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Semco Energy Inc – ‘10-K405’ for 12/31/00

On: Friday, 3/30/01, at 11:02am ET · For: 12/31/00 · Accession #: 277158-1-500003 · File #: 1-15565

  As Of                Filer                Filing    For·On·As Docs:Size

 3/30/01  Semco Energy Inc                  10-K405    12/31/00    8:249K

Annual Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K405     Form 10-K for Year Ended 12/31/2000                   19    122K 
 2: EX-10       Exhibit 10.12 - Directors' Deferred Comp. Agr.         5±    21K 
 3: EX-10       Exhibit 10.13 - Stock Option Plan of 2000              1      8K 
 4: EX-12       Exhibit 12 - Ratio of Earnings to Fixed Charges        1      9K 
 5: EX-13       Exhibit 13 - 2000 Annual Report to Shareholders       43    282K 
 6: EX-21       Exhibit 21 - Subsidiaries as of 12/31/2000             2±     9K 
 7: EX-23       Exhibit 23 - Consent of Ind. Public Accountants        1      6K 
 8: EX-24       Exhibit 24 - Power of Attorney                         2±    11K

10-K405 — Form 10-K for Year Ended 12/31/2000
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Business Certain Relationships and Related Transactions Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Construction Services Corporate and other Directors and Executive Officers of the Registrant Diversified Businesses Engineering Services Executive Compensation Exhibits, Financial Statement Schedules, and Reports on Form 8-K Financial Statements and Supplementary Data Information About Forward-Looking Statements Key to Abbreviated Terms Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations Market for the Registrant's Common Equity and Related Stockholder Matters Properties Quantitative and Qualitative Disclosures About Market Risk Security Ownership of Certain Beneficial Owners and Management Selected Financial Data Signatures Submission of Matters to A Vote of Security Holders
1	1st Page - Filing Submission
2	Item 1. Business
"	Item 2. Properties
"	Item 3. Legal Proceedings
"	Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
"	Item 10. Directors and Executive Officers of the Registrant
"	Item 13. Certain Relationships and Related Transactions
"	Signatures
3	Key to Abbreviated Terms
4	Information About Forward-Looking Statements
8	Diversified Businesses
"	Construction Services
9	Engineering Services
12	Corporate and other
"	Item 4. Submission of Matters to A Vote of Security Holders
"	Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
13	Item 6. Selected Financial Data
"	Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Item 7A. Quantitative and Qualitative Disclosures About Market Risk
"	Item 8. Financial Statements and Supplementary Data
14	Item 11. Executive Compensation
"	Item 12. Security Ownership of Certain Beneficial Owners and Management
15	Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

10-K405 1st Page of 19 TOC ↑Top Previous Next ↓Bottom Just 1st
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-K

(Mark  One)                                                                     
    [X]       ANNUAL  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE  ACT  OF  1934                             
FOR  THE  FISCAL YEAR ENDED DECEMBER 31, 2000       

   [ ]       TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
SECURITIES  EXCHANGE  ACT  OF  1934                 
            For  the  transition  period  from  ___________  to  ___________

Commission file number 001-15565

SEMCO ENERGY, INC.
(Exact name of registrant as specified in its charter)

MICHIGAN                             38-2144267   
(State  of  incorporation)                 (I.R.S.  Employer          
                                  Identification  No.)

405  WATER  STREET,  PORT  HURON,  MICHIGAN         48060             
(Address  of  principal  executive  offices)     (Zip  Code)          

810-987-2200
 (Registrant's  telephone  number,  including  area  code)

Securities  registered  pursuant  to  Section  12(b)  of  the  Act:             

                                                                [Download Table]

                                           Name  of  each  exchange  on
Title  of  each  class                          which  registered      
-------------------------------------      ----------------------------
                                                                       
COMMON  STOCK,  $1  PAR  VALUE             NEW  YORK  STOCK  EXCHANGE  
INCOME  PRIDES                             NEW  YORK  STOCK  EXCHANGE  
10 1/4%  TRUST  PREFERRED  SECURITIES      NEW  YORK  STOCK  EXCHANGE  

Securities  registered  pursuant  to  Section  12(g)  of  the  Act:  None       

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the registrant was
required  to  file  such  reports),  and  (2)  has  been  subject  to  such     
filing  requirements  for  the  past  90  days.  Yes  [X]       No  [ ]         

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  registrant's  knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form  10-K.  [X]                                                                

The  aggregate  market  value  of  the  Registrant's  Common  Stock  held  by   
non-affiliates  as  of  February  28,  2001 was $228,052,662 based on 15,864,533
shares  held by non-affiliates and the closing price of $14 3/8 on that day (New
York  Stock  Exchange).                                                         

Number of outstanding shares of the Registrant's Common Stock as of February 28,
2001:  18,057,442                                                               

DOCUMENTS INCORPORATED BY REFERENCE:

Portions  of  Registrant's  definitive  Proxy  Statement  (filed  pursuant  to  
Regulation  14A)  with respect to Registrant's  April 17, 2001 Annual Meeting of
Shareholders  are  incorporated  by  reference  in  Part  III.  Portions  of the
Registrant's  2000  Annual  Report  to Shareholders (filed as Exhibit 13 to this
Form  10-K)  are  incorporated by reference in Part I, Item 1 and Part II, Items
5,6,  7,  7A  and  8,  from  such  exhibits  as  noted  herein.                 

10-K405 2nd Page of 19 TOC 1st Previous Next ↓Bottom Just 2nd
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                         T A B L E  O F  C O N T E N T S                        

                                                                           PAGE 
CONTENTS                                                                  NUMBER

                                                                                
KEY  TO  ABBREVIATED  TERMS . . . . . . . . . . . . . . . . . . . . . .      1  

INFORMATION  ABOUT  FORWARD-LOOKING  STATEMENTS . . . . . . . . . . . .      2  

PART  I                                                                         

ITEM     1.     BUSINESS. . . . . . . . . . . . . . . . . . . . . . . .      2  

ITEM     2.     PROPERTIES. . . . . . . . . . . . . . . . . . . . . . .      8  

ITEM     3.     LEGAL  PROCEEDINGS. . . . . . . . . . . . . . . . . . .     10  

ITEM     4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . .     10  

PART  II                                                                        

ITEM     5.     MARKET  FOR  THE  REGISTRANT'S  COMMON  EQUITY  AND             
                RELATED  STOCKHOLDER  MATTERS . . . . . . . . . . . . .     10  

ITEM     6.     SELECTED  FINANCIAL  DATA . . . . . . . . . . . . . . .     11  

ITEM     7.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL          
                CONDITION  AND  RESULTS  OF  OPERATIONS . . . . . . . .     11  

ITEM     7A.    QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT              
                MARKET  RISKS . . . . . . . . . . . . . . . . . . . . .     11  

ITEM     8.     FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA . . . .     11  

ITEM     9.     CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON          
                ACCOUNTING  AND  FINANCIAL  DISCLOSURE. . . . . . . . .     11  

PART  III                                                                       

ITEM    10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. . .     12  

ITEM    11.     EXECUTIVE  COMPENSATION . . . . . . . . . . . . . . . .     12  

ITEM    12.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS            
                AND  MANAGEMENT . . . . . . . . . . . . . . . . . . . .     12  

ITEM    13.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS. . .     12  

PART  IV                                                                        

ITEM    14.     EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES,  AND  REPORTS       
                ON  FORM  8-K . . . . . . . . . . . . . . . . . . . . .     13  

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     18  

10-K405 3rd Page of 19 TOC 1st Previous Next ↓Bottom Just 3rd
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KEY  TO  ABBREVIATED  TERMS                                                     

