(Mark One)
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T
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the fiscal year ended
December 31, 2013
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£
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the transition period from ______________ to ______________
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Minnesota
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41-0418150
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Name of each exchange on which registered
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Common Stock, without par value
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New York Stock Exchange
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Part I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Part II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Abbreviation or Acronym
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Term
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AC
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Alternating Current
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AFUDC
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Allowance for Funds Used During Construction - the cost of both debt and equity funds used to finance utility plant additions during construction periods
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ALLETE
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ALLETE, Inc.
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ALLETE Clean Energy
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ALLETE Clean Energy, Inc.
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ALLETE Properties
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ALLETE Properties, LLC and its subsidiaries
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ArcelorMittal
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ArcelorMittal USA, Inc.
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ATC
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American Transmission Company LLC
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Basin
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Basin Electric Power Cooperative
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Bison Wind Energy Center
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Bison 1, 2 & 3 Wind Facilities
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Bison 4
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Bison 4 Wind Project
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BNI Coal
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BNI Coal, Ltd.
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Boswell
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Boswell Energy Center
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CAIR
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Clean Air Interstate Rule
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CO
2
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Carbon Dioxide
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Company
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ALLETE, Inc. and its subsidiaries
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CSAPR
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Cross-State Air Pollution Rule
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DC
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Direct Current
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EPA
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Environmental Protection Agency
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ESOP
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Employee Stock Ownership Plan
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FASB
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Financial Accounting Standards Board
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FERC
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Federal Energy Regulatory Commission
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Form 8-K
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ALLETE Current Report on Form 8-K
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Form 10-K
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ALLETE Annual Report on Form 10-K
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Form 10-Q
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ALLETE Quarterly Report on Form 10-Q
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GAAP
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Accounting Principles Generally Accepted in the United States
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GHG
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Greenhouse Gases
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GNTL
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Great Northern Transmission Line
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IBEW
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International Brotherhood of Electrical Workers
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Invest Direct
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ALLETE’s Direct Stock Purchase and Dividend Reinvestment Plan
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Item ___
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Item ___ of this Form 10-K
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kV
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Kilovolt(s)
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Laskin
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Laskin Energy Center
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LIBOR
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London Inter Bank Offered Rate
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MACT
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Maximum Achievable Control Technology
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Magnetation
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Magnetation, LLC
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Manitoba Hydro
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Manitoba Hydro-Electric Board
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MATS
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Mercury and Air Toxics Standards
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MBtu
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Million British thermal units
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Medicare Part D
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Medicare Part D provision of the Patient Protection and Affordable Care Act of 2010
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Mesabi Nugget
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Mesabi Nugget Delaware, LLC
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Minnesota Power
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An operating division of ALLETE, Inc.
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Minnkota Power
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Minnkota Power Cooperative, Inc.
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MISO
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Midcontinent Independent System Operator, Inc.
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Moody’s
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Moody’s Investors Service, Inc.
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MPCA
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Minnesota Pollution Control Agency
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MPUC
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Minnesota Public Utilities Commission
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MW / MWh
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Megawatt(s) / Megawatt-hour(s)
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NAAQS
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National Ambient Air Quality Standards
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NDPSC
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North Dakota Public Service Commission
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NERC
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North American Electric Reliability Corporation
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NOL
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Net Operating Loss
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Non-residential
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Retail commercial, non-retail commercial, office, industrial, warehouse, storage and institutional
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NO
2
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Nitrogen Dioxide
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NO
X
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Nitrogen Oxides
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Note ___
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Note ___ to the consolidated financial statements in this Form 10-K
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NPDES
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National Pollutant Discharge Elimination System
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NYSE
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New York Stock Exchange
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Oliver Wind I
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Oliver Wind I Energy Center
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Oliver Wind II
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Oliver Wind II Energy Center
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Palm Coast Park
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Palm Coast Park development project in Florida
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Palm Coast Park District
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Palm Coast Park Community Development District
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PolyMet
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PolyMet Mining Corporation
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PPA
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Power Purchase Agreement
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PPACA
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Patient Protection and Affordable Care Act of 2010
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PSCW
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Public Service Commission of Wisconsin
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Rainy River Energy
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Rainy River Energy Corporation - Wisconsin
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RSOP
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Retirement Savings and Stock Ownership Plan
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SEC
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Securities and Exchange Commission
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SIP
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State Implementation Plan
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SO
2
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Sulfur Dioxide
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Square Butte
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Square Butte Electric Cooperative
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Standard & Poor’s
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Standard & Poor’s Ratings Services
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SWL&P
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Superior Water, Light and Power Company
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Taconite Harbor
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Taconite Harbor Energy Center
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Taconite Ridge
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Taconite Ridge Energy Center
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Town Center
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Town Center at Palm Coast development project in Florida
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Town Center District
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Town Center at Palm Coast Community Development District
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U.S.
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United States of America
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USS Corporation
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United States Steel Corporation
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•
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our ability to successfully implement our strategic objectives;
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•
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global and domestic economic conditions affecting us or our customers;
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•
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wholesale power market conditions;
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•
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regulatory or legislative actions, including those of the United States Congress, state legislatures, the FERC, the MPUC, the PSCW, the NDPSC, the EPA and various state and local regulators, that impact our allowed rates of return, capital structure, ability to secure financing, industry and rate structure, acquisition and disposal of assets and facilities, operation and construction of plant facilities, recovery of purchased power, capital investments and other expenses, including present or prospective environmental matters;
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•
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changes in and compliance with laws and regulations;
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•
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effects of competition, including competition for retail and wholesale customers;
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•
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effects of restructuring initiatives in the electric industry;
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•
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changes in tax rates or policies or in rates of inflation;
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•
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the impacts on our Regulated Operations of climate change and future regulation to restrict the emissions of GHG;
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•
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the outcome of legal and administrative proceedings (whether civil or criminal) and settlements;
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•
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weather conditions, natural disasters and pandemic diseases;
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•
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our ability to access capital markets and bank financing;
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•
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changes in interest rates and the performance of the financial markets;
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•
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project delays or changes in project costs;
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•
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availability and management
of construction materials and skilled construction labor for capital projects;
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•
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changes in operating expenses and capital expenditures and our ability to recover these costs;
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•
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pricing, availability and transportation of fuel and other commodities and the ability to recover the costs of such commodities;
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•
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our ability to replace a mature workforce and retain qualified, skilled and experienced personnel;
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•
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effects of emerging technology;
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•
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war, acts of terrorism and cyber attacks;
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•
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our ability to manage expansion and integrate acquisitions;
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•
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our current and potential industrial and municipal customers’ ability to execute announced expansion plans;
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•
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population growth rates and demographic patterns; and
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•
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zoning and permitting of land held for resale, real estate development or changes in the real estate market.
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Year Ended December 31
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2013
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2012
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2011
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Consolidated Operating Revenue – Millions
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$1,018.4
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$961.2
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$928.2
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||||||
Percentage of Consolidated Operating Revenue
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Regulated Operations
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91
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%
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91
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%
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92
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%
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Investments and Other
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9
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%
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9
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%
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8
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%
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100
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%
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100
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%
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100
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%
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Regulated Utility Electric Sales
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Year Ended December 31
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2013
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%
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2012
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%
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2011
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%
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Millions of Kilowatt-hours
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Retail and Municipals
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Residential
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1,177
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9
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1,132
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9
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1,159
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9
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Commercial
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1,455
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11
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1,436
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11
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1,433
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11
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Industrial
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7,338
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55
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7,502
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57
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7,365
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56
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Municipals
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999
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8
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1,020
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8
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1,013
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7
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Total Retail and Municipals
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10,969
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83
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11,090
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85
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10,970
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83
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Other Power Suppliers
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2,278
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17
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1,999
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15
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2,205
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17
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Total Regulated Utility Electric Sales
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13,247
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100
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13,089
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100
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13,175
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100
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Industrial Customer Electric Sales
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Year Ended December 31
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2013
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%
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2012
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%
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2011
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%
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Millions of Kilowatt-hours
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Taconite/Iron Concentrate
(a)
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4,851
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66
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4,968
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66
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4,874
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66
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Paper, Pulp and Wood Products
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1,505
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21
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1,571
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21
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1,560
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21
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Pipelines and Other Industrial
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982
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13
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963
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13
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931
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13
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Total Industrial Customer Electric Sales
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7,338
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100
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7,502
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100
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7,365
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100
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(a)
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Kilowatt-hour sales to taconite/iron concentrate customers decreased from 2012 primarily due to 154 million kilowatt-hours sold in 2012 through a short-term, fixed price contract.
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Customer
(d)
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Industry
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Location
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Ownership
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Earliest
Termination Date
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ArcelorMittal – Minorca Mine
(a)
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Taconite
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Virginia, MN
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ArcelorMittal
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January 31, 2018
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Hibbing Taconite Co.
(a)
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Taconite
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Hibbing, MN
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62.3% ArcelorMittal
23.0% Cliffs Natural Resources Inc.
14.7% USS Corporation
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January 31, 2018
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United Taconite LLC
(a)
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Taconite
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Eveleth, MN
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Cliffs Natural Resources Inc.
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January 31, 2018
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USS Corporation
(USS – Minnesota Ore)
(a,b)
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Taconite
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Mt. Iron, MN and Keewatin, MN
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USS Corporation
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January 31, 2018
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Mesabi Nugget
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Iron Nugget
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Hoyt Lakes, MN
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80% Steel Dynamics, Inc.
20% Kobe Steel USA
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December 31, 2017
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Boise, Inc.
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Paper
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International Falls, MN
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Packaging Corporation of America
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December 31, 2023
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UPM, Blandin Paper Mill
(a)
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Paper
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Grand Rapids, MN
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UPM-Kymmene Corporation
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January 31, 2018
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NewPage Corporation – Duluth Mill
(c)
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Paper and Pulp
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Duluth, MN
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NewPage Corporation
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December 31, 2022
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Sappi Cloquet LLC
(a)
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Paper and Pulp
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Cloquet, MN
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Sappi Limited
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January 31, 2018
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(a)
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The contract will terminate four years from the date of written notice from either Minnesota Power or the customer. No notice of contract cancellation has been given by either party. Thus, the earliest date of cancellation is January 31, 2018.
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(b)
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USS Corporation owns both the Minntac Plant in Mountain Iron, MN and the Keewatin Taconite Plant in Keewatin, MN.
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(c)
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On January 6, 2014, Verso Paper Corporation announced its plan to acquire NewPage Corporation, which is expected to occur in the second half of 2014. This acquisition will not impact Minnesota Power’s electric service agreement with NewPage Corporation.
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(d)
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On January 27 2014, a new electric service agreement was entered into between Minnesota Power and Magnetation for its facility near Coleraine, Minnesota. This agreement is subject to MPUC approval and will be effective one month following approval through December 31, 2025. In addition, a transmission service extension is required to be constructed and is expected to complete in the fourth quarter of 2014.
