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SEMCO Rate Case Settlement Expected to Produce $90.5M

Coming in at less than the company was seeking, SEMCO Energy Inc. said Wednesday that the Michigan Public Service Commission (MPSC) has approved the SEMCO Energy Gas Co. division's base rate case settlement, which is estimated to produce total annual revenues of $90.5 million. The new rates were effective Wednesday.

The revised base rates are intended to recover the company's nongas costs of providing service, This total annual revenue figure includes an estimated increase in annual base rate revenues of approximately $12.65 million based on adjusted 2005 test year data. However, based on the Company's current projections for 2007 residential use per customer, SEMCO expects the revised rates would result in an increase of $10.55 million in annualized base rate revenue. The company had requested an $18.9 million increase.

A typical residential customer will see an estimated increase of $3.37 a month as a result of the settlement. The MPSC action does not include changes in the cost of natural gas. Some requests that SEMCO included in the initial rate case filing are not part of the settlement, including proposals that would have changed the method for collecting certain expenses and the funding of customer conservation programs. The settlement does address a continuing decline in residential customer consumption by changing a key billing element included in rates. As part of the settlement, the company also agreed not to file for base rate increases for MPSC division customers until after Jan. 1, 2008.

"Although this settlement does not include the innovative rate design and the associated conservation plan that the company originally proposed, it does recognize that residential customer consumption has been steadily declining," said Eugene N. Dubay, COO of SEMCO Energy Gas Co. "To address this situation, the MPSC included an adjustment to the monthly customer charge and a move toward market realities by significantly reducing the billing determinant. We were hopeful that the commission would have adopted more of our proposed rate design changes because we firmly believe that they are a more balanced approach to collecting our fixed costs. We continue to experience significant changes in our business and, therefore, I fully expect that we will once again focus the MPSC on needed rate design improvements in our next rate case filing."

SEMCO Energy Inc. distributes natural gas to more than 400,000 customers combined in Michigan, as SEMCO Energy Gas, and in Alaska, as ENSTAR Natural Gas Co.

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