SEMCO Energy Inc. is a mostly rate-regulated gas distribution business. It is relatively small in size. Its higher-risk gas storage, pipeline, and propane distribution operations contribute less than 5% of EBITDA. Its management of regulatory risk is average. We use more relaxed financial ratio benchmarks relative to the typical corporate issuer based on the low-risk regulated business strategy. Core financial measures are consistent with the company's financial risk profile category. We assume flat sales and minimal customer growth. The negative outlook on SEMCO Energy Inc. reflects S&P Global Ratings' negative outlook on parent AltaGas Ltd. The negative outlook on AltaGas reflects our view that AltaGas' proposed acquisition of WGL Holdings Inc. has significant financing and regulatory timing risks to bring
