ALLETE announces earnings, considers transmission future

ALLETE Inc. on Wednesday 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 compared to $2.31 in 2010, an increase of 11 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 Al Hodnick, ALLETE chairman, president and chief executive officer. 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.

To bring renewable, carbon-free energy from Canada and upgrade the Upper Midwest’s electric system, Minnesota Power is proposing the construction of new transmission from Winnipeg to the Mesabi Iron Range and eventually into Duluth. Minnesota Power also is exploring other regional grid enhancements.

Minnesota Power on Jan. 26 received Minnesota Public Utilities Commission approved a long-term 250-megawatt purchase of hydropower from Manitoba Hydro beginning in 2020. Minnesota Power and Manitoba Hydro are proposing construction of a 500-kilovolt line from Winnepeg to the Mesabi Iron Range.

Minnesota Power and American Transmission Co. are evaluating joint development of a double-circuit 345-kilovolt line from the Iron Range to Duluth for service in about 2020.

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