
    $
    3,343
  18




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MICHIGAN CONSOLIDATED GAS COMPANY
 
 CONSOLIDATED STATEMENT OF CASH FLOWS
 Year Ended December 31(in Millions)
    
    2006
    
    
    2005
    
    
    2004Operating ActivitiesNet income
    
    $
    52
    
    
    $
    13
    
    
    $
    19Adjustments to reconcile net income to net cash from
operating activities:Depreciation and amortization
    
    
    95
    
    
    
    97
    
    
    
    108Deferred income taxes and investment tax credits, net
    
    
    (35
    )
    
    
    
    
    
    
    45Asset (gains) and losses, net
    
    
    
    
    
    
    48
    
    
    
    (1
    )Changes in assets and liabilities:Accounts receivable, net
    
    
    166
    
    
    
    (198
    )
    
    
    (38
    )Inventories
    
    
    41
    
    
    
    (31
    )
    
    
    27Postretirement obligation
    
    
    203
    
    
    
    26
    
    
    
    22Prepaid benefit costs and due from affiliate
    
    
    34
    
    
    
    (32
    )
    
    
    (34
    )Recoverable pension and postretirement costs
    
    
    (259
    )
    
    
    
    
    
    
    Accrued gas cost recovery
    
    
    120
    
    
    
    (16
    )
    
    
    (36
    )Accounts payable
    
    
    (43
    )
    
    
    83
    
    
    
    18Federal income, property and other taxes payable
    
    
    (10
    )
    
    
    (14
    )
    
    
    24Other assets
    
    
    (68
    )
    
    
    (16
    )
    
    
    (10
    )Other liabilities
    
    
    38
    
    
    
    14
    
    
    
    (7
    )Net cash (used for) from operating activities
    
    
    334
    
    
    
    (26
    )
    
    
    137Investing ActivitiesPlant and equipment expenditures
    
    
    (154
    )
    
    
    (114
    )
    
    
    (112
    )Acquisitions, net of cash acquired
    
    
    (3
    )
    
    
    
    
    
    
    Proceeds from sale of assets
    
    
    3
    
    
    
    
    
    
    
    6Other
    
    
    1
    
    
    
    
    
    
    
    6Net cash used for investing activities
    
    
    (153
    )
    
    
    (114
    )
    
    
    (100
    )Financing ActivitiesIssuance of long-term debt
    
    
    
    
    
    
    
    
    
    
    117Redemption of long-term debt
    
    
    (40
    )
    
    
    
    
    
    
    (112
    )Short-term borrowings, net
    
    
    (97
    )
    
    
    197
    
    
    
    7Dividends on Common Stock
    
    
    (50
    )
    
    
    (50
    )
    
    
    (50
    )Net cash from (used for) from financing activities
    
    
    (187
    )
    
    
    147
    
    
    
    (38
    )Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    (6
    )
    
    
    7
    
    
    
    (1
    )Cash and Cash Equivalents at Beginning of Period
    
    
    7
    
    
    
    
    
    
    
    1Cash and Cash Equivalents at End of Period
    
    $
    1
    
    
    $
    7
    
    
    $
    Cash Paid for:Interest (excluding interest capitalized)
    
    $
    66
    
    
    $
    57
    
    
    $
    56Income taxes
    
    
    49
    
    
    
    9
    
    
    
    
  19




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MICHIGAN CONSOLIDATED GAS COMPANY
 
 CONSOLIDATED STATEMENT CHANGES IN SHAREHOLDERS EQUITY
 AND COMPREHENSIVE INCOME
 AccumulatedAdditional
    
    
    
    
    
    Other(Dollars in Millions,
    
    Common Stock
    
    Paid in
    
    Retained
    
    ComprehensiveShares in Thousands)
    
    Shares
    
    Amount
    
    Capital
    
    Earnings
    
    Income (Loss)
    
    TotalBalance, December 31, 2003
    
    
    10,300
    
    
    $
    10
    
    
    $
    432
    
    
    $
    381
    
    
    $
    
    
    
    $
    823Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    19Dividends declared on
Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50
    )
    
    
    
    
    
    
    (50
    )Net change in unrealized losses
on derivatives, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Balance, December 31, 2004
    
    
    10,300
    
    
    
    10
    
    
    
    432
    
    
    
    350
    
    
    
    (1
    )
    
    
    791Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    13Dividends declared on
Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50
    )
    
    
    
    
    
    
    (50
    )Balance, December 31, 2005
    
    
    10,300
    
    
    
    10
    
    
    
    432
    
    
    
    313
    
    
    
    (1
    )
    
    
    754Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    52Dividends declared on
Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (50
    )
    
    
    
    
    
    
    (50
    )Balance, December 31, 2006
    
    
    10,300
    
    
    $
    10
    
    
    $
    432
    
    
    $
    315
    
    
    $
    (1
    )
    
    $
    756
  (in Millions)
    