                                                                                
AMR . . . .  (Automated  Meter  Reading)  a  meter  reading  system that employs
             radio  waves  to  collect  natural  gas  consumption  data         
ATS . . . .  (Aggregated  Transportation  Service)  a  program  that  allows    
             commercial  and  industrial  gas distribution customers in Michigan
             to  purchase  their  gas  from  third-party gas suppliers, with the
             Company transporting the gas                                       
Bcf . . . .  A  measure  of  natural gas volumes equivalent to one billion cubic
             feet                                                               
Degree Day.  A measure of coldness computed by the number of degrees the average
             daily  temperature  falls  below  65  degrees  Fahrenheit          
DRIP. . . .  Direct  Stock  Purchase  and  Dividend  Reinvestment  Plan         
FASB. . . .  Financial  Accounting  Standards  Board                            
FERC. . . .  Federal  Energy  Regulatory  Commission                            
FOS . . . .  (Field  Order  System)  a computerized dispatching system for field
             service  calls                                                     
GCR . . . .  (Gas  Cost  Recovery)  a  process  by  which  the  Gas Distribution
             Business,  through annual gas cost proceedings before the MPSC, can
             recover  the  prudent  and  reasonable  cost  of  gas  sold        
Mcf . . . .  A  measure  of natural gas volumes equivalent to one thousand cubic
             feet                                                               
MMcf. . . .  A  measure  of  natural gas volumes equivalent to one million cubic
             feet                                                               
MPSC. . . .  Michigan  Public  Service  Commission                              
PGA . . . .  (Purchased  Gas Adjustment) a process by which the Gas Distribution
             business,  through  annual gas cost proceedings before the RCA, can
             recover  the  prudent  and  reasonable  cost  of  gas  sold        
RCA . . . .  Regulatory  Commission  of  Alaska                                 
SFAS. . . .  Statement  of  Financial  Accounting  Standards                    
Tcf . . . .  A  measure  of natural gas volumes equivalent to one trillion cubic
             feet.                                                              

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10-K405 4th Page of 19 TOC 1st Previous Next ↓Bottom Just 4th
INFORMATION  ABOUT  FORWARD-LOOKING  STATEMENTS                                 

This  document  contains  forward-looking  statements  within the meaning of the
Private  Securities  Litigation  Reform  Act  of  1995 that are based on current
expectations,  estimates  and  projections  of  SEMCO  Energy,  Inc.  and  its  
subsidiaries  (the  "Company").  Statements  that  are  not  historical  facts, 
including  statements  about  the  Company's outlook, beliefs, plans, goals, and
expectations,  are  forward-looking statements.  These statements are subject to
potential  risks  and  uncertainties  and,  therefore, actual results may differ
materially.  The  Company  undertakes  no  obligation  to  update  publicly  any
forward-looking statements whether as a result of new information, future events
or  otherwise.  Factors  that may impact forward-looking statements include, but
are  not limited to, the following: (i) the effects of weather and other natural
phenomena;  (ii) the economic climate and growth in the geographical areas where
the  Company  does business; (iii) the capital intensive nature of the Company's
business;  (iv) increased competition within the energy industry as well as from
alternative  forms  of energy; (v) the timing and extent of changes in commodity
prices  for natural gas and propane; (vi) the effects of changes in governmental
and  regulatory  policies,  including income taxes, environmental compliance and
authorized  rates;  (vii)  the Company's ability to bid on and win construction,
engineering  and quality assurance contracts; (viii) the impact of energy prices
on  the  amount  of projects and business available to the Company's engineering
services  segment;  (ix) the nature, availability and projected profitability of
potential  investments  available  to  the Company; (x) the Company's ability to
accomplish  its  financing  objectives  in a timely and cost-effective manner in
light  of  changing  conditions  in  the capital markets, and (xi) the Company's
ability  to  operate  and  integrate  acquired businesses in accordance with its
plans.                                                                          

PART I

ITEM  1.          BUSINESS                                                      

SEMCO  ENERGY,  INC.                                                            

SEMCO  Energy,  Inc. is a diversified energy and infrastructure services company
headquartered  in southeastern Michigan.  It was founded in 1950 as Southeastern
Michigan  Gas  Company.  SEMCO Energy, Inc. and its subsidiaries (the "Company")
operate  four business segments: (1) gas distribution; (2) pipeline construction
services; (3) engineering services; and (4) propane, pipelines and storage.  The
latter  three  segments  are  sometimes referred to together as the "diversified
businesses".  Certain  smaller  subsidiaries or divisions of the Company are not
part  of  the  four  previously  mentioned business segments.  Instead, they are
included  together in a category the Company refers to as "Corporate and other".
For  information on what constitutes a business segment, refer to Note 11 of the
Notes  to the Consolidated Financial Statements on page 63 of the Company's 2000
Annual  Report  to  Shareholders,  which  information  is incorporated herein by
reference  from  Exhibit  13  to  this  Form  10-K.  The Company also created an
information  technology  business  during  2000.  The  Company's  other business
segments  are  currently  the  primary  customers  of the information technology
business.  The  subsidiary  comprising  the  Company's energy marketing business
("Energy  Services")  was  sold  effective  March  31,  1999.  The  Company  had
approximately  1,568  employees  at  December  31,  2000.                       

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10-K405 5th Page of 19 TOC 1st Previous Next ↓Bottom Just 5th
GAS  DISTRIBUTION                                                               

The  Company's  gas  distribution  business  segment  consists  of operations in
Michigan  and  Alaska.  ENSTAR,  the  Alaska-based  operation  was  acquired  on
November 1, 1999. The acquisition of ENSTAR was accounted for as a purchase and,
therefore, the consolidated financial statements and the table below include the
results  of  ENSTAR's  operations  since  November  1,  1999.                   
     The Michigan gas distribution operation and ENSTAR are referred to together
as the "Gas Distribution Business".  The Michigan gas distribution operation and
ENSTAR  Natural  Gas  Company  operate as divisions of SEMCO Energy, Inc.  SEMCO
Energy Gas Company, which had conducted the Michigan gas distribution operation,
was  merged  into  SEMCO  Energy,  Inc.  on  December 31, 1999.  Alaska Pipeline
Company operates as a subsidiary of SEMCO Energy, Inc. and as part of the ENSTAR
operations.                                                                     
     The  Gas  Distribution  Business  distributes and transports natural gas to
residential,  commercial  and  industrial customers and is the Company's largest
business  segment.  Set forth in the table below is gas sales and transportation
information  for  the  past  three  years:                                      

                                                                [Download Table]


Years  ended  December  31,                      2000      1999      1998       
---------------------------------------------  --------  --------  --------     

                                                                                

GAS SALES REVENUE (IN THOUSANDS):                                               
  Residential . . . . . . . . . . . . . . . .  $190,221  $137,407  $118,220     
  Commercial. . . . . . . . . . . . . . . . .    62,354    38,451    42,041     
  Industrial. . . . . . . . . . . . . . . . .    18,412     6,763     6,439     
                                               --------  --------  --------     
    Total gas sales revenue (a) . . . . . . .  $270,987  $182,621  $166,700     
                                               ========  ========  ========     

GAS TRANSPORTATION REVENUE (IN THOUSANDS) . .  $ 30,783  $ 22,369  $ 14,832     
                                               ========  ========  ========     

VOLUMES OF GAS SOLD (MMCF):                                                     
  Residential . . . . . . . . . . . . . . . .    41,397    28,583    21,946     
  Commercial. . . . . . . . . . . . . . . . .    14,591     8,882     8,840     
  Industrial. . . . . . . . . . . . . . . . .     5,066     1,780     1,461     
                                               --------  --------  --------     
    Total volumes of gas sold (a) . . . . . .    61,054    39,245    32,247     

VOLUMES OF GAS TRANSPORTED (MMCF) . . . . . .    48,706    32,417    23,791     
                                               --------  --------  --------     
TOTAL VOLUMES DELIVERED (a) . . . . . . . . .   109,760    71,662    56,038     
                                               ========  ========  ========     

<FN>                                                                            
(a)  Does  not include the sale of excess inventory gas to a third party in 2000
and  1999.                                                                      

     Refer  to  Note 11 of the Notes to the Consolidated Financial Statements on
pages  63  and  64  of  the  Company's 2000 Annual Report to Shareholders, which
information  is  incorporated  herein  by reference from Exhibit 13 to this Form
10-K,  for  the operating revenues, operating income, assets and other financial
information  of  the  Gas  Distribution  Business  for  the  past  three  years.

