Document and Entity Information
Document and Entity Information Document | 3 Months Ended |
Mar. 31, 2016shares | |
Document and Entity Information [Abstract] | |
Entity Registrant Name | ALLETE INC |
Entity Central Index Key | 66,756 |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 49,256,265 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q1 |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Mar. 31, 2016 |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 | |
Current Assets [Abstract] | |||
Cash and Cash Equivalents | $ 97 | $ 97 | |
Accounts Receivable (Less Allowance of $1.2 and $1.0) | 124.8 | 121.2 | |
Inventories | 116 | 117.1 | |
Prepayments and Other | 41.5 | 35.7 | |
Total Current Assets | 379.3 | 371 | |
Property, Plant and Equipment – Net | 3,642.3 | 3,669.1 | |
Regulatory Assets | 367.1 | 372 | |
Investment in ATC | 128.6 | 124.5 | |
Other Investments | 72.9 | 74.6 | |
Goodwill and Intangible Assets – Net | 213.9 | 215.2 | |
Other Non-Current Assets | 68.6 | 68.1 | |
Total Assets | [1] | 4,872.7 | 4,894.5 |
Current Liabilities [Abstract] | |||
Accounts Payable | 58.8 | 88.8 | |
Accrued Taxes | 52.2 | 44 | |
Accrued Interest | 14.9 | 18.6 | |
Long-Term Debt Due Within One Year | 14.8 | 35.7 | |
Notes Payable | 0.7 | 1.6 | |
Other | 82.8 | 86.1 | |
Total Current Liabilities | 224.2 | 274.8 | |
Long-Term Debt | 1,551.3 | 1,556.7 | |
Deferred Income Taxes | 589.7 | 579.8 | |
Regulatory Liabilities | 102.2 | 105 | |
Defined Benefit Pension and Other Postretirement Benefit Plans | 205.7 | 206.8 | |
Other Non-Current Liabilities | 347.1 | 349 | |
Total Liabilities | $ 3,020.2 | $ 3,072.1 | |
Commitments, Guarantees and Contingencies (Note 13) | |||
Equity [Abstract] | |||
Common Stock Without Par Value, 80.0 Shares Authorized, 49.3 and 49.1 Shares Outstanding | $ 1,281 | $ 1,271.4 | |
Accumulated Other Comprehensive Loss | (24.7) | (24.5) | |
Retained Earnings | 593.5 | 573.3 | |
Total ALLETE Equity | 1,849.8 | 1,820.2 | |
Non-Controlling Interest in Subsidiaries | 2.7 | 2.2 | |
Total Equity | 1,852.5 | 1,822.4 | |
Total Liabilities and Equity | $ 4,872.7 | $ 4,894.5 | |
[1] | As a result of revised accounting guidance adopted in the first quarter of 2016, we reclassified unamortized debt issuance costs from Other Non-Current Assets to Long-Term Debt on the Consolidated Balance Sheet. Prior period segment assets have been revised to conform to the current presentation. (See Note 1. Operations and Significant Accounting Policies.) |
Consolidated Balance Sheet Pare
Consolidated Balance Sheet Parentheticals - USD ($) shares in Millions, $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Accounts Receivable [Abstract] | ||
Accounts Receivable, Allowance | $ 1.2 | $ 1 |
Common Stock [Abstract] | ||
Common Stock, Par Value | $ 0 | $ 0 |
Common Stock, Shares Authorized | 80 | 80 |
Common Stock, Shares Outstanding | 49.3 | 49.1 |
Consolidated Statement of Incom
Consolidated Statement of Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Statement [Abstract] | ||
Operating Revenue | $ 333.8 | $ 320 |
Operating Expenses [Abstract] | ||
Fuel and Purchased Power | 76.9 | 86 |
Transmission Services | 16.8 | 14.9 |
Cost of Sales | 33.3 | 31.2 |
Operating and Maintenance | 78.1 | 79.7 |
Depreciation and Amortization | 48.1 | 39 |
Taxes Other than Income Taxes | 13.8 | 12.8 |
Total Operating Expenses | 267 | 263.6 |
Operating Income | 66.8 | 56.4 |
Other Income (Expense) [Abstract] | ||
Interest Expense | (16.9) | (15.1) |
Equity Earnings in ATC | 4.8 | 3.9 |
Other | 1 | 1.1 |
Total Other Expense | (11.1) | (10.1) |
Income Before Non-Controlling Interest and Income Taxes | 55.7 | 46.3 |
Income Tax Expense | 9.3 | 6.2 |
Net Income | 46.4 | 40.1 |
Less: Non-Controlling Interest in Subsidiaries | 0.5 | 0.2 |
Net Income Attributable to ALLETE | $ 45.9 | $ 39.9 |
Average Shares of Common Stock and Per Share Data [Abstract] | ||
Basic (in shares) | 49.2 | 46.9 |
Diluted (in shares) | 49.2 | 47.1 |
Basic Earnings Per Share of Common Stock | $ 0.93 | $ 0.85 |
Diluted Earnings Per Share of Common Stock | 0.93 | 0.85 |
Dividends Per Share of Common Stock | $ 0.52 | $ 0.505 |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Comprehensive Income [Abstract] | ||
Net Income | $ 46.4 | $ 40.1 |
Other Comprehensive Income (Loss) [Abstract] | ||
Unrealized Gain (Loss) on Securities Net of Income Taxes of $(0.3), and $0.1 | (0.4) | 0.1 |
Unrealized Gain on Derivatives Net of Income Taxes of $– and $– | 0 | 0.1 |
Defined Benefit Pension and Other Postretirement Benefit Plans Net of Income Taxes of $0.1 and $0.2 | 0.2 | 0.3 |
Total Other Comprehensive Income (Loss) | (0.2) | 0.5 |
Total Comprehensive Income | 46.2 | 40.6 |
Less: Non-Controlling Interest in Subsidiaries | 0.5 | 0.2 |
Comprehensive Income Attributable to ALLETE | $ 45.7 | $ 40.4 |
Consolidated Statement of Comp6
Consolidated Statement of Comprehensive Income Parentheticals - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Comprehensive Income [Abstract] | ||
Unrealized Gain on Securities, Income Taxes | $ (0.3) | $ 0.1 |
Unrealized Gain on Derivatives, Income Tax | 0 | 0 |
Defined Benefit Pension and Other Postretirement Benefit Plans, Income Tax | $ 0.1 | $ 0.2 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Operating Activities [Abstract] | ||
Net Income | $ 46.4 | $ 40.1 |
Allowance for Funds Used During Construction – Equity | (0.9) | (0.9) |
Income from Equity Investments – Net of Dividends | (2.9) | (0.8) |
Depreciation Expense | 46.8 | 38.4 |
Amortization of Power Purchase Agreements | (5.6) | (4.9) |
Amortization of Other Intangible Assets and Other Assets | 2.3 | 0.8 |
Deferred Income Tax Expense | 9.2 | 6.1 |
Share-Based Compensation Expense | 0.6 | 0.6 |
ESOP Compensation Expense | 0 | 2.4 |
Defined Benefit Pension and Postretirement Benefit Expense | 1.3 | 3.8 |
Bad Debt Expense | 0.6 | 0.2 |
Changes in Operating Assets and Liabilities [Abstract] | ||
Accounts Receivable | (4.2) | 7.8 |
Inventories | 1.1 | (8.8) |
Prepayments and Other | 0.1 | (0.7) |
Accounts Payable | (4.2) | (14) |
Other Current Liabilities | 0.9 | (1.7) |
Changes in Regulatory and Other Non-Current Assets | 2.8 | (4.1) |
Changes in Regulatory and Other Non-Current Liabilities | (1.1) | 7.5 |
Cash from Operating Activities | 93.2 | 71.8 |
Investing Activities [Abstract] | ||
Proceeds from Sale of Available-for-sale Securities | 1.1 | 0.2 |
Payments for Purchase of Available-for-sale Securities | (0.3) | (0.4) |
Acquisitions of Subsidiaries – Net of Cash Acquired | 0 | (166.9) |
Investment in ATC | (1.2) | (0.4) |
Changes to Other Investments | 0.2 | 0 |
Additions to Property, Plant and Equipment | (42.4) | (88.2) |
Construction Costs for Development Project | 0 | (0.2) |
Cash for Investing Activities | (42.6) | (255.9) |
Financing Activities [Abstract] | ||
Proceeds from Issuance of Common Stock | 9 | 141.5 |
Changes in Restricted Cash | (5.8) | (0.8) |
Changes in Notes Payable | (0.9) | (3.4) |
Repayments of Long-Term Debt | (26.6) | (2) |
Acquisition-Related Contingent Consideration Payments | (0.6) | 0 |
Dividends on Common Stock | (25.7) | (24.9) |
Cash from (for) Financing Activities | (50.6) | 110.4 |
Change in Cash and Cash Equivalents | 0 | (73.7) |
Cash and Cash Equivalents at Beginning of Period | 97 | 145.8 |
Cash and Cash Equivalents at End of Period | $ 97 | $ 72.1 |
Consolidated Statement of Share
Consolidated Statement of Shareholders' Equity Consolidated Statement of Shareholders' Equity - 3 months ended Mar. 31, 2016 - USD ($) $ in Millions | Total | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Common Stock [Member] |
Beginning Balance at Dec. 31, 2015 | $ 1,820.2 | $ 573.3 | $ (24.5) | $ 1,271.4 |
Comprehensive Income [Abstract] | ||||
Net Income | 46.4 | 46.4 | ||
Other Comprehensive Income – Net of Tax [Abstract] | ||||
Unrealized Loss on Securities – Net | (0.4) | (0.4) | ||
Defined Benefit Pension and Other Postretirement Plans – Net | 0.2 | 0.2 | ||
Total Comprehensive Income | 46.2 | |||
Non-Controlling Interest in Subsidiaries | (0.5) | (0.5) | ||
Total Comprehensive Income Attributable to ALLETE | 45.7 | |||
Common Stock Issued – Net | 9.6 | 9.6 | ||
Dividends Declared | (25.7) | (25.7) | ||
Ending Balance at Mar. 31, 2016 | $ 1,849.8 | $ 593.5 | $ (24.7) | $ 1,281 |
Operations and Significant Acco
Operations and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Operations and Significant Accounting Policies [Text Block] | OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Inventories. Inventories are stated at the lower of cost or market. Inventories in our Regulated Operations and ALLETE Clean Energy segments are carried at an average cost basis. Inventories in our U.S. Water Services and Corporate and Other segments are carried at an average cost, first-in, first-out or specific identification basis. Inventories March 31, December 31, Millions Fuel (a) $56.5 $58.1 Materials and Supplies 49.0 49.1 Raw Materials 2.6 2.7 Work in Progress 0.8 — Finished Goods 7.4 7.5 Reserve for Obsolescence (0.3 ) (0.3 ) Total Inventories $116.0 $117.1 (a) Fuel consists primarily of coal inventory at Minnesota Power. Prepayments and Other Current Assets March 31, December 31, Millions Deferred Fuel Adjustment Clause $12.4 $10.6 Restricted Cash (a) 11.5 5.6 Other 17.6 19.5 Total Prepayments and Other Current Assets $41.5 $35.7 (a) Restricted Cash includes collateral deposits required under ALLETE Clean Energy’s loan agreements and cash pledged as collateral for U.S. Water Services’ standby letters of credit. Other Non-Current Assets. Restricted Cash. Included in Other Non-Current Assets on the Consolidated Balance Sheet was restricted cash of $8.1 million as of March 31, 2016 , and December 31, 2015 , related to collateral deposits required under ALLETE Clean Energy’s loan agreements. Other Current Liabilities March 31, December 31, Millions Customer Deposits $14.0 $15.1 Power Purchase Agreements 23.6 23.3 Other 45.2 47.7 Total Other Current Liabilities $82.8 $86.1 NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Other Non-Current Liabilities March 31, December 31, Millions Asset Retirement Obligation $136.2 $131.4 Power Purchase Agreements 131.9 138.1 Contingent Consideration (a) 36.7 36.6 Other 42.3 42.9 Total Other Non-Current Liabilities $347.1 $349.0 (a) Contingent Consideration relates to the estimated fair value of the earnings-based payment resulting from the U.S. Water Services acquisition. (See Note 3. Acquisitions and Note 5. Fair Value.) Supplemental Statement of Cash Flows Information. Three Months Ended March 31, 2016 2015 Millions Cash Paid During the Period for Interest – Net of Amounts Capitalized $19.6 $15.3 Cash Paid During the Period for Income Taxes $0.1 $0.1 Noncash Investing and Financing Activities Decrease in Accounts Payable for Capital Additions to Property, Plant and Equipment $(25.6) $(32.2) Capitalized Asset Retirement Costs $3.5 $1.2 AFUDC–Equity $0.9 $0.9 Contingent Consideration — $35.7 Subsequent Events. The Company performed an evaluation of subsequent events for potential recognition and disclosure through the time of the financial statements issuance. New Accounting Standards. Amendments to the Consolidation Analysis. In February 2015, the FASB issued revised guidance which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The new standard affects (1) limited partnerships and similar legal entities, (2) evaluating fees paid to a decision maker or a service provider as a variable interest, (3) the effect of fee arrangements on the primary beneficiary determination, (4) the effect of related parties on the primary beneficiary determination, and (5) certain investment funds. This guidance was adopted in the first quarter of 2016 and did not have a material impact on our Consolidated Financial Statements. Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). In May 2015, the FASB issued an accounting standard update which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share (or its equivalent) practical expedient. The guidance applies to investments for which there is not a readily determinable fair value (market quote) or the investment is in a mutual fund without a publicly available net asset value. This guidance was adopted in the first quarter of 2016 and did not have a material impact on our Consolidated Financial Statements. Presentation of Debt Issuance Costs. In April 2015, the FASB issued revised guidance addressing the presentation requirements for debt issuance costs. Under the revised guidance, all costs incurred to issue debt are to be presented on the Consolidated Balance Sheet as a direct deduction from the carrying amount of that debt liability. This guidance was adopted in the first quarter of 2016 resulting in the reclassification of unamortized debt issuance costs from Other Non-Current Assets to Long-Term Debt on the Consolidated Balance Sheet. The effect of the adoption decreased Total Assets and Total Liabilities on ALLETE's Consolidated Balance Sheet by $12.6 million as of December 31, 2015 . NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued) New Accounting Standards (Continued) Leases. In February 2016, the FASB issued an accounting standard update which revises the existing guidance for leases. Under the revised guidance, lessees will be required to recognize a “right-of-use” asset and a lease liability for all leases with a term greater than 12 months. The new standard also requires additional quantitative and qualitative disclosures by lessees and lessors to enable users of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. The accounting for leases by lessors and the recognition, measurement and presentation of expenses and cash flows from leases are not expected to significantly change as a result of the updated guidance. The revised guidance is effective for the Company beginning in the first quarter of 2019 with early adoption permitted. The Company is evaluating the impact of the amended lease guidance on the Company’s Consolidated Financial Statements. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2016 | |
Investments [Abstract] | |
Investments [Text Block] | INVESTMENTS Investments. As of March 31, 2016 , the investment portfolio included the legacy real estate assets of ALLETE Properties, debt and equity securities consisting primarily of securities held in other postretirement plans to fund employee benefits, the cash equivalents within these plans, and other assets consisting primarily of land in Minnesota. Other Investments March 31, December 31, Millions ALLETE Properties $49.1 $50.1 Available-for-sale Securities (a) 17.4 18.5 Cash Equivalents 2.5 2.0 Other 3.9 4.0 Total Other Investments $72.9 $74.6 (a) As of March 31, 2016 , the aggregate amount of available-for-sale corporate debt securities maturing in one year or less was zero , in one year to less than three years was $1.6 million , in three years to less than five years was $4.1 million , and in five or more years was $4.7 million . Land Inventory. Land inventory is accounted for as held for use and is recorded at cost, unless the carrying value is determined not to be recoverable in accordance with the accounting standards for property, plant and equipment, in which case the land inventory is written down to estimated fair value. Land values are reviewed for indicators of impairment on a quarterly basis and no impairments were recorded for the three months ended March 31, 2016 . |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
Acquisitions [Text Block] | ACQUISITIONS The acquisitions below are consistent with ALLETE’s stated strategy of investing in energy infrastructure and related services businesses to complement its core regulated utility, balance exposure to business cycles and changing demand, and provide potential long-term earnings growth. The pro forma impact of the following acquisitions was not significant , either individually or in the aggregate, to the results of the Company for the three months ended March 31, 2016 and 2015 . 2015 Activity. U.S. Water Services. In February 2015 , ALLETE acquired U.S. Water Services . Total consideration for the transaction was $202.3 million , which included payment of $166.6 million in cash and an estimated fair value of earnings-based contingent consideration of $35.7 million , as estimated at the date of acquisition, to be paid through 2019. The contingent consideration is presented within Other Non-Current Liabilities on the Consolidated Balance Sheet. The Consolidated Statement of Income reflects 100 percent of the results of operations for U.S. Water Services since the acquisition date as the Company has acquired 100 percent of U.S. Water Services. The acquisition was accounted for as a business combination and the purchase price was allocated based on the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition. The purchase price accounting, which was finalized in 2015, is reflected in the following table. Fair value measurements were valued primarily using the discounted cash flow method. NOTE 3. ACQUISITIONS (Continued) 2015 Activity (Continued) Millions Assets Acquired Cash and Cash Equivalents $0.9 Accounts Receivable 16.8 Inventories (a) 13.4 Other Current Assets (b) 5.3 Property, Plant and Equipment 10.6 Intangible Assets (c) 83.0 Goodwill (d) 122.9 Other Non-Current Assets 0.2 Total Assets Acquired $253.1 Liabilities Assumed Current Liabilities $19.2 Non-Current Liabilities 31.6 Total Liabilities Assumed $50.8 Net Identifiable Assets Acquired $202.3 (a) Included in Inventories was $2.7 million of fair value adjustments relating to work in progress and finished goods inventories which were recognized as Cost of Sales within one year from the acquisition date. (b) Included in Other Current Assets was $1.6 million relating to the fair value of sales backlog. Sales backlog was recognized as Cost of Sales within one year from the acquisition date. Also included in Other Current Assets was restricted cash of $2.1 million relating to cash pledged as collateral for standby letters of credit. (c) Intangible Assets include customer relationships, patents, non-compete agreements, and trademarks and trade names. (See Note 4. Goodwill and Intangible Assets.) (d) For tax purposes, the purchase price allocation resulted in $2.9 million of deductible goodwill. Acquisition-related costs of $3.0 million after-tax were expensed as incurred during the first quarter of 2015 and recorded in Operating and Maintenance on the Consolidated Statement of Income. Chanarambie/Viking. In April 2015 , ALLETE Clean Energy acquired 100 percent of wind energy facilities in southern Minnesota ( Chanarambie/Viking ) from EDF Renewable Energy, Inc. for $48.0 million . The facilities have 97.5 MW of generating capability and are located near ALLETE Clean Energy’s Lake Benton facility. The wind energy facilities began commercial operations in 2003 and have PPAs in place for their entire output, which expire in 2018 ( 12 MW) and 2023 ( 85.5 MW). The acquisition was accounted for as a business combination and the purchase price was allocated based on the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition. The purchase price accounting, which was finalized in 2015, is reflected in the following table. Fair value measurements were valued primarily using the discounted cash flow method. NOTE 3. ACQUISITIONS (Continued) 2015 Activity (Continued) Millions Assets Acquired Current Assets $4.8 Property, Plant and Equipment 103.0 Other Non-Current Assets (a) 1.0 Total Assets Acquired $108.8 Liabilities Assumed Current Liabilities (b) $6.7 Power Purchase Agreements 49.0 Non-Current Liabilities 5.1 Total Liabilities Assumed $60.8 Net Identifiable Assets Acquired $48.0 (a) Included in Other Non-Current Assets was $0.3 million of goodwill. For tax purposes, the purchase price allocation resulted in no allocation to goodwill. (b) Current Liabilities included $5.9 million related to the current portion of Power