Exhibit 10.9.9 - Long-Term Incentive Plan effective as of January 1, 2007


    
      Exhibit
        10.9.9

    

    
 

    


    
      	
                

               

               

               

               

               

              

               

               

               

               

               

              Long
                Term

              Incentive
                Plan

              


              


              


              


              


               

              Effective
                1/1/2007

               

            


    

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ARTICLE
      1

    Philosophy,
      Strategy and Purpose

    


    1.1      Incentive
      Compensation Philosophy.
      The
      goal of the compensation policies and incentive plans of SEMCO Energy, Inc.
      (the
“Company”) is to inspire and reward achievement of the Company’s strategic
      objectives, by encouraging balanced and sound business decision-making for
      the
      long-term benefit of the Company. The Company believes that this approach aligns
      the interests of eligible participants with those of the Company’s
      shareholders.

    


    1.2    Strategy.
      The
      incentive strategy of the Company is to benchmark peer group, industry, and
      appropriate labor market criteria as a component of total remuneration. The
      target compensation position is the 50th
      percentile of market consensus.

    


    1.3    Purpose.
      The
      purpose of the Long-Term Incentive Plan (the “LTIP”) is to provide a focused
      approach to long-term incentive compensation for Participants using awards
      authorized under the Company’s shareholder-approved 2004 Stock Award and
      Incentive Plan (the “2004 Plan”). The LTIP aids the Company in attracting,
      retaining, motivating and rewarding employees of the Company, or its
      subsidiaries or affiliates, who are eligible to participate in the 2004 Plan
      and
      this LTIP, by providing for equitable and competitive compensation
      opportunities, to recognize individual contributions and reward achievement
      of
      the Company’s long-term goals, and to promote the creation of long-term value
      for shareholders by closely aligning the interests of Participants with those
      of
      shareholders.

    


    


    ARTICLE
      2

    Eligibility

    


    2.1    Eligibility.
      In
      order to participate in the LTIP, individuals must be active, full time
      employees on the date of an award, and be in one of the following employee
      groups (the “Participants”):

     

    
      	 	Executive
              Level	Chief
              Executive Officer	 
	 	Executive
              Level	Senior
              Vice President(s)	 
	 	Executive
              Level	Vice
              President(s)	 
	 	Executive
              Level	Regional
              Vice President(s)	 
	 	Management
              Level	Employee
              Director(s)	 
	 	Other
              Officer	Corporate
              Secretary	 


    

     

     

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      2
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    ARTICLE
      3

    Opportunity
      Level

    


    3.1    Incentive
      Opportunity Level. The following table delineates the annual LTIP incentive
      opportunity level as a percentage of base salary. The CEO shall submit to the
      Compensation Committee recommendations for opportunity level, and the
      Compensation Committee may increase or decrease a Participant’s LTIP incentive
      opportunity level based on objective performance identified through the
      Performance Management Program. Award opportunity percentages will be submitted
      by the Compensation Committee to the Board of Directors for approval, generally
      at its February meetings each year.

    


    
      	
              Executive

            	
              Target

            
	
              President
                & CEO

            	
              100%

            
	
              SVP
                & COO

            	
               
                70%

            
	
              SVP
                & CFO

            	
               
                65%

            
	
              SVP
                & General Counsel

            	
               
                55%

            
	
              VP
                of Human Resources and Administration

            	
               
                55%

            
	
              VP
                & Deputy General Counsel

            	
               
                40%

            
	
              VP
                & Controller

            	
               
                35%

            
	
              Regional
                Vice President(s)

            	
               
                25%

            
	
              Employee
                Director(s)

            	
               
                18%

            
	
              Corporate
                Secretary

            	
               
                18%

            


    

    


    


    ARTICLE
      4

    Awards
      and Award Descriptions

    


    4.1    Awards.
      Awards
      under the 2004 Plan may be in various forms, including stock options, stock
      appreciation rights, restricted stock, deferred stock, bonus stock and awards
      in
      lieu of obligations, dividend equivalents, other share-based awards, or
      performance awards. Awards under the 2004 Plan have generally been in the form
      of (i) stock options, (ii) performance share units, and (iii) restricted stock
      units. Annually, the Compensation Committee shall approve the form of award(s),
      as permitted under the 2004 Plan, and, if more than one form of award is used
      in
      any one year, the Compensation Committee will determine how much of each kind
      of
      award to make to each Participant. LTIP awards are generally made in early
      to
      mid-March.

    


    4.2    Award
      Descriptions.

    


    
      	 	 	
              (a)

            	
              Stock
                Options.
                An option to purchase from the Company the number of shares of Company
                Common Stock equal to the total shares under option at a fixed price.
                The
                exercise price is the average of the high and low prices of a share
                of
                Company Common Stock traded on the NYSE on the day the options are
                granted. Stock Options expire ten (10) years from the date of the
                award.
                The expiration date is the last day the optionee may exercise the
                option
                and purchase stock at the exercise price under an award. Any unused
                options are forfeited after 4:00 p.m. ET on that date. LTIP Stock
                Options
                are non-qualified, which means they do not qualify for special tax
                treatment under the US Internal Revenue Code. Upon Stock Option exercise,
                the optionee receives ordinary income (to the extent the market value
                of
                the stock exceeds the exercise price). The Company receives a
                corresponding tax deduction as long as it reports the optionee’s income to
                the IRS. For additional information, refer to the Form of Employee
                Stock
                Option Agreement.

