Cover
Cover | 9 Months Ended |
Sep. 30, 2023 shares | |
Cover [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Sep. 30, 2023 |
Document Transition Report | false |
Entity File Number | 1-3548 |
Entity Registrant Name | ALLETE, Inc. |
State of Incorporation | MN |
Entity Tax Identification Number | 41-0418150 |
Entity Address, Address Line One | 30 West Superior Street |
Entity Address, City or Town | Duluth |
Entity Address, State or Province | MN |
Entity Address, Postal Zip Code | 55802-2093 |
City Area Code | 218 |
Local Phone Number | 279-5000 |
Title of 12(b) Security | Common Stock, without par value |
Trading Symbol | ALE |
Name of Exchange | NYSE |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 57,477,405 |
Entity Central Index Key | 0000066756 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2023 |
Document Fiscal Period Focus | Q3 |
Amendment Flag | false |
Consolidated Balance Sheet Unau
Consolidated Balance Sheet Unaudited - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Current Assets | ||
Cash and Cash Equivalents | $ 125.5 | $ 36.4 |
Accounts Receivable (Less Allowance of $1.5 and $1.6) | 119.6 | 137.9 |
Inventories – Net | 180.3 | 455.9 |
Prepayments and Other | 77.8 | 87.8 |
Total Current Assets | 503.2 | 718 |
Property, Plant and Equipment – Net | 4,996.8 | 5,004 |
Regulatory Assets | 443.3 | 441 |
Equity Investments | 329.7 | 322.7 |
Goodwill and Intangible Assets – Net | 155.5 | 155.6 |
Other Non-Current Assets | 216.3 | 204.3 |
Total Assets | 6,644.8 | 6,845.6 |
Current Liabilities | ||
Accounts Payable | 112.3 | 103 |
Accrued Taxes | 63.5 | 69.1 |
Accrued Interest | 16.2 | 20.5 |
Long-Term Debt Due Within One Year | 111 | 272.6 |
Other | 110.5 | 251 |
Total Current Liabilities | 413.5 | 716.2 |
Long-Term Debt | 1,686.1 | 1,648.2 |
Deferred Income Taxes | 171.2 | 158.1 |
Regulatory Liabilities | 549.3 | 526.1 |
Defined Benefit Pension and Other Postretirement Benefit Plans | 164.2 | 179.7 |
Other Non-Current Liabilities | 263.8 | 269 |
Total Liabilities | 3,248.1 | 3,497.3 |
Commitments, Guarantees and Contingencies (Note 6) | ||
Equity | ||
Common Stock Without Par Value, 80.0 Shares Authorized, 57.5 and 57.2 Shares Issued and Outstanding | 1,797.2 | 1,781.5 |
Accumulated Other Comprehensive Loss | (24.5) | (24.4) |
Retained Earnings | 1,013.9 | 934.8 |
Total ALLETE Equity | 2,786.6 | 2,691.9 |
Non-Controlling Interest in Subsidiaries | 610.1 | 656.4 |
Total Equity | 3,396.7 | 3,348.3 |
Total Liabilities and Equity | $ 6,644.8 | $ 6,845.6 |
Consolidated Balance Sheet Un_2
Consolidated Balance Sheet Unaudited Parentheticals - USD ($) shares in Millions, $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Accounts Receivable [Abstract] | ||
Accounts Receivable (Less Allowance of $1.5 and $1.6) | $ 1.5 | $ 1.6 |
Common Stock [Abstract] | ||
Common stock, shares authorized (in shares) | 80 | 80 |
Common stock, shares outstanding (in shares) | 57.5 | 57.2 |
Common stock, shares issued (in shares) | 57.5 | 57.2 |
Consolidated Statement of Incom
Consolidated Statement of Income Unaudited - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Operating Revenue | ||||
Contracts with Customers – Utility | $ 314.3 | $ 322.6 | $ 919.1 | $ 960.3 |
Contracts with Customers – Non-utility | 63.2 | 64.5 | 554.1 | 178.3 |
Other – Non-utility | 1.3 | 1.2 | 3.9 | 6.3 |
Total Operating Revenue | 378.8 | 388.3 | 1,477.1 | 1,144.9 |
Operating Expenses | ||||
Fuel, Purchased Power and Gas – Utility | 124.9 | 136.8 | 350.8 | 417.4 |
Transmission Services – Utility | 22.7 | 19.3 | 66.3 | 57.5 |
Cost of Sales – Non-utility | 33 | 38.4 | 436.7 | 96.9 |
Operating and Maintenance | 83.6 | 83.2 | 254.2 | 238.1 |
Depreciation and Amortization | 63.1 | 58.7 | 188.2 | 181.4 |
Taxes Other than Income Taxes | 15.5 | 18.5 | 43.1 | 53.1 |
Total Operating Expenses | 342.8 | 354.9 | 1,339.3 | 1,044.4 |
Operating Income | 36 | 33.4 | 137.8 | 100.5 |
Other Income (Expense) | ||||
Interest Expense | (20.5) | (18.4) | (60.9) | (55.3) |
Equity Earnings | 4.7 | 2.3 | 16.1 | 13.1 |
Other | 68.7 | 2.3 | 75.3 | 16.4 |
Total Other Income (Expense) | 52.9 | (13.8) | 30.5 | (25.8) |
Income Before Income Taxes | 88.9 | 19.6 | 168.3 | 74.7 |
Income Tax Expense (Benefit) | 19.3 | (7.2) | 20.4 | (19.4) |
Net Income | 69.6 | 26.8 | 147.9 | 94.1 |
Net Loss Attributable to Non-Controlling Interest | (16.3) | (6.9) | (47.7) | (43.5) |
Net Income Attributable to ALLETE | $ 85.9 | $ 33.7 | $ 195.6 | $ 137.6 |
Earnings Per Share [Abstract] | ||||
Basic (in shares) | 57.4 | 57.1 | 57.3 | 55.5 |
Diluted (in shares) | 57.5 | 57.2 | 57.4 | 55.6 |
Basic Earnings Per Share of Common Stock (in usd per share) | $ 1.50 | $ 0.59 | $ 3.41 | $ 2.48 |
Diluted Earnings Per Share of Common Stock (in usd per share) | $ 1.49 | $ 0.59 | $ 3.41 | $ 2.48 |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income Unaudited - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Comprehensive Income [Abstract] | ||||
Net Income | $ 69.6 | $ 26.8 | $ 147.9 | $ 94.1 |
Other Comprehensive Income (Loss) | ||||
Net of Income Tax Expense (Benefit) of $—, $—, $0.1 and $(0.2) | 0 | 0 | 0.1 | (0.4) |
Net of Income Tax Expense (Benefit) of $—, $0.1, $(0.1) and $0.2 | (0.1) | 0.1 | (0.2) | 0.4 |
Total Other Comprehensive Income (Loss) | (0.1) | 0.1 | (0.1) | 0 |
Total Comprehensive Income | 69.5 | 26.9 | 147.8 | 94.1 |
Net Loss Attributable to Non-Controlling Interest | (16.3) | (6.9) | (47.7) | (43.5) |
Total Comprehensive Income Attributable to ALLETE | $ 85.8 | $ 33.8 | $ 195.5 | $ 137.6 |
Consolidated Statement of Com_2
Consolidated Statement of Comprehensive Income Unaudited Parentheticals - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Unrealized gain (loss) on securities, income tax expense | $ 0 | $ 0 | $ 0.1 | $ (0.2) |
Defined benefit pension and other postretirement benefit plans, income tax expense | $ 0 | $ 0.1 | $ (0.1) | $ 0.2 |
Consolidated Statement of Cash
Consolidated Statement of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Operating Activities | ||
Net Income | $ 147.9 | $ 94.1 |
Adjustments to Reconcile Net Income to Cash provided by (used in) Operating Activities: | ||
AFUDC – Equity | (2.5) | (2.4) |
Income from Equity Investments – Net of Dividends | 0.6 | 3.8 |
Loss on Investments and Property, Plant and Equipment | 0.6 | 2.1 |
Depreciation Expense | 188.2 | 181.3 |
Amortization of PSAs | (3.9) | (6.3) |
Amortization of Other Intangible Assets and Other Assets | 5.3 | 6.3 |
Deferred Income Tax Benefit | 1.3 | (19.7) |
Share-Based and ESOP Compensation Expense | 4.3 | 4.2 |
Defined Benefit Pension and Postretirement Benefit | (2.5) | (2.2) |
Fuel Adjustment Clause | 53.8 | (3.5) |
Bad Debt Expense | 1.2 | 1.4 |
Provision for Interim Rate Refund | 21 | 0 |
Residential Interim Rate Adjustment | 0 | (5.9) |
Changes in Operating Assets and Liabilities | ||
Accounts Receivable | 17.2 | 3.2 |
Inventories | 275.6 | (261.4) |
Prepayments and Other | 0.6 | (7.7) |
Accounts Payable | (8) | 8 |
Other Current Liabilities | (167.9) | 63.5 |
Cash Contributions to Defined Benefit Pension Plans | (17.3) | 0 |
Changes in Regulatory and Other Non-Current Assets | 4.1 | 28 |
Changes in Regulatory and Other Non-Current Liabilities | 0.4 | (5.6) |
Cash provided by Operating Activities | 520 | 81.2 |
Investing Activities | ||
Proceeds from Sale of Available-for-sale Securities | 0.5 | 1.7 |
Payments for Purchase of Available-for-sale Securities | (0.8) | (1.7) |
Acquisition of Subsidiaries - Net of Cash & Restricted Cash Acquired | 0 | (155) |
Payments for Equity Method Investments | (6.6) | (5.1) |
Additions to Property, Plant and Equipment | (184.1) | (153.5) |
Other Investing Activities | (9.6) | 2.5 |
Cash used in Investing Activities | (200.6) | (311.1) |
Financing Activities | ||
Proceeds from Issuance of Common Stock | 11.4 | 244.4 |
Equity Issuance Costs | 0 | (8.1) |
Proceeds from Issuance of Short-Term and Long-Term Debt | 409.8 | 710.5 |
Repayments of Short-Term and Long-Term Debt | (533.4) | (761) |
Proceeds from Non-Controlling Interest in Subsidiaries – Net | 9.9 | 155.7 |
Distributions to Non-Controlling Interest | (8.5) | 0 |
Dividends on Common Stock | (116.5) | (108.6) |
Other Financing Activities | (1.1) | (2.1) |
Cash provided by (used in) Financing Activities | (228.4) | 230.8 |
Change in Cash, Cash Equivalents and Restricted Cash | 91 | 0.9 |
Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 40.2 | 47.7 |
Cash, Cash Equivalents and Restricted Cash at End of Period | $ 131.2 | $ 48.6 |
Consolidated Statement of Equit
Consolidated Statement of Equity - USD ($) $ in Millions | Total | Common Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Non-Controlling Interest in Subsidiaries |
Balance, Beginning of Period at Dec. 31, 2021 | $ 1,536.7 | $ (23.8) | $ 900.2 | $ 533.2 | |
Consolidated Statement of Equity [Roll Forward] | |||||
Common Stock Issued | 240.5 | ||||
Unrealized Gain (Loss) on Debt Securities | $ (0.4) | (0.4) | |||
Defined Benefit Pension and Other Postretirement Plans | 0.4 | 0.4 | |||
Net Income Attributable to ALLETE | 137.6 | 137.6 | |||
Common Stock Dividends | (108.6) | ||||
Proceeds from Non-Controlling Interest in Subsidiaries – Net | 182.9 | ||||
Net Loss Attributable to Non-Controlling Interest | 43.5 | (43.5) | |||
Distributions to Non-Controlling Interest | (1.3) | ||||
Balance, End of Period at Sep. 30, 2022 | $ 3,353.9 | 1,777.2 | (23.8) | 929.2 | 671.3 |
Consolidated Statement of Equity [Roll Forward] | |||||
Dividends Per Share of Common Stock (in usd per share | $ 1.95 | ||||
Balance, Beginning of Period at Dec. 31, 2021 | 1,536.7 | (23.8) | 900.2 | 533.2 | |
Balance, End of Period at Dec. 31, 2022 | $ 3,348.3 | 1,781.5 | (24.4) | 934.8 | 656.4 |
Balance, Beginning of Period at Jun. 30, 2022 | 1,771.7 | (23.9) | 932.6 | 678.5 | |
Consolidated Statement of Equity [Roll Forward] | |||||
Common Stock Issued | 5.5 | ||||
Unrealized Gain (Loss) on Debt Securities | 0 | ||||
Defined Benefit Pension and Other Postretirement Plans | 0.1 | 0.1 | |||
Net Income Attributable to ALLETE | 33.7 | 33.7 | |||
Common Stock Dividends | (37.1) | ||||
Net Loss Attributable to Non-Controlling Interest | 6.9 | (6.9) | |||
Distributions to Non-Controlling Interest | (0.3) | ||||
Balance, End of Period at Sep. 30, 2022 | $ 3,353.9 | 1,777.2 | (23.8) | 929.2 | 671.3 |
Consolidated Statement of Equity [Roll Forward] | |||||
Dividends Per Share of Common Stock (in usd per share | $ 0.65 | ||||
Balance, Beginning of Period at Dec. 31, 2022 | $ 3,348.3 | 1,781.5 | (24.4) | 934.8 | 656.4 |
Consolidated Statement of Equity [Roll Forward] | |||||
Common Stock Issued | 15.7 | ||||
Unrealized Gain (Loss) on Debt Securities | 0.1 | 0.1 | |||
Defined Benefit Pension and Other Postretirement Plans | (0.2) | (0.2) | |||
Net Income Attributable to ALLETE | 195.6 | 195.6 | |||
Common Stock Dividends | (116.5) | ||||
Proceeds from Non-Controlling Interest in Subsidiaries – Net | 9.9 | ||||
Net Loss Attributable to Non-Controlling Interest | 47.7 | (47.7) | |||
Distributions to Non-Controlling Interest | (8.5) | ||||
Balance, End of Period at Sep. 30, 2023 | $ 3,396.7 | 1,797.2 | (24.5) | 1,013.9 | 610.1 |
Consolidated Statement of Equity [Roll Forward] | |||||
Dividends Per Share of Common Stock (in usd per share | $ 2.0325 | ||||
Balance, Beginning of Period at Jun. 30, 2023 | 1,791.6 | (24.4) | 966.9 | 634.4 | |
Consolidated Statement of Equity [Roll Forward] | |||||
Common Stock Issued | 5.6 | ||||
Unrealized Gain (Loss) on Debt Securities | $ 0 | ||||
Defined Benefit Pension and Other Postretirement Plans | (0.1) | (0.1) | |||
Net Income Attributable to ALLETE | 85.9 | 85.9 | |||
Common Stock Dividends | (38.9) | ||||
Net Loss Attributable to Non-Controlling Interest | 16.3 | (16.3) | |||
Distributions to Non-Controlling Interest | (8) | ||||
Balance, End of Period at Sep. 30, 2023 | $ 3,396.7 | $ 1,797.2 | $ (24.5) | $ 1,013.9 | $ 610.1 |
Consolidated Statement of Equity [Roll Forward] | |||||
Dividends Per Share of Common Stock (in usd per share | $ 0.6775 |
Operations and Significant Acco
Operations and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Operations and Significant Accounting Policies | OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Subsequent Events. The Company performed an evaluation of subsequent events for potential recognition and disclosure through the date of the financial statements issuance. Cash, Cash Equivalents and Restricted Cash. We consider all investments purchased with original maturities of three months or less to be cash equivalents. As of September 30, 2023, restricted cash amounts included in Prepayments and Other on the Consolidated Balance Sheet include collateral deposits required under an ALLETE Clean Energy loan. The restricted cash amounts included in Other Non-Current Assets represent collateral deposits required under an ALLETE Clean Energy loan agreement as well as PSAs. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheet that aggregate to the amounts presented in the Consolidated Statement of Cash Flows. Cash, Cash Equivalents and Restricted Cash September 30, December 31, September 30, December 31, Millions Cash and Cash Equivalents $125.5 $36.4 $42.1 $45.1 Restricted Cash included in Prepayments and Other 3.3 1.5 4.2 0.3 Restricted Cash included in Other Non-Current Assets 2.4 2.3 2.3 2.3 Cash, Cash Equivalents and Restricted Cash on the Consolidated Statement of Cash Flows $131.2 $40.2 $48.6 $47.7 Inventories – Net. Inventories are stated at the lower of cost or net realizable value. Inventories in our Regulated Operations segment are carried at an average cost or first-in, first-out basis. Inventories in our ALLETE Clean Energy segment and Corporate and Other businesses are carried at an average cost, first-in, first-out or specific identification basis. Inventories – Net September 30, December 31, Millions Fuel (a) $33.0 $33.4 Materials and Supplies 115.4 75.1 Renewable Energy Facilities Under Development (b) 31.9 347.4 Total Inventories – Net $180.3 $455.9 (a) Fuel consists primarily of coal inventory at Minnesota Power. (b) Renewable Energy Facilities Under Development as of September 30, 2023, consists primarily of project costs related to renewable energy development projects at New Energy. As of December 31, 2022, it consisted primarily of project costs related to ALLETE Clean Energy’s Northern Wind and Red Barn wind projects sold in the first quarter of 2023 and second quarter of 2023, respectively. (See Other Current Liabilities.) Goodwill. The aggregate carrying amount of goodwill was $154.9 million as of September 30, 2023 ($154.9 million as of December 31, 2022). There have been no changes to goodwill by reportable segment for the quarter and nine months ended September 30, 2023. NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Other Non-Current Assets September 30, December 31, Millions Contract Assets (a) $19.1 $21.0 Operating Lease Right-of-use Assets 11.6 12.7 Finance Lease Right-of-use Assets 2.1 — ALLETE Properties 19.4 19.1 Restricted Cash 2.4 2.3 Other Postretirement Benefit Plans 60.2 58.8 Other 101.5 90.4 Total Other Non-Current Assets $216.3 $204.3 (a) Contract Assets consist of payments made to customers as an incentive to execute or extend service agreements. The contract payments are being amortized over the term of the respective agreements as a reduction to revenue. Other Current Liabilities