    2006
    
    
    2005
    
    
    2004Net income
    
    $
    52
    
    
    $
    13
    
    
    $
    19Other comprehensive income (loss), net of tax:Net unrealized losses on derivatives:Losses arising during the period, net of taxes of $- $- and $(1)
    
    
    
    
    
    
    
    
    
    
    (1
    )Comprehensive income
    
    $
    52
    
    
    $
    13
    
    
    $
    18
  20




---



##### Table of Contents



Michigan Consolidated Gas Company
 
 Notes to Consolidated Financial Statements
 NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
 Corporate Structure
   Principles of Consolidation
  Consolidation of Variable Interest
Entities, an Interpretation of ARB No. 51.
 Basis of Presentation
  Revenues
   21




---



##### Table of Contents



Comprehensive Income
 .
 Net
    
    
    AccumulatedUnrealized
    
    
    OtherLosses on
    
    
    Comprehensive(in Millions)
    
    Derivatives
    
    
    LossBeginning balance
    
    $
    (1
    )
    
    $
    (1
    )Current  period change
    
    
    
    
    
    
    Ending balance
    
    $
    (1
    )
    
    $
    (1
    )
 Cash Equivalents
  Inventories
   22




---



##### Table of Contents



Property, Retirement and Maintenance, and Depreciation and Depletion
  (in Millions)
    
    2006
    
    
    2005Property, Plant and EquipmentDistribution
    
    $
    2,175
    
    
    $
    2,098Storage
    
    
    245
    
    
    
    237Other
    
    
    971
    
    
    
    917Total
    
    
    3,391
    
    
    
    3,252Less Accumulated DepreciationDistribution
    
    
    (926
    )
    
    
    (891
    )Storage
    
    
    (108
    )
    
    
    (104
    )Other
    
    
    (505
    )
    
    
    (473
    )Total
    
    
    (1,539
    )
    
    
    (1,468
    )Net Property, Plant and Equipment
    
    $
    1,852
    
    
    $
    1,784
     Asset Retirement Obligations
 Accounting for Asset
Retirement Obligations Accounting for Conditional Asset
Retirement Obligations, an interpretation of FASB Statement No. 143.
 23




---



##### Table of Contents



Accounting for the Effects of Certain Types of Regulation
    (in Millions)Asset retirement obligations at January 1, 2006
    
    $
    97Accretion
    
    
    6Asset retirement obligations at December 31, 2006
    
    $
    103
 Long-Lived Assets
  Excise and Sales Taxes
  Deferred Debt Costs
  Insured and Uninsured Risks
  24




---



##### Table of Contents



Investments in Debt and Equity Securities
  Asset (Gains) and Losses, net
   Note
    
    Title2
    
    
    New Accounting Pronouncements4
    
    
    Regulatory Matters5
    
    
    Income Taxes9
    
    
    Financial and Other Derivative Instruments11
    
    
    Retirement Benefits and Trusteed Assets
 NOTE 2  NEW ACCOUNTING PRONOUNCEMENTS
 Accounting for Uncertainty in Income Taxes
 Accounting for
Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109  Accounting for Income
Taxes.
 Fair
Value Accounting
 Fair Value Measurements
 The Fair Value Option for Financial Assets and Financial Liabilities - Including an Amendment of FASB Statement No. 115.
 25




---



##### Table of Contents



Accounting for Defined Benefit Pension and Other Postretirement Plans
 Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans  an Amendment of FASB Statements No. 87, 88, 106, and
132(R).
    Quantifying Misstatements
 Financial
Statements  Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in
Current Year Financial Statements
 Stock Based Compensation
 Share-Based Payment,
 26




---



##### Table of Contents



NOTE 3  RESTRUCTURING
 Performance Excellence Process
     EmployeeSeverance(in Millions)
    
    Costs (1)
    
    
    Other Costs (1)
    
    
    Total CostsCosts incurred:
    
    $
    17
    
    
    $
    7
    
    
    $
    24
 
 (1)
    
    Includes corporate allocations Accounting for Costs
Associated with Exit or Disposal Activities
 NOTE 4  REGULATORY MATTERS
 Regulation
  Regulatory Assets and Liabilities
 Accounting for the Effects of Certain Types of Regulation
  27




---



##### Table of Contents



(in Millions)
    
    2006
    
    
    2005AssetsDeferred environmental costs
    
    $
    38
    
    
    $
    32Unamortized loss on reacquired debt
    
    
    30
    
    
    
    32Accrued GCR revenue
    
    
    
    
    
    
    42Recoverable pension and postretirement costs
    
    
    260
    
    
    
    1Recoverable uncollectibles expense
    
    
    45
    
    
    
    11373
    
    
    
    118Less amount included in current assets
    
    
    (11
    )
    
    
    (53
    )$
    362
    
    
    $
    65LiabilitiesAsset removal costs
    
    $
    354
    
    
    $
    353Refundable income taxes
    
    
    114
    
    
    
    125Accrued GCR refund
    
    
    81
    
    
    
    Safety and training cost refund
    
    
    3
    
    
    
    Accrued pension
    
    
    39
    
    
    
    12591
    
    
    
    490Less amount included in current liabilities and other liabilities
    
    
    (81
    )
    
    
    $
    510
    
    
    $
    490
 ASSETS
 
    
    Deferred environmental costs The MPSC approved the deferral and
recovery of investigation and remediation costs associated with
former MGP sites.
    