GAS  SALES  Gas  sales  revenue  is  generated  primarily  through  the sale and
delivery  of  natural  gas  to  residential  and  commercial  customers.  These 
customers  use  natural  gas  mainly  for space heating purposes.  Consequently,
weather  has a significant impact on sales.  Given the impact of weather on this
business  segment,  most  of  its  gas  sales revenue is earned in the first and
fourth  quarters  of  the  calendar year.  Revenues from gas sales accounted for
65%,  50%  and  26%  of  consolidated operating revenues in 2000, 1999 and 1998,
respectively.  If  operating  revenues  from  the  Company's  energy  marketing 
business,  which  was  sold effective March 31, 1999, are excluded, gas sales by
the  Gas  Distribution  Business  would  have  accounted  for  66%  and  68%  of
consolidated  operating  revenues  for  1999  and  1998,  respectively.         
     Competition  in the gas sales market arises from alternative energy sources
such  as  electricity,  propane and oil.  However, this competition is inhibited
because of the time, inconvenience and investment for residential and commercial
customers to convert to an alternate energy source when the price of natural gas
fluctuates.  For  more  information  on  competition  for  the  Gas Distribution
Business,  refer  to  the  section  titled  "Outlook"  on pages 33 and 34 of the
Company's  2000 Annual Report to Shareholders, which information is incorporated
herein  by  reference  from  Exhibit  13  to  this  Form  10-K.                 
     The  Company's  aggregated  transportation  service  ("ATS") program, which
became  effective April 1, 1998, provides all Michigan commercial and industrial
customers  the  opportunity  to  purchase their gas from a third-party supplier,
while  allowing  the Gas Distribution Business to continue charging the existing
distribution fees and customer fees plus a gas load balancing fee.  Refer to the

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sections  titled "Gas Sales Margin" and "Gas Transportation Revenue" on pages 31
and 32 of the Company's 2000 Annual Report to Shareholders, which information is
incorporated  herein by reference from Exhibit 13 to this Form 10-K, for further
information  regarding  the  impact  of  the  ATS  program  on  gas  sales  and 
transportation  revenue.                                                        

TRANSPORTATION  The  Gas  Distribution Business provides transportation services
to  its  large-volume  commercial and industrial customers.  This service offers
those  customers the option of purchasing natural gas directly from producers or
marketing  companies  and  utilizing the Gas Distribution Business' distribution
network  to  transport  the  gas  to  their  facilities.                        
     Alaska  Pipeline  Company  ("APC")  owns  and operates the only natural gas
transmission  lines  in its service area that are operated for utility purposes.
APC's  transmission  system  delivers  natural  gas  from  producing  fields  in
southcentral  Alaska to ENSTAR's Anchorage-based gas distribution system.  APC's
only  customer  is  ENSTAR  Natural  Gas  Company.                              
     The market price of alternate energy sources such as coal, electricity, oil
and  steam  is  the  primary  competitive  factor  affecting  the  demand  for  
transportation.  Certain large industrial customers have some ability to convert
to  another  form of energy if the price of natural gas increases significantly.
Partially offsetting the impact of price sensitivity has been the use of natural
gas  as  an  industrial  fuel because of clean air legislation and the resultant
pressures  on  industry  and  electric  utilities to reduce emissions from their
plants.                                                                         
     As  is  the  case  with  many  gas  distribution  utilities, there has been
downward  pressure  on  transportation  rates  due  to  the  potential  risk for
industrial  customers  and electric generating plants located in close proximity
to  interstate  natural gas pipelines to bypass the Company and connect directly
to  such pipelines.  However, management is currently unaware of any significant
bypass  efforts by the Company's customers.  The Company has addressed and would
continue  to  address  any  such  efforts  by offering special services and rate
arrangements  designed  to  retain  these  customers  on  the  Company's system.
Customers  in  ENSTAR's service territory are currently precluded from bypassing
ENSTAR's  transportation and distribution system due to the limited availability
of gas transmission systems and the large distances between producing fields and
the  locations  of  current  customers.                                         

CUSTOMER BASE  At December 31, 2000, the Michigan gas distribution operation had
approximately  262,000  customers.  The  largest  concentration  of  customers, 
approximately  110,000,  is  located  in  southeastern  Michigan.  The remaining
Michigan  customers  are located in and around the following communities: Battle
Creek,  Albion,  Holland,  Three  Rivers,  Niles,  Marquette  and Houghton.  The
Michigan  customer  base  is  diverse  and  includes residential, commercial and
industrial  customers.  The  largest  customers  include  power  plants,  food  
production  facilities,  paper  processing  plants,  furniture manufacturers and
others  in  a  variety  of other industries.  The average number of customers in
Michigan  has  increased  by  an average of approximately 3% annually during the
past  three  years.  By  contrast,  the  customer  growth  rate for the U.S. gas
distribution  industry  has  averaged  approximately 1% annually during the past
three years.  However, average annual gas usage per customer has been decreasing
slightly  because  new  homes  and  appliances  are  much more energy efficient.
     At  December  31,  2000,  ENSTAR had approximately 105,000 customers in and
around  the  Anchorage,  Alaska area including the communities of Big Lake, Bird
Creek,  Butte,  Chugiak, Eagle River, Eklutna, Girdwood, Houston, Indian, Kenai,
Knik,  Nikiski,  Palmer,  Peters Creek, Portage, Sterling, Soldotna, Wasilla and
Whittier.  ENSTAR  is  the  sole  distributor  of  natural  gas  to  the greater
Anchorage  metropolitan area, and its service area encompasses approximately 50%
of  the  population of Alaska.  ENSTAR has two types of customers: gas sales and
transportation.  Gas  sales  customers are primarily residential and commercial.
ENSTAR  provides  transportation  service,  on  behalf  of gas producers and gas
marketers,  to  power  plant  sites,  a  liquified natural gas plant, an ammonia
plant,  and hundreds of commercial locations. The average number of customers at
ENSTAR  has increased by an average of approximately 3% annually during the past
three  years.                                                                   

GAS  SUPPLY  The  Gas  Distribution Business has agreements with TransCanada Gas
Services,  Inc.  ("TransCanada")  for  the three year period that began April 1,
1999,  under  which  TransCanada provides the Company's natural gas requirements
and  manages  the  Company's  natural  gas  supply  and  the  supply  aspects of
transportation  and  storage operations in Michigan.  For additional information
about  these  agreements,  refer  to  Note  2  of  the Notes to the Consolidated
Financial  Statements on pages 50 through 52 of the Company's 2000 Annual Report
to  Shareholders,  which  information  is  incorporated herein by reference from

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10-K405 7th Page of 19 TOC 1st Previous Next ↓Bottom Just 7th
Exhibit  13  to  this Form 10-K.  The Gas Distribution Business owns underground
storage facilities in Michigan with a working capacity of 4.8 billion cubic feet
("Bcf").  In  addition,  it  leases  6.5  Bcf  of  storage from Eaton Rapids Gas
Storage  System  and  3.5  Bcf  from  non-affiliates in Michigan.  The owned and
leased  storage  capacity  equals 35% to 40% of the Company's average annual gas
sales volumes in Michigan.  SEMCO Gas Storage Company (an affiliated company) is
a  50%  owner  of  Eaton  Rapids  Gas  Storage  System.                         
     ENSTAR  has a gas purchase contract (the "Marathon Contract") with Marathon
Oil  Company ("Marathon") that has been approved by the Regulatory Commission of
Alaska  ("RCA")  and  is  a  "requirements"  contract  with  no  specified daily
deliverability or annual take-or-pay quantities.  Marathon has agreed to deliver
all  of  ENSTAR's  gas requirements in excess of those provided for in other gas
supply  contracts in existence as of May 1, 1988, subject to certain exceptions,
until the commitment has been exhausted.  However, ENSTAR's purchase obligations
and  Marathon's  delivery  obligations are set at specified annual amounts after
2001.  The  contract  has  a  base  price and is subject to an annual adjustment
based  on  changes  in  the  price  of certain traded oil futures contracts plus
reimbursement  for  any  severance  taxes  and  other  charges.                 
     ENSTAR also has an RCA-approved gas purchase contract with the Municipality
of Anchorage, Chevron U.S.A., Inc. and ARCO Alaska, Inc. (the "Beluga Contract")
which  provides  for  the delivery of up to approximately 220 Bcf of gas through
the  year  2009  from  the  Beluga  field.  The  pricing mechanism in the Beluga
Contract  is  similar  to  that  contained  in  the  Marathon  Contract.        
     In  May  2000,  ENSTAR signed a gas supply contract with Anadarko Petroleum
and  Phillips  Alaska (formerly ARCO Alaska) for natural gas deliveries from the
Moquawkie gas field beginning in 2002 ("the Moquawkie Contract").  The agreement
provides  that  Anadarko  and  Phillips  will  supply ENSTAR's additional supply
requirements  through 2003, and supply a portion of ENSTAR's needs through 2016.
The  producers  have  the  opportunity  to  commit more gas to ENSTAR based upon
results  of  their  drilling programs in 2000 and 2001.  The contract has a base
price,  subject  to  annual  adjustment  based upon 50% of the change in certain
inflation  measures, of $2.75 per MCF plus reimbursement for any severance taxes
and  other  charges.  The  contract  was  approved  by  the  RCA  in  July 2000.
     Based  on  gas  purchases during the twelve months ended December 31, 2000,
which  are  not  necessarily  indicative  of the volume of future purchases, gas
reserves  committed to ENSTAR under the Marathon, Beluga and Moquawkie Contracts
are  sufficient  to  supply  all  of  ENSTAR's  expected gas supply requirements
through  the  year 2003.  After that time supplies will still be available under
these  contracts  in  accordance  with  their  terms,  but at least a portion of
ENSTAR's  requirements  are  expected to be satisfied outside the terms of these
contracts,  as  currently  in  effect.                                          
     ENSTAR's  gas  supply  source,  primarily  though  the Marathon, Beluga and
Moquawkie Contracts, is confined to the Cook Inlet area with no direct access to
other  natural gas pipelines.  However, the Cook Inlet area is home to major gas
producing  fields,  with  proven  and  producing  reserves  of approximately 2.3
trillion  cubic  feet ("Tcf").  An additional 2.3 Tcf of undiscovered gas in the
Cook  Inlet  area  has been estimated by the United States Geological Survey and
Minerals  Management  Service.                                                  
     The  Michigan-based  gas  distribution  operation  is  served by four major
interstate  pipelines:  (1)  Panhandle  Eastern  Pipe Line Company; (2) Northern
Natural  Gas  Company;  (3)  Great  Lakes  Gas  Transmission Company and (4) ANR
Pipeline  Company.                                                              

