EXHIBIT 12(B)
ALLETE
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS AND
SUPPLEMENTAL RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
FOR THE YEAR ENDED DECEMBER 31 2000 1999 1998 1997 1996
- ----------------------------------------------------------------------------------------------
Millions Except Ratios
Income from Continuing Operations Per
Consolidated Statement of Income $148.6 $ 68.0 $ 88.5 $ 77.6 $ 69.2
Add (Deduct)
Current Income Tax Expense 91.1 70.5 52.9 44.7 31.4
Deferred Income Tax Expense (Benefit) (4.8) (11.3) 2.7 3.2 (9.8)
Deferred Investment Tax Credits (1.8) (1.5) (1.6) (1.3) (2.0)
Undistributed Income From Less Than 50%
Owned Equity Investments - (0.6) (14.1) (13.9) (11.0)
Minority Interest - 1.8 2.0 2.3 3.3
- ----------------------------------------------------------------------------------------------
233.1 126.9 130.4 112.6 81.1
- ----------------------------------------------------------------------------------------------
Fixed Charges
Interest on Long-Term Debt 54.5 48.4 48.5 50.4 52.4
Capitalized Interest 0.9 0.7 1.0 1.5 1.5
Other Interest Charges - Net 15.9 12.0 17.1 14.3 10.2
Interest Component of All Rentals 8.5 4.8 5.7 3.7 2.5
Distributions on Redeemable Preferred
Securities of Subsidiary 6.0 6.0 6.0 6.0 4.7
- ----------------------------------------------------------------------------------------------
Total Fixed Charges 85.8 71.9 78.3 75.9 71.3
- ----------------------------------------------------------------------------------------------
Earnings Before Income Taxes and
Fixed Charges (Excluding Capitalized Interest) $318.0 $198.1 $207.7 $187.0 $150.9
- ----------------------------------------------------------------------------------------------
Preferred Dividend Requirements $ 0.9 $ 2.0 $ 2.0 $ 2.0 $ 2.4
Ratio of Income from Continuing Operations Before
Income Taxes to Income from Continuing Operations 1.57 1.85 1.61 1.60 1.28
- ----------------------------------------------------------------------------------------------
Preferred Dividend Factor $ 1.4 $ 3.7 $ 3.2 $ 3.2 $ 3.1
Total Fixed Charges 85.8 71.9 78.3 75.9 71.3
- ----------------------------------------------------------------------------------------------
Total Fixed Charges and Preferred Dividends $ 87.2 $ 75.6 $ 81.5 $ 79.1 $ 74.4
- ----------------------------------------------------------------------------------------------
Ratio of Earnings to Fixed Charges and
Preferred Dividends 3.65 2.62 2.55 2.36 2.03
- ----------------------------------------------------------------------------------------------
Earnings Before Income Taxes and
Fixed Charges (Excluding Capitalized Interest) $318.0 $198.1 $207.7 $187.0 $150.9
Supplemental Charges 14.8 15.4 14.5 12.0 14.4
- ----------------------------------------------------------------------------------------------
Earnings Before Income Taxes and Fixed and
Supplemental Charges (Excluding Capitalized
Interest) $332.8 $213.5 $222.2 $199.0 $165.3
- ----------------------------------------------------------------------------------------------
Total Fixed Charges and Preferred Dividends $ 87.2 $ 75.6 $ 81.5 $ 79.1 $ 74.4
Supplemental Charges 14.8 15.4 14.5 12.0 14.4
- ----------------------------------------------------------------------------------------------
Total Fixed Charges, Preferred Dividends and
Supplemental Charges $102.0 $ 91.0 $ 96.0 $ 91.1 $ 88.8
- ----------------------------------------------------------------------------------------------
Supplemental Ratio of Earnings to
Fixed Charges and Preferred Dividends (a) 3.26 2.35 2.31 2.18 1.86
- ----------------------------------------------------------------------------------------------
(a) The supplemental ratio of earnings to fixed charges includes Minnesota
Power's obligation under a contract with Square Butte Electric Cooperative
(Square Butte) which extends through 2026, under which Minnesota Power is
entitled to approximately 71% of the output of a 455-megawatt coal-fired
generating unit (Unit). Minnesota Power is obligated to pay its pro rata
share of Square Butte's costs based on Unit output entitlement. Minnesota
Power's payment obligation is suspended if Square Butte fails to deliver
any power, whether produced or purchased, for a period of one year. Square
Butte's fixed costs consist primarily of debt service. Variable operating
costs include the price of coal purchased from BNI Coal, Ltd. under a
long-term contract. (See Note 14 to ALLETE's 2000 consolidated financial
statements in ALLETE's Annual Report on Form 10-K for the year ended
December 31, 2000.)