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Year Ended
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|||
|
Unit
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Year
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Net
|
December 31, 2013
|
|||
Regulated Utility Power Supply
|
No.
|
Installed
|
Capability
|
Generation and Purchases
|
|||
|
|
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MW
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MWh
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%
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||
Coal-Fired
|
|
|
|
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Boswell Energy Center
|
1
|
1958
|
67
|
|
|
|
|
in Cohasset, MN
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2
|
1960
|
68
|
|
|
|
|
|
3
|
1973
|
362
|
|
|
|
|
|
4
|
1980
|
468
|
|
(a)
|
|
|
|
|
|
965
|
|
6,869,392
|
|
51.0
|
Laskin Energy Center
|
1
|
1953
|
49
|
|
(b)
|
|
|
in Hoyt Lakes, MN
|
2
|
1953
|
50
|
|
(b)
|
|
|
|
|
|
99
|
|
471,771
|
|
3.5
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Taconite Harbor Energy Center
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1
|
1957
|
79
|
|
|
|
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in Schroeder, MN
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2
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1957
|
77
|
|
|
|
|
|
3
|
1967
|
84
|
|
(b)
|
|
|
|
|
|
240
|
|
1,064,434
|
|
7.9
|
Total Coal
|
|
|
1,304
|
|
8,405,597
|
|
62.4
|
Biomass/Coal/Natural Gas
|
|
|
|
|
|
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Hibbard Renewable Energy Center in Duluth, MN
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3 & 4
|
1949, 1951
|
58
|
|
25,216
|
|
0.2
|
Cloquet Energy Center in Cloquet, MN
|
5
|
2001
|
23
|
|
98,022
|
|
0.7
|
Total Biomass/Coal/Natural Gas
|
|
|
81
|
|
123,238
|
|
0.9
|
Hydro
(c)
|
|
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|
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|
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Group consisting of ten stations in MN
|
Multiple
|
Multiple
|
91
|
|
190,273
|
|
1.4
|
Wind
(d)
|
|
|
|
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Taconite Ridge Energy Center in Mt. Iron, MN
|
Multiple
|
2008
|
25
|
|
55,891
|
|
0.4
|
Bison Wind Energy Center in Oliver and Morton Counties, ND
|
Multiple
|
2010-2012
|
292
|
|
780,799
|
|
5.8
|
Total Wind
|
|
|
317
|
|
836,690
|
|
6.2
|
Total Company Generation
|
|
|
1,793
|
|
9,555,798
|
|
70.9
|
Long-Term Purchased Power
|
|
|
|
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Lignite Coal - Square Butte near Center, ND
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|
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1,254,622
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9.3
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Wind - Oliver County, ND
|
|
|
|
307,595
|
|
2.3
|
|
Hydro - Manitoba Hydro in Winnipeg, MB, Canada
|
|
|
|
261,085
|
|
1.9
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|
Total Long-Term Purchased Power
|
|
|
|
|
1,823,302
|
|
13.5
|
Other Purchased Power
(e
)
|
|
|
|
2,106,725
|
|
15.6
|
|
Total Purchased Power
|
|
|
|
|
3,930,027
|
|
29.1
|
Total
|
|
|
1,793
|
|
13,485,825
|
|
100.0
|
(a)
|
Boswell Unit 4 net capability shown above reflects Minnesota Power’s ownership percentage of 80 percent. WPPI Energy owns 20 percent of Boswell Unit 4. (See Note 4. Jointly-Owned Facilities and Projects.)
|
(b)
|
Future plans for our Laskin Energy Center and Taconite Harbor Unit 3 are included in our “EnergyForward” plan which includes the conversion of Laskin from coal to natural gas in 2015 and the retiring of Taconite Harbor Unit 3 in 2015. (See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
–
Outlook
–
EnergyForward.)
|
(c)
|
The Thomson Energy Center is currently off-line due to damage to the forebay canal and flooding at the facility, which occurred in June 2012. (See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
–
Outlook
–
Hydro Operations.)
|
(d)
|
Taconite Ridge consists of 10 wind turbine generator units with a total nameplate capacity of 25 MW. Bison Wind Energy Center consists of 101 wind turbine generator units, with a total nameplate capacity of 292 MW. The net capability reflected in the table is the actual accredited capacity of the facility, which is the amount of net generating capability associated with the facility for which capacity credit was obtained using limited historical data. As more data is collected, actual accredited capacity may increase.
|
(e)
|
Includes short-term market purchases in the MISO market and from Other Power Suppliers.
|
Non-Rate Base Power Supply
|
Unit No.
|
Year
Installed
|
Year
Acquired
|
Net
Capability (MW)
|
Rapids Energy Center
(a)
|
|
|
|
|
in Grand Rapids, MN
|
|
|
|
|
Steam – Biomass
(b)
|
6 & 7
|
1969, 1980
|
2000
|
26
|
Hydro – Conventional Run-of-River
|
4 & 5
|
1917, 1948
|
2000
|
1
|
(a)
|
The net generation is primarily dedicated to the needs of one customer.
|
(b)
|
Rapids Energy Center’s fuel supply is supplemented by coal.
|
•
|
Expanding our renewable energy supply;
|
•
|
Providing energy conservation initiatives for our customers and engaging in other demand side efforts;
|
•
|
Improving efficiency of our energy generating facilities;
|
•
|
Supporting research of technologies to reduce carbon emissions from generation facilities and carbon sequestration efforts; and
|
•
|
Evaluating and developing less carbon intensive future generating assets such as efficient and flexible natural gas generating facilities.
|
Executive Officers
|
Initial Effective Date
|
|
|
Alan R. Hodnik, Age 54
|
|
Chairman, President and Chief Executive Officer
|
May 10, 2011
|
President and Chief Executive Officer
|
May 1, 2010
|
President
|
May 1, 2009
|
Chief Operating Officer – Minnesota Power
|
May 8, 2007
|
|
|
Robert J. Adams, Age 51
|
|
Vice President – Business Development and Chief Risk Officer
|
May 13, 2008
|
|
|
Deborah A. Amberg, Age 48
|
|
Senior Vice President, General Counsel and Secretary
|
January 1, 2006
|
|
|
Steven Q. DeVinck, Age 54
|
|
Controller and Vice President – Business Support
|
December 5, 2009
|
Controller
|
July 12, 2006
|
|
|
David J. McMillan, Age 52
|
|
Senior Vice President – External Affairs
|
January 1, 2012
|
Senior Vice President – Marketing, Regulatory and Public Affairs
|
January 1, 2006
|
Executive Vice President – Minnesota Power
|
January 1, 2006
|
|
|
Mark A. Schober, Age 58
|
|
Senior Vice President and Chief Financial Officer
|
July 1, 2006
|
|
|
Donald W. Stellmaker, Age 56
|
|
Vice President and Corporate Treasurer
|
August 19, 2011
|
Treasurer
|
July 24, 2004
|
•
|
severe or unexpected weather conditions and natural disasters;
|
•
|
seasonality;
|
•
|
changes in electricity usage;
|
•
|
transmission or transportation constraints, inoperability or inefficiencies;
|
•
|
availability of competitively priced alternative energy sources;
|
•
|
changes in supply and demand for energy;
|
•
|
changes in power production capacity;
|
•
|
outages at our generating facilities or those of our competitors;
|
•
|
availability of fuel transportation;
|
•
|
changes in production and storage levels of natural gas, lignite, coal, crude oil and refined products;
|
•
|
wars, sabotage, terrorist acts or other catastrophic events; and
|
•
|
federal, state, local and foreign energy, environmental, or other regulation and legislation.
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
|||||
Millions
|
|
|
|
|
|
||||||||||
Operating Revenue
|
|
$1,018.4
|
|
|
$961.2
|
|
|
$928.2
|
|
|
$907.0
|
|
|
$759.1
|
|
Operating Expenses
|
864.3
|
|
806.0
|
|
778.2
|
|
771.2
|
|
653.1
|
|
|||||
Net Income
|
104.7
|
|
97.1
|
|
93.6
|
|
74.8
|
|
60.7
|
|
|||||
Less: Non-Controlling Interest in Subsidiaries
(a)
|
—
|
|
—
|
|
(0.2
|
)
|
(0.5
|
)
|
(0.3
|
)
|
|||||
Net Income Attributable to ALLETE
|
|
$104.7
|
|
|
$97.1
|
|
|
$93.8
|
|
|
$75.3
|
|
|
$61.0
|
|
Common Stock Dividends
|
|
$75.2
|
|
|
$69.1
|
|
|
$62.1
|
|
|
$60.8
|
|
|
$56.5
|
|
Earnings Retained in Business
|
|
$29.5
|
|
|
$28.0
|
|
|
$31.7
|
|
|
$14.5
|
|
|
$4.5
|
|
Shares Outstanding – Millions
|
|
|
|
|
|
||||||||||
Year-End
|
41.4
|
|
39.4
|
|
37.5
|
|
35.8
|
|
35.2
|
|
|||||
Average
(b)
|
|
|
|
|
|
||||||||||
Basic
|
39.7
|
|
37.6
|
|
35.3
|
|
34.2
|
|
32.2
|
|
|||||
Diluted
|
39.8
|
|
37.6
|
|
35.4
|
|
34.3
|
|
32.2
|
|
|||||
Diluted Earnings Per Share
|
|
$2.63
|
|
|
$2.58
|
|
|
$2.65
|
|
|
$2.19
|
|
|
$1.89
|
|
Total Assets
|
|
$3,476.8
|
|
|
$3,253.4
|
|
|
$2,876.0
|
|
|
$2,609.1
|
|
|
$2,393.1
|
|
Long-Term Debt
|
|
$1,083.0
|
|
|
$933.6
|
|
|
$857.9
|
|
|
$771.6
|
|
|
$695.8
|
|
Return on Common Equity
|
8.3
|
%
|
8.6
|
%
|
9.1
|
%
|
7.8
|
%
|
6.9
|
%
|
|||||
Common Equity Ratio
|
55
|
%
|
54
|
%
|
56
|
%
|
56
|
%
|
57
|
%
|
|||||
Dividends Declared per Common Share
|
|
$1.90
|
|
|
$1.84
|
|
|
$1.78
|
|
|
$1.76
|
|
|
$1.76
|
|
Dividend Payout Ratio
|
72
|
%
|
71
|
%
|
67
|
%
|
80
|
%
|
93
|
%
|
|||||
Book Value Per Share at Year-End
|
|
$32.43
|
|
|
$30.50
|
|
|
$28.77
|
|
|
$27.25
|
|
|
$26.39
|
|
Capital Expenditures by Segment
|
|
|
|
|
|
||||||||||
Regulated Operations
|
|
$326.3
|
|
|
$418.2
|
|
|
$228.0
|
|
|
$256.4
|
|
|
$299.2
|
|
Investments and Other
|
13.2
|
|
14.0
|
|
18.8
|
|
3.6
|
|
4.5
|
|
|||||
Total Capital Expenditures
|
|
$339.5
|
|
|
$432.2
|
|
|
$246.8
|
|
|
$260.0
|
|
|
$303.7
|
|
(a)
|
In 2011, the remaining shares of the ALLETE Properties non-controlling interest were purchased.
|
(b)
|
Excludes unallocated ESOP shares.
|
ALLETE Properties
|
2013
|
2012
|
||||||||
Revenue and Sales Activity
|
Acres
(a)
|
|
Amount
|
|
Acres
(a)
|
|
Amount
|
|
||
Dollars in Millions
|
|
|
|
|
||||||
Revenue from Land Sales
|
293
|
|
|
$3.5
|
|
—
|
|
—
|
|
|
Other Revenue
(b)
|
|
0.9
|
|
|
|
|
$2.1
|
|
||
Total ALLETE Properties Revenue
|
|
|
$4.4
|
|
|
|
|
$2.1
|
|
(a)
|
Acreage amounts are shown on a gross basis, including wetlands.
