Exhibit 10.4

                               GUARANTEE AGREEMENT

                                     BETWEEN

      SEMCO ENERGY, INC. (AS GUARANTOR) AND BANK ONE TRUST COMPANY, NATIONAL
                                   ASSOCIATION
                                   (AS TRUSTEE)

                           DATED AS OF APRIL 19, 2000







<PAGE>


<TABLE>
<CAPTION>
                                          TABLE OF CONTENTS*


                                                                                                   PAGE
                                                                                                   ----
<S>                                               <C>                                               <C>
ARTICLE I DEFINITIONS                                                                                1
  SECTION 1.01.                                   Definitions                                        1
ARTICLE II TRUST INDENTURE ACT                                                                       3
  SECTION 2.01.                                   Trust Indenture Act; Application                   3
  SECTION 2.02.                                   Lists of Holders of Securities                     3
  SECTION 2.03.                                   Reports by the Trustee                             4
  SECTION 2.04.                                   Periodic Reports to Trustee                        4
  SECTION 2.05.                                   Evidence of Compliance with Conditions Precedent   4
  SECTION 2.06.                                   Events of Default; Waiver                          4
  SECTION 2.07.                                   Event of Default; Notice                           4
  SECTION 2.08.                                   Conflicting Interests                              5
ARTICLE III POWERS, DUTIES AND RIGHTS OF TRUSTEE                                                     5
  SECTION 3.01.                                   Powers and Duties of the Trustee                   5
  SECTION 3.02.                                   Certain Rights of Trustee                          6
  SECTION 3.03.                                   Compensation; Fees; Indemnity                      8
ARTICLE IV TRUSTEE                                                                                   8
  SECTION 4.01.                                   Trustee; Eligibility                               8
  SECTION 4.02.                                   Appointment, Removal and Resignation of Trustee    9
ARTICLE V GUARANTEE                                                                                  9
  SECTION 5.01.                                   Guarantee                                          9
  SECTION 5.02.                                   Waiver of Notice and Demand                        9
  SECTION 5.03.                                   Obligations Not Affected                          10
  SECTION 5.04.                                   Rights of Holders                                 10
  SECTION 5.05.                                   Guarantee of Payment                              11
  SECTION 5.06.                                   Subrogation                                       11
  SECTION 5.07.                                   Independent Obligations                           11
ARTICLE VI SUBORDINATION                                                                            11
  SECTION 6.01.                                   Subordination                                     11
ARTICLE VII TERMINATION                                                                             12
  SECTION 7.01.                                   Termination                                       12
ARTICLE VIII MISCELLANEOUS                                                                          12
  SECTION 8.01.                                   Successors and Assigns                            12
  SECTION 8.02.                                   Amendments                                        12
  SECTION 8.03.                                   Notices                                           12
  SECTION 8.04.                                   Benefit                                           13
  SECTION 8.05.                                   Interpretation                                    13
  SECTION 8.06.                                   Governing Law                                     14



<FN>
*     This  Table  of  Contents does not constitute part of the Indenture or have any bearing upon the
interpretation  of  any  of  its  terms  and  provisions.
</TABLE>

                                        i
<PAGE>
<TABLE>
<CAPTION>


                             CROSS-REFERENCE TABLE*


     SECTION OF            SECTION OF
TRUST INDENTURE ACT        GUARANTEE
OF 1939, AS AMENDED        AGREEMENT
--------------------       --------------------
<C>                        <S>

              310(a)       4.01(a)
              310(b)       4.01(c), 2.08
              310(c)       Inapplicable
              311(a)       2.02(b)
              311(b)       2.02(b)
              311(c)       Inapplicable
              312(a)       2.02(a)
              312(b)       2.02(b)
              313          2.03
              314(a)       2.04
              314(b)       Inapplicable
              314(c)       2.05
              314(d)       Inapplicable
              314(e)       1.01, 2.05, 3.02
              314(f)       2.01, 3.02
              315(a)       3.01(d)
              315(b)       2.07
              315(c)       3.01
              315(d)       3.01(d)
              315(e)       Inapplicable
              316(a)       5.04(iii), 2.06
              316(b)       5.04
              316(c)       2.02
              317(a)       5.04(ii)
              317(b)       Inapplicable
              318(a)       2.01(b)
              318(b)       2.01
              318(c)       2.01(a)


<FN>
*     This  Cross-Reference  Table  does  not  constitute  part of the Guarantee
Agreement  and  shall  not  affect  the  interpretation  of  any of its terms or
provisions.
</TABLE>


                                        ii
<PAGE>
                               GUARANTEE AGREEMENT

     This  GUARANTEE  AGREEMENT  ("Guarantee  Agreement"), dated as of April 19,
2000  is  executed  and  delivered by SEMCO ENERGY, INC., a Michigan corporation
(the  "Guarantor"), and Bank One Trust Company, National Association, a national
banking  association, as trustee (the "Trustee"), for the benefit of the Holders
(as  defined  herein)  from  time  to time of the Trust Preferred Securities (as
defined  herein)  of  SEMCO CAPITAL TRUST I, a Delaware statutory business trust
(the  "Trust  ").