September 30, December 31, Millions Customer Deposits (a) $6.0 $150.7 PSAs 6.0 6.1 Provision for Interim Rate Refund 39.4 18.4 Manufactured Gas Plant (b) 3.4 14.7 Operating Lease Liabilities 3.0 3.2 Finance Lease Liabilities 0.4 — Other 52.3 57.9 Total Other Current Liabilities $110.5 $251.0 (a) Customer Deposits as of December 31, 2022, primarily related to deposits received by ALLETE Clean Energy for the Northern Wind and Red Barn wind projects sold in the first quarter of 2023 and second quarter of 2023, respectively. (See Inventories – Net.) (b) The manufactured gas plant represents the current liability for remediation of a former manufactured gas plant site located in Superior, Wisconsin, and formerly operated by SWL&P. Other Non-Current Liabilities September 30, December 31, Millions Asset Retirement Obligation (a) $200.8 $200.4 PSAs 22.4 26.9 Operating Lease Liabilities 8.5 9.3 Finance Lease Liabilities 1.7 — Other 30.4 32.4 Total Other Non-Current Liabilities $263.8 $269.0 (a) The asset retirement obligation is primarily related to our Regulated Operations and is funded through customer rates over the life of the related assets. Additionally, BNI Energy funds its obligation through its cost-plus coal supply agreements for which BNI Energy has recorded a receivable of $32.4 million in Other Non-Current Assets on the Consolidated Balance Sheet as of September 30, 2023 ($32.4 million as of December 31, 2022). NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Quarter Ended Nine Months Ended September 30, September 30, Other Income 2023 2022 2023 2022 Millions Pension and Other Postretirement Benefit Plan Non-Service Credits (a) $1.8 $1.9 $5.5 $7.2 Interest and Investment Income (b) 6.6 (0.4) 8.7 (1.3) AFUDC - Equity 1.1 0.7 2.5 2.4 PSA Liability (c) — — — 10.2 Gain on Arbitration Award (d) 58.4 — 58.4 — Other 0.8 0.1 0.2 (2.1) Total Other Income $68.7 $2.3 $75.3 $16.4 (a) These are components of net periodic pension and other postretirement benefit cost other than service cost. (See Note 9. Pension and Other Postretirement Benefit Plans.) (b) Interest and Investment Income for the quarter and nine months ended September 30, 2023, reflects $5.1 million of interest income related to interest awarded as part of an arbitration ruling involving a subsidiary of ALLETE Clean Energy. (See Note 6. Commitments, Guarantees, and Contingencies.) (c) The gain on removal of the PSA liability for the Northern Wind project upon decommissioning of the legacy wind energy facility assets, which was more than offset by a reserve for an anticipated loss on the sale of the Northern Wind project that was recorded in Cost of Sales - Non-Utility on the Consolidated Statement of Income. (d) This reflects a gain recognized for the favorable outcome of an arbitration ruling involving a subsidiary of ALLETE Clean Energy. (See Note 6. Commitments, Guarantees, and Contingencies.) Supplemental Statement of Cash Flows Information. Nine Months Ended September 30, 2023 2022 Millions Cash Paid for Interest – Net of Amounts Capitalized $64.8 $60.5 Cash Paid for Income Taxes – Net $14.1 $1.1 Noncash Investing and Financing Activities Increase in Accounts Payable for Capital Additions to Property, Plant and Equipment $11.8 $2.4 Reclassification of Property, Plant and Equipment to Inventory (a) — $99.8 Capitalized Asset Retirement Costs $2.4 $9.0 AFUDC–Equity $2.5 $2.4 (a) The decommissioning of the legacy Northern Wind assets resulted in a reclassification from Property, Plant and Equipment – Net to Inventories – Net in the second quarter of 2022 as they were repowered and subsequently sold to a subsidiary of Xcel Energy Inc. Non-Controlling Interest in Subsidiaries. Non-controlling interest in subsidiaries on the Consolidated Balance Sheet and net loss attributable to non-controlling interest on the Consolidated Statement of Income represent the portion of equity ownership and earnings, respectively, of subsidiaries that are not attributable to equity holders of ALLETE. These amounts are primarily related to the tax equity financing structures for ALLETE Clean Energy’s 106 MW Glen Ullin, 80 MW South Peak, 303 MW Diamond Spring and 303 MW Caddo wind energy facilities as well as ALLETE’s equity investment in the 250 MW Nobles 2 wind energy facility. In the third quarter of 2023, we recognized a $5.7 million increase in Net Loss Attributable to Non-Controlling Interest on the Consolidated Statement of Income for the correction of an error related to the calculation of non-controlling interest in subsidiaries under the hypothetical liquidation at book value method, of which $3.6 million related to 2022. We have evaluated the effect of this out-of-period adjustment on the quarter and nine months ended September 30, 2023, as well as on the previous interim and annual periods in which they should have been recognized and concluded that this adjustment is not material to any of the periods affected. |
Regulatory Matters
Regulatory Matters | 9 Months Ended |
Sep. 30, 2023 | |
Regulated Operations [Abstract] | |
Regulatory Matters | REGULATORY MATTERS Regulatory matters are summarized in Note 4. Regulatory Matters to the Consolidated Financial Statements in our 2022 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, PSCW or FERC. As authorized by the MPUC, Minnesota Power also recognizes revenue under cost recovery riders for transmission, renewable, and environmental investments and expenditures. Revenue from cost recovery riders was $44.9 million for the nine months ended September 30, 2023 ($19.5 million for the nine months ended September 30, 2022). 2024 Minnesota General Rate Case. On November 1, 2023, Minnesota Power filed a retail rate increase request with the MPUC seeking an average increase of approximately 12.00 percent for retail customers, net of rider revenue incorporated into base rates. The rate filing seeks a return on equity of 10.30 percent and a 53.00 percent equity ratio. On an annualized basis, the requested final rate increase would generate approximately $89 million in additional revenue. Once the filing is accepted as complete, an annual interim rate increase of approximately $64 million, net of rider revenue incorporated into base rates and subject to refund, is expected to be implemented within 60 days, subject to MPUC adjustment and authorization. We cannot predict the level of interim or final rates that may be authorized by the MPUC. 2022 Minnesota General Rate Case. On November 1, 2021, Minnesota Power filed a retail rate increase request with the MPUC seeking an average increase of approximately 18 percent for retail customers. The rate filing sought a return on equity of 10.25 percent and a 53.81 percent equity ratio. On an annualized basis, the requested final rate increase would have generated approximately $108 million in additional revenue. In an order dated February 28, 2023, the MPUC made determinations regarding Minnesota Power’s general rate case including allowing a return on common equity of 9.65 percent and a 52.50 percent equity ratio. We expect additional revenue from base rates of approximately $60 million and an additional $10 million in revenue recognized under cost recovery riders on an annualized basis. On March 20, 2023, Minnesota Power filed a petition for reconsideration with the MPUC requesting reconsideration and clarification of certain decisions in the MPUC’s order. Minnesota Power’s petition included requesting reconsideration of the ratemaking treatment of Taconite Harbor and Minnesota Power’s prepaid pension asset as well as clarification on interim rate treatment for sales to certain customers that did not operate during 2022. The MPUC denied the requests for reconsideration in an order dated May 15, 2023, and provided clarification in support of the interim rate refund treatment for sales to certain customers that did not operate during 2022. On June 14, 2023, Minnesota Power filed notice with the Minnesota Court of Appeals (Court) to appeal specific aspects of the MPUC’s rate case orders. Minnesota Power is appealing the ratemaking treatment of Taconite Harbor and Minnesota Power’s prepaid pension asset. We are unable to predict the outcome of this proceeding. In an order dated September 29, 2023, the MPUC approved Minnesota Power’s final rates, which were implemented beginning on October 1, 2023. The MPUC order also approved Minnesota Power’s interim rate refund plan. Interim rates were collected through the third quarter with reserves recorded as necessary. Minnesota Power has recorded a reserve for an interim rate refund of $39.4 million pre-tax as of September 30, 2023 ($18.4 million as of December 31, 2022). The reserve will be refunded to customers beginning in the fourth quarter of 2023. Renewable Cost Recovery Rider. Minnesota Power has an approved cost recovery rider in place to charge retail customers on a current basis for the costs of certain renewable investments and expenditures, including a return on the capital invested. Current customer billing rates for the renewable cost recovery rider were approved by the MPUC in an order dated January 24, 2023. On March 29, 2023, Minnesota Power submitted its latest renewable cost recovery rider factor filing, which the MPUC approved in an order dated October 3, 2023. Updated billing rates were included on customer bills starting in the fourth quarter of 2023. Solar Cost Recovery Rider. Minnesota Power has an approved cost recovery rider in place to charge retail customers on a current basis for solar costs related to investments and expenditures for meeting the state of Minnesota’s solar energy standard. Current customer billing rates for the solar cost recovery rider were approved by the MPUC in an August 2022 order. On August 23, 2023, Minnesota Power submitted its latest solar cost recovery rider factor filing to the MPUC. Upon approval of the filing, Minnesota Power would be authorized to include updated billing rates on customer bills. NOTE 2. REGULATORY MATTERS (Continued) Fuel Adjustment Clause. Minnesota Power incurred higher fuel and purchased power costs in 2022 than those factored in its fuel adjustment forecast filed in May 2021 for 2022, which resulted in the recognition of an approximately $13 million regulatory asset in 2022. Minnesota Power requested recovery of the regulatory asset over 12 months as part of its annual true-up filing submitted to the MPUC on March 1, 2023, which was approved by the MPUC in an order dated July 31, 2023. We began recovery of the regulatory asset in the third quarter of 2023. Minnesota Power has incurred lower fuel and purchased power costs in 2023 than those factored in its fuel adjustment forecast filed in May 2022 for 2023, which resulted in the recognition of a $28.3 million regulatory liability as of September 30, 2023. On August 30, 2023, Minnesota Power submitted a filing with the MPUC requesting to refund a portion of over-collected fuel adjustment clause recoveries for 2023 from October 2023 through December 2023. No parties objected to the request and lower rates were implemented in October 2023 to refund the over-collection of fuel adjustment clause recoveries, subject to final approval by the MPUC which is expected in 2024. Energy Conservation and Optimization (ECO) Plan. On April 3, 2023, Minnesota Power submitted its 2022 ECO, formerly known as the conservation improvement program, annual filing detailing Minnesota Power’s ECO plan results and proposed financial incentive, which was approved by the MPUC July 21, 2023. As a result, Minnesota Power recognized revenue of $2.2 million for the approved financial inventive in the third quarter of 2023. A financial incentive of $1.9 million was recognized in the second quarter of 2022 upon approval by the MPUC of Minnesota Power’s 2021 ECO annual filing. The financial incentives are recognized in the period in which the MPUC approves the filing. On June 30, 2023, Minnesota Power submitted its triennial filing for 2024 through 2026 to the MPUC and Minnesota Department of Commerce, which outlines Minnesota Power’s ECO spending and energy-saving goals for those years. Minnesota Power’s investment goals are $12.5 million for 2024, $12.7 million for 2025 and $12.8 million for 2026, subject to MPUC and Minnesota Department of Commerce approval. Regulatory Assets and Liabilities. Our regulated utility operations are subject to accounting standards for the effects 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. 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 2. REGULATORY MATTERS (Continued) Regulatory Assets and Liabilities September 30, December 31, Millions Current Regulatory Assets (a) Fuel Adjustment Clause $12.1 $25.6 Other 1.8 — Total Current Regulatory Assets $13.9 $25.6 Non-Current Regulatory Assets Defined Benefit Pension and Other Postretirement Plans $223.6 $225.9 Income Taxes 91.4 97.6 Cost Recovery Riders 40.8 41.2 Asset Retirement Obligations 37.1 35.6 Taconite Harbor (b) 24.2 — Manufactured Gas Plant 14.1 15.1 Fuel Adjustment Clause 4.1 14.5 PPACA Income Tax Deferral 4.0 4.1 Other 4.0 7.0 Total Non-Current Regulatory Assets $443.3 $441.0 Current Regulatory Liabilities (c) Provision for Interim Rate Refund (d) $39.4 $18.4 Transmission Formula Rates Refund 1.2 4.9 Other 1.3 0.1 Total Current Regulatory Liabilities $41.9 $23.4 Non-Current Regulatory Liabilities Income Taxes $315.7 $332.5 Wholesale and Retail Contra AFUDC 78.6 80.7 Plant Removal Obligations 65.9 60.0 Fuel Adjustment Clause 28.3 — Non-Jurisdictional Land Sales 20.7 7.5 North Dakota Investment Tax Credits 16.4 16.9 Defined Benefit Pension and Other Postretirement Benefit Plans 11.8 17.6 Boswell Units 1 and 2 Net Plant and Equipment 6.7 6.7 Other 5.2 4.2 Total Non-Current Regulatory Liabilities $549.3 $526.1 (a) Current regulatory assets are presented within Prepayments and Other on the Consolidated Balance Sheet. (b) In the first quarter of 2023, Minnesota Power retired Taconite Harbor Units 1 and 2. The remaining net book value was reclassified from property, plant and equipment to a regulatory asset on the Consolidated Balance Sheet when the units were retired. Minnesota Power expects to receive recovery of the remaining net book value from customers. (c) Current regulatory liabilities are presented within Other Current Liabilities on the Consolidated Balance Sheet. (d) See 2022 Minnesota General Rate Case. |
Equity Investments
Equity Investments | 9 Months Ended |
