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SEMCO ENERGY, Inc. Expects Lower 2002 Earnings

FARMINGTON HILLS, Mich., Oct. 29 -- SEMCO ENERGY, Inc. (NYSE: SEN) today announced preliminary third quarter 2002 financial results of a net loss of approximately $.38 per share, which is below the current consensus estimate of a loss of $.31 per share. An operating loss is typically reported for this quarter due to the seasonality of the gas distribution business.

The Gas Distribution Business expects to report an operating loss of approximately $.7 million for the third quarter of 2002 compared to an operating loss of $2.2 million for the third quarter of 2001. The Construction Services Business expects to report operating income of approximately $.6 million for the third quarter of 2002 compared to operating income of $3.6 million for the third quarter of 2001. The Company also announced that it expects earnings for the year 2002 to be lower than the current consensus estimate of $.80 per share.

Marcus Jackson, Chairman, President and Chief Executive Officer said, "The preliminary results for the third quarter for the Gas Distribution Business improved over the prior year. However, the preliminary results at the Construction Services Business were below our expectations and are down from last year's results. As we noted in the second quarter, increased competition and reduced capital spending by customers have negatively impacted this segment of the business as customers have cut back or delayed construction projects. These delays are due in part to warmer than normal weather in the Midwest during the past several years. The softness in this market is expected to continue in the fourth quarter. In addition, operating performance at several of the business units has been below our expectations."

Mr. Jackson also said, "Through the second quarter, the Company began to see the positive results of the restructuring activity undertaken since late last year and I continue to be pleased with the results of the gas distribution business and believe we have a sound business strategy."

SEMCO will finalize and release third quarter 2002 results and provide further guidance for 2002 on Wednesday, November 6, 2002. The company will host a conference call at 9:00 a.m. Eastern Standard Time on Thursday, November 7, 2002. The call will be webcast and will be available through SEMCO's website at .

SEMCO ENERGY, Inc. is a diversified energy and infrastructure company that distributes natural gas to more than 377,000 customers in Michigan and Alaska. It also owns and operates businesses involved in pipeline construction services, propane distribution, intrastate pipelines 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.

The following is a "Safe-Harbor" statement under the Private Securities Litigation Reform Act of 1995. This release contains forward-looking statements that involve risks and uncertainties. Statements that are not historic facts, including statements about the Company's outlook, beliefs, plans, goals and expectations, are forward-looking statements. Factors that may impact forward-looking statements include, but are not limited to, the effects of weather, the economic climate, competition, commodity prices, changing conditions in the capital markets, regulatory approval processes, success in obtaining new business and other risks detailed from time to time in the company's Securities and Exchange Commission filings.

Source: SEMCO ENERGY, 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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