[ALLETE LOGO]                           For Release:        October 18, 2000
                                        Contact:            Terry Johnson
  NEWS                                                      (218) 723-3934
                                                            tmjohnson@allete.com

                                        Investor contact:   Tim Thorp
                                                            (218) 723-3953
                                                            tthorp@allete.com

            ALLETE THIRD QUARTER EARNINGS ON TARGET; ANNUAL EARNINGS
            --------------------------------------------------------
                   GROWTH TARGET HIKED TO 12 PERCENT FOR 2001
                   ------------------------------------------

ALLETE (NYSE:  ALE) today reported third quarter earnings of 50 cents per share,
meeting  analysts'  expectations  and matching  last year's strong third quarter
results.

Third quarter net income was $35 million on quarterly  revenue of $323.5 million
compared to net income of $34.5 million on revenue of $308 million a year ago.

"We are on track to achieve our target of 10 percent annual  earnings growth for
2000,"  said Edwin L.  Russell,  chief  executive  officer  of ALLETE.  "Equally
important, our automotive acquisitions have positioned us to grow earnings by 12
percent in 2001." Russell noted that ADESA recently acquired 24 auto auctions in
three different transactions.  Based on twelve-month-ended  historical data, the
newly  acquired  auctions sold about  600,000  vehicles,  generating  revenue of
approximately $200 million.

AUTOMOTIVE  SERVICES continued its double-digit growth in net income. The number
of vehicles  sold at ADESA  auctions  increased  23 percent.  Same store  growth
increased  13  percent  as  measured  by  earnings   before   interest,   taxes,
depreciation,  amortization and lease expense.  Vehicles  financed by Automotive
Finance  Corporation  were up 6.5 percent  over the same  period  last year.  In
addition, AFC's loan portfolio is up 15 percent over 1999 to $395 million.

Third  quarter net income from  INVESTMENTS  was lower than 1999  because of two
large real estate  transactions that occurred last year.  Overall,  year-to-date
results for real estate are ahead of last year,  although  they  typically  vary
from  quarter to quarter,  depending  on the timing of major  transactions.  Net
income  from  the  company's   securities   portfolio  and  emerging  technology
investments posted strong increases over last year.

In ENERGY SERVICES,  sales to industrial,  commercial and residential  customers
were up 13 percent and exceeded  record levels that were  achieved in 1999.  Net
income, however,  declined by $7.2 million due in large part to a lack of demand
in the  region's  power  market as a result  of more  moderate  summer  weather.
Transmission constraints were also a factor.

Net income from WATER SERVICES was steady.

                                    - more -



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ALLETE News Release                                                       Page 2
- --------------------------------------------------------------------------------

ALLETE is a  multi-services  company  with  corporate  headquarters  in  Duluth,
Minnesota.  Holdings  include the second largest  wholesale  automobile  auction
network in North  America;  the  leading  provider  of  independent  auto dealer
inventory financing;  the largest  investor-owned water utilities in Florida and
North  Carolina;  significant  real  estate  holdings  in Florida and a low-cost
electric  utility  that serves some of the largest  industrial  customers in the
United States.

The  statements  contained in this release and  statements  that the company may
make orally in connection  with this release that are not  historical  facts are
forward-looking  statements.  Actual  results may differ  materially  from those
projected in the forward-looking  statements.  These forward-looking  statements
involve  risks  and  uncertainties  and  investors  are  directed  to the  risks
discussed in documents  filed by the company  with the  Securities  and Exchange
Commission.

                                       ###




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            ALLETE - 30 West Superior Street, Duluth, Minnesota 55802
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ALLETE News Release                                                       Page 3
- --------------------------------------------------------------------------------




                                                      ALLETE
                                         CONSOLIDATED STATEMENT OF INCOME
                                 FOR THE PERIODS ENDED SEPTEMBER 30, 2000 AND 1999
                                         Millions Except Per Share Amounts

                                                                     Quarter Ended              Year to Date
                                                                   2000         1999          2000         1999
- ----------------------------------------------------------------------------------------------------------------
                                                                                              
OPERATING REVENUE
     Energy Services                                              $146.1       $154.8        $426.6       $422.3
     Automotive Services                                           137.4        105.5         386.6        306.3
     Water Services                                                 30.2         31.1          89.9         85.4
     Investments                                                     9.8         16.6          70.0         30.9
                                                                  ------       ------        ------       ------
         Total Operating Revenue                                   323.5        308.0         973.1        844.9
                                                                  ------       ------        ------       ------
OPERATING EXPENSES
     Fuel and Purchased Power                                       61.7         54.9         171.6        154.8
     Operations                                                    196.7        180.4         595.8        515.3
     Interest Expense                                               15.7         15.1          47.2         43.7
                                                                  ------       ------        ------       ------
         Total Operating Expenses                                  274.1        250.4         814.6        713.8
                                                                  ------       ------        ------       ------
OPERATING INCOME BEFORE CAPITAL RE AND ACE                          49.4         57.6         158.5        131.1

INCOME (LOSS) FROM INVESTMENT IN CAPITAL RE AND
    RELATED DISPOSITION OF ACE                                         -          0.3          48.0        (15.5)
                                                                  ------       ------        ------       ------
OPERATING INCOME                                                    49.4         57.9         206.5        115.6

DISTRIBUTIONS ON REDEEMABLE
    PREFERRED SECURITIES OF SUBSIDIARY                               1.5          1.5           4.5          4.5
INCOME TAX EXPENSE                                                  12.9         21.9          72.4         53.8
                                                                  ------       ------        ------       ------
NET INCOME                                                        $ 35.0       $ 34.5        $129.6       $ 57.3
                                                                  ======       ======        ======       ======