    Unamortized loss on reacquired debt The unamortized discount,
premium and expense related to debt redeemed with a refinancing
are deferred, amortized and recovered over the life of the
replacement issue.
    
    Accrued GCR revenue Receivable for the temporary under-recovery
of and a return on gas costs incurred by MichCon which are
recoverable through the GCR mechanism.
    
    Recoverable pension and postretirement costs The traditional
rate setting process allows for the recovery of pension and
postretirement costs as measured by generally accepted accounting
principles. In 2006, we adopted SFAS No. 158, Employers
Accounting for Defined benefit Pension and Other Postretirement
Plans.See Note 11.
    
    Recoverable uncollectibles expense Receivable for the MPSC
approved uncollectible expense true-up mechanism that tracks the
difference in the fluctuation in uncollectible accounts and
amounts recognized pursuant to the MPSC authorization. Of the
total amount deferred, $11 million represents 2005 expenses and is
expected to be recovered during 2007. The remainder relates to
2006 expense, the recovery period of which will be determined upon
receipt of an MPSC order.
 LIABILITIES
 
    
    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 refund Liability for the temporary over-recovery of
and a return on gas costs incurred by MichCon which are
recoverable through the GCR mechanism.
    
    Safety and training cost refund The MPSC ordered the refund of
unspent costs which were included in the Companys rate structure.
 28




---



##### Table of Contents




    
    Accrued pension Pension expense refundable to customers
representing the difference created from volatility in the pension
obligation and amounts recognized pursuant to MPSC authorization.
 Regulatory Accounting Treatment for Performance Excellence Process
  Gas Rate Case
      29




---



##### Table of Contents



Uncollectible Expense Tracker Mechanism and Report of Safety and Training-Related Expenditures
   Gas Cost Recovery Proceedings
 2004 Plan Year 
 2005-2006 Plan Year 
 30




---



##### Table of Contents



2006-2007 Plan Year
 2007-2008 Plan Year / Native Base Gas Sale Consolidated
 Other
  NOTE 5  INCOME TAXES
   31




---



##### Table of Contents



(Dollars in Millions)
    
    2006
    
    
    2005
    
    
    2004Income tax expense at 35% statutory rate
    
    $
    22
    
    
    $
    
    
    
    $
    3Investment tax credit
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )Depreciation
    
    
    (7
    )
    
    
    (7
    )
    
    
    (7
    )Employee Stock Ownership Plan Dividends
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )Medicare Benefits
    
    
    (1
    )
    
    
    (2
    )
    
    
    (1
    )Other, net
    
    
    
    
    
    
    (3
    )
    
    
    (2
    )Total
    
    $
    12
    
    
    $
    (14
    )
    
    $
    (9
    )Effective federal income tax rate
    
    
    18.8
    %
    
    
    (n/m)(1
    )%
    
    
    (98.3
    )%
 
 (1)
    
     Due to the amount of the pre-tax loss in 2005, the effective tax rate in not meaningful
(n/m).  (in Millions)
    
    2006
    
    
    2005
    
    
    2004Current federal and other income tax expense (benefit)
    
    $
    47
    
    
    $
    (14
    )
    
    $
    (44
    )Deferred federal and other income tax expense
    
    
    (35
    )
    
    
    
    
    
    
    35Total
    
    $
    12
    
    
    $
    (14
    )
    
    $
    (9
    )
   (in Millions)
    
    2006
    
    
    2005Property, plant and equipment
    
    $
    (107
    )
    
    $
    (97
    )Employee benefits
    
    
    (85
    )
    
    
    (82
    )Other Comprehensive Income (OCI)
    
    
    1
    
    
    
    1Other, net
    
    
    31
    
    
    
    (5
    )$
    (160
    )
    
    $
    (183
    )Deferred income tax liabilities
    
    $
    (553
    )
    
    $
    (518
    )Deferred income tax assets
    
    
    393
    
    
    
    335$
    (160
    )
    
    $
    (183
    )Current deferred income tax assets (included in Current Assets  Other)
    
    $
    21
    
    
    
    8Long term deferred income tax liabilities
    
    
    (181
    )
    
    
    (191
    )(160
    )
    
    
    (183
    )
   32




---



##### Table of Contents



NOTE 6  LONG-TERM DEBT AND PREFERRED SECURITIES
 Long-Term Debt
  (in Millions)
    
