T
|
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
£
|
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Minnesota
|
41-0418150
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
Large Accelerated Filer
T
|
Accelerated Filer
£
|
Non-Accelerated Filer
£
|
Smaller Reporting Company
£
|
Page
|
|||
Definitions
|
3
|
||
Safe Harbor Statement
Under the Private Securities Litigation Reform Act of 1995
|
5
|
||
Part I.
|
Financial Information
|
||
Item 1.
|
Financial Statements (Unaudited)
|
||
Consolidated Balance Sheet -
|
|||
June 30, 2011 and December 31, 2010
|
6
|
||
Consolidated Statement of Income -
|
|||
Quarter and Six Months Ended June 30, 2011 and 2010
|
7
|
||
Consolidated Statement of Cash Flows -
|
|||
Six Months Ended June 30, 2011 and 2010
|
8
|
||
Notes to Consolidated Financial Statements
|
9
|
||
Item 2.
|
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
|
27
|
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
41
|
|
Item 4.
|
Controls and Procedures
|
42
|
|
Part II.
|
Other Information
|
||
Item 1.
|
Legal Proceedings
|
42
|
|
Item 1A.
|
Risk Factors
|
42
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
42
|
|
Item 3.
|
Defaults Upon Senior Securities
|
43
|
|
Item 4.
|
Reserved
|
43
|
|
Item 5.
|
Other Information
|
43
|
|
Item 6.
|
Exhibits
|
43
|
|
Signatures
|
44
|
Abbreviation or Acronym
|
Term
|
AC
|
Alternating Current
|
AFUDC
|
Allowance for Funds Used During Construction – consisting of the cost of both the debt and equity funds used to finance utility plant additions during construction periods
|
ALLETE
|
ALLETE, Inc.
|
ALLETE Properties
|
ALLETE Properties, LLC and its subsidiaries
|
ARS
|
Auction Rate Securities
|
ATC
|
American Transmission Company LLC
|
Bison 1
|
Bison 1 Wind Project
|
Bison 2
|
Bison 2 Wind Project
|
Bison 3
|
Bison 3 Wind Project
|
BNI Coal
|
BNI Coal, Ltd.
|
Boswell
|
Boswell Energy Center
|
CO
2
|
Carbon Dioxide
|
Company
|
ALLETE, Inc. and its subsidiaries
|
DC
|
Direct Current
|
EPA
|
Environmental Protection Agency
|
ESOP
|
Employee Stock Ownership Plan
|
FASB
|
Financial Accounting Standards Board
|
FERC
|
Federal Energy Regulatory Commission
|
Form 10-K
|
ALLETE Annual Report on Form 10-K
|
Form 10-Q
|
ALLETE Quarterly Report on Form 10-Q
|
GAAP
|
United States Generally Accepted Accounting Principles
|
GHG
|
Greenhouse Gases
|
Hibbard
|
Hibbard Renewable Energy Center
|
Invest Direct
|
ALLETE’s Direct Stock Purchase and Dividend Reinvestment Plan
|
kV
|
Kilovolt(s)
|
Laskin
|
Laskin Energy Center
|
Manitoba Hydro
|
Manitoba Hydro-Electric Board
|
Medicare Part D
|
Medicare Part D provision of the Patient Protection and Affordable Care Act of 2010
|
Minnesota Power
|
An operating division of ALLETE, Inc.
|
Minnkota Power
|
Minnkota Power Cooperative, Inc.
|
MISO
|
Midwest Independent Transmission System Operator, Inc.
|
MPCA
|
Minnesota Pollution Control Agency
|
MPUC
|
Minnesota Public Utilities Commission
|
MW / MWh
|
Megawatt(s) / Megawatt-hour(s)
|
Definitions (Continued)
|
|
Abbreviation or Acronym
|
Term
|
NAAQS
|
National Ambient Air Quality Standards
|
NDPSC
|
North Dakota Public Service Commission
|
Non-residential
|
Retail commercial, non-retail commercial, office, industrial, warehouse, storage and institutional
|
NO
2
|
Nitrogen Dioxide
|
NO
X
|
Nitrogen Oxide
|
Note ___
|
Note ___ to the consolidated financial statements in this Form 10-Q
|
NPDES
|
National Pollutant Discharge Elimination System
|
Oliver Wind I
|
Oliver Wind I Energy Center
|
Oliver Wind II
|
Oliver Wind II Energy Center
|
Palm Coast Park
|
Palm Coast Park development project in Florida
|
Palm Coast Park District
|
Palm Coast Park Community Development District
|
PPA
|
Power Purchase Agreement
|
PPACA
|
The Patient Protection and Affordable Care Act of 2010
|
PSCW
|
Public Service Commission of Wisconsin
|
Rainy River Energy
|
Rainy River Energy Corporation - Wisconsin
|
SEC
|
Securities and Exchange Commission
|
SO
2
|
Sulfur Dioxide
|
Square Butte
|
Square Butte Electric Cooperative
|
SWL&P
|
Superior Water, Light and Power Company
|
Taconite Harbor
|
Taconite Harbor Energy Center
|
Taconite Ridge
|
Taconite Ridge Energy Center
|
Town Center
|
Town Center at Palm Coast development project in Florida
|
Town Center District
|
Town Center at Palm Coast Community Development District
|
WDNR
|
Wisconsin Department of Natural Resources
|
·
|
our ability to successfully implement our strategic objectives;
|
·
|
prevailing governmental policies, regulatory actions, and legislation, including those of the United States Congress, state legislatures, the FERC, the MPUC, the PSCW, the NDPSC, the EPA and various state, local and county regulators, and city administrators, about allowed rates of return, financings, industry and rate structure, acquisition and disposal of assets and facilities, real estate development, operation and construction of plant facilities, recovery of purchased power, capital investments and other expenses, present or prospective wholesale and retail competition (including but not limited to transmission costs), zoning and permitting of land held for resale and environmental matters;
|
·
|
our ability to manage expansion and integrate acquisitions;
|
·
|
the potential impacts of climate change and future regulation to restrict the emissions of GHG on our Regulated Operations
;
|
·
|
effects of restructuring initiatives in the electric industry;
|
·
|
economic and geographic factors, including political and economic risks;
|
·
|
changes in and compliance with laws and regulations;
|
·
|
weather conditions;
|
·
|
natural disasters and pandemic diseases;
|
·
|
war and acts of terrorism;
|
·
|
wholesale power market conditions;
|
·
|
population growth rates and demographic patterns;
|
·
|
effects of competition, including competition for retail and wholesale customers;
|
·
|
changes in the real estate market;
|
·
|
pricing and transportation of commodities;
|
·
|
changes in tax rates or policies or in rates of inflation;
|
·
|
project delays or changes in project costs;
|
·
|
availability and management
of construction materials and skilled construction labor for capital projects;
|
·
|
changes in operating expenses and capital expenditures;
|
·
|
global and domestic economic conditions affecting us or our customers;
|
·
|
our ability to access capital markets and bank financing;
|
·
|
changes in interest rates and the performance of the financial markets;
|
·
|
our ability to replace a mature workforce and retain qualified, skilled and experienced personnel; and
|
·
|
the outcome of legal and administrative proceedings (whether civil or criminal) and settlements that affect the business and profitability of ALLETE.