AVERAGE SHARES OF COMMON STOCK
    Basic                                                           70.0         68.6          69.6         68.2
    Diluted                                                         70.4         68.9          69.8         68.4

EARNINGS PER SHARE OF COMMON STOCK
    Basic                                                          $0.50        $0.50         $1.85        $0.82
    Diluted                                                        $0.50        $0.50         $1.84        $0.82






                             ALLETE
                   CONSOLIDATED BALANCE SHEET
                            Millions

                                               Sept. 30,     Dec. 31,
                                                 2000         1999
- ---------------------------------------------------------------------
                                                      
ASSETS

   Current Assets                             $   716.7     $   564.5

   Property, Plant and Equipment                1,327.3       1,258.8

   Investments                                    115.3         197.2

   Goodwill                                       326.4         181.0

   Other                                          110.7         111.1


                                              ---------     ---------
TOTAL ASSETS                                  $ 2,596.4     $ 2,312.6
                                              =========     =========


                                               Sept. 30,     Dec. 31,
                                                 2000         1999
- ---------------------------------------------------------------------
                                                      
LIABILITIES AND STOCKHOLDERS' EQUITY

   Current Liabilities                        $   643.9     $   398.3


   Long-Term Debt                                 709.2         712.8

   Other Liabilities                              272.9         289.2

   Mandatorily Redeemable Preferred
   Securities of ALLETE Capital I                  75.0          75.0

   Redeemable Serial Preferred Stock                  -          20.0

   Stockholders' Equity                           895.4         817.3
                                              ---------     ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $ 2,596.4     $ 2,312.6
                                              =========     =========


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ALLETE News Release                                                       Page 4
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                                                                      QUARTER ENDED             YEAR TO DATE
                                                                      SEPTEMBER 30,             SEPTEMBER 30,
ALLETE                                                              2000        1999         2000         1999
- -----------------------------------------------------------------------------------------------------------------
                                                                                              
   NET INCOME
   Millions

      Energy Services                                             $ 11.4       $ 18.6        $ 31.4       $ 38.2
      Automotive Services                                           15.4          9.7          42.0         31.3
      Water Services                                                 3.8          3.9          10.3          9.6
      Investments                                                    5.0          6.2          26.7         15.5
      Corporate Charges                                             (0.6)        (3.9)        (11.2)       (13.2)
                                                                  ------       ------        ------       ------
        Net Income Before Capital Re and ACE                        35.0         34.5          99.2         81.4
      Capital Re and ACE Transactions *                                -            -          30.4        (24.1)
                                                                  ------       ------        ------       ------
        Net Income                                                $ 35.0       $ 34.5        $129.6       $ 57.3

   DILUTED EARNINGS PER SHARE
      Before Capital Re and ACE Transactions                      $ 0.50       $ 0.50        $ 1.40       $ 1.17
      Capital Re and ACE Transactions *                                -            -          0.44        (0.35)
                                                                  ------       ------        ------       ------
                                                                  $ 0.50       $ 0.50        $ 1.84       $ 0.82

  ---------------
   * In May 2000 ALLETE sold its  investment  in ACE Limited (ACE) common stock, which resulted in an after-tax
     gain of $30.4 million,  or $.44 per share. The ACE shares  were  received in December  1999 upon  completion
     of ACE's merger  with  Capital Re  Corporation  (Capital  Re).  During  1999  ALLETE recorded an aggregate
     $36.2 million,  or $0.52 per share after-tax non-cash charge in connection  with the valuation and exchange
     of its investment in Capital Re stock for the ACE shares,  including a $24.1  million,  or $0.35 per share
     charge in the second quarter.


                                                                     QUARTER ENDED               YEAR TO DATE
                                                                     SEPTEMBER 30,               SEPTEMBER 30,
ALLETE                                                             2000         1999          2000         1999
- -----------------------------------------------------------------------------------------------------------------
                                                                                            
STATISTICAL DATA

     CORPORATE
              Common Stock
                  High                                            $24.25       $19.88        $24.25       $22.09
                  Low                                             $17.31       $16.56        $14.75       $16.56
                  Close                                           $22.13       $17.56        $22.13       $17.56

              Book Value                                          $12.02       $10.61        $12.02       $10.61

     ENERGY SERVICES
         Millions of Kilowatthours Sold

              Retail
                  Residential                                      202.2        202.4         652.0        648.2
                  Commercial                                       286.3        273.2         808.1        777.5
                  Industrial                                     1,714.0      1,465.7       5,152.3      4,726.8
                  Other                                             19.2         20.0          54.8         54.9
              Resale                                               644.6        834.9       2,178.6      2,294.6
                                                                 -------      -------       -------      -------
                                                                 2,866.3      2,796.2       8,845.8      8,502.0
     AUTOMOTIVE SERVICES
         Vehicles Sold                                           337,000      274,000       940,000      804,000
         Vehicles Financed                                       198,000      186,000       595,000      509,000
         EBITDAL (Millions) **                                     $43.1        $29.2        $117.1        $89.1

     WATER SERVICES
         Millions of Gallons Billed

              Florida Water Services
                  Water                                          4,704.3      4,309.0      14,656.2     13,328.9
                  Wastewater                                     1,246.7      1,179.8       4,007.3      3,688.9
              Heater Utilities
                  Water                                            950.0      1,064.8       2,606.8      2,327.8


- ---------------
** Earnings Before Interest, Taxes, Depreciation, Amortization and Lease Expense



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            ALLETE - 30 West Superior Street, Duluth, Minnesota 55802
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