    2006
    
    
    2005First Mortgage Bonds, interest payable semi-annually7.15% series due 2006
    
    $
    
    
    
    $
    407.21% series due 2007
    
    
    30
    
    
    
    307.06% series due 2012
    
    
    40
    
    
    
    408.25% series due 2014
    
    
    80
    
    
    
    80Remarketable securities, interest payable semi-annually6.45% series due 2038
    
    
    75
    
    
    
    75Senior notes, interest payable semi-annually6.125% series due 2008
    
    
    200
    
    
    
    2005.0% series due 2019
    
    
    120
    
    
    
    1205.7% series due 2033
    
    
    200
    
    
    
    200745
    
    
    
    785Less amount due within one year
    
    
    (30
    )
    
    
    (40
    )Total
    
    $
    715
    
    
    $
    745
    2012 and(in Millions)
    
    2007
    
    2008
    
    2009
    
    2010
    
    2011
    
    thereafter
    
    TotalAmount to mature
    
    $
    30
    
    
    $
    275
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    440
    
    
    $
    745
  (in Millions)MonthCompany
    
    Retired
    
    Type
    
    Interest Rate
    
    Maturity
    
    AmountMichCon
    
    May
    
    First Mortgage Bonds
    
    
    7.15
    %
    
    May 2006
    
    $
    40
 33




---



##### Table of Contents



Preferred and Preference Securities  Authorized and Unissued
  NOTE 7  SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS
      NOTE 8  CAPITAL AND OPERATING LEASES
 Lessee
 34




---



##### Table of Contents



Operating(in Millions)
    
    Leases2007
    
    
    12008
    
    
    12009
    
    
    12010
    
    
    12011
    
    
    1Thereafter
    
    
    Total minimum lease payments
    
    $
    5
  Lessor
  (in Millions)2007
    
    
    92008
    
    
    92009
    
    
    92010
    
    
    92011
    
    
    9Thereafter
    
    
    80Total minimum future lease receipts
    
    
    125Residual value of leased pipeline
    
    
    40Less  unearned income
    
    
    (86
    )Net investment in direct financing lease
    
    
    79Less  current portion
    
    
    (1
    )$
    78
 NOTE 9  FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS
 Accounting for Derivative Instruments and Hedging Activities,
 
    
    Derivative instruments must be recognized as assets or liabilities
and measured at fair value, unless they meet the normal purchases
and sales exemption.
    
    Accounting for changes in fair value depends on the purpose of the
derivative instrument and whether it is designated as a hedge and
qualifies for hedge accounting.
    
    Special accounting is allowed for derivative instruments
that qualify as a hedge and are 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 to
earnings.
    
    Special accounting is also allowed for derivative instruments
that qualify as a hedge and are designated as a hedge of the changes in
fair value of an existing asset, liability or firm commitment.
Gain or loss on
 35




---



##### Table of Contents



the hedging instrument is recorded into earnings.
An offsetting loss or gain on the underlying asset, liability or
firm commitment is also recorded to earnings.
  Commodity Price Risk
  Credit Risk
  Interest Rate Risk
  Fair Value of Financial Instruments
  2006
    
    2005Fair Value
    
    Carrying Value
    
    Fair Value
    
    Carrying ValueLong-Term Debt
    
    $ 747 million
    
    $ 745 million
    
    $ 806 million
    
    $ 785 million
 36




---



##### Table of Contents



NOTE 10  COMMITMENTS AND CONTINGENCIES
 Environmental Matters
    Personal Property Taxes
   Labor Contracts
  37




---



##### Table of Contents



Other Commitments
  Bankruptcies
  Other
   NOTE 11- RETIREMENT BENEFITS AND TRUSTEED ASSETS
 Adoption of SFAS No. 158, Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans
 Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans  an Amendment of FASB Statements No. 87, 88, 106, and
132(R).
  38




---



##### Table of Contents



Measurement Date
  Pension Plan Benefits
     39




---



##### Table of Contents



(in Millions)
    
    2006
    
    
    2005
    
    
    2004Service Cost
    
    $
    7
    
    
    $
    5
    
    
    $
    5Interest Cost
    
    
    16
    
    
    
    15
    
    
    
    15Expected Return on Plan Assets
    
    
    (30
    )
    
    
    (28
    )
    
    
    (28
    )Amortization ofNet loss
    
    
    2
    
    
    
    1
    
    
    
    Prior service cost
    
    
    1
    
    
    
    1
    
    
    
    1Special Termination Benefits
    
    
    6
    
    
    
    
    
    
    
    Net Pension Expense (Credit)
    
    $
    2
    
    
    $
    (6
    )
    
    $
    (7
    )
   (in Millions)
    
    2006
    
    
    2005Accumulated Benefit Obligation  End of Period
    
    $
    266
    
    
    $
    244Projected Benefit Obligation  Beginning of Period
    
    $
    275
    
    
    $
    256Service Cost
    
    
    7
    
    
    