Sep. 30, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Investments | EQUITY INVESTMENTS 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 portions of Wisconsin, Michigan, Minnesota and Illinois. We account for our investment in ATC under the equity method of accounting. ALLETE’s Investment in ATC Millions Equity Investment Balance as of December 31, 2022 $165.4 Cash Investments 6.6 Equity in ATC Earnings 17.3 Distributed ATC Earnings (13.8) Amortization of the Remeasurement of Deferred Income Taxes 1.0 Equity Investment Balance as of September 30, 2023 $176.5 ATC’s authorized return on equity was 10.02 percent, or 10.52 percent including an incentive adder for participation in a regional transmission organization, based on a 2020 FERC order which is subject to various outstanding legal challenges related to the return on equity calculation and refund period ordered by the FERC. In August 2022, the U.S. Court of Appeals for the District of Columbia Circuit vacated and remanded the 2020 FERC order back to FERC. We cannot predict the return on equity the FERC will ultimately authorize in the remanded proceeding. In addition, the FERC issued a Notice of Proposed Rulemaking in 2021 proposing to limit the 0.50 percent incentive adder for participation in a regional transmission organization to only the first three years of membership in such an organization. If this proposal is adopted, our equity in earnings from ATC would be reduced by approximately $1 million pre-tax annually. Investment in Nobles 2. Our subsidiary, ALLETE South Wind, owns 49 percent of Nobles 2, the entity that owns and operates a 250 MW wind energy facility in southwestern Minnesota pursuant to a 20-year PPA with Minnesota Power. We account for our investment in Nobles 2 under the equity method of accounting. ALLETE’s Investment in Nobles 2 Millions Equity Investment Balance as of December 31, 2022 $157.3 Equity in Nobles 2 Earnings (a) (1.2) Distributed Nobles 2 Earnings (2.9) Equity Investment Balance as of September 30, 2023 $153.2 (a) The Company also recorded earnings from net loss attributable to non-controlling interest of $7.2 million related to its investment in Nobles 2. |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value | FAIR VALUEFair 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 7. Fair Value to the Consolidated Financial Statements in our 2022 Form 10-K. NOTE 4. FAIR VALUE (Continued) 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 September 30, 2023, and December 31, 2022. 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 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 September 30, 2023 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Millions Assets Investments (a) Available-for-sale – Equity Securities $8.1 — — $8.1 Available-for-sale – Corporate and Governmental Debt Securities (b) — $5.8 — 5.8 Cash Equivalents 5.8 — — 5.8 Total Fair Value of Assets $13.9 $5.8 — $19.7 Liabilities Deferred Compensation (c) — $15.9 — $15.9 Total Fair Value of Liabilities — $15.9 — $15.9 Fair Value as of December 31, 2022 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Millions Assets Investments (a) Available-for-sale – Equity Securities $7.7 — — $7.7 Available-for-sale – Corporate and Governmental Debt Securities — $5.7 — 5.7 Cash Equivalents 4.2 — — 4.2 Total Fair Value of Assets $11.9 $5.7 — $17.6 Liabilities Deferred Compensation (c) — $15.0 — $15.0 Total Fair Value of Liabilities — $15.0 — $15.0 (a) Included in Other Non-Current Assets on the Consolidated Balance Sheet. (b) As of September 30, 2023, the aggregate amount of available-for-sale corporate and governmental debt securities maturing in one year or less was $1.6 million, in one year to less than three years was $2.9 million, in three years to less than five years was $0.9 million and in five or more years was $0.4 million. (c) Included in Other Non-Current Liabilities on the Consolidated Balance Sheet. Fair Value of Financial Instruments. With the exception of the item listed in the following table, the estimated fair value of all financial instruments approximates the carrying amount. The fair value of the item listed in the following table was based on quoted market prices for the same or similar instruments (Level 2). Financial Instruments Carrying Amount Fair Value Millions Short-Term and Long-Term Debt (a) September 30, 2023 $1,805.5 $1,582.5 December 31, 2022 $1,929.1 $1,782.7 (a) Excludes unamortized debt issuance costs. NOTE 4. FAIR VALUE (Continued) Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis. Non-financial assets such as equity method investments, land inventory, 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 quarter and nine months ended September 30, 2023, and the year ended December 31, 2022, there were no indicators of impairment for these non-financial assets. We continue to monitor changes in the broader energy markets along with wind resource expectations that could indicate impairment at ALLETE Clean Energy wind energy facilities upon contract expirations or for facilities without long-term contracts for their entire output. A continued decline or volatility in energy prices or lower wind resource expectations could result in a future impairment. |
Short-Term and Long-Term Debt
Short-Term and Long-Term Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Short-Term and Long-Term Debt | SHORT-TERM AND LONG-TERM DEBT The following tables present the Company’s short-term and long-term debt as of September 30, 2023, and December 31, 2022: September 30, 2023 Principal Unamortized Debt Issuance Costs Total Millions Short-Term Debt $111.1 $(0.1) $111.0 Long-Term Debt 1,694.4 (8.3) 1,686.1 Total Debt $1,805.5 $(8.4) $1,797.1 December 31, 2022 Principal Unamortized Debt Issuance Costs Total Millions Short-Term Debt $272.7 $(0.1) $272.6 Long-Term Debt 1,656.4 (8.2) 1,648.2 Total Debt $1,929.1 $(8.3) $1,920.8 We had $19.8 million outstanding in standby letters of credit and $33.3 million outstanding draws under our lines of credit as of September 30, 2023 ($32.8 million in standby letters of credit and $31.3 million outstanding draws as of December 31, 2022). We also have standby letters of credit outstanding under other letter of credit facilities. (See Note 6. Commitments, Guarantees and Contingencies.) On October 17, 2023, ALLETE amended its $400 million credit facility (Credit Agreement), which was scheduled to expire in January 2026, to $355 million and extended the expiration date to January 10, 2027. The amended Credit Agreement is unsecured and has a variable interest rate. ALLETE may request a single, one On April 27, 2023, ALLETE issued $125 million of its First Mortgage Bonds (Bonds) to certain institutional buyers in the private placement market. The Bonds, which bear interest at 4.98 percent, will mature in April 2033 and pay interest semi-annually in May and November of each year, commencing on November 1, 2023. ALLETE has the option to prepay all or a portion of the Bonds at its discretion, subject to a make-whole provision. The Bonds are subject to additional terms and conditions which are customary for these types of transactions. Proceeds from the sale of the Bonds were used to refinance existing indebtedness and for general corporate purposes. The Bonds were sold in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, to institutional accredited investors. NOTE 5. SHORT-TERM AND LONG-TERM DEBT (Continued) 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 September 30, 2023, our ratio was approximately 0.36 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. ALLETE has no significant restrictions on its ability to pay dividends from retained earnings or net income. As of September 30, 2023, ALLETE was in compliance with its financial covenants. |
Commitments, Guarantees and Con
Commitments, Guarantees and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments, Guarantees and Contingencies | COMMITMENTS, GUARANTEES AND CONTINGENCIES Power Purchase and Sale 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 PPAs are summarized in Note 9. Commitments, Guarantees and Contingencies to the Consolidated Financial Statements in our 2022 Form 10-K, with additional disclosure provided in the following paragraphs. Square Butte PPA. As of September 30, 2023, Square Butte had total debt outstanding of $176.9 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 nine months ended September 30, 2023, was $64.8 million ($63.8 million for the same period in 2022). 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 $4.1 million ($3.7 million for the same period in 2022). Minnesota Power’s payments to Square Butte are approved as a purchased power expense for ratemaking purposes by both the MPUC and the FERC. Minnkota Power PSA. Minnesota Power has a PSA with Minnkota Power, which commenced in 2014. Under the PSA, 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, Minnesota Power sold to Minnkota Power approximately 37 percent in 2023 and 32 percent in 2022. 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 2025. Minnesota Power also has coal transportation agreements in place for the delivery of a significant portion of its coal requirements through December 2024. The costs of fuel and related transportation costs for Minnesota Power’s generation are recoverable from Minnesota Power’s retail and municipal utility customers through the fuel adjustment clause. 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 been promulgated by both the EPA and state authorities over the past several years. Minnesota Power’s facilities are subject to additional requirements under many of 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. NOTE 6. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued) Environmental Matters (Continued) We consider our businesses to be in substantial compliance with currently applicable environmental regulations and believe all necessary permits have been obtained. We anticipate that with many state and federal environmental regulations and requirements finalized, or to be finalized in the near future, potential expenditures for future environmental matters may be material and 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 expensed 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 thermal 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 emission requirements. Cross-State Air Pollution Rule (CSAPR). The CSAPR requires certain states, including Minnesota, to reduce power plant emissions that contribute to ozone or fine particulate pollution in other states. The CSAPR does not require installation of controls but does require 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. Minnesota Power continues to monitor ongoing CSAPR rulemakings and compliance implementation, including the EPA’s Good Neighbor Plan published June 5, 2023, modifying certain aspects of the CSAPR’s program scope and extent. 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. Minnesota Power actively monitors NAAQS developments and compliance costs for existing standards or proposed NAAQS revisions are not currently expected to be material. The EPA is currently reviewing the secondary NAAQS for NO x and SO 2 , as well as particulate matter. In June 2021, the EPA announced it would reconsider the December 2020 final rule retaining the 2012 particulate matter NAAQS. On January 6, 2023, the EPA announced a proposed rule to revise the primary annual particulate matter NAAQS from its current level while retaining the other primary and secondary particulate matter NAAQS. The rule was advanced to the White House Office of Management and Budget (OMB) on September 22, 2023 and a final rule is tentatively expected by the end of the year. The EPA also announced in October 2021 that it was reconsidering the 2020 Ozone NAAQS rule finalized in December 2020, and issued an initial draft policy assessment on April 28, 2022, recommending retention of the current standard. A second version of the draft policy assessment was then published for public comment on March 1, 2023. Subsequently on August 21, 2023, the EPA announced it would cease reconsideration of the Ozone NAAQS and initiate a new review instead. This new NAAQS review is expected to take several years, during which time the existing 2020 ozone NAAQS will remain in place. Anticipated timelines and compliance costs related to the proposed and expected NAAQS revisions cannot yet be estimated; however, costs could be material. Minnesota Power would seek recovery of additional costs through a rate proceeding. EPA Good Neighbor Plan for 2015 Ozone NAAQS . On June 5, 2023, the EPA published a final Federal Implementation Plan (FIP) rule in the Federal Register, the Good Neighbor Plan, to address regional ozone transport for the 2015 Ozone NAAQS by reducing NO x emissions during the period of May 1 through September 30 (ozone season). This rule addresses certain good neighbor or interstate transport provisions of the Clean Air Act relative to the 2015 Ozone NAAQS. In the justification for the final rule, the EPA asserts that 23 states, including Minnesota, are modeled as significant contributors to downwind states’ challenges in attaining or maintaining ozone NAAQS compliance within their state borders. The Good Neighbor Plan is designed to resolve this interstate transport issue by implementing a variety of NO x reduction strategies, including federal implementation plan requirements, NO x emission limitations, and ozone season allowance program requirements, beginning with the 2023 ozone season. The final rule imposes restrictions on fossil-fuel fired power plants in 22 states and on certain industrial sources in 20 states. Implementation of the rule will occur in part through changes to the existing CSAPR program for power plants. NOTE 6. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued) Environmental Matters (Continued) Minnesota Power previously submitted public comments to the EPA on the April 2022 proposed Good Neighbor Plan. Concerns noted by Minnesota Power and other entities included the technical accuracy of the EPA’s assumptions and methods used to identify Minnesota as a significant contributor state, as well as the proposed rule’s intended timeline. On February 13, 2023, the EPA also published its final rule to partially disapprove the Good Neighbor State Implementation Plans (SIPs) for the states of Minnesota and Wisconsin, and to disapprove 19 other SIP submissions. The SIP final action subjects Minnesota to the final Good Neighbor Plan and associated compliance costs will be known when the final SIP rule evaluation and implementation has been completed. On April 14, 2023, Minnesota Power and a coalition of other Minnesota utilities and industry (the parties) co-filed challenges to the EPA’s final Minnesota SIP disapproval, submitting a petition for reconsideration and stay to the EPA and a petition for judicial review to the U.S. Court of Appeals for the Eighth Circuit (Eighth Circuit Court). The parties are challenging and requesting reconsideration of certain technical components of the EPA’s review and subsequent partial disapproval of the state of Minnesota’s SIP, including the rulemaking process, air modeling practices and other emissions inventory aspects. On May 31, 2023, the parties filed a motion to stay the SIP disapproval with the Eighth Circuit Court, which granted the stay on July 5, 2023, which prevents the Good Neighbor Plan from taking effect in Minnesota while the stay remains in effect. On September 29, 2023, the EPA issued an updated final interim rule addressing the stays in Minnesota and five other states, formally staying the effectiveness of the final FIP for states with active stays in place. The state of Minnesota was therefore not subject to compliance obligations for the 2023 ozone season, which would have gone into effect on August 4, 2023. Future compliance obligations will depend on the eventual resolution of the stay and appeal. Additionally, challenges have been filed against the final SIP rule by the Minnesota coalition parties and other entities. Anticipated compliance costs related to final Good Neighbor Plan compliance cannot yet be estimated due to uncertainties about SIP approval status, implementation timing, and allowance costs and facility emissions during the ozone