RATES  AND  REGULATION  The  rates  of gas distribution customers located in the
City  of  Battle  Creek, Michigan and surrounding communities are subject to the
jurisdiction  of  the  City  Commission  of  Battle  Creek.  The Michigan Public
Service Commission ("MPSC") authorizes the rates charged to all of the remaining
Michigan  customers.  ENSTAR  is  subject  to  regulation  by the RCA, which has
jurisdiction  over,  among  other  things,  rates,  accounting  procedures,  and
standards  of  service.  During  2000,  the  Company  filed  certain  revenue   
requirements  and cost of service information with the RCA of Alaska as required
by  the  October  1999  order approving the transfer of ownership of ENSTAR.  In
November  2000,  the  RCA  issued  an order requesting additional information in
order  to  ensure  that  ENSTAR's rates are just and reasonable.  The order also
appointed  a  hearing examiner and set a prehearing conference in February 2001.
The  order  indicated  that, if changes in ENSTAR's existing rates are required,
such changes would be applied on a prospective basis.  On March 5, 2001, the RCA
issued  a  second  order  granting  ENSTAR's  motion  to  use  a 2000 test year,
accepting  a  proposed  procedural  schedule,  and  finding  that,  because  the
proceeding  was  taking  longer  than expected, ENSTAR should show cause why its
current rates should not be made interim and refundable effective April 4, 2001.

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     Management  periodically  reviews  the  adequacy  of  the  rates of the Gas
Distribution  Business  and  files  requests  for  rate increases whenever it is
deemed  necessary  and  appropriate.  However,  a  recent  rate  case  includes 
provisions limiting the Company's ability to request a rate increase in Michigan
during  the  three year period that began April 1, 1999.  Refer to Note 2 of the
Notes  to  the  Consolidated  Financial Statements on pages 50 through 52 of the
Company's  2000 Annual Report to Shareholders, which information is incorporated
herein  by  reference from Exhibit 13 to this Form 10-K, for further information
on  regulatory  matters  including  recent  regulatory  orders  and  rate cases.

ENVIRONMENTAL  MATTERS  The  Gas  Distribution  Business  currently  owns  seven
Michigan  sites  which  formerly housed manufactured gas plants.  In the earlier
part  of  the 20th century, gas was manufactured from processes using coal, coke
or  oil.  By-products  of  this  process  have  left some contamination at these
sites.  The  Gas  Distribution  Business is in compliance with State of Michigan
rules  which require companies to take "due care" steps to insure that the sites
are  safe.  The Gas Distribution Business has submitted plans to the appropriate
regulatory  authority  in the State of Michigan to close one site and begin work
at  another site. Remedial investigation work is also in progress at a number of
these  sites  in  accordance  with  approved  priority  plans.  For  further    
information,  refer  to  Note  14  of  the  Notes  to the Consolidated Financial
Statements  on  pages  66  and  67  of  the  Company's  2000  Annual  Report  to
Shareholders, which information is incorporated herein by reference from Exhibit
13  to  this  Form  10-K.                                                       

DIVERSIFIED  BUSINESSES                                                         

The  Company's  diversified  businesses  have  grown during the past three years
primarily  through  acquisitions.  The  following table shows operating revenues
for  each  of  the  diversified businesses, including intercompany revenues, for
1998  through  2000:                                                            

                                                                [Download Table]


Years  Ended  December  31,             2000      1999     1998          
------------------------------------  --------  -------  -------         
                                            (in  thousands)              

                                                                         
Operating Revenues                                                       
  Construction Services. . . . . . .  $105,231  $58,272  $25,904         
  Engineering Services . . . . . . .    20,655   17,486   41,366         
  Propane, Pipelines and Storage . .     6,949    6,284    4,852         

<FN>                                                                     
The  amounts  in  the  above  table  include  intercompany  transactions.

     Refer  to  Note 11 of the Notes to the Consolidated Financial Statements on
pages  63  and  64  of  the  Company's 2000 Annual Report to Shareholders, which
information  is  incorporated  herein  by reference from Exhibit 13 to this Form
10-K,  for  each  of  the  diversified  business'  operating revenues, operating
income,  assets  and  other  financial  information  for  the  past three years.

CONSTRUCTION  SERVICES                                                          

The  Company's  construction services segment ("Construction Services") operates
in the mid-western, southern and southeastern areas of the United States and has
offices  in  Florida,  Georgia,  Illinois, Iowa, Kansas, Michigan, Tennessee and
Texas.  Its primary service is the installation of underground natural gas mains
and  service lines. Construction Services also provides underground construction
services to the telecommunications and water supply industries.   As of December
31,  2000,  Construction Services was comprised of seven companies that were all
acquired  since  mid-1997: (1) Sub-Surface Construction Co.; (2) King Energy and
Construction  Co.;  (3)  K&B  Construction,  Inc.; (4) Iowa Pipeline Associates,
Inc.; (5) Flint Construction Co.; (6) Long's Underground Technologies, Inc.; and
(7)  KLP  Construction  Co.  On  December 31, 1999, King Energy and Construction
Co.  was  merged  into  Flint  Construction  Co.  During  2000, the construction
businesses  were  reorganized as subsidiaries of NATCOMM, Inc., a new subsidiary
of  the Company. There is additional information regarding these acquisitions in
Note 3 of the Notes to the Consolidated Financial Statements on pages 52 through
54  of  the  Company's  2000 Annual Report to Shareholders, which information is
incorporated  herein  by  reference  from  Exhibit  13  to  this  Form  10-K.   