     WHEREAS,  pursuant  to  an Amended and Restated Trust Agreement (the "Trust
Agreement"),  dated  as of April 19, 2000, among the Trustee, the other Trustees
named  therein,  and  SEMCO  Energy,  Inc.,  as  Depositor,  and  the holders of
undivided  beneficial interests in the assets of the Trust, the Trust is issuing
as  of  the  date  hereof  $40,000,000 aggregate liquidation amount of its 10  %
Trust  Preferred  Securities  (the  "Trust  Preferred  Securities") representing
preferred  undivided  beneficial interests in the assets of the Trust and having
the  terms  set  forth  in  the  Trust  Agreement;

     WHEREAS, the Trust Preferred Securities will be issued by the Trust and the
proceeds thereof will be used to purchase Subordinated Debentures (as defined in
the  Trust Agreement) of the Guarantor, which will be held by the Trust as trust
assets;  and

     WHEREAS,  as  incentive  for  the  Holders  to purchase the Trust Preferred
Securities,  the  Guarantor desires to irrevocably and unconditionally agree, to
the  extent  set  forth herein, to pay to the Holders the Guarantee Payments (as
defined  herein)  and to make certain other payments on the terms and conditions
set  forth  herein.

     NOW,  THEREFORE,  in  consideration  of  the  payment  for  Trust Preferred
Securities  by  each  Holder  thereof, which payment the Guarantor hereby agrees
shall  benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement  for  the  benefit  of  the  Holders  from  time  to time of the Trust
Preferred  Securities.

                                    ARTICLE I

                                   DEFINITIONS

     Section  1.01.  Definitions

     As  used  in  this  Guarantee  Agreement,  the terms set forth below shall,
unless  the context otherwise requires, have the following meanings. Capitalized
or  otherwise defined terms used but not otherwise defined herein shall have the
meanings  assigned to such terms in the Trust Agreement as in effect on the date
hereof.

     "Affiliate"  of  any  specified  Person  means any other Person directly or
indirectly  controlling  or  controlled  by  or  under direct or indirect common
control  with  such  specified  Person.  For  the  purposes  of this definition,
"control"  when  used  with  respect  to any specified Person means the power to
direct  the  management  and  policies  of  such Person, directly or indirectly,
whether  through  the  ownership of voting securities, by contract or otherwise;
and  the  terms  "controlling" and "controlled" have meanings correlative to the
foregoing.

     "Event  of  Default" means a failure by the Guarantor to perform any of its
payment  obligations  under  this  Guarantee  Agreement.

     "Guarantee  Payments"  shall  mean the following payments or distributions,
without  duplication,  with  respect  to  the Trust Preferred Securities, to the
extent not paid or made by or on behalf of the Trust: (i) any accrued and unpaid
distributions  that  are  required to be paid on such Trust Preferred Securities
but if and only if and to the extent the Trust has funds legally and immediately
available  therefor  to  make such payment; (ii) the redemption price, including
all  accrued and unpaid distributions to the date of redemption (the "Redemption
Price"), with respect to the Trust Preferred Securities called for redemption by
the  Trust but if and only if and to the extent that the Trust has funds legally
and  immediately  available  therefor sufficient to make such payment; and (iii)
upon  a  voluntary  or involuntary dissolution, winding-up or termination of the
Trust (other than in connection with the distribution of Subordinated Debentures
to  the  holders  of  Trust  Securities  or  the  redemption of all of the Trust
Preferred Securities), the lesser of (a) the aggregate of the liquidation amount
and  all  accrued  and unpaid distributions on the Trust Preferred Securities to
the  date  of payment, to the extent the Trust has funds legally and immediately
available  therefor,  and  (b)  the  amount  of  assets  of  the Trust remaining
available  for  distribution  to  Holders in liquidation of the Trust (in either
case,  the  "Liquidation  Distribution").

<PAGE>
     "Holder"  shall  mean any holder, as registered on the books and records of
the  Trust,  of  any  Trust  Preferred  Securities;  provided,  however, that in
determining  whether  the holders of the requisite percentage of Trust Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall  not  include  the  Guarantor  or  any  Affiliate  of  the  Guarantor.

     "Indenture"  means  the Subordinated Indenture, dated as of April 19, 2000,
among  the  Guarantor, as issuer, and Bank One Trust Company, NA, as trustee, as
supplemented  by the First Supplemental Indenture dated as of April 19, 2000, by
and  between  the  Guarantor  and  Bank  One  Trust  Company,  NA,  as  trustee.

     "Majority in liquidation amount of Trust Preferred Securities" means a vote
by  Holder(s)  of  Trust  Preferred Securities, voting separately as a class, of
more  than  50%  of  the  liquidation  amount  of all Trust Preferred Securities
outstanding  at  the  time  of  determination.

     "Officers'  Certificate"  means a certificate signed by the Chairman of the
Board,  the  President  or  a Vice President, and by the Treasurer, an Assistant
Treasurer,  the  Secretary  or  an  Assistant  Secretary,  of the Guarantor, and
delivered  to  the  Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee Agreement
shall  include:

     (a)  a  statement  that  each officer signing the Officers' Certificate has
read  such  covenant  or  condition and the definitions herein relating thereto;

     (b)  a  brief  statement  as  to the nature and scope of the examination or
investigation  upon  which the statements or opinions contained in the Officers'
Certificate  are  based;

     (c) a statement that, in the opinion of each such officer, he has made such
examination  or  investigation  as  is  necessary  to  enable  him to express an
informed  opinion  as  to  whether  or  not  such covenant or condition has been
complied  with;  and

     (d)  a  statement  as to whether, in the opinion of each such officer, such
condition  or  covenant  has  been  complied  with.

