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SEMCO ENERGY GAS COMPANY Continues 'Customer Choice' Rate Freeze Program

PORT HURON, Mich., Feb. 20 /PRNewswire/ -- SEMCO ENERGY GAS COMPANY today announced it plans to continue its "Customer Choice" rate freeze program through the final year of the three-year program approved by the Michigan Public Service Commission (MPSC) in September 1998.

SEMCO ENERGY's 262,000 customers in Michigan will continue to enjoy a relatively low price of $3.24 per thousand cubic feet (Mcf) for natural gas until the rate freeze program ends March 31, 2002, Gas Company President and Chief Executive Officer Jon A. Kosht said.

Although natural gas users across the nation have seen very large increases in the price of natural gas, SEMCO ENERGY customers have been protected by the price freeze.

"Absent SEMCO ENERGY's 'Customer Choice' rate freeze program, the current monthly cost of natural gas in the market place, plus the cost to deliver it to Michigan, is over two times our price," he said.

SEMCO ENERGY, in response to the recent volatility and unprecedented increases in natural gas prices, recently reviewed the possibility of restructuring the "Customer Choice" rate freeze program, but could not achieve a price favorable to customers.

"SEMCO ENERGY is committed to maintaining natural gas as a cost-effective fuel for space heating and other uses," Kosht said.

SEMCO ENERGY is able to maintain its price freeze despite dramatic increases in the cost of natural gas because of a long-term supply and asset management contract negotiated in 1998 with TransCanada Gas Services, based in Calgary, Alberta.

Under the current program, SEMCO ENERGY is projected to save its customers approximately $112 million on their gas bills in 2001, according to a study done in late December 2000 by the Michigan Public Service Commission. The MPSC regulates the state's public utilities.

"We would have sought authority from the MPSC to restructure our current program only if it would have benefited our customers in the long term," Kosht said. "SEMCO ENERGY has always been willing and able to continue the existing program unless a restructured program yielded benefits for our customers. That is what we plan to do."

SEMCO ENERGY GAS COMPANY, a division of SEMCO ENERGY, Inc. (NYSE: SEN), distributes natural gas to more than 260,000 residential, commercial and industrial customers in Michigan. The Alaska division, ENSTAR Natural Gas Company, distributes natural gas to more than 100,000 customers in Anchorage and surrounding areas. The Company also owns and operates businesses involved in natural gas engineering and quality assurance services, pipeline construction services, propane distribution, intrastate pipeline and natural gas storage in various regions of the United States. In addition, it provides information technology and outsourcing services, specializing in the mid-range computer market.
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CONTACT: Francis R. Lieder, Jr. of SEMCO ENERGY GAS COMPANY, 810-987-2200, ext. 4186, or fax, 810-989-4098

"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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