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    Construction  Services  had  operating  revenues,  excluding  intercompany
transactions,  of  $95.5 million, $50.0 million, and $16.6 million in 2000, 1999
and  1998,  respectively.  These  operating  revenues  accounted  for  23%  of  
consolidated  operating  revenues  in  2000,  and  17%  and  7%  of consolidated
operating  revenues,  excluding energy marketing operating revenues, during 1999
and  1998.  Construction  Services' business is seasonal in nature.  Most of the
profits  from  this  segment  are  made  during  the  summer  and  fall  months.
Construction  Services  generally  incurs  losses  during the winter months when
underground  construction  is  inhibited  by  weather.                          
    Construction  Services  competes  with  small  and  medium-sized  regional
underground  facilities  contractors  as  well  as in-house utility construction
operations.  The  natural  gas  construction services industry is comprised of a
highly  fragmented  group  of  companies  focused primarily on regional or local
markets.  The top six construction companies in the United States have less than
10%  of  the  market.  Approximately  30%  of the market represents work done by
utility  companies'  in-house  construction operations with the remainder of the
market  being served by a large number of small- and medium-size companies.  For
more  information on competition for Construction Services, refer to the section
titled "Outlook" on page 35 of the Company's 2000 Annual Report to Shareholders,
which  information  is  incorporated herein by reference from Exhibit 13 to this
Form  10-K.                                                                     

ENGINEERING  SERVICES                                                           

The  Company's engineering services business segment ("Engineering Services") is
comprised  of  two  companies, Maverick Pipeline Services, Inc. ("Maverick") and
Oilfield Materials Consultants, Inc. ("OMC").  Maverick was acquired in December
1997  and  OMC was acquired in November 1998.  Maverick purchased the assets and
assumed  certain  liabilities  of  Drafting Services, Inc. in September 1999 and
Pinpoint  Locators,  Inc.  in  October  1999.  These  two  businesses  are being
operated as divisions of Maverick.  During 2000, the engineering businesses were
reorganized  as  subsidiaries of NATCOMM, Inc., a new subsidiary of the Company.
See  Note  3  of  the Notes to the Consolidated Financial Statements on pages 52
through  54  of  the  Company's  2000  Annual  Report  to  Shareholders,  which 
information  is  incorporated  herein  by reference from Exhibit 13 to this Form
10-K,  for information regarding acquisitions.  Engineering Services has offices
in  New  Jersey,  Michigan,  Louisiana  and  Texas  and  provides  a  variety of
energy-related  engineering  and  quality  assurance services in several states.
   Engineering  Services  had  operating  revenues,  excluding  intercompany
transactions,  of  $12.3 million, $14.8 million, and $40.9 million in 2000, 1999
and  1998,  respectively.  These  operating  revenues  accounted  for  3%  of   
consolidated  operating  revenues  in  2000,  and  5%  and  17%  of consolidated
operating  revenues,  excluding energy marketing operating revenues, during 1999
and  1998.                                                                      
     Engineering  Services provides services to the natural gas distribution and
transmission,  oil  products,  exploration/production  and  telecommunication   
industries.  These  services  include  engineering  design,  distribution system
design,  construction  project  management,  field  surveys,  global positioning
surveys,  inspection,  testing, pipeline-mill quality assurance and full turnkey
service.  Engineering  Services  competes  with  regional,  national  and       
international  firms  as  well  as  in-house  engineering  and  field  service  
departments.  Refer  to the section titled "Outlook" on page 36 of the Company's
2000  Annual Report to Shareholders, which information is incorporated herein by
reference  from  Exhibit 13 to this Form 10-K, for further discussion concerning
competition  in  the  engineering  services  industry.                          
     There  was a reduction in oil and gas production and related activities due
to  the  downturn in oil prices in late 1998 and early 1999.  This resulted in a
significant  decrease in the amount of Engineering Services' pipeline inspection
and  quality  assurance projects.  Despite a recovery in oil prices in late 1999
and  2000,  these types of projects have not returned to previous levels.  There
also  has  been  a reduction or deferral of new engineering projects for the gas
distribution industry due to the cash flow impact of the warm weather during the
past  three  years.    Management  believes that the level of available projects
will  increase  as  gas  distribution  companies start releasing new engineering
projects  and as pipeline construction and inspection projects become available.

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PROPANE,  PIPELINES  AND  STORAGE                                               

The  Company's  pipelines and storage business consists of three pipelines and a
gas  storage  facility, all of which are located in Michigan.  The Company has a
partial ownership interest in one of the pipelines and an equity interest in the
gas  storage  facility. Refer to Item 2 of this Form 10-K, which is incorporated
herein  by  reference,  for  additional information on each pipeline and storage
facility such as its location and customers.  In March 1998, the Company entered
the propane distribution business with the acquisition of Hotflame Gas, Inc. and
Hotflame  Transport Co., Inc. (together known as "Hotflame").  Hotflame supplies
approximately  5  million  gallons  of  propane  annually to retail customers in
Michigan's  upper  peninsula  and  northeast Wisconsin.  Because propane is used
principally  for  heating,  most  of  the                                       
operating  income  for the propane business is generated in the first and fourth
quarters  of  the  calendar  year.                                              
     The  retail  propane industry is highly fragmented with the largest firm in
the  industry serving less than 10% of the national market and the vast majority
of  propane  companies  individually  having less than one percent market share.
Propane  is  transported  easily  in pressurized containers and is generally the
fuel used in rural areas where natural gas pipelines and distribution systems do
not exist or are not economical to build.  The Company purchases the majority of
its  propane  from  Amoco  Canada  Marketing Corporation.  The propane operation
competes  with  other  energy sources such as natural gas, fuel oil, electricity
and other regional propane providers.  The basis of the competition is generally
price  and service. The propane business has become increasingly competitive and
less  profitable,  which necessitates large-scale operations to be successful in
the  long  term.  The  Company  will continue to assess the strategic fit of the
propane  business  over  the  coming  year.                                     

ITEM  2.          PROPERTIES                                                    

GAS  DISTRIBUTION                                                               

The  gas  delivery  system  of  the Michigan gas distribution operation included
approximately  153  miles  of  gas transmission pipelines and 5,295 miles of gas
distribution  pipelines  at  December  31,  2000.  The  pipelines  are  located 
throughout  the southern half of Michigan's lower peninsula (centered around the
cities  of Port Huron, Albion, Battle Creek and Holland) and also in the central
and western areas of Michigan's upper peninsula.  At December 31, 2000, ENSTAR's
gas  delivery  system  included  approximately  394  miles  of  gas transmission
pipelines and 2,297 miles of gas distribution pipelines.  ENSTAR's pipelines are
located in Anchorage and other communities around the Cook Inlet area of Alaska.
     The  distribution system and service lines of the Gas Distribution Business
are, for the most part, located on or under public streets, alleys, highways and
other  public  places,  or  on  private  property  not owned by the Company with
permission  or  consent,  except to an inconsequential extent, of the individual
owners.  The  distribution  systems and service lines located on or under public
streets, alleys, highways and other public places were all installed under valid
rights  and  consents  granted  by  appropriate  local  authorities.            
     The  Gas  Distribution  Business owns underground gas storage facilities in
eight  depleted  salt  caverns  and  three  depleted  gas  fields, together with
measuring,  compressor  and transmission facilities.  The storage facilities are
all  located  in Michigan.  The aggregate working capacity of the storage system
is  approximately  4.8  Bcf.                                                    
     The  Gas  Distribution  Business  also  owns  meters and service lines, gas
regulating  and  metering  stations,  garages,  warehouses  and  other buildings
necessary  and  useful in conducting its business.  It also leases a significant
portion  of  its  computer  and  transportation  equipment.                     

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CONSTRUCTION  SERVICES                                                          

The  tangible properties of Construction Services include equipment required for
the  installation,  repair  or  replacement  of underground pipelines or similar
items.  This  includes  primarily  equipment  necessary  for  excavation such as
backhoes,  trenchers,  directional drills and dumptrucks.  This equipment can be
driven  or  carried on trailers from one worksite to another.  Substantially all
of Construction Services' equipment at December 31, 2000 was located in Florida,
Georgia,  Illinois,  Iowa,  Kansas,  Michigan,  Tennessee  and  Texas.          

ENGINEERING  SERVICES                                                           

Engineering  Services'  properties  include primarily computers, trucks, testing
equipment  and  related  devices  required  to  perform  engineering and related
services.  Much  of  the  equipment  is  portable  and  is used by the Company's
employees  at  customer  worksites  throughout  several  states.                