|
June 30,
|
December 31,
|
|
2011
|
2010
|
|
Assets
|
||
Current Assets
|
||
Cash and Cash Equivalents
|
$79.4
|
$44.9
|
Short-Term Investments
|
–
|
6.7
|
Accounts Receivable (Less Allowance of $1.0 and $0.9)
|
71.9
|
99.5
|
Inventories
|
61.3
|
60.0
|
Prepayments and Other
|
20.6
|
28.6
|
Total Current Assets
|
233.2
|
239.7
|
Property, Plant and Equipment - Net
|
1,861.1
|
1,805.6
|
Regulatory Assets
|
290.2
|
310.2
|
Investment in ATC
|
96.3
|
93.3
|
Other Investments
|
129.0
|
126.0
|
Other Non-Current Assets
|
35.7
|
34.3
|
Total Assets
|
$2,645.5
|
$2,609.1
|
Liabilities and Equity
|
||
Liabilities
|
||
Current Liabilities
|
||
Accounts Payable
|
$44.4
|
$75.4
|
Accrued Taxes
|
19.8
|
22.0
|
Accrued Interest
|
12.8
|
13.4
|
Long-Term Debt Due Within One Year
|
12.9
|
13.4
|
Notes Payable
|
2.5
|
1.0
|
Other
|
23.6
|
33.7
|
Total Current Liabilities
|
116.0
|
158.9
|
Long-Term Debt
|
770.7
|
771.6
|
Deferred Income Taxes
|
353.8
|
325.2
|
Regulatory Liabilities
|
43.4
|
43.6
|
Defined Benefit Pension and Other Postretirement Benefit Plans
|
222.9
|
231.4
|
Other Non-Current Liabilities
|
100.9
|
93.4
|
Total Liabilities
|
1,607.7
|
1,624.1
|
Commitments and Contingencies (Note 13)
|
||
Equity
|
||
ALLETE’s Equity
|
||
Common Stock Without Par Value, 80.0 Shares Authorized, 36.5 and 35.8 Shares Outstanding
|
660.1
|
636.1
|
Unearned ESOP Shares
|
(32.4)
|
(36.8)
|
Accumulated Other Comprehensive Loss
|
(21.3)
|
(23.2)
|
Retained Earnings
|
422.6
|
399.9
|
Total ALLETE Equity
|
1,029.0
|
976.0
|
Non-Controlling Interest in Subsidiaries
|
8.8
|
9.0
|
Total Equity
|
1,037.8
|
985.0
|
Total Liabilities and Equity
|
$2,645.5
|
$2,609.1
|
Quarter Ended
|
Six Months Ended
|
|||
June 30,
|
June 30,
|
|||
2011
|
2010
|
2011
|
2010
|
|
Operating Revenue
|
$219.9
|
$211.2
|
$462.1
|
$444.8
|
Operating Expenses
|
||||
Fuel and Purchased Power
|
76.0
|
74.3
|
155.0
|
154.1
|
Operating and Maintenance
|
95.7
|
85.4
|
185.8
|
173.1
|
Depreciation
|
22.1
|
19.8
|
44.4
|
39.8
|
Total Operating Expenses
|
193.8
|
179.5
|
385.2
|
367.0
|
Operating Income
|
26.1
|
31.7
|
76.9
|
77.8
|
Other Income (Expense)
|
||||
Interest Expense
|
(11.0)
|
(9.5)
|
(21.7)
|
(18.4)
|
Equity Earnings in ATC
|
4.6
|
4.4
|
9.0
|
8.9
|
Other
|
1.0
|
2.2
|
1.8
|
3.2
|
Total Other Expense
|
(5.4)
|
(2.9)
|
(10.9)
|
(6.3)
|
Income Before Non-Controlling Interest and Income Taxes
|
20.7
|
28.8
|
66.0
|
71.5
|
Income Tax Expense
|
3.8
|
9.4
|
12.0
|
29.3
|
Net Income
|
16.9
|
19.4
|
54.0
|
42.2
|
Less: Non-Controlling Interest in Subsidiaries
|
(0.1)
|
–
|
(0.2)
|
(0.2)
|
Net Income Attributable to ALLETE
|
$17.0
|
$19.4
|
$54.2
|
$42.4
|
Average Shares of Common Stock
|
||||
Basic
|
35.0
|
34.1
|
34.8
|
34.0
|
Diluted
|
35.1
|
34.2
|
34.9
|
34.1
|
Basic Earnings Per Share of Common Stock
|
$0.49
|
$0.57
|
$1.56
|
$1.25
|
Diluted Earnings Per Share of Common Stock
|
$0.48
|
$0.57
|
$1.55
|
$1.25
|
Dividends Per Share of Common Stock
|
$0.445
|
$0.44
|
$0.89
|
$0.88
|
Six Months Ended
|
||
June 30,
|
||
2011
|
2010
|
|
Operating Activities
|
||
Net Income
|
$54.0
|
$42.2
|
Allowance for Funds Used During Construction
|
(1.1)
|
(2.1)
|
Income from Equity Investments, Net of Dividends
|
(0.9)
|
(1.4)
|
Gain on Sale of Assets
|
(0.7)
|
(0.7)
|
Depreciation Expense
|
44.4
|
39.8
|
Amortization of Debt Issuance Costs
|
0.5
|
0.5
|
Deferred Income Tax Expense
|
11.8
|
23.1
|
Share-Based Compensation Expense
|
1.1
|
1.1
|
ESOP Compensation Expense
|
3.6
|
3.5
|
Bad Debt Expense
|
0.5
|
0.5
|
Changes in Operating Assets and Liabilities
|
||
Accounts Receivable
|
27.2
|
10.1
|
Inventories
|
(1.3)
|
(0.1)
|
Prepayments and Other
|
8.0
|
2.4
|
Accounts Payable
|
(17.7)
|
(10.4)
|
Other Current Liabilities
|
(10.1)
|
(3.7)
|
Changes in Regulatory and Other Non-Current Assets
|
(2.5)
|
5.1
|
Changes in Defined Benefit Pension and Other Postretirement Benefit Plans
|
(8.5)
|
(0.4)
|
Changes in Regulatory and Other Non-Current Liabilities
|
21.7
|
(1.0)
|
Cash from Operating Activities
|
130.0
|
108.5
|
Investing Activities
|
||
Proceeds from Sale of Available-for-sale Securities
|
7.2
|
0.5
|
Payments for Purchase of Available-for-sale Securities
|
(1.2)
|
(1.4)
|
Investment in ATC
|
(1.4)
|
(1.2)
|
Changes to Other Investments
|
(1.4)
|
(0.6)
|
Additions to Property, Plant and Equipment
|
(91.6)
|
(79.5)
|
Proceeds from Sale of Assets
|
1.4
|
–
|
Cash for Investing Activities
|
(87.0)
|
(82.2)
|
Financing Activities
|
||
