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S T A T E O F M I C H I G A N BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION * * * * * In the matter of the application of ) SEMCO ENERGY GAS COMPANY for authority ) to implement a gas cost recovery plan and factors ) Case No. U-15453 for the 12-month period of April 2008 through ) March 2009 for its Battle Creek Division. ) ) At the July 29, 2008 meeting of the Michigan Public Service Commission in Lansing, Michigan. PRESENT: Hon. Orjiakor N. Isiogu, Chairman Hon. Monica Martinez, Commissioner Hon. Steven A. Transeth, Commissioner ORDER APPROVING SETTLEMENT AGREEMENT On December 21, 2007, pursuant to 1982 PA 304, MCL 460.6h et seq., SEMCO Energy Gas Company (SEMCO) filed an application with supporting testimony and exhibits requesting approval of its gas cost recovery (GCR) plan and factors for the 12-month period ending March 31, 2009 for its Battle Creek Division. On May 2, 2008, SEMCO filed amended testimony and exhibits. A prehearing conference was held on February 13, 2008, before Administrative Law Judge Sharon L. Feldman; SEMCO and the Commission Staff participated in the proceedings. On June 23, 2008, the parties submitted a settlement agreement resolving all issues in the case. According to the terms of the settlement agreement, attached as Exhibit A, the parties agree that SEMCO’s 2008-2009 GCR plan as reflected in its initial and amended case filings, is

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Page 1: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan

S T A T E O F M I C H I G A N

BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

* * * * *

In the matter of the application of ) SEMCO ENERGY GAS COMPANY for authority ) to implement a gas cost recovery plan and factors ) Case No. U-15453 for the 12-month period of April 2008 through ) March 2009 for its Battle Creek Division. ) ) At the July 29, 2008 meeting of the Michigan Public Service Commission in Lansing,

Michigan.

PRESENT: Hon. Orjiakor N. Isiogu, Chairman

Hon. Monica Martinez, Commissioner Hon. Steven A. Transeth, Commissioner

ORDER APPROVING SETTLEMENT AGREEMENT

On December 21, 2007, pursuant to 1982 PA 304, MCL 460.6h et seq., SEMCO Energy Gas

Company (SEMCO) filed an application with supporting testimony and exhibits requesting

approval of its gas cost recovery (GCR) plan and factors for the 12-month period ending

March 31, 2009 for its Battle Creek Division. On May 2, 2008, SEMCO filed amended testimony

and exhibits.

A prehearing conference was held on February 13, 2008, before Administrative Law Judge

Sharon L. Feldman; SEMCO and the Commission Staff participated in the proceedings. On

June 23, 2008, the parties submitted a settlement agreement resolving all issues in the case.

According to the terms of the settlement agreement, attached as Exhibit A, the parties agree

that SEMCO’s 2008-2009 GCR plan as reflected in its initial and amended case filings, is

Page 2: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan

Page 2 U-15453

reasonable and should be approved. The parties also agree that for purposes of the five-year

forecast for the 2009-2010 and 2011-2012 GCR plan years, SEMCO will adhere to gas purchasing

practices as set forth in Attachment 2 to the settlement agreement. The parties further agree that

the Commission should approve a base GCR factor of $10.5214 per dekatherm (Dth) for

SEMCO’s Battle Creek Division, as set forth in Attachment 1 to the settlement agreement. The

parties agree that this base GCR factor shall be effective the first billing month immediately

following the issuance of a Commission order approving the settlement agreement. The parties

agree that the base GCR factor is comprised of a demand capacity charge of $0.4810 per Dth, a

balancing recovery charge of $0.2500 per Dth, and a gas commodity charge of $9.7904 per Dth.

The parties further agree that if this settlement agreement is approved effective after the second

quarter matrix is typically calculated and during the July, August, or September billing months, the

maximum authorized factor in effect for those months will reflect the contingency matrix

adjustment calculated pursuant to Attachment 1 to the settlement agreement for the second quarter

of SEMCO’s 2008-2009 GCR period. Thereafter, SEMCO agrees to recalculate the 2008-2009

maximum authorized GCR factor with symmetry for the third and fourth quarters of the plan

period in accordance with the contingency matrix set forth in Attachment 1. The New York

Mercantile Exchange increase used to calculate the quarterly adjustment is capped at $3.00 per

million British thermal units (MMBtu). Any new GCR factor ceiling calculated under the matrix

will not decrease below the base GCR factor of $10.5214 per Dth; however, the Commission

observes that if the price of natural gas declines SEMCO may elect to bill a lower factor under

MCL 460.6h(9) and nothing in the settlement agreement precludes the company from doing so.