PROPANE,  PIPELINES  AND  STORAGE                                               

The  principal  properties  of  this  business  segment  include  interests  and
operations  in  propane distribution, natural gas transmission and gathering and
an  underground  gas  storage  system.                                          
     The  Company  owns  a  50%  equity interest in the Eaton Rapids Gas Storage
System  ("ERGSS").  The  Company's  equity  investment in the ERGSS totaled $4.1
million  at December 31, 2000. This system, located near Eaton Rapids, Michigan,
became  operational  in  March  1990  and  consists of approximately 12.8 Bcf of
underground  storage  capacity.  The Gas Distribution Business leases 6.5 Bcf of
the  capacity.                                                                  
     During  2000,  the  Company  sold  its  50% equity interest in the Michigan
Intrastate  Lateral  System  and  its  50%  interest  in the Michigan Intrastate
Pipeline  System.                                                               
     The  property  of  the propane distribution operation consists primarily of
pressurized  propane  storage tanks used by customers to store propane purchased
from  the  Company  and  trucks for transporting propane.  The Company also owns
large  propane  storage  tanks  that  allow  the  Company to store up to 258,000
gallons  of propane inventory.  The propane distribution property is all located
in  Michigan's  upper  peninsula  and  northeast  Wisconsin.                    
     The  following table sets forth the pipeline operations wholly or partially
owned  by  the  Company,  the  total  net property of the project, the Company's
ownership  percentage  and  net  property  at  December  31,  2000:             

                                                                [Download Table]


                            Total        The Company's    The Company's
                         Net Property  Percent Ownership  Net  Property
                         ------------  -----------------  -------------
                                 (in  thousands  of  dollars)          

                                                                       
Litchfield Lateral. . . .  $ 9,648           33%            $ 3,184    
Greenwood Pipeline. . . .    6,426          100%              6,426    
Eaton Rapids Pipeline . .      762          100%                762    
                           -------                          -------    
                           $16,836                          $10,372    
                           =======                          =======    

     The Litchfield Lateral is a 31-mile pipeline located in southwest Michigan.
The line, which is leased entirely to ANR Pipeline Company, links the ERGSS with
interstate  pipeline  supplies.  The Litchfield Lateral began operations in July
1992.                                                                           
     The Greenwood Pipeline, an 18.5-mile pipeline constructed in 1991, connects
two  interstate  pipelines  with  the Detroit Edison Greenwood Power Plant.  The
pipeline  provides  transportation  services to the Greenwood Power Plant and to
SEMCO  Gas' Port Huron area, northern territory.  In 1999, the pipeline received
upgrades  which  allowed  the  Company  to serve additional peak load generation
units  at  the  Greenwood  site.  There  is an agreement between the Company and
Detroit  Edison whereby Detroit Edison has contracted for the entire capacity of
the  line  which  amounts  to  240  million  cubic  feet  ("MMcf")  per  day.   
     The  Eaton  Rapids  Pipeline  is  a  37-mile  pipeline that provides direct
delivery  of  gas  from  the  ERGSS to the Gas Distribution Business' systems in
Battle  Creek  and  Albion, Michigan. The original 30-mile line was purchased in
1986.  The  seven-mile  extension  to  the  ERGSS  was  completed  in  1990.    
     The Company previously owned a 40% interest in the Iosco-Reno System, which
consisted  of  the  Iosco  County  Pipeline  and Reno Gas Processing Plant.  The
Company  sold  its  interest  during  1999.                                     

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CORPORATE  AND  OTHER                                                           

The  properties  of  the  Corporate  and other segment include office buildings,
leasehold  improvements, office equipment, computers and computer systems.  This
property  is  located  in  Port  Huron  and  Marysville,  Michigan.             

ITEM  3.          LEGAL  PROCEEDINGS                                            

None.                                                                           

ITEM  4.          SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS   

None.                                                                           

 PART II

ITEM  5.          MARKET  FOR  THE  REGISTRANT'S  COMMON  EQUITY  AND  RELATED  
STOCKHOLDER  MATTERS                        

MARKET  INFORMATION  AND  NYSE  LISTING                                         

SEMCO  Energy, Inc. Common Stock began trading on the New York Stock Exchange on
January  6, 2000 under the trading symbol "SEN".  Prior to this date the Company
was  traded on The Nasdaq Stock Market under the symbol "SMGS."  The table below
shows  the  reported  high  and low quotations of the Company's common stock, as
reported  in  the  Wall  Street  Journal.                                       

                                                                [Download Table]


        2000  Price  Range                  1999  Price  Range         
-----------------------------------  ----------------------------------
 2000            High       Low       1999            High     Low     
-----------------------------------  ----------------------------------
                                                                       
 First Quarter   $14        $10-3/4   First Quarter   $17-1/2  $14-1/4 
 Second Quarter  $15        $11-1/8   Second Quarter  $16-7/8  $13-1/4 
 Third Quarter   $16-15/16  $12-1/4   Third Quarter   $16      $13     
 Fourth Quarter  $16-5/8    $13-3/4   Fourth Quarter  $15-3/8  $11-5/16

     See  the  cover  page  for  a  recent  stock price and the number of shares
outstanding.  The  Company  issued  unregistered  shares  of its common stock in
connection  with  certain  acquisition  transactions during the past three years
(for  additional  information,  refer  to  Notes  3  and  5  of the Notes to the
Consolidated  Financial  Statements  on pages 52 through 54 and 55 through 57 of
the  Company's  2000  Annual  Report  to  Shareholders,  which  information  is 
incorporated  herein  by  reference  from  Exhibit  13  to this Form 10-K).  See
Selected Financial Data in Item 6 of this Form 10-K for the number of registered
common  shareholders at year end for the past five years.  The Company had 9,501
registered  common  shareholders  at  February  28,  2001.                      

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DIVIDENDS                                                                       

For  information  regarding  dividends,  see  Notes 5 and 16 of the Notes to the
Consolidated Financial Statements on pages 55 through 57 and 68 of the Company's
2000  Annual Report to Shareholders, which information is incorporated herein by
reference from Exhibit 13 to this Form 10-K, and Selected Financial Data in item
6  of  this  Form  10-K.                                                        

ITEM  6.          SELECTED  FINANCIAL  DATA                                     

For  the information required pursuant to this item, refer to the section titled
"Selected  Financial  Data" in the Company's 2000 Annual Report to Shareholders,
pages  70  and  71,  which  information is incorporated herein by reference from
Exhibit  13  to  this  Form  10-K.                                              

ITEM 7.          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS                       

For  the information required pursuant to this item, refer to the section titled
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations"  in  the  Company's  2000  Annual  Report  to Shareholders, pages 28
through  42,  which information is incorporated herein by reference from Exhibit
13  to  this  Form  10-K.                                                       

ITEM  7A.        QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET RISK

For  the information required pursuant to this item, refer to the section titled
"Market  Risk  Information"  on  page  41 of the Company's 2000 Annual Report to
Shareholders, which information is incorporated herein by reference from Exhibit
13  to  this  Form  10-K.                                                       

ITEM  8.          FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA               

For  the  information  required  pursuant  to  this item, refer to the following
sections  of the Company's 2000 Annual Report to Shareholders, which information
is  incorporated  herein  by  reference  from  Exhibit  13  to  this  Form 10-K:

Consolidated  Statements  of  Income,  page  43                       
Consolidated  Statements  of  Cash  Flows,  page  44                  
Consolidated  Statements  of  Financial  Position,  page  45          
Consolidated  Statements  of  Capitalization,  page  46               
     Consolidated  Statements of Changes in Common Shareholders' Equity, page 47
Notes  to the Consolidated Financial Statements, pages 48 through 68  
Report  of  Independent  Public  Accountants,  page  69               

ITEM  9.          CHANGES  IN  AND  DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND  FINANCIAL  DISCLOSURE                  

None.                                                                           

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PART III

ITEM  10.     DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT          

The  information  appearing  under the captions "Information About Directors and
Executive  Officers" in the Company's definitive Proxy Statement (filed pursuant
to  Regulation  14A) with respect to the Company's April 17, 2001 Annual Meeting
of  Shareholders  is  incorporated  by  reference  herein.                      

ITEM  11.     EXECUTIVE  COMPENSATION                                           

The  information  appearing  under  the  caption  "Compensation of Directors and
Executive  Officers" in the Company's definitive Proxy Statement (filed pursuant
to Regulation 14A) with respect to Registrant's April 17, 2001 Annual Meeting of
Shareholders  is  incorporated  by  reference herein.  There are no compensation
committee  interlocks  or  insider  participation.                              

ITEM  12.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT

The  information  appearing  under  the  caption  "Stock  Outstanding and Voting
Rights"  in  the  Company's  definitive  Proxy  Statement  (filed  pursuant  to 
Regulation  14A)  with respect to the Company's April 17, 2001 Annual Meeting of
Shareholders  is  incorporated  by  reference  herein.                          