season. However, the costs could be material, including costs of additional NO x controls, emission allowance program participation, or operational changes, if any are required. Minnesota Power would seek recovery of additional costs through a rate proceeding. EPA National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial and Institutional Boilers and Process Heaters (Industrial Boiler MACT) Rule . A final rule issued by the EPA for Industrial Boiler MACT became effective in 2013 with compliance required at major existing sources in 2016. Minnesota Power’s Hibbard Renewable Energy Center and Rapids Energy Center are subject to this rule. Compliance with the Industrial Boiler MACT Rule consisted largely of adjustments to fuels and operating practices and compliance costs were not material. Subsequent to this initial rulemaking, litigation from 2016 through 2018 resulted in court orders directing that the EPA reconsider certain aspects of the regulation including the basis for and numerical value of several different emission limits. On October 6, 2022, the EPA published a final rule in the Federal Register incorporating these changes. The rule became effective on December 5, 2022, imposing a compliance deadline of October 6, 2025. Minnesota Power’s review of this new rule indicates that the revisions should not significantly impact its affected units. As such, compliance costs associated with the new Industrial Boiler MACT Rule are not currently expected to be material; however, Minnesota Power would seek recovery of additional costs through a rate proceeding. EPA Mercury and Air Toxics Standards (MATS) Rule . On April 24, 2023, the EPA published a proposed revision to the existing MATS Rule as part of its mandatory 2020 MATS review. In this proposed rule, the EPA is proposing to alter certain compliance and operational requirements, and to lower several emission limits including filterable particulate matter as well as mercury for lignite units. Compliance would be due in the 2026 to 2027 timeframe. The MATS regulation applies at Minnesota Power’s Boswell facility, which is currently well-controlled for these emissions and is in full compliance with existing requirements. Initial review of this draft regulation indicates that compliance costs should not be material based on the proposed revision. The EPA expects to issue the final rule in March 2024. Compliance costs cannot yet be estimated; however, recovery of any additional costs would be sought through a rate proceeding. NOTE 6. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued) Environmental Matters (Continued) Climate Change. The scientific community generally accepts that emissions of GHGs 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 or other changes in temperatures; increased risk of wildfires; 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 renewable power supply for both our operations and the operations of others; • Providing energy conservation initiatives for our customers and engaging in other demand side management efforts; • Improving efficiency of our generating facilities; • Supporting research of technologies to reduce carbon emissions from generating facilities and carbon sequestration efforts; • Evaluating and developing less carbon intensive future generating assets such as efficient and flexible natural gas‑fired generating facilities; • Managing vegetation on right-of-way corridors to reduce potential wildfire or storm damage risks; and • Practicing sound forestry management in our service territories to create landscapes more resilient to disruption from climate-related changes, including planting and managing long-lived conifer species. EPA Regulation of GHG Emissions. On May 23, 2023, the EPA published in the Federal Register a proposal for five separate regulatory actions under Section 111 of the Clean Air Act (CAA) addressing greenhouse gas (GHG) emissions from fossil fuel-fired electric generating units (EGUs). The EPA is proposing revised new source performance standards (NSPS) for new, modified and reconstructed EGUs (Section 111(b) of the CAA) as well as emission guidelines for certain existing (Section 111(d) of the CAA) EGUs. The EPA also proposed in this action to officially repeal the predecessor regulation “Affordable Clean Energy Rule”, first issued in 2019 and later vacated in 2021. The draft rules were open for public comment until August 8, 2023, and the EPA’s Spring 2023 unified agenda identifies the EPA’s goal of issuing final regulations in April 2024. The Company will continue to monitor this GHG rulemaking and analyze potential impacts to our existing and proposed thermal generating facilities from the draft Section 111 rules, which would apply to several Company assets including existing EGUs at the Boswell and Laskin facilities as well as the proposed combined cycle natural gas-fired generating facility, NTEC. Minnesota Power continues implementing its Energy Forward strategic plan that provides for significant emissions reductions and diversifying its electricity generation mix to include more renewable and natural gas energy. We are unable to predict compliance costs due to the draft status of the rules and the need for a state implementation plan for Section 111(d) existing units; however, the costs could be material. Minnesota Power would seek recovery of additional costs through a rate proceeding. Water. The Clean Water Act requires NPDES permits be obtained from the EPA (or, when delegated, from individual state pollution control agencies) for any wastewater discharged into navigable waters. We have obtained all necessary NPDES permits, including NPDES storm water permits for applicable facilities, to conduct our operations. Steam Electric Power Generating Effluent Limitations Guidelines. In 2015, the EPA issued revised federal effluent limitation guidelines (ELG) for steam electric power generating stations under the Clean Water Act. It set effluent limits and prescribed BACT for several wastewater streams, including flue gas desulphurization (FGD) water, bottom ash transport water and coal combustion landfill leachate. In 2017, the EPA announced a two-year postponement of the ELG compliance date of November 1, 2018, to November 1, 2020, while the agency reconsidered the bottom ash transport water (BATW) and FGD wastewater provisions. On April 12, 2019, the U.S. Court of Appeals for the Fifth Circuit vacated and remanded back to the EPA portions of the ELG that allowed for continued discharge of legacy wastewater and leachate. On October 13, 2020, the EPA published a final ELG Rule allowing re-use of bottom ash transport water in FGD scrubber systems with limited discharges related to maintaining system water balance. The rule sets technology standards and numerical pollutant limits for discharges of bottom ash transport water and FGD wastewater. Compliance deadlines depend on subcategory, with compliance generally required as soon as possible, beginning after October 13, 2021, but no later than December 31, 2025, or December 31, 2028, in some specific cases. The rule also established new subcategories for retiring high-flow and low-utilization units, and established a voluntary incentives program for FGD wastewater. In accordance with the January 2021 Executive Order 13990, the EPA was mandated to conduct a review of actions and polices taken during the prior administration, including the 2020 ELG Rule. On September 14, 2021, the EPA published a notice of availability for its preliminary effluent guidelines program plan. In the plan, the EPA confirmed the agency is initiating a rulemaking process to strengthen wastewater pollution limitations from FGD and bottom ash transport water discharges while the 2020 ELG Rule remains in effect. NOTE 6. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued) Environmental Matters (Continued) On March 29, 2023, the EPA published a proposed new ELG rule in the Federal Register to update the 2020 ELGs; the public comment period was open until May 30, 2023. In the proposed rule, the EPA is revising ELGs for existing sources, including establishing zero discharge limitations for BATW and FGD wastewater; new limits for combustion residual leachate; and allowing states to set discharge limits for legacy wastewater in surface impoundments based on best professional judgment. The rule proposes to preserve flexibility and maintain exemptions for units permanently ceasing coal combustion by 2028, and adds a new category for units that have already complied with the 2020 ELG rule and which will retire by 2032. Additionally, the EPA is encouraging state permitting authorities to conduct functional equivalency tests for facilities with landfills or CCR surface impoundments to identify groundwater to surface water point source discharges. More stringent limitations would apply where point source discharges occur. Bottom ash transport and FGD wastewater ELGs are not expected to have a significant impact on Minnesota Power operations. Boswell, where these ELGs are applicable, completed conversion to dry bottom ash handling and installed a FGD dewatering system in September 2022. The dry conversion projects eliminated bottom ash transport water and minimized wastewater from the FGD system. Re-use and onsite consumption is planned for the remaining FGD waste stream and for dewatering legacy wastewater from Boswell’s existing impoundments. The EPA’s reconsideration of legacy wastewater and leachate discharge requirements has the potential to impact dewatering associated with the closed impoundment at Laskin and the closed Taconite Harbor dry ash landfill. At this time, we estimate no additional material compliance costs for ELG bottom ash water and FGD requirements. Compliance costs we might incur related to other ELG waste streams (e.g., leachate) or other potential future water discharge regulations at Minnesota Power facilities cannot be estimated; however, the costs could be material, including costs associated with wastewater treatment and re-use. Minnesota Power would seek recovery of additional costs through a rate proceeding. Permitted Water Discharges – Sulfate . In 2017, the MPCA released a draft water quality standard in an attempt to update Minnesota’s existing 10 mg/L sulfate limit for waters used for the production of wild rice with the proposed rulemaking heard before an administrative law judge (ALJ). In 2018, the ALJ rejected significant portions of the proposed rulemaking and the MPCA subsequently withdrew the rulemaking. The existing 10 mg/L limit remains in place, but the MPCA is currently prohibited under state law from listing wild rice waters as impaired or requiring sulfate reduction technology. In April 2021, the MPCA’s proposed list of impaired waters submitted pursuant to the Clean Water Act was partially rejected by the EPA due to the absence of wild rice waters listed for sulfate impairment. The EPA transmitted a final list of 32 EPA-added wild rice waters to the MPCA in November 2021. This list could subsequently be used to set sulfate limits in discharge permits for power generation facilities and municipal and industrial customers, including paper and pulp facilities, and mining operations. At this time, we are unable to determine the specific impacts these developments may have on Minnesota Power operations, if any. Minnesota Power would seek recovery of additional costs through a rate proceeding. Solid and Hazardous Waste. The Resource Conservation and Recovery Act of 1976 regulates the management and disposal of solid and hazardous wastes. We are required to notify the EPA of hazardous waste activity and, consequently, routinely submit reports to the EPA. Coal Ash Management Facilities. Minnesota Power produces the majority of its coal ash at Boswell, with small amounts of ash generated at Hibbard Renewable Energy Center. Ash storage and disposal methods include storing ash in clay-lined onsite impoundments (ash ponds), disposing of dry ash in a lined dry ash landfill, applying ash to land as an approved beneficial use, and trucking ash to state permitted landfills. Coal Combustion Residuals from Electric Utilities (CCR). In 2015, the EPA published the final rule (2015 Rule) regulating CCR as nonhazardous waste under Subtitle D of the Resource Conservation and Recovery Act (RCRA) in the Federal Register. The rule includes additional requirements for new landfill and impoundment construction as well as closure activities related to certain existing impoundments. Costs of compliance for Boswell and Laskin are expected to be incurred primarily over the next 12 years and be between approximately $65 million and $120 million. Compliance costs for CCR at Taconite Harbor are not expected to be material. Minnesota Power would seek recovery of additional costs through a rate proceeding. NOTE 6. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued) Environmental Matters (Continued) Minnesota Power continues to work on minimizing costs through evaluation of beneficial re-use and recycling of CCR and CCR-related waters. In 2017, the EPA announced its intention to formally reconsider the CCR rule under Subtitle D of the RCRA. In March 2018, the EPA published the first phase of the proposed rule revisions in the Federal Register. In 2018, the EPA finalized revisions to elements of the CCR rule, including extending certain deadlines by two years, the establishment of alternative groundwater protection standards for certain constituents and the potential for risk-based management options at facilities based on site characteristics. In 2018, a U.S. District Court for the District of Columbia decision vacated specific provisions of the CCR rule. The court decision resulted in a change to the status of three existing clay-lined impoundments at Boswell that must now be considered unlined. The EPA proposed additional rule revisions in 2019 to address outstanding issues from litigation and closure timelines for unlined impoundments, respectively. The first of these rules, CCR Part A Rule, was finalized in September 2020. The Part A Rule revision requires unlined impoundments to cease disposal of waste as soon as technically feasible but no later than April 11, 2021. Upon completion of dry ash conversion activities, Boswell ceased disposal in both impoundments in September 2022. Both impoundments are now inactive and have initiated closure. On May 17, 2023, the EPA released a proposed rule for CCR legacy surface impoundments. The proposal expands the scope of units regulated under the CCR rule to include legacy ponds (inactive surface impoundments at inactive facilities) and creates a new category of units called CCR management units, which includes inactive and closed impoundments and landfills as well as other non-containerized accumulations of CCR. The proposed rule was published in the Federal Register on May 18, 2023, and the 60-day public comment period ended on July 17, 2023. The EPA is proposing to require that all generating facilities evaluate and identify all past deposits of CCR materials on their sites and close or re-close existing CCR units to meet current closure standards, as well as install groundwater monitoring systems, conduct groundwater monitoring and implement groundwater corrective actions as necessary. This rule has the potential to impact Boswell and Laskin. Compliance costs for Minnesota