    5Interest Cost
    
    
    16
    
    
    
    15Actuarial Loss
    
    
    12
    
    
    
    14Benefits Paid
    
    
    (17
    )
    
    
    (15
    )Special Termination Benefits
    
    
    6
    
    
    
    Plan Amendments
    
    
    
    
    
    
    
 40




---



##### Table of Contents



(in Millions)
    
    2006
    
    
    2005Projected Benefit Obligation  End of Period
    
    $
    299
    
    
    $
    275Plan Assets at Fair Value  Beginning of Period
    
    $
    344
    
    
    $
    330Actual Return on Plan Assets
    
    
    43
    
    
    
    29Benefits Paid
    
    
    (17
    )
    
    
    (15
    )Plan Assets at Fair Value  End of Period
    
    $
    370
    
    
    $
    344Funded Status of the Plans
    
    $
    71
    
    
    $
    69December Adjustment
    
    
    
    
    
    
    Funded Status, End of Year
    
    $
    71
    
    
    
    69UnrecognizedNet Actuarial loss (a)
    
    
    
    
    
    
    53Prior service cost(a)
    
    
    
    
    
    
    5Prepaid Pension Cost(a)
    
    
    
    
    
    $
    127Noncurrent Assets (b)
    
    $
    71Current Liabilities (b)
    
    $
    Noncurrent Liabilities (b)
    
    $
    Amounts Recognized in Regulatory Assets(b)Net Actuarial loss (b)
    
    $
    50Prior service cost(b)
    
    $
    3
 
 (a)
    
     Disclosure no longer required by FAS 158, adopted in 2006, retroactive adoption not
permitted.(b)
    
    - New disclosure required by FAS 158, adopted in 2006, retroactive adoption not
permitted.  2006
    
    2005
    
    2004Projected Benefit ObligationDiscount rate
    
    
    5.70
    %
    
    
    5.90
    %
    
    
    6.00
    %Annual increase in future compensation levels
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    4.0
    %Net Pension CostsDiscount rate
    
    
    5.90
    %
    
    
    6.00
    %
    
    
    6.25
    %Annual increase in future compensation levels
    
    
    4.0
    %
    
    
    4.0
    %
    
    
    4.0
    %Expected long-term rate of return on Plan assets
    
    
    8.75
    %
    
    
    9.0
    %
    
    
    9.0
    %
  41




---



##### Table of Contents



(in Millions)2007
    
    $
    142008
    
    
    142009
    
    
    152010
    
    
    162011
    
    
    162012  2016
    
    
    95Total
    
    
    170
    2006
    
    2005Equity Securities
    
    
    68
    %
    
    
    68
    %Debt Securities
    
    
    23
    
    
    
    27Other
    
    
    9
    
    
    
    5100
    %
    
    
    100
    %
  42




---



##### Table of Contents



Equity Securities
    
    
    65
    %Debt Securities
    
    
    20Other
    
    
    15100
    %
  Other Postretirement Benefits
   (in Millions)
    
    2006
    
    
    2005
    
    
    2004Service Cost
    
    $
    14
    
    
    $
    11
    
    
    $
    8Interest Cost
    
    
    26
    
    
    
    24
    
    
    
    23Expected Return on Plan Assets
    
    
    (12
    )
    
    
    (12
    )
    
    
    (11
    )Amortization ofNet loss
    
    
    9
    
    
    
    7
    
    
    
    2Prior service cost
    
    
    2
    
    
    
    2
    
    
    
    1Net transition obligation
    
    
    5
    
    
    
    6
    
    
    
    8Special Termination Benefits
    
    
    2
    
    
    
    
    
    
    
    Net Postretirement Cost
    
    $
    46
    
    
    $
    38
    
    
    $
    31
 43




---



##### Table of Contents



(in Millions)
    
    2006
    
    
    2005Accumulated Postretirement Benefit Obligation  Beginning of Period
    
    $
    453
    
    
    $
    419Service Cost
    
    
    14
    
    
    
    11Interest Cost
    
    
    26
    
    
    
    25Actuarial Loss
    
    
    38
    
    
    
    26Special Termination Benefits
    
    
    2
    
    
    
    Benefits Paid
    
    
    (23
    )
    
    
    (22
    )Plan Amendments
    
    
    
    
    
    
    (6
    )Accumulated Postretirement Benefit Obligation  End of Period
    
    $
    510
    
    
    $
    453Plan Assets at Fair Value  Beginning of Period
    
    $
    129
    
    
    $
    126Company Contribution
    
    
    20
    
    
    
    Actual Return on Plan Assets
    
    
    16
    
    
    
    12Benefits Paid
    
    
    (9
    )
    
    
    (8
    )Plan Assets at Fair Value  End of Period
    
    $
    156
    
    
    $
    130Funded Status of the Plans
    
    $
    (354
    )
    
