Exhibit 10.18 - Short-Term Incentive Plan Amended and Restated effective January
      1, 2007


    
      Exhibit
        10.18

    

    


    


    
      	 

              

               

               

              
 

              Short-Term

              Incentive
                Plan

              


               

              


              


              


              


              


              


              Amended
                and Restated Effective 1/1/2007

               

            


    

    


    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ARTICLE
      1

    Philosophy,
      Strategy and Purpose

    


    1.1     Incentive
      Compensation Philosophy.
      The
      goal of the Company’s compensation policies and incentive plans 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 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 Short-Term Incentive Plan (the “Plan”) is to aid SEMCO Energy,
      Inc. (the “Company”) in attracting, retaining, motivating and rewarding
      employees of the Company or its subsidiaries or affiliates who participate
      in
      the Plan (the “Participants”), to provide for equitable and competitive
      compensation opportunities, to recognize individual contributions and reward
      achievement of the Company’s annual goals, and to promote the creation of value
      for shareholders. The Plan authorizes the payment of cash incentives to
      Participants.

    


    


    ARTICLE
      2

    Performance
      Levels, Opportunity Levels, Weightings

    


    2.1     Incentive
      Performance Levels.
      The
      threshold, target, and maximum performance levels and related payouts for the
      Plan shall be determined annually by the Compensation Committee and approved
      by
      the Board of Directors. Such annual performance targets and payouts shall be
      appropriate for the particular annual metrics chosen to measure performance
      under the Plan and shall take into consideration any other facts and
      circumstances the Compensation Committee deems it necessary or appropriate
      to
      consider in making these determinations.

    


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    2.2     Incentive
      Opportunity Levels.
      The
      following table delineates at
      target
      individual incentive opportunity levels as a percentage of base salary for
      each
      Participant group. The threshold and maximum levels are established annually
      by
      the Compensation Committee.

    


    
      	
              Group

            	
              Target

            
	
              President
                & CEO

            	
              60.0%

            
	
              SVP
                & COO

            	
              50.0%

            
	
              SVP
                & CFO 

            	
              40.0%

            
	
              SVP
                & General Counsel

            	
              40.0%

            
	
              VP
                of HR & Administration

            	
              40.0%

            
	
              VP
                & Deputy General Counsel

            	
              30.0%

            
	
              VP
                & Controller / Regional VP

            	
              25.0%

            
	
              Employee
                Director

            	
              20.0%

            
	
              Manager
                

            	
               6.0%

            
	
              Supervisor

            	
               3.0%

            
	
              Salaried
                Professional Positions

            	
               2.0%

            


    

    


    2.3     Performance
      Measurement Weightings.
      The
      Plan metrics are a combination of annual Corporate and Balanced Scorecard
      results as measured on each eligible Participant’s annual Performance
      Assessment. The following table delineates the performance measurement
      weightings:

    


    
      	
              Group

            	
              Corporate
                Results

              (Financial
                Targets)

            	
              Individual
                Results

              (Balanced
                Scorecard)

            
	
              President
                & CEO

            	
              70%

            	
              30%

            
	
              SVP
                & COO 

            	
              70%

            	
              30%

            
	
              SVP
                & CFO

            	
              70%

            	
              30%

            
	
              SVP
                & General Counsel 

            	
              60%

            	
              40%

            
	
              VP
                of HR & Administration

            	
              60%

            	
              40%

            
	
              VP
                & Deputy General Counsel

            	
              50%

            	
              50%

            
	
              VP
                & Controller / Regional VP

            	
              40%

            	
              60%

            
	
              Employee
                Director

            	
              30%

            	
              70%

            
	
              Manager

            	
              20%

            	
              80%

            
	
              Supervisor

            	
              20%

            	
              80%

            
	
              Salaried
                Professional Positions

            	
              20%

            	
              80%

            


    

    


    


    ARTICLE
      3

    Participants
      and Payouts

    


    3.1     Participants.
      Participation in the Plan shall be based on job title. Exceptions shall be
      approved by the Compensation Committee and the Board of Directors.

     

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    Employees
      who become Participants in the Plan for a portion of a Plan year will have
      their
      opportunity level prorated. Employees must be employed at the time of the Plan
      payout to be eligible for a payout, except for the case of death, total
      disability or retirement (in which case payout will be prorated based on the
      last day of active employment). Employees who voluntarily leave the Company
      or
      are released for cause prior to Plan payout are not eligible to receive any
      payout under the Plan.

    


    3.2     Payouts.
      Payouts
      under the Plan will be accrued on the books of the Company during the Plan
      year.
      Accruals must be adjusted prior to or at year-end to accommodate above target
      performance. The performance level for Incentive Opportunity must reflect all
      of
      the appropriate accrued payout. The CEO shall submit to the Compensation
      Committee recommendations for payout under the Plan. The CEO may recommend
      the
      payout to be less than the formulas reflect considering the following factors:
      difficulty of objectives, unusual occurrences, windfalls, or other extenuating
      circumstances; provided, however, that the payout recommendation may not be
      increased. Payouts will be reviewed and approved by the Compensation Committee
      and the Board, generally at their February meetings following the Plan year,
      and, if approved, will be paid no later than March 15th.

    


    


    ARTICLE
      4

    Administration

    


    4.1     Administration.
      The
      Compensation Committee is responsible for recommending the compensation for
      senior management. The Compensation Committee will report periodically to the
      Board of Directors about the work of the Compensation Committee. The
      Compensation Committee will meet from time to time to establish Plan goals,
      threshold, target and maximum performance levels, review progress, and (if
      appropriate) recommend to the Board of Directors approval of Plan goals,
      threshold, target and maximum performance levels, and payouts.

    


    4.2     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 Plan.

    


    IN
      WITNESS WHEREOF, the Company has caused this
      Amended
      and Restated Short-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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