Proceeds from Issuance of Common Stock
|
22.9
|
15.2
|
Proceeds from Issuance of Long-Term Debt
|
–
|
80.0
|
Payments on Long-Term Debt
|
(1.5)
|
(69.9)
|
Debt Issuance Costs
|
–
|
(0.7)
|
Dividends on Common Stock
|
(31.4)
|
(30.8)
|
Changes in Notes Payable
|
1.5
|
(0.5)
|
Cash for Financing Activities
|
(8.5)
|
(6.7)
|
Change in Cash and Cash Equivalents
|
34.5
|
19.6
|
Cash and Cash Equivalents at Beginning of Period
|
44.9
|
25.7
|
Cash and Cash Equivalents at End of Period
|
$79.4
|
$45.3
|
June 30,
|
December 31,
|
|
Inventories
|
2011
|
2010
|
Millions
|
||
Fuel
|
$23.5
|
$22.9
|
Materials and Supplies
|
37.8
|
37.1
|
Total Inventories
|
$61.3
|
$60.0
|
June 30,
|
December 31,
|
|
Prepayments and Other Current Assets
|
2011
|
2010
|
Millions
|
||
Deferred Fuel Adjustment Clause
|
$15.0
|
$20.6
|
Other
|
5.6
|
8.0
|
Total Prepayments and Other Current Assets
|
$20.6
|
$28.6
|
June 30,
|
December 31,
|
|
Other Non-Current Liabilities
|
2011
|
2010
|
Millions
|
||
Asset Retirement Obligation
|
$52.0
|
$50.3
|
Other
|
48.9
|
43.1
|
Total Other Non-Current Liabilities
|
$100.9
|
$93.4
|
For the Six Months Ended June 30,
|
2011
|
2010
|
Millions
|
||
Cash Paid During the Period for Interest – Net of Amounts Capitalized
|
$21.9
|
$16.3
|
Cash Paid During the Period for Income Taxes
|
$0.4
|
$1.5
|
Noncash Investing and Financing Activities
|
||
Increase (Decrease) in Accounts Payable for Capital Additions to Property, Plant and Equipment
|
$(13.2)
|
$4.4
|
AFUDC – Equity
|
$1.1
|
$2.1
|
Regulated
|
Investments
|
||
Consolidated
|
Operations
|
and Other
|
|
Millions
|
|||
For the Quarter Ended June 30, 2011
|
|||
Operating Revenue
|
$219.9
|
$201.8
|
$18.1
|
Fuel and Purchased Power Expense
|
76.0
|
76.0
|
–
|
Operating and Maintenance Expense
|
95.7
|
77.2
|
18.5
|
Depreciation Expense
|
22.1
|
20.9
|
1.2
|
Operating Income (Loss)
|
26.1
|
27.7
|
(1.6)
|
Interest Expense
|
(11.0)
|
(9.1)
|
(1.9)
|
Equity Earnings in ATC
|
4.6
|
4.6
|
–
|
Other Income
|
1.0
|
0.6
|
0.4
|
Income (Loss) Before Non-Controlling Interest and Income
Taxes
|
20.7
|
23.8
|
(3.1)
|
Income Tax Expense (Benefit)
|
3.8
|
5.5
|
(1.7)
|
Net Income (Loss)
|
16.9
|
18.3
|
(1.4)
|
Less: Non-Controlling Interest in Subsidiaries
|
(0.1)
|
–
|
(0.1)
|
Net Income (Loss) Attributable to ALLETE
|
$17.0
|
$18.3
|
$(1.3)
|
Regulated
|
Investments
|
||
Consolidated
|
Operations
|
and Other
|
|
Millions
|
|||
For the Quarter Ended June 30, 2010
|
|||
Operating Revenue
|
$211.2
|
$194.1
|
$17.1
|
Fuel and Purchased Power Expense
|
74.3
|
74.3
|
–
|
Operating and Maintenance Expense
|
85.4
|
69.3
|
16.1
|
Depreciation Expense
|
19.8
|
18.7
|
1.1
|
Operating Income (Loss)
|
31.7
|
31.8
|
(0.1)
|
Interest Expense
|
(9.5)
|
(7.7)
|
(1.8)
|
Equity Earnings in ATC
|
4.4
|
4.4
|
–
|
Other Income
|
2.2
|
1.1
|
1.1
|
Income (Loss) Before Non-Controlling Interest and Income
Taxes
|
28.8
|
29.6
|
(0.8)
|
Income Tax Expense (Benefit)
|
9.4
|
11.4
|
(2.0)
|
Net Income
|
19.4
|
18.2
|
1.2
|
Less: Non-Controlling Interest in Subsidiaries
|
–
|
–
|
–
|
Net Income Attributable to ALLETE
|
$19.4
|
$18.2
|
$1.2
|
Regulated
|
Investments
|
||
Consolidated
|
Operations
|
and Other
|
|
Millions
|
|||
For the Six Months Ended June 30, 2011
|
|||
Operating Revenue
|
$462.1
|
$424.8
|
$37.3
|
Fuel and Purchased Power Expense
|
155.0
|
155.0
|
–
|
Operating and Maintenance Expense
|
185.8
|
148.4
|
37.4
|
Depreciation Expense
|
44.4
|
42.1
|
2.3
|
Operating Income (Loss)
|
76.9
|
79.3
|
(2.4)
|
Interest Expense
|
(21.7)
|
(17.7)
|
(4.0)
|
Equity Earnings in ATC
|
9.0
|
9.0
|
–
|
Other Income
|
1.8
|
1.2
|
0.6
|
Income (Loss) Before Non-Controlling Interest and Income
Taxes
|
66.0
|
71.8
|
(5.8)
|
Income Tax Expense (Benefit)
|
12.0
|
15.1
|
(3.1)
|
Net Income (Loss)
|
54.0
|
56.7
|
(2.7)
|
Less: Non-Controlling Interest in Subsidiaries
|
(0.2)
|
–
|
(0.2)
|
Net Income (Loss) Attributable to ALLETE
|
$54.2
|
$56.7
|
$(2.5)
|
As of June 30, 2011
|
|||
Total Assets
|
$2,645.5
|
$2,381.6
|
$263.9
|
Property, Plant and Equipment – Net
|
$1,861.1
|
$1,808.9
|
$52.2
|
Accumulated Depreciation
|
$1,062.6
|
$1,011.3
|
$51.3
|
Capital Additions
|
$79.7
|
$69.3
|
$10.4
|
Regulated
|
Investments
|
||
Consolidated
|
Operations
|
and Other
|
|
Millions
|
|||
For the Six Months Ended June 30, 2010
|
|||
Operating Revenue
|
$444.8
|
$410.2
|
$34.6
|
Fuel and Purchased Power Expense
|
154.1
|
154.1
|
–
|
Operating and Maintenance Expense
|
173.1
|
139.1
|
34.0
|
Depreciation Expense
|