    $
    (323
    )December Adjustment
    
    
    7
    
    
    
    (7
    )Funded Status at Fair Value-End of Period
    
    $
    (347
    )
    
    
    (330
    )Unrecognized (a)Net loss (a)
    
    
    
    
    
    
    133Prior service cost (a)
    
    
    
    
    
    
    14Net transition obligation (a)
    
    
    
    
    
    
    39Accrued Postretirement Liability   End of period (a)
    
    
    
    
    
    $
    (144
    )Noncurrent Assets (b)
    
    $
    Current Liabilities (b)
    
    $
    Noncurrent Liabilities(b)
    
    $
    (347
    )Amounts Recognized in Regulatory Assets (b)Net loss (b)
    
    $
    157Prior service cost (b)
    
    $
    12Net transition obligation (b)
    
    $
    35
 
 (a)
    
     Disclosure no longer required by FAS 158, adopted in 2006, retroactive adoption not
permitted.(b)
    
    - New disclosure required by FAS 158, adopted in 2006, retroactive adoption not
permitted. 44




---



##### Table of Contents



2006
    
    2005
    
    2004Projected Benefits ObligationDiscount rate
    
    
    5.70
    %
    
    
    5.90
    %
    
    
    6.00
    %Net Benefit CostsDiscount rate
    
    
    5.90
    %
    
    
    6.00
    %
    
    
    6.25
    %Expected long-term rate of return on Plan assets
    
    
    8.75
    %
    
    
    9.0
    %
    
    
    9.0
    %
   (in Millions)2007
    
    $
    312008
    
    
    312009
    
    
    322010
    
    
    332011
    
    
    342012  2016
    
    
    173Total
    
    $
    334
   (in Millions)2007
    
    $
    22008
    
    
    22009
    
    
    22010
    
    
    22011
    
    
    22012  2016
    
    
    8Total
    
    $
    18
   2006
    
    2005Equity Securities
    
    
    68
    %
    
    
    69
    %Debt Securities
    
    
    27
    
    
    
    31Other
    
    
    5
    
    
    
    100
    %
    
    
    100
    %
 45




---



##### Table of Contents



Equity Securities
    
    
    65
    %Debt Securities
    
    
    20Other
    
    
    15100
    %
  Postretirement(in Millions)
    
    Qualified Plans
    
    Plans
    
    Total Benefit PlansIncrease (Decrease)
in Assets and
LiabilitiesPrepaid pension assets
    
    $
    (53
    )
    
    $
    
    
    
    $
    (53
    )Accrued
postretirement
liability
    
    
    
    
    
    $
    204
    
    
    $
    204Regulatory assets
    
    $
    53
    
    
    $
    204
    
    
    $
    257
 Grantor Trust
  46




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##### Table of Contents



NOTE 12  RELATED PARTY TRANSACTIONS
   (in Millions)
    
    2006
    
    2005
    
    2004RevenuesTransportation and storage services
    
    $
    9
    
    
    $
    11
    
    
    $
    8Other services
    
    
    4
    
    
    
    5
    
    
    
    3CostsGas purchases
    
    
    
    
    
    
    
    
    
    
    5Other services and interest
    
    
    13
    
    
    
    14
    
    
    
    15Corporate expenses and merger costs (net) (1)
    
    
    68
    
    
    
    93
    
    
    
    100
 December 31,(in Millions)
    
    2006
    
    2005AssetsAccounts receivable
    
    $
    82
    
    
    $
    55Prepaid pension assets
    
    
    294
    
    
    
    272Liabilities & EquityAccounts payable
    
    
    13
    
    
    
    16Notes payable
    
    
    12
    
    
    
    16Dividends payable
    
    
    13
    
    
    
    13Dividends declared
    
    
    50
    
    
    
    50Dividends paid
    
    
    50
    
    
    
    50
 
 (1)
    
    As a result of an MPSC order, DTE Energy ceased billing merger costs to MichCon
effective April 2005.   47




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##### Table of Contents



NOTE 13  SUPPLEMENTARY QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
  First
    
    Second
    
    Third
    
    Fourth(in Millions)
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Year2006Operating Revenues
    
    $
    863
    
    
    $
    229
    
    
    $
    167
    
    
    $
    552
    
    
    $
    1,811Operating Income (Loss)
    
    
    82
    
    
    
    (9
    )
    
    
    (14
    )
    
    
    56
    
    
    
    115Net Income (Loss)
    
    
    50
    
    
    
    (13
    )
    
    
    (19
    )
    
    
    34
    
    
    
    522005Operating Revenues
    
    
    834
    
    
    
    261
    
    
    
    206
    
    
    
    797
    
    
    
    2,098Operating Income (Loss)
    
    
    1
    
    
    
    (3
    )
    
    
    (19
    )
    
    
    66
    
    
    
    45Net Income (Loss)
    
