ALLETE announces 2011 earnings during call, webcast today

ALLETE, Inc. (NYSE: ALE) today announced 2011 earnings of $2.65 per share. The company reported net income of $93.8 million on revenue of $928.2 million compared to net income of $75.3 million on revenue of $907 million in 2010.

Excluding an eight-cents-per-share benefit in 2011 and a 12-cents-per-share charge in 2010 - both related to new federal health care legislation - pro forma earnings per share were $2.57 in 2011 versus $2.31 in 2010, an increase of eleven percent. These results were at the upper end of the company's earnings guidance range.

Income from ALLETE's Regulated Operations segment increased by $20.6 million compared to 2010. Minnesota Power's kilowatt-hour electric sales to industrial customers were strong throughout 2011, particularly in the area of taconite processing, where power sales increased 13 percent compared to 2010.

Higher revenue from cost recovery riders associated with Minnesota Power's capital expenditures for renewable energy and transmission infrastructure also contributed to the year-over-year increase.

Regulated Operations recorded a one-time $6.2 million, or 18 cents-per-share, benefit from the reversal of a deferred tax liability in the first quarter of 2011. Additionally, the company benefited from renewable tax credits related to its wind generation development, increased financial incentives under Minnesota's

Conservation Incentive Program, and higher wholesale rates in 2011. These gains were partially offset by increased operating and maintenance, depreciation, property tax, benefit and interest expenses during the year.

Investments and Other recorded a loss of $6.6 million in 2011 compared to a loss of $4.5 million a year ago, due in part to higher business development, state income tax and investment related expenses. Both BNI Coal and ALLETE Properties experienced slightly improved results in 2011 over 2010.

A higher share balance in 2011 had a dilutive effect of eight cents per share of common stock.

“We're pleased with these positive 2011 financial results and expect 2012 earnings will be within the range of $2.45 to $2.65,” said ALLETE Chairman, President and CEO Al Hodnik. He noted that the

ALLETE Board of Directors recently raised the quarterly dividend by 3.4 percent.

“Over the next few years we anticipate that new industrial customer growth in our region will accelerate, and we are excited about our transmission build prospects linked to the recently approved Manitoba Hydro transaction. We'll continue to make significant capital investments in renewable energy generation, transmission, and environmental upgrades,” Hodnik said. “ALLETE continues to make progress on executing its multi-faceted, multi-year growth strategy with the objective of creating value for our shareholders.”

The company will host a conference call and webcast at 10 a.m. Eastern time today to discuss details of its performance for 2011 and the outlook for 2012. Interested parties may listen live by calling (877) 303- 5852, or by accessing the webcast at www.allete.com. Slides accompanying the call will also be posted on ALLETE's Web site. A replay of the call will be available through February 17, 2012 by dialing (855) 859-2056, pass code 43561387.

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