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

BEFORE THE MICHIGAN PUBLIC SERVICE COMMISSION

* * * * *

In the matter of the application of ) SEMCO ENERGY GAS COMPANY ) for a certificate of public convenience and necessity ) Case No. U-18384 to construct and operate the Baraga Pipeline and for ) approval of a natural gas transportation contract. ) ) At the October 25, 2017 meeting of the Michigan Public Service Commission in Lansing,

Michigan.

PRESENT: Hon. Sally A. Talberg, Chairman

Hon. Norman J. Saari, Commissioner Hon. Rachael A. Eubanks, Commissioner

ORDER APPROVING SETTLEMENT AGREEMENT

On April 26, 2017, SEMCO Energy Gas Company (SEMCO) filed an application, with

supporting exhibits, pursuant to 1929 PA 9 (Act 9), MCL 483.101 et seq., requesting (1) a

certificate of public convenience and necessity to construct and operate a 4.5 mile, 8.625-inch,

outside diameter natural gas transmission pipeline (Baraga Pipeline) from Northern Natural Gas

Company’s existing 8-inch diameter pipeline, located in the Southeast ¼ of Section 30, T51N,

R33W, Baraga Township, Baraga County, to Upper Michigan Energy Resources Corporation’s

proposed A.J. Mihm Generating Station, to be located in the Northwest ¼ of Section 27, T51N,

R34W, Baraga Township, Baraga County; and (2) approval of its Facility Construction and

Transportation Services Contract with Upper Michigan Energy Resources Corporation (UMERC)

for common carrier services on the pipeline.

Page 2 U-18384

Prehearing conferences were held on June 6 and July 26, 2017, before Administrative Law

Judge Martin D. Snider. SEMCO and the Commission Staff participated in the proceedings.

Subsequently, the parties submitted a settlement agreement resolving all issues in the case.

The Commission has reviewed the application, testimony, exhibits, and settlement agreement

and finds that the public interest is adequately represented by the parties who entered into the

settlement agreement. The Commission further finds that the settlement agreement is in the public

interest, represents a fair and reasonable resolution of the proceeding, and should be approved.

The Commission additionally finds that there will be minor impairment to the environment if

the Baraga Pipeline is constructed as proposed, but there is no other feasible and prudent

alternative to this impairment. According to SEMCO’s environmental report, attached as

Exhibit C to its application, along with the direct testimony filed by SEMCO in this case,

approximately 3.83 miles, or 85%, of the proposed route for the Baraga Pipeline lies within an

existing Michigan Department of Transportation (MDOT) right-of-way along M-38, with the

remaining 15% located within existing UMERC property, resulting in a route that is the most

practical with the least impact on the environment. SEMCO’s environmental report further

discusses the construction methods and procedures to be used that will minimize the impact of the

project during construction and restoration. For example, the horizontal directional drill method

will be utilized for sensitive resources, such as wetlands. Additionally, to protect the northern

long-eared bat, a threatened species that may be present in the project’s forested areas during the

spring, summer, and fall seasons, SEMCO’s environmental report indicates that the intent is to

complete forest clearing activities for the project during the winter season. SEMCO’s

environmental report also determined wetlands are present in the project area; therefore, SEMCO

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will need to obtain the necessary permits from the Michigan Department of Environmental Quality

to excavate soil from, place fill in, or otherwise alter regulated wetlands in the project area.

The Commission concludes that any environmental impairment caused by the proposed

pipeline is de minimis and “ ‘consistent with the promotion of the public health, safety[,] and

welfare in light of the state’s paramount concern for the protection of its natural resources from

pollution, impairment[,] or destruction.’ ” Mich State Hwy Comm v Vanderkloot, 392 Mich 159,

185; 220 NW2d 416 (1974). The filed application, exhibits, testimony, and settlement agreement

support the required agency review and environmental obligations of the Commission that arise

from Part 17 of the Natural Resources and Environmental Protection Act, MCL 324.1701 et seq.

The Commission notes, however, that a finding of public convenience and necessity pursuant to

Act 9 is not a determination that the proposed project complies with any other applicable statutes

or environmental reviews.

THEREFORE, IT IS ORDERED that:

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

B. SEMCO Energy Gas Company is authorized to construct and operate the Baraga Pipeline

in Baraga Township, Baraga County, as proposed in its application and subject to the conditions

and requirements set forth in the settlement agreement.

C. The map, route, and type of construction of the Baraga Pipeline as proposed by SEMCO

Energy Gas Company are approved, allowing for minor route deviations as addressed in the

settlement agreement; however, SEMCO Energy Gas Company shall not begin construction until

all necessary easements and permits have been acquired.

D. The Facility Construction and Transportation Services Contract, attached as Attachment D

to SEMCO Energy Gas Company’s application, is approved.

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

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

after issuance and notice of this order, pursuant to MCL 462.26. To comply with the Michigan

Rules of Court’s requirement to notify the Commission of an appeal, appellants shall send required

notices to both the Commission’s Executive Secretary and to the Commission’s Legal Counsel.

Electronic notifications should be sent to the Executive Secretary at mpscedockets@michigan.gov

and to the Michigan Department of the Attorney General – Public Service Division at

pungp1@michigan.gov. In lieu of electronic submissions, paper copies of such notifications may

be sent to the Executive Secretary and the Attorney General – Public Service Division at 7109 W.

Saginaw Hwy., Lansing, MI 48917.

MICHIGAN PUBLIC SERVICE COMMISSION

________________________________________ Sally A. Talberg, Chairman

________________________________________ Norman J. Saari, Commissioner

________________________________________ Rachael A. Eubanks, Commissioner By its action of October 25, 2017. ________________________________ Kavita Kale, Executive Secretary

EXHIBIT A