     "Person"  means any individual, corporation, partnership, limited liability
company,  joint venture, trust, unincorporated organization or government or any
agency  or  political  subdivision  thereof.

     "Responsible  Officer"  means,  with  respect  to  the  Trustee,  any  Vice
President, any Assistant Vice President, the Secretary, any Assistant Secretary,
the  Treasurer, any Assistant Treasurer, any Senior Trust Officer, Trust Officer
or  Assistant  Trust  Officer  or  any  other  officer  of  the  Corporate Trust
Department  of  the  Trustee  customarily  performing functions similar to those
performed  by  any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred  because  of  that  officer's  knowledge  of  and  familiarity with the
particular  subject.

     "Successor Trustee" means a successor Trustee possessing the qualifications
to  act  as  Trustee  under  Section  4.01.

     "Trust  Common  Securities"  means  the  securities  representing  common
undivided  beneficial  interests  in  the  assets  of  the  Trust.

     "Trust  Indenture  Act"  means the Trust Indenture Act of 1939, as amended.

     "Trust  Securities"  means  the  Trust  Preferred  Securities and the Trust
Common  Securities.

     "Trustee"  means  Bank  One  Trust  Company,  National  Association until a
Successor  Trustee has been appointed and has accepted such appointment pursuant
to  the  terms  of  this  Guarantee  Agreement  and  thereafter  means each such
Successor  Trustee.


                                        2
<PAGE>
                                   ARTICLE II

                               TRUST INDENTURE ACT

     Section  2.01.  Trust  Indenture  Act;  Application.

     (a)  This  Guarantee  Agreement  is  subject to the provisions of the Trust
Indenture  Act  that  are  required  to  be part of this Guarantee Agreement and
shall,  to  the  extent  applicable,  be  governed  by  such  provisions;  and

     (b)  If  and  to  the extent that any provision of this Guarantee Agreement
limits,  qualifies  or conflicts with the duties imposed by Sections 310 to 317,
inclusive,  of  the  Trust  Indenture  Act,  such  imposed duties shall control.

     Section  2.02.  Lists  of  Holders  of  Securities;  Record  Date.

     (a) The Guarantor shall furnish or cause to be furnished to the Trustee (a)
semiannually, not later than June 1 and December 1 in each year, a list, in such
form  as  the  Trustee may reasonably require, of the names and addresses of the
Holders ("List of Holders") as of a date not more than 15 days prior to the time
such  list  is furnished, and (b) at such other times as the Trustee may request
in  writing,  within  30  days  after  the  receipt by the Guarantor of any such
request,  a List of Holders as of a date not more than 15 days prior to the time
such  list  is furnished; provided that, the Guarantor shall not be obligated to
provide  such  List  of  Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Trustee by the Guarantor or at
any  time the Trustee is the Securities Registrar under the Trust Agreement. The
Trustee  may  destroy any List of Holders previously given to it on receipt of a
new  List  of  Holders.

     (b)  The  Trustee  shall comply with its obligations under Sections 311(a),
311(b),  312(b)  and  316(c)  of  the  Trust  Indenture  Act.

     Section  2.03.  Reports  by  the  Trustee

Within  60  days  after May 15 of each year commencing May 15, 2000, the Trustee
shall  provide  to the Holders of the Trust Preferred Securities such reports as
are  required  by  Section 313(a) and (b) of the Trust Indenture Act, if any, in
the  form  and in the manner provided by Section 313 of the Trust Indenture Act.
The  Trustee shall also comply with the other requirements of Section 313 of the
Trust  Indenture  Act.

     Section  2.04.  Periodic  Reports  to  Trustee

     The  Guarantor  shall  provide  to  the Trustee such documents, reports and
information  as  required  by Section 314 of the Trust Indenture Act (if any) in
the  form,  in  the manner and at the times required by Section 314 of the Trust
Indenture  Act,  and shall provide, within 120 days after the end of each fiscal
year  of the Guarantor, the compliance certificate required by Section 314(a)(4)
of  the  Trust  Indenture  Act  in  the  form and in the manner required by such
Section.

     Section  2.05.  Evidence  of  Compliance  with  Conditions  Precedent

     The Guarantor shall provide to the Trustee such evidence of compliance with
any  conditions precedent, if any, provided for in this Guarantee Agreement that
relate  to any of the matters set forth in Section 314(c) of the Trust Indenture
Act.  Any  certificate or opinion required to be given by an officer pursuant to
Section  314(c)(1)  may  be  given  in  the  form  of  an Officers' Certificate.

     Section  2.06.  Events  of  Default;  Waiver

     The  Holders  of  a  Majority  in  liquidation  amount  of  Trust Preferred
Securities  may,  by vote, on behalf of all of the Holders, waive any past Event
of  Default  and  its  consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be deemed
to  have been cured and not to have existed, for every purpose of this Guarantee
Agreement, but no such waiver shall extend to any subsequent or other default or
Event  of  Default  or  impair  any  right  consequent  thereon.

                                        3
<PAGE>
     Section  2.07.  Event  of  Default;  Notice.