|
(b)
|
For the year ended December 31, 2012, Other Revenue includes wetland mitigation bank credit sales of $1.1 million.
|
Kilowatt-hours Sold
|
2012
|
|
2011
|
|
Quantity
Variance
|
%
Variance
|
||
Millions
|
|
|
|
|
||||
Regulated Utility
|
|
|
|
|
||||
Retail and Municipals
|
|
|
|
|
||||
Residential
|
1,132
|
|
1,159
|
|
(27
|
)
|
(2.3
|
)
|
Commercial
|
1,436
|
|
1,433
|
|
3
|
|
0.2
|
|
Industrial
|
7,502
|
|
7,365
|
|
137
|
|
1.9
|
|
Municipals
|
1,020
|
|
1,013
|
|
7
|
|
0.7
|
|
Total Retail and Municipals
|
11,090
|
|
10,970
|
|
120
|
|
1.1
|
|
Other Power Suppliers
|
1,999
|
|
2,205
|
|
(206
|
)
|
(9.3
|
)
|
Total Regulated Utility Kilowatt-hours Sold
|
13,089
|
|
13,175
|
|
(86
|
)
|
(0.7
|
)
|
ALLETE Properties
|
2012
|
2011
|
||||||||
Revenue and Sales Activity
|
Acres
(a)
|
Amount
|
Acres
(a)
|
Amount
|
||||||
Dollars in Millions
|
|
|
|
|
||||||
Revenue from Land Sales
|
—
|
|
—
|
|
3
|
|
|
$0.4
|
|
|
Other Revenue
(b)
|
|
|
$2.1
|
|
|
0.9
|
|
|||
Total ALLETE Properties Revenue
|
|
|
$2.1
|
|
|
|
$1.3
|
|
(a)
|
Acreage amounts are shown on a gross basis, including wetlands.
|
(b)
|
For the year ended December 31, 2012, Other Revenue includes wetland mitigation bank credit sales of $1.1 million. For the year ended December 31, 2011, Other Revenue includes a $0.4 million 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.
|
•
|
Major wind investments in North Dakota. Our Bison Wind Energy Center has 292 MW of nameplate capacity with an additional 205 MW under construction (see
Renewable Energy
).
|
•
|
Planned installation of approximately $310 million in emissions control technology at our Boswell Unit 4 to further reduce emissions of SO
2
, particulates and mercury (see
Boswell Mercury Emission Reduction Plan
).
|
•
|
Planning for the proposed GNTL to deliver hydroelectric power from northern Manitoba by 2020 (see
Transmission
).
|
•
|
The conversion of Laskin from coal to cleaner-burning natural gas in 2015.
|
•
|
Retiring Taconite Harbor Unit 3, one of three coal-fired units at Taconite Harbor, in 2015.
|
Summary of Development Projects (100% Owned)
|
|
|
|
Residential
|
|
Non-residential
|
|||
Land Available-for-Sale
|
|
Acres
(a)
|
|
Units
(b)
|
|
Sq. Ft.
(b,c)
|
|||
Current Development Projects
|
|
|
|
|
|
|
|||
Town Center
|
|
964
|
|
|
2,485
|
|
|
2,236,700
|
|
Palm Coast Park
|
|
3,777
|
|
|
3,554
|
|
|
3,096,800
|
|
Total Current Development Projects
|
|
4,741
|
|
|
6,039
|
|
|
5,333,500
|
|
|
|
|
|
|
|
|
|||
Planned Development Project
|
|
|
|
|
|
|
|||
Ormond Crossings
|
|
2,914
|
|
|
2,950
|
|
|
3,215,000
|
|
Other
|
|
|
|
|
|
|
|||
Lake Swamp Wetland Mitigation Project
|
|
3,044
|
|
|
(d)
|
|
|
(d)
|
|
Total of Development Projects
|
|
10,699
|
|
|
8,989
|
|
|
8,548,500
|
|
(a)
|
Acreage amounts are approximate and shown on a gross basis, including wetlands.
|
(b)
|
Units and square footage are estimated. 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 are available-for-sale to developers of other projects that are located in the bank’s service area.
|
As of December 31
|
2013
|
|
%
|
2012
|
|
%
|
2011
|
|
%
|
|||
Millions
|
|
|
|
|
|
|
||||||
Common Equity
|
|
$1,342.9
|
|
55
|
|
$1,201.0
|
|
54
|
|
$1,079.3
|
|
56
|
Long-Term Debt (Including Current Maturities)
|
1,110.2
|
|
45
|
1,018.1
|
|
46
|
863.3
|
|
44
|
|||
Short-Term Debt
|
—
|
|
—
|
—
|
|
—
|
1.1
|
|
—
|
|||
|
|
$2,453.1
|
|
100
|
|
$2,219.1
|
|
100
|
|
$1,943.7
|
|
100
|
Year Ended December 31
|
2013
|
|
2012
|
|
2011
|
|
|||
Millions
|
|
|
|
||||||
Cash and Cash Equivalents at Beginning of Period
|
|
$80.8
|
|
|
$101.1
|
|
|
$44.9
|
|
Cash Flows from (for)
|
|
|
|
||||||
Operating Activities
|
239.4
|
|
239.6
|
|
241.7
|
|
|||
Investing Activities
|
(336.6
|
)
|
(420.1
|
)
|
(240.9
|
)
|
|||
Financing Activities
|
113.7
|
|
160.2
|
|
55.4
|
|
|||
Change in Cash and Cash Equivalents
|
16.5
|
|
(20.3
|
)
|
56.2
|
|
|||
Cash and Cash Equivalents at End of Period
|
|
$97.3
|
|
|
$80.8
|
|
|
$101.1
|
|
|
Payments Due by Period
|
||||||||||||||
Contractual Obligations
|
|
Less than
|
1 to 3
|
4 to 5
|
After
|
||||||||||
As of December 31, 2013
|
Total
|
1 Year
|
Years
|
Years
|
5 Years
|
||||||||||
Millions
|
|
|
|
|
|
||||||||||
Long-Term Debt
|
|
$1,768.3
|
|
|
$75.3
|
|
|
$304.0
|
|
|
$175.2
|
|
|
$1,213.8
|
|
Pension
(a)
|
379.5
|
|
33.9
|
|
107.6
|
|
76.5
|
|
161.5
|
|
|||||
Other Postretirement Benefit Plans
(a)
|
94.1
|
|
7.7
|
|
26.4
|
|
19.3
|
|
40.7
|
|
|||||
Operating Lease Obligations
|
78.4
|
|
12.1
|
|
29.7
|
|
13.8
|
|
22.8
|
|
|||||
Uncertain Tax Positions
(b)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Capital Purchase Obligations
(c)
|
358.2
|
|
332.5
|
|
25.7
|
|
—
|
|
—
|
|
|||||
Other Purchase Obligations
(d)
|
452.3
|
|
89.9
|
|
131.5
|
|
83.6
|
|
147.3
|
|
|||||
|
|
$3,130.8
|
|
|
$551.4
|
|
|
$624.9
|
|
|
$368.4
|
|
|
$1,586.1
|
|
(a)
|
Represents the estimated future benefit payments for our defined benefit pension and other postretirement plans through 2023.
|
(b)
|
Excludes $1.2 million of non-current unrecognized tax benefits due to uncertainty regarding the timing of future cash payments related to uncertain tax positions.
|
(c)
|
Consists mostly of capital expenditures related to our Bison 4 project and the Boswell Unit 4 environmental upgrade.
|
(d)
|
Excludes the agreement with Manitoba Hydro expiring in 2022, as this contract is for surplus energy only. Also excludes the agreement with Manitoba Hydro commencing in 2020, as our obligation under this contract is subject to the construction of a hydro generation facility by Manitoba Hydro and additional transmission capacity. Also, excludes Oliver Wind I and Oliver Wind II, as we only pay for energy as it is delivered to us. (See Item 1. Business – Regulated Operations – Power Supply.)
|
Credit Ratings
|
Standard & Poor’s
|
Moody’s
|
Issuer Credit Rating
|
BBB+
|
A3
|
Commercial Paper
|
A-2
|
P-2
|
Senior Secured
|
|
|
First Mortgage Bonds
(a)
|
A
|
A1
|
(a)
|
Includes collateralized pollution control bonds.
|
Capital Expenditures
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Total
|
|
|||||||
Millions
|
|
|
|
|
|
|
|||||||||||||
Regulated Utility Operations
|
|
|
|
|
|
|
|||||||||||||
|
Base and Other
|
|
$175
|
|
|
$170
|
|
|
$145
|
|
|
$140
|
|
|
$145
|
|
|
$775
|
|
|
Cost Recovery
(a)
|
|
|
|
|
|
|
||||||||||||
|
Environmental
(b)
|
115
|
|
125
|
|
5
|
|
—
|
|
—
|
|
245
|
|
||||||
|
Renewable
(c)
|
285
|
|
—
|
|
—
|
|
—
|
|
—
|
|
285
|
|
||||||
|
Transmission
(d)
|
30
|
|
10
|
|
35
|
|
85
|
|
105
|
|
265
|
|
||||||
|
Total Cost Recovery
|
430
|
|
135
|
|
40
|
|
85
|
|
105
|
|
795
|
|
||||||
Regulated Utility Capital Expenditures
|
605
|
|
305
|
|
185
|
|
225
|
|
250
|
|
1,570
|
|
|||||||
Other
|
|
35
|
|
15
|
|
10
|
|
25
|
|
20
|
|
105
|
|
||||||
Total Capital Expenditures
|
|
$640
|
|
|
$320
|
|
|
$195
|
|
|
$250
|
|
|
$270
|
|
|
$1,675
|
|
(a)
|
Estimated capital expenditures eligible for cost recovery outside of a rate case.
|
(b)
|
Environmental capital expenditures primarily related to compliance with the MATS rule for Boswell Unit 4 which reflect Minnesota Power’s ownership percentage of 80 percent. (See Note 12. Commitments, Guarantees and Contingencies.)
|
(c)
|
Related to Bison 4. (See Outlook – Regulated Operations.)
|
(d)
|
Transmission capital expenditures related to construction of the GNTL are estimated at approximately $230 million through 2018. (See Outlook – Regulated Operations.)
|
|
Expected Maturity Date
|
|||||||||||||||||||||||
Interest Rate Sensitive
Financial Instruments
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Thereafter
|
|
Total
|
|
Fair Value
|
|||||||||
Dollars in Millions
|
|
|
|
|
|
|
|
|
||||||||||||||||
Long-Term Debt
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed Rate
|
|
$20.4
|
|
|
$52.3
|
|
|
$22.3
|
|
|
$51.8
|
|
|
$1.7
|
|
|
$822.9
|
|
|
$971.4
|
|
|
$996.0
|
|
Average Interest Rate – %
|
6.4
|
|
1.9
|
|
7.1
|
|
5.8
|
|
1.4
|
|
5.0
|
|
5.0
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Variable Rate
|
|
$6.8
|
|
|
$90.7
|
|
—
|
|
—
|
|
—
|
|
|
$41.3
|
|
|
$138.8
|
|
|
$138.8
|
|
|||
Average Interest Rate – %
(a)
|
4.5
|
|
0.9
|
|
—
|
|
—
|
|
—
|
|
0.1
|
|
0.8
|
|
|
(a)
|
The $75 million term loan, which was amended in August 2013, matures in 2015. It has an effective fixed rate of 1.70 percent through August 2014, and 1.625 percent for the remaining term due to an interest rate swap.
|
•
|
Directors.