Power facilities cannot be estimated at this time; however, the costs could be material. Minnesota Power would seek recovery of additional costs through a rate proceeding. Additionally, the EPA released a proposed CCR Part B rulemaking in February 2020 addressing options for beneficial reuse of CCR materials, alternative liner demonstrations and other CCR regulatory revisions. Portions of the Part B rule addressing alternative liner equivalency standards were finalized in November 2020. According to the EPA’s updated spring 2023 regulatory agenda, finalization of the remainder of the proposed Part B rule has been moved to the agency’s long-term agenda. The final federal permit rule is still expected in late-2023. The final federal permit rule will finalize procedures for implementing a CCR federal permit program. Other Environmental Matters. Manufactured Gas Plant Site. SWL&P continues working with the Wisconsin Department of Natural Resources (WDNR) to address and remediate environmental conditions at a former manufactured gas plant site located in Superior, Wisconsin, and formerly operated by SWL&P. As of September 30, 2023, we have recorded a liability of approximately $4 million for remediation costs at this site. SWL&P has also recorded an associated regulatory asset as we expect recovery of these remediation costs to be allowed by the PSCW. Remediation costs are expected to be incurred through 2025. Other Matters. Letters of Credit and Surety Bonds. We have multiple credit facility agreements in place that provide the ability to issue standby letters of credit to satisfy contractual security requirements across our businesses. As of September 30, 2023, we had $163.6 million of outstanding letters of credit issued, including those issued under our revolving credit facility. Regulated Operations. As of September 30, 2023, we had $24.2 million outstanding in standby letters of credit at our Regulated Operations which are pledged as security to MISO, the NDPSC and a state agency. ALLETE Clean Energy. ALLETE Clean Energy’s wind energy facilities have various PSAs in place for some or all of their output that expire in various years between 2024 and 2039. As of September 30, 2023, ALLETE Clean Energy has $105.3 million outstanding in standby letters of credit, the majority of which are pledged as security under these PSAs and PSAs for wind energy facilities developed for others. ALLETE Clean Energy does not believe it is likely that any of these outstanding letters of credit will be drawn upon. Corporate and Other. BNI Energy . As of September 30, 2023, BNI Energy had surety bonds outstanding of $82.4 million related to the reclamation liability for closing costs associated with its mine and mine facilities. Although its coal supply agreements obligate the customers to provide for the closing costs, additional assurance is required by federal and state regulations. BNI Energy’s total reclamation liability is currently estimated at $82.1 million. BNI Energy does not believe it is likely that any of these outstanding surety bonds will be drawn upon. Investment in Nobles 2 . The Nobles 2 wind energy facility requires standby letters of credit as security for certain contractual obligations. As of September 30, 2023, ALLETE South Wind has $10.1 million outstanding in standby letters of credit, related to its portion of the security requirements relative to its ownership in Nobles 2. We do not believe it is likely that any of these outstanding letters of credit will be drawn upon. South Shore Energy . As of September 30, 2023, South Shore Energy had $23.9 million outstanding in standby letters of credit pledged as security in connection with the development of NTEC. South Shore Energy does not believe it is likely that any of these outstanding letters of credit will be drawn upon. Legal Proceedings. We are involved in litigation arising in the normal course of business. Also in the normal course of business, we are involved in tax, regulatory and other governmental audits, inspections, investigations and other proceedings that involve state and federal taxes, safety, and compliance with regulations, rate base and cost of service issues, among other things. We do not expect the outcome of these matters to have a material effect on our financial position, results of operations or cash flows. In the first quarter of 2023, an ALLETE Clean Energy subsidiary initiated arbitration proceedings seeking damages against a counterparty for non-performance under a contract. Arbitration hearings were held in June and July 2023, and a final arbitration ruling was issued in favor of ALLETE Clean Energy’s subsidiary in September 2023. The final arbitration ruling awarded $68.3 million to ALLETE Clean Energy’s subsidiary, which included prejudgment interest of $5.1 million, recovery of $3.6 million of arbitration-related costs, and resulted in the recognition of a $58.4 million pre-tax gain in the third quarter of 2023. The arbitration ruling also resulted in the receipt of approximately $60 million of cash, net of distr |
Earnings Per Share and Common S
Earnings Per Share and Common Stock | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Earnings Per Share and Common Stock | 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 non-vested restricted stock units and performance share awards granted under our Executive Long-Term Incentive Compensation Plan. 2023 2022 Reconciliation of Basic and Diluted Dilutive Dilutive Earnings Per Share Basic Securities Diluted Basic Securities Diluted Millions Except Per Share Amounts Quarter ended September 30, Net Income Attributable to ALLETE $85.9 $85.9 $33.7 $33.7 Average Common Shares 57.4 0.1 57.5 57.1 0.1 57.2 Earnings Per Share $1.50 $1.49 $0.59 $0.59 Nine Months Ended September 30, Net Income Attributable to ALLETE $195.6 $195.6 $137.6 $137.6 Average Common Shares 57.3 0.1 57.4 55.5 0.1 55.6 Earnings Per Share $3.41 $3.41 $2.48 $2.48 |
Income Tax Expense
Income Tax Expense | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Tax Expense | INCOME TAX EXPENSE Quarter Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Millions Current Income Tax Expense (a) Federal $4.0 — $12.6 — State 1.1 $0.2 6.5 $0.3 Total Current Income Tax Expense $5.1 $0.2 $19.1 $0.3 Deferred Income Tax Expense (Benefit) Federal (b) $5.2 $(8.4) $(10.9) $(20.7) State 9.1 1.1 12.5 1.4 Investment Tax Credit Amortization (0.1) (0.1) (0.3) (0.4) Total Deferred Income Tax Expense (Benefit) $14.2 $(7.4) $1.3 $(19.7) Total Income Tax Expense (Benefit) $19.3 $(7.2) $20.4 $(19.4) (a) For the quarter and nine months ended September 30, 2023, the federal current tax expense was partially offset by production tax credits. For the quarter and nine months ended September 30, 2022, the federal and state current tax expense was minimal due to NOLs which resulted from the bonus depreciation provisions of certain tax legislation. (b) For the quarter ended September 30, 2023, the federal deferred tax expense was due to higher pre-tax income at ALLETE Clean Energy, partially offset by production tax credits. For the nine months ended September 30, 2023 and 2022, and the quarter ended September 30, 2022, the federal deferred income tax benefit is primarily due to production tax credits. NOTE 8. INCOME TAX EXPENSE (Continued) 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. Quarter Ended Nine Months Ended Reconciliation of Taxes from Federal Statutory September 30, September 30, Rate to Total Income Tax Expense 2023 2022 2023 2022 Millions Income Before Income Taxes $88.9 $19.6 $168.3 $74.7 Statutory Federal Income Tax Rate 21 % 21 % 21 % 21 % Income Taxes Computed at Statutory Federal Rate $18.7 $4.1 $35.3 $15.7 Increase (Decrease) in Income Tax Due to: State Income Taxes – Net of Federal Income Tax Benefit 8.0 1.1 15.0 6.6 Deferred Revaluation – Net of Federal Income Tax Benefit — — — (5.2) Production Tax Credits (a) (7.7) (9.7) (28.3) (34.4) Investment Tax Credits (a) (1.6) (3.2) (5.2) (3.2) Regulatory Differences – Excess Deferred Tax (2.3) (1.5) (7.5) (6.7) Non-Controlling Interest in Subsidiaries 3.0 1.4 8.9 8.4 Other 1.2 0.6 2.2 (0.6) Total Income Tax Expense (Benefit) $19.3 $(7.2) $20.4 $(19.4) (a) For the quarter and nine months ended September 30, 2023, the credits are presented net of any estimated discount on the sale of certain credits. For the nine months ended September 30, 2023, the effective tax rate was an expense of 12.1 percent (benefit of 26.0 percent for the nine months ended September 30, 2022). The effective tax rates for 2023 and 2022 were primarily impacted by production tax credits. Uncertain Tax Positions. As of September 30, 2023, we had gross unrecognized tax benefits of $1.1 million ($1.3 million as of December 31, 2022). Of the total gross unrecognized tax benefits, $0.6 million represents the amount of unrecognized tax benefits included on the Consolidated Balance Sheet that, if recognized, would favorably impact the effective income tax rate. The unrecognized tax benefit amounts have been presented as an increase to the net deferred tax liability 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. The examination by the state of Wisconsin for the tax years 2018 through 2020 has been closed with no findings. ALLETE has no open federal or state audits, and is no longer subject to federal examination for years before 2019, or state examination for years before 2018. Additionally, the statute of limitations related to the federal tax credit carryforwards will remain open until those credits are utilized in subsequent returns. |
Pension and Other Postretiremen
Pension and Other Postretirement Benefit Plans | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Pension and Other Postretirement Benefit Plans | PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS Pension Other Components of Net Periodic Benefit Cost (Credit) 2023 2022 2023 2022 Millions Quarter Ended September 30, Service Cost $1.7 $2.1 $0.6 $0.8 Non-Service Cost Components (a) Interest Cost 10.2 6.9 1.6 1.1 Expected Return on Plan Assets (10.9) (10.4) (2.9) (2.4) Amortization of Prior Service Credits (0.1) — (1.8) (1.8) Amortization of Net Loss 1.4 2.8 (0.6) 0.1 Net Periodic Benefit Cost (Credit) $2.3 $1.4 $(3.1) $(2.2) Nine Months Ended September 30, Service Cost $4.9 $6.9 $1.7 $2.3 Non-Service Cost Components (a) Interest Cost 30.4 20.4 4.6 3.3 Expected Return on Plan Assets (32.8) (31.1) (8.5) (7.2) Amortization of Prior Service Credits (0.1) (0.1) (5.3) (5.6) Amortization of Net Loss 4.3 8.6 (1.7) 0.3 Net Periodic Benefit Cost (Credit) $6.7 $4.7 $(9.2) $(6.9) (a) These components of net periodic benefit cost (credit) are included in the line item “Other” under Other Income (Expense) on the Consolidated Statement of Income. Employer Contributions. For the nine months ended September 30, 2023, we contributed $17.3 million in cash to the defined benefit pension plans (none for the nine months ended September 30, 2022); we do not expect to make additional contributions to our defined benefit pension plans in 2023. For the nine months ended September 30, 2023 and 2022, we made no contributions to our other postretirement benefit plans; we do not expect to make any contributions to our other postretirement benefit plans in 2023. |
Business Segments
Business Segments | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Business Segments | BUSINESS SEGMENTS We present two reportable segments: Regulated Operations and ALLETE Clean Energy. We measure performance of our operations through budgeting and monitoring of contributions to consolidated net income by each business segment. Regulated Operations includes three operating segments which consist of our regulated utilities, Minnesota Power and SWL&P, as well as our investment in ATC. ALLETE Clean Energy is our business focused on developing, acquiring and operating clean and renewable energy projects. We also present Corporate and Other which includes New Energy, a renewable energy development company, BNI Energy, our coal mining operations in North Dakota, ALLETE Properties, our legacy Florida real estate investment, along with our investment in Nobles 2, South Shore Energy, our non-rate regulated, Wisconsin subsidiary developing NTEC, other business development and corporate expenditures, unallocated interest expense, a small amount of non-rate base generation, land holdings in Minnesota, and earnings on cash and investments. NOTE 10. BUSINESS SEGMENTS (Continued) Quarter Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Millions Operating Revenue Regulated Operations Residential $37.9 $40.1 $123.3 $136.7 Commercial 49.2 49.0 140.9 141.7 Municipal 8.7 9.8 25.2 31.9 Industrial 154.3 147.3 439.4 445.7 Other Power Suppliers 31.0 46.7 103.2 124.6 Other 33.2 29.7 87.1 79.7 Total Regulated Operations 314.3 322.6 919.1 960.3 ALLETE Clean Energy Long-term PSA 12.9 14.4 44.5 58.7 Sale of Wind Energy Facilities — — 348.4 — Other 1.3 1.2 3.9 6.3 Total ALLETE Clean Energy 14.2 15.6 396.8 65.0 Corporate and Other Long-term Contract 24.6 23.5 74.0 67.5 Sale of Renewable Development Projects 20.8 22.1 73.2 36.6 Other 4.9 4.5 14.0 15.5 Total Corporate and Other 50.3 50.1 161.2 119.6 Total Operating Revenue $378.8 $388.3 $1,477.1 $1,144.9 Net Income (Loss) Attributable to ALLETE Regulated Operations $34.0 $38.3 $112.4 $119.4 ALLETE Clean Energy (a) 54.8 (7.3) 66.4 15.0 Corporate and Other (b) (2.9) 2.7 16.8 3.2 Total Net Income Attributable to ALLETE $85.9 $33.7 $195.6 $137.6 (a) Net income in 2023 includes a $44.3 million after-tax gain recognized for a favorable arbitration ruling. (See Note 6. Commitments, Guarantees and Contingencies.) (b) Net income in 2023 includes a $3.8 million after-tax expense recognized for the consolidated income tax impact of the gain on arbitration. (See Note 6. Commitments, Guarantees and Contingencies.) Net Income in 2022 includes a $5.7 million after-tax expense as a result of purchase price accounting related to projects under development at the time of acquisition and $2.6 million after-tax of transaction costs related to the acquisition of New Energy. September 30, December 31, Millions Assets Regulated Operations $4,272.4 $4,291.4 ALLETE Clean Energy 1,599.7 1,873.3 Corporate and Other 772.7 680.9 Total Assets $6,644.8 $6,845.6 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) Attributable to ALLETE | $ 85.9 | $ 33.7 | $ 195.6 | $ 137.6 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Operations and Significant Ac_2
Operations and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Subsequent Events | Subsequent Events. The Company performed an evaluation of subsequent events for potential recognition and disclosure through the date of the financial statements issuance. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash. We consider all investments purchased with original maturities of three months or less to be cash equivalents. As of September 30, 2023, restricted cash amounts included in Prepayments and Other on the Consolidated Balance Sheet include collateral deposits required under an ALLETE Clean Energy loan. The restricted cash amounts included in Other Non-Current Assets represent collateral deposits required under an ALLETE Clean Energy loan agreement as well as PSAs. |