Purchase Agreements. Acquisition-related costs of $0.2 million after-tax were expensed as incurred during the second quarter of 2015 and recorded in Operating and Maintenance on the Consolidated Statement of Income. Armenia Mountain. In July 2015 , ALLETE Clean Energy acquired 100 percent of a wind energy facility located near Troy, Pennsylvania ( Armenia Mountain ) from The AES Corporation (AES) and a minority shareholder for $111.1 million , plus the assumption of existing debt. The facility has 100.5 MW of generating capability, began commercial operations in 2009, and has PPAs in place for its entire output, which expire in 2024. The acquisition was accounted for as a business combination and the purchase price was allocated based on the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition. The purchase price accounting, which was finalized in 2015, is reflected in the following table. Fair value measurements were valued primarily using the discounted cash flow method. Millions Assets Acquired Current Assets (a) $9.0 Property, Plant and Equipment 156.2 Other Non-Current Assets (b) 14.4 Total Assets Acquired $179.6 Liabilities Assumed Current Liabilities $2.9 Long-Term Debt Due Within One Year 5.9 Long-Term Debt 55.0 Other Non-Current Liabilities 4.7 Total Liabilities Assumed $68.5 Net Identifiable Assets Acquired $111.1 (a) Included in Current Assets was $1.0 million related to the current portion of Power Purchase Agreements and $6.0 million of restricted cash related to collateral deposits required under its loan agreement. (b) Included in Other Non-Current Assets was $8.2 million related to the non-current portion of Power Purchase Agreements, $6.1 million of restricted cash related to collateral deposits required under its loan agreements, and an immaterial amount of goodwill. For tax purposes, the purchase price allocation resulted in no allocation to goodwill. NOTE 3. ACQUISITIONS (Continued) 2015 Activity (Continued) Acquisition-related costs of $1.6 million after-tax were expensed as incurred throughout the second and third quarters of 2015, and recorded in Operating and Maintenance on the Consolidated Statement of Income. A and W Technologies. In November 2015 , U.S. Water Services acquired 100 percent of A and W Technologies, Inc. (AWT). Total consideration for the transaction was $9.3 million , which included payment of $8.3 million in cash and a $1.0 million payment due in April 2017. AWT, similar to U.S. Water Services, is an integrated water management company and was acquired to expand U.S. Water Services’ regional footprint in the Southeastern United States. The acquisition was accounted for as a business combination and the purchase price was allocated based on the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition. The purchase price accounting, which was finalized in 2015, is reflected in the following table. Fair value measurements were valued primarily using the discounted cash flow method. Millions Assets Acquired Current Assets $1.0 Property, Plant and Equipment 0.1 Intangible Assets (a) 3.9 Goodwill (b) 4.4 Total Assets Acquired $9.4 Liabilities Assumed Current Liabilities $0.1 Total Liabilities Assumed $0.1 Net Identifiable Assets Acquired $9.3 (a) Intangible Assets include customer relationships and non-compete agreements. (See Note 4. Goodwill and Intangible Assets.) (b) For tax purposes, the purchase price allocation resulted in $4.4 million of deductible goodwill. Acquisition-related costs were immaterial , expensed as incurred during the fourth quarter of 2015 and recorded in Operating and Maintenance on the Consolidated Statement of Income. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets [Text Block] | GOODWILL AND INTANGIBLE ASSETS The aggregate carrying amount of goodwill was $130.6 million as of March 31, 2016 , and December 31, 2015 . There have been no changes to goodwill by reportable segment for the three months ended March 31, 2016 . Balances of intangible assets, net, excluding goodwill as of March 31, 2016 , are as follows: December 31, Amortization March 31, Millions Intangible Assets Definite-Lived Intangible Assets Customer Relationships $60.8 $(1.1) $59.7 Developed Technology and Other (a) 7.2 (0.2) 7.0 Total Definite-Lived Intangible Assets 68.0 (1.3) 66.7 Indefinite-Lived Intangible Assets Trademarks and Trade Names 16.6 n/a 16.6 Total Intangible Assets $84.6 $(1.3) $83.3 (a) Developed Technology and Other includes patents, non-compete agreements, and land easements. NOTE 4. GOODWILL AND INTANGIBLE ASSETS (Continued) Customer relationships have a remaining useful life of approximately 22 years and developed technology and other have remaining useful lives ranging from approximately 3 years to approximately 13 years (weighted average of approximately 9 years). The weighted average remaining useful life of all definite-lived intangible assets as of March 31, 2016 , is approximately 20 years. Amortization expense of intangible assets for the three months ended March 31, 2016 , was $1.3 million . Accumulated amortization was $5.4 million as of March 31, 2016 ( $4.1 million as of December 31, 2015 ). The estimated amortization expense for definite-lived intangible assets for the remainder of 2016 is $3.8 million . Estimated annual amortization expense for definite-lived intangible assets is $5.0 million in 2017 , $4.7 million in 2018 , $4.4 million in 2019 , $4.2 million in 2020 and $44.6 million thereafter . |
Fair Value
Fair Value | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value [Text Block] | FAIR VALUE Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best available information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs, which are used to measure fair value, are prioritized through the fair value hierarchy. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Descriptions of the three levels of the fair value hierarchy are discussed in Note 10. Fair Value to the Consolidated Financial Statements in our 2015 Form 10-K. The following tables set forth by level within the fair value hierarchy, our assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2016 , and December 31, 2015 . Each asset and liability is classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of these assets and liabilities and their placement within the fair value hierarchy levels. The estimated fair value of Cash and Cash Equivalents listed on the Consolidated Balance Sheet approximates the carrying amount and therefore is excluded from the recurring fair value measures in the following tables. Fair Value as of March 31, 2016 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Millions Assets Investments (a) Available-for-sale – Equity Securities $7.0 — — $7.0 Available-for-sale – Corporate Debt Securities — $10.4 — 10.4 Cash Equivalents 2.5 — — 2.5 Total Fair Value of Assets $9.5 $10.4 — $19.9 Liabilities (b) Deferred Compensation — $14.9 — $14.9 U.S. Water Services Contingent Consideration — — $36.7 36.7 Total Fair Value of Liabilities — $14.9 $36.7 $51.6 Total Net Fair Value of Assets (Liabilities) $9.5 $(4.5) $(36.7) $(31.7) (a) Included in Other Investments on the Consolidated Balance Sheet. (b) Included in Other Non-Current Liabilities on the Consolidated Balance Sheet. NOTE 5. FAIR VALUE (Continued) Fair Value as of December 31, 2015 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Millions Assets Investments (a) Available-for-sale – Equity Securities $7.6 — — $7.6 Available-for-sale – Corporate Debt Securities — $10.9 — 10.9 Cash Equivalents 2.0 — — 2.0 Total Fair Value of Assets $9.6 $10.9 — $20.5 Liabilities (b) Deferred Compensation — $16.1 — $16.1 U.S. Water Services Contingent Consideration — — $36.6 36.6 Total Fair Value of Liabilities — $16.1 $36.6 $52.7 Total Net Fair Value of Assets (Liabilities) $9.6 $(5.2) $(36.6) $(32.2) (a) Included in Other Investments on the Consolidated Balance Sheet. (b) Included in Other Non-Current Liabilities on the Consolidated Balance Sheet. The Level 3 activity in the preceding tables is the result of the February 2015 acquisition of U.S. Water Services. Changes in the fair value of U.S. Water Services’ Contingent Consideration for the three months ended March 31, 2016 , are primarily due to accretion expense. For the three months ended March 31, 2016 , and the year ended December 31, 2015 , there were no transfers in or out of Levels 1, 2 or 3. Fair Value of Financial Instruments. With the exception of the item listed in the table below, the estimated fair value of all financial instruments approximates the carrying amount. The fair value for the item listed below was based on quoted market prices for the same or similar instruments (Level 2). Financial Instruments Carrying Amount Fair Value Millions Long-Term Debt, Including Current Portion March 31, 2016 $1,578.4 $1,708.0 December 31, 2015 $1,605.0 $1,676.0 Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis. Non-financial assets such as equity method investments, goodwill, intangible assets, and property, plant and equipment are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment is recognized. For the three months ended March 31, 2016 , and the year ended December 31, 2015 , there were no indicators of impairment for these non-financial assets. |
Regulatory Matters
Regulatory Matters | 3 Months Ended |
Mar. 31, 2016 | |
Regulated Operations [Abstract] | |
Regulatory Matters [Text Block] | REGULATORY MATTERS Regulatory matters are summarized in Note 5. Regulatory Matters to our Consolidated Financial Statements in our 2015 Form 10-K, with additional disclosure provided in the following paragraphs. Electric Rates. Entities within our Regulated Operations segment file for periodic rate revisions with the MPUC, the FERC or the PSCW. 2010 Minnesota Rate Case. Minnesota Power’s current retail rates are based on a 2011 MPUC retail rate order, effective June 1, 2011, that allows for a 10.38 percent return on common equity and a 54.29 percent equity ratio. Subsequent to this order, and as authorized by the MPUC, Minnesota Power also recognizes revenue under cost recovery riders for environmental, renewable and transmission investments. (See Transmission Cost Recovery Rider, Renewable Cost Recovery Rider and Boswell Mercury Emissions Reduction Plan .) Revenue from cost recovery riders was $25.4 million for the three months ended March 31, 2016 ( $20.7 million for the three months ended March 31, 2015 ). NOTE 6. REGULATORY MATTERS (Continued) Energy-Intensive Trade-Exposed (EITE) Customer Rates. The state of Minnesota enacted an EITE customer ratemaking law in June 2015. The law established that it is the energy policy of the state to have competitive rates for certain industries such as mining and forest products. In November 2015, Minnesota Power filed a rate schedule petition for EITE customers and a corresponding rider for EITE cost recovery with the MPUC. The rate proposal was revenue and cash flow neutral. In an order dated March 23, 2016, the MPUC dismissed the petition without prejudice, providing Minnesota Power the option to refile the petition with additional information or file a new petition. Minnesota Power is evaluating the MPUC’s decision. FERC-Approved Wholesale Rates. Minnesota Power has 16 non-affiliated municipal customers in Minnesota. SWL&P is a Wisconsin utility and a wholesale customer of Minnesota Power. In April 2015, Minnesota Power amended its formula-based wholesale electric sales contract with the Nashwauk Public Utilities Commission, extending the term through June 30, 2028. The electric service agreements with SWL&P and one other municipal customer are effective through June 30, 2019. The rates included in these three contracts are set each July 1 based on a cost-based formula methodology, using estimated costs and a rate of return that is equal to Minnesota Power’s authorized rate of return for Minnesota retail customers (currently 10.38 percent ). The formula-based rate methodology also provides for a yearly true-up calculation for actual costs incurred. In September 2015, Minnesota Power amended its wholesale electric contracts with 14 municipal customers, extending the contract terms through December 31, 2024. These contracts include fixed capacity charges through 2018; beginning in 2019, the capacity charge will not increase by more than two percent or decrease by more than one percent from the previous year’s capacity charge and will be determined using a cost-based formula methodology. The base energy charge for each year of the contract term will be set each January 1, subject to monthly adjustment, and will also be determined using a cost-based formula methodology. All of the wholesale contracts include a termination clause requiring a three -year notice to terminate. In January 2016, one of Minnesota Power’s municipal customers provided notice of its intent to terminate its contract effective June 30, 2019. Minnesota Power currently provides approximately 29 MW of average monthly demand to this customer. Under the Nashwauk Public Utilities Commission agreement, no termination notice may be given prior to June 30, 2025. Under the agreement with SWL&P, no termination notice may be given prior to June 30, 2016. The remaining 14 municipal customers may not give termination notices prior to December 31, 2021. 2012 Wisconsin Rate Case. SWL&P’s current retail rates are based on a 2012 PSCW retail rate order, effective January 1, 2013, that allows for a 10.9 percent return on common equity. Transmission Cost Recovery Rider. Minnesota Power has an approved cost recovery rider in place for certain transmission investments and expenditures. In an order dated February 3, 2016, the MPUC approved Minnesota Power’s updated billing factor which allows Minnesota Power to charge retail customers on a current basis for the costs of constructing certain transmission facilities plus a return on the capital invested. As a result of the MPUC approval of the certificate of need for the GNTL in June 2015, the project is eligible for cost recovery under the existing transmission cost recovery rider. Minnesota Power anticipates including its portion of the investments and expenditures for the GNTL in future transmission factor filings to include updated billing rates on customer bills. Renewable Cost Recovery Rider. Minnesota Power has an approved cost recovery rider in place for investments and expenditures related to the 497 MW Bison Wind Energy Center in North Dakota and the restoration and repair of Thomson. Updated customer billing rates for the renewable cost recovery rider were approved by the MPUC in an order dated March 9, 2016, allowing Minnesota Power to charge retail customers on a current basis for the costs of constructing certain renewable investments plus a return on the capital invested. While approving the updated customer billing rates for the renewable cost recovery rider, the MPUC also allowed Minnesota Power additional time to submit support for its position on its utilization of North Dakota investment tax credits. NOTE 6. REGULATORY MATTERS (Continued) Minnesota Power accounts for North Dakota investment tax credits based on long-standing regulatory precedents of stand-alone allocation methodology of accounting for income taxes. The stand-alone method provides that income taxes (and credits) are calculated as if Minnesota Power was the only entity included in ALLETE’s consolidated federal and unitary state income tax returns. Minnesota Power has recorded a regulatory liability for North Dakota investment tax credits generated by its jurisdictional activity and expected to be realized in the future. North Dakota investment tax credits attributable to ALLETE’s apportionment and income of ALLETE’s other subsidiaries are included in the ALLETE consolidated group. The Minnesota Department of Commerce (Department) has inquired about our use of the North Dakota investment tax credits, taking the position that all North Dakota investment tax credits generated from the Bison Wind Energy Center should be credited to Minnesota Power ratepayers. The MPUC did not come to a decision on this issue in its order dated March 9, 2016, but requested that Minnesota Power provide further support on its position which was submitted on April 8, 2016. The amount of North Dakota investment tax credits recognized by ALLETE as of March 31, 2016 , total approximately $8 million , which represents the amount of North Dakota investment tax credits that the Department believes should be refunded to ratepayers. Minnesota Power will appropriately consider all avenues of appeal should an adverse decision be issued by the MPUC. Annual Automatic Adjustment (AAA) of Charges. On April 14, 2016, the MPUC approved Minnesota Power’s AAA filings made in 2012 and 2013, and deferred action for approximately 90 days on the AAA filing made in 2014 pending review and confirmation of coal transportation costs and terms of service. Minnesota Power’s AAA filings made in 2014 and 2015 are pending MPUC approval, and represent approximately $350 million in retail fuel cost recovery collected, but subject to refund. Minnesota Power currently expects full recovery of amounts represented by each AAA filing, although we cannot predict the outcome of the pending filings at the MPUC. Integrated Resource Plan (IRP). In a November 2013 order, the MPUC approved Minnesota Power’s 2013 IRP which detailed its EnergyForward strategic plan, announced in January 2013. Significant elements of the EnergyForward plan include major wind investments in North Dakota completed in the fourth quarter of 2014, the installation of emissions control technology at Boswell Unit 4 completed in December 2015, planning for the proposed GNTL, the conversion of Laskin from coal to natural gas completed in June 2015 and the retirement of Taconite Harbor Unit 3 completed in May 2015. In September 2015, Minnesota Power filed its 2015 IRP with the MPUC which includes an analysis of a variety of existing and future energy resource alternatives and a projection of customer cost impact by class. The 2015 IRP also contains the next steps in Minnesota Power’s EnergyForward plan including the economic idling of Taconite Harbor Units 1 and 2 in the fall of 2016, the ceasing of coal-fired operations at Taconite Harbor in 2020, and the addition of between 200 MW and 300 MW of natural gas-fired generation in the next decade. Boswell Mercury Emissions Reduction Plan. Minnesota Power has an approved environmental improvement rider in place for investments and expenditures related to the implementation of the Boswell Unit 4 mercury emissions reduction plan completed in 2015. Customer billing rates for the environmental improvement rider were approved by the MPUC in August 2015. In September 2015, Minnesota Power filed an updated environmental improvement factor filing which included updated costs associated with Boswell Unit 4. Upon approval of the filing, Minnesota Power will be authorized to include updated billing rates on customer bills. Boswell Remaining Life Petition. In November 2015, Minnesota Power filed a petition with the MPUC for approval to extend Boswell’s remaining life to 2050 for all units and utilize the existing environmental improvement rider to credit a portion of the depreciation expense savings to customers. The extension request is based on the significant multi-emissions retrofit work done at Boswell Unit 3 and Boswell Unit 4. NOTE 6. REGULATORY MATTERS (Continued) Great Northern Transmission Line (GNTL) . Minnesota Power and Manitoba Hydro have proposed construction of the GNTL, an approximately 220 -mile 500 kV transmission line between Manitoba and Minnesota’s Iron Range. The GNTL is subject to various federal and state regulatory approvals. In October 2013, a certificate of need application was filed with the MPUC which was approved in a June 2015 order. Based on this order, Minnesota Power’s portion of the investments and expenditures for the project are eligible for cost recovery under its existing transmission cost recovery rider and are anticipated to be included in future transmission factor filings. In a December 2015 order, the FERC approved our request to recover on construction work in progress related to the GNTL from Minnesota Power’s wholesale customers. In April 2014, Minnesota Power filed a route permit application with the MPUC and a request for a presidential permit to cross the U.S.