The information regarding directors will be included in the “Election of Directors” section;
|
•
|
Audit Committee Financial Expert.
The information regarding the Audit Committee financial expert will be included in the “Audit Committee Report” section;
|
•
|
Audit Committee Members.
The identity of the Audit Committee members will be included in the “Audit Committee Report” section;
|
•
|
Executive Officers.
The information regarding executive officers is included in Part I of this Form 10-K; and
|
•
|
Section 16(a) Compliance.
The information regarding Section 16(a) compliance will be included in the “Ownership of ALLETE Common Stock – Section 16(a) Beneficial Ownership Reporting Compliance” section.
|
•
|
Corporate Governance Guidelines;
|
•
|
Audit Committee Charter;
|
•
|
Executive Compensation Committee Charter; and
|
•
|
Corporate Governance and Nominating Committee Charter.
|
Exhibit Number
|
||||||
1
|
—
|
Assignment and Assumption of and Amendment No. 2 to Third Amended and Restated Distribution Agreement dated February 13, 2014, between ALLETE, Inc. and Lampert Capital Markets, Inc.
|
||||
*3(a)1
|
—
|
Articles of Incorporation, amended and restated as of May 8, 2001 (filed as Exhibit 3(b) to the March 31, 2001,
Form 10-Q, File No. 1-3548).
|
||||
*3(a)2
|
—
|
Amendment to Articles of Incorporation, dated as of September 20, 2004 (filed as Exhibit 3 to the September 21, 2004, Form 8-K, File No. 1-3548).
|
||||
*3(a)3
|
—
|
Amendment to Articles of Incorporation, dated as of May 12, 2009 (filed as Exhibit 3 to the June 30, 2009, Form 10-Q, File No. 1-3548).
|
||||
*3(a)4
|
—
|
Amendment to Articles of Incorporation, dated as of May 11, 2010 (filed as Exhibit 3(a) to the May 14, 2010, Form 8-K, File No. 1-3548).
|
||||
*3(a)5
|
—
|
Amendment to Certificate of Assumed Name, filed with the Minnesota Secretary of State on May 8, 2001 (filed as
Exhibit 3(a) to the March 31, 2001, Form 10-Q, File No. 1-3548).
|
||||
*3(b)
|
—
|
Bylaws, as amended effective May 11, 2010 (filed as Exhibit 3(b) to the May 14, 2010, Form 8-K, File No. 1-3548).
|
||||
*4(a)1
|
—
|
Mortgage and Deed of Trust, dated as of September 1, 1945, between Minnesota Power & Light Company (now ALLETE) and The Bank of New York Mellon (formerly Irving Trust Company) and Philip L. Watson (successor to Richard H. West), Trustees (filed as Exhibit 7(c), File No. 2-5865).
|
||||
*4(a)2
|
—
|
Supplemental Indentures to ALLETE’s Mortgage and Deed of Trust:
|
||||
|
|
Number
|
Dated as of
|
Reference File
|
Exhibit
|
|
|
|
First
|
March 1, 1949
|
2-7826
|
7(b)
|
|
|
|
Second
|
July 1, 1951
|
2-9036
|
7(c)
|
|
|
|
Third
|
March 1, 1957
|
2-13075
|
2(c)
|
|
|
|
Fourth
|
January 1, 1968
|
2-27794
|
2(c)
|
|
|
|
Fifth
|
April 1, 1971
|
2-39537
|
2(c)
|
|
|
|
Sixth
|
August 1, 1975
|
2-54116
|
2(c)
|
|
|
|
Seventh
|
September 1, 1976
|
2-57014
|
2(c)
|
|
|
|
Eighth
|
September 1, 1977
|
2-59690
|
2(c)
|
|
|
|
Ninth
|
April 1, 1978
|
2-60866
|
2(c)
|
|
|
|
Tenth
|
August 1, 1978
|
2-62852
|
2(d)2
|
|
|
|
Eleventh
|
December 1, 1982
|
2-56649
|
4(a)3
|
|
|
|
Twelfth
|
April 1, 1987
|
33-30224
|
4(a)3
|
|
|
|
Thirteenth
|
March 1, 1992
|
33-47438
|
4(b)
|
|
|
|
Fourteenth
|
June 1, 1992
|
33-55240
|
4(b)
|
|
|
|
Fifteenth
|
July 1, 1992
|
33-55240
|
4(c)
|
|
|
|
Sixteenth
|
July 1, 1992
|
33-55240
|
4(d)
|
|
|
|
Seventeenth
|
February 1, 1993
|
33-50143
|
4(b)
|
|
|
|
Eighteenth
|
July 1, 1993
|
33-50143
|
4(c)
|
|
|
|
Nineteenth
|
February 1, 1997
|
1-3548 (1996 Form 10-K)
|
4(a)3
|
|
|
|
Twentieth
|
November 1, 1997
|
1-3548 (1997 Form 10-K)
|
4(a)3
|
|
|
|
Twenty-first
|
October 1, 2000
|
333-54330
|
4(c)3
|
|
|
|
Twenty-second
|
July 1, 2003
|
1-3548 (June 30, 2003 Form 10-Q)
|
4
|
|
|
|
Twenty-third
|
August 1, 2004
|
1-3548 (Sept. 30, 2004 Form 10-Q)
|
4(a)
|
|
|
|
Twenty-fourth
|
March 1, 2005
|
1-3548 (March 31, 2005 Form 10-Q)
|
4
|
|
|
|
Twenty-fifth
|
December 1, 2005
|
1-3548 (March 31, 2006 Form 10-Q)
|
4
|
|
|
|
Twenty-sixth
|
October 1, 2006
|
1-3548 (2006 Form 10-K)
|
4
|
|
|
|
Twenty-seventh
|
February 1, 2008
|
1-3548 (2007 Form 10-K)
|
4(a)3
|
|
|
|
Twenty-eighth
|
May 1, 2008
|
1-3548 (June 30, 2008 Form 10-Q)
|
4
|
|
|
|
Twenty-ninth
|
November 1, 2008
|
1-3548 (2008 Form 10-K)
|
4(a)3
|
|
|
|
Thirtieth
|
January 1, 2009
|
1-3548 (2008 Form 10-K)
|
4(a)4
|
|
|
|
Thirty-first
|
February 1, 2010
|
1-3548 (March 31, 2010 Form 10-Q)
|
4
|
|
|
|
Thirty-second
|
August 1, 2010
|
1-3548 (Sept. 30, 2010 Form 10-Q)
|
4
|
Exhibit Number
|
||||||
+*10(e)5
|
—
|
|
ALLETE Executive Annual Incentive Plan Form of Awards Effective 2013 (filed as Exhibit 10(f)5 to the 2012
Form 10-K, File No. 1-3548).
|
|||
+10(e)6
|
—
|
|
ALLETE Executive Annual Incentive Plan Form of Awards Effective 2014.
|
|||
+*10(f)1
|
—
|
|
ALLETE and Affiliated Companies Supplemental Executive Retirement Plan (SERP I), as amended and restated, effective January 1, 2009 (filed as Exhibit 10(i)4 to the 2008 Form 10-K, File No. 1-3548).
|
|||
+*10(f)2
|
—
|
|
Amendment to the ALLETE and Affiliated Companies Supplemental Executive Retirement Plan (SERP I), effective January 1, 2011 (filed as Exhibit 10(i)2 to the 2010 Form 10-K, File No. 1-3548).
|
|||
+*10(f)3
|
—
|
|
ALLETE and Affiliated Companies Supplemental Executive Retirement Plan II (SERP II), as amended and restated, effective January 1, 2011 (filed as Exhibit 10(i)3 to the 2010 Form 10-K, File No. 1-3548).
|
|||
+*10(g)1
|
—
|
|
Minnesota Power and Affiliated Companies Executive Investment Plan I, as amended and restated, effective November 1, 1988 (filed as Exhibit 10(c) to the 1988 Form 10-K, File No. 1-3548).
|
|||
+*10(g)2
|
—
|
|
Amendments through December 2003 to the Minnesota Power and Affiliated Companies Executive Investment Plan I (filed as Exhibit 10(v)2 to the 2003 Form 10-K, File No. 1-3548).
|
|||
+*10(g)3
|
—
|
|
July 2004 Amendment to the Minnesota Power and Affiliated Companies Executive Investment Plan I (filed as
Exhibit 10(b) to the June 30, 2004, Form 10-Q, File No. 1-3548).
|
|||
+*10(g)4
|
—
|
|
August 2006 Amendment to the Minnesota Power and Affiliated Companies Executive Investment Plan I (filed as
Exhibit 10(b) to the September 30, 2006, Form 10-Q, File No. 1-3548).
|
|||
+*10(h)1
|
—
|
|
Minnesota Power and Affiliated Companies Executive Investment Plan II, as amended and restated, effective November 1, 1988 (filed as Exhibit 10(d) to the 1988 Form 10-K, File No. 1-3548).
|
|||
+*10(h)2
|
—
|
|
Amendments through December 2003 to the Minnesota Power and Affiliated Companies Executive Investment Plan II (filed as Exhibit 10(w)2 to the 2003 Form 10-K, File No. 1-3548).
|
|||
+*10(h)3
|
—
|
|
July 2004 Amendment to the Minnesota Power and Affiliated Companies Executive Investment Plan II (filed as
Exhibit 10(c) to the June 30, 2004, Form 10-Q, File No. 1-3548).
|
|||
+*10(h)4
|
—
|
|
August 2006 Amendment to the Minnesota Power and Affiliated Companies Executive Investment Plan II (filed as
Exhibit 10(c) to the September 30, 2006, Form 10-Q, File No. 1-3548).
|
|||
+*10(i)
|
—
|
|
ALLETE Deferred Compensation Trust Agreement, as amended and restated, effective December 15, 2012 (filed as
Exhibit 10(j) to the 2012 Form 10-K, File No. 1-3548).
|
|||
+*10(j)1
|
—
|
|
ALLETE Executive Long-Term Incentive Compensation Plan as amended and restated effective January 1, 2006 (filed as Exhibit 10 to the May 16, 2005, Form 8-K, File No. 1-3548).
|
|||
+*10(j)2
|
—
|
|
Amendment to the ALLETE Executive Long-Term Incentive Compensation Plan, effective January 1, 2011 (filed as Exhibit 10(m)2 to the 2010 Form 10-K, File No. 1-3548).
|
|||
+*10(j)3
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2008 (filed as Exhibit 10(m)10 to the 2007 Form 10-K, File No. 1-3548).
|
|||
+*10(j)4
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2009 (filed as Exhibit 10(m)11 to the 2008 Form 10-K, File No. 1-3548).
|
|||
+*10(j)5
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Restricted Stock Unit Grant Effective 2009 (filed as Exhibit 10(m)12 to the 2008 Form 10-K, File No. 1-3548).
|
|||
+*10(j)6
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2010 (filed as Exhibit 10(m)8 to the 2009 Form 10-K, File No. 1-3548).
|
|||
+*10(j)7
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Restricted Stock Unit Grant Effective 2010 (filed as Exhibit 10(m)9 to the 2009 Form 10-K, File No. 1-3548).
|
|||
+*10(j)8
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2011 (filed as Exhibit 10(m)11 to the 2010 Form 10-K, File No. 1-3548).
