Semco’s net declines for quarter

Allen Baker, Petroleum News contributing writer

Semco Energy Inc. reported a profit of $10.7 million for the first quarter, down 5 percent from $11.3 million in the same quarter of 2002.

While temperatures were 13.8 percent higher in the Enstar service area of Alaska, the weather was 10.9 percent colder in Semco’s Michigan service area, which has more customers. The two basically canceled each other out as far as revenue, and the gas distribution business brought in operating income of $30.5 million against $30.2 million.

But the construction services segment for the Farmington Hills, Mich., concern continued to show red ink. While the business is seasonally slow in the cold months, the loss this year was $3.6 million for construction services, compared with $1.3 million in red ink a year ago. Company executives said things were better than normal in the year-ago quarter and this year’s performance was closer to the norm. But the segment has shown weakness in recent quarters. The propane, pipelines and storage business had operating income of $900,000 compared with $600,000 a year ago, with cold weather boosting propane sales.

As part of its earnings presentation, Semco executives said the company was putting its Alaska Pipeline Co. up for sale (see story on page 4).

Shortly after the earnings announcement, Semco also reached a settlement with Michigan regulators for a rate restructuring that will add in the neighborhood of $6 million a year in added revenues, most of which will likely be profit. The settlement increases the monthly charge per customer, which will effectively mean more revenue in the slow summer months and less in the normally profitable winter period.

Semco, which has 385,500 gas customers in Alaska and Michigan, had revenues of $207 million for the quarter, up a third from $156 million in the same period a year ago.