39.8
|
37.7
|
2.1
|
Operating Income (Loss)
|
77.8
|
79.3
|
(1.5)
|
Interest Expense
|
(18.4)
|
(15.3)
|
(3.1)
|
Equity Earnings in ATC
|
8.9
|
8.9
|
–
|
Other Income
|
3.2
|
2.3
|
0.9
|
Income (Loss) Before Non-Controlling Interest and Income
Taxes
|
71.5
|
75.2
|
(3.7)
|
Income Tax Expense (Benefit)
|
29.3
|
32.1
|
(2.8)
|
Net Income (Loss)
|
42.2
|
43.1
|
(0.9)
|
Less: Non-Controlling Interest in Subsidiaries
|
(0.2)
|
–
|
(0.2)
|
Net Income (Loss) Attributable to ALLETE
|
$42.4
|
$43.1
|
$(0.7)
|
As of June 30, 2010
|
|||
Total Assets
|
$2,447.8
|
$2,211.2
|
$236.6
|
Property, Plant and Equipment – Net
|
$1,671.7
|
$1,627.4
|
$44.3
|
Accumulated Depreciation
|
$1,007.5
|
$959.4
|
$48.1
|
Capital Additions
|
$85.1
|
$85.0
|
$0.1
|
June 30,
|
December 31,
|
|
Investments
|
2011
|
2010
|
Millions
|
||
ALLETE Properties
|
$92.7
|
$94.0
|
Available-for-sale Securities
|
30.5
|
25.2
|
Other
|
5.8
|
6.8
|
Total Investments
|
$129.0
|
$126.0
|
June 30,
|
December 31,
|
|
ALLETE Properties
|
2011
|
2010
|
Millions
|
||
Land Held-for-sale Beginning Balance (January 1, 2011 and 2010, respectively)
|
$86.0
|
$74.9
|
Deeds to Collateralized Property
|
1.6
|
9.9
|
Capitalized Improvements and Other
|
–
|
1.2
|
Cost of Real Estate Sold
|
(0.3)
|
–
|
Land Held-for-sale Ending Balance
|
87.3
|
86.0
|
Long-Term Finance Receivables (net of allowances of $0.9 and $0.8)
|
2.1
|
3.7
|
Other
|
3.3
|
4.3
|
Total Real Estate Assets
|
$92.7
|
$94.0
|
Long-Term Finance Receivables
|
Real |
Allowance Roll-Forward
|
Estate |
Millions
|
|
Beginning Balance as of December 31, 2010
|
$0.8
|
Additional Reserve
|
0.1
|
Ending Balance as of June 30, 2011
|
$0.9
|
Fair Value as of June 30, 2011
|
||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Millions
|
||||
Assets:
|
||||
Equity Securities
|
$21.4
|
–
|
–
|
$21.4
|
Available-for-sale Securities – Corporate Debt Securities
|
–
|
$8.0
|
–
|
8.0
|
Money Market Funds
|
3.6
|
–
|
–
|
3.6
|
Total Fair Value of Assets
|
$25.0
|
$8.0
|
–
|
$33.0
|
Liabilities:
|
||||
Deferred Compensation
|
–
|
$14.6
|
–
|
$14.6
|
Total Fair Value of Liabilities
|
–
|
$14.6
|
–
|
$14.6
|
Total Net Fair Value of Assets (Liabilities)
|
$25.0
|
$(6.6)
|
–
|
$18.4
|
Fair Value as of December 31, 2010
|
||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Millions
|
||||
Assets:
|
||||
Equity Securities
|
$19.4
|
–
|
–
|
$19.4
|
Available-for-sale Securities
|
||||
Corporate Debt Securities
|
–
|
$7.5
|
–
|
7.5
|
Debt Securities Issued by States of the United States (ARS)
|
–
|
–
|
$6.7
|
6.7
|
Total Available-for-sale Securities
|
–
|
7.5
|
6.7
|
14.2
|
Money Market Funds
|
0.8
|
–
|
–
|
0.8
|
Total Fair Value of Assets
|
$20.2
|
$7.5
|
$6.7
|
$34.4
|
Liabilities:
|
||||
Deferred Compensation
|
–
|
$13.3
|
–
|
$13.3
|
Total Fair Value of Liabilities
|
–
|
$13.3
|
–
|
$13.3
|
Total Net Fair Value of Assets (Liabilities)
|
$20.2
|
$(5.8)
|
$6.7
|
$21.1
|
Recurring Fair Value Measures
Activity in Level 3
|
Derivatives
|
Debt Securities
Issued by
States
of the United
States (ARS)
|
||
Millions
|
||||
Balance as of December 31, 2010 and December 31, 2009, respectively
|
–
|
$0.7
|
$6.7
|
$6.7
|
Redeemed During the Period
|
–
|
(0.7)
|
(6.7)
|
–
|
Balance as of June 30, 2011 and June 30, 2010, respectively
|
–
|
–
|
–
|
$6.7
|
Financial Instruments
|
Carrying Amount
|
Fair Value
|
Millions
|
||
Long-Term Debt, Including Current Portion
|
||
June 30, 2011
|
$783.6
|
$807.8
|
December 31, 2010
|
$785.0
|
$796.7
|
June 30,
|
December 31,
|
|
Regulatory Assets and Liabilities
|
2011
|
2010
|
Millions
|
||
Current Regulatory Assets
(a)
|
||
Deferred Fuel
|
$15.0
|
$20.6
|
Total Current Regulatory Assets
|
15.0
|
20.6
|
Non-Current Regulatory Assets
|
||
Future Benefit Obligations Under
|
||
Defined Benefit Pension and Other Postretirement Benefit Plans
|
249.5
|
257.9
|
Boswell Unit 3 Environmental Rider
|
–
|
20.5
|
Income Taxes
|
22.1
|
17.3
|
Asset Retirement Obligation
|
8.7
|
7.8
|
Medicare Part D
|
5.0
|
–
|
Premium on Reacquired Debt
|
1.7
|
1.8
|
Rate Case Expenses
|
1.0
|
1.4
|
Other
|
2.2
|
3.5
|
Total Non-Current Regulatory Assets
|
290.2
|
310.2
|
Total Regulatory Assets
|
$305.2
|
$330.8
|
Non-Current Regulatory Liabilities
|
||
Income Taxes
|
$22.2
|
$23.4
|
Plant Removal Obligations
|
16.4
|
16.9
|
Other
|
4.8
|
3.3
|
Total Non-Current Regulatory Liabilities
|
$43.4
|
$43.6
|
(a)
|
Current regulatory assets are included in prepayments and other on the consolidated balance sheet.