     (a)  The  Trustee shall, within 90 days after the occurrence of an Event of
Default  actually  known  to  the Trustee, transmit by mail, first class postage
prepaid,  to  the  Holders,  notices  of all such Events of Default, unless such
defaults  have  been  cured  before the giving of such notice, provided that the
Trustee  shall  be  protected  in  withholding such notice if and so long as the
board  of  directors, the executive committee, or a trust committee of directors
and/or  Responsible  Officers  of  the Trustee in good faith determines that the
withholding  of  such  notice  is  in  the  interests  of  the  Holders.

     (b)  The  Trustee  shall  not  be  deemed to have knowledge of any Event of
Default  unless the Trustee shall have received written notice, or a Responsible
Officer  charged  with  the  administration  of  the  Trust Agreement shall have
obtained  written  notice,  of  such  Event  of  Default.

     Section  2.08.  Conflicting  Interests

     The  Trust  Agreement  shall be deemed to be specifically described in this
Guarantee  Agreement  for  the  purposes  of  clause  (i)  of  the first proviso
contained  in  Section  310(b)  of  the  Trust  Indenture  Act.

                                   ARTICLE III

                      POWERS, DUTIES AND RIGHTS OF TRUSTEE

     Section  3.01.  Powers  and  Duties  of  the  Trustee.

     (a)  This  Guarantee Agreement shall be held by the Trustee for the benefit
of  the  Holders, and the Trustee shall not transfer this Guarantee Agreement to
any  Person  except the Trustee shall assign rights hereunder to a Holder to the
extent such assignment is necessary to exercise such Holder's rights pursuant to
Section 5.04 or to a Successor Trustee upon acceptance by such Successor Trustee
of its appointment to act as Successor Trustee. The right, title and interest of
the  Trustee shall automatically vest in any Successor Trustee, and such vesting
and  cessation of title shall be effective whether or not conveyancing documents
have  been  executed and delivered pursuant to the appointment of such Successor
Trustee.

     (b)  If  an  Event  of  Default has occurred and is continuing, the Trustee
shall  enforce  this  Guarantee  Agreement  for  the  benefit  of  the  Holders.

     (c)  The  Trustee,  before the occurrence of any Event of Default and after
the  curing  or  waiving  of all Events of Default that may have occurred, shall
undertake  to  perform  only  such  duties as are specifically set forth in this
Guarantee  Agreement, and no implied covenants shall be read into this Guarantee
Agreement  against  the  Trustee. In case an Event of Default has occurred (that
has  not  been  cured  or  waived  pursuant  to Section 2.06), the Trustee shall
exercise such of the rights and powers vested in it by this Guarantee Agreement,
and  use the same degree of care and skill in its exercise thereof, as a prudent
person  would  exercise  or use under the circumstances in the conduct of his or
her  own  affairs.

     (d)  No provision of this Guarantee Agreement shall be construed to relieve
the  Trustee  from  liability  for  its  own negligent action, its own negligent
failure  to  act,  or  its  own  willful  misconduct,  except  that:

          (i)  prior  to  the  occurrence  of any Event of Default and after the
curing  or  waiving  of  all  such  Events  of  Default  that may have occurred:

               (A) the duties and obligations of the Trustee shall be determined
solely  by  the  express provisions of this Guarantee Agreement, and the Trustee
shall not be liable except for the performance of such duties and obligations as
are  specifically  set  forth  in  this  Guarantee  Agreement;  and

                                        4
<PAGE>
               (B)  in  the absence of bad faith on the part of the Trustee, the
Trustee  may  conclusively  rely,  as  to  the  truth  of the statements and the
correctness of the opinions expressed therein, upon any certificates or opinions
furnished  to  the  Trustee and conforming to the requirements of this Guarantee
Agreement;  but  in  the  case  of any such certificates or opinions that by any
provision  hereof  are specifically required to be furnished to the Trustee, the
Trustee  shall  be  under a duty to examine the same to determine whether or not
they  conform  to  the  requirements  of  this  Guarantee  Agreement;

          (ii) the Trustee shall not be liable for any error of judgment made in
good  faith  by  a Responsible Officer of the Trustee, unless it shall be proved
that  the  Trustee  was negligent in ascertaining the pertinent facts upon which
such  judgment  was  made;

          (iii) the Trustee shall not be liable with respect to any action taken
or  omitted  to be taken by it in good faith in accordance with the direction of
the  Holders  of  a  Majority  in  liquidation  amount  of  the  Trust Preferred
Securities  relating  to the time, method and place of conducting any proceeding
for  any  remedy  available  to  the  Trustee,  or exercising any trust or power
conferred  upon  the  Trustee  under  this  Guarantee  Agreement;  and

          (iv)  no  provision  of  this  Guarantee  Agreement  shall require the
Trustee  to  expend  or risk its own funds or otherwise incur personal financial
liability  in  the performance of any of its duties or in the exercise of any of
its rights or powers, if the Trustee shall have reasonable grounds for believing
that  the  repayment  of such funds or liability is not reasonably assured to it
under  the  terms of this Guarantee Agreement or adequate indemnity against such
risk  or  liability  is  not  reasonably  assured  to  it.

     Section  3.02.  Certain  Rights  of  Trustee.

