LANSING, October 29.  The Michigan Public Service
Commission today approved a settlement agreement that will merge
Michigan Gas Company's and Southeastern Michigan Gas Company's rate
structures and gas cost recovery clauses.   As a result of this decision,
all SEMCO Energy Gas Company customers will be billed identical rates and
charges for natural gas services.   Michigan Gas Company and
Southeastern merged as SEMCO Energy Gas Company in April 1997. 
Since the merger, Michigan Gas Company and SEMCO customers have
been billed using different rate structures.  Today's order  also approved
a $401,772 annual rate increase for SEMCO's natural gas customers.   On
December 10, 1996,  Michigan Gas Company and Southeastern had filed
a joint application, as SEMCO,  to merge their rate structures and
implement an annual rate  increase of $5.6 million.  Today's order also
authorizes:

     An overall rate of return of 8.59% for SEMCO;
     An incentive ratemaking plan, designed to provide an efficiency
     incentive for the        company, with customers sharing in
     any resulting efficiencies;
     Expansion of customer choice through the adoption of two new
     aggregation tariffs; and
     Adoption of Transportation Standards of Conduct and daily load
     balancing requirements   for existing transportation customers.

     SEMCO's residential customers using 120 Mcf (thousand cubic
feet) of natural gas per year will see an annual increase of about $13.00. 
Individual customer increases will vary, based on actual customer natural
gas use.  Commercial and industrial sales customers will also see an
increase, based on actual natural gas use.  
 
    MPSC staff, SEMCO, the Association of Businesses Advocating
Tariff Equity, Attorney General Frank Kelley and Stone Container
Corporation negotiated the settlement agreement.

     SEMCO, headquartered in Port Huron, provides natural gas service
to about 200,000 customers in 22 Michigan counties.

     The MPSC is an agency within the Department of Consumer and
Industry Services.

Case No. U-11220
(SEMCO rate revision)
October 29, 1997