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Semco Makes Asset Management Deal With TransCanada
Semco Energy Gas Co. signed of a three-year agreement withTransCanada PipeLines Ltd. for management of its gas supply. Thecompany also will buy the majority of its gas supplies fromTransCanada for the three years of the agreement, which iseffective April 1, 1999.
Semco, a regulated gas distributor, has more than 240,000customers in the Upper and Lower Peninsulas of Michigan. Theagreement calls for TransCanada to manage 157.5 MMcf/d of gastransportation on five U.S. pipelines on behalf of Semco.TransCanada also will manage 16 Bcf of storage for the utility.
“This agreement will have positive results for Semco Energycustomers and shareholders with lower prices for our product andthe opportunity to increase earnings in the future by being on thecompetitive edge,” said William L. Johnson, CEO Semco.
A strategic alliance with an asset manager is another move bySemco to position itself for the competitive market that will existafter gas industry deregulation is completed, said Jon A. Kosht,vice president for rates and regulatory affairs. The company inSeptember said it will reduce and freeze its gas cost recoveryfactor for three years beginning with the April 1999 billing cycle.The GCR factor is the purchased gas cost component of the ratescharged by the company to its customers.
TransCanada, based in Calgary, Alberta, is a North Americanenergy services company with businesses in transmission, marketingand processing. TransCanada Energy markets gas and gas liquids,crude oil and petroleum products as well as electricity. SteveBecker, TransCanada Gas Services executive vice president, said thecompany’s offices in Calgary, Houston and Omaha will be involved inmanaging the Semco assets. “We’re confident TransCanada’s assetmanagement expertise will result in significant efficiencies tohelp Semco keep their products and services competitive.”
Semco Energy has two other subsidiaries: Semco Energy Services,an unregulated division which markets gas throughout the UnitedStates and Canada; and Semco Energy Ventures, which acquires andoperates companies involved in gas pipeline and distribution systemconstruction, pipeline construction engineering and propaneoperations.
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