LANSING – SEMCO Energy Co. has filed an application with the Michigan Public Service Commission (PSC) to raise its annual natural gas rates by $18 million.

SEMCO said that the average residential customer would see an increase of about 5 percent over last year.

“Now keep in mind, what a company asks for in its application does not mean it’s going to receive anything near that,” said Judy Palnau, the public information officer for the PSC. “What they ask for and what they get are two entirely different things.

SEMCO is headquartered in Port Huron, filed its proposal on May 25. The company supplies natural gas to 286,000 consumers in Michigan, 90 percent of which are residential.

Its main areas of operation include portions of Southeast Michigan including Macomb County, Southwest Michigan including Holland and Zeeland, and portions of the Upper Pennisula including Marquette.

The Attorney General’s office has filed testimony with the PSC opposing the increased rate, according to Ari Faneuil, a media relations officer for the attorney general.

The attorney general argues that consumers should not be punished for conserving energy.

A hearing is scheduled for the week of Dec. 18.

“Periodically, utilities everywhere file a rate case to recover the cost of doing business,” said Tim Lubbers, director of marketing and corporate relations for SEMCO. “The reason we filed the case is to recover the cost of doing business, reading the meters, fixing pipes and to do all the things that utility companies should do.

“The reason we filed the case is because of declining customer consumption. Everybody is conserving energy, which is a good thing, but because service charges are consumption-based, our revenues decline while our costs continue to rise, like everybody’s costs do,” he said.

One other natural gas rate case is awaiting commission ruling. Consumer’s Energy is requesting a $132.4 million annual increase. It also wants the commission to make permanent a previous $58.1 million increase that was approved temporarily.

Earlier this year, the PSC predicted a drop of 12 percent in natural gas prices. SEMCO Energy and Consumer’s Energy requests to increase their rates leads to some confusion on whether households will save as much as $20 per month during the winter heating season as the PSC predicted.

“The 12 percent decline that we were predicting relates to the cost of the gas,” said Palnau. “That means that it relates to gas recovery cases and not rate cases such as SEMCO and Consumer’s Energy.”

Michigan law allows gas utilities to recover what they spend when they purchase natural gas on the market. The companies are allowed to recover their costs without a mark up, so they don’t make a profit on the price of fuel.

The PSC is expected to announce a ruling on SEMCO’s application in March.