|
ALLETE’s Investment in ATC
|
|
Millions
|
|
Equity Investment Balance as of December 31, 2010
|
$93.3
|
Cash Investments
|
1.4
|
Equity in ATC Earnings
|
9.0
|
Distributed ATC Earnings
|
(7.4)
|
Equity Investment Balance as of June 30, 2011
|
$96.3
|
Quarter Ended
|
Six Months Ended
|
|||
ATC Summarized Financial Data
|
June 30,
|
June 30,
|
||
Income Statement Data
|
2011
|
2010
|
2011
|
2010
|
Millions
|
||||
Revenue
|
$138.2
|
$138.7
|
$277.8
|
$277.1
|
Operating Expense
|
63.0
|
62.9
|
126.1
|
125.7
|
Other Expense
|
19.6
|
21.7
|
41.9
|
42.2
|
Net Income
|
$55.6
|
$54.1
|
$109.8
|
$109.2
|
ALLETE’s Equity in Net Income
|
$4.6
|
$4.4
|
$9.0
|
$8.9
|
Quarter Ended
|
Six Months Ended
|
|||
June 30,
|
June 30,
|
|||
2011
|
2010
|
2011
|
2010
|
|
Millions
|
||||
AFUDC
–
Equity
|
$0.5
|
$0.9
|
$1.1
|
$2.1
|
Investment and Other Income
|
0.5
|
1.3
|
0.7
|
1.1
|
Total Other Income
|
$1.0
|
$2.2
|
$1.8
|
$3.2
|
Quarter Ended
|
Six Months Ended
|
|||
June 30,
|
June 30,
|
|||
2011
|
2010
|
2011
|
2010
|
|
Millions
|
||||
Current Tax Expense (Benefit)
|
||||
Federal
(a)
|
–
|
–
|
–
|
$7.2
|
State
(a)
|
$0.1
|
$(1.9)
|
$0.2
|
(1.0)
|
Total Current Tax Expense (Benefit)
|
0.1
|
(1.9)
|
0.2
|
6.2
|
Deferred Tax Expense
|
||||
Federal
(b)
|
4.0
|
8.2
|
10.8
|
18.0
|
State
(b)
|
–
|
3.3
|
1.5
|
5.5
|
Deferred Tax Credits
|
(0.3)
|
(0.2)
|
(0.5)
|
(0.4)
|
Total Deferred Tax Expense
|
3.7
|
11.3
|
11.8
|
23.1
|
Total Income Tax Expense
|
$3.8
|
$9.4
|
$12.0
|
$29.3
|
(a)
|
For the quarter and six months ended June 30, 2011, the federal and state current tax expense was affected by a net operating loss (NOL) which resulted primarily from the bonus depreciation provision of tax legislation passed in 2010. The 2011 federal and state NOL will be carried forward to offset future taxable income. For the six months ended June 30, 2010, we recorded federal current tax expense, as the 2010 tax legislation allowing bonus depreciation was not enacted until the third quarter of 2010. The state current benefit for the quarter and six months ended June 30, 2010, was due to the completion of a state audit and state renewable tax credits.
|
(b)
|
The quarter ended June 30, 2011, includes a $2.9 million income tax benefit related to the MPUC approval of our request to defer the retail portion of the tax charge taken in 2010 resulting from PPACA. The six months ended June 30, 2011, includes the second quarter item above and the reversal in the first quarter of 2011 of a $6.2 million deferred tax liability related to a revenue receivable that Minnesota Power agreed to forgo as part of a stipulation and settlement agreement in its 2010 rate case. Included in the six months ended June 30, 2010, is a charge of $4.0 million as a result of PPACA (See Note 5. Regulatory Matters).
|
Quarter Ended
|
Six Months Ended
|
|||
June 30,
|
June 30,
|
|||
Comprehensive Income (Loss)
|
2011
|
2010
|
2011
|
2010
|
Millions
|
||||
Net Income
|
$16.9
|
$19.4
|
$54.0
|
$42.2
|
Other Comprehensive Income (Loss)
|
||||
Unrealized Gain (Loss) on Securities
Net of income taxes of $0.2, $(0.4), $0.8 and $(0.4)
|
0.2
|
(0.6)
|
1.1
|
(0.5)
|
Defined Benefit Pension and Other Postretirement Plans
Net of income taxes of $0.2, $0.2, $0.5 and $0.4
|
0.4
|
0.3
|
0.8
|
0.6
|
Total Other Comprehensive Income (Loss)
|
0.6
|
(0.3)
|
1.9
|
0.1
|
Total Comprehensive Income
|
$17.5
|
$19.1
|
$55.9
|
$42.3
|
Less: Non-Controlling Interest in Subsidiaries
|
(0.1)
|
–
|
(0.2)
|
(0.2)
|
Comprehensive Income Attributable to ALLETE
|
$17.6
|
$19.1
|
$56.1
|
$42.5
|
2011
|
2010
|
||||||
Reconciliation of Basic and Diluted
|
Dilutive
|
Dilutive
|
|||||
Earnings Per Share
|
Basic
|
Securities
|
Diluted
|
Basic
|
Securities
|
Diluted
|
|
Millions Except Per Share Amounts
|
|||||||
For the Quarter Ended June 30,
|
|||||||
Net Income Attributable to ALLETE
|
$17.0
|
$17.0
|
$19.4
|
$19.4
|
|||
Common Shares
|
35.0
|
0.1
|
35.1
|
34.1
|
0.1
|
34.2
|
|
Earnings Per Share
|
$0.49
|
$0.48
|
$0.57
|
$0.57
|
|||
For the Six Months Ended June 30,
|
|||||||
Net Income Attributable to ALLETE
|
$54.2
|
$54.2
|
$42.4
|
$42.4
|
|||
Common Shares
|
34.8
|
0.1
|
34.9
|
34.0
|
0.1
|
34.1
|
|
Earnings Per Share
|
$1.56
|
$1.55
|
$1.25
|
$1.25
|
Pension
|
Other
Postretirement
|
|||
Components of Net Periodic Benefit Expense
|
2011
|
2010
|
2011
|
2010
|
Millions
|
||||
For the Quarter Ended June 30,
|
||||
Service Cost
|
$1.9
|
$1.6
|
$0.9
|
$1.2
|
Interest Cost
|
6.8
|
6.5
|
2.7
|
2.8
|
Expected Return on Plan Assets
|
(8.6)
|
(8.4)
|
