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SEMCO ENERGY GAS COMPANY to Make Refund to Customers, Earnings Not Affected

PORT HURON, Mich., Dec. 7 /PRNewswire/ -- On December 6, 1999, SEMCO ENERGY GAS COMPANY received an order from the Michigan Public Service Commission (MPSC), which approved a refund to customers of gas costs above previously estimated levels. The total amount is approximately $2.1 million. MPSC-approved gas purchasing plans forecast the volumes and costs of gas SEMCO ENERGY GAS COMPANY expects to purchase in a 12-month period. The routine reconciliation recognizes the actual cost of gas versus the projected cost reflected on the customer's bill statement during the year. The Gas Cost Recovery Plan affected by the December 6 order was for the period April 1, 1998 through March 31, 1999 and was filed in December 1997.

SEMCO ENERGY GAS COMPANY had anticipated the refund order, which has no effect on earnings.

"This is a routine event that balances actual gas costs with the revenue collected from our customers," said Jon A. Kosht, President and Chief Operating Officer of SEMCO ENERGY GAS COMPANY.

The refund will occur by the issuance of a credit in the January 2000 billing month to current customers and a refund check to past customers. The average residential heating customer will receive a one-time credit of approximately $9.00. Individual customer credits will vary, based on actual natural gas use during that period. Commercial and industrial customers, who bought gas from SEMCO ENERGY GAS COMPANY, also will see a credit on their January bills, based on actual use.

SEMCO ENERGY GAS COMPANY and ENSTAR Natural Gas Company are subsidiaries of SEMCO ENERGY, Inc. (Nasdaq: SMGS) and are regulated natural gas distribution companies with a combined total of more than 350,000 customers in Michigan and Alaska. SEMCO ENERGY VENTURES, an unregulated division, acquires and operates businesses in gas engineering and quality assurance services, pipeline construction services, propane distribution, intrastate pipelines and natural gas storage in various regions of the United States.
CONTACT: Analysts: Edric R. Mason, Jr., 810-989-4104, or Fax, 810-989-4098, or Media: Francis R. Lieder, Jr., 810-987-2200, ext. 4186, or Fax, 810-989-4098, both of SEMCO ENERGY GAS COMPANY

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding SEMCO Energy's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.

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