-Canadian border with the U.S. Department of Energy. In an order dated April 11, 2016, the MPUC approved the route permit which largely follows Minnesota Power’s preferred route, including the international border crossing. A final decision on the presidential permit by the U.S. Department of Energy is expected in the second quarter of 2016. Manitoba Hydro must also obtain regulatory and governmental approvals related to a new transmission line in Canada. In September 2015, Manitoba Hydro submitted the final preferred route and EIS for the transmission line in Canada to the Manitoba Conservation and Water Stewardship for regulatory approval. Construction of Manitoba Hydro’s hydroelectric generation facility commenced in 2014. Upon receipt of all applicable permits and approvals, construction of the GNTL is expected to begin by 2017 and to be completed in 2020. MISO Return on Equity Complaints. In November 2013, several customer groups located within the MISO service area filed complaints with the FERC requesting, among other things, a reduction in the base return on equity used by MISO transmission owners, including ALLETE, to 9.15 percent . In February 2015, an additional complaint was filed with the FERC seeking an order to further reduce the base return on equity to 8.67 percent . In December 2015, a federal administrative law judge ruled that the MISO transmission users have been charged an unreasonable base return on equity and proposed a reduction to 10.32 percent, subject to approval or adjustment by the FERC. A final decision from the FERC on the administrative law judge’s recommendation is expected in 2016. Minnesota Solar Energy Standard. In May 2013, legislation was enacted by the state of Minnesota requiring at least 1.5 percent of total retail electric sales, excluding sales to certain industrial customers, to be generated by solar energy by the end of 2020. At least 10 percent of the 1.5 percent mandate must be met by solar energy generated by or procured from solar photovoltaic devices with a nameplate capacity of 20 kilowatts or less. Minnesota Power has two solar projects under development. In August 2015, Minnesota Power filed for MPUC approval of a 10 MW utility scale solar project at Camp Ripley, a Minnesota Army National Guard base and training facility near Little Falls, Minnesota. In an order dated February 24, 2016, the MPUC approved the Camp Ripley solar project as eligible to meet the solar energy standard and for current cost recovery, subject to certain compliance requirements. In September 2015, Minnesota Power filed for MPUC approval of a 1 MW community solar garden project in Saint Louis County, Minnesota, to be owned and operated by a third party with the output purchased by Minnesota Power. If the community solar garden project is also approved, Minnesota Power believes these projects will meet approximately one-third of the overall mandate and approximately one-fourth of the mandate related to solar photovoltaic devices with a nameplate capacity of 20 kilowatts or less. Costs associated with these projects are expected to be recovered from customers. Regulatory Assets and Liabilities. Our regulated utility operations are subject to accounting guidance for the effect of certain types of regulation. Regulatory assets represent incurred costs that have been deferred as they are probable for recovery in customer rates. Regulatory liabilities represent obligations to make refunds to customers and amounts collected in rates for which the related costs have not yet been incurred. The Company assesses quarterly whether regulatory assets and liabilities meet the criteria for probability of future recovery or deferral. No regulatory assets or liabilities are currently earning a return. The recovery, refund or credit to rates for these regulatory assets and liabilities will occur over the periods either specified by the applicable regulatory authority or over the corresponding period related to the asset or liability. NOTE 6. REGULATORY MATTERS (Continued) Regulatory Assets and Liabilities March 31, December 31, Millions Current Regulatory Assets (a) Deferred Fuel Adjustment Clause $12.4 $10.6 Total Current Regulatory Assets 12.4 10.6 Non-Current Regulatory Assets Defined Benefit Pension and Other Postretirement Benefit Plans (b) 217.0 219.3 Income Taxes (c) 64.4 64.2 Cost Recovery Riders (d) 54.3 58.0 Asset Retirement Obligations (e) 22.5 21.6 PPACA Income Tax Deferral 5.0 5.0 Other 3.9 3.9 Total Non-Current Regulatory Assets 367.1 372.0 Total Regulatory Assets $379.5 $382.6 Non-Current Regulatory Liabilities Wholesale and Retail Contra AFUDC (f) $57.1 $58.0 Plant Removal Obligations 20.6 22.1 Income Taxes (c) 5.7 6.1 Defined Benefit Pension and Other Postretirement Benefit Plans (b) 0.4 0.9 Other 18.4 17.9 Total Non-Current Regulatory Liabilities $102.2 $105.0 (a) Current regulatory assets are included in Prepayments and Other on the Consolidated Balance Sheet. (b) Defined benefit pension and other postretirement items included in our Regulated Operations, which are otherwise required to be recognized in accumulated other comprehensive income as actuarial gains and losses as well as prior service costs and credits, are recognized as regulatory assets or regulatory liabilities on the Consolidated Balance Sheet. The asset or liability will decrease as the deferred items are amortized and recognized as components of net periodic benefit cost. (See Note 12. Pension and Other Postretirement Benefit Plans.) (c) These assets and liabilities are offsets to deferred income taxes recognized on certain regulatory temporary differences, which will reverse over the remaining lives of those temporary differences. (d) The cost recovery rider regulatory assets are revenues not yet collected from our customers primarily due to capital expenditures related to the Bison Wind Energy Center, investment in CapX2020 projects, and the Boswell Unit 4 environmental upgrade and are recognized in accordance with the accounting standards for alternative revenue programs. The cost recovery rider regulatory assets as of March 31, 2016 , will be recovered over the next two years. (e) Asset retirement obligations will accrete and be amortized over the lives of the related property with asset retirement obligations. (f) Wholesale and Retail Contra AFUDC represents the regulatory offset to AFUDC Equity and Debt recorded during the construction period of our cost recovery rider projects prior to placing the projects in service. The regulatory liability will decrease over the remaining depreciable life of the related asset. |
Investment in ATC
Investment in ATC | 3 Months Ended |
Mar. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Investment in ATC [Text Block] | INVESTMENT IN ATC Our wholly-owned subsidiary, ALLETE Transmission Holdings, owns approximately 8 percent of ATC, a Wisconsin-based utility that owns and maintains electric transmission assets in parts of Wisconsin, Michigan, Minnesota and Illinois. We account for our investment in ATC under the equity method of accounting. As of March 31, 2016 , our equity investment in ATC was $128.6 million ( $124.5 million at December 31, 2015 ). In the first three months of 2016 , we invested $1.2 million in ATC, and on April 29, 2016 , we invested an additional $0.4 million . We expect to make additional investments of approximately $4.6 million in 2016 . ALLETE’s Investment in ATC Millions Equity Investment Balance as of December 31, 2015 $124.5 Cash Investments 1.2 Equity in ATC Earnings 4.8 Distributed ATC Earnings (1.9 ) Equity Investment Balance as of March 31, 2016 $128.6 |
Short-Term and Long-Term Debt
Short-Term and Long-Term Debt | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Short-Term and Long-Term Debt [Text Block] | SHORT-TERM AND LONG-TERM DEBT March 31, 2016 Principal Unamortized Debt Issuance Costs Total Millions Short-Term Debt (a) $16.1 $(0.6) $15.5 Long-Term Debt 1,563.0 (11.7) 1,551.3 Total Debt $1,579.1 $(12.3) $1,566.8 (a) Consisted of long-term debt due within one year and notes payable. December 31, 2015 Principal Unamortized Debt Issuance Costs Total Millions Short-Term Debt (a) $37.9 $(0.6) $37.3 Long-Term Debt 1,568.7 (12.0) 1,556.7 Total Debt $1,606.6 $(12.6) $1,594.0 (a) Consisted of long-term debt due within one year and notes payable. No long-term debt was issued in the first three months of 2016. Financial Covenants. Our long-term debt arrangements contain customary covenants. In addition, our lines of credit and letters of credit supporting certain long-term debt arrangements contain financial covenants. Our compliance with financial covenants is not dependent on debt ratings. The most restrictive financial covenant requires ALLETE to maintain a ratio of indebtedness to total capitalization (as the amounts are calculated in accordance with the respective long-term debt arrangements) of less than or equal to 0.65 to 1.00 , measured quarterly. As of March 31, 2016 , our ratio was approximately 0.46 to 1.00 . Failure to meet this covenant would give rise to an event of default if not cured after notice from the lender, in which event ALLETE may need to pursue alternative sources of funding. Some of ALLETE’s debt arrangements contain “cross-default” provisions that would result in an event of default if there is a failure under other financing arrangements to meet payment terms or to observe other covenants that would result in an acceleration of payments due. As of March 31, 2016 , ALLETE was in compliance with its financial covenants. |
Income Tax Expense
Income Tax Expense | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Tax Expense [Text Block] | INCOME TAX EXPENSE Three Months Ended March 31, 2016 2015 Millions Current Tax Expense (a) Federal — — State $0.1 $0.1 Total Current Tax Expense $0.1 $0.1 Deferred Tax Expense (Benefit) Federal $4.6 $4.8 State 4.8 1.5 Investment Tax Credit Amortization (0.2 ) (0.2 ) Total Deferred Tax Expense $9.2 $6.1 Total Income Tax Expense $9.3 $6.2 (a) For the three months ended March 31, 2016 and 2015, the federal and state current tax expense was minimal due to NOLs which resulted from the bonus depreciation provisions of the Protecting Americans from Tax Hikes Act of 2015, the Tax Increase Prevention Act of 2014 and the American Taxpayer Relief Act of 2012. The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company would make a cumulative adjustment in that quarter. NOTE 9. INCOME TAX EXPENSE (Continued) Reconciliation of Taxes from Federal Statutory Rate to Total Income Tax Expense Three Months Ended March 31 2016 2015 Millions Income Before Non-Controlling Interest and Income Taxes $55.7 $46.3 Statutory Federal Income Tax Rate 35 % 35 % Income Taxes Computed at 35 percent Statutory Federal Rate 19.5 16.2 Increase (Decrease) in Tax Due to: State Income Taxes – Net of Federal Income Tax Benefit 3.2 1.0 Production Tax Credits (13.9 ) (12.8 ) Regulatory Differences for Utility Plant (0.1 ) (0.4 ) Other 0.6 2.2 Total Income Tax Expense $9.3 $6.2 For the three months ended March 31, 2016 , the effective tax rate was 16.7 percent ( 13.4 percent for the three months ended March 31, 2015 ). Uncertain Tax Positions. As of March 31, 2016 , we had gross unrecognized tax benefits of $2.3 million ( $2.4 million as of December 31, 2015 ). Of the total gross unrecognized tax benefits, $0.6 million represents the amount of unrecognized tax benefits included in the Consolidated Balance Sheet that, if recognized, would favorably impact the effective income tax rate. The unrecognized tax benefit amounts have been presented as reductions to the tax benefits associated with NOL and tax credit carryforwards on the Consolidated Balance Sheet. ALLETE and its subsidiaries file a consolidated federal income tax return as well as combined and separate state income tax returns in various jurisdictions. ALLETE is no longer subject to federal or state examination for years before 2012. |
Reclassifications Out of Accumu
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2016 | |
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) [Abstract] | |
Reclassifications Out of Accumulated Other Comprhensive Income (Loss) [Text Block] | RECLASSIFICATIONS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Changes in Accumulated Other Comprehensive Loss. Comprehensive income (loss) is the change in shareholders’ equity during a period from transactions and events from non-owner sources, including net income. The amounts recorded to accumulated other comprehensive loss include unrealized gains and losses on available-for-sale securities, defined benefit pension and other postretirement items, consisting of deferred actuarial gains or losses and prior service costs or credits, and gains and losses on derivatives accounted for as cash flow hedges. For the three months ended March 31, 2016 and 2015 , reclassifications out of accumulated other comprehensive income for the Company were not material . See Note 12. Pension and Other Postretirement Benefit Plans regarding the reclassification of a portion of accumulated other comprehensive loss related to the Company’s benefit plans during the year. Changes in accumulated other comprehensive loss for the three months ended March 31, 2016 , are presented on the Consolidated Statement of Shareholders’ Equity. |
Earnings Per Share and Common S
Earnings Per Share and Common Stock | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share and Common Stock [Text Block] | EARNINGS PER SHARE AND COMMON STOCK We compute basic earnings per share using the weighted average number of shares of common stock outstanding during each period. The difference between basic and diluted earnings per share, if any, arises from outstanding stock options, non-vested restricted stock units, performance share awards granted under our Executive Long-Term Incentive Compensation Plan and common shares under the forward sale agreement. For the three months ended March 31, 2016 and 2015 , no options to purchase shares of common stock were excluded from the computation of diluted earnings per share. NOTE 11. EARNINGS PER SHARE AND COMMON STOCK (Continued) 2016 2015 Reconciliation of Basic and Diluted Dilutive Dilutive Earnings Per Share Basic Securities Diluted Basic Securities Diluted Millions Except Per Share Amounts Three months ended March 31, Net Income Attributable to ALLETE $45.9 $45.9 $39.9 $39.9 Average Common Shares 49.2 — 49.2 46.9 0.2 47.1 Earnings Per Share $0.93 $0.93 $0.85 $0.85 |
Pension and Other Postretiremen
Pension and Other Postretirement Benefit Plans | 3 Months Ended |
Mar. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Pension and Other Postretirement Benefit Plans [Text Block] | PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS Pension Other Postretirement Components of Net Periodic Benefit Expense (Income) 2016 2015 2016 2015 Millions Three Months Ended March 31, Service Cost $2.0 $2.5 $1.0 $1.1 Interest Cost 8.1 7.5 1.9 1.8 Expected Return on Plan Assets (10.6 ) (10.2 ) (2.8 ) (2.7 ) Amortization of Prior Service Credits — — (0.7 ) (0.8 ) Amortization of Net Loss 2.4 4.5 — 0.1 Net Periodic Benefit Expense (Income) $1.9 $4.3 $(0.6) $(0.5) Employer Contributions. For the three months ended March 31, 2016 and 2015 , no contributions were made to our defined benefit pension plan; we expect to make $2.0 million in contributions to our defined benefit pension plan in 2016 . For the three months ended March 31, 2016 and 2015 , we made no contributions to our other postretirement benefit plan; we do not expect to make any contributions to our other postretirement benefit plan in 2016 . |
Commitments, Guarantees and Con
Commitments, Guarantees and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments, Guarantees and Contingencies [Abstract] | |
Commitments, Guarantees and Contingencies [Text Block] | COMMITMENTS, GUARANTEES AND CONTINGENCIES Power Purchase Agreements. Our long-term PPAs have been evaluated under the accounting guidance for variable interest entities. We have determined that either we have no variable interest in the PPAs or, where we do have variable interests, we are not the primary beneficiary; therefore, consolidation is not required. These conclusions are based on the fact that we do not have both control over activities that are most significant to the entity and an obligation to absorb losses or receive benefits from the entity’s performance. Our financial exposure relating to these PPAs is limited to our capacity and energy payments. Our power purchase agreements are summarized in Note 12. Commitments, Guarantees and Contingencies to our Consolidated Financial Statements in our 2015 Form 10-K, with additional disclosure provided in the following paragraphs. Square Butte PPA. Minnesota Power has a PPA with Square Butte, a North Dakota cooperative corporation, that extends through 2026 (Agreement). Minnesota Power is obligated to pay its pro rata share of Square Butte’s costs based on its entitlement to the output of Square Butte’s 455 MW coal-fired generating unit. Minnesota Power’s output entitlement under the Agreement is 50 percent for the remainder of the Agreement, subject to the provisions of the Minnkota Power sales agreement described below. Square Butte’s costs consist primarily of debt service, operating and maintenance, depreciation and fuel expenses. As of March 31, 2016 , Square Butte had total debt outstanding of $363.5 million . Fuel expenses are recoverable through Minnesota Power’s fuel adjustment clause and include the cost of coal purchased from BNI Energy under a long-term contract. Minnesota Power’s cost of power purchased from Square Butte during the three months ended March 31, 2016 , was $18.5 million ( $19.2 million for the three months ended March 31, 2015 ). This reflects Minnesota Power’s pro rata share of total Square Butte costs based on the 50 percent output entitlement. Included in this amount was Minnesota Power’s pro rata share of interest expense of $2.4 million during the three months ended March 31, 2016 ( $2.5 million for the three months ended March 31, 2015 ). Minnesota Power’s payments to Square Butte are approved as a purchased power expense for ratemaking purposes by both the MPUC and the FERC. NOTE 13. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued) Power Purchase Agreements (Continued) Minnkota Power Sales Agreement. Minnesota Power has a power sales agreement with Minnkota Power, which commenced June 1, 2014. Under the power sales agreement, Minnesota Power is selling a portion of its entitlement from Square Butte to Minnkota Power, resulting in Minnkota Power’s net entitlement increasing and Minnesota Power’s net entitlement decreasing until Minnesota Power’s share is eliminated at the end of 2025. Of Minnesota Power’s 50 percent output entitlement, it sold to Minnkota Power approximately 28 percent in 2016 and in 2015 . Coal, Rail and Shipping Contracts. Minnesota Power has coal supply agreements providing for the purchase of a significant portion of its coal requirements through December 2016 and a portion of its coal requirements through December 2019. Minnesota Power also has coal transportation agreements in place for the delivery of a significant portion of its coal requirements through December 2018. The minimum annual payment obligation under these supply and transportation agreements is $24.9 million for the remainder of 2016 , $26.3 million in 2017 , $27.0 million in 2018 and $1.8 million in 2019 . The delivered costs of fuel for Minnesota Power’s generation are recoverable from Minnesota Power’s utility customers through the fuel adjustment clause. Leasing Agreements. BNI Energy is obligated to make lease payments for a dragline totaling $2.8 million annually for the lease term, which expires in 2027. BNI Energy has the option at the end of the lease term to renew the lease at fair market value, to purchase the dragline at fair market value, or to surrender the dragline and pay a $3.0 million termination fee. We also lease other properties and equipment under operating lease agreements with terms expiring through 2022. The aggregate amount of minimum lease payments for all operating leases is $14.0 million in 2016 , $12.6 million in 2017 , $11.1 million in 2018 , $9.9 million in 2019 , $6.9 million in 2020 and $23.2 million thereafter. Transmission. We continue to make investments in transmission opportunities that strengthen or enhance the transmission grid or take advantage of our geographical location between sources of renewable energy and end users. These include the GNTL, investments to enhance our own transmission facilities, investments in other transmission assets (individually or in combination with others), and our investment in ATC. Our transmission investments are summarized in Note 12. Commitments, Guarantees and Contingencies to our Consolidated Financial Statements in our 2015 Form 10-K, with additional disclosure provided in the following paragraphs. Great Northern Transmission Line (GNTL). As a condition of the long-term PPA signed in May 2011 with Manitoba Hydro, construction of additional transmission capacity is required. As a result, Minnesota Power and Manitoba Hydro proposed construction of the GNTL, an approximately 220 -mile 500 kV transmission line between Manitoba and Minnesota’s Iron Range in order to strengthen the electric grid, enhance regional reliability and promote a greater exchange of sustainable energy. The GNTL is subject to various federal and state regulatory approvals. In October 2013, a certificate of need application was filed with the MPUC which was approved in a June 2015 order. Based on this order, Minnesota Power’s portion of the investments and expenditures for the project are eligible for cost recovery under its existing transmission cost recovery rider and are anticipated to be included in future transmission factor filings. (See Note 6. Regulatory Matters.) In a December 2015 order, the FERC approved our request to recover on construction work in progress related to the GNTL from Minnesota Power’s wholesale customers. In April 2014, Minnesota Power filed a route permit application with the MPUC and a request for a presidential permit to cross the U.S.-Canadian border with the U.S. Department of Energy. In an order dated April 11, 2016, the MPUC approved the route permit which largely follows Minnesota Power’s preferred route, including the international border crossing. A final decision on the presidential permit by the U.S. Department of Energy is expected in the second quarter of 2016. Manitoba Hydro must also obtain regulatory and governmental approvals related to a new transmission line in Canada. In September 2015, Manitoba Hydro submitted the final preferred route and EIS for the transmission line in Canada to the Manitoba Conservation and Water Stewardship for regulatory approval. Construction of Manitoba Hydro’s hydroelectric generation facility commenced in 2014. Upon receipt of all applicable permits and approvals, construction of the GNTL is expected to begin by 2017 and to be completed in 2020. Total project cost in the U.S., including substation work, is estimated to be between $ 560 million and $ 710 million . Minnesota Power is expected to have majority ownership of the transmission line. NOTE 13. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued) Environmental Matters. Our businesses are subject to regulation of environmental matters by various federal, state and local authorities. A number of regulatory changes to the Clean Air Act, the Clean Water Act and various waste management requirements have recently been promulgated by both the EPA and state authorities. Minnesota Power’s facilities are subject to additional regulation under many of these regulations. In response to these regulations, Minnesota Power is reshaping its generation portfolio over time to reduce its reliance on coal, has installed cost-effective emission control technology, and advocates for sound science and policy during rulemaking implementation. We consider our businesses to be in substantial compliance with currently applicable environmental regulations and believe all necessary permits to conduct such operations have been obtained. We anticipate that with many state and federal environmental regulations finalized, or to be finalized in the near future, potential expenditures for future environmental matters may be material and may require significant capital investments. Minnesota Power has evaluated various environmental compliance scenarios using possible outcomes of environmental regulations to project power supply trends and impacts on customers. We review environmental matters on a quarterly basis. Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on current law and existing technologies. Accruals are adjusted as assessment and remediation efforts progress or as additional technical or legal information becomes available. Accruals for environmental liabilities are included in the Consolidated Balance Sheet at undiscounted amounts and exclude claims for recoveries from insurance or other third parties. Costs related to environmental contamination treatment and cleanup are charged to expense unless recoverable in rates from customers. Air. The electric utility industry is regulated both at the federal and state level to address air emissions. Minnesota Power’s generating facilities mainly burn low-sulfur western sub-bituminous coal. All of Minnesota Power’s coal-fired generating facilities are equipped with pollution control equipment such as scrubbers, baghouses and low NO X technologies. Under currently applicable environmental regulations, these facilities are substantially compliant with applicable emission requirements. New Source Review (NSR). In August 2008, Minnesota Power received a Notice of Violation (NOV) from the EPA asserting violations of the NSR requirements of the Clean Air Act at Boswell and Laskin Unit 2 between the years of 1981 and 2001. Minnesota Power received an additional NOV in April 2011 alleging that two projects undertaken at Rapids Energy Center in 2004 and 2005 should have been reviewed under the NSR requirements and that the Rapids Energy Center’s Title V permit was violated. Minnesota Power reached a settlement with the EPA regarding these NOVs and entered into a Consent Decree which was approved by the U.S. District Court for the District of Minnesota (Court) in September 2014. The Consent Decree provided for, among other requirements, more stringent emissions limits at all affected units, the option of refueling, retrofits or retirements at certain small coal units, and the addition of 200 MW of wind energy. Provisions of the Consent Decree require that, by no later than December 31, 2018, Boswell Units 1 and 2 must be retired, refueled, repowered, or emissions rerouted through existing emission control technology at Boswell. Minnesota Power estimates that if the units are not retired, capital expenditures could range between $20 million and $40 million . Minnesota Power’s 2015 IRP filed with the MPUC on September 1, 2015, outlined Minnesota Power’s preferred option to reroute emissions from Boswell Units 1 and 2 through existing emission control technology at Boswell Unit 3. We are required to notify the EPA no later than December 31, 2016, whether we will retire, refuel, repower or reroute Boswell Units 1 and 2. We believe that future capital expenditures or costs to retire would likely be eligible for recovery in rates over time subject to regulatory approval in a rate proceeding. Cross-State Air Pollution Rule (CSAPR). In April 2014, the U.S. Supreme Court issued an opinion reversing an August 2012 U.S. Court of Appeals for the D.C. Circuit decision that had vacated the CSAPR. The EPA filed a motion with the U.S. Court of Appeals for the D.C. Circuit in June 2014, to have the stay of CSAPR lifted and the CSAPR compliance deadlines tolled by three years. In October 2014, the U.S. Court of Appeals for the D.C. Circuit granted the EPA's motion, allowing the first compliance period, Phase I, to begin on January 1, 2015, with Phase II beginning in 2017. CSAPR requires a total of 28 states in the eastern half of the United States, including Minnesota, to reduce power plant emissions that contribute to ozone or fine particulate pollution in other states. CSAPR does not require installation of controls; rather it requires that facilities have sufficient allowances to cover their emissions on an annual basis. These allowances are allocated to facilities from each state’s annual budget and can be bought and sold. NOTE 13. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued) Environmental Matters (Continued) In December 2014, the EPA distributed the CSAPR allowances to CSAPR-subject units for the Phase I years (2015 and 2016). Phase II allowances (2017-2020) have not been distributed. Based on our initial accounting of the NO x and SO 2 Phase I allowances already issued, and our review of the projected CSAPR Phase II allowances not yet issued, we currently expect projected generation levels and emission rates will result in compliance in both Phase I and Phase II. Mercury and Air Toxics Standards (MATS) Rule (formerly known as the Electric Generating Unit Maximum Achievable Control Technology (MACT) Rule). Under Section 112 of the Clean Air Act, the EPA is required to set emission standards for hazardous air pollutants (HAPs) for certain source categories. The EPA published the final MATS rule in the Federal Register in February 2012, addressing such emissions from coal-fired utility units greater than 25 MW. There are currently 187 listed HAPs that the EPA is required to evaluate for establishment of MACT standards. In the final MATS rule, the EPA established categories of HAPs, including mercury, trace metals other than mercury, acid gases, dioxin/furans, and organics other than dioxin/furans. The EPA also established emission limits for the first three categories of HAPs, and work practice standards for the remaining categories. Affected sources were required to be in compliance with the rule by April 2015. States had the authority to grant sources a one-year extension. The MPCA approved Minnesota Power’s request for an extension of the date of compliance for the Boswell Unit 4 environmental upgrade to April 1, 2016. Construction on the project to implement the Boswell Unit 4 mercury emissions reduction plan was completed in 2015. Boswell Unit 3 is also subject to the MATS rule; however, investments and compliance work completed at Boswell Unit 3, including the emission reduction investments completed in 2009, meet the requirements of the MATS rule. The conversion of Laskin Units 1 and 2 to natural gas in June 2015 positioned those units for MATS compliance. In June 2015, the U.S. Supreme Court reversed and remanded an earlier U.S. Court of Appeals for the D.C. Circuit decision on the MATS rule. The U.S. Supreme Court ruled that it was unreasonable for the EPA to deem cost of compliance irrelevant in determining that regulation of emissions of hazardous air pollutants from power plants was “appropriate and necessary” under Section 112 of the Clean Air Act. The MATS rule remains in effect until the U.S. Court of Appeals for the D.C. Circuit acts on the remand. In December 2015, the U.S. Court of Appeals for the D.C. Circuit rejected a motion by utilities and states to vacate the MATS rule, instead ordering the rule to remain in effect while the EPA completes its review. On April 15, 2016, the EPA announced its determination that the MATS rule is appropriate and necessary, even after considering cost of compliance. The outcome of these proceedings is not expected to have a material impact on Minnesota Power generation due to emission reduction obligations under the Minnesota Mercury Emissions Reduction Act and the Consent Decree. (See New Source Review. ) Minnesota Mercury Emissions Reduction Act/Rule. In order to comply with the 2006 Minnesota Mercury Emissions Reduction Act, which was incorporated into rules promulgated by the MPCA in September 2014, Minnesota Power was required to implement a mercury emissions reduction project for Boswell Unit 4 by December 31, 2018. The Boswell Unit 4 environmental upgrade discussed above (see Mercury and Air Toxics Standards (MATS) Rule ) fulfills the requirements of the Minnesota Mercury Emissions Reduction Act. EPA National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial and Institutional Boilers and Process Heaters. A final rule issued by the EPA for Industrial Boiler MACT became effective in December 2012. Major existing sources had until January 31, 2016, to achieve compliance with the final rule. Minnesota Power’s Hibbard Renewable Energy Center and Rapids Energy Center are subject to this rule. We expect compliance to consist largely of adjustments to our operating practices; therefore the costs for complying with the final rule are not expected to be material. National Ambient Air Quality Standards (NAAQS). The EPA is required to review the NAAQS every five years. If the EPA determines that a state’s air quality is not in compliance with the NAAQS, the state is required to adopt plans describing how it will reduce emissions to attain the NAAQS. These state plans often include more stringent air emission limitations on sources of air pollutants than the NAAQS. Four NAAQS have either recently been revised or are currently proposed for revision, as described below. Ozone NAAQS. The EPA has proposed to more stringently control emissions that result in ground level ozone. In January 2010, the EPA proposed to revise the 2008 eight-hour ozone standard of 75 parts per billion (ppb) and to adopt a secondary standard for the protection of sensitive vegetation from ozone-related damage. In October 2015, the EPA published the final rule in the Federal Register revising the eight-hour ozone standard to 70 ppb with a secondary standard also set at 70 ppb. All areas of Minnesota currently meet the new standard based on the most recent available ambient monitoring data. However, some areas in the metropolitan Twin Cities and southwest portion of the state are close to exceeding the standard, so voluntary efforts to reduce ozone continue in the state. No additional costs for compliance are anticipated at this time. NOTE 13. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued) Environmental Matters (Continued) Particulate Matter NAAQS. The EPA finalized the Particulate Matter NAAQS in September 2006. Since then, the EPA has established more stringent 24-hour and annual average fine particulate matter (PM 2.5 ) standards; the 24-hour coarse particulate matter standard has remained unchanged. In December 2012, the EPA issued a final rule implementing a more stringent annual PM 2.5 standard, while retaining the current 24-hour PM 2.5 standard. To implement the new annual PM 2.5 standard, the EPA is also revising aspects of relevant monitoring, designation and permitting requirements. New projects and permits must comply with the new standard, which is generally demonstrated by modeling at the facility level. Under the final rule, states will be responsible for additional PM 2.5 monitoring, which will likely be accomplished by relocating or repurposing existing monitors. The EPA asked states to submit attainment designations by December 2013, based on already available monitoring data, and issued designations of the 2012 revised primary annual fine particulate attainment status in December 2014. The EPA designated the entire state of Minnesota as unclassifiable/attainment; however, Minnesota sources may ultimately be required to reduce their emissions to assist with attainment in neighboring states. Accordingly, the costs for complying with the final Particulate Matter NAAQS cannot be estimated at this time. SO 2 and NO 2 NAAQS. During 2010, the EPA finalized one-hour NAAQS for SO 2 and NO 2 . Ambient monitoring data indicates that Minnesota is likely in compliance with these standards; however, the one-hour SO 2 NAAQS also requires the EPA to evaluate additional modeling and monitoring considerations to determine attainment. In April 2012, the MPCA notified Minnesota Power that modeling had been suspended as a result of the EPA’s announcement that the SIP submittals would not require modeling demonstrations for states, such as Minnesota, where ambient monitors indicate compliance with the standard. The EPA notified states that their infrastructure SIPs for maintaining attainment of the standard were required to be submitted to the EPA for approval by June 2013. However, the State of Minnesota delayed completing the documents pending EPA guidance to states for preparing the SIP submittal. In September 2013 the EPA provided guidance to states regarding implementation of the one-hour NO 2 NAAQS and in June 2014, as clarified in February 2015, the MPCA submitted a SIP revision to the EPA addressing the infrastructure requirements of Sections 110(a)(1) and 110(a)(2) of the Clean Air Act in regards to the one-hour NO 2 and SO 2 NAAQS, among other standards. The SIP stated that since the EPA determined in January 2012 that no area in the country is in violation of the one-hour NO 2 NAAQS, there are no nonattainment areas in the country for this pollutant, and therefore Minnesota’s NO 2 emissions cannot be significantly contributing to nonattainment in any other state. In October 2015, the EPA published in the Federal Register an approval and partial disapproval of the June 2014 SIP revision. According to the MPCA, the partial disapproval is regarding state delegation of a program unrelated to the one-hour NAAQS for SO 2 and NO 2, and is not expected to require further action. As such, additional compliance costs for the one-hour NO 2 NAAQS are not expected at this time. In August 2015, the EPA finalized the SO 2 data requirements rule (DRR) for the 2010 one-hour NAAQS to assist the states in implementing the standard. The rule sets emissions thresholds and exemptions for facilities that trigger modeling requirements. On January 8, 2016, the MPCA informed the EPA of the Minnesota sources subject to the rule, confirming that Boswell and Taconite Harbor are the only Minnesota Power generating facilities subject to the DRR. The MPCA is required to notify the EPA how each source will evaluate air quality by July 1, 2016. The MPCA has informed Minnesota Power that compliant SO 2 modeling recently completed at these facilities should satisfy the DRR obligations, and no further modeling should be required. The MPCA is in discussion with the EPA to confirm its conclusion. As such, additional compliance costs for the one-hour SO 2 NAAQS are not expected at this time. Class I Air Quality Petitions and Requests. In July 2014, the Fond du Lac Band of Lake Superior Chippewa (Fond du Lac Band) announced its intent to petition the EPA to redesignate its reservation air shed from Class II to Class I air quality pursuant to Section 164(c) of the Clean Air Act. The Fond du Lac Band does not currently possess authority to directly regulate air quality. Class I air shed status, if granted, would allow the Fond du Lac Band to impose more stringent Clean Air Act protections within the boundaries of the Fond du Lac reservation, including the reservation air shed, near Cloquet, Minnesota. Five other reservations across the U.S. have applied for and received Class I status. A public hearing was held by the Fond du Lac Band in October 2014, and the extended public comment period on the petition expired in November 2014. After the Fond du Lac Band prepares responses to the comments, it is anticipated to make a formal submittal request to the EPA. The Company has requested additional clarification from the Fond du Lac Band and the MPCA on the final regulatory structure that may arise from a Class I redesignation. NOTE 13. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued) Environmental Matters (Continued) In May 2013, the Bad River Band of Lake Superior Chippewa (Bad River Band) announced its intent to petition the EPA to redesignate its reservation air shed, which is located approximately 100 miles east of Duluth, Minnesota, from Class II to Class I air quality pursuant to Section 164(c) of the Clean Air Act. The Class I analysis report was issued by the Bad River Band in January 2015 which was followed by public hearings in March 2015 and a public comment period ending in May 2015. After the Bad River Band prepares responses to the comments, it is also anticipated to make a formal submittal request to the EPA. There is no deadline for the approval, denial, or modification of these requests by the EPA. We are unable to determine the impact of potential Class I status on the Company’s operations at this time. Climate Change. The scientific community generally accepts that emissions of GHG are linked to global climate change which creates physical and financial risks. Physical risks could include, but are not limited to: increased or decreased precipitation and water levels in lakes and rivers; increased temperatures; and changes in the intensity and frequency of extreme weather events. These all have the potential to affect the Company’s business and operations. We are addressing climate change by taking the following steps that also ensure reliable and environmentally compliant generation resources to meet our customers’ requirements: • Expanding our renewable energy supply; • Providing energy conservation initiatives for our customers and engaging in other demand side efforts; • Improving efficiency of our energy generating facilities; • Supporting research of technologies to reduce carbon emissions from generation facilities and carbon sequestration efforts; and • Evaluating and developing less carbon intensive future generating assets such as efficient and flexible natural gas generating facilities. President Obama’s Climate Action Plan. In June 2013, President Obama announced a Climate Action Plan (CAP) that calls for implementation of measures that reduce GHG emissions in the U.S., emphasizing means such as expanded deployment of renewable energy resources, energy and resource conservation, energy efficiency improvements and a shift to fuel sources that have lower emissions. Certain portions of the CAP directly address electric utility GHG emissions. EPA Regulation of GHG Emissions. In May 2010, the EPA issued the Prevention of Significant Deterioration (PSD) and Title V Greenhouse Gas Tailoring Rule (Tailoring Rule). The Tailoring Rule establishes permitting thresholds required to address GHG emissions for new facilities, existing facilities that undergo major modifications and other facilities characterized as major sources under the Clean Air Act’s Title V program. For our existing facilities, the rule does not require amending our existing Title V operating permits to include GHG requirements. However, GHG requirements are likely to be added to our existing Title V operating permits by the MPCA as these permits are renewed or amended. In late 2010, the EPA issued guidance to permitting authorities and affected sources to facilitate incorporation of the Tailoring Rule permitting requirements into the Title V and PSD permitting programs. The guidance stated that the project-specific, top-down Best Available Control Technology (BACT) determination process used for other pollutants will also be used to determine BACT for GHG emissions. Through sector-specific white papers, the EPA also provided examples and technical summaries of GHG emission control technologies and techniques the EPA considers available or likely to be available to sources. It is possible that these control technologies could be determined to be BACT on a project-by-project basis. In June 2014, the U.S. Supreme Court invalidated the aspect of the Tailoring Rule that established lower permitting thresholds for GHG than for other pollutants subject to PSD. However, the court also upheld the EPA’s power to require BACT for GHG from sources already subject to regulation under PSD. Minnesota Power’s coal-fired generating facilities are already subject to regulation under PSD, so we anticipate that ultimately PSD for GHG will apply to our facilities, but the timing of the promulgation of a replacement for the Tailoring Rule is uncertain. The PSD applies to existing facilities only when they undertake a major modification that increases emissions. At this time, we are unable to predict the compliance costs that we might incur. In March 2012, the EPA announced a proposed rule to apply CO 2 emission New Source Performance Standards (NSPS), under Section 111(b) of the Clean Air Act, to new fossil fuel-fired electric generating units. The proposed NSPS would have applied only to new or re-powered units. Based on the volume of comments received, the EPA announced its intent to re-propose the rule. In September 2013, the EPA retracted its March 2012 proposal and announced the release of a revised NSPS for new or re-powered utility CO 2 emissions. NOTE 13. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued) Environmental Matters (Continued) In June 2014, the EPA announced a proposed rule under Section 111(d) of the Clean Air Act for existing power plants entitled “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Generating Units”, also referred to as the Clean Power Plan (CPP). The EPA issued the final CPP in August 2015, together with a proposed federal implementation plan and a model rule for emissions trading. Numerous petitions for review of the rule have been filed with the U.S. Court of Appeals for the District of Columbia Circuit. On February 9, 2016, the U.S. Supreme Court issued an order staying the effectiveness of the rule until after the appellate court process is complete. The CPP establishes uniform CO 2 emission performance rates for existing fossil fuel-fired and natural gas-fired combined cycle generating units, setting state-specific goals for CO 2 emissions from the power sector. State goals were determined based on CPP source-specific performance emission rates and each state’s mix of power plants. The EPA maintains such goals are achievable if a state undertakes a combination of measures across its power sector that constitute the EPA’s guideline for a Best System of Emission Reductions (BSER). BSER is comprised of three building blocks: 1) improved fossil fuel power plant efficiency, 2) increased reliance on low-emitting power sources by generating more electricity from existing natural gas combined cycle units, and 3) building more zero- and low-emitting power sources, including renewable energy. States may also choose to include avoided CO 2 emissions from customer energy efficiency measures for credit towards meeting state goals. State goals under the CPP are expressed as both mass-based and rate-based goals, and include interim goals to be met over the years 2022 through 2029, as well as a final goal to be met in 2030 and thereafter. Under the CPP, each state is required to develop a state implementation plan by September 6, 2016, or by September 6, 2018, if granted an extension. If the CPP is upheld at the completion of the appellate court process, all of these deadlines may be reset based on the length of time that the appeals process takes. In developing its plan, a state may choose to meet either the mass-based or the rate-based goals. Minnesota Power is currently evaluating the CPP as it relates to the State of Minnesota as well as its potential impact on the Company and is actively discussing potential compliance scenarios with regulatory agencies and in public stakeholder meetings. Minnesota has already initiated several measures consistent with those called for under the CAP and CPP. Minnesota Power is implementing its EnergyForward strategic plan that provides for significant emission reductions and diversifying its electricity generation mix to include more renewable and natural gas energy. (See Note 6. Regulatory Matters.) We are unable to predict the GHG emission compliance costs we might incur; however, the costs could be material. Minnesota Power would seek recovery of any additional costs through cost recovery riders or in a general rate case. Minnesota’s Next Generation Energ |
Business Segments
Business Segments | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Business Segments [Text Block] | BUSINESS SEGMENTS During the third quarter of 2015, management updated our reportable segment presentation to reflect the manner in which we operate, assess, and allocate resources after our recent acquisitions. We now present three reportable segments, Regulated Operations, ALLETE Clean Energy and U.S. Water Services. Prior period amounts have been revised to conform with the current business segment presentation. Regulated Operations includes three operating segments which consist of our regulated utilities, Minnesota Power and SWL&P, as well as our investment in ATC, a Wisconsin-based regulated utility that owns and maintains electric transmission assets in parts of Wisconsin, Michigan, Minnesota and Illinois. ALLETE Clean Energy is our business aimed at acquiring or developing capital projects that create energy solutions by way of wind, solar, biomass, hydro, natural gas, shale resources, clean coal technology and other emerging energy innovations. U.S. Water Services is our integrated water management company which was acquired in February 2015. The ALLETE Clean Energy and U.S. Water Services reportable segments comprise our Energy Infrastructure and Related Services businesses. We also present Corporate and Other which includes two operating segments, BNI Energy, our coal mining operations in North Dakota, and ALLETE Properties, our legacy Florida real estate investment, along with other business development and corporate expenditures, unallocated interest expense, a small amount of non-rate base generation, approximately 5,000 acres of land in Minnesota, and earnings on cash and investments. NOTE 14. BUSINESS SEGMENTS (Continued) Three Months Ended March 31, 2016 2015 Millions Operating Revenue Regulated Operations $252.3 $262.8 Energy Infrastructure and Related Services ALLETE Clean Energy 23.6 12.4 U.S. Water Services 32.4 15.5 Corporate and Other 25.5 29.3 Total Operating Revenue $333.8 $320.0 Net Income (Loss) Attributable to ALLETE Regulated Operations (a) $42.4 $41.0 Energy Infrastructure and Related Services ALLETE Clean Energy 6.1 2.5 U.S. Water Services (0.5 ) (0.1 ) Corporate and Other (a) (2.1 ) (3.5 ) Total Net Income Attributable to ALLETE $45.9 $39.9 (a) In 2015, an intercompany loan agreement was entered into and interest expense was allocated to certain subsidiaries which is eliminated in consolidation. Prior period segment results have been revised to conform to the current presentation as if the intercompany loan existed as of January 1, 2015. March 31, December 31, Millions Assets Regulated Operations (a) $3,822.3 $3,853.1 Energy Infrastructure and Related Services ALLETE Clean Energy (a) 498.1 501.5 U.S. Water Services 256.6 258.3 Corporate and Other 295.7 281.6 Total Assets (a) $4,872.7 $4,894.5 (a) As a result of revised accounting guidance adopted in the first quarter of 2016, we reclassified unamortized debt issuance costs from Other Non-Current Assets to Long-Term Debt on the Consolidated Balance Sheet. Prior period segment assets have been revised to conform to the current presentation. (See Note 1. Operations and Significant Accounting Policies.) |
Operations and Significant Ac23
Operations and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Inventories [Policy Text Block] | Inventories are stated at the lower of cost or market. Inventories in our Regulated Operations and ALLETE Clean Energy segments are carried at an average cost basis. Inventories in our U.S. Water Services and Corporate and Other segments are carried at an average cost, first-in, first-out or specific identification basis. |
Subsequent Events [Policy Text Block] | The Company performed an evaluation of subsequent events for potential recognition and disclosure through the time of the financial statements issuance. |
New Accounting Standards [Policy Text Block] | Amendments to the Consolidation Analysis. In February 2015, the FASB issued revised guidance which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. The new standard affects (1) limited partnerships and similar legal entities, (2) evaluating fees paid to a decision maker or a service provider as a variable interest, (3) the effect of fee arrangements on the primary beneficiary determination, (4) the effect of related parties on the primary beneficiary determination, and (5) certain investment funds. This guidance was adopted in the first quarter of 2016 and did not have a material impact on our Consolidated Financial Statements. Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). In May 2015, the FASB issued an accounting standard update which removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share (or its equivalent) practical expedient. The guidance applies to investments for which there is not a readily determinable fair value (market quote) or the investment is in a mutual fund without a publicly available net asset value. This guidance was adopted in the first quarter of 2016 and did not have a material impact on our Consolidated Financial Statements. Presentation of Debt Issuance Costs. In April 2015, the FASB issued revised guidance addressing the presentation requirements for debt issuance costs. Under the revised guidance, all costs incurred to issue debt are to be presented on the Consolidated Balance Sheet as a direct deduction from the carrying amount of that debt liability. This guidance was adopted in the first quarter of 2016 resulting in the reclassification of unamortized debt issuance costs from Other Non-Current Assets to Long-Term Debt on the Consolidated Balance Sheet. The effect of the adoption decreased Total Assets and Total Liabilities on ALLETE's Consolidated Balance Sheet by $12.6 million as of December 31, 2015 . NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued) New Accounting Standards (Continued) Leases. In February 2016, the FASB issued an accounting standard update which revises the existing guidance for leases. Under the revised guidance, lessees will be required to recognize a “right-of-use” asset and a lease liability for all leases with a term greater than 12 months. The new standard also requires additional quantitative and qualitative disclosures by lessees and lessors to enable users of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. The accounting for leases by lessors and the recognition, measurement and presentation of expenses and cash flows from leases are not expected to significantly change as a result of the updated guidance. The revised guidance is effective for the Company beginning in the first quarter of 2019 with early adoption permitted. The Company is evaluating the impact of the amended lease guidance on the Company’s Consolidated Financial Statements. |
Land Inventory [Policy Text Block] | Land inventory is accounted for as held for use and is recorded at cost, unless the carrying value is determined not to be recoverable in accordance with the accounting standards for property, plant and equipment, in which case the land inventory is written down to estimated fair value. Land values are reviewed for indicators of impairment on a quarterly basis and no impairments were recorded for the three months ended March 31, 2016 . |
Acquisition [Policy Text Block] | The acquisition was accounted for as a business combination and the purchase price was allocated based on the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition. The purchase price accounting, which was finalized in 2015, is reflected in the following table. Fair value measurements were valued primarily using the discounted cash flow method. The acquisition was accounted for as a business combination and the purchase price was allocated based on the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition. The purchase price accounting, which was finalized in 2015, is reflected in the following table. Fair value measurements were valued primarily using the discounted cash flow method. The acquisition was accounted for as a business combination and the purchase price was allocated based on the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition. The purchase price accounting, which was finalized in 2015, is reflected in the following table. Fair value measurements were valued primarily using the discounted cash flow method. The acquisition was accounted for as a business combination and the purchase price was allocated based on the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition. The purchase price accounting, which was finalized in 2015, is reflected in the following table. Fair value measurements were valued primarily using the discounted cash flow method. |
Fair Value Measurement [Policy Text Block] | Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best available information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs, which are used to measure fair value, are prioritized through the fair value hierarchy. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Descriptions of the three levels of the fair value hierarchy are discussed in Note 10. Fair Value to the Consolidated Financial Statements in our 2015 Form 10-K. The following tables set forth by level within the fair value hierarchy, our assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2016 , and December 31, 2015 . Each asset and liability is classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of these assets and liabilities and their placement within the fair value hierarchy levels. Non-financial assets such as equity method investments, goodwill, intangible assets, and property, plant and equipment are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment is recognized. |
Regulatory Assets and Liabilities [Policy Text Block] | Our regulated utility operations are subject to accounting guidance for the effect of certain types of regulation. Regulatory assets represent incurred costs that have been deferred as they are probable for recovery in customer rates. Regulatory liabilities represent obligations to make refunds to customers and amounts collected in rates for which the related costs have not yet been incurred. The Company assesses quarterly whether regulatory assets and liabilities meet the criteria for probability of future recovery or deferral. No regulatory assets or liabilities are currently earning a return. The recovery, refund or credit to rates for these regulatory assets and liabilities will occur over the periods either specified by the applicable regulatory authority or over the corresponding period related to the asset or liability. |
Equity Method Investments [Policy Text Block] | We account for our investment in ATC under the equity method of accounting. |
Income Tax [Policy Text Block] | The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, the Company updates its estimate of the annual effective tax rate, and if the estimated annual effective tax rate changes, the Company would make a cumulative adjustment in that quarter. |