|
|||
+*10(j)9
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Restricted Stock Unit Grant Effective 2011 (filed as Exhibit 10(m)12 to the 2010 Form 10-K, File No. 1-3548).
|
|||
+*10(j)10
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2012 (filed as Exhibit 10(m)12 to the 2011 Form 10-K, File No. 1-3548).
|
|||
+*10(j)11
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Restricted Stock Unit Grant Effective 2012 (filed as Exhibit 10(m)13 to the 2011 Form 10-K, File No. 1-3548).
|
|||
+*10(j)12
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2013 (filed as Exhibit 10(k)14 to the 2012 Form 10-K, File No. 1-3548).
|
|||
+*10(j)13
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Restricted Stock Unit Grant Effective 2013 (filed as Exhibit 10(k)15 to the 2012 Form 10-K, File No. 1-3548).
|
|||
+10(j)14
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2014.
|
|||
+10(j)15
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Restricted Stock Unit Grant Effective 2014.
|
|||
+*10(k)1
|
—
|
|
Minnesota Power (now ALLETE) Non-Employee Director Stock Plan, effective May 9, 1995 (filed as Exhibit 10 to the
March 31, 1995, Form 10-Q, File No. 1-3548).
|
|||
+*10(k)2
|
—
|
|
Amendments through December 2003 to the Minnesota Power (now ALLETE) Non-Employee Director Stock Plan (filed as Exhibit 10(z)2 to the 2003 Form 10-K, File No. 1-3548).
|
Exhibit Number
|
||||||
+*10(k)3
|
—
|
|
July 2004 Amendment to the ALLETE Non-Employee Director Stock Plan (filed as Exhibit 10(e) to the June 30, 2004, Form 10-Q, File No. 1-3548).
|
|||
+*10(k)4
|
—
|
|
January 2007 Amendment to the ALLETE Non-Employee Director Stock Plan (filed as Exhibit 10(n)4 to the 2006 Form 10‑K, File No. 1-3548).
|
|||
+*10(k)5
|
—
|
|
May 2009 Amendment to the ALLETE Non-Employee Director Stock Plan (filed as Exhibit 10(b) to the June 30, 2009, Form 10-Q, File No. 1-3548).
|
|||
+*10(k)6
|
—
|
|
May 2010 Amendment to the ALLETE Non-Employee Director Stock Plan (filed as Exhibit 10(a) to the June 30, 2010, Form 10-Q, File No. 1-3548).
|
|||
+*10(k)7
|
—
|
|
October 2010 Amendment to the ALLETE Non-Employee Director Stock Plan (filed as Exhibit 10 to the September 30, 2010, Form 10-Q, File No. 1-3548).
|
|||
+*10(k)8
|
—
|
|
Amended and Restated ALLETE Non-Employee Director Stock Plan, effective May 15, 2013 (filed as Exhibit 10(a) to the June 30, 2013, Form 10-Q, File No. 1-3548).
|
|||
+*10(l)1
|
—
|
|
ALLETE Non-Management Director Compensation Summary Effective May 1, 2010 (filed as Exhibit 10(b) to the March 31, 2010, Form 10-Q, File No. 1-3548).
|
|||
+*10(l)2
|
—
|
|
ALLETE Non-Management Director Compensation Summary effective January 19, 2011 (filed as Exhibit 10(n)9 to the 2010 Form 10-K, File No. 1-3548).
|
|||
+*10(l)3
|
—
|
|
ALLETE Non-Management Director Compensation Summary effective January 19, 2012 (filed as Exhibit 10(n)10 to the 2011 Form 10-K, File No. 1-3548).
|
|||
+10(l)4
|
—
|
|
ALLETE Non-Management Director Compensation Summary effective January 1, 2014.
|
|||
+*10(m)1
|
—
|
|
Minnesota Power (now ALLETE) Non-Employee Director Compensation Deferral Plan Amended and Restated, effective
January 1, 1990 (filed as Exhibit 10(ac) to the 2002 Form 10-K, File No. 1-3548).
|
|||
+*10(m)2
|
—
|
|
October 2003 Amendment to the Minnesota Power (now ALLETE) Non-Employee Director Compensation Deferral Plan (filed as Exhibit 10(aa)2 to the 2003 Form 10-K, File No. 1-3548).
|
|||
+*10(m)3
|
—
|
|
January 2005 Amendment to the ALLETE Non-Employee Director Compensation Deferral Plan (filed as Exhibit 10(c) to the March 31, 2005, Form 10-Q, File No. 1-3548).
|
|||
+*10(m)4
|
—
|
|
October 2006 Amendment to the ALLETE Non-Employee Director Compensation Deferral Plan (filed as Exhibit 10(d) to the September 30, 2006, Form 10-Q, File No. 1-3548).
|
|||
+*10(m)5
|
—
|
|
July 2012 Amendment to the ALLETE Non-Employee Director Compensation Deferral Plan (filed as Exhibit 10(n)5 to the 2012 Form 10-K, File No. 1-3548).
|
|||
+*10(n)1
|
—
|
|
ALLETE Non-Employee Director Compensation Deferral Plan II, effective May 1, 2009 (filed as Exhibit 10(a) to the June 30, 2009, Form 10-Q, File No. 1-3548).
|
|||
+*10(n)2
|
—
|
|
ALLETE Non-Employee Director Compensation Deferral Plan II, as amended and restated, effective July 24, 2012 (filed as Exhibit 10(o)2 to the 2012 Form 10-K, File No. 1-3548).
|
|||
+*10(o)1
|
—
|
|
ALLETE Non-Employee Director Compensation Trust Agreement, effective October 11, 2004 (filed as Exhibit 10(a) to the September 30, 2004, Form 10-Q, File No. 1-3548).
|
|||
+*10(o)2
|
—
|
|
ALLETE Non-Employee Director Compensation Trust Agreement, as amended and restated, effective December 15, 2012 (filed as Exhibit 10(p)2 to the 2012 Form 10-K, File No. 1-3548).
|
|||
+*10(p)
|
—
|
|
July 2013 ALLETE and Affiliated Companies Compensation Recovery Policy (filed as Exhibit 10(c) to the June 30, 2013, Form 10-Q, File No. 1-3548).
|
|||
+*10(q)
|
—
|
|
ALLETE and Affiliated Companies Change in Control Severance Plan, as amended and restated, effective January 19, 2011 (filed as Exhibit 10(q) to the 2010 Form 10-K, File No. 1-3548).
|
|||
12
|
—
|
|
Computation of Ratios of Earnings to Fixed Charges.
|
|||
21
|
—
|
|
Subsidiaries of the Registrant.
|
|||
23
|
—
|
|
Consent of Independent Registered Public Accounting Firm.
|
|||
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 Annual Report by the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|||
95
|
—
|
|
Mine Safety.
|
|||
99
|
—
|
|
ALLETE News Release dated February 14, 2014, announcing earnings for the year ended December 31, 2013.
(This exhibit has been furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.)
|
Exhibit Number
|
||||||
101.INS
|
—
|
|
XBRL Instance
|
|||
101.SCH
|
—
|
|
XBRL Schema
|
|||
101.CAL
|
—
|
|
XBRL Calculation
|
|||
101.DEF
|
—
|
|
XBRL Definition
|
|||
101.LAB
|
—
|
|
XBRL Label
|
|||
101.PRE
|
—
|
|
XBRL Presentation
|
*
|
Incorporated herein by reference as indicated.
|
+
|
Management contract or compensatory plan or arrangement pursuant to Item 15(b).
|
|
|
ALLETE, Inc.
|
|
|
|
||
|
|
||
Dated:
|
February 14, 2014
|
By
|
/s/ Alan R. Hodnik
|
|
|
Alan R. Hodnik
|
|
|
|
Chairman, President, Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Alan R. Hodnik
|
|
Chairman, President, Chief Executive Officer and Director
|
|
February 14, 2014
|
Alan R. Hodnik
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Mark A. Schober
|
|
Senior Vice President and Chief Financial Officer
|
|
February 14, 2014
|
Mark A. Schober
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Steven Q. DeVinck
|
|
Controller and Vice President – Business Support
|
|
February 14, 2014
|
Steven Q. DeVinck
|
|
(Principal Accounting Officer)
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Kathryn W. Dindo
|
|
Director
|
|
February 14, 2014
|
Kathryn W. Dindo
|
|
|
|
|
|
|
|
|
|
/s/ Sidney W. Emery, Jr.
|
|
Director
|
|
February 14, 2014
|
Sidney W. Emery, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ George G. Goldfarb
|
|
Director
|
|
February 14, 2014
|
George G. Goldfarb
|
|
|
|
|
|
|
|
|
|
/s/ James S. Haines, Jr.