ITEM  13.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS                

The  information appearing under the captions "Certain Business Relationships of
Directors"  and  "Employment and Related Agreements" in the Company's definitive
Proxy Statement (filed pursuant to Regulation 14A) with respect to the Company's
April  17,  2001  Annual  Meeting  of  Shareholders is incorporated by reference
herein.                                                                         

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 PART IV

ITEM  14.     EXHIBITS,  FINANCIAL  STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  1        All  Financial  Statements.  For  a  list  of financial statements
              incorporated  by  reference, see the Part II, Item 8 of this 10-K.

(a)  2        Financial  Statement Schedules.  The following additional data and
              schedule  should  be  read  in  conjunction  with the Consolidated
              Financial  Statements  in Part II, Item 8 of this 10-K.  Schedules
              not  included  herein  have  been  omitted  because  they  are not
              applicable  or the required information is shown in such financial
statements  or  notes  thereto.                     

                                                                [Download Table]

                                                      Pages  in  10-K
                                                      ---------------
                                                                     
Report  of  Independent  Public  Accountants               14        

Schedule  II  -  Consolidated  Valuation  and  Qualifying            
Accounts  for  the  years  ended  December  31,  2000,               
1999  and  1998                                            15        

(a)  3     Exhibits,  including  those  incorporated  by reference are listed on
page  16  and  17  of  this  10-K.                        

(b)        On  November  30,  2000,  the  Company  filed  Form  8-K  to file the
           Regulatory  Commission  of  Alaska  order  entitled, "Order Requiring
           Filings;  Designating  Public  Advocacy  Section  A Party; Appointing
           A  Hearing  Examiner;  Establishing  Deadlines  for Intervention; and
Scheduling Prehearing Conference".                        

(c)        The  Exhibits,  if any, filed herewith are identified in Item 14(a) 3
above.                                                    

(d)        The  financial  statement  schedules  filed are identified under Item
14(a)  2  above.                                          

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REPORT  OF  INDEPENDENT  PUBLIC  ACCOUNTANTS                                    

To  SEMCO  Energy,  Inc.:                                                       

We have audited, in accordance with auditing standards generally accepted in the
United  States,  the  consolidated  financial  statements  of SEMCO Energy, Inc.
included in this Form 10-K, and have issued our report thereon dated January 30,
2001.  Our  audit  was  made  for the purpose of forming an opinion on the basic
financial  statements taken as a whole.  The schedule listed in item 14 (a) 2 is
presented  for  purposes  of  complying  with  the  Securities  and  Exchange   
Commission's  rules  and  is  not  part  of the basic financial statements.  The
schedule  has  been subjected to the auditing procedures applied in the audit of
the  basic  financial  statements  and,  in  our  opinion,  fairly states in all
material  respects  the  financial  data  required  to  be  set forth therein in
relation  to  the  basic  financial  statements  taken  as  a  whole.           

Arthur  Andersen  LLP                                                           

Detroit,  Michigan,                                                             
January  30,  2001                                                              

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SCHEDULE  II                                                                    

                                                        [Enlarge/Download Table]


                               SEMCO ENERGY, INC.                                                 

          SCHEDULE II - CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS                            
                             (THOUSANDS OF DOLLARS)                                               

                                                                         DEDUCTIONS               
                                                       ADDITIONS FOR    FROM RESERVE              
                                             BALANCE    PROVISIONS     FOR PURPOSE FOR    BALANCE 
                                            BEGINNING     CHARGED     WHICH THE RESERVE     END   
          DESCRIPTION                       OF PERIOD    TO INCOME      WAS PROVIDED     OF PERIOD
------------------------------------------  ---------  -------------  -----------------  ---------

                                                                                                  
YEAR ENDED DECEMBER 31, 2000                                                                      
----------------------------                                                                      

Reserves deducted from receivables in                                                             
  the Statement of Financial Position:                                                            
    Allowances for doubtful accounts . . .  $ 1,080      $1,186          $   830          $1,436  
                                            =======      ======          =======          ======  

Reserves deducted from net property,                                                              
  Plant and equipment in the                                                                      
  Statement of Financial Position. . . . .  $ 1,642      $    0          $ 1,642          $    0  
                                            =======      ======          =======          ======  

YEAR ENDED DECEMBER 31, 1999                                                                      
----------------------------                                                                      

Reserves deducted from receivables in                                                             
  the Statement of Financial Position:                                                            
    Allowances for doubtful accounts . . .  $   632      $1,115          $   667          $1,080  
                                            =======      ======          =======          ======  

Reserves deducted from net property,                                                              
  Plant and equipment in the                                                                      
  Statement of Financial Position. . . . .  $ 1,401      $  241          $     0          $1,642  
                                            =======      ======          =======          ======  

YEAR ENDED DECEMBER 31, 1998                                                                      
----------------------------                                                                      

Reserves deducted from receivables in                                                             
  the Statement of Financial Position:                                                            
    Allowances for doubtful accounts . . .  $ 1,498      $  742          $ 1,608          $  632  
                                            =======      ======          =======          ======  

Reserves deducted from net property,                                                              
  Plant and equipment in the                                                                      
  Statement of Financial Position. . . . .  $ 2,401      $  100          $ 1,100          $1,401  
                                            =======      ======          =======          ======  

Reserves deducted from deferred                                                                   
  credits and other liabilities in the                                                            
  Statement of Financial Position:                                                                
    Reserve for NOARK investment . . . . .  $25,212      $    0          $25,212          $    0  
                                            =======      ======          =======          ======  


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EXHIBITS,  INCLUDING  THOSE  INCORPORATED  BY  REFERENCE                        

                                                        [Enlarge/Download Table]


                                                                           Filed        
                                                                     -------------------
Exhibit                                                                           By    
  No.                        Description                             Herewith  Reference
-------  ----------------------------------------------------------  --------  ---------

                                                                                        
 3.(i)   Articles of Incorporation of SEMCO Energy, Inc., as                            
         restated June 25, 1999.(g) . . . . . . . . . . . . . . . .                x    
 3.(ii)  Bylaws--last revised October 14, 1999.(h). . . . . . . . .                x    
 4.1     Note Agreement dated as of June 1, 1994, relating to                           
         issuance of $80,000,000 of long-term debt.(a). . . . . . .                x    
 4.2     Rights Agreement dated as of April 15, 1997 with                               
         Continental Stock Transfer & Trust Company, as                                 
         Rights Agent.(c) . . . . . . . . . . . . . . . . . . . . .                x    
 4.3     Note Agreement dated as of October 1, 1997, relating to                        
         issuance of $60,000,000 of long-term debt.(e). . . . . . .                x    
 4.4     Form of Indenture relating to Senior Debt Securities                           
         dated as of October 23, 1998, with Bank One Trust                              
         Company (formerly NBD Bank) as Trustee.(f) . . . . . . . .                x    
 4.5     First Supplemental Indenture relating to Senior Debt                           
         Securities dated as of June 16, 2000, with Bank One                            
         Trust Company as Trustee.(j) . . . . . . . . . . . . . . .                x    
 4.6     Second Supplemental Indenture relating to Senior Debt                          
         Securities dated as of June 29, 2000, with Bank One                            
         Trust Company as Trustee.(j) . . . . . . . . . . . . . . .                x    
 4.7     Indenture relating to Subordinated Debentures dated                            
         as of April 19, 2000, with Bank One Trust                                      
         Company, Trustee.(k) . . . . . . . . . . . . . . . . . . .                x    
 4.8     First Supplemental Indenture relating to Subordinated                          
         Debentures dated as of April 19, 2000, with Bank One                           
         Trust Company, as Trustee.(k). . . . . . . . . . . . . . .                x    
10       Material  Contracts.                                                           
10.1     Short-Term Incentive Plan as amended June 10, 1999.(g) . .                x    
10.2     1997 Long-Term Incentive Plan.(b). . . . . . . . . . . . .                x    
10.3     Stock Option Certificate and Agreement dated                                   
         October 10, 1996 with William L. Johnson.(c) . . . . . . .                x    
10.4     Stock Option Certificate and Agreement dated                                   
         February 26, 1997 with William L. Johnson.(c). . . . . . .                x    
10.5     Employment Agreement dated October 10, 1996, with                              
         William L. Johnson.(d) . . . . . . . . . . . . . . . . . .                x    
10.6     Executive Security Agreement.(l) . . . . . . . . . . . . .                x    
10.7     Split-Dollar Agreement.(l) . . . . . . . . . . . . . . . .                x    
10.8     SEMCO Energy, Inc. Deferred Compensation Plan (for                             
         certain executive and management employees).(i). . . . . .                x    
10.9     Form of Change in Control Agreement (for certain                               
         officers).(k). . . . . . . . . . . . . . . . . . . . . . .                x    
10.10    Form of Change of Control Employment Agreement dated                           
         as of March 1, 2000 (for certain officers).(k) . . . . . .                x    
10.11    Executive Security Trust.(l) . . . . . . . . . . . . . . .                x    
10.12    Deferred Compensation and Stock Purchase Agreement for                         
         Non-Employee Directors for 2001. . . . . . . . . . . . . .     x               
10.13    Stock Option Plan of 2000. . . . . . . . . . . . . . . . .     x               
12       Ratio of Earnings to Fixed Charges.  . . . . . . . . . . .     x               
13       SEMCO Energy, Inc. 2000 Annual Report to Shareholders,                         
         pages 28-71. . . . . . . . . . . . . . . . . . . . . . . .     x               
21       Subsidiaries  of  the  Registrant. . . . . . . . . . . . .     x               
23       Consent of Independent Public Accountants. . . . . . . . .     x               
24       Power of Attorney. . . . . . . . . . . . . . . . . . . . .     x               
99       Proxy Statement dated March 8, 2001.(m). . . . . . . . . .                x    