Earnings Per Share [Policy Text Block] | We compute basic earnings per share using the weighted average number of shares of common stock outstanding during each period. The difference between basic and diluted earnings per share, if any, arises from outstanding stock options, non-vested restricted stock units, performance share awards granted under our Executive Long-Term Incentive Compensation Plan and common shares under the forward sale agreement. For the three months ended March 31, 2016 and 2015 , no options to purchase shares of common stock were excluded from the computation of diluted earnings per share. |
Environmental Accruals [Policy Text Block] | We review environmental matters on a quarterly basis. Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on current law and existing technologies. Accruals are adjusted as assessment and remediation efforts progress or as additional technical or legal information becomes available. Accruals for environmental liabilities are included in the Consolidated Balance Sheet at undiscounted amounts and exclude claims for recoveries from insurance or other third parties. Costs related to environmental contamination treatment and cleanup are charged to expense unless recoverable in rates from customers. |
Operations and Significant Ac24
Operations and Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Inventories [Table Text Block] | Inventories March 31, December 31, Millions Fuel (a) $56.5 $58.1 Materials and Supplies 49.0 49.1 Raw Materials 2.6 2.7 Work in Progress 0.8 — Finished Goods 7.4 7.5 Reserve for Obsolescence (0.3 ) (0.3 ) Total Inventories $116.0 $117.1 (a) Fuel consists primarily of coal inventory at Minnesota Power. |
Prepayments and Other Current Assets [Table Text Block] | Prepayments and Other Current Assets March 31, December 31, Millions Deferred Fuel Adjustment Clause $12.4 $10.6 Restricted Cash (a) 11.5 5.6 Other 17.6 19.5 Total Prepayments and Other Current Assets $41.5 $35.7 (a) Restricted Cash includes collateral deposits required under ALLETE Clean Energy’s loan agreements and cash pledged as collateral for U.S. Water Services’ standby letters of credit. |
Other Current Liabilities [Table Text Block] | Other Current Liabilities March 31, December 31, Millions Customer Deposits $14.0 $15.1 Power Purchase Agreements 23.6 23.3 Other 45.2 47.7 Total Other Current Liabilities $82.8 $86.1 |
Other Non-Current Liabilities [Table Text Block] | Other Non-Current Liabilities March 31, December 31, Millions Asset Retirement Obligation $136.2 $131.4 Power Purchase Agreements 131.9 138.1 Contingent Consideration (a) 36.7 36.6 Other 42.3 42.9 Total Other Non-Current Liabilities $347.1 $349.0 (a) Contingent Consideration relates to the estimated fair value of the earnings-based payment resulting from the U.S. Water Services acquisition. (See Note 3. Acquisitions and Note 5. Fair Value.) |
Supplemental Statement of Cash Flows Information [Table Text Block] | Supplemental Statement of Cash Flows Information. Three Months Ended March 31, 2016 2015 Millions Cash Paid During the Period for Interest – Net of Amounts Capitalized $19.6 $15.3 Cash Paid During the Period for Income Taxes $0.1 $0.1 Noncash Investing and Financing Activities Decrease in Accounts Payable for Capital Additions to Property, Plant and Equipment $(25.6) $(32.2) Capitalized Asset Retirement Costs $3.5 $1.2 AFUDC–Equity $0.9 $0.9 Contingent Consideration — $35.7 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Investments [Abstract] | |
Other Investments [Table Text Block] | Other Investments March 31, December 31, Millions ALLETE Properties $49.1 $50.1 Available-for-sale Securities (a) 17.4 18.5 Cash Equivalents 2.5 2.0 Other 3.9 4.0 Total Other Investments $72.9 $74.6 (a) As of March 31, 2016 , the aggregate amount of available-for-sale corporate debt securities maturing in one year or less was zero , in one year to less than three years was $1.6 million , in three years to less than five years was $4.1 million , and in five or more years was $4.7 million . |
Acquisitions (Table)
Acquisitions (Table) | 3 Months Ended |
Mar. 31, 2016 | |
U.S. Water Services [Member] | |
Business Acquisition [Line Items] | |
Schedule of Business Acquisitions [Table Text Block] | Millions Assets Acquired Cash and Cash Equivalents $0.9 Accounts Receivable 16.8 Inventories (a) 13.4 Other Current Assets (b) 5.3 Property, Plant and Equipment 10.6 Intangible Assets (c) 83.0 Goodwill (d) 122.9 Other Non-Current Assets 0.2 Total Assets Acquired $253.1 Liabilities Assumed Current Liabilities $19.2 Non-Current Liabilities 31.6 Total Liabilities Assumed $50.8 Net Identifiable Assets Acquired $202.3 (a) Included in Inventories was $2.7 million of fair value adjustments relating to work in progress and finished goods inventories which were recognized as Cost of Sales within one year from the acquisition date. (b) Included in Other Current Assets was $1.6 million relating to the fair value of sales backlog. Sales backlog was recognized as Cost of Sales within one year from the acquisition date. Also included in Other Current Assets was restricted cash of $2.1 million relating to cash pledged as collateral for standby letters of credit. (c) Intangible Assets include customer relationships, patents, non-compete agreements, and trademarks and trade names. (See Note 4. Goodwill and Intangible Assets.) (d) For tax purposes, the purchase price allocation resulted in $2.9 million of deductible goodwill. |
Chanarambie/Viking [Member] | |
Business Acquisition [Line Items] | |
Schedule of Business Acquisitions [Table Text Block] | Millions Assets Acquired Current Assets $4.8 Property, Plant and Equipment 103.0 Other Non-Current Assets (a) 1.0 Total Assets Acquired $108.8 Liabilities Assumed Current Liabilities (b) $6.7 Power Purchase Agreements 49.0 Non-Current Liabilities 5.1 Total Liabilities Assumed $60.8 Net Identifiable Assets Acquired $48.0 (a) Included in Other Non-Current Assets was $0.3 million of goodwill. For tax purposes, the purchase price allocation resulted in no allocation to goodwill. (b) Current Liabilities included $5.9 million related to the current portion of Power Purchase Agreements. |
Armenia Mountain [Member] | |
Business Acquisition [Line Items] | |
Schedule of Business Acquisitions [Table Text Block] | Millions Assets Acquired Current Assets (a) $9.0 Property, Plant and Equipment 156.2 Other Non-Current Assets (b) 14.4 Total Assets Acquired $179.6 Liabilities Assumed Current Liabilities $2.9 Long-Term Debt Due Within One Year 5.9 Long-Term Debt 55.0 Other Non-Current Liabilities 4.7 Total Liabilities Assumed $68.5 Net Identifiable Assets Acquired $111.1 (a) Included in Current Assets was $1.0 million related to the current portion of Power Purchase Agreements and $6.0 million of restricted cash related to collateral deposits required under its loan agreement. (b) Included in Other Non-Current Assets was $8.2 million related to the non-current portion of Power Purchase Agreements, $6.1 million of restricted cash related to collateral deposits required under its loan agreements, and an immaterial amount of goodwill. For tax purposes, the purchase price allocation resulted in no allocation to goodwill. |
A and W Technologies [Member] | |
Business Acquisition [Line Items] | |
Schedule of Business Acquisitions [Table Text Block] | Millions Assets Acquired Current Assets $1.0 Property, Plant and Equipment 0.1 Intangible Assets (a) 3.9 Goodwill (b) 4.4 Total Assets Acquired $9.4 Liabilities Assumed Current Liabilities $0.1 Total Liabilities Assumed $0.1 Net Identifiable Assets Acquired $9.3 (a) Intangible Assets include customer relationships and non-compete agreements. (See Note 4. Goodwill and Intangible Assets.) (b) For tax purposes, the purchase price allocation resulted in $4.4 million of deductible goodwill. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets [Table Text Block] | Balances of intangible assets, net, excluding goodwill as of March 31, 2016 , are as follows: December 31, Amortization March 31, Millions Intangible Assets Definite-Lived Intangible Assets Customer Relationships $60.8 $(1.1) $59.7 Developed Technology and Other (a) 7.2 (0.2) 7.0 Total Definite-Lived Intangible Assets 68.0 (1.3) 66.7 Indefinite-Lived Intangible Assets Trademarks and Trade Names 16.6 n/a 16.6 Total Intangible Assets $84.6 $(1.3) $83.3 (a) Developed Technology and Other includes patents, non-compete agreements, and land easements. |
Fair Value (Tables)
Fair Value (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Recurring Fair Value Measures [Table Text Block] | Fair Value as of March 31, 2016 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Millions Assets Investments (a) Available-for-sale – Equity Securities $7.0 — — $7.0 Available-for-sale – Corporate Debt Securities — $10.4 — 10.4 Cash Equivalents 2.5 — — 2.5 Total Fair Value of Assets $9.5 $10.4 — $19.9 Liabilities (b) Deferred Compensation — $14.9 — $14.9 U.S. Water Services Contingent Consideration — — $36.7 36.7 Total Fair Value of Liabilities — $14.9 $36.7 $51.6 Total Net Fair Value of Assets (Liabilities) $9.5 $(4.5) $(36.7) $(31.7) (a) Included in Other Investments on the Consolidated Balance Sheet. (b) Included in Other Non-Current Liabilities on the Consolidated Balance Sheet. NOTE 5. FAIR VALUE (Continued) Fair Value as of December 31, 2015 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Millions Assets Investments (a) Available-for-sale – Equity Securities $7.6 — — $7.6 Available-for-sale – Corporate Debt Securities — $10.9 — 10.9 Cash Equivalents 2.0 — — 2.0 Total Fair Value of Assets $9.6 $10.9 — $20.5 Liabilities (b) Deferred Compensation — $16.1 — $16.1 U.S. Water Services Contingent Consideration — — $36.6 36.6 Total Fair Value of Liabilities — $16.1 $36.6 $52.7 Total Net Fair Value of Assets (Liabilities) $9.6 $(5.2) $(36.6) $(32.2) (a) Included in Other Investments on the Consolidated Balance Sheet. (b) Included in Other Non-Current Liabilities on the Consolidated Balance Sheet. |
Financial Instruments [Table Text Block] | Financial Instruments Carrying Amount Fair Value Millions Long-Term Debt, Including Current Portion March 31, 2016 $1,578.4 $1,708.0 December 31, 2015 $1,605.0 $1,676.0 |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Regulated Operations [Abstract] | |
Regulatory Assets and Liabilities [Table Text Block] | Regulatory Assets and Liabilities March 31, December 31, Millions Current Regulatory Assets (a) Deferred Fuel Adjustment Clause $12.4 $10.6 Total Current Regulatory Assets 12.4 10.6 Non-Current Regulatory Assets Defined Benefit Pension and Other Postretirement Benefit Plans (b) 217.0 219.3 Income Taxes (c) 64.4 64.2 Cost Recovery Riders (d) 54.3 58.0 Asset Retirement Obligations (e) 22.5 21.6 PPACA Income Tax Deferral 5.0 5.0 Other 3.9 3.9 Total Non-Current Regulatory Assets 367.1 372.0 Total Regulatory Assets $379.5 $382.6 Non-Current Regulatory Liabilities Wholesale and Retail Contra AFUDC (f) $57.1 $58.0 Plant Removal Obligations 20.6 22.1 Income Taxes (c) 5.7 6.1 Defined Benefit Pension and Other Postretirement Benefit Plans (b) 0.4 0.9 Other 18.4 17.9 Total Non-Current Regulatory Liabilities $102.2 $105.0 (a) Current regulatory assets are included in Prepayments and Other on the Consolidated Balance Sheet. (b) Defined benefit pension and other postretirement items included in our Regulated Operations, which are otherwise required to be recognized in accumulated other comprehensive income as actuarial gains and losses as well as prior service costs and credits, are recognized as regulatory assets or regulatory liabilities on the Consolidated Balance Sheet. The asset or liability will decrease as the deferred items are amortized and recognized as components of net periodic benefit cost. (See Note 12. Pension and Other Postretirement Benefit Plans.) (c) These assets and liabilities are offsets to deferred income taxes recognized on certain regulatory temporary differences, which will reverse over the remaining lives of those temporary differences. (d) The cost recovery rider regulatory assets are revenues not yet collected from our customers primarily due to capital expenditures related to the Bison Wind Energy Center, investment in CapX2020 projects, and the Boswell Unit 4 environmental upgrade and are recognized in accordance with the accounting standards for alternative revenue programs. The cost recovery rider regulatory assets as of March 31, 2016 , will be recovered over the next two years. (e) Asset retirement obligations will accrete and be amortized over the lives of the related property with asset retirement obligations. (f) Wholesale and Retail Contra AFUDC represents the regulatory offset to AFUDC Equity and Debt recorded during the construction period of our cost recovery rider projects prior to placing the projects in service. The regulatory liability will decrease over the remaining depreciable life of the related asset. |
Investment in ATC (Tables)
Investment in ATC (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Equity Method Investments and Joint Ventures [Abstract] | |
ALLETE's Investment in ATC [Table Text Block] | ALLETE’s Investment in ATC Millions Equity Investment Balance as of December 31, 2015 $124.5 Cash Investments 1.2 Equity in ATC Earnings 4.8 Distributed ATC Earnings (1.9 ) Equity Investment Balance as of March 31, 2016 $128.6 |
Short-Term and Long-Term Debt S
Short-Term and Long-Term Debt Short-Term and Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Short-Term and Long-Term Debt [Table Text Block] | December 31, 2015 Principal Unamortized Debt Issuance Costs Total Millions Short-Term Debt (a) $37.9 $(0.6) $37.3 Long-Term Debt 1,568.7 (12.0) 1,556.7 Total Debt $1,606.6 $(12.6) $1,594.0 (a) Consisted of long-term debt due within one year and notes payable. March 31, 2016 Principal Unamortized Debt Issuance Costs Total Millions Short-Term Debt (a) $16.1 $(0.6) $15.5 Long-Term Debt 1,563.0 (11.7) 1,551.3 Total Debt $1,579.1 $(12.3) $1,566.8 (a) Consisted of long-term debt due within one year and notes payable. |
Income Tax Expense (Tables)
Income Tax Expense (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Tax Expense [Table Text Block] | Three Months Ended March 31, 2016 2015 Millions Current Tax Expense (a) Federal — — State $0.1 $0.1 Total Current Tax Expense $0.1 $0.1 Deferred Tax Expense (Benefit) Federal $4.6 $4.8 State 4.8 1.5 Investment Tax Credit Amortization (0.2 ) (0.2 ) Total Deferred Tax Expense $9.2 $6.1 Total Income Tax Expense $9.3 $6.2 (a) For the three months ended March 31, 2016 and 2015, the federal and state current tax expense was minimal due to NOLs which resulted from the bonus depreciation provisions of the Protecting Americans from Tax Hikes Act of 2015, the Tax Increase Prevention Act of 2014 and the American Taxpayer Relief Act of 2012. |
Reconciliation of Taxes from Federal Statutory Rate to Total Income Tax Expense [Table Text Block] | Reconciliation of Taxes from Federal Statutory Rate to Total Income Tax Expense Three Months Ended March 31 2016 2015 Millions Income Before Non-Controlling Interest and Income Taxes $55.7 $46.3 Statutory Federal Income Tax Rate 35 % 35 % Income Taxes Computed at 35 percent Statutory Federal Rate 19.5 16.2 Increase (Decrease) in Tax Due to: State Income Taxes – Net of Federal Income Tax Benefit 3.2 1.0 Production Tax Credits (13.9 ) (12.8 ) Regulatory Differences for Utility Plant (0.1 ) (0.4 ) Other 0.6 2.2 Total Income Tax Expense $9.3 $6.2 |
Earnings Per Share and Common33
Earnings Per Share and Common Stock (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic and Diluted Earnings Per Share [Table Text Block] | 2016 2015 Reconciliation of Basic and Diluted Dilutive Dilutive Earnings Per Share Basic Securities Diluted Basic Securities Diluted Millions Except Per Share Amounts Three months ended March 31, Net Income Attributable to ALLETE $45.9 $45.9 $39.9 $39.9 Average Common Shares 49.2 — 49.2 46.9 0.2 47.1 Earnings Per Share $0.93 $0.93 $0.85 $0.85 |
Pension and Other Postretirem34
Pension and Other Postretirement Benefit Plans (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Components of Net Periodic Benefit Expense (Income) [Table Text Block] | Pension Other Postretirement Components of Net Periodic Benefit Expense (Income) 2016 2015 2016 2015 Millions Three Months Ended March 31, Service Cost $2.0 $2.5 $1.0 $1.1 Interest Cost 8.1 7.5 1.9 1.8 Expected Return on Plan Assets (10.6 ) (10.2 ) (2.8 ) (2.7 ) Amortization of Prior Service Credits — — (0.7 ) (0.8 ) Amortization of Net Loss 2.4 4.5 — 0.1 Net Periodic Benefit Expense (Income) $1.9 $4.3 $(0.6) $(0.5) |
Business Segments (Tables)
Business Segments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Business Segments [Table Text Block] | Three Months Ended March 31, 2016 2015 Millions Operating Revenue Regulated Operations $252.3 $262.8 Energy Infrastructure and Related Services ALLETE Clean Energy 23.6 12.4 U.S. Water Services 32.4 15.5 Corporate and Other 25.5 29.3 Total Operating Revenue $333.8 $320.0 Net Income (Loss) Attributable to ALLETE Regulated Operations (a) $42.4 $41.0 Energy Infrastructure and Related Services ALLETE Clean Energy 6.1 2.5 U.S. Water Services (0.5 ) (0.1 ) Corporate and Other (a) (2.1 ) (3.5 ) Total Net Income Attributable to ALLETE $45.9 $39.9 (a) In 2015, an intercompany loan agreement was entered into and interest expense was allocated to certain subsidiaries which is eliminated in consolidation. Prior period segment results have been revised to conform to the current presentation as if the intercompany loan existed as of January 1, 2015. March 31, December 31, Millions Assets Regulated Operations (a) $3,822.3 $3,853.1 Energy Infrastructure and Related Services ALLETE Clean Energy (a) 498.1 501.5 U.S. Water Services 256.6 258.3 Corporate and Other 295.7 281.6 Total Assets (a) $4,872.7 $4,894.5 (a) As a result of revised accounting guidance adopted in the first quarter of 2016, we reclassified unamortized debt issuance costs from Other Non-Current Assets to Long-Term Debt on the Consolidated Balance Sheet. Prior period segment assets have been revised to conform to the current presentation. (See Note 1. Operations and Significant Accounting Policies.) |
Operations and Significant Ac36
Operations and Significant Accounting Policies (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 | |
Inventories [Abstract] | |||
Fuel | [1] | $ 56.5 | $ 58.1 |
Materials and Supplies | 49 | 49.1 | |
Raw Materials | 2.6 | 2.7 | |
Work in Progress | 0.8 | 0 | |
Finished Goods | 7.4 | 7.5 | |
Reserve for Obsolescence | (0.3) | (0.3) | |
Total Inventories | 116 | 117.1 | |
Prepayments and Other Current Assets [Abstract] | |||
Deferred Fuel Adjustment Clause | 12.4 | 10.6 | |
Restricted Cash | [2] | 11.5 | 5.6 |
Other | 17.6 | 19.5 | |
Total Prepayments and Other Current Assets | 41.5 | 35.7 | |
Other Non-Current Assets [Abstract] | |||
Restricted Cash - Non-Current | 8.1 | 8.1 | |
Other Current Liabilites [Abstract] | |||
Customer Deposits | 14 | 15.1 | |
Power Purchase Agreements | 23.6 | 23.3 | |
Other | 45.2 | 47.7 | |
Total Other Current Liabilities | 82.8 | 86.1 | |
Other Non-Current Liabilities [Abstract] | |||
Asset Retirement Obligation | 136.2 | 131.4 | |
Power Purchase Agreements | 131.9 | 138.1 | |
Contingent Consideration | [3] | 36.7 | 36.6 |
Other | 42.3 | 42.9 | |
Total Other Non-Current Liabilities | $ 347.1 | $ 349 | |
[1] | Fuel consists primarily of coal inventory at Minnesota Power. | ||
[2] | Restricted Cash includes collateral deposits required under ALLETE Clean Energy’s loan agreements and cash pledged as collateral for U.S. Water Services’ standby letters of credit. | ||
[3] | Contingent Consideration relates to the estimated fair value of the earnings-based payment resulting from the U.S. Water Services acquisition. (See Note 3. Acquisitions and Note 5. Fair Value.) |
Operations and Significant Ac37