|
|
Director
|
|
February 14, 2014
|
James S. Haines, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ James J. Hoolihan
|
|
Director
|
|
February 14, 2014
|
James J. Hoolihan
|
|
|
|
|
|
|
|
|
|
/s/ Heidi E. Jimmerson
|
|
Director
|
|
February 14, 2014
|
Heidi E. Jimmerson
|
|
|
|
|
|
|
|
|
|
/s/ Madeleine W. Ludlow
|
|
Director
|
|
February 14, 2014
|
Madeleine W. Ludlow
|
|
|
|
|
|
|
|
|
|
/s/ Douglas C. Neve
|
|
Director
|
|
February 14, 2014
|
Douglas C. Neve
|
|
|
|
|
|
|
|
|
|
/s/ Leonard C. Rodman
|
|
Director
|
|
February 14, 2014
|
Leonard C. Rodman
|
|
|
|
|
|
|
|
|
|
/s/ Bruce W. Stender
|
|
Director
|
|
February 14, 2014
|
Bruce W. Stender
|
|
|
|
|
As of December 31
|
2013
|
|
2012
|
|
||
Millions
|
|
|
||||
Assets
|
|
|
||||
Current Assets
|
|
|
||||
Cash and Cash Equivalents
|
|
$97.3
|
|
|
$80.8
|
|
Accounts Receivable (Less Allowance of $1.1 and $1.0)
|
96.3
|
|
89.0
|
|
||
Inventories
|
59.3
|
|
69.8
|
|
||
Prepayments and Other
|
35.1
|
|
33.6
|
|
||
Deferred Income Taxes
|
19.0
|
|
—
|
|
||
Total Current Assets
|
307.0
|
|
273.2
|
|
||
Property, Plant and Equipment – Net
|
2,576.5
|
|
2,347.6
|
|
||
Regulatory Assets
|
263.8
|
|
340.3
|
|
||
Investment in ATC
|
114.6
|
|
107.3
|
|
||
Other Investments
|
146.3
|
|
143.5
|
|
||
Other Non-Current Assets
|
68.6
|
|
41.5
|
|
||
Total Assets
|
|
$3,476.8
|
|
|
$3,253.4
|
|
Liabilities and Equity
|
|
|
||||
Liabilities
|
|
|
||||
Current Liabilities
|
|
|
||||
Accounts Payable
|
|
$99.9
|
|
|
$90.5
|
|
Accrued Taxes
|
34.8
|
|
30.2
|
|
||
Accrued Interest
|
15.7
|
|
15.6
|
|
||
Long-Term Debt Due Within One Year
|
27.2
|
|
84.5
|
|
||
Other
|
52.6
|
|
62.6
|
|
||
Total Current Liabilities
|
230.2
|
|
283.4
|
|
||
Long-Term Debt
|
1,083.0
|
|
933.6
|
|
||
Deferred Income Taxes
|
479.1
|
|
423.8
|
|
||
Regulatory Liabilities
|
81.0
|
|
60.1
|
|
||
Defined Benefit Pension and Other Postretirement Benefit Plans
|
133.4
|
|
228.2
|
|
||
Other Non-Current Liabilities
|
127.2
|
|
123.3
|
|
||
Total Liabilities
|
2,133.9
|
|
2,052.4
|
|
||
Commitments and Contingencies (Note 12)
|
|
|
||||
Equity
|
|
|
||||
Common Stock Without Par Value, 80.0 Shares Authorized, 41.4 and 39.4
|
|
|
||||
Shares Outstanding
|
885.2
|
|
784.7
|
|
||
Unearned ESOP Shares
|
(14.3
|
)
|
(21.3
|
)
|
||
Accumulated Other Comprehensive Loss
|
(17.1
|
)
|
(22.0
|
)
|
||
Retained Earnings
|
489.1
|
|
459.6
|
|
||
Total Equity
|
1,342.9
|
|
1,201.0
|
|
||
Total Liabilities and Equity
|
|
$3,476.8
|
|
|
$3,253.4
|
|
Year Ended December 31
|
2013
|
|
2012
|
|
2011
|
|
|||
Millions Except Per Share Amounts
|
|
|
|
||||||
Operating Revenue
|
|
$1,018.4
|
|
|
$961.2
|
|
|
$928.2
|
|
Operating Expenses
|
|
|
|
||||||
Fuel and Purchased Power
|
334.8
|
|
308.7
|
|
306.6
|
|
|||
Operating and Maintenance
|
412.9
|
|
397.1
|
|
381.2
|
|
|||
Depreciation
|
116.6
|
|
100.2
|
|
90.4
|
|
|||
Total Operating Expenses
|
864.3
|
|
806.0
|
|
778.2
|
|
|||
Operating Income
|
154.1
|
|
155.2
|
|
150.0
|
|
|||
Other Income (Expense)
|
|
|
|
||||||
Interest Expense
|
(50.3
|
)
|
(45.5
|
)
|
(43.6
|
)
|
|||
Equity Earnings in ATC
|
20.3
|
|
19.4
|
|
18.4
|
|
|||
Other
|
9.3
|
|
6.0
|
|
4.4
|
|
|||
Total Other Expense
|
(20.7
|
)
|
(20.1
|
)
|
(20.8
|
)
|
|||
Income Before Non-Controlling Interest and Income Taxes
|
133.4
|
|
135.1
|
|
129.2
|
|
|||
Income Tax Expense
|
28.7
|
|
38.0
|
|
35.6
|
|
|||
Net Income
|
104.7
|
|
97.1
|
|
93.6
|
|
|||
Less: Non-Controlling Interest in Subsidiaries
|
—
|
|
—
|
|
(0.2
|
)
|
|||
Net Income Attributable to ALLETE
|
|
$104.7
|
|
|
$97.1
|
|
|
$93.8
|
|
Average Shares of Common Stock
|
|
|
|
||||||
Basic
|
39.7
|
|
37.6
|
|
35.3
|
|
|||
Diluted
|
39.8
|
|
37.6
|
|
35.4
|
|
|||
Basic Earnings Per Share of Common Stock
|
|
$2.64
|
|
|
$2.59
|
|
|
$2.66
|
|
Diluted Earnings Per Share of Common Stock
|
|
$2.63
|
|
|
$2.58
|
|
|
$2.65
|
|
Dividends Per Share of Common Stock
|
|
$1.90
|
|
|
$1.84
|
|
|
$1.78
|
|
|
|
|
|
||||||
|
|
|
|
||||||
Comprehensive Income (Loss)
|
2013
|
|
2012
|
|
2011
|
|
|||
Millions
|
|
|
|
||||||
Net Income
|
|
$104.7
|
|
|
$97.1
|
|
|
$93.6
|
|
Other Comprehensive Income (Loss)
|
|
|
|
||||||
Unrealized Gain (Loss) on Securities
|
|
|
|
||||||
Net of Income Taxes of $–, $0.8 and $(0.1)
|
—
|
|
1.2
|
|
(0.3
|
)
|
|||
Unrealized Gain (Loss) on Derivatives
|
|
|
|
||||||
Net of Income Taxes of $–, $(0.1) and $(0.2)
|
0.1
|
|
(0.2
|
)
|
(0.3
|
)
|
|||
Defined Benefit Pension and Other Postretirement Benefit Plans
|
|
|
|
||||||
Net of Income Taxes of $3.3, $3.9, and $(3.6)
|
4.8
|
|
5.9
|
|
(5.1
|
)
|
|||
Total Other Comprehensive Income (Loss)
|
4.9
|
|
6.9
|
|
(5.7
|
)
|
|||
Total Comprehensive Income
|
|
$109.6
|
|
|
$104.0
|
|
|
$87.9
|
|
Less: Non-Controlling Interest in Subsidiaries
|
—
|
|
—
|
|
(0.2
|
)
|
|||
Comprehensive Income Attributable to ALLETE
|
|
$109.6
|
|
|
$104.0
|
|
|
$88.1
|
|
Year Ended December 31
|
2013
|
|
2012
|
|
2011
|
|
|||
Millions
|
|
|
|
||||||
Operating Activities
|
|
|
|
||||||
Net Income
|
|
$104.7
|
|
|
$97.1
|
|
|
$93.6
|
|
Allowance for Funds Used During Construction – Equity
|
(4.6
|
)
|
(5.1
|
)
|
(2.5
|
)
|
|||
Income from Equity Investments, Net of Dividends
|
(4.2
|
)
|
(3.7
|
)
|
(3.2
|
)
|
|||
Gain on Real Estate Foreclosure
|
—
|
|
—
|
|
(0.5
|
)
|
|||
Loss (Gain) on Sale of Assets
|
(0.4
|
)
|
0.2
|
|
(0.9
|
)
|
|||
Gain on Sale of Investments
|
(2.2
|
)
|
—
|
|
—
|
|
|||
Loss on Impairment of Assets
|
—
|
|
—
|
|
1.7
|
|
|||
Depreciation Expense
|
116.6
|
|
100.2
|
|
90.4
|
|
|||
Amortization of Debt Issuance Costs
|
1.0
|
|
1.0
|
|
0.9
|
|
|||
Deferred Income Tax Expense
|
28.6
|
|
37.5
|
|
35.8
|
|
|||
Share-Based Compensation Expense
|
2.4
|
|
2.1
|
|
1.6
|
|
|||
ESOP Compensation Expense
|
8.4
|
|
7.7
|
|
7.4
|
|
|||
Defined Benefit Pension and Other Postretirement Benefit Expense
|
21.0
|
|
27.5
|
|
23.6
|
|
|||
Bad Debt Expense
|
1.3
|
|
1.0
|
|
1.2
|
|
|||
Changes in Operating Assets and Liabilities
|
|
|
|
||||||
Accounts Receivable
|
(8.6
|
)
|
(10.1
|
)
|
18.6
|
|
|||
Inventories
|
10.5
|
|
(0.7
|
)
|
(9.1
|
)
|
|||
Prepayments and Other
|
(1.4
|
)
|
(6.5
|
)
|
1.5
|
|
|||
Accounts Payable
|
1.1
|
|
(1.5
|
)
|
(9.5
|
)
|
|||
Other Current Liabilities
|
1.4
|
|
21.8
|
|
15.4
|
|
|||
Cash Contributions to Defined Benefit Pension and Other
Postretirement Plans
|
(10.8
|
)
|
(8.8
|
)
|
(24.7
|
)
|
|||
Changes in Regulatory and Other Non-Current Assets
|
(18.3
|
)
|
(20.9
|
)
|
(7.5
|
)
|
|||
Changes in Regulatory and Other Non-Current Liabilities
|
(7.1
|
)
|
0.8
|
|
7.9
|
|
|||
Cash from Operating Activities
|
239.4
|
|
239.6
|
|
241.7
|
|
|||
Investing Activities
|
|
|
|
||||||
Proceeds from Sale of Available-for-sale Securities
|
16.1
|
|
1.5
|
|
7.8
|
|
|||
Payments for Purchase of Available-for-sale Securities
|
(4.7
|
)
|
(1.8
|
)
|
(2.3
|
)
|
|||
Investment in ATC
|
(3.1
|
)
|
(4.7
|
)
|
(2.0
|
)
|
|||
Changes to Other Investments
|
(12.3
|
)
|
(9.6
|
)
|
(7.4
|
)
|
|||
Additions to Property, Plant and Equipment
|
(328.5
|
)
|
(405.8
|
)
|
(239.2
|
)
|
|||
Changes to Restricted Cash
|
(5.4
|
)
|
—
|
|
—
|
|
|||
Proceeds from Sale of Assets
|
1.3
|
|
0.3
|
|
2.2
|
|
|||
Cash for Investing Activities
|
(336.6
|
)
|
(420.1
|
)
|
(240.9
|
)
|
|||
Financing Activities
|
|
|
|
||||||
Proceeds from Issuance of Common Stock
|
98.2
|
|
77.0
|
|
39.1
|
|
|||
Proceeds from Issuance of Long-Term Debt
|
169.8
|
|
180.6
|
|
81.4
|
|
|||
Changes in Notes Payable
|
—
|
|
(1.1
|
)
|
0.1
|
|
|||
Reductions of Long-Term Debt
|
(77.7
|
)
|
(25.9
|
)
|
(3.1
|
)
|
|||
Debt Issuance Costs
|
(1.4
|
)
|
(1.3
|
)
|
—
|
|
|||
Dividends on Common Stock
|
(75.2
|
)
|
(69.1
|
)
|
(62.1
|
)
|
|||
Cash from Financing Activities
|
113.7
|
|
160.2
|
|
55.4
|
|
|||
Change in Cash and Cash Equivalents
|
16.5
|
|
(20.3
|
)
|
56.2
|
|
|||
Cash and Cash Equivalents at Beginning of Period