     (a)  Subject  to  the  provisions  of  Section  3.01:

          (i)  the  Trustee  may  rely and shall be fully protected in acting or
refraining  from acting upon any resolution, certificate, statement, instrument,
opinion,  report,  notice,  request, direction, consent, order, bond, debenture,
note,  other  evidence of indebtedness or other paper or document believed by it
to  be genuine and to have been signed, sent or presented by the proper party or
parties;

          (ii)  any  direction  or  act  of  the  Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers' Certificate;

          (iii) whenever, in the administration of this Guarantee Agreement, the
Trustee  shall  deem  it desirable that a matter be proved or established before
taking,  suffering  or  omitting any action hereunder, the Trustee (unless other
evidence  is herein specifically prescribed) may, in the absence of bad faith on
its  part, request and rely upon an Officers' Certificate which, upon receipt of
such  request,  shall  be  promptly  delivered  by  the  Guarantor;

          (iv)  the  Trustee  may  consult  with  counsel of its choice, and the
written advice or opinion of such counsel with respect to legal matters shall be
full  and  complete authorization and protection in respect of any action taken,
suffered  or  omitted  by it hereunder in good faith and in accordance with such
advice  or  opinion;  such counsel may be counsel to the Guarantor or any of its
Affiliates  and  may  include  any  of its employees; the Trustee shall have the
right  at  any  time  to seek instructions concerning the administration of this
Guarantee  Agreement  from  any  court  of  competent  jurisdiction;

          (v)  the  Trustee  shall be under no obligation to exercise any of the
rights  or  powers  vested  in  it by this Guarantee Agreement at the request or
direction  of  any Holder, unless such Holder shall have provided to the Trustee
such adequate security and indemnity as would satisfy a reasonable person in the
position  of the Trustee, against the costs, expenses (including attorneys' fees
and  expenses)  and  liabilities  that might be incurred by it in complying with
such  request  or  direction,  including  such  reasonable  advances  as  may be
requested  by  the  Trustee;  provided  that  nothing  contained in this Section
3.02(a)(v)  shall  be  taken  to  relieve the Trustee, upon the occurrence of an
Event  of Default, of its obligation to exercise the rights and powers vested in
it  by  this  Guarantee  Agreement;

                                        5
<PAGE>
          (vi) the Trustee shall not be bound to make any investigation into the
facts  or  matters stated in any resolution, certificate, statement, instrument,
opinion,  report,  notice,  request, direction, consent, order, bond, debenture,
note,  other  evidence  of  indebtedness  or  other  paper  or document, but the
Trustee,  in its discretion, may make such further inquiry or investigation into
such  facts  or  matters  as  it  may  see  fit;

          (vii) the Trustee may execute any of the trusts or powers hereunder or
perform  any  duties  hereunder  either  directly  or  by  or  through agents or
attorneys,  and  the  Trustee  shall  not  be  responsible for any misconduct or
negligence  on  the  part of any agent or attorney appointed with due care by it
hereunder;  and

          (viii)  whenever in the administration of this Guarantee Agreement the
Trustee  shall  deem  it  desirable  to  receive  instructions  with  respect to
enforcing  any remedy or right or taking any other action hereunder, the Trustee
(i)  may  request instructions from the Holders, (ii) may refrain from enforcing
such  remedy  or  right  or taking such other action until such instructions are
received,  and  (iii)  shall  be  protected  in  acting  in accordance with such
instructions.

     (b)  No provision of this Guarantee Agreement shall be deemed to impose any
duty  or  obligation  on  the Trustee to perform any act or acts or exercise any
right,  power, duty or obligation conferred or imposed on it in any jurisdiction
in  which  it  shall be illegal, or in which the Trustee shall be unqualified or
incompetent  in  accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power or
authority  available  to  the  Trustee  shall  be  construed  to  be  a  duty.

     Section  3.03.  Compensation;  Fees;  Indemnity.

     The  Guarantor  agrees:

     (a) to pay to the Trustee from time to time reasonable compensation for all
services  rendered  by  the  Trustee  hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express  trust);

     (b) except as otherwise expressly provided herein, to reimburse the Trustee
upon request for all reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any provision of this Guarantee Agreement
(including the reasonable compensation and the expenses and disbursements of its
agents  and counsel), except any such expense, disbursement or advance as may be
attributable  to  its  negligence  or  bad  faith;  and

     (c) to indemnify the Trustee for, and to hold the Trustee harmless against,
any  and  all  loss,  damage,  claims,  liability  or  expense  incurred without
negligence  or  bad  faith on its part, arising out of or in connection with the
acceptance  or  administration  of this Guarantee Agreement, including the costs
and  expenses  of  defending itself against any claim or liability in connection
with  the  exercise  or  performance  of  any of its powers or duties hereunder.

     The  provisions  of this Section 3.03 shall survive the termination of this
Guarantee  Agreement  or  the  registration  or  removal  of  the  Trustee.

                                   ARTICLE IV

                                     TRUSTEE

     Section  4.01.  Trustee;  Eligibility.

