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       SEMCOENERGY                                                     NEWS
1411 Third Street, Suite A                                            RELEASE
   Port Huron, MI 48060


FOR IMMEDIATE RELEASE


ANALYSTS CONTACT: THOMAS CONNELLY
Director Treasury and Investor Relations
Phone: 248-458-6163

MEDIA CONTACT: TIMOTHY LUBBERS
Director of Marketing and Corporate Communications
Phone: 810-887-4208



           SEMCO ENERGY ANNOUNCES REPURCHASE AGREEMENT FOR CONVERTIBLE
           PREFERENCE STOCK AND PROPOSED $60 MILLION OFFERING OF NEW
                           CONVERTIBLE PREFERRED STOCK


      PORT HURON, MI, MARCH 8, 2005 - SEMCO ENERGY, INC. (NYSE: SEN) announced
today that it has reached an agreement with an affiliate of k1 Ventures Ltd. to
repurchase all of the outstanding and issued shares (52,542.94) of SEMCO's 6%
Series B Convertible Preference Stock held by the affiliate. As part of the
transaction, SEMCO will also repurchase from the k1 affiliate warrants to
purchase 905,565 shares of SEMCO's common stock. The aggregate purchase price
under the agreement is $60 million, plus accrued dividends if the closing occurs
after March 19, 2005.

      The Series B Convertible Preference Stock and warrants were initially
issued by SEMCO and acquired by the k1 affiliate during the first half of 2004.
Additional shares of the 6% Series Convertible Preference Stock currently
outstanding were issued as "payment-in-kind" dividends during the period the
stock was outstanding. The repurchase is a result of difficulties encountered by
the parties in meeting their agreed deadline for a decision of the Regulatory
Commission of Alaska with respect to the investment by the k1 affiliate. The
agreement to repurchase the Series B Preference Stock and warrants contains a
termination date of April 15, 2005.

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      The repurchase will be funded from proceeds from the proposed sale of a
new series of convertible preferred stock.

      SEMCO intends to offer, subject to market and other conditions, $60
million of a new issue of convertible preferred stock. The offering will be
conducted pursuant to Rule 144A under the Securities Act of 1933 (the "Act") to
qualified institutional buyers and to certain non-U.S. persons in offshore
transactions pursuant to Regulation S under the Act. The preferred stock will be
convertible into shares of SEMCO common stock.

      SEMCO expects to grant the initial purchasers of the convertible preferred
stock a 30-day option to purchase up to an additional $5 million of convertible
preferred stock in connection with the offering.

      This announcement is neither an offer to sell nor a solicitation of an
offer to buy any of these securities. These securities have not been registered
under the Act or any state securities laws, and unless so registered, may not be
offered or sold in the United States except pursuant to an exemption from the
registration requirements of the Act and applicable state laws.

      SEMCO ENERGY, Inc. distributes natural gas to approximately 398,000
customers combined in Michigan, as SEMCO ENERGY GAS COMPANY, and in Alaska, as
ENSTAR Natural Gas Company. It also owns and operates businesses involved in
propane distribution, intrastate pipelines and natural gas storage in various
regions of the United States.

      The following is a "Safe-Harbor" statement under the Private Securities
Litigation Reform Act of 1995. This release contains forward-looking statements
that involve risks and uncertainties. Statements that are not historic facts,
including statements about the Company's outlook, beliefs, plans, goals and
expectations, are forward-looking statements. Factors that may impact
forward-looking statements include, but are not limited to, the effects of
weather, the economic climate, competition, commodity prices, changing
conditions in the capital markets, the Company's ability to complete the
offering in a timely manner on commercially acceptable terms, regulatory
approval processes, success in obtaining new business, success in defending
claims against the Company, and other risks detailed from time to time in the
Company's Securities and Exchange Commission filings.


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