Thus, if gas prices decline, voluntary GCR factor reductions may be appropriate.

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Page 3 U-15453

The Commission finds that the settlement agreement is reasonable and in the public interest,

and should be approved.

THEREFORE, IT IS ORDERED that:

A. The settlement agreement, attached as Exhibit A, is approved.

B. The 2008-2009 gas cost recovery plan as filed, amended, and as modified by the settlement

agreement, is approved.

C. SEMCO Energy Gas Company is authorized for the 2008-2009 plan year to incorporate

into its rates a base gas cost recovery factor of $10.5214 per dekatherm, effective with the first

billing month following the issuance of this order.

D. SEMCO Energy Gas Company is authorized to implement maximum gas cost recovery

factors for the 2008-2009 plan year as set forth in the settlement agreement and pursuant to the

contingency mechanism set forth in Attachment 1 of the settlement agreement.

E. SEMCO Energy Gas Company shall file, within 30 days, tariff sheets updated to reflect the

approvals granted herein and substantially similar to Attachment 1 to the settlement agreement and

Exhibit B to this order.

The Commission reserves jurisdiction and may issue further orders as necessary.

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Page 4 U-15453

Any party desiring to appeal this order must do so in the appropriate court within 30 days after

issuance and notice of this order, under MCL 462.26.

MICHIGAN PUBLIC SERVICE COMMISSION

________________________________________ Orjiakor N. Isiogu, Chairman

________________________________________ Monica Martinez, Commissioner

________________________________________ Steven A. Transeth, Commissioner By its action of July 29, 2008. ________________________________ Mary Jo Kunkle, Executive Secretary

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EXHIBIT A

Page 6: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 7: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 8: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 9: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
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ATTACHMENT 1

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ATTACHMENT 2

Page 13: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 14: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 15: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 16: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 17: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 18: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 19: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 20: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 21: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 22: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 23: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
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Page 25: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
Page 26: et seq....2008/07/29  · Page 2 U-15453 reasonable and should be approved. The parties also agree that for purposes of the five-year forecast for the 2009-2010 and 2011-2012 GCR plan
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M.P.S.C. - No. 3 – Gas Sixth Revised Sheet No. D-3.00 SEMCO ENERGY GAS COMPANY – B.C. DIVISION Cancels Fifth Revised Sheet No. D-3.00 (Adjust GCR Factor)

Issued June 13, 2008 by Effective for bills rendered on and after Eugene N. Dubay The first billing cycle of the April 2008 Senior Vice President and C.O.O. Billing Month. Issued under authority of 1982 Port Huron, MI 48060 PA 304, Section 6h and the Michigan Public Service Commission for Self-implementation in Case No. U-15453.

The Gas Cost Recovery Factors

Pursuant to MCL 460.6h (9), the Company is authorized to implement Gas Cost Recovery Factors for The April 2008 through March 2009 GCR plan period of up to:

Billing Months Maximum Authorized Actual Factor Billed Factor $/Dth $/Dth

April 2008 $10.0598/ Dth $8.0500/ Dth May 2008 $10.0598/ Dth $10.0598/ Dth June 2008 $10.0598/ Dth $10.0598/ Dth July, 2008 $10.7029/ Dth $10.7029/ Dth August, 2008 $10.7029/ Dth September, 2008 $10.7029/ Dth October, 2008 $10.7029/ Dth November, 2008 $10.7029/ Dth December, 2008 $10.7029/ Dth January, 2009 $10.7029/ Dth February, 2009 $10.7029/ Dth March, 2009 $10.7029/ Dth

The current month’s Gas Cost Recovery factor is composed of the following cost components: Balancing Charge ......................................$0.2500 per Dth Capacity Demand Charge ....................................$0.4747 per Dth Gas Commodity Charge ......................................$9.9782 per Dth

EXHIBIT B

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