     (a)  There  shall  at  all  times  be  a  Trustee  which  shall:

          (i)  not  be  an  Affiliate  of  the  Guarantor;  and

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<PAGE>
          (ii)  be  a corporation organized and doing business under the laws of
the  United  States  of  America  or  any  State  or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the Securities and
Exchange Commission to act as an institutional trustee under the Trust Indenture
Act,  authorized  under  such  laws to exercise corporate trust powers, having a
combined  capital and surplus of at least 50 million U.S. dollars ($50,000,000),
and  subject  to  supervision  or  examination by Federal, State, Territorial or
District  of  Columbia  authority.  If  such  corporation  publishes  reports of
condition  at  least  annually,  pursuant  to  law or to the requirements of the
supervising  or examining authority referred to above, then, for the purposes of
this  Section  4.01(a)(ii), the combined capital and surplus of such corporation
shall  be deemed to be its combined capital and surplus as set forth in its most
recent  report  of  condition  so  published.

     (b)  If  at any time the Trustee shall cease to be eligible to so act under
Section 4.01(a), the Trustee shall immediately resign in the manner and with the
effect  set  out  in  Section  4.02(c).

     (c)  If  the Trustee has or shall acquire any "conflicting interest" within
the  meaning  of  Section  310(b)  of  the  Trust Indenture Act, the Trustee and
Guarantor  shall in all respects comply with the provisions of Section 310(b) of
the  Trust  Indenture  Act,  subject  to  the  rights  of  the Trustee under the
penultimate  paragraph  thereof.

     Section  4.02.  Appointment,  Removal  and  Resignation  of  Trustee.

     (a)  Subject  to  Section  4.02(b), the Trustee may be appointed or removed
without  cause  at  any  time  by  the  Guarantor.

     (b)  The  Trustee  shall  not be removed until a Successor Trustee has been
appointed  and  has  accepted such appointment by written instrument executed by
such  Successor  Trustee  and  delivered  to  the  Guarantor.

     (c)  The  Trustee  appointed  to office shall hold office until a Successor
Trustee  shall  have  been  appointed  or  until its removal or resignation. The
Trustee may resign from office (without need for prior or subsequent accounting)
by  an  instrument  in  writing  executed  by  the  Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Trustee has
been  appointed  and  has  accepted  such  appointment  by instrument in writing
executed  by  such  Successor  Trustee  and  delivered  to the Guarantor and the
resigning  Trustee.

     (d)  If  no  Successor  Trustee  shall  have  been  appointed  and accepted
appointment  as  provided  in this Section 4.02 within 60 days after delivery to
the  Guarantor  of  an  instrument  of  resignation,  the  resigning Trustee may
petition  any  court  of  competent  jurisdiction for appointment of a Successor
Trustee.  Such court may thereupon, after prescribing such notice, if any, as it
may  deem  proper,  appoint  a  Successor  Trustee.

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<PAGE>
                                    ARTICLE V

                                    GUARANTEE

     Section  5.01.  Guarantee

     The  Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders  the Guarantee Payments (without duplication of amounts theretofore paid
by or on behalf of the Trust), as and when due, regardless of any defense, right
of  set-off  or  counterclaim which the Guarantor may have or assert against any
person.  The Guarantor's obligation to make a Guarantee Payment may be satisfied
by  direct payment of the required amounts by the Guarantor to the Holders or by
causing  the  Trust  to  pay  such  amounts  to  the  Holders.

     Section  5.02.  Waiver  of  Notice  and  Demand

     The  Guarantor  hereby  waives  notice  of  acceptance  of  this  Guarantee
Agreement  and  of  any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Trust or
any  other  Person  before  proceeding against the Guarantor, protest, notice of
nonpayment,  notice  of dishonor, notice of redemption and all other notices and
demands.

     Section  5.03.  Obligations  Not  Affected

     The  obligation  of the Guarantor to make the Guarantee Payments under this
Guarantee  Agreement  shall  in  no way be affected or impaired by reason of the
happening  from  time  to  time  of  any  of  the  following:

     (a)  the  release  or  waiver,  by  operation  of  law or otherwise, of the
performance  or  observance  by  the  Trust of any express or implied agreement,
covenant,  term  or  condition  relating to the Trust Preferred Securities to be
performed  or  observed  by  the  Trust;

     (b)  the  extension  of  time  for  the  payment by the Trust of all or any
portion  of the Distributions, Redemption Price, Liquidation Distribution or any
other  sums  payable  under  the  terms of the Trust Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of,  or  in  connection  with,  the  Trust  Preferred  Securities (other than an
extension  of  time  for payment of Distributions, Redemption Price, Liquidation
Distribution  or  other  sum  payable  that  results  from  the extension of any
interest  payment  period  on  the  Subordinated  Debentures  permitted  by  the
Indenture);

     (c)  any  failure,  omission, delay or lack of diligence on the part of the
Holders  to  enforce,  assert  or exercise any right, privilege, power or remedy
conferred  on  the  Holders  pursuant  to  the  terms  of  the  Trust  Preferred
Securities,  or  any  action  on  the  part  of the Trust granting indulgence or
extension  of  any  kind;

     (d)  the  voluntary  or  involuntary  liquidation, dissolution, sale of any
collateral,  receivership, insolvency, bankruptcy, assignment for the benefit of
creditors,  reorganization, arrangement, composition or readjustment of debt of,
or  other  similar  proceedings affecting, the Trust or any of the assets of the
Trust;

     (e)  any  invalidity  of,  or  defect or deficiency in, the Trust Preferred
Securities;

     (f)  the  settlement  or  compromise of any obligation guaranteed hereby or
hereby  incurred;  or

     (g)  any  other  circumstance  whatsoever that might otherwise constitute a
legal  or  equitable discharge or defense of a guarantor, it being the intent of
this  Section  5.03  that  the  obligations  of the Guarantor hereunder shall be
absolute  and  unconditional  under  any  and  all  circumstances.

