Exhibit 10.14.1 FIRST AMENDMENT TO THE SEVERANCE AGREEMENT BETWEEN SEMCO ENERGY, INC. AND LANCE S. SMOTHERMAN

FIRST AMENDMENT TO THE SEVERANCE AGREEMENT

THIS FIRST AMENDMENT to the Severance Agreement (the “Agreement”) dated June 29, 2005, by and between SEMCO Energy, Inc. (the “Company”), a corporation organized and existing under the laws of the State of Michigan, and Lance S. Smotherman (“Executive”) is made as of this 22^nd day of February, 2007.

WHEREAS, the Company and the Executive entered into the Agreement as of June 29, 2005;

WHEREAS, Section 3 of the Agreement provides for Executive’s compensation;

WHEREAS, the Company’s Board of Directors has, from time to time since the execution of the Agreement approved adjustments to the Target Annual Bonus opportunity and Long-Term Incentive Award Target set forth in the Agreement; and

WHEREAS, the Company and Executive desire to amend the Agreement to include the previously approved changes in the Target Annual Bonus opportunity and Long-Term Incentive Award Target for the Executive and to allow for increases in the short-term and long-term incentive opportunity levels from time to time without further amendments to the Agreement and to make certain other changes in the Agreement;

NOW, THEREFORE, the Agreement is hereby amended as follows:

1.  By adding the following to the end of Section 3.2:

The percentage set forth in Exhibit C shall be reviewed annually by the Board of Directors, and may be increased from time to time to reflect market changes in the compensation paid to similarly-situated executives but may not be decreased without Executive’s express written consent.

2.  By adding the following to the end of Section 3.3.2:

The Long-Term Incentive Award Target set forth in Exhibit D shall be reviewed annually by the Board of Directors, and may be increased from time to time to reflect market changes in the compensation paid to similarly-situated executives but may not be decreased without Executive’s written consent.

3.  Exhibit A to the Agreement is amended as follows:

Effective February 22, 2007, Executive’s title shall be: Senior Vice President of Human Resources and Administration.

Executive shall report to the Company’s President and Chief Executive Officer.

Executive’s functions, authority, duties, and responsibilities shall include (without limitation): Overall responsibility for, and supervision of, all Human Resources, Information Technology, Safety, Training, and Communications matters involving or otherwise affecting the Company, including (without limitation) advising the Board of Directors with respect to all such matters, determining and implementing the Company’s Human Resources, Information Technology, Safety, Training, and Communications strategies and activities, and controlling all expenditures related thereto. Executive shall at all times be a member of the Company’s senior executive group, for purpose of providing the benefit of his business experience to the Company.

4.  Exhibit C to the Agreement is amended as follows:

Effective as of February 23, 2006, Executive’s Target Annual Bonus shall be 35% multiplied by his Base Salary.

Effective as of January 1, 2007, Executive’s Target Annual Bonus shall be 40% multiplied by his Base Salary.

5.  Exhibit D to the Agreement is amended as follows:

Effective as of February 23, 2006, Executive’s Long-Term Incentive Award Target is increased from 40% multiplied by his Base Salary to 50% multiplied by his Base Salary.

Effective as of January 1, 2007, Executive’s Long-Term Incentive Award Target is increased from 50% multiplied by his Base Salary to 55% multiplied by his Base Salary.

Except as expressly amended hereby, the Agreement shall remain in full force and effect.

 

2

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be executed as of the day and year first above written.