Tim Lubbers, SEMCO’s director of business development

MARQUETTE — Semco Energy Gas Co. customers should expect a rate increase effective Jan. 1.

The Michigan Public Service Commission on Friday approved a $19.9 million annual rate increase for the company, just over 50% of the company’s initial rate request.

The ruling means a residential customer using an average of 100 cubic feet of natural gas will see an 8% increase, or $4.03 per month, on their monthly bill. The increase includes a 75-cent hike in the monthly customer service charge from $11.50 to $12.25. The average residential monthly bill will rise from $51.33 to $55.36, according to the MPSC order.

The Michigan Department of Attorney General, the nonprofit consumer-advocacy organization Citizens Utility Board of Michigan and the Retail Energy Supply Association, a trade association representing competitive retail energy suppliers, were intervenors in the case.

In a Friday blog post, CUB officials thanked everyone involved in the agreement.

“Congratulations to Semco, Attorney General Dana Nessel and the other parties for taking on important issues of fairness for the average customer with this agreement,” the post states.

Several factors led to the Port Huron utility’s request for an increase, said Tim Lubbers, Semco’s director of business development, community and legislative engagement.

“For one thing, it had been about nine years since our last increase,” Lubbers said. “Over that time, our costs have increased. We also just constructed a new pipeline, which is included in the rate increase.”

The 42-mile Marquette connector pipeline spanning from Negaunee Township to Arnold was completed in November. It connects the Northern Natural Gas Transmission system in the northwestern Upper Peninsula to the Great Lakes Gas Transmission system, which runs across the southern U.P. The final cost of the project was $159 million, Lubbers said in an interview in November.

The pipeline is expected to add capacity to Semco’s system and “increase reliability and redundancy in the area,” he said.

Semco will also add a financial assistance program for 12,000 low-income customers who could see an average rate decrease of between $6.67 and $24.42 per month as part of the rate case, Lubbers said, which is also built into the increased customer rates.

The company is prevented from seeking another general rate increase before 2023, according to the MPSC order.

Lubbers said the settlement is a “positive” outcome for all involved.

“Semco does not file many rate cases, and the fact we were able to reach a settlement with the state attorney general’s office, and the other parties involved is positive,” Lubbers said. “This settlement will allow us to continue to provide safe, reliable service, which benefits all customers.”

Semco is the third largest natural gas utility in Michigan, serving 275,000 residential customers.

Lisa Bowers can be reached at 906-228-2500, ext. 242.