    
    (13
    )
    
    
    (50
    )
    
    
    159
    
    
    
    (83
    )
    
    
    13
 48




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##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 (a) Evaluation of disclosure controls and procedures
  (b) Changes in internal control over financial reporting
  
 Item 9B. Other Information
  
 Part III
 
 Item 10. Directors, Executive Officers and Corporate Governance
 
 Item 11. Executive Compensation
 
 Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  49




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##### Table of Contents



Item 14. Principal Accountant Fees and Services
  2006
    
    
    2005Audit fees (1)
    
    $
    878,675
    
    
    $
    1,529,517Audit-related fees (2)
    
    
    
    
    
    
    Tax fees (2)
    
    
    
    
    
    
    All other fees
    
    
    
    
    
    
    $
    878,675
    
    
    $
    1,529,517
 
 (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.(2)
    
    Certain audit- related and tax fees are charged to DTE Energy and are indirectly
allocated to MichCon through overheads.   50




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##### Table of Contents



Part IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (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.
 (i)
    
    Exhibits filed herewith:12-8
    
    Computation of Ratio of Earnings to Fixed Charges.23-6
    
    Consent of Deloitte & Touche LLP31-29
    
    Chief Executive Officer Section 302 Form 10-K Certification of Periodic Report.31-30
    
    Chief Financial Officer Section 302 Form 10-K Certification of Periodic Report.(ii)
    
    Exhibits incorporated herein by reference:3(a)
    
    Restated Articles of Incorporation (Exhibit 3-1 to Form 10-Q for the quarter ended March 31, 1993).3(b)
    
    By-Laws (Exhibit 3-2 to Form 10-Q for the quarter ended March 31, 1993).4(a)
    
    Indenture dated as of June 1, 1998 between Michigan Consolidated Gas Company
and Citibank, N.A., as trustee, related to Senior Debt Securities (Exhibit 4-1
to Registration Statement (File No. 333-63370)).4(b)
    
    First Supplemental Indenture dated as of June 18, 1998, establishing
Extendable Mandatory Par Put Remarketed Securities (SM) due June 30, 2038 and
Resetable Mandatory Putable/Remarketable Securities, due June 30, 2038
(Exhibit 4-1 to Form 8-K dated June 18, 1998).4(c)
    
    Third Supplemental Indenture dated as of August 15, 2001, establishing 6 1/8%
Senior Notes due 2008 (Exhibit 4-2 to Form 10-Q for the quarter ended
September 30, 2001).4(d)
    
    Fourth Supplemental Indenture dated as of February 15, 2003, establishing
5.70% Senior Notes, 2003 Series A due 2033 (Exhibit 4-3 to Form 10-Q for the
quarter ended March 31, 2003).
 
 51




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##### Table of Contents



4(e)
    
    Fifth Supplemental Indenture dated as of October 1, 2004, establishing 5.00%
Senior Notes, 2004 Series E due 2019 (Exhibit 4-6 to Form 10-Q for the quarter
ended September 31, 2004).4(f)
    
    Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 (Exhibit 7-D
to Registration Statement No. 2-5252).4(g)
    
    Twenty-ninth Supplemental Indenture dated as of July 15, 1989, among Michigan
Consolidated Gas Company and Citibank, N.A. and Robert T. Kirchner, as
trustees, creating an issue of first mortgage bonds and providing for the
modification and restatement of the Indenture of Mortgage and Deed of Trust
dated as of March 1, 1944 (Exhibit 4-2 to Registration Statement (File No.
333-63370)).4(h)
    
    Thirty-second Supplemental Indenture dated as of January 5, 1993, creating
first mortgage bonds designated Secured Term Notes, Series B (Exhibit 4-1 to
Form 10-K for the year ended December 31, 1992).4(i)
    
    Thirty-third Supplemental Indenture dated as of May 1, 1995, creating first
mortgage bonds designated Secured Medium Term Notes, Series B (Exhibit 4-2 to
Registration Statement on Form S-3 (File No. 33-59093)).4(j)
    
    Thirty-fourth Supplemental Indenture dated as of November 1, 1996, creating
first mortgage bonds designated Secured Medium Term Notes, Series C (Exhibit
4-2 to Registration Statement on Form S-3 (File No. 333-16285)).4(k)
    
    Thirty-fifth Supplemental Indenture dated as of June 18, 1998, creating an
issue of first mortgage bonds designated as collateral bonds (Exhibit 4-2 to
Form 8-K dated June 18, 1998).4(l)
    
    Thirty-sixth Supplemental Indenture dated as of August 15, 2001, creating
6 1/8% collateral bonds due 2008 (Exhibit 4-3 to Form 10-Q for the quarter
ended September 30, 2001).4(m)
    
    Thirty-seventh Supplemental Indenture dated as of February 15, 2003,
establishing the 5.70% collateral bonds due 2033 (Exhibit 4-4 to Form 10-Q for
the quarter ended March 31, 2003).4(n)
    