<FN>                                                                                    
Key  to  Exhibits  Incorporated  by  Reference                                          
(a)     Filed with SEMCO Energy, Inc.'s Form 10-Q for the quarter ended June 30,        
        1994,  File  No.  0-8503.                                                       
(b)     Filed  March  6,  1997  as  part  of  SEMCO  Energy,  Inc.'s  1997 Proxy        
        Statement,  dated  March  7,  1997,  File  No.     0-8503.                      
(c)     Filed  with  SEMCO  Energy,  Inc.'s  Form 10-K for 1996, dated March 27,        
        1997,  File  No.  0-8503.                                                       
(d)     Filed  with  SEMCO  Energy, Inc.'s Form 10-Q for the quarter ended March        
        31,  1997,  File  No.  0-8503.                                                  
(e)     Filed  with  SEMCO  Energy,  Inc.'s  Form  10-Q  for  the  quarter ended        
        September  30,  1997,  File  No.  0-8503.                                       
(f)     Filed  with  SEMCO Energy, Inc.'s Registration Statement, Form S-3, Nos.        
        333-58715  and  333-58715-01,  filed  July  8,  1998.                           
(g)     Filed with SEMCO Energy, Inc.'s Form 10-Q for the quarter ended June 30,        
        1999,  File  No.  0-8503.                                                       
(h)     Filed  with  SEMCO  Energy,  Inc.'s  Form  10-Q  for  the  quarter ended        
        September  30,  1999,  File  No.  0-8503.                                       
(i)     Filed  with  SEMCO  Energy,  Inc.'s  Form 10-K for 1999, dated March 20,        
        2000,  File  No.  001-15565.                                                    
(j)     Filed  with  SEMCO Energy, Inc.'s Form 8-K dated July 26, 2000, File No.        
        001-15565.                                                                      
(k)     Filed  with  SEMCO  Energy, Inc.'s Form 10-Q for the quarter ended March        
        31,  2000.                                                                      
(l)     Filed  with  SEMCO  Energy,  Inc.'s  Form  10-Q  for  the  quarter ended        
        September  30,  2000.                                                           
(m)     Filed  March  5,  2001, pursuant to Rule 14a-6 of the Exchange Act, File        
        No.  001-15565.                                                                 

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SIGNATURES

          Pursuant  to the requirements of Section 13 of the Securities Exchange
Act  of  1934,  the  Registrant  has duly caused this report to be signed on its
behalf  by  the  undersigned,  thereunto  duly  authorized.                     

SEMCO  ENERGY,  INC.  

Date:  March  30,  2001      By  /s/William  L.  Johnson                        
                                 -----------------------------------------------
      William  L.  Johnson
                                 Chairman, President and Chief Executive Officer

          Pursuant  to  the requirements of the Securities Exchange Act of 1934,
this  report  has  been  signed  below by the following persons on behalf of the
Registrant  and  in  the  capacities  and  on  the  dates  indicated.           

                                                        [Enlarge/Download Table]


     Signature                            Title                                 Date      
     ---------                            -----                                 ----      

                                                                                          

/s/William L. Johnson      Chairman, President and Chief Executive Officer  March 30, 2001
-------------------------                                                                 
   William  L.  Johnson        (Director)                                                 

/s/Sebastian Coppola       Senior Vice President, Treasurer and             March 30, 2001
-------------------------                                                                 
   Sebastian  Coppola          Chief  Financial  Officer                                  
                               (Principal Financial and                                   
                               Accounting Officer)                                        

/s/John  M.  Albertine*    Director                                         March 30, 2001
-------------------------                                                                 
   John  M.  Albertine                                                                    

/s/Daniel  A.  Burkhardt*  Director                                         March 30, 2001
-------------------------                                                                 
   Daniel  A.  Burkhardt                                                                  

/s/Edward  J.  Curtis*     Director                                         March 30, 2001
-------------------------                                                                 
   Edward  J.  Curtis                                                                     

/s/John  T.  Ferris*       Director                                         March 30, 2001
-------------------------                                                                 
   John  T.  Ferris                                                                       

/s/Michael  O.  Frazer*    Director                                         March 30, 2001
-------------------------                                                                 
   Michael  O.  Frazer                                                                    

/s/Marcus  Jackson*        Director                                         March 30, 2001
-------------------------                                                                 
   Marcus  Jackson                                                                        

/s/Harvey  I.  Klein*      Director                                         March 30, 2001
-------------------------                                                                 
   Harvey  I.  Klein                                                                      

/s/Frederick  S.  Moore*   Director                                         March 30, 2001
-------------------------                                                                 
   Frederick  S.  Moore                                                                   

/s/Edith  A.  Stotler*     Director                                         March 30, 2001
-------------------------                                                                 
   Edith  A.  Stotler                                                                     

/s/Donald  W.  Thomason*   Director                                         March 30, 2001
-------------------------                                                                 
   Donald  W.  Thomason                                                                   

*By /s/William L. Johnson                                                   March 30, 2001
   ----------------------                                                                 
       William L. Johnson                                                                 
       Attorney-in-fact                                                                   

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘10-K405’ Filing	Date	First	Last	Other Filings

	4/17/01	1	14	DEF 14A
	4/4/01	7
Filed on:	3/30/01	19
	3/8/01	18
	3/5/01	7	18	DEF 14A
	2/28/01	1	12	4
	1/30/01	16
For Period End:	12/31/00	1	17	4, 5
	11/30/00	15		4, 8-K
	9/30/00	18		10-Q, 4
	7/26/00	18		8-K
	6/29/00	18		424B5
	6/16/00	18
	4/19/00	18
	3/31/00	18		10-Q, 4
	3/20/00	18		10-K405, 8-K
	3/1/00	18		DEF 14A
	1/6/00	12
	12/31/99	5	17	10-K405, 4, 5
	11/1/99	5
	10/14/99	18
	9/30/99	18		10-Q, 4
	6/30/99	18		10-Q, 4
	6/25/99	18
	6/10/99	18
	4/1/99	6	8
	3/31/99	4	5	10-Q, 4, 4/A
	12/31/98	15	17	10-K405, 4, 5, U-3A-2
	10/23/98	18		424B5, 8-K
	7/8/98	18		10-Q/A, 4, S-3
	4/1/98	5
	10/1/97	18
	9/30/97	18		10-Q, 4
	4/15/97	18		DEF 14A
	3/31/97	18		10-K405, 10-Q, 4
	3/27/97	18
	3/7/97	18
	3/6/97	18		DEF 14A
	2/26/97	18
	10/10/96	18
	6/30/94	18		10-Q
	6/1/94	18
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Semco Energy Inc – ‘10-K405’ for 12/31/00

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