|
80.8
|
|
101.1
|
|
44.9
|
|
|||
Cash and Cash Equivalents at End of Period
|
|
$97.3
|
|
|
$80.8
|
|
|
$101.1
|
|
|
Total
Shareholders’
Equity
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Unearned
ESOP
Shares
|
Common
Stock
|
||||||||
Millions
|
|
|
|
|
|
||||||||
Balance as of December 31, 2010
|
|
$976.0
|
|
|
$399.9
|
|
$(23.2)
|
$(36.8)
|
|
$636.1
|
|
||
Comprehensive Income
|
|
|
|
|
|
||||||||
Net Income
|
93.6
|
|
93.6
|
|
|
|
|
||||||
Other Comprehensive Income – Net of Tax
|
|
|
|
|
|
||||||||
Unrealized Loss on Securities – Net
|
(0.3
|
)
|
|
(0.3
|
)
|
|
|
||||||
Unrealized Loss on Derivatives – Net
|
(0.3
|
)
|
|
(0.3
|
)
|
|
|
||||||
Defined Benefit Pension and Other Postretirement Plans – Net
|
(5.1
|
)
|
|
(5.1
|
)
|
|
|
||||||
Total Comprehensive Income
|
87.9
|
|
|
|
|
|
|||||||
Non-Controlling Interest in Subsidiaries
|
0.2
|
|
0.2
|
|
|
|
|
||||||
Total Comprehensive Income Attributable to ALLETE
|
88.1
|
|
|
|
|
|
|||||||
Common Stock Issued – Net
|
69.5
|
|
|
|
|
69.5
|
|
||||||
Dividends Declared
|
(62.1
|
)
|
(62.1
|
)
|
|
|
|
||||||
ESOP Shares Earned
|
7.8
|
|
|
|
7.8
|
|
|
||||||
Balance as of December 31, 2011
|
1,079.3
|
|
431.6
|
|
(28.9
|
)
|
(29.0
|
)
|
705.6
|
|
|||
Comprehensive Income
|
|
|
|
|
|
||||||||
Net Income
|
97.1
|
|
97.1
|
|
|
|
|
||||||
Other Comprehensive Income – Net of Tax
|
|
|
|
|
|
||||||||
Unrealized Gain on Securities – Net
|
1.2
|
|
|
1.2
|
|
|
|
||||||
Unrealized Loss on Derivatives – Net
|
(0.2
|
)
|
|
(0.2
|
)
|
|
|
||||||
Defined Benefit Pension and Other Postretirement Plans – Net
|
5.9
|
|
|
5.9
|
|
|
|
||||||
Total Comprehensive Income Attributable to ALLETE
|
104.0
|
|
|
|
|
|
|||||||
Common Stock Issued – Net
|
79.1
|
|
|
|
|
79.1
|
|
||||||
Dividends Declared
|
(69.1
|
)
|
(69.1
|
)
|
|
|
|
||||||
ESOP Shares Earned
|
7.7
|
|
|
|
7.7
|
|
|
||||||
Balance as of December 31, 2012
|
1,201.0
|
|
459.6
|
|
(22.0
|
)
|
(21.3
|
)
|
784.7
|
|
|||
Comprehensive Income
|
|
|
|
|
|
||||||||
Net Income
|
104.7
|
|
104.7
|
|
|
|
|
||||||
Other Comprehensive Income – Net of Tax
|
|
|
|
|
|
||||||||
Unrealized Gain on Derivatives – Net
|
0.1
|
|
|
0.1
|
|
|
|
||||||
Defined Benefit Pension and Other Postretirement Plans – Net
|
4.8
|
|
|
4.8
|
|
|
|
||||||
Total Comprehensive Income Attributable to ALLETE
|
109.6
|
|
|
|
|
|
|||||||
Common Stock Issued – Net
|
100.5
|
|
|
|
|
100.5
|
|
||||||
Dividends Declared
|
(75.2
|
)
|
(75.2
|
)
|
|
|
|
||||||
ESOP Shares Earned
|
7.0
|
|
|
|
7.0
|
|
|
||||||
Balance as of December 31, 2013
|
|
$1,342.9
|
|
|
$489.1
|
|
$(17.1)
|
$(14.3)
|
|
$885.2
|
|
Consolidated Statement of Cash Flows
|
|
|
|
||||||
Year Ended December 31
|
2013
|
|
2012
|
|
2011
|
|
|||
Millions
|
|
|
|
||||||
Cash Paid During the Period for Interest – Net of Amounts Capitalized
|
|
$47.5
|
|
|
$42.7
|
|
|
$43.2
|
|
Cash Paid (Received) During the Period for Income Taxes
(a)
|
|
$0.5
|
|
—
|
|
$(11.4)
|
|||
Noncash Investing and Financing Activities
|
|
|
|
||||||
Increase in Accounts Payable for Capital Additions to Property, Plant and Equipment
|
|
$8.3
|
|
|
$20.2
|
|
$5.9
|
||
Increase (Decrease) in Capitalized Asset Retirement Costs
|
$(0.7)
|
|
$17.1
|
|
|
$0.3
|
|
||
AFUDC – Equity
|
|
$4.6
|
|
|
$5.1
|
|
|
$2.5
|
|
ALLETE Common Stock Contributed to the Pension Plan
|
—
|
|
—
|
|
$(20.0)
|
(a)
|
Due to bonus depreciation provisions in 2010 and 2012 federal legislation, NOLs were generated which resulted in little or no estimated tax payments, and in 2011, refunds were received from NOL carrybacks against prior years’ taxable income.
|
Accounts Receivable
|
|
|
|
||||
As of December 31
|
2013
|
|
|
2012
|
|
||
Millions
|
|
|
|
||||
Trade Accounts Receivable
|
|
|
|
||||
Billed
|
|
$78.7
|
|
|
|
$70.4
|
|
Unbilled
|
18.7
|
|
|
17.4
|
|
||
Less: Allowance for Doubtful Accounts
|
1.1
|
|
|
1.0
|
|
||
Total Trade Accounts Receivable
|
96.3
|
|
|
86.8
|
|
||
Income Taxes Receivable
|
—
|
|
|
2.2
|
|
||
Total Accounts Receivable - Net
|
|
$96.3
|
|
|
|
$89.0
|
|
Inventories
|
|
|
|
||||
As of December 31
|
2013
|
|
|
2012
|
|
||
Millions
|
|
|
|
||||
Fuel
(a)
|
|
$13.1
|
|
|
|
$28.0
|
|
Materials and Supplies
|
46.2
|
|
|
41.8
|
|
||
Total Inventories
|
|
$59.3
|
|
|
|
$69.8
|
|
(a)
|
Fuel inventory was lower in 2013 primarily due to higher than expected thermal generation and the timing of coal shipments.
|
Prepayments and Other Current Assets
|
|
|
|
||||
As of December 31
|
2013
|
|
|
2012
|
|
||
Millions
|
|
|
|
||||
Deferred Fuel Adjustment Clause
|
|
$23.0
|
|
|
|
$22.5
|
|
Other
|
12.1
|
|
|
11.1
|
|
||
Total Prepayments and Other Current Assets
|
|
$35.1
|
|
|
|
$33.6
|
|
Other Current Liabilities
|
|
|
|
||||
As of December 31
|
2013
|
|
|
2012
|
|
||
Millions
|
|
|
|
||||
Customer Deposits
|
|
$26.0
|
|
|
|
$28.8
|
|
Other
|
26.6
|
|
|
33.8
|
|
||
Total Other Current Liabilities
|
|
$52.6
|
|
|
|
$62.6
|
|
Other Non-Current Liabilities
|
|
|
|
||||
As of December 31
|
2013
|
|
|
2012
|
|
||
Millions
|
|
|
|
||||
Asset Retirement Obligation
|
|
$81.8
|
|
|
|
$77.9
|
|
Other
|
45.4
|
|
|
45.4
|
|
||
Total Other Non-Current Liabilities
|
|
$127.2
|
|
|
|
$123.3
|
|
|
Consolidated
|
Regulated
Operations
|
Investments
and Other
|
||||||
Millions
|
|
|
|
||||||
2013
|
|
|
|
||||||
Operating Revenue
|
|
$1,018.4
|
|
|
$925.5
|
|
|
$92.9
|
|
Fuel and Purchased Power Expense
|
334.8
|
|
334.8
|
|
—
|
|
|||
Operating and Maintenance Expense
|
412.9
|
|
322.4
|
|
90.5
|
|
|||
Depreciation Expense
|
116.6
|
|
110.2
|
|
6.4
|
|
|||
Operating Income (Loss)
|
154.1
|
|
158.1
|
|
(4.0
|
)
|
|||
Interest Expense
|
(50.3
|
)
|
(42.1
|
)
|
(8.2
|
)
|
|||
Equity Earnings in ATC
|
20.3
|
|
20.3
|
|
—
|
|
|||
Other Income
|
9.3
|
|
4.7
|
|
4.6
|
|
|||
Income (Loss) Before Income Taxes
|
133.4
|
|
141.0
|
|
(7.6
|
)
|
|||
Income Tax Expense (Benefit)
|
28.7
|
|
36.1
|
|
(7.4
|
)
|
|||
Net Income (Loss)
|
|
$104.7
|
|
|
$104.9
|
|
$(0.2)
|
||
Total Assets
|
|
$3,476.8
|
|
|
$3,160.8
|
|
|
$316.0
|
|
Capital Additions
|
|
$339.5
|
|
|
$326.3
|
|
|
$13.2
|
|
|
Consolidated
|
Regulated
Operations
|
Investments
and Other
|
||||||
Millions
|
|
|
|
||||||
2012
|
|
|
|
||||||
Operating Revenue
|
|
$961.2
|
|
|
$874.4
|
|
|
$86.8
|
|
Fuel and Purchased Power Expense
|
308.7
|
|
308.7
|
|
—
|
|
|||
Operating and Maintenance Expense
|
397.1
|
|
310.0
|
|
87.1
|
|
|||
Depreciation Expense
|
100.2
|
|
93.9
|
|
6.3
|
|
|||
Operating Income (Loss)
|
155.2
|
|
161.8
|
|
(6.6
|
)
|
|||
Interest Expense
|
(45.5
|
)
|
(39.8
|
)
|
(5.7
|
)
|
|||
Equity Earnings in ATC
|
19.4
|
|
19.4
|
|
—
|
|
|||
Other Income
|
6.0
|
|
5.1
|
|
0.9
|
|
|||
Income (Loss) Before Income Taxes
|
135.1
|
|
146.5
|
|
(11.4
|
)
|
|||
Income Tax Expense (Benefit)
|
38.0
|
|
50.4
|
|
(12.4
|
)
|
|||
Net Income
|
|
$97.1
|
|
|
$96.1
|
|
|
$1.0
|
|
Total Assets
|
|
$3,253.4
|
|
|
$2,962.4
|
|
|
$291.0
|
|
Capital Additions
|
|
$432.2
|
|
|
$418.2
|
|
|
$14.0
|
|
|
Consolidated
|
Regulated
Operations
|
Investments
and Other
|
||||||
Millions
|
|
|
|
||||||
2011
|
|
|
|
||||||
Operating Revenue
|
|
$928.2
|
|
|
$851.9
|
|
|
$76.3
|
|
Fuel and Purchased Power Expense
|
306.6
|
|
306.6
|
|
—
|
|
|||
Operating and Maintenance Expense
|
381.2
|
|
301.5
|
|
79.7
|
|
|||
Depreciation Expense
|
90.4
|
|
85.4
|
|
5.0
|
|
|||
Operating Income (Loss)
|
150.0
|
|
158.4
|
|
(8.4
|
)
|
|||
Interest Expense
|
(43.6
|
)
|
(35.8
|
)
|
(7.8
|
)
|
|||
Equity Earnings in ATC
|
18.4
|
|
18.4
|
|
—
|
|
|||
Other Income
|
4.4
|
|
2.6
|
|
1.8
|
|
|||
Income (Loss) Before Non-Controlling Interest and Income Taxes
|
129.2
|
|
143.6
|
|
(14.4
|
)
|
|||
Income Tax Expense (Benefit)
|
35.6
|
|
43.2
|
|
(7.6
|
)
|
|||
Net Income (Loss)
|
93.6
|
|
100.4
|
|
(6.8
|
)
|
|||
Less: Non-Controlling Interest in Subsidiaries
|
(0.2
|
)
|
—
|
|
(0.2
|
)
|
|||
Net Income (Loss) Attributable to ALLETE
|
|
$93.8