    Thirty-eighth Supplemental Indenture dated as of October 1, 2004, establishing
the 2004 Series E collateral bonds (Exhibit 4-5 to Form 10-Q for the quarter
ended September 31, 2004).10(a)
    
    Form of Second Amended and Restated Five-Year Credit Agreement dated as of
October 17, 2005, by and among Michigan Consolidated Gas Company, the lenders
party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and
Barclays Bank PLC and Citibank, N.A. as Co-Syndication Agents (Exhibit 10.2 to
Form 8-K dated October 17, 2005).10(b)
    
    Form of Amendment No. 1 to Five-Year Credit Agreement dated as of January 10,
2007, by and among Michigan Consolidated Gas Company, the lenders party
thereto, JPMorgan Chase Bank, N. A., as Administrative Agent, and Barclays
Bank PLC and Citibank, N.A. as Co-Syndication Agents (Exhibit 10.1 to Form 8-K
dated January 10, 2007).10(c)
    
    Form of Five-Year Credit Agreement dated as of October 17, 2005, by and among
Michigan Consolidated Gas Company, the lenders party thereto, JPMorgan Chase
Bank, N.A., as
 52




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##### Table of Contents



Administrative Agent, and Barclays Bank PLC and Citibank, N.A.
as Co-Syndication Agents (Exhibit 10.1 to Form 8-K dated October 17, 2005).10(d)
    
    Form of Amendment No. 1 to Second Amended and Restated Five-Year Credit
Arrangement dated as of January 10, 2007, by and among Michigan Consolidated
Gas Company, the lenders party thereto JPMorgan Chase Bank, N.A., as
Administrative Agent, and Barclays Bank PLC and Citibank, N.A. as
Co-Syndication Agents (Exhibit 10.2 to Form 8-K dated January 10, 2007).10(e)
    
    MichCon Investment and Stock Ownership Plan, as amended and restated effective
as of January 1, 2002 (Exhibit 10-19 to Form 10-K for the year ended December
31, 2005).(iii)
    
    Exhibits furnished herewith:32-29
    
    Chief Executive Officer Section 906 Form 10-K Certification of Periodic Report32-30
    
    Chief Financial Officer Section 906 Form 10-K Certification of Periodic Report
 53




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##### Table of Contents



Michigan Consolidated Gas Company
 
 Schedule II  Valuation and Qualifying Accounts
 Year Ending December 31,2006
    
    
    2005
    
    
    2004(in Millions)Allowance for Doubtful Accounts (shown as
deduction from accounts receivable in
the Consolidated Statement
of Financial Position)Balance at Beginning of Period
    
    $
    78
    
    
    $
    71
    
    
    $
    43Additions:Charged to costs and expenses
    
    
    68
    
    
    
    64
    
    
    
    62Charged to other accounts (1)
    
    
    4
    
    
    
    4
    
    
    
    4Deductions (2)
    
    
    (54
    )
    
    
    (61
    )
    
    
    (38
    )Balance at End of Period
    
    $
    96
    
    
    $
    78
    
    
    $
    71
 
 (1)
    
    Collection of accounts previously written off.(2)
    
    Non-collectible accounts written off. 54




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##### Table of Contents



SIGNATURES
  MICHIGAN CONSOLIDATED GAS COMPANY(Registrant)Date:  March 1, 2007
    By:
    /s/  PETER B. OLEKSIAKPeter B. OleksiakVice President and Controller, and

Chief Accounting Officer  By
    
    /s/ ANTHONY F. EARLEY, JR.
    
    By
    
    /s/ PETER B. OLEKSIAKAnthony F. Earley, Jr. 

Chairman of the Board and

Chief Executive Officer
    
    
    
    Peter B. Oleksiak

Vice President and Controller, and

Chief Accounting OfficerBy
    
    /s/ SANDRA KAY ENNIS
    
    By
    
    /s/ DAVID E. MEADORSandra Kay Ennis

Director and Corporate Secretary
    
    
    
    David E. Meador

Director, Executive Vice
President and Chief Financial
OfficerBy
    
    /s/ BRUCE D. PETERSONBruce D. Peterson 

Director
  55




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##### Table of Contents



Exhibit Index
 Exhibit No.
    
    Description(i)
    
    Exhibits filed herewith:12-8
    
    Computation of Ratio of Earnings to Fixed Charges.23-6
    
    Consent of Deloitte & Touche LLP31-29
    
    Chief Executive Officer Section 302 Form 10-K Certification of Periodic Report.31-30
    
    Chief Financial Officer Section 302 Form 10-K Certification of Periodic Report.(iii)
    
    Exhibits furnished herewith:32-29
    
    Chief Executive Officer Section 906 Form 10-K Certification of Periodic Report32-30
    
    Chief Financial Officer Section 906 Form 10-K Certification of Periodic Report