(2.5)
|
(2.4)
|
Amortization of Prior Service Costs
|
0.1
|
0.1
|
(0.5)
|
–
|
Amortization of Net Loss
|
3.0
|
1.7
|
2.2
|
1.2
|
Amortization of Transition Obligation
|
–
|
–
|
0.1
|
0.6
|
Net Periodic Benefit Expense
|
$3.2
|
$1.5
|
$2.9
|
$3.4
|
For the Six Months Ended June 30,
|
||||
Service Cost
|
$3.8
|
$3.1
|
$1.9
|
$2.4
|
Interest Cost
|
13.7
|
13.1
|
5.4
|
5.5
|
Expected Return on Plan Assets
|
(17.3)
|
(16.8)
|
(4.9)
|
(4.8)
|
Amortization of Prior Service Costs
|
0.2
|
0.2
|
(0.9)
|
–
|
Amortization of Net Loss
|
6.0
|
3.3
|
4.3
|
2.4
|
Amortization of Transition Obligation
|
–
|
–
|
0.1
|
1.2
|
Net Periodic Benefit Expense
|
$6.4
|
$2.9
|
$5.9
|
$6.7
|
·
|
Expand our renewable energy supply;
|
·
|
Improve the efficiency of our coal-based generation facilities, as well as other process efficiencies;
|
·
|
Provide energy conservation initiatives for our customers and engage in other demand side efforts;
|
·
|
Support research of technologies to reduce carbon emissions from generation facilities and support carbon sequestration efforts; and
|
·
|
Achieve overall carbon emission reductions.
|
Kilowatt-hours Sold
|
Quantity
|
%
|
|||||
Quarter Ended June 30,
|
2011
|
2010
|
Variance
|
Variance
|
|||
Millions
|
|||||||
Regulated Utility
|
|||||||
Retail and Municipals
|
|||||||
Residential
|
238
|
229
|
9
|
3.9%
|
|||
Commercial
|
328
|
327
|
1
|
0.3%
|
|||
Industrial
|
1,782
|
1,728
|
54
|
3.1%
|
|||
Municipals
|
230
|
228
|
2
|
0.9%
|
|||
Total Retail and Municipals
|
2,578
|
2,512
|
66
|
2.6%
|
|||
Other Power Suppliers
|
614
|
736
|
(122)
|
(16.6)%
|
|||
Total Regulated Utility Kilowatt-hours Sold
|
3,192
|
3,248
|
(56)
|
(1.7)%
|
ALLETE Properties
|
2011
|
2010
|
||
Revenue and Sales Activity
|
Quantity
|
Amount
|
Quantity
|
Amount
|
Dollars in Millions
|
||||
Revenue from Land Sales
|
||||
Acres
|
–
|
–
|
–
|
–
|
Revenue from Land Sales
|
–
|
–
|
||
Other Revenue
(a)
|
$0.5
|
$1.2
|
||
Total ALLETE Properties Revenue
|
$0.5
|
$1.2
|
(a)
|
For the quarter ended June 30, 2011, Other Revenue includes a forfeited deposit due to the transfer of property back to ALLETE Properties by deed-in-lieu of foreclosure, in satisfaction of amounts previously owed under long-term financing receivables. For the quarter ended June 30, 2010, Other Revenue primarily includes a $0.7 million pre-tax gain resulting from the transfer of property back to ALLETE Properties by deed-in-lieu of foreclosure, in satisfaction of amounts previously owed under long-term financing receivables from an entity which filed for bankruptcy in June 2009.
|
Kilowatt-hours Sold
|
Quantity
|
%
|
|||||
Six Months Ended June 30,
|
2011
|
2010
|
Variance
|
Variance
|
|||
Millions
|
|||||||
Regulated Utility
|
|||||||
Retail and Municipals
|
|||||||
Residential
|
600
|
586
|
14
|
2.4%
|
|||
Commercial
|
704
|
699
|
5
|
0.7%
|
|||
Industrial
|
3,620
|
3,157
|
463
|
14.7%
|
|||
Municipals
|
499
|
493
|
6
|
1.2%
|
|||
Total Retail and Municipals
|
5,423
|
4,935
|
488
|
9.9%
|
|||
Other Power Suppliers
|
1,154
|
1,539
|
(385)
|
(25.0)%
|
|||
Total Regulated Utility Kilowatt-hours Sold
|
6,577
|
6,474
|
103
|
1.6%
|
ALLETE Properties
|
2011
|
2010
|
||
Revenue and Sales Activity
|
Quantity
|
Amount
|
Quantity
|
Amount
|
Dollars in Millions
|
||||
Revenue from Land Sales
|
||||
Acres
(a)
|
3
|
$0.4
|
–
|
–
|
Revenue from Land Sales
|
0.4
|
–
|
||
Other Revenue
(b)
|
0.7
|
$1.3
|
||
Total ALLETE Properties Revenue
|
$1.1
|
$1.3
|
(a)
|
Acreage amounts are shown on a gross basis, including wetlands and non-controlling interest.
|
(b)
|
For the six months ended June 30, 2011, Other Revenue includes a forfeited deposit due to the transfer of property back to ALLETE Properties by deed-in-lieu of foreclosure, in satisfaction of amounts previously owed under long-term financing receivables. For the six months ended June 30, 2010, Other Revenue primarily includes a $0.7 million pre-tax gain resulting from the transfer of property back to ALLETE Properties by deed-in-lieu of foreclosure, in satisfaction of amounts previously owed under long-term financing receivables from an entity which filed for bankruptcy in June 2009.
|
·
|
Increased system flexibility to adapt to volatile business cycles and varied future industrial load scenarios;
|
·
|
Reductions in the emission of GHGs (primarily CO
2
); and
|
·
|
Compliance with mandated renewable energy standards.
|
Summary of Development Projects
|
Residential
|
Non-residential
|
||
Land Available-for-Sale
|
Ownership
|
Acres
(a)
|
Units
(b)
|
Sq. Ft.