     There  shall  be  no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.

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<PAGE>
     Section  5.04.  Rights  of  Holders

     The  Guarantor  expressly  acknowledges  that: (i) this Guarantee Agreement
will  be  deposited  with the Trustee to be held for the benefit of the Holders;
(ii)  the Trustee has the right to enforce this Guarantee Agreement on behalf of
the  Holders; (iii) the Holders of a Majority in liquidation amount of the Trust
Preferred  Securities  have  the  right  to direct the time, method and place of
conducting  any proceeding for any remedy available to the Trustee in respect of
this  Guarantee  Agreement  or  to  direct  the  exercise  of any trust or power
conferred  upon  the  Trustee under this Guarantee Agreement, provided that such
direction  shall  not be in conflict with any rule of law or with this Guarantee
Agreement,  and  could  not  involve  the  Trustee  in  personal  liability  in
circumstances  where reasonable indemnity would not be adequate; (iv) any Holder
may  institute  a legal proceeding directly against the Guarantor to enforce its
rights  under  this  Guarantee  Agreement,  without  first  instituting  a legal
proceeding  against  or  requesting  or  directing  that  action be taken by the
Trustee  or  any  other  person; it being understood and intended that no one or
more of such Holders shall have any right in any manner whatsoever by virtue of,
or  by availing of, any provision of this Guarantee Agreement to affect, disturb
or  prejudice the rights of any other of such Holders or to obtain or to seek to
obtain  priority  or preference over any other of such Holders or to enforce any
right  under  this Guarantee Agreement, except in the manner herein provided and
for  the  equal  and ratable benefit of all of such Holders; and (v) the Holders
have  those  rights  set  forth  in  Section  316(b) of the Trust Indenture Act.

     Section  5.05.  Guarantee  of  Payment

     This  Guarantee  Agreement  creates  a  guarantee  of  payment  and  not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication) or upon the distribution of
Subordinated  Debentures  to  the  Holders  in  exchange  for  all  of the Trust
Preferred  Securities.

     Section  5.06.  Subrogation

     The  Guarantor  shall  be  subrogated to all (if any) rights of the Holders
against the Trust in respect of any amounts paid to the Holders by the Guarantor
under  this Guarantee Agreement; provided, however, that the Guarantor shall not
(except  to  the  extent required by mandatory provisions of law) be entitled to
enforce or exercise any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Guarantee Agreement, if, at the time of any such payment, any amounts
of  Guarantee Payments are due and unpaid under this Guarantee Agreement. If any
amount  shall  be  paid to the Guarantor in violation of the preceding sentence,
the  Guarantor  agrees  to  hold such amount in trust for the Holders and to pay
over  such  amount  to  the  Holders.

     Section  5.07.  Independent  Obligations

     The  Guarantor  acknowledges that its obligations hereunder are independent
of  the  obligations of the Trust with respect to the Trust Preferred Securities
and  that  the Guarantor shall be liable as principal and as debtor hereunder to
make  Guarantee  Payments  pursuant  to  the  terms  of this Guarantee Agreement
notwithstanding  the  occurrence  of  any  event  referred to in subsections (a)
through  (g),  inclusive,  of  Section  5.03  hereof.



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<PAGE>
                                   ARTICLE VI

                                  SUBORDINATION

     Section  6.01.  Subordination

     This  Guarantee  Agreement  will  constitute an unsecured obligation of the
Guarantor  and  will  rank (i) subordinate and junior in right of payment to all
other  liabilities  of  the  Guarantor,  including  the Subordinated Debentures,
except  those obligations or liabilities made pari passu or subordinate by their
terms,  (ii)  pari  passu  with the most senior preferred stock now or hereafter
issued  or  guaranteed by the Guarantor, and (iii) senior to all common stock of
the  Guarantor.

                                   ARTICLE VII

                                   TERMINATION

     Section  7.01.  Termination

     This  Guarantee  Agreement  shall  terminate and be of no further force and
effect  upon:  (i)  full  payment of the Redemption Price of all Trust Preferred
Securities,  (ii)  the distribution of Subordinated Debentures to the Holders in
exchange for all of the Trust Preferred Securities, or (iii) full payment of the
amounts  payable  in accordance with the Trust Agreement upon liquidation of the
Trust.  Notwithstanding the foregoing, this Guarantee Agreement will continue to
be  effective  or  will  be  reinstated,  as the case may be, if at any time any
Holder  must  restore  payment  of any sums paid with respect to Trust Preferred
Securities  or  under  this  Guarantee  Agreement.

                                  ARTICLE VIII

                                  MISCELLANEOUS

     Section  8.01.  Successors  and  Assigns

     All  guarantees  and agreements contained in this Guarantee Agreement shall
bind  the  successors,  assigns,  receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders then outstanding. Except
in  connection  with  a  consolidation,  merger,  conveyance, transfer, or lease
involving  the Guarantor that is permitted under Article Eight of the Indenture,
the  Guarantor  shall  not  assign  its  obligations  hereunder.