Operations and Significant Accounting Policies - Supplemental Statement of Cash Flow Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Supplemental Cash Flow Elements [Abstract] | ||
Cash Paid During the Period for Interest – Net of Amounts Capitalized | $ 19.6 | $ 15.3 |
Cash Paid During the Period for Income Taxes | 0.1 | 0.1 |
Noncash Investing and Financing Activities [Abstract] | ||
Decrease in Accounts Payable for Capital Additions to Property, Plant and Equipment | (25.6) | (32.2) |
Capitalized Asset Retirement Costs | 3.5 | 1.2 |
AFUDC–Equity | 0.9 | 0.9 |
Contingent Consideration | $ 0 | $ 35.7 |
Operations and Significant Ac38
Operations and Significant Accounting Policies - New Accounting Standards (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Total Assets [Member] | |
Reclassifications [Line Items] | |
Reclassification Adjustment | $ (12.6) |
Total Liabilities [Member] | |
Reclassifications [Line Items] | |
Reclassification Adjustment | $ (12.6) |
Investments (Details)
Investments (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2015 | ||
Investments [Abstract] | |||
ALLETE Properties | $ 49.1 | $ 50.1 | |
Available-for-sale Securities | 17.4 | [1] | 18.5 |
Cash Equivalents | 2.5 | 2 | |
Other | 3.9 | 4 | |
Total Other Investments | 72.9 | $ 74.6 | |
Impairment of Land Inventory | 0 | ||
Available-for-sale Securities Corporate Debt Securities, Maturities [Abstract] | |||
One Year or Less | 0 | ||
One Year to Less Than Three Years | 1.6 | ||
Three Years to Less Than Five Years | 4.1 | ||
Five or More Years | $ 4.7 | ||
[1] | As of March 31, 2016, the aggregate amount of available-for-sale corporate debt securities maturing in one year or less was zero, in one year to less than three years was $1.6 million, in three years to less than five years was $4.1 million, and in five or more years was $4.7 million. |
Acquisitions (Details)
Acquisitions (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Business Combinations [Abstract] | |||
Reason for Business Acquisitions | The acquisitions below are consistent with ALLETE’s stated strategy of investing in energy infrastructure and related services businesses to complement its core regulated utility, balance exposure to business cycles and changing demand, and provide potential long-term earnings growth. | The acquisitions below are consistent with ALLETE’s stated strategy of investing in energy infrastructure and related services businesses to complement its core regulated utility, balance exposure to business cycles and changing demand, and provide potential long-term earnings growth. | |
Pro Forma Impact of Business Acquisitions | not significant | not significant |
Acquisitions - U.S. Water Servi
Acquisitions - U.S. Water Services (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 11 Months Ended | ||
Feb. 28, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | ||
Assets Acquired [Abstract] | |||||
Goodwill | $ 130.6 | $ 130.6 | |||
Liabilities Assumed [Abstract] | |||||
Restricted Cash - Current | [1] | $ 11.5 | $ 5.6 | ||
U.S. Water Services [Member] | |||||
Business Acquisition [Line Items] | |||||
Date of Acquisition | February 2,015 | ||||
Name of Acquired Entity | U.S. Water Services | ||||
Total Consideration | $ 202.3 | ||||
Payments to Acquire Business | 166.6 | ||||
Contingent Consideration | $ 35.7 | ||||
Percent of Results of Operations Reflected in Income Statement | 100.00% | 100.00% | |||
Percentage of Voting Interests Acquired | 100.00% | ||||
Assets Acquired [Abstract] | |||||
Cash and Cash Equivalents | $ 0.9 | ||||
Accounts Receivable | 16.8 | ||||
Inventories | [2] | 13.4 | |||
Other Current Assets | [3] | 5.3 | |||
Property, Plant and Equipment | 10.6 | ||||
Intangible Assets | [4] | 83 | |||
Goodwill | [5] | 122.9 | |||
Other Non-Current Assets | 0.2 | ||||
Total Assets Acquired | 253.1 | ||||
Liabilities Assumed [Abstract] | |||||
Current Liabilities | 19.2 | ||||
Non-Current Liabilities | 31.6 | ||||
Total Liabilities Assumed | 50.8 | ||||
Net Identifiable Assets Acquired | 202.3 | ||||
Fair Value Adjustments for Work in Process and Finished Goods | 2.7 | ||||
Fair Value of Sales Backlog | 1.6 | ||||
Restricted Cash - Current | 2.1 | ||||
Tax Deductible Goodwill | $ 2.9 | ||||
Acquisition Related Costs | $ 3 | ||||
[1] | Restricted Cash includes collateral deposits required under ALLETE Clean Energy’s loan agreements and cash pledged as collateral for U.S. Water Services’ standby letters of credit. | ||||
[2] | Included in Inventories was $2.7 million of fair value adjustments relating to work in progress and finished goods inventories which were recognized as Cost of Sales within one year from the acquisition date. | ||||
[3] | Included in Other Current Assets was $1.6 million relating to the fair value of sales backlog. Sales backlog was recognized as Cost of Sales within one year from the acquisition date. Also included in Other Current Assets was restricted cash of $2.1 million relating to cash pledged as collateral for standby letters of credit. | ||||
[4] | Intangible Assets include customer relationships, patents, non-compete agreements, and trademarks and trade names. (See Note 4. Goodwill and Intangible Assets.) | ||||
[5] | For tax purposes, the purchase price allocation resulted in $2.9 million of deductible goodwill. |
Acquisitions - Chanarambie_Viki
Acquisitions - Chanarambie/Viking (Details) $ in Millions | 1 Months Ended | 3 Months Ended | |||
Apr. 30, 2015USD ($)MW | Jun. 30, 2015USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | ||
Liabilities Assumed [Abstract] | |||||
Power Purchase Agreements - Non-Current Liability | $ 131.9 | $ 138.1 | |||
Goodwill | 130.6 | 130.6 | |||
Power Purchase Agreements - Current Liability | $ 23.6 | $ 23.3 | |||
Chanarambie/Viking [Member] | |||||
Business Acquisition [Line Items] | |||||
Date of Acquisition | April 2,015 | ||||
Percentage of Voting Interests Acquired | 100.00% | ||||
Name of Acquired Entity | Chanarambie/Viking | ||||
Payments to Acquire Business | $ 48 | ||||
Generating Capacity (MW) | MW | 97.5 | ||||
Assets Acquired [Abstract] | |||||
Current Assets | $ 4.8 | ||||
Property, Plant and Equipment | 103 | ||||
Other Non-Current Assets | [1] | 1 | |||
Total Assets Acquired | 108.8 | ||||
Liabilities Assumed [Abstract] | |||||
Current Liabilities | [2] | 6.7 | |||
Power Purchase Agreements - Non-Current Liability | 49 | ||||
Non-Current Liabilities | 5.1 | ||||
Total Liabilities Assumed | 60.8 | ||||
Net Identifiable Assets Acquired | 48 | ||||
Goodwill | 0.3 | ||||
Tax Deductible Goodwill | 0 | ||||
Power Purchase Agreements - Current Liability | $ 5.9 | ||||
Acquisition Related Costs | $ 0.2 | ||||
Chanarambie/Viking [Member] | Chanarambie/Viking PPA (expires 2018) [Member] | |||||
Business Acquisition [Line Items] | |||||
Generating Capacity (MW) | MW | 12 | ||||
Chanarambie/Viking [Member] | Chanarambie/Viking PPA (expires 2023) [Member] | |||||
Business Acquisition [Line Items] | |||||
Generating Capacity (MW) | MW | 85.5 | ||||
[1] | Included in Other Non-Current Assets was $0.3 million of goodwill. For tax purposes, the purchase price allocation resulted in no allocation to goodwill. | ||||
[2] | Current Liabilities included $5.9 million related to the current portion of Power Purchase Agreements. |
Acquisitions - Armenia Mountain
Acquisitions - Armenia Mountain (Details) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Jul. 31, 2015USD ($)MW | Dec. 31, 2015USD ($) | Mar. 31, 2016USD ($) | ||
Liabilities Assumed [Abstract] | ||||
Restricted Cash - Current | [1] | $ 5.6 | $ 11.5 | |
Restricted Cash - Non-Current | 8.1 | $ 8.1 | ||
Armenia Mountain [Member] | ||||
Business Acquisition [Line Items] | ||||
Date of Acquisition | July 2,015 | |||
Percentage of Voting Interests Acquired | 100.00% | |||
Name of Acquired Entity | Armenia Mountain | |||
Payments to Acquire Business | $ 111.1 | |||
Assets Acquired [Abstract] | ||||
Current Assets | [2] | 9 | ||
Property, Plant and Equipment | 156.2 | |||
Other Non-Current Assets | [3] | 14.4 | ||
Total Assets Acquired | 179.6 | |||
Liabilities Assumed [Abstract] | ||||
Current Liabilities | 2.9 | |||
Long-Term Debt Due Within One Year | 5.9 | |||
Long-Term Debt | 55 | |||
Other Non-Current Liabilities | 4.7 | |||
Total Liabilities Assumed | 68.5 | |||
Net Identifiable Assets Acquired | 111.1 | |||
Power Purchase Agreements - Current Asset | 1 | |||
Restricted Cash - Current | 6 | |||
Power Purchase Agreements - Non-Current Asset | 8.2 | |||
Restricted Cash - Non-Current | $ 6.1 | |||
Goodwill | immaterial | |||
Tax Deductible Goodwill | $ 0 | |||
Acquisition Related Costs | $ 1.6 | |||
Armenia Mountain [Member] | Armenia Mountain PPAs (expire 2024) [Member] | ||||
Business Acquisition [Line Items] | ||||
Generating Capacity (MW) | MW | 100.5 | |||
[1] | Restricted Cash includes collateral deposits required under ALLETE Clean Energy’s loan agreements and cash pledged as collateral for U.S. Water Services’ standby letters of credit. | |||
[2] | Included in Current Assets was $1.0 million related to the current portion of Power Purchase Agreements and $6.0 million of restricted cash related to collateral deposits required under its loan agreement. | |||
[3] | Included in Other Non-Current Assets was $8.2 million related to the non-current portion of Power Purchase Agreements, $6.1 million of restricted cash related to collateral deposits required under its loan agreements, and an immaterial amount of goodwill. For tax purposes, the purchase price allocation resulted in no allocation to goodwill. |
Acquisitions - A and W Technolo
Acquisitions - A and W Technologies (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | ||
Nov. 30, 2015 | Dec. 31, 2015 | Mar. 31, 2016 | ||
Assets Acquired [Abstract] | ||||
Goodwill | $ 130.6 | $ 130.6 | ||
A and W Technologies [Member] | ||||
Business Acquisition [Line Items] | ||||
Date of Acquisition | November 2015 | |||
Percentage of Voting Interests Acquired | 100.00% | |||
Name of Acquired Entity | A and W Technologies, Inc. | |||
Total Consideration | $ 9.3 | |||
Payments to Acquire Business | 8.3 | |||
Payment Due in April 2017 | 1 | |||
Assets Acquired [Abstract] | ||||
Current Assets | 1 | |||
Property, Plant and Equipment | 0.1 | |||
Intangible Assets | [1] | 3.9 | ||
Goodwill | [2] | 4.4 | ||
Total Assets Acquired | 9.4 | |||
Liabilities Assumed [Abstract] | ||||
Current Liabilities | 0.1 | |||
Total Liabilities Assumed | 0.1 | |||
Net Identifiable Assets Acquired | 9.3 | |||
Tax Deductible Goodwill | $ 4.4 | |||
Acquisition-Related Costs | immaterial | |||
[1] | Intangible Assets include customer relationships and non-compete agreements. (See Note 4. Goodwill and Intangible Assets.) | |||
[2] | For tax purposes, the purchase price allocation resulted in $4.4 million of deductible goodwill. |
Goodwill and Intangible Asset45
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 130.6 | $ 130.6 |
Changes to Goodwill | $ 0 |
Goodwill and Intangible Asset46
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2015 | ||
Definite-Lived Intangible Assets [Roll Forward] | |||
Beginning Balance | $ 68 | ||
Amortization | (1.3) | ||
Ending Balance | 66.7 | ||
Intangible Assets [Abstract] | |||
Total Intangible Assets | 83.3 | $ 84.6 | |
Total Intangible Assets, Amortization | (1.3) | ||
Accumulated Amortization | 5.4 | $ 4.1 | |
Estimated Annual Amortization Expense for Definite-Lived Intangible Assets [Abstract] | |||
Remainder of 2016 | 3.8 | ||
2,017 | 5 | ||
2,018 | 4.7 | ||
2,019 | 4.4 | ||
2,020 | 4.2 | ||
Thereafter | $ 44.6 | ||
Weighted Average [Member] | |||
Intangible Assets [Abstract] | |||
Remaining Useful Life (Years) | 20 years | ||
Trademarks and Trade Names [Member] | |||
Indefinite-Lived Intangible Assets [Roll Forward] | |||
Beginning Balance | $ 16.6 | ||
Ending Balance | 16.6 | ||
Customer Relationships [Member] | |||
Definite-Lived Intangible Assets [Roll Forward] | |||
Beginning Balance | 60.8 | ||
Amortization | (1.1) | ||
Ending Balance | 59.7 | ||
Intangible Assets [Abstract] | |||
Total Intangible Assets, Amortization | $ (1.1) | ||
Remaining Useful Life (Years) | 22 years | ||
Developed Technology and Other [Member] | |||
Definite-Lived Intangible Assets [Roll Forward] | |||
Beginning Balance | [1] | $ 7.2 | |
Amortization | [1] | (0.2) | |
Ending Balance | [1] | 7 | |
Intangible Assets [Abstract] | |||
Total Intangible Assets, Amortization | [1] | $ (0.2) | |
Developed Technology and Other [Member] | Minimum [Member] | |||
Intangible Assets [Abstract] | |||
Remaining Useful Life (Years) | 3 years | ||
Developed Technology and Other [Member] | Maximum [Member] | |||
Intangible Assets [Abstract] | |||
Remaining Useful Life (Years) | 13 years | ||
Developed Technology and Other [Member] | Weighted Average [Member] | |||
Intangible Assets [Abstract] | |||
Remaining Useful Life (Years) | 9 years | ||
[1] | Developed Technology and Other includes patents, non-compete agreements, and land easements. |
Fair Value - Recurring Fair Val
Fair Value - Recurring Fair Value Measures (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2016 | Dec. 31, 2015 | ||||
Investments [Abstract] | |||||
Cash Equivalents | $ 2.5 | $ 2 | |||
Liabilities [Abstract] | |||||
U.S. Water Services Contingent Consideration | [1] | 36.7 | 36.6 | ||
Recurring Fair Value Measurements [Member] | |||||
Investments [Abstract] | |||||
Available-for-sale – Equity Securities | 7 | [2] | 7.6 | [3] | |
Available-for-sale – Corporate Debt Securities | 10.4 | [2] | 10.9 | [3] | |
Cash Equivalents | 2.5 | [2] | 2 | [3] | |
Total Fair Value of Assets | 19.9 | 20.5 | |||
Liabilities [Abstract] | |||||
Deferred Compensation | 14.9 | [4] | 16.1 | [5] | |
U.S. Water Services Contingent Consideration | 36.7 | [4] | 36.6 | [5] | |
Total Fair Value of Liabilities | 51.6 | 52.7 | |||
Total Net Fair Value of Assets (Liabilities) | (31.7) | (32.2) | |||
Fair Value Hierarchy Transfers, All Levels | 0 | 0 | |||
Recurring Fair Value Measurements [Member] | Level 1 [Member] | |||||
Investments [Abstract] | |||||
Available-for-sale – Equity Securities | 7 | [2] | 7.6 | [3] | |
Available-for-sale – Corporate Debt Securities | 0 | [2] | 0 | [3] | |
Cash Equivalents | 2.5 | [2] | 2 | [3] | |
Total Fair Value of Assets | 9.5 | 9.6 | |||
Liabilities [Abstract] | |||||
Deferred Compensation | 0 | [4] | 0 | [5] | |
U.S. Water Services Contingent Consideration | 0 | [4] | 0 | [5] | |
Total Fair Value of Liabilities | 0 | 0 | |||
Total Net Fair Value of Assets (Liabilities) | 9.5 | 9.6 | |||
Recurring Fair Value Measurements [Member] | Level 2 [Member] | |||||
Investments [Abstract] | |||||
Available-for-sale – Equity Securities | 0 | [2] | 0 | [3] | |
Available-for-sale – Corporate Debt Securities | 10.4 | [2] | 10.9 | [3] | |
Cash Equivalents | 0 | [2] | 0 | [3] | |
Total Fair Value of Assets | 10.4 | 10.9 | |||
Liabilities [Abstract] | |||||
Deferred Compensation | 14.9 | [4] | 16.1 | [5] | |
U.S. Water Services Contingent Consideration | 0 | [4] | 0 | [5] | |
Total Fair Value of Liabilities | 14.9 | 16.1 | |||
Total Net Fair Value of Assets (Liabilities) | (4.5) | (5.2) | |||
Recurring Fair Value Measurements [Member] | Level 3 [Member] | |||||
Investments [Abstract] | |||||
Available-for-sale – Equity Securities | 0 | [2] | 0 | [3] | |
Available-for-sale – Corporate Debt Securities | 0 | [2] | 0 | [3] | |
Cash Equivalents | 0 | [2] | 0 | [3] | |
Total Fair Value of Assets | 0 | 0 | |||
Liabilities [Abstract] | |||||
Deferred Compensation | 0 | [4] | 0 | [5] | |
U.S. Water Services Contingent Consideration | 36.7 | [4] | 36.6 | [5] | |
Total Fair Value of Liabilities | 36.7 | 36.6 | |||
Total Net Fair Value of Assets (Liabilities) | $ (36.7) | $ (36.6) | |||
[1] | Contingent Consideration relates to the estimated fair value of the earnings-based payment resulting from the U.S. Water Services acquisition. (See Note 3. Acquisitions and Note 5. Fair Value.) | ||||
[2] | Included in Other Investments on the Consolidated Balance Sheet. | ||||
[3] | Included in Other Investments on the Consolidated Balance Sheet. | ||||
[4] | Included in Other Non-Current Liabilities on the Consolidated Balance Sheet. | ||||
[5] | Included in Other Non-Current Liabilities on the Consolidated Balance Sheet. |
Fair Value - Financial Instrume
Fair Value - Financial Instruments (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Fair Value of Financial Statements [Line Items] | ||
Long-Term Debt, Including Current Portion - Carrying Amount | $ 1,578.4 | $ 1,605 |
Level 2 [Member] | ||
Fair Value of Financial Statements [Line Items] | ||
Long-Term Debt, Including Current Portion - Fair Value | $ 1,708 | $ 1,676 |
Fair Value - Assets and Liabili
Fair Value - Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Nonrecurring Fair Value Measurements [Member] | ||
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis [Abstract] | ||
Indicators of Impairment | $ 0 | $ 0 |
Regulatory Matters - Utility Ra
Regulatory Matters - Utility Rates (Details) $ in Millions | Jan. 01, 2013 | Jun. 01, 2011 | Mar. 31, 2016USD ($)CustomersYearsMW | Mar. 31, 2015USD ($) |
Minnesota Power [Member] | Bison Wind Energy Center [Member] | ||||
Regulatory Matters [Line Items] | ||||
Generating Capacity (MW) | MW | 497 | |||
PSCW [Member] | 2012 Wisconsin Rate Case [Member] | SWL&P [Member] | Retail [Member] | ||||
Regulatory Matters [Line Items] | ||||
Approved Return on Common Equity | 10.90% | |||
Electric Rates [Member] | MPUC [Member] | 2010 Minnesota Rate Case [Member] | Minnesota Power [Member] | Retail [Member] | ||||
Regulatory Matters [Line Items] | ||||
Approved Return on Common Equity | 10.38% | |||
Approved Equity Ratio | 54.29% | |||
Electric Rates [Member] | MPUC [Member] | Minnesota Cost Recovery Riders [Member] | Minnesota Power [Member] | Retail [Member] | ||||
Regulatory Matters [Line Items] | ||||
Revenue from Cost Recovery Riders | $ | $ 25.4 | $ 20.7 | ||
Electric Rates [Member] | MPUC [Member] | Renewable Cost Recovery Rider [Member] | Minnesota Power [Member] | Retail [Member] | ||||
Regulatory Matters [Line Items] | ||||
North Dakota Investment Tax Credits | $ | 8 | |||
Electric Rates [Member] | MPUC [Member] | Annual Automatic Adjustment of Charges [Member] | Minnesota Power [Member] | Retail [Member] | ||||
Regulatory Matters [Line Items] | ||||
Retail Fuel Cost Recovery Collected but Subject to Refund | $ | $ 350 | |||
Electric Rates [Member] | FERC [Member] | FERC-Approved Wholesale Rates [Member] | Minnesota Power [Member] | Municipal Customers [Member] | ||||
Regulatory Matters [Line Items] | ||||
Number of Customers | Customers | 16 | |||
Length of Notice Required to Terminate Contract (Years) | Years | 3 | |||
Electric Rates [Member] | FERC [Member] | FERC-Approved Wholesale Rates [Member] | Minnesota Power [Member] | Municipal Customers [Member] | Wholesale Electric Contracts (Expire December 2024) [Member] | ||||
Regulatory Matters [Line Items] | ||||
Number of Customers | Customers | 14 | |||
Electric Rates [Member] | FERC [Member] | FERC-Approved Wholesale Rates [Member] | Minnesota Power [Member] | Municipal Customers [Member] | Wholesale Electric Contracts (Expire December 2024) [Member] | Maximum [Member] | ||||
Regulatory Matters [Line Items] | ||||
Change in Annual Capacity Charge Per Contract - Percentage | 2.00% | |||
Electric Rates [Member] | FERC [Member] | FERC-Approved Wholesale Rates [Member] | Minnesota Power [Member] | Municipal Customers [Member] | Wholesale Electric Contracts (Expire December 2024) [Member] | Minimum [Member] | ||||
Regulatory Matters [Line Items] | ||||
Change in Annual Capacity Charge Per Contract - Percentage | (1.00%) | |||
Electric Rates [Member] | FERC [Member] | FERC-Approved Wholesale Rates [Member] | Minnesota Power [Member] | Municipal Customers [Member] | Wholesale Electric Contract (Termination Effective June 2019) [Member] | ||||
Regulatory Matters [Line Items] | ||||
Number of Customers | Customers | 1 | |||
Average Monthly Demand (MW) | MW | 29 |
Regulatory Matters - Integrated