(b, c)
|
Current Development Projects
|
||||
Town Center
|
80%
|
963
|
2,373
|
2,225,200
|
Palm Coast Park
|
100%
|
3,842
|
3,564
|
3,056,800
|
Total Current Development Projects
|
4,805
|
5,937
|
5,282,000
|
|
Planned Development Project
|
||||
Ormond Crossings
|
100%
|
2,924
|
2,950
|
3,215,000
|
Other
|
||||
Lake Swamp Wetland Mitigation Project
|
100%
|
3,049
|
(d)
|
(d)
|
Total of Development Projects
|
10,778
|
8,887
|
8,497,000
|
(a)
|
Acreage amounts are approximate and shown on a gross basis, including wetlands and non-controlling interest.
|
(b)
|
Estimated and includes non-controlling interest. Density at build out may differ from these estimates.
|
(c)
|
Depending on the project, non-residential includes retail commercial, non-retail commercial, office, industrial, warehouse, storage and institutional.
|
(d)
|
The Lake Swamp wetland mitigation bank is a permitted, regionally significant wetlands mitigation bank. Wetland mitigation credits will be used at Ormond Crossings and will also be available-for-sale to developers of other projects that are located in the bank’s service area.
|
June 30,
|
December 31,
|
|||
2011
|
%
|
2010
|
%
|
|
Millions
|
||||
ALLETE Equity
|
$1,029.0
|
56
|
$976.0
|
55
|
Non-Controlling Interest in Subsidiaries
|
8.8
|
1
|
9.0
|
1
|
Long-Term Debt (Including Current Maturities)
|
783.6
|
43
|
785.0
|
44
|
Short-Term Debt
|
2.5
|
–
|
1.0
|
–
|
$1,823.9
|
100
|
$1,771.0
|
100
|
For the Six Months Ended June 30,
|
2011
|
2010
|
Millions
|
||
Cash and Cash Equivalents at Beginning of Period
|
$44.9
|
$25.7
|
Cash Flows from (used for)
|
||
Operating Activities
|
130.0
|
108.5
|
Investing Activities
|
(87.0)
|
(82.2)
|
Financing Activities
|
(8.5)
|
(6.7)
|
Change in Cash and Cash Equivalents
|
34.5
|
19.6
|
Cash and Cash Equivalents at End of Period
|
$79.4
|
$45.3
|
Capital Expenditures
|
2011
|
2012
|
2013
|
2014
|
2015
|
Total
|
||
Millions
|
||||||||
Regulated Utility Operations
|
||||||||
Base and Other
|
$107
|
$97
|
$92
|
$94
|
$99
|
$489
|
||
Current Cost Recovery
(a)
|
||||||||
Renewable
(b)
|
124
|
291
|
4
|
8
|
1
|
428
|
||
Transmission
(c)
|
26
|
26
|
32
|
20
|
11
|
115
|
||
Total Current Cost Recovery
|
150
|
317
|
36
|
28
|
12
|
543
|
||
Regulated Utility Capital Expenditures
|
257
|
414
|
128
|
122
|
111
|
1,032
|
||
Other
|
21
|
25
|
14
|
8
|
8
|
76
|
||
Total Capital Expenditures
|
$278
|
$439
|
$142
|
$130
|
$119
|
$1,108
|
(a)
|
Estimated current capital expenditures recoverable outside of a rate case.
|
(b)
|
Renewable riders include Bison 1, Bison 2, Bison 3 and Hibbard Projects.
|
(c)
|
Transmission capital expenditures include CapX2020 projects.
|
|
10(a)
|
Credit Agreement dated as of May 25, 2011 among ALLETE, Inc., as Borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and JPMorgan Securities LLC, as Sole Lead Arranger and Sole Book Runner (filed as Exhibit 10 to the May 27, 2011, Form 8-K, File No. 1-3548).
|
|
10(b)
|
Amended and Restated Letter of Credit Agreement, dated as of June 3, 2011, among ALLETE, the Participating Banks and Wells Fargo Bank, National Association, as Administrative Agent and Issuing Bank.
|
|
31(a)
|
Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31(b)
|
Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32
|
Section 1350 Certification of Periodic Report by the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance
|
101.SCH
|
XBRL Schema
|
101.CAL
|
XBRL Calculation
|
101.DEF
|
XBRL Definition
|
101.LAB
|
XBRL Label
|
101.PRE
|
XBRL Presentation
|
ALLETE, INC.
|
||
August 5, 2011
|
/s/ Mark A. Schober
|
|
Mark A. Schober
|
||
Senior Vice President and Chief Financial Officer
|
||
August 5, 2011
|
/s/ Steven Q. DeVinck
|
|
Steven Q. DeVinck
|
||
Controller and Vice President – Business Support
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2011, of ALLETE;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 5, 2011
|
Alan R. Hodnik
|
|
Alan R. Hodnik
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q for the quarterly period ended June 30, 2011, of ALLETE;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 5, 2011
|
Mark A. Schober
|
|
Mark A. Schober
|
|
Senior Vice President and Chief Financial Officer
|
1.
|
The Quarterly Report on Form 10-Q of ALLETE for the quarterly period ended June 30, 2011, (Report) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of ALLETE.
|
Date: August 5, 2011
|
Alan R. Hodnik
|
|
Alan R. Hodnik
|
|
President and Chief Executive Officer
|
Date: August 5, 2011
|
Mark A. Schober
|
|
Mark A. Schober
|
|
Senior Vice President and Chief Financial Officer
|
AMENDED AND RESTATED LETTER OF CREDIT AGREEMENT
Dated as of
June 3, 2011
Among
ALLETE, INC.
(formerly known as Minnesota Power, Inc.)