            


    

     

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      3
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              (b)

            	
              Performance
                Share Units.
                A
                Performance Share Unit (“PSU”) is a grant representing a target number of
                shares of Company Common Stock with vesting and payment contingent
                upon
                achievement of specified performance goals over a multi-year period.
                Grantees whose performance meets or exceeds threshold level of performance
                with respect to at least one of the performance goals established
                by the
                Compensation Committee and approved by the Board of Directors for
                such
                Performance Period have the opportunity to receive from 25% to 150%
                of the
                target. The value of PSUs is tied to the market value of the Company’s
                Common Stock at the time of payment, which follows the end of the
                performance cycle. For additional information, refer to the Form
                of
                Employee Performance Share Unit Award
                Agreement.

            


    

    


    
      	 	 	 	
              (i)

            	
              Performance
                Share Metrics.
                The LTIP PSU metrics are three-year cumulative objectives defined
                annually
                at the time of award, and maintained for the duration of each three-year
                cycle. The PSU target(s) will be set by the Compensation Committee
                with
                input from Management, and will be reviewed and approved by the Board
                of
                Directors.

            


    

    


    
      	 	 	 	
              (ii)

            	
              Payment.
                Following the completion of each three-year performance period, the
                CEO
                shall submit to the Compensation Committee recommendations as to
                the level
                of performance achieved under the performance goals for the performance
                period. Upon certification by the Compensation Committee of the achieved
                performance, which generally takes place at the Committee’s February
                meeting, payment in shares of Company Common Stock shall be made
                no later
                than March 15.

            


    

     

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      4
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              Unless
                otherwise provided in the Performance Share Unit Award Agreement,
                Participants must be actively employed on the last day of the performance
                period to receive payment except where employment is terminated due
                to
                retirement, disability retirement, death, or as a result of a Change
                of
                Control. Unless otherwise provided in the Performance Share Unit
                Award
                Agreement, if the Participant’s employment is terminated for one of the
                specified reasons, the number of PSUs earned may be
                pro-rated.

            


    

    


    


    ARTICLE
      5

    Administration

    


    5.1    Administration.
      The
      Compensation Committee shall administer the LTIP and will have the authority
      set
      forth in the 2004 Plan The Compensation Committee will meet from time to time
      to
      establish LTIP goals, review progress, and approve LTIP payouts. The
      Compensation Committee will report periodically to the Board of Directors about
      the work of the Compensation Committee and, if appropriate, recommend to the
      Board of Directors that it approve LTIP goals, participant eligibility and
      incentive opportunity level changes.

    


    5.2    CEO’s
      Participation.
      Although not a member of the Compensation Committee, the CEO attends
      Compensation Committee meetings in an advisory capacity. The CEO’s participation
      allows the Compensation Committee to remain fully independent of management
      while at the same time receive input from the CEO on the LTIP.

    


    IN
      WITNESS WHEREOF, the Company has caused this
      Long-Term Incentive Plan, which is effective as of January 1, 2007, to be
      executed as of the 22nd
      day of
      February, 2007.

     

    
      	 	 	 
	 	SEMCO
              ENERGY, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Lance
              S. Smotherman
	 	 	
              

            
	 	Title: 	Sr.V.P.
              of H.R. & Admin.
	 	
              

            


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      5
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    Schedule
      A

    


    Performance
      Share Unit Award Level:

    


    The
      trigger for the Long-Term Incentive Plan is the achievement of 25% of the
      cumulative three-year objectives with the maximum at 150%.

    


    Determination
      of Award

    


    


    
      	 	
              Achievement
                Level of Performance

            	
              Award
                as Percentage of Performance Target

            
	
              Threshold

            	
              25.0%

            	
              25.0%

            
	 	
              30.0%

            	
              30.0%

            
	 	
              35.0%

            	
              35.0%

            
	 	
              40.0%

            	
              40.0%

            
	 	
              45.0%

            	
              45.0%

            
	 	
              50.0%

            	
              50.0%

            
	 	
              55.0%

            	
              55.0%

            
	 	
              60.0%

            	
              60.0%

            
	 	
              65.0%

            	
              65.0%

            
	 	
              70.0%

            	
              70.0%

            
	 	
              75.0%

            	
              75.0%

            
	 	
              80.0%

            	
              80.0%

            
	 	
              85.0%

            	
              85.0%

            
	 	
              90.0%

            	
              90.0%

            
	 	
              95.0%

            	
              95.0%

            
	
              Target

            	
              100%

            	
              100%

            
	 	
              105.0%

            	
              105.0%

            
	 	
              110.0%

            	
              110.0%

            
	 	
              115.0%

            	
              115.0%

            
	 	
              120.0%

            	
              120.0%

            
	 	
              125.0%

            	
              125.0%

            
	 	
              130.0%

            	
              130.0%

            
	 	
              135.0%

            	
              135.0%

            
	 	
              140.0%

            	
              140.0%

            
	 	
              145.0%

            	
              145.0%

            
	
              Maximum

            	
              150.0%

            	
              150.0%