     SECTION  8.02.  Amendments

     Except  with  respect  to any changes which do not materially and adversely
affect  the  rights  of  Holders  (in  which  case no consent of Holders will be
required),  this Guarantee Agreement may only be amended with the prior approval
of  the  Holders  of  not  less  than  66-2/3%  in liquidation amount of all the
outstanding  Trust  Preferred  Securities.  The provisions of Article Six of the
Trust Agreement concerning meetings of Holders shall apply to the giving of such
approval.

     Section  8.03.  Notices

     Any  notice,  request  or  other  communication required or permitted to be
given  hereunder  shall  be  in  writing,  duly  signed by the party giving such
notice,  and  delivered,  telecopied  or  mailed by first class mail as follows:

     (a) if given to the Guarantor, to the address set forth below or such other
address  as  the  Guarantor  may  give notice of to the Trustee and the Holders:

     SEMCO  Energy,  Inc.
                                        10
<PAGE>
     405  Water  Street
     Port  Huron,  Michigan  48060

     (b) if given to the Trust, in care of the Trustee, or to the Trustee at the
Trust's (and the Trustee's) address set forth below or such other address as the
Trustee  on  behalf  of  the  Trust  may  give  notice  of  to  the  Holders:

     SEMCO  Capital  Trust  I

     with a copy, in the case of a notice to the Trust (other than a notice from
the  Guarantor),  to  the  Guarantor.

     (c)  if  given  to  any  Holder,  at the address set forth on the books and
records  of  the  Trust.

     All  notices  hereunder shall be deemed to have been given when received in
person,  telecopied  with  receipt  confirmed,  or  mailed  by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot  be  delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of  such  refusal  or  inability  to  deliver.

     Section  8.04.  Benefit

     This  Guarantee  Agreement  is  solely  for the benefit of the Holders and,
subject  to  Section  3.01(a),  is  not  separately  transferable from the Trust
Preferred  Securities.

     Section  8.05.  Interpretation

     In  this  Guarantee  Agreement,  unless  the  context  otherwise  requires:

     (a)  capitalized  terms used in this Guarantee Agreement but not defined in
the  preamble  hereto  have  the respective meanings assigned to them in Section
1.01;

     (b)  a  term  defined  anywhere  in  this  Guarantee Agreement has the same
meaning  throughout;

     (c)  all  references  to  "the  Guarantee  Agreement"  or  "this  Guarantee
Agreement"  are to this Guarantee Agreement as modified, supplemented or amended
from  time  to  time;

     (d) all references in this Guarantee Agreement to Articles and Sections are
to Articles and Sections of this Guarantee Agreement unless otherwise specified;

     (e)  a  term  defined  in the Trust Indenture Act has the same meaning when
used  in  this  Guarantee  Agreement  unless otherwise defined in this Guarantee
Agreement  or  unless  the  context  otherwise  requires;

     (f)  a  reference  to  the singular includes the plural and vice versa; and

     (g) the masculine, feminine or neuter genders used herein shall include the
masculine,  feminine  and  neuter  genders.

     Section  8.06.  Governing  Law.

     THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED
IN  ACCORDANCE  WITH  THE  INTERNAL LAWS OF THE STATE OF NEW YORK. THE GUARANTOR
HEREBY  IRREVOCABLY  SUBMITS  TO  THE JURISDICTION OF THE UNITED STATES DISTRICT
COURT  FOR  THE  SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW
YORK  LOCATED  IN  THE  CITY  AND  COUNTY  OF  NEW  YORK  IN ANY ACTION, SUIT OR
PROCEEDING  BROUGHT  AGAINST  IT  AND  RELATED  TO  OR  IN  CONNECTION WITH THIS
GUARANTEE  AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, AND TO THE EXTENT

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<PAGE>
PERMITTED  BY  APPLICABLE  LAW,  THE  GUARANTOR  HEREBY WAIVES AND AGREES NOT TO
ASSERT  BY  WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR
PROCEEDING,  ANY  CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
SUCH  COURTS,  THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM,  THAT  THE  VENUE  OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT
THIS GUARANTEE AGREEMENT OR ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR
THE  SUBJECT  MATTER  HEREOF  MAY  NOT  BE  LITIGATED  IN OR BY SUCH COURTS. THE
GUARANTOR  AGREES  THAT  SERVICE  OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR
REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS GUARANTEE AGREEMENT
OR  ANY  METHOD  AUTHORIZED  BY  THE  LAWS  OF  NEW  YORK.

     This  instrument  may  be  executed  in any number of counterparts, each of
which  so  executed shall be deemed to be an original, but all such counterparts
shall  together  constitute  but  one  and  the  same  instrument.








                                        12
<PAGE>
     THIS  GUARANTEE  AGREEMENT  is  executed as of the day and year first above
written.

     SEMCO  ENERGY,  INC.

     By:  /s/William L. Johnson
     Name:   William  L.  Johnson
     Title:  Chairman  of  the  Board  and
             Chief  Executive  Officer

     BANK  ONE  TRUST  COMPANY,  National
     Association
       as  Trustee

     By:  /s/Ernest J. Peck
     Name:   Ernest J. Peck
     Title:  Vice President









DETROIT  15245-21  508911-3


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