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Southeastern Michigan Gas Enterprises, Inc. -- Rate Case Filing Seeks Relief In Variety Of Areas

PORT HURON, Mich., Dec. 20 /PRNewswire/ -- Southeastern Michigan Gas Enterprises, Inc. (Nasdaq: SMGS) has filed a rate case with the Michigan Public Service Commission (MPSC) consisting of five major components to help it resolve a series of future, competitive issues.

     1.  A recovery of $5.5 million in revenue deficiency;

     2.  The merger of regulated companies, which will accomplish a
         single rate structure, a single Gas Cost Recovery mechanism and a
         single set of tariffs, rules and regulations;

     3.  The second phase of an "unbundling" program for residential

     4.  Innovative rate design, consisting of declining block rates
         for sales customers and capacity reservation charges for
         transportation customers; and

     5.  The introduction of incentive regulation, comprised of a
         proposal to share excess authorized returns with ratepayers.

Southeastern Michigan Gas Enterprises is filing the rate case in the name of two of its subsidiaries: Southeastern Michigan Gas Company and Michigan Gas Company. The rates and regulations of both companies are out of step with significant changes, including the addition of 40,000 new customers in recent years. Southeastern Michigan Gas Company has not filed a rate case with the MPSC in 10 years; Michigan Gas filed its last MPSC rate case six years ago. An order from the MPSC on the current rate case is expected by September of 1997.

"Approval by the MPSC of this rate case would bring strategic, financial and operational benefits to all of our ratepayers. Increased purchasing economics and streamlining of inventories, integration of operations and additional financial strength and flexibility are among the benefits of consolidation. Likewise, reduction in the number of regulatory and reporting requirements, better utilization of management resources and a single corporate identity will benefit customers, employees and communities served. And, our innovative unbundling programs and sharing excess returns with customers provide for testing the viability of new concepts," said Jon A. Kosht, Vice President of Gas Supply, Rates & Regulatory Affairs.

The MPSC-approved order would affect the rates of both Southeastern Michigan Gas and Michigan Gas (MI Gas) Companies. A typical MI Gas customer (who uses 120 mcf annually) may see an annual increase of about 7%, while a typical Southeastern customer may see an annual increase of about 10%.
SOURCE Southeastern Michigan Gas Enterprises, Inc.

"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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