Regulatory Matters - Integrated Resource Plan (Details) - MPUC [Member] - Integrated Resource Plan [Member] - Natural Gas-Fired [Member] - Minnesota Power [Member] | Mar. 31, 2016MW |
Minimum [Member] | |
Regulatory Matters [Line Items] | |
Generating Capacity (MW) | 200 |
Maximum [Member] | |
Regulatory Matters [Line Items] | |
Generating Capacity (MW) | 300 |
Regulatory Matters - Great Nort
Regulatory Matters - Great Northern Transmission Line (GNTL) (Details) - Great Northern Transmission Line [Member] | Mar. 31, 2016kVMiles |
Regulatory Matters [Line Items] | |
Transmission Line Length (Miles) | Miles | 220 |
Transmission Line Capacity (kV) | kV | 500 |
MPUC [Member] | Great Northern Transmission Line Route Permit [Member] | Minnesota Power [Member] | |
Regulatory Matters [Line Items] | |
Transmission Line Length (Miles) | Miles | 220 |
Transmission Line Capacity (kV) | kV | 500 |
Regulatory Matters - MISO Retur
Regulatory Matters - MISO Return on Equity Complaints (Details) - FERC [Member] | Mar. 31, 2016 |
Return on Equity Complaint 1 [Member] | |
Loss Contingencies [Line Items] | |
Proposed Return on Common Equity | 9.15% |
Return on Equity Complaint 2 [Member] | |
Loss Contingencies [Line Items] | |
Proposed Return on Common Equity | 8.67% |
Return on Equity Complaints [Member] | |
Loss Contingencies [Line Items] | |
Proposed Return on Common Equity | 10.32% |
Regulatory Matters - Minnesota
Regulatory Matters - Minnesota Solar Energy Standard (Details) - MPUC [Member] | Mar. 31, 2016MW |
Regulatory Matters [Line Items] | |
Solar Energy Standard Mandate - Overall Mandate Percentage | 1.50% |
Solar Energy Standard Mandate - Small Scale Solar Mandate Percentage | 10.00% |
Maximum [Member] | |
Regulatory Matters [Line Items] | |
Solar Energy Standard Mandate - Qualifying Capacity for Small Scale Solar Mandate (MW) | 0.02 |
Minnesota Solar Energy Standard [Member] | Minnesota Power [Member] | |
Regulatory Matters [Line Items] | |
Number of Projects | 2 |
Solar Energy Standard Mandate - Percentage of Overall Mandate Expected to be Met with Current Filings or Projects | 33.00% |
Solar Energy Standard Mandate - Percentage of Small Scale Solar Mandate Expected to be Met with Current Filings or Projects | 25.00% |
Minnesota Solar Energy Standard - Camp Ripley Project [Member] | Minnesota Power [Member] | |
Regulatory Matters [Line Items] | |
Generating Capacity (MW) | 10 |
Minnesota Solar Energy Standard - Community Solar Garden Project [Member] | Minnesota Power [Member] | |
Regulatory Matters [Line Items] | |
Generating Capacity (MW) | 1 |
Regulatory Matters - Regulatory
Regulatory Matters - Regulatory Assets and Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2015 | ||
Regulatory Assets and Liabilities [Line Items] | |||
Regulatory Assets and Liabilities Currently Earning a Return | No regulatory assets or liabilities are currently earning a return. | ||
Current Regulatory Assets | $ 12.4 | $ 10.6 | |
Non-Current Regulatory Assets | 367.1 | 372 | |
Total Regulatory Assets | 379.5 | 382.6 | |
Non-Current Regulatory Liabilities | 102.2 | 105 | |
Wholesale and Retail Contra AFUDC [Member] | |||
Regulatory Assets and Liabilities [Line Items] | |||
Non-Current Regulatory Liabilities | [1] | 57.1 | 58 |
Plant Removal Obligations [Member] | |||
Regulatory Assets and Liabilities [Line Items] | |||
Non-Current Regulatory Liabilities | 20.6 | 22.1 | |
Income Taxes [Member] | |||
Regulatory Assets and Liabilities [Line Items] | |||
Non-Current Regulatory Liabilities | [2] | 5.7 | 6.1 |
Defined Benefit Pension and Other Postretirement Benefit Plans [Member] | |||
Regulatory Assets and Liabilities [Line Items] | |||
Non-Current Regulatory Liabilities | [3] | 0.4 | 0.9 |
Deferred Fuel Adjustment Clause [Member] | |||
Regulatory Assets and Liabilities [Line Items] | |||
Current Regulatory Assets | [4] | 12.4 | 10.6 |
Defined Benefit Pension and Other Postretirement Benefit Plans [Member] | |||
Regulatory Assets and Liabilities [Line Items] | |||
Non-Current Regulatory Assets | [3] | 217 | 219.3 |
Income Taxes [Member] | |||
Regulatory Assets and Liabilities [Line Items] | |||
Non-Current Regulatory Assets | [2] | 64.4 | 64.2 |
Cost Recovery Riders [Member] | |||
Regulatory Assets and Liabilities [Line Items] | |||
Non-Current Regulatory Assets | [5] | 54.3 | 58 |
Asset Retirement Obligations [Member] | |||
Regulatory Assets and Liabilities [Line Items] | |||
Non-Current Regulatory Assets | [6] | 22.5 | 21.6 |
PPACA Income Tax Deferral [Member] | |||
Regulatory Assets and Liabilities [Line Items] | |||
Non-Current Regulatory Assets | 5 | 5 | |
Other | |||
Regulatory Assets and Liabilities [Line Items] | |||
Non-Current Regulatory Assets | 3.9 | 3.9 | |
Non-Current Regulatory Liabilities | $ 18.4 | $ 17.9 | |
[1] | Wholesale and Retail Contra AFUDC represents the regulatory offset to AFUDC Equity and Debt recorded during the construction period of our cost recovery rider projects prior to placing the projects in service. The regulatory liability will decrease over the remaining depreciable life of the related asset. | ||
[2] | These assets and liabilities are offsets to deferred income taxes recognized on certain regulatory temporary differences, which will reverse over the remaining lives of those temporary differences. | ||
[3] | Defined benefit pension and other postretirement items included in our Regulated Operations, which are otherwise required to be recognized in accumulated other comprehensive income as actuarial gains and losses as well as prior service costs and credits, are recognized as regulatory assets or regulatory liabilities on the Consolidated Balance Sheet. The asset or liability will decrease as the deferred items are amortized and recognized as components of net periodic benefit cost. (See Note 12. Pension and Other Postretirement Benefit Plans.) | ||
[4] | Current regulatory assets are included in Prepayments and Other on the Consolidated Balance Sheet. | ||
[5] | The cost recovery rider regulatory assets are revenues not yet collected from our customers primarily due to capital expenditures related to the Bison Wind Energy Center, investment in CapX2020 projects, and the Boswell Unit 4 environmental upgrade and are recognized in accordance with the accounting standards for alternative revenue programs. The cost recovery rider regulatory assets as of March 31, 2016, will be recovered over the next two years. | ||
[6] | Asset retirement obligations will accrete and be amortized over the lives of the related property with asset retirement obligations. |
Investment in ATC (Details)
Investment in ATC (Details) - USD ($) $ in Millions | Apr. 29, 2016 | Mar. 31, 2016 | Mar. 31, 2015 |
Investment in ATC [Line Items] | |||
Cash Investments | $ 1.2 | $ 0.4 | |
ALLETE's Investment in ATC [Roll Forward] | |||
Equity Investment Beginning Balance | 124.5 | ||
Cash Investments | 1.2 | 0.4 | |
Equity Earnings in ATC | 4.8 | $ 3.9 | |
Equity Investment Ending Balance | $ 128.6 | ||
ATC [Member] | |||
Investment in ATC [Line Items] | |||
Ownership Percentage | 8.00% | ||
Cash Investments | $ 1.2 | ||
Expected Additional Investment in 2016 | 4.6 | ||
ALLETE's Investment in ATC [Roll Forward] | |||
Equity Investment Beginning Balance | 124.5 | ||
Cash Investments | 1.2 | ||
Equity Earnings in ATC | 4.8 | ||
Distributed ATC Earnings | (1.9) | ||
Equity Investment Ending Balance | $ 128.6 | ||
ATC [Member] | Subsequent Event [Member] | |||
Investment in ATC [Line Items] | |||
Cash Investments | $ 0.4 | ||
ALLETE's Investment in ATC [Roll Forward] | |||
Cash Investments | $ 0.4 |
Short-Term and Long-Term Debt (
Short-Term and Long-Term Debt (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2016 | Dec. 31, 2015 | |||
Debt Disclosure [Abstract] | ||||
Short-Term Debt - Principal | $ 16,100,000 | [1] | $ 37,900,000 | [2] |
Short-Term Debt - Unamortized Debt Issuance Costs | (600,000) | [1] | (600,000) | [2] |
Short-Term Debt - Total | 15,500,000 | [1] | 37,300,000 | [2] |
Long-term Debt - Principal | 1,563,000,000 | 1,568,700,000 | ||
Long-Term Debt - Unamortized Debt Issuance Costs | (11,700,000) | (12,000,000) | ||
Long-Term Debt - Total | 1,551,300,000 | 1,556,700,000 | ||
Total Debt - Principal | 1,579,100,000 | 1,606,600,000 | ||
Total Debt - Unamortized Debt Issuance Costs | (12,300,000) | (12,600,000) | ||
Total Debt - Total | 1,566,800,000 | $ 1,594,000,000 | ||
Long-term Debt Issued | $ 0 | |||
[1] | Consisted of long-term debt due within one year and notes payable. | |||
[2] | Consisted of long-term debt due within one year and notes payable. |
Short-Term and Long-Term Debt -
Short-Term and Long-Term Debt - Financial Covenants (Details) | Mar. 31, 2016 |
Debt Disclosure [Abstract] | |
Required Indebtedness to Total Capitalization Ratio | 0.65 |
Actual Indebtedness to Total Capitalization Ratio | 0.46 |
Income Tax Expense (Details)
Income Tax Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | ||
Current Tax Expense [Abstract] | ||||
Federal | [1] | $ 0 | $ 0 | |
State | [1] | 0.1 | 0.1 | |
Total Current Tax Expense | 0.1 | 0.1 | ||
Deferred Tax Expense (Benefit) [Abstract] | ||||
Federal | 4.6 | 4.8 | ||
State | 4.8 | 1.5 | ||
Investment Tax Credit Amortization | (0.2) | (0.2) | ||
Total Deferred Tax Expense | 9.2 | 6.1 | ||
Total Income Tax Expense | 9.3 | 6.2 | ||
Reconciliation of Taxes from Federal Statutory Rate to Total Income Tax Expense [Abstract] | ||||
Income Before Non-Controlling Interest and Income Taxes | $ 55.7 | $ 46.3 | ||
Statutory Federal Income Tax Rate | 35.00% | 35.00% | ||
Income Taxes Computed at 35 percent Statutory Federal Rate | $ 19.5 | $ 16.2 | ||
Increase (Decrease) in Tax [Abstract] | ||||
State Income Taxes – Net of Federal Income Tax Benefit | 3.2 | 1 | ||
Production Tax Credits | (13.9) | (12.8) | ||
Regulatory Differences for Utility Plant | (0.1) | (0.4) | ||
Other | 0.6 | 2.2 | ||
Total Income Tax Expense | $ 9.3 | $ 6.2 | ||
Effective Tax Rate | 16.70% | 13.40% | ||
Uncertain Tax Positions [Abstract] | ||||
Gross Unrecognized Tax Benefits | $ 2.3 | $ 2.4 | ||
Unrecognized Tax Benefits That Would Favorably Impact Effective Income Tax Rate | $ 0.6 | |||
[1] | For the three months ended March 31, 2016 and 2015, the federal and state current tax expense was minimal due to NOLs which resulted from the bonus depreciation provisions of the Protecting Americans from Tax Hikes Act of 2015, the Tax Increase Prevention Act of 2014 and the American Taxpayer Relief Act of 2012. |
Reclassifications Out of Accu60
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Details) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) [Abstract] | ||
Reclassifications Out of Accumulated Other Comprehensive Income | not material | not material |
Earnings Per Share and Common61
Earnings Per Share and Common Stock (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Earnings Per Share [Abstract] | ||
Antidilutive Shares Excluded from Diluted Earnings Per Share Computation | 0 | 0 |
Earnings Per Share - Basic [Abstract] | ||
Net Income Attributable to ALLETE | $ 45.9 | $ 39.9 |
Average Common Shares | 49.2 | 46.9 |
Earnings Per Share | $ 0.93 | $ 0.85 |
Earnings Per Share - Diluted [Abstract] | ||
Net Income to Attributable ALLETE | $ 45.9 | $ 39.9 |
Average Common Shares | 49.2 | 47.1 |
Earnings Per Share | $ 0.93 | $ 0.85 |
Dilutive Securities (Shares) | 0 | 0.2 |
Pension and Other Postretirem62
Pension and Other Postretirement Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Pension [Member] | ||
Components of Net Periodic Benefit Expense (Income) [Abstract] | ||
Service Cost | $ 2 | $ 2.5 |
Interest Cost | 8.1 | 7.5 |
Expected Return on Plan Assets | (10.6) | (10.2) |
Amortization of Prior Service Credits | 0 | 0 |
Amortization of Net Loss | 2.4 | 4.5 |
Net Periodic Benefit Expense (Income) | 1.9 | 4.3 |
Contributions | 0 | 0 |
Estimated Future Contributions | 2 | |
Other Postretirement [Member] | ||
Components of Net Periodic Benefit Expense (Income) [Abstract] | ||
Service Cost | 1 | 1.1 |
Interest Cost | 1.9 | 1.8 |
Expected Return on Plan Assets | (2.8) | (2.7) |
Amortization of Prior Service Credits | (0.7) | (0.8) |
Amortization of Net Loss | 0 | 0.1 |
Net Periodic Benefit Expense (Income) | (0.6) | (0.5) |
Contributions | 0 | $ 0 |
Estimated Future Contributions | $ 0 |
Commitments, Guarantees and C63
Commitments, Guarantees and Contingencies - Power Purchase Agreements (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2016USD ($)MW | Mar. 31, 2015USD ($) | |
Minnkota Power Sales Agreement [Member] | Square Butte Coal-fired Unit [Member] | ||
Power Purchase Agreements [Line Items] | ||
Output Entitlement | 28.00% | 28.00% |
Square Butte PPA [Member] | ||
Power Purchase Agreements [Line Items] | ||
PPA Counterparty Debt Outstanding | $ 363.5 | |
Cost of Power Purchased | 18.5 | $ 19.2 |
Pro Rata Share of Interest Expense | $ 2.4 | $ 2.5 |
Square Butte PPA [Member] | Square Butte Coal-fired Unit [Member] | ||
Power Purchase Agreements [Line Items] | ||
Generating Capacity (MW) | MW | 455 | |
Output Entitlement | 50.00% |
Commitments, Guarantees and C64
Commitments, Guarantees and Contingencies - Coal, Rail and Shipping Contracts (Details) - Coal Supply and Transportation Agreements [Member] $ in Millions | Mar. 31, 2016USD ($) |
Coal, Rail and Shipping Contracts [Line Items] | |
Minimum Annual Payment Obligation for Remainder of 2016 | $ 24.9 |
Minimum Annual Payment Obligation in 2017 | 26.3 |
Minimum Annual Payment Obligation in 2018 | 27 |
Minimum Annual Payment Obligation in 2019 | $ 1.8 |
Commitments, Guarantees and C65
Commitments, Guarantees and Contingencies - Leasing Agreements (Details) $ in Millions | Mar. 31, 2016USD ($) |
Leasing Agreements [Line Items] | |
Minimum Lease Payments Due in 2016 | $ 14 |
Minimum Lease Payments Due in 2017 | 12.6 |
Minimum Lease Payments Due in 2018 | 11.1 |
Minimum Lease Payments Due in 2019 | 9.9 |
Minimum Lease Payments Due in 2020 | 6.9 |
Minimum Lease Payments Thereafter | 23.2 |
BNI Coal Dragline Lease [Member] | |
Leasing Agreements [Line Items] | |
Minimum Lease Payments Due in 2016 | 2.8 |
Minimum Lease Payments Due in 2017 | 2.8 |
Minimum Lease Payments Due in 2018 | 2.8 |
Minimum Lease Payments Due in 2019 | 2.8 |
Minimum Lease Payments Due in 2020 | 2.8 |
Minimum Lease Payments Thereafter | 19.6 |
Termination Fee | $ 3 |
Commitments, Guarantees and C66
Commitments, Guarantees and Contingencies - Transmission (Details) - Great Northern Transmission Line [Member] $ in Millions | Mar. 31, 2016USD ($)kVMiles |
Transmission [Line Items] | |
Transmission Line Length (Miles) | Miles | 220 |
Transmission Line Capacity (kV) | kV | 500 |
Minimum [Member] | |
Transmission [Line Items] | |
Estimated Capital Expenditures | $ 560 |
Maximum [Member] | |
Transmission [Line Items] | |
Estimated Capital Expenditures | $ 710 |
Commitments, Guarantees and C67
Commitments, Guarantees and Contingencies - Environmental Matters (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($)MW | |
Ozone NAAQS [Member] | |
Environmental Matters [Line Items] | |
Estimated Environmental Compliance Costs | $ 0 |
Minimum [Member] | Coal Combustion Residuals [Member] | |
Environmental Matters [Line Items] | |
Estimated Environmental Compliance Costs | 65 |
Maximum [Member] | Clean Water Act - Aquatic Organisms [Member] | |
Environmental Matters [Line Items] | |
Estimated Environmental Compliance Costs | 15 |
Maximum [Member] | Coal Combustion Residuals [Member] | |
Environmental Matters [Line Items] | |
Estimated Environmental Compliance Costs | $ 100 |
NOV Consent Decree [Member] | |
Environmental Matters [Line Items] | |
Additional Wind Generating Capacity (MW) | MW | 200 |
NOV Consent Decree [Member] | Minimum [Member] | |
Environmental Matters [Line Items] | |
Estimated Capital Expenditures | $ 20 |
NOV Consent Decree [Member] | Maximum [Member] | |
Environmental Matters [Line Items] | |
Estimated Capital Expenditures | $ 40 |
Commitments, Guarantees and C68
Commitments, Guarantees and Contingencies - Other Matters (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
ALLETE Clean Energy [Member] | Letters of Credit [Member] | ||
Guarantor Obligations [Line Items] | ||
Collateral | $ 12.5 | |
U.S. Water Services [Member] | Letters of Credit [Member] | ||
Guarantor Obligations [Line Items] | ||
Collateral | 0.8 | |
BNI Energy Reclamation Liability [Member] | ||
Guarantor Obligations [Line Items] | ||
Estimated Obligation | 47.5 | |
BNI Energy Reclamation Liability [Member] | Letters of Credit [Member] | ||
Guarantor Obligations [Line Items] | ||
Collateral | 0.6 | |
BNI Energy Reclamation Liability [Member] | Surety Bonds [Member] | ||
Guarantor Obligations [Line Items] | ||
Collateral | 49.9 | |
ALLETE Properties Development and Maintenance Obligations [Member] | ||
Guarantor Obligations [Line Items] | ||
Estimated Obligation | 6.3 | |
ALLETE Properties Development and Maintenance Obligations [Member] | Surety Bonds and Letters of Credit [Member] | ||
Guarantor Obligations [Line Items] | ||
Collateral | $ 10.3 | |
Town Center Community Development District Obligations [Member] | ||
Guarantor Obligations [Line Items] | ||
Ownership Percentage of Benefited Property | 72.00% | 72.00% |
Annual Assessment | $ 1.4 | |
Palm Coast Park Community Development District Obligations [Member] | ||
Guarantor Obligations [Line Items] | ||
Ownership Percentage of Benefited Property | 92.00% | 92.00% |
Annual Assessment | $ 2.1 |
Business Segments (Details)
Business Segments (Details) $ in Millions | 3 Months Ended | |||
Mar. 31, 2016USD ($)a | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | ||
Business Segments [Line Items] | ||||
Description of Effect on Previously Reported Segment Information for Change in Composition of Reportable Segments | During the third quarter of 2015, management updated our reportable segment presentation to reflect the manner in which we operate, assess, and allocate resources after our recent acquisitions. We now present three reportable segments, Regulated Operations, ALLETE Clean Energy and U.S. Water Services. Prior period amounts have been revised to conform with the current business segment presentation. | |||
Number of Reportable Segments | 3 | |||
Operating Revenue | $ 333.8 | $ 320 | ||
Net Income (Loss) Attributable to ALLETE | 45.9 | 39.9 | ||
Assets | [1] | $ 4,872.7 | $ 4,894.5 | |
Regulated Operations [Member] [Member] | ||||
Business Segments [Line Items] | ||||
Number of Operating Segments | 3 | |||
Operating Revenue | $ 252.3 | 262.8 | ||
Net Income (Loss) Attributable to ALLETE | [2] | 42.4 | 41 | |
Assets | [1] | 3,822.3 | 3,853.1 | |
ALLETE Clean Energy [Member] | ||||
Business Segments [Line Items] | ||||
Operating Revenue | 23.6 | 12.4 | ||
Net Income (Loss) Attributable to ALLETE | 6.1 | 2.5 | ||
Assets | [1] | 498.1 | 501.5 | |
U.S. Water Services [Member] | ||||
Business Segments [Line Items] | ||||
Operating Revenue | 32.4 | 15.5 | ||
Net Income (Loss) Attributable to ALLETE | (0.5) | (0.1) | ||
Assets | $ 256.6 | 258.3 | ||
Corporate and Other [Member] | ||||
Business Segments [Line Items] | ||||
Number of Operating Segments | 2 | |||
Land in Minnesota (Acres) | a | 5,000 | |||
Operating Revenue | $ 25.5 | 29.3 | ||
Net Income (Loss) Attributable to ALLETE | [2] | (2.1) | $ (3.5) | |
Assets | $ 295.7 | $ 281.6 | ||
[1] | As a result of revised accounting guidance adopted in the first quarter of 2016, we reclassified unamortized debt issuance costs from Other Non-Current Assets to Long-Term Debt on the Consolidated Balance Sheet. Prior period segment assets have been revised to conform to the current presentation. (See Note 1. Operations and Significant Accounting Policies.) | |||
[2] | In 2015, an intercompany loan agreement was entered into and interest expense was allocated to certain subsidiaries which is eliminated in consolidation. Prior period segment results have been revised to conform to the current presentation as if the intercompany loan existed as of January 1, 2015. |