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Southeastern Michigan Gas Enterprises, Inc. Announces Option Plus -- More Choice for Utility Customers.

PORT HURON, Mich., Oct. 2 /PRNewswire/ -- Southeastern Michigan Gas Enterprises, Inc.'s (Nasdaq: SMGS) ("SEMGE") President and Chief Executive Officer, Bill Johnson, today announced "Option Plus." The program is the first of its kind in Michigan and will allow a limited number of natural gas customers, including residential users, to purchase gas supplies from sources other than their local distribution company. The program will be offered beginning April 1, 1997, to customers of SEMGE subsidiary Battle Creek Gas Company.

More than a decade of natural gas industry deregulation has transformed conditions for once-sheltered producers, pipeline companies and local distribution companies, ushering in greater competition and expanded choice for customers. Choice is a product of "unbundling" the gas purchasing, transmission, storage, distribution, meter reading, billing and other services associated with natural gas use and offering them to customers based on their needs and wants.

Industrial and large commercial natural gas users with the expertise and resources to purchase directly from producers or marketers have enjoyed increased flexibility since the late 1980s. Programs like Option Plus now make it possible for smaller customers to exercise similar options, choosing from among alternative suppliers and services.

"The Battle Creek Option Plus program will be offered to up to 1,000 residential and small commercial and industrial customers," said Jon Kosht, Vice President of Rates and Regulatory Affairs, SEMGE. "We're offering this program because continuously enhancing our product and service offerings in response to the changing needs of the marketplace is critical. It's also consistent with our strategic direction to unearth every conceivable business opportunity among energy consumers."

Of course, Battle Creek Gas Company will continue to offer its traditional "bundled" gas sales service. Currently, the cost that local gas distribution companies incur for natural gas is simply passed through to consumers -- there is no markup.

Mr. Johnson also said that, as part of a rate case filing later this year, a second pilot program will be proposed for MPSC approval for implementation in 1998 and will be offered to customers of SEMGE subsidiaries Michigan Gas Company and Southeastern Michigan Gas Company.

Southeastern Michigan Gas Enterprises, Inc. owns Battle Creek Gas Company, which serves 34,000 customers in 13 cities and towns including Battle Creek; Michigan Gas Company, which serves 98,000 customers in 6 counties in southwestern and western Michigan and 7 counties in the Upper Peninsula; and Southeastern Michigan Gas Company, which serves 96,000 customers in eastern and central Michigan.
SOURCE Southeastern Michigan Gas Enterprises, Inc.
CONTACT: Jon A. Kosht, Vice President, Gas Supply, Rates ''&'' Regulatory Affairs, of Southeastern Michigan Gas Enterprises, 810-989-4107

"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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