THE PARTICIPATING BANKS PARTY HERETO
and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent and Issuing Bank
|
Page | |||
ARTICLE I DEFINITIONS | 1 | ||
Se c t ion 1.1 | Definitions | 1 | |
ARTICLE II LETTER OF CREDIT | 13 | ||
Section 2.1
Section 2.2
Section 2.3
Section 2.4
Section 2.5
Section 2.6
S
ection 2.7
Section 2.8
Section 2.9
Section 2.10
Section 2.11
Section 2.12
Section 2.13
Section 2.14
Section 2.15
Section 2.16
Section 2.17
|
Issuance of L/C Extension
Letter of Credit Drawings
Company Reimbursement Obligations; Participating Bank Payments
in Respect of the Letter of Credit; Drawing Loans
Agreement of the Company and Each Participating Bank
Interest Rates and Payment Dates
Payments
Security Interest in Pledged Bonds
Fees
Method of Payment
Lending Offices and Funding
Computation of Interest
Payment Due on Non-Business Day to be made on Next Business Day
Late Payments
Source of Funds
Extension of Stated Expiration Date
Provisions Applicable to LIBOR Drawing Loans
Rescission of Payments
|
13
14
14
16
16
17
18
18
19
19
19
19
20
20
20
21
22
|
|
ARTICLE III CONDITIONS PRECEDENT | 22 | ||
Section 3.1
Section 3.2
|
Conditions Precedent to Issuance of the L/C Extension
Conditions Precedent to Drawing Loans
|
22
23
|
|
ARTICLE IV REPRESENTATIONS AND WARRANTIES | 24 | ||
Section 4.1 | Company’s Representations | 24 | |
ARTICLE V COVENANTS | 26 | ||
Section 5.1
Section 5.2
Section 5.3
Section 5.4
Section 5.5
Section 5.6
Section 5.7
Section 5.8
Section 5.9
Section 5.10
Section 5.11
Section 5.12
|
Information
Maintenance of Property; Insurance
Maintenance of Existence
Compliance with Laws
Inspection of Property, Books and Records
Use of Proceeds
Taxes
Negative Pledge
Prohibition of Fundamental Changes
Maximum Ratio of Total Indebtedness to Total Capitalization
Bond Documents
Official Statement
|
27
28
28
28
28
29
29
29
31
31
31
31
|
Section 5.13
Section 5.14
Section 5.15
Section 5.16
|
Optional Redemptions
Conversion
Pari Passu
Patriot Act Compliance
|
32
32
32
32
|
|
ARTICLE VI EVENTS OF DEFAULT | 32 | ||
Section 6.1
Section 6.2
Section 6.3
|
Events of Default
Remedies
Pledge of Special Deposit Account
|
32
34
35
|
|
ARTICLE VII MISCELLANEOUS | 35 | ||
Section 7.1
Section 7.2
Section 7.3
Section 7.4
Section 7.5
Section 7.6
Section 7.7
Section 7.8
Section 7.9
Section 7.10
Section 7.11
Section 7.12
Section 7.13
Section 7.14
Section 7.15
Section 7.16
Section 7.17
Section 7.18
Section 7.19
Section 7.20
Section 7.21
Section 7.22
Section 7.23
|
Taxes
Increased Costs
Right of Setoff; Other Collateral
Indemnity; Costs and Expenses
Non-Controlled Persons
Obligations Absolute
Liability of the Issuing Bank
Participants, Etc.
Survival of this Agreement
Amendments and Waivers
Waiver of Rights by the Banks
Severability
Governing Law; Submission to Jurisdiction
Notices
Survival of Certain Obligations
Taxes and Expenses
Pleadings
Counterparts
Waiver of Jury Trial
Register
Adjustments; Set-off
Patriot Act Notice
Restatement
|
35
36
38
39
42
42
42
43
44
44
45
45
45
45
47
47
47
47
47
47
48
48
48
|
|
ARTICLE VIII THE ADMINISTRATIVE AGENT | 48 | ||
Section 8.1
Section 8.2
Section 8.3
Section 8.4
Section 8.5
Section 8.6
Section 8.7
|
Appointment and Authorization of Administrative Agent
Administrative Agent and its Affiliates
Action by Administrative Agent
Consultation with Experts
Liability of Administrative Agent; Credit Decision
Indemnity
Resignation of Administrative Agent and Successor Administrative Agent
|
48
49
49
49
49
50
50
|
|
Exhibit A
Exhibit B
|
Form of Extension of Letter of Credit
Participating Bank Commitment Percentages
|
||
(A) | the representations and warranties of the Company contained in Article IV are correct on and as of the date hereof as though made on such date; | ||
(B) | no Event of Default has occurred and is continuing, or would result from the issuance of the L/C Extenstion or the execution and delivery of this Agreement, and no event has occurred and is continuing which would constitute an Event of Default or a Potential Default; and | ||
(C) | no event of default has occurred or is continuing on the part of the Company under any of its existing debt agreements; |
(A) | such Bank shall promptly notify the Company in writing of the happening of such event and will designate a different lending office if such designation will avoid the need for, or reduce the amount of such compensation and will not, in the judgement of such Bank, be otherwise disadvantageous to such Bank; | ||
(B) | such Bank shall promptly deliver to the Company a certificate stating the change which has occurred or the reserve requirements or other costs or conditions which have been imposed on such |
Bank or the request, direction, or requirement with which it has complied, together with the date thereof, the amount of such increased cost, reduction or payment and reasonably detailed description of the way in which such amount has been calculated, and such Bank's determination of such amounts, absent fraud or manifest error, shall be conclusive (in determining such amount, such Bank may use any reasonable averaging and attribution methods); and | |||
(C) | the Company shall pay to each Bank, from time to time as specified by such Bank, such amount as will compensate such Banks, for such additional cost, reduction, or payment. |
|
If to the Issuing Bank and/or the Administrative Agent, to
|
|
Faegre & Benson LLP
|
|
2200 Wells Fargo Center
|
|
90 South Seventh Street
|
|
Minneapolis, MN 55402
|
|
Attention: James M. Pfau
|
|
Telephone: 612-766-7000
|
|
Facsimile: 612-766-1600
E-mail: jpfau@faegre.com
|
If to the Company, to
|
ALLETE, Inc.
|
|
30 West Superior Street
|
|
Duluth, Minnesota 55802
|
|
Attention: Treasurer
|
|
Telephone: 218-723-3942
|
|
Facsimile: 218-723-3912
E-mail: dstellmaker@allete.com
|
If to the Remarketing Agent, to
|
Wells Fargo Brokerage Services, LLC
|
|
MAC N9303 105
|
|
608 Second Avenue South
|
|
Minneapolis, Minnesota 55402
|
|
Attention: Remarketing Desk
|
|
Telephone: 612-667-9435
|
|
Facsimile: 612-667-1593
|
If to the Trustee, to
|
U.S. Bank National Association
|
|
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, as Issuing Bank and as a Participating Bank
|
|
By
/s/Keith R. Luettel
|
|
Keith R. Luettel
|
|
Its Vice President
|
Wells Fargo Bank, N.A.
U. S. Trade Services
Standby Letters of Credit
MAC A0195-212
One Front Street, 21
st
Floor
San Francisco, CA 94111
Phone: 1(800) 798-2815 Option 1
E-Mail: sftrade@wellsfargo.com
|
BENEFICIARY | APPLICANT | |
U.S. Bank National Association | Allete, Inc. | |
Attention: Corp. Trust Dept. | 30 W. Superior Street | |
60 Livingston Avenue | Attn: Richard Ausman-Cash Mgr | |
St. Paul, Minnesota 55107 | Duluth, Minnesota 55802 |
at either | One Front Street | or | 401 Linden Street | ||
MAC A0195-212, | MAC D4004-017, | ||||
San Francisco, CA 94111 | Winston-Salem, NC 27101 |
Participating Bank
|
Commitment Percentage
|
Wells Fargo Bank, National Association
|
100%
|