Inventories – Net | Inventories – Net. Inventories are stated at the lower of cost or net realizable value. Inventories in our Regulated Operations segment are carried at an average cost or first-in, first-out basis. Inventories in our ALLETE Clean Energy segment and Corporate and Other businesses are carried at an average cost, first-in, first-out or specific identification basis. |
Regulatory Assets and Liabilities | Regulatory Assets and Liabilities. Our regulated utility operations are subject to accounting standards for the effects 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. 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. |
Investment in ATC | 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 portions of Wisconsin, Michigan, Minnesota and Illinois. |
Fair Value | FAIR VALUEFair 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. 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, land inventory, 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. |
Power Purchase and Sale Agreements | Power Purchase and Sale 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. |
Environmental Matters | 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 expensed unless recoverable in rates from customers. |
Earnings Per Share and Common Stock | EARNINGS PER SHARE AND COMMON STOCKWe 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 non-vested restricted stock units and performance share awards granted under our Executive Long-Term Incentive Compensation Plan. |
Income Tax Expense | 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. |
Uncertain Tax Positions | The unrecognized tax benefit amounts have been presented as an increase to the net deferred tax liability on the Consolidated Balance Sheet. |
Business Segments | BUSINESS SEGMENTSWe present two reportable segments: Regulated Operations and ALLETE Clean Energy. We measure performance of our operations through budgeting and monitoring of contributions to consolidated net income by each business segment. |
Operations and Significant Ac_3
Operations and Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Cash, Cash Equivalents and Restricted Cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheet that aggregate to the amounts presented in the Consolidated Statement of Cash Flows. Cash, Cash Equivalents and Restricted Cash September 30, December 31, September 30, December 31, Millions Cash and Cash Equivalents $125.5 $36.4 $42.1 $45.1 Restricted Cash included in Prepayments and Other 3.3 1.5 4.2 0.3 Restricted Cash included in Other Non-Current Assets 2.4 2.3 2.3 2.3 Cash, Cash Equivalents and Restricted Cash on the Consolidated Statement of Cash Flows $131.2 $40.2 $48.6 $47.7 |
Inventories – Net | Inventories in our ALLETE Clean Energy segment and Corporate and Other businesses are carried at an average cost, first-in, first-out or specific identification basis. Inventories – Net September 30, December 31, Millions Fuel (a) $33.0 $33.4 Materials and Supplies 115.4 75.1 Renewable Energy Facilities Under Development (b) 31.9 347.4 Total Inventories – Net $180.3 $455.9 (a) Fuel consists primarily of coal inventory at Minnesota Power. (b) Renewable Energy Facilities Under Development as of September 30, 2023, consists primarily of project costs related to renewable energy development projects at New Energy. As of December 31, 2022, it consisted primarily of project costs related to ALLETE Clean Energy’s Northern Wind and Red Barn wind projects sold in the first quarter of 2023 and second quarter of 2023, respectively. (See Other Current Liabilities.) |
Other Non-Current Assets | Other Non-Current Assets September 30, December 31, Millions Contract Assets (a) $19.1 $21.0 Operating Lease Right-of-use Assets 11.6 12.7 Finance Lease Right-of-use Assets 2.1 — ALLETE Properties 19.4 19.1 Restricted Cash 2.4 2.3 Other Postretirement Benefit Plans 60.2 58.8 Other 101.5 90.4 Total Other Non-Current Assets $216.3 $204.3 |
Other Current Liabilities | Other Current Liabilities September 30, December 31, Millions Customer Deposits (a) $6.0 $150.7 PSAs 6.0 6.1 Provision for Interim Rate Refund 39.4 18.4 Manufactured Gas Plant (b) 3.4 14.7 Operating Lease Liabilities 3.0 3.2 Finance Lease Liabilities 0.4 — Other 52.3 57.9 Total Other Current Liabilities $110.5 $251.0 (a) Customer Deposits as of December 31, 2022, primarily related to deposits received by ALLETE Clean Energy for the Northern Wind and Red Barn wind projects sold in the first quarter of 2023 and second quarter of 2023, respectively. (See Inventories – Net.) |
Other Non-Current Liabilities | Other Non-Current Liabilities September 30, December 31, Millions Asset Retirement Obligation (a) $200.8 $200.4 PSAs 22.4 26.9 Operating Lease Liabilities 8.5 9.3 Finance Lease Liabilities 1.7 — Other 30.4 32.4 Total Other Non-Current Liabilities $263.8 $269.0 |
Other Income | Quarter Ended Nine Months Ended September 30, September 30, Other Income 2023 2022 2023 2022 Millions Pension and Other Postretirement Benefit Plan Non-Service Credits (a) $1.8 $1.9 $5.5 $7.2 Interest and Investment Income (b) 6.6 (0.4) 8.7 (1.3) AFUDC - Equity 1.1 0.7 2.5 2.4 PSA Liability (c) — — — 10.2 Gain on Arbitration Award (d) 58.4 — 58.4 — Other 0.8 0.1 0.2 (2.1) Total Other Income $68.7 $2.3 $75.3 $16.4 (a) These are components of net periodic pension and other postretirement benefit cost other than service cost. (See Note 9. Pension and Other Postretirement Benefit Plans.) (b) Interest and Investment Income for the quarter and nine months ended September 30, 2023, reflects $5.1 million of interest income related to interest awarded as part of an arbitration ruling involving a subsidiary of ALLETE Clean Energy. (See Note 6. Commitments, Guarantees, and Contingencies.) (c) The gain on removal of the PSA liability for the Northern Wind project upon decommissioning of the legacy wind energy facility assets, which was more than offset by a reserve for an anticipated loss on the sale of the Northern Wind project that was recorded in Cost of Sales - Non-Utility on the Consolidated Statement of Income. (d) This reflects a gain recognized for the favorable outcome of an arbitration ruling involving a subsidiary of ALLETE Clean Energy. (See Note 6. Commitments, Guarantees, and Contingencies.) |
Supplemental Statement of Cash Flows Information | Supplemental Statement of Cash Flows Information. Nine Months Ended September 30, 2023 2022 Millions Cash Paid for Interest – Net of Amounts Capitalized $64.8 $60.5 Cash Paid for Income Taxes – Net $14.1 $1.1 Noncash Investing and Financing Activities Increase in Accounts Payable for Capital Additions to Property, Plant and Equipment $11.8 $2.4 Reclassification of Property, Plant and Equipment to Inventory (a) — $99.8 Capitalized Asset Retirement Costs $2.4 $9.0 AFUDC–Equity $2.5 $2.4 (a) The decommissioning of the legacy Northern Wind assets resulted in a reclassification from Property, Plant and Equipment – Net to Inventories – Net in the second quarter of 2022 as they were repowered and subsequently sold to a subsidiary of Xcel Energy Inc. |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Regulated Operations [Abstract] | |
Regulatory Assets and Liabilities | 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 2. REGULATORY MATTERS (Continued) Regulatory Assets and Liabilities September 30, December 31, Millions Current Regulatory Assets (a) Fuel Adjustment Clause $12.1 $25.6 Other 1.8 — Total Current Regulatory Assets $13.9 $25.6 Non-Current Regulatory Assets Defined Benefit Pension and Other Postretirement Plans $223.6 $225.9 Income Taxes 91.4 97.6 Cost Recovery Riders 40.8 41.2 Asset Retirement Obligations 37.1 35.6 Taconite Harbor (b) 24.2 — Manufactured Gas Plant 14.1 15.1 Fuel Adjustment Clause 4.1 14.5 PPACA Income Tax Deferral 4.0 4.1 Other 4.0 7.0 Total Non-Current Regulatory Assets $443.3 $441.0 Current Regulatory Liabilities (c) Provision for Interim Rate Refund (d) $39.4 $18.4 Transmission Formula Rates Refund 1.2 4.9 Other 1.3 0.1 Total Current Regulatory Liabilities $41.9 $23.4 Non-Current Regulatory Liabilities Income Taxes $315.7 $332.5 Wholesale and Retail Contra AFUDC 78.6 80.7 Plant Removal Obligations 65.9 60.0 Fuel Adjustment Clause 28.3 — Non-Jurisdictional Land Sales 20.7 7.5 North Dakota Investment Tax Credits 16.4 16.9 Defined Benefit Pension and Other Postretirement Benefit Plans 11.8 17.6 Boswell Units 1 and 2 Net Plant and Equipment 6.7 6.7 Other 5.2 4.2 Total Non-Current Regulatory Liabilities $549.3 $526.1 (a) Current regulatory assets are presented within Prepayments and Other on the Consolidated Balance Sheet. (b) In the first quarter of 2023, Minnesota Power retired Taconite Harbor Units 1 and 2. The remaining net book value was reclassified from property, plant and equipment to a regulatory asset on the Consolidated Balance Sheet when the units were retired. Minnesota Power expects to receive recovery of the remaining net book value from customers. (c) Current regulatory liabilities are presented within Other Current Liabilities on the Consolidated Balance Sheet. (d) See 2022 Minnesota General Rate Case. |
Equity Investments (Tables)
Equity Investments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | We account for our investment in ATC under the equity method of accounting. ALLETE’s Investment in ATC Millions Equity Investment Balance as of December 31, 2022 $165.4 Cash Investments 6.6 Equity in ATC Earnings 17.3 Distributed ATC Earnings (13.8) Amortization of the Remeasurement of Deferred Income Taxes 1.0 Equity Investment Balance as of September 30, 2023 $176.5 ALLETE’s Investment in Nobles 2 Millions Equity Investment Balance as of December 31, 2022 $157.3 Equity in Nobles 2 Earnings (a) (1.2) Distributed Nobles 2 Earnings (2.9) Equity Investment Balance as of September 30, 2023 $153.2 (a) The Company also recorded earnings from net loss attributable to non-controlling interest of $7.2 million related to its investment in Nobles 2. |
Fair Value (Tables)
Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Recurring Fair Value Measures | The estimated fair value of Cash and Cash Equivalents 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 September 30, 2023 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Millions Assets Investments (a) Available-for-sale – Equity Securities $8.1 — — $8.1 Available-for-sale – Corporate and Governmental Debt Securities (b) — $5.8 — 5.8 Cash Equivalents 5.8 — — 5.8 Total Fair Value of Assets $13.9 $5.8 — $19.7 Liabilities Deferred Compensation (c) — $15.9 — $15.9 Total Fair Value of Liabilities — $15.9 — $15.9 Fair Value as of December 31, 2022 Recurring Fair Value Measures Level 1 Level 2 Level 3 Total Millions Assets Investments (a) Available-for-sale – Equity Securities $7.7 — — $7.7 Available-for-sale – Corporate and Governmental Debt Securities — $5.7 — 5.7 Cash Equivalents 4.2 — — 4.2 Total Fair Value of Assets $11.9 $5.7 — $17.6 Liabilities Deferred Compensation (c) — $15.0 — $15.0 Total Fair Value of Liabilities — $15.0 — $15.0 (a) Included in Other Non-Current Assets on the Consolidated Balance Sheet. (b) As of September 30, 2023, the aggregate amount of available-for-sale corporate and governmental debt securities maturing in one year or less was $1.6 million, in one year to less than three years was $2.9 million, in three years to less than five years was $0.9 million and in five or more years was $0.4 million. |
Fair Value of Financial Instruments | The fair value of the item listed in the following table was based on quoted market prices for the same or similar instruments (Level 2). Financial Instruments Carrying Amount Fair Value Millions Short-Term and Long-Term Debt (a) September 30, 2023 $1,805.5 $1,582.5 December 31, 2022 $1,929.1 $1,782.7 (a) Excludes unamortized debt issuance costs. |
Short-Term and Long-Term Debt (
Short-Term and Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Short-Term and Long-Term Debt | The following tables present the Company’s short-term and long-term debt as of September 30, 2023, and December 31, 2022: September 30, 2023 Principal Unamortized Debt Issuance Costs Total Millions Short-Term Debt $111.1 $(0.1) $111.0 Long-Term Debt 1,694.4 (8.3) 1,686.1 Total Debt $1,805.5 $(8.4) $1,797.1 December 31, 2022 Principal Unamortized Debt Issuance Costs Total Millions Short-Term Debt $272.7 $(0.1) $272.6 Long-Term Debt 1,656.4 (8.2) 1,648.2 Total Debt $1,929.1 $(8.3) $1,920.8 |
Earnings Per Share and Common_2
Earnings Per Share and Common Stock (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Reconciliation of Basic and Diluted Earnings Per Share | The difference between basic and diluted earnings per share, if any, arises from non-vested restricted stock units and performance share awards granted under our Executive Long-Term Incentive Compensation Plan. 2023 2022 Reconciliation of Basic and Diluted Dilutive Dilutive Earnings Per Share Basic Securities Diluted Basic Securities Diluted Millions Except Per Share Amounts Quarter ended September 30, Net Income Attributable to ALLETE $85.9 $85.9 $33.7 $33.7 Average Common Shares 57.4 0.1 57.5 57.1 0.1 57.2 Earnings Per Share $1.50 $1.49 $0.59 $0.59 Nine Months Ended September 30, Net Income Attributable to ALLETE $195.6 $195.6 $137.6 $137.6 Average Common Shares 57.3 0.1 57.4 55.5 0.1 55.6 Earnings Per Share $3.41 $3.41 $2.48 $2.48 |
Income Tax Expense (Tables)
Income Tax Expense (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Tax Expense | Quarter Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Millions Current Income Tax Expense (a) Federal $4.0 — $12.6 — State 1.1 $0.2 6.5 $0.3 Total Current Income Tax Expense $5.1 $0.2 $19.1 $0.3 Deferred Income Tax Expense (Benefit) Federal (b) $5.2 $(8.4) $(10.9) $(20.7) State 9.1 1.1 12.5 1.4 Investment Tax Credit Amortization (0.1) (0.1) (0.3) (0.4) Total Deferred Income Tax Expense (Benefit) $14.2 $(7.4) $1.3 $(19.7) Total Income Tax Expense (Benefit) $19.3 $(7.2) $20.4 $(19.4) (a) For the quarter and nine months ended September 30, 2023, the federal current tax expense was partially offset by production tax credits. For the quarter and nine months ended September 30, 2022, the federal and state current tax expense was minimal due to NOLs which resulted from the bonus depreciation provisions of certain tax legislation. |
Reconciliation of Taxes from Federal Statutory Rate to Total Income Tax Expense | 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. Quarter Ended Nine Months Ended Reconciliation of Taxes from Federal Statutory September 30, September 30, Rate to Total Income Tax Expense 2023 2022 2023 2022 Millions Income Before Income Taxes $88.9 $19.6 $168.3 $74.7 Statutory Federal Income Tax Rate 21 % 21 % 21 % 21 % Income Taxes Computed at Statutory Federal Rate $18.7 $4.1 $35.3 $15.7 Increase (Decrease) in Income Tax Due to: State Income Taxes – Net of Federal Income Tax Benefit 8.0 1.1 15.0 6.6 Deferred Revaluation – Net of Federal Income Tax Benefit — — — (5.2) Production Tax Credits (a) (7.7) (9.7) (28.3) (34.4) Investment Tax Credits (a) (1.6) (3.2) (5.2) (3.2) Regulatory Differences – Excess Deferred Tax (2.3) (1.5) (7.5) (6.7) Non-Controlling Interest in Subsidiaries 3.0 1.4 8.9 8.4 Other 1.2 0.6 2.2 (0.6) Total Income Tax Expense (Benefit) $19.3 $(7.2) $20.4 $(19.4) |
Pension and Other Postretirem_2
Pension and Other Postretirement Benefit Plans (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Retirement Benefits [Abstract] | |
Components of Net Periodic Benefit Cost (Credit) | Pension Other Components of Net Periodic Benefit Cost (Credit) 2023 2022 2023 2022 Millions Quarter Ended September 30, Service Cost $1.7 $2.1 $0.6 $0.8 Non-Service Cost Components (a) Interest Cost 10.2 6.9 1.6 1.1 Expected Return on Plan Assets (10.9) (10.4) (2.9) (2.4) Amortization of Prior Service Credits (0.1) — (1.8) (1.8) Amortization of Net Loss 1.4 2.8 (0.6) 0.1 Net Periodic Benefit Cost (Credit) $2.3 $1.4 $(3.1) $(2.2) Nine Months Ended September 30, Service Cost $4.9 $6.9 $1.7 $2.3 Non-Service Cost Components (a) Interest Cost 30.4 20.4 4.6 3.3 Expected Return on Plan Assets (32.8) (31.1) (8.5) (7.2) Amortization of Prior Service Credits (0.1) (0.1) (5.3) (5.6) Amortization of Net Loss 4.3 8.6 (1.7) 0.3 Net Periodic Benefit Cost (Credit) $6.7 $4.7 $(9.2) $(6.9) |
Business Segments (Tables)
Business Segments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting [Abstract] | |
Business Segments | We also present Corporate and Other which includes New Energy, a renewable energy development company, BNI Energy, our coal mining operations in North Dakota, ALLETE Properties, our legacy Florida real estate investment, along with our investment in Nobles 2, South Shore Energy, our non-rate regulated, Wisconsin subsidiary developing NTEC, other business development and corporate expenditures, unallocated interest expense, a small amount of non-rate base generation, land holdings in Minnesota, and earnings on cash and investments. NOTE 10. BUSINESS SEGMENTS (Continued) Quarter Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Millions Operating Revenue Regulated Operations Residential $37.9 $40.1 $123.3 $136.7 Commercial 49.2 49.0 140.9 141.7 Municipal 8.7 9.8 25.2 31.9 Industrial 154.3 147.3 439.4 445.7 Other Power Suppliers 31.0 46.7 103.2 124.6 Other 33.2 29.7 87.1 79.7 Total Regulated Operations 314.3 322.6 919.1 960.3 ALLETE Clean Energy Long-term PSA 12.9 14.4 44.5 58.7 Sale of Wind Energy Facilities — — 348.4 — Other 1.3 1.2 3.9 6.3 Total ALLETE Clean Energy 14.2 15.6 396.8 65.0 Corporate and Other Long-term Contract 24.6 23.5 74.0 67.5 Sale of Renewable Development Projects 20.8 22.1 73.2 36.6 Other 4.9 4.5 14.0 15.5 Total Corporate and Other 50.3 50.1 161.2 119.6 Total Operating Revenue $378.8 $388.3 $1,477.1 $1,144.9 Net Income (Loss) Attributable to ALLETE Regulated Operations $34.0 $38.3 $112.4 $119.4 ALLETE Clean Energy (a) 54.8 (7.3) 66.4 15.0 Corporate and Other (b) (2.9) 2.7 16.8 3.2 Total Net Income Attributable to ALLETE $85.9 $33.7 $195.6 $137.6 (a) Net income in 2023 includes a $44.3 million after-tax gain recognized for a favorable arbitration ruling. (See Note 6. Commitments, Guarantees and Contingencies.) (b) Net income in 2023 includes a $3.8 million after-tax expense recognized for the consolidated income tax impact of the gain on arbitration. (See Note 6. Commitments, Guarantees and Contingencies.) Net Income in 2022 includes a $5.7 million after-tax expense as a result of purchase price accounting related to projects under development at the time of acquisition and $2.6 million after-tax of transaction costs related to the acquisition of New Energy. September 30, December 31, Millions Assets Regulated Operations $4,272.4 $4,291.4 ALLETE Clean Energy 1,599.7 1,873.3 Corporate and Other 772.7 680.9 Total Assets $6,644.8 $6,845.6 |
Operations and Significant Ac_4
Operations and Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Cash, Cash Equivalents and Restricted Cash [Abstract] | ||||
Cash and Cash Equivalents | $ 125.5 | $ 36.4 | $ 42.1 | $ 45.1 |
Restricted Cash included in Prepayments and Other | 3.3 | 1.5 | 4.2 | 0.3 |
Restricted Cash included in Other Non-Current Assets | 2.4 | 2.3 | 2.3 | 2.3 |
Cash, Cash Equivalents and Restricted Cash on the Consolidated Statement of Cash Flows | $ 131.2 | $ 40.2 | $ 48.6 | $ 47.7 |
Operations and Significant Ac_5
Operations and Significant Accounting Policies - Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Fuel | $ 33 | $ 33.4 |
Materials and Supplies | 115.4 | 75.1 |
Renewable Energy Facilities Under Development | 31.9 | 347.4 |
Inventories – Net | $ 180.3 | $ 455.9 |
Operations and Significant Ac_6
Operations and Significant Accounting Policies - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) MW | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Non-Controlling Interest Details [Line Items] | |||||
Goodwill | $ | $ 154.9 | $ 154.9 | $ 154.9 | ||
Net Loss Attributable to Non-Controlling Interest | $ | (16.3) | $ (6.9) | $ (47.7) | $ (43.5) | |
Revision of Prior Period, Error Correction, Adjustment | |||||
Non-Controlling Interest Details [Line Items] | |||||
Net Loss Attributable to Non-Controlling Interest | $ | $ 5.7 | $ 3.6 | |||
Glen Ullin Energy Center | |||||
Non-Controlling Interest Details [Line Items] | |||||
Generating capacity subject to tax equity financing | 106 | ||||
South Peak | |||||
Non-Controlling Interest Details [Line Items] | |||||
Generating capacity subject to tax equity financing | 80 | ||||
Diamond Spring | |||||
Non-Controlling Interest Details [Line Items] | |||||
Generating capacity subject to tax equity financing | 303 | ||||
Caddo | |||||
Non-Controlling Interest Details [Line Items] | |||||
Generating capacity subject to tax equity financing | 303 | ||||
Nobles 2 | |||||
Non-Controlling Interest Details [Line Items] | |||||
Generating capacity subject to tax equity financing | 250 |
Operations and Significant Ac_7
Operations and Significant Accounting Policies - Other Non-Current Assets (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Dec. 31, 2021 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Contract Assets | $ 19.1 | $ 21 | ||
Operating Lease Right-of-use Assets | 11.6 | 12.7 | ||
Finance Lease Right-of-use Assets | 2.1 | 0 | ||
ALLETE Properties | 19.4 | 19.1 | ||
Restricted Cash | 2.4 | 2.3 | $ 2.3 | $ 2.3 |
Other Postretirement Benefit Plans | 60.2 | 58.8 | ||
Other | 101.5 | 90.4 | ||
Total Other Non-Current Assets | $ 216.3 | $ 204.3 |
Operations and Significant Ac_8
Operations and Significant Accounting Policies - Other Current Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Customer Deposits | $ 6 | $ 150.7 |
PSAs | 6 | 6.1 |
Provision for Interim Rate Refund | 39.4 | 18.4 |
Manufactured Gas Plant - Current | 3.4 | 14.7 |
Operating Lease Liabilities | 3 | 3.2 |
Finance Lease Liabilities | 0.4 | 0 |
Other | 52.3 | 57.9 |
Total Other Current Liabilities | $ 110.5 | $ 251 |
Operations and Significant Ac_9
Operations and Significant Accounting Policies - Other Non-Current Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Business Segments [Line Items] | ||
Asset Retirement Obligation | $ 200.8 | $ 200.4 |
PSAs | 22.4 | 26.9 |
Operating Lease Liabilities | 8.5 | 9.3 |
Finance Lease Liabilities | 1.7 | 0 |
Other | 30.4 | 32.4 |
Other Non-Current Liabilities | 263.8 | 269 |
BNI Energy | ||
Business Segments [Line Items] | ||
Other Receivables | $ 32.4 | $ 32.4 |
Operations and Significant A_10
Operations and Significant Accounting Policies - Other Income (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Other Income | ||||
Total Other Income | $ 68.7 | $ 2.3 | $ 75.3 | $ 16.4 |
Pension and Other Postretirement Benefit Plan Non-Service Credits | ||||
Other Income | ||||
Total Other Income | 1.8 | 1.9 | 5.5 | 7.2 |
Interest and Investment Income (b) | ||||
Other Income | ||||
Total Other Income | 6.6 | (0.4) | 8.7 | (1.3) |
AFUDC - Equity | ||||
Other Income | ||||
Total Other Income | 1.1 | 0.7 | 2.5 | 2.4 |
PSA Liability | ||||
Other Income | ||||
Total Other Income | 0 | 0 | 0 | 10.2 |
Arbitration Award | ||||
Other Income | ||||
Total Other Income | 58.4 | 0 | 58.4 | 0 |
Other | ||||
Other Income | ||||
Total Other Income | 0.8 | $ 0.1 | 0.2 | $ (2.1) |
Interest Income Related To Interest Awarded As Part Of An Arbitration Ruling | ||||
Other Income | ||||
Total Other Income | $ 5.1 | $ 5.1 |
Operations and Significant A_11
Operations and Significant Accounting Policies - Supplemental Statement of Cash Flows Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Cash Paid for Interest – Net of Amounts Capitalized | $ 64.8 | $ 60.5 |
Cash Paid for Income Taxes – Net | 14.1 | 1.1 |
Noncash Investing and Financing Activities | ||
Increase in Accounts Payable for Capital Additions to Property, Plant and Equipment | 11.8 | 2.4 |
Reclassification of Property, Plant and Equipment to Inventory | 0 | 99.8 |
Capitalized Asset Retirement Costs | 2.4 | 9 |
AFUDC–Equity | $ 2.5 | $ 2.4 |
Regulatory Matters - Electric R
Regulatory Matters - Electric Rates (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||||
Nov. 02, 2023 | Nov. 01, 2023 | Feb. 28, 2023 | Nov. 01, 2021 | Sep. 30, 2023 | Jun. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2023 | Dec. 31, 2022 | |
Regulatory Matters [Line Items] | ||||||||||
Regulatory Assets | $ 443.3 | $ 443.3 | $ 441 | |||||||
Regulatory Liabilities | 549.3 | 549.3 | 526.1 | |||||||
ECO Annual Filing Member | MPUC | Minnesota Power | ||||||||||
Regulatory Matters [Line Items] | ||||||||||
Revenue from cost recovery riders and other regulatory programs | 2.2 | $ 1.9 | ||||||||
ECO Triennial Filing | MPUC | Minnesota Power | ||||||||||
Regulatory Matters [Line Items] | ||||||||||
Conservation improvement program goal, next fiscal year | $ 12.5 | |||||||||
Energy conservation and optimization plan goal, second fiscal year | 12.7 | |||||||||
Energy conservation and optimization plan goal, third fiscal year | $ 12.8 | |||||||||
Electric Rates | Fuel Adjustment Clause 2022 | MPUC | Minnesota Power | ||||||||||
Regulatory Matters [Line Items] | ||||||||||
Regulatory Assets | 13 | |||||||||
Electric Rates | Fuel Adjustment Clause 2023 | MPUC | Minnesota Power | ||||||||||
Regulatory Matters [Line Items] | ||||||||||
Regulatory Liabilities | 28.3 | 28.3 | ||||||||
Retail Customers | Electric Rates | Current Cost Recovery Rider | MPUC | Minnesota Power | ||||||||||
Regulatory Matters [Line Items] | ||||||||||
Revenue from cost recovery riders and other regulatory programs | 44.9 | $ 19.5 | ||||||||
Retail Customers | Electric Rates | 2024 Minnesota General Rate Case | MPUC | Minnesota Power | Subsequent Event | ||||||||||
Regulatory Matters [Line Items] | ||||||||||
Requested rate increase percent | 12% | |||||||||
Requested return on equity | 10.30% | |||||||||
Requested equity capital structure | 53% | |||||||||
Annual additional revenue generated from requested final rate increase | $ 64 | $ 89 | ||||||||
Annual interim rate increase implementation | 60 days | |||||||||
Retail Customers | Electric Rates | 2022 Minnesota General Rate Review | MPUC | Minnesota Power | ||||||||||
Regulatory Matters [Line Items] | ||||||||||
Revenue from cost recovery riders and other regulatory programs | $ 10 | |||||||||
Requested rate increase percent | 18% | |||||||||
Requested return on equity | 10.25% | |||||||||
Requested equity capital structure | 53.81% | |||||||||
Annual additional revenue generated from requested final rate increase | $ 108 | |||||||||
Authorized return on equity | 9.65% | |||||||||
Return on common equity | 52.50% | |||||||||
Additional revenue from base rates | $ 60 | |||||||||
Customer refund | $ 39.4 | $ 39.4 | $ 18.4 |
Regulatory Matters - Regulatory
Regulatory Matters - Regulatory Assets and Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Regulatory Assets and Liabilities [Line Items] | ||
Total Current Regulatory Assets | $ 13.9 | $ 25.6 |
Total Non-Current Regulatory Assets | 443.3 | 441 |
Total Current Regulatory Liabilities | 41.9 | 23.4 |
Total Non-Current Regulatory Liabilities | 549.3 | 526.1 |
Provision for Interim Rate Refund | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Current Regulatory Liabilities | 39.4 | 18.4 |
Transmission Formula Rates Refund | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Current Regulatory Liabilities | 1.2 | 4.9 |
Other | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Current Regulatory Liabilities | 1.3 | 0.1 |
Total Non-Current Regulatory Liabilities | 5.2 | 4.2 |
Income Taxes | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Liabilities | 315.7 | 332.5 |
Wholesale and Retail Contra AFUDC | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Liabilities | 78.6 | 80.7 |
Plant Removal Obligations | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Liabilities | 65.9 | 60 |
Fuel Adjustment Clause | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Liabilities | 28.3 | 0 |
Non-Jurisdictional Land Sales | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Liabilities | 20.7 | 7.5 |
North Dakota Investment Tax Credits | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Liabilities | 16.4 | 16.9 |
Defined Benefit Pension and Other Postretirement Benefit Plans | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Liabilities | 11.8 | 17.6 |
Boswell Units 1 and 2 Net Plant and Equipment | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Liabilities | 6.7 | 6.7 |
Fuel Adjustment Clause | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Current Regulatory Assets | 12.1 | 25.6 |
Total Non-Current Regulatory Assets | 4.1 | 14.5 |
Other | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Current Regulatory Assets | 1.8 | 0 |
Total Non-Current Regulatory Assets | 4 | 7 |
Defined Benefit Pension and Other Postretirement Benefit Plans | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Assets | 223.6 | 225.9 |
Income Taxes | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Assets | 91.4 | 97.6 |
Cost Recovery Riders | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Assets | 40.8 | 41.2 |
Asset Retirement Obligations | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Assets | 37.1 | 35.6 |
Taconite Harbor | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Assets | 24.2 | 0 |
Manufactured Gas Plant | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Assets | 14.1 | 15.1 |
PPACA Income Tax Deferral | ||
Regulatory Assets and Liabilities [Line Items] | ||
Total Non-Current Regulatory Assets | $ 4 | $ 4.1 |
Equity Investments - Narrative
Equity Investments - Narrative (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) MW | |
Wind Turbine Generators | Tenaska | Tenaska PPA | Minnesota Power | |
Investments In ATC [Roll Forward] | |
Generating capacity counterparty owned (MegaWatt) | MW | 250 |
Long-term contract for purchase of electric power | 20 years |
ATC | |
Investments In ATC [Roll Forward] | |
Ownership percentage | 8% |
Authorized return on equity | 10.02% |
Authorized return on equity, including incentive adder | 10.52% |
Basis point incentive adder | 0.50% |
Approximate annual reduction in pretax income for FERC proposal to limit incentive adder, Allete's proportionate share | $ | $ 1 |
Nobles 2 | |
Investments In ATC [Roll Forward] | |
Ownership percentage | 49% |
Equity Investments - Investment
Equity Investments - Investment in ATC (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Investments In ATC [Roll Forward] | ||||
Equity Investment Balance as of December 31, 2022 | $ 322.7 | |||
Cash Investments | 6.6 | $ 5.1 | ||
Equity Earnings | $ 4.7 | $ 2.3 | 16.1 | 13.1 |
Equity Investment Balance as of September 30, 2023 | 329.7 | 329.7 | ||
Net Loss Attributable to Non-Controlling Interest | (16.3) | $ (6.9) | (47.7) | $ (43.5) |
ATC | ||||
Investments In ATC [Roll Forward] | ||||
Equity Investment Balance as of December 31, 2022 | 165.4 | |||
Cash Investments | 6.6 | |||
Equity Earnings | 17.3 | |||
Distributed earnings | (13.8) | |||
Amortization of the Remeasurement of Deferred Income Taxes | 1 | |||
Equity Investment Balance as of September 30, 2023 | 176.5 | 176.5 | ||
Nobles 2 | ||||
Investments In ATC [Roll Forward] | ||||
Equity Investment Balance as of December 31, 2022 | 157.3 | |||
Equity Earnings | (1.2) | |||
Distributed earnings | (2.9) | |||
Equity Investment Balance as of September 30, 2023 | $ 153.2 | 153.2 | ||
Net Loss Attributable to Non-Controlling Interest | $ 7.2 |
Fair Value - Recurring Fair Val
Fair Value - Recurring Fair Value Measures (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Liabilities | ||
Aggregate amount of available-for-sale corporate and governmental debt securities maturing in one year | $ 1.6 | |
Aggregate amount of available-for-sale corporate and governmental debt securities maturing after one year through three years | 2.9 | |
Aggregate amount of available-for-sale corporate and governmental debt securities maturing after one year through three years after three years through five years | 0.9 | |
Aggregate amount of available-for-sale corporate and governmental debt securities maturing after one year through three years after three years through five years after five years | 0.4 | |
Recurring Fair Value Measures | ||
Investments [Abstract] | ||
Available-for-sale – Equity Securities | 8.1 | $ 7.7 |
Available-for-sale – Corporate and Governmental Debt Securities | 5.8 | 5.7 |
Cash Equivalents | 5.8 | 4.2 |
Total Fair Value of Assets | 19.7 | 17.6 |
Liabilities | ||
Deferred compensation | 15.9 | 15 |
Total Fair Value of Liabilities | 15.9 | 15 |
Recurring Fair Value Measures | Level 1 | ||
Investments [Abstract] | ||
Available-for-sale – Equity Securities | 8.1 | 7.7 |
Available-for-sale – Corporate and Governmental Debt Securities | 0 | 0 |
Cash Equivalents | 5.8 | 4.2 |
Total Fair Value of Assets | 13.9 | 11.9 |
Liabilities | ||
Deferred compensation | 0 | 0 |
Total Fair Value of Liabilities | 0 | 0 |
Recurring Fair Value Measures | Level 2 | ||
Investments [Abstract] | ||
Available-for-sale – Equity Securities | 0 | 0 |
Available-for-sale – Corporate and Governmental Debt Securities | 5.8 | 5.7 |
Cash Equivalents | 0 | 0 |
Total Fair Value of Assets | 5.8 | 5.7 |
Liabilities | ||
Deferred compensation | 15.9 | 15 |
Total Fair Value of Liabilities | 15.9 | 15 |
Recurring Fair Value Measures | Level 3 | ||
Investments [Abstract] | ||
Available-for-sale – Equity Securities | 0 | 0 |
Available-for-sale – Corporate and Governmental Debt Securities | 0 | 0 |
Cash Equivalents | 0 | 0 |
Total Fair Value of Assets | 0 | 0 |
Liabilities | ||
Deferred compensation | 0 | 0 |
Total Fair Value of Liabilities | $ 0 | $ 0 |
Fair Value - Fair Value of Fina
Fair Value - Fair Value of Financial Instruments and Assets Measured on a Nonrecurring Basis (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value of Financial Instruments [Line Items] | ||
Short-term and long-term debt - carrying amount | $ 1,805.5 | $ 1,929.1 |
Level 2 | ||
Fair Value of Financial Instruments [Line Items] | ||
Short-term and long-term debt - fair value | $ 1,582.5 | $ 1,782.7 |
Short-Term and Long-Term Debt -
Short-Term and Long-Term Debt - Schedule of Short-Term and Long-Term Debt (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Principal | ||
Short-Term Debt | $ 111.1 | $ 272.7 |
Long-Term Debt | 1,694.4 | 1,656.4 |
Total Debt | 1,805.5 | 1,929.1 |
Unamortized Debt Issuance Costs | ||
Short-Term Debt | (0.1) | (0.1) |
Long-Term Debt | (8.3) | (8.2) |
Total Debt | (8.4) | (8.3) |
Total | ||
Short-Term Debt | 111 | 272.6 |
Long-Term Debt | 1,686.1 | 1,648.2 |
Total Debt | $ 1,797.1 | $ 1,920.8 |
Short-Term and Long-Term Debt_2
Short-Term and Long-Term Debt - Narrative (Details) $ in Millions | Apr. 27, 2023 USD ($) | Oct. 17, 2023 USD ($) | Oct. 16, 2023 USD ($) | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Debt Instrument [Line Items] | |||||
Actual ratio of indebtedness to total capitalization | 0.36 | ||||
ALLETE Bonds 4.98% Due April 2033 | |||||
Debt Instrument [Line Items] | |||||
Proceeds from issuance of first mortgage bond | $ 125 | ||||
Interest rate | 4.98% | ||||
Credit Agreement | Line of Credit | |||||
Debt Instrument [Line Items] | |||||
Letters of credit outstanding | $ 19.8 | $ 32.8 | |||
Line of credit draw outstanding | $ 33.3 | $ 31.3 | |||
Credit Agreement | Line of Credit | Subsequent Event | |||||
Debt Instrument [Line Items] | |||||
Line of credit | $ 355 | $ 400 | |||
Extension period | 1 year | ||||
Issuable letters of credit | $ 80 | ||||
Minimum | |||||
Debt Instrument [Line Items] | |||||
Required ratio of indebtedness to total capitalization | 0.65 | ||||
Maximum | |||||
Debt Instrument [Line Items] | |||||
Required ratio of indebtedness to total capitalization | 1 |
Commitments, Guarantees and C_2
Commitments, Guarantees and Contingencies - Power Purchase Agreements (Details) - Square Butte PPA - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Square Butte | ||
Power Purchase Agreements [Line Items] | ||
PPA counterparty total debt outstanding | $ 176.9 | |
Square Butte | Minnesota Power | ||
Power Purchase Agreements [Line Items] | ||
Cost of power purchased | 64.8 | $ 63.8 |
Pro rata share of PPA counterparty interest expense | $ 4.1 | $ 3.7 |
Square Butte | Minnesota Power | Square Butte Coal-Fired Unit | ||
Power Purchase Agreements [Line Items] | ||
Expected output entitlement | 50% | |
Minnkota Power | Minnesota Power | Square Butte Coal-Fired Unit | Minnkota Power PSA | ||
Power Purchase Agreements [Line Items] | ||
Expected output entitlement | 37% | 32% |
Commitments, Guarantees and C_3
Commitments, Guarantees and Contingencies - Environmental Matters (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Coal Combustion Residuals | Minnesota Power | |
Environmental Matters [Line Items] | |
Expected period for costs of compliance | 12 years |
Coal Combustion Residuals | Minimum | Minnesota Power | |
Environmental Matters [Line Items] | |
Estimated costs of compliance | $ 65 |
Coal Combustion Residuals | Maximum | Minnesota Power | |
Environmental Matters [Line Items] | |
Estimated costs of compliance | 120 |
Manufactured Gas Plant | SWL&P | Superior, WI | |
Environmental Matters [Line Items] | |
Redemption cost liability | $ 4 |
Commitments, Guarantees and C_4
Commitments, Guarantees and Contingencies - Other Matters (Details) $ in Millions | 3 Months Ended |
Sep. 30, 2023 USD ($) | |
Guarantor Obligations [Line Items] | |
Gross proceeds from arbitration | $ 68.3 |
Prejudgment interest from legal settlements | 5.1 |
Arbitration costs recovery | 3.6 |
Pre tax gain from legal settlements | 58.4 |
Proceeds from arbitration ruling | 60 |
ALLETE, Inc. | Standby Letters of Credit | |
Guarantor Obligations [Line Items] | |
Letters of credit outstanding | 163.6 |
Regulated Operations | Standby Letters of Credit | |
Guarantor Obligations [Line Items] | |
Letters of credit outstanding | 24.2 |
ALLETE Clean Energy | Standby Letters of Credit | |
Guarantor Obligations [Line Items] | |
Letters of credit outstanding | 105.3 |
BNI Energy Reclamation Liability | |
Guarantor Obligations [Line Items] | |
Estimated obligation | 82.1 |
BNI Energy Reclamation Liability | Surety Bonds | |
Guarantor Obligations [Line Items] | |
Collateral | 82.4 |
ALLETE South Wind | Standby Letters of Credit | |
Guarantor Obligations [Line Items] | |
Letters of credit outstanding | 10.1 |
South Shore Energy | Standby Letters of Credit | |
Guarantor Obligations [Line Items] | |
Letters of credit outstanding | $ 23.9 |
Earnings Per Share and Common_3
Earnings Per Share and Common Stock (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Basic | ||||
Net Income Attributable to ALLETE | $ 85.9 | $ 33.7 | $ 195.6 | $ 137.6 |
Average common shares (in shares) | 57.4 | 57.1 | 57.3 | 55.5 |
Earnings Per Share (in usd per share) | $ 1.50 | $ 0.59 | $ 3.41 | $ 2.48 |
Diluted | ||||
Net Income Attributable to ALLETE | $ 85.9 | $ 33.7 | $ 195.6 | $ 137.6 |
Average common shares adjustment (in shares) | 0.1 | 0.1 | 0.1 | 0.1 |
Average common shares (in shares) | 57.5 | 57.2 | 57.4 | 55.6 |
Earnings Per Share (in usd per share) | $ 1.49 | $ 0.59 | $ 3.41 | $ 2.48 |
Income Tax Expense - Schedule o
Income Tax Expense - Schedule of Income Tax Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Current Income Tax Expense | ||||
Federal | $ 4 | $ 0 | $ 12.6 | $ 0 |
State | 1.1 | 0.2 | 6.5 | 0.3 |
Total Current Income Tax Expense | 5.1 | 0.2 | 19.1 | 0.3 |
Deferred Income Tax Expense (Benefit) | ||||
Federal | 5.2 | (8.4) | (10.9) | (20.7) |
State | 9.1 | 1.1 | 12.5 | 1.4 |
Investment Tax Credit Amortization | (0.1) | (0.1) | (0.3) | (0.4) |
Total Deferred Income Tax Expense (Benefit) | 14.2 | (7.4) | 1.3 | (19.7) |
Total Income Tax Expense (Benefit) | $ 19.3 | $ (7.2) | $ 20.4 | $ (19.4) |
Income Tax Expense - Reconcilia
Income Tax Expense - Reconciliation of Taxes from Federal Statutory Rate to Total Income Tax Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Reconciliation of Taxes from Federal Statutory Rate to Total Income Tax Expense [Abstract] | ||||
Income Before Income Taxes | $ 88.9 | $ 19.6 | $ 168.3 | $ 74.7 |
Income Taxes Computed at Statutory Federal Rate | 18.7 | 4.1 | 35.3 | 15.7 |
Increase (Decrease) in Income Tax Due to: | ||||
State Income Taxes – Net of Federal Income Tax Benefit | 8 | 1.1 | 15 | 6.6 |
Deferred Revaluation – Net of Federal Income Tax Benefit | 0 | 0 | 0 | (5.2) |
Production tax credits | (7.7) | (9.7) | (28.3) | (34.4) |
Investment tax credits | (1.6) | (3.2) | (5.2) | (3.2) |
Regulatory Differences – Excess Deferred Tax | (2.3) | (1.5) | (7.5) | (6.7) |
Non-Controlling Interest in Subsidiaries | 3 | 1.4 | 8.9 | 8.4 |
Other | 1.2 | 0.6 | 2.2 | (0.6) |
Total Income Tax Expense (Benefit) | $ 19.3 | $ (7.2) | $ 20.4 | $ (19.4) |
Income Tax Expense - Narrative
Income Tax Expense - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||
Effective tax rate | 12.10% | (26.00%) | |
Gross unrecognized tax benefits | $ 1.1 | $ 1.3 | |
Gross unrecognized tax benefits that would favorably impact effective income tax rate | $ 0.6 |
Pension and Other Postretirem_3
Pension and Other Postretirement Benefit Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pension | ||||
Components of Net Periodic Benefit Cost (Credit) [Abstract] | ||||
Service Cost | $ 1.7 | $ 2.1 | $ 4.9 | $ 6.9 |
Interest Cost | 10.2 | 6.9 | 30.4 | 20.4 |
Expected Return on Plan Assets | (10.9) | (10.4) | (32.8) | (31.1) |
Amortization of Prior Service Credits | (0.1) | 0 | (0.1) | (0.1) |
Amortization of Net Loss | 1.4 | 2.8 | 4.3 | 8.6 |
Net Periodic Benefit Cost (Credit) | 2.3 | 1.4 | 6.7 | 4.7 |
Other Postretirement | ||||
Components of Net Periodic Benefit Cost (Credit) [Abstract] | ||||
Service Cost | 0.6 | 0.8 | 1.7 | 2.3 |
Interest Cost | 1.6 | 1.1 | 4.6 | 3.3 |
Expected Return on Plan Assets | (2.9) | (2.4) | (8.5) | (7.2) |
Amortization of Prior Service Credits | (1.8) | (1.8) | (5.3) | (5.6) |
Amortization of Net Loss | (0.6) | 0.1 | (1.7) | 0.3 |
Net Periodic Benefit Cost (Credit) | $ (3.1) | $ (2.2) | $ (9.2) | $ (6.9) |
Pension and Other Postretirem_4
Pension and Other Postretirement Benefit Plans - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Pension | ||
Pension and Other Postretirement Benefit Plans [Line Items] | ||
Employer contributions | $ 17.3 | $ 0 |
Expected future employer contributions | 0 | |
Other Postretirement | ||
Pension and Other Postretirement Benefit Plans [Line Items] | ||
Employer contributions | 0 | $ 0 |
Expected future employer contributions | $ 0 |
Business Segments - Narrative (
Business Segments - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 segment | |
Business Segments [Line Items] | |
Number of reportable segments | 2 |
Regulated Operations | |
Business Segments [Line Items] | |
Number of operating segments | 3 |
Business Segments - (Details)
Business Segments - (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Business Segments [Line Items] | |||||
Total Operating Revenue | $ 378.8 | $ 388.3 | $ 1,477.1 | $ 1,144.9 | |
Net Income (Loss) Attributable to ALLETE | 85.9 | 33.7 | 195.6 | 137.6 | |
Gain from legal settlements | 44.3 | ||||
Income tax expense from settlement proceeds | 3.8 | ||||
Assets | 6,644.8 | 6,644.8 | $ 6,845.6 | ||
Corporate and Other | |||||
Business Segments [Line Items] | |||||
Total Operating Revenue | 378.8 | 388.3 | 1,477.1 | 1,144.9 | |
Regulated Operations | |||||
Business Segments [Line Items] | |||||
Net Income (Loss) Attributable to ALLETE | 34 | 38.3 | 112.4 | 119.4 | |
Assets | 4,272.4 | 4,272.4 | 4,291.4 | ||
Regulated Operations | Operating Segments | |||||
Business Segments [Line Items] | |||||
Total Operating Revenue | 314.3 | 322.6 | 919.1 | 960.3 | |
Regulated Operations | Residential | Operating Segments | |||||
Business Segments [Line Items] | |||||
Operating Revenue | 37.9 | 40.1 | 123.3 | 136.7 | |
Regulated Operations | Commercial | Operating Segments | |||||
Business Segments [Line Items] | |||||
Operating Revenue | 49.2 | 49 | 140.9 | 141.7 | |
Regulated Operations | Municipal | Operating Segments | |||||
Business Segments [Line Items] | |||||
Operating Revenue | 8.7 | 9.8 | 25.2 | 31.9 | |
Regulated Operations | Industrial | Operating Segments | |||||
Business Segments [Line Items] | |||||
Operating Revenue | 154.3 | 147.3 | 439.4 | 445.7 | |
Regulated Operations | Other Power Suppliers | Operating Segments | |||||
Business Segments [Line Items] | |||||
Operating Revenue | 31 | 46.7 | 103.2 | 124.6 | |
Regulated Operations | Other | Operating Segments | |||||
Business Segments [Line Items] | |||||
Operating Revenue | 33.2 | 29.7 | 87.1 | 79.7 | |
ALLETE Clean Energy | |||||
Business Segments [Line Items] | |||||
Net Income (Loss) Attributable to ALLETE | 54.8 | (7.3) | 66.4 | 15 | |
Assets | 1,599.7 | 1,599.7 | 1,873.3 | ||
ALLETE Clean Energy | Operating Segments | |||||
Business Segments [Line Items] | |||||
Total Operating Revenue | 14.2 | 15.6 | 396.8 | 65 | |
ALLETE Clean Energy | Long-term PSA | Operating Segments | |||||
Business Segments [Line Items] | |||||
Operating Revenue | 12.9 | 14.4 | 44.5 | 58.7 | |
ALLETE Clean Energy | Sale of Wind Energy Facilities | Operating Segments | |||||
Business Segments [Line Items] | |||||
Operating Revenue | 0 | 0 | 348.4 | 0 | |
ALLETE Clean Energy | Other | Operating Segments | |||||
Business Segments [Line Items] | |||||
Operating revenue, other than customer revenue | 1.3 | 1.2 | 3.9 | 6.3 | |
Corporate and Other | |||||
Business Segments [Line Items] | |||||
Net Income (Loss) Attributable to ALLETE | (2.9) | 2.7 | 16.8 | 3.2 | |
Assets | 772.7 | 772.7 | $ 680.9 | ||
Corporate and Other | Corporate and Other | |||||
Business Segments [Line Items] | |||||
Total Operating Revenue | 50.3 | 50.1 | 161.2 | 119.6 | |
Corporate and Other | New Energy | |||||
Business Segments [Line Items] | |||||
Purchase price accounting impact | 5.7 | ||||
Transaction costs | 2.6 | ||||
Corporate and Other | Long-term Contract | Corporate and Other | |||||
Business Segments [Line Items] | |||||
Operating Revenue | 24.6 | 23.5 | 74 | 67.5 | |
Corporate and Other | Sale of Renewable Development Projects | Corporate and Other | |||||
Business Segments [Line Items] | |||||
Operating Revenue | 20.8 | 22.1 | 73.2 | 36.6 | |
Corporate and Other | Other | Corporate and Other | |||||
Business Segments [Line Items] | |||||
Operating Revenue | $ 4.9 | $ 4.5 | $ 14 | $ 15.5 |