|
|
|
$100.4
|
|
$(6.6)
|
||
Total Assets
|
|
$2,876.0
|
|
|
$2,579.8
|
|
|
$296.2
|
|
Capital Additions
|
|
$246.8
|
|
|
$228.0
|
|
|
$18.8
|
|
Property, Plant and Equipment
|
|
|
|
||||
As of December 31
|
2013
|
|
2012
|
||||
Millions
|
|
|
|
||||
Regulated Utility
|
|
$3,380.0
|
|
|
|
$3,232.9
|
|
Construction Work in Progress
|
303.9
|
|
|
151.8
|
|
||
Accumulated Depreciation
|
(1,181.7
|
)
|
|
(1,102.8
|
)
|
||
Regulated Utility Plant - Net
|
2,502.2
|
|
|
2,281.9
|
|
||
Non-Rate Base Energy Operations
|
131.3
|
|
|
118.0
|
|
||
Construction Work in Progress
|
3.4
|
|
|
4.2
|
|
||
Accumulated Depreciation
|
(60.4
|
)
|
|
(56.7
|
)
|
||
Non-Rate Base Energy Operations Plant - Net
|
74.3
|
|
|
65.5
|
|
||
Other Plant - Net
|
—
|
|
|
0.2
|
|
||
Property, Plant and Equipment - Net
|
|
$2,576.5
|
|
|
|
$2,347.6
|
|
Estimated Useful Lives of Property, Plant and Equipment
|
||||
Generation
|
5 to 35 years
|
|
Distribution
|
14 to 65 years
|
Transmission
|
42 to 61 years
|
|
Other Plant
|
5 to 25 years
|
Asset Retirement Obligation
|
|
|
||
Millions
|
|
|
||
Obligation as of December 31, 2011
|
|
|
$57.0
|
|
Accretion Expense
|
|
3.8
|
|
|
Revisions in estimated cash flows
|
|
17.1
|
|
|
Obligation as of December 31, 2012
|
|
77.9
|
|
|
Accretion Expense
|
|
4.6
|
|
|
Revisions in estimated cash flows
|
|
(0.7
|
)
|
|
Obligation as of December 31, 2013
|
|
|
$81.8
|
|
Regulated Utility Plant
|
Plant in
Service
|
Accumulated
Depreciation
|
Construction Work in Progress
|
%
Ownership
|
||||||
Millions
|
|
|
|
|
||||||
Boswell Unit 4
|
|
$416.1
|
|
|
$197.5
|
|
|
$71.5
|
|
80
|
CapX2020 Projects
|
22.8
|
|
1.0
|
|
57.7
|
|
9.3 - 14.7
|
|||
Total
|
|
$438.9
|
|
|
$198.5
|
|
|
$129.2
|
|
|
Regulatory Assets and Liabilities
|
|
|
||||
As of December 31
|
2013
|
|
2012
|
|
||
Millions
|
|
|
||||
Current Regulatory Assets
(a)
|
|
|
||||
Deferred Fuel
|
|
$23.0
|
|
|
$22.5
|
|
Total Current Regulatory Assets
|
23.0
|
|
22.5
|
|
||
Non-Current Regulatory Assets
|
|
|
||||
Future Benefit Obligations Under
|
|
|
||||
Defined Benefit Pension and Other Postretirement Plans
(b)
|
164.1
|
|
260.7
|
|
||
Income Taxes
|
35.3
|
|
36.0
|
|
||
Asset Retirement Obligation
|
16.0
|
|
12.1
|
|
||
Cost Recovery Riders
(c)
|
39.6
|
|
18.5
|
|
||
PPACA Income Tax Deferral
|
5.0
|
|
5.0
|
|
||
Conservation Improvement Program
|
—
|
|
4.3
|
|
||
Other
|
3.8
|
|
3.7
|
|
||
Total Non-Current Regulatory Assets
|
263.8
|
|
340.3
|
|
||
|
|
|
||||
Total Regulatory Assets
|
|
$286.8
|
|
|
$362.8
|
|
|
|
|
||||
Non-Current Regulatory Liabilities
|
|
|
||||
Income Taxes
|
|
$17.0
|
|
|
$19.5
|
|
Plant Removal Obligations
|
19.7
|
|
18.1
|
|
||
Wholesale and Retail Contra AFUDC
|
19.7
|
|
15.5
|
|
||
Defined Benefit Pension and Other Postretirement Plans
(b)
|
16.3
|
|
—
|
|
||
Other
|
8.3
|
|
7.0
|
|
||
Total Non-Current Regulatory Liabilities
|
|
$81.0
|
|
|
$60.1
|
|
(a)
|
Current regulatory assets are included in Prepayments and Other on the Consolidated Balance Sheet.
|
(b)
|
Defined benefit pension and other postretirement items included in our Regulated Operations, which are otherwise required to be recognized in accumulated other comprehensive income, are recognized as regulatory assets or regulatory liabilities on our Consolidated Balance Sheet (See Note 17. Pension and Other Postretirement Benefit Plans).
|
(c)
|
The cost recovery rider regulatory asset is primarily due to capital expenditures related to our Bison Wind Energy Center and is recognized in accordance with the accounting standards for alternative revenue programs.
|
ALLETE’s Investment in ATC
|
|
|
||||
Year Ended December 31
|
2013
|
|
2012
|
|
||
Millions
|
|
|
||||
Equity Investment Beginning Balance
|
|
$107.3
|
|
|
$98.9
|
|
Cash Investments
|
3.1
|
|
4.7
|
|
||
Equity in ATC Earnings
|
20.3
|
|
19.4
|
|
||
Distributed ATC Earnings
|
(16.1
|
)
|
(15.7
|
)
|
||
Equity Investment Ending Balance
|
|
$114.6
|
|
|
$107.3
|
|
ATC Summarized Financial Data
|
|
|
||||
Balance Sheet Data
|
|
|
||||
As of December 31
|
2013
|
|
2012
|
|
||
Millions
|
|
|
||||
Current Assets
|
|
$80.7
|
|
|
$63.1
|
|
Non-Current Assets
|
3,509.5
|
|
3,274.7
|
|
||
Total Assets
|
|
$3,590.2
|
|
|
$3,337.8
|
|
Current Liabilities
|
|
$381.4
|
|
|
$251.5
|
|
Long-Term Debt
|
1,550.0
|
|
1,550.0
|
|
||
Other Non-Current Liabilities
|
126.2
|
|
95.8
|
|
||
Members’ Equity
|
1,532.6
|
|
1,440.5
|
|
||
Total Liabilities and Members’ Equity
|
|
$3,590.2
|
|
|
$3,337.8
|
|
Income Statement Data
|
|
|
|
||||||
Year Ended December 31
|
2013
|
|
2012
|
|
2011
|
|
|||
Millions
|
|
|
|
||||||
Revenue
|
|
$626.3
|
|
|
$603.2
|
|
|
$567.2
|
|
Operating Expense
|
295.1
|
|
281.0
|
|
261.6
|
|
|||
Other Expense
|
83.6
|
|
84.8
|
|
81.7
|
|
|||
Net Income
|
|
$247.6
|
|
|
$237.4
|
|
|
$223.9
|
|
ALLETE’s Equity in Net Income
|
|
$20.3
|
|
|
$19.4
|
|
|
$18.4
|
|
Other Investments
|
|
|
||||
As of December 31
|
2013
|
|
2012
|
|
||
Millions
|
|
|
||||
ALLETE Properties
|
|
$89.9
|
|
|
$91.1
|
|
Available-for-sale Securities
(a)
|
17.7
|
|
26.8
|
|
||
Cash Equivalents
|
34.2
|
|
20.7
|
|
||
Other
|
4.5
|
|
4.9
|
|
||
Total Other Investments
|
|
$146.3
|
|
|
$143.5
|
|
(a)
|
As of
December 31, 2013
, the aggregate amount of available-for-sale corporate debt securities maturing in one year or less was
$0.6 million
, in one year to less than three years was
$4.7 million
, in three years to less than five years was
$2.0 million
, and in five or more years was
$2.5 million
.
|
ALLETE Properties
|
December 31, 2013
|
|
December 31, 2012
|
|
||
Millions
|
|
|
||||
Land Inventory Beginning Balance
|
|
$86.5
|
|
|
$86.0
|
|
Cost of Sales
|
(1.5
|
)
|
(0.2
|
)
|
||
Other
|
0.4
|
|
0.7
|
|
||
Land Inventory Ending Balance
|
85.4
|
|
86.5
|
|
||
Long-Term Finance Receivables (net of allowances of $0.6 and $0.6)
|
1.4
|
|
1.4
|
|
||
Other
|
3.1
|
|
3.2
|
|
||
Total Real Estate Assets
|
|
$89.9
|
|
|
$91.1
|
|
|
Net
|
Gross Realized
|
Net Unrealized
Gain (Loss) in Other
|
|
Year Ended December 31
|
Proceeds
|
Gain
|
(Loss)
|
Comprehensive Income
|
2013
|
$16.1
|
$2.2
|
—
|
—
|
2012
|
$1.5
|
—
|
—
|
$1.2
|
2011
|
$7.8
|
—
|
—
|
$(0.3)
|
|
Fair Value as of December 31, 2013
|
|||||||||||||
Recurring Fair Value Measures
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||
Millions
|
|
|
|
|
|
|
|
|||||||
Assets:
|
|
|
|
|
|
|
|
|||||||
Investments
|
|
|
|
|
|
|
|
|||||||
Available-for-sale Securities – Equity Securities
|
|
$7.9
|
|
|
—
|
|
|
—
|
|
|
|
$7.9
|
|
|
Available-for-sale Securities – Corporate Debt Securities
|
—
|
|
|
|
$9.8
|
|
|
—
|
|
|
9.8
|
|
||
Cash Equivalents
|
34.2
|
|
|
—
|
|
|
—
|
|
|
34.2
|
|
|||
Total Fair Value of Assets
|
|
$42.1
|
|
|
|
$9.8
|
|
|
—
|
|
|
|
$51.9
|
|
|
|
|
|
|
|
|
|
|||||||
Liabilities:
|
|
|
|
|
|
|
|
|||||||
Deferred Compensation
|
—
|
|
|
|
$16.8
|
|
|
—
|
|
|
|
$16.8
|
|
|
Derivatives – Interest Rate Swap
|
—
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|||
Total Fair Value of Liabilities
|
—
|
|
|
|
$17.4
|
|
|
—
|
|
|
|
$17.4
|
|
|
Total Net Fair Value of Assets (Liabilities)
|
|
$42.1
|
|
|
$(7.6)
|
|
—
|
|
|
|
$34.5
|
|
|
Fair Value as of December 31, 2012
|
|||||||||||||
Recurring Fair Value Measures
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||
Millions
|
|
|
|
|
|
|
|
|||||||
Assets:
|
|
|
|
|
|
|
|
|||||||
Investments
|
|
|
|
|
|
|
|
|||||||
Available-for-sale Securities – Equity Securities
|
|
$18.0
|
|
|
—
|
|
|
—
|
|
|
|
$18.0
|
|
|
Available-for-sale Securities – Corporate Debt Securities
|
—
|
|
|
|
$8.8
|
|
|
—
|
|
|
8.8
|
|
||
Cash Equivalents
|
20.7
|
|
|
—
|
|
|
—
|
|
|
20.7
|
|
|||
Total Fair Value of Assets
|
|
$38.7
|
|
|
|
$8.8
|
|
|
—
|
|
|
|
$47.5
|
|
|
|
|
|
|
|
|
|
|||||||
Liabilities:
|
|
|
|
|
|
|
|
|||||||
Deferred Compensation
|
—
|
|
|
|
$14.0
|
|
|
—
|
|
|
|
$14.0
|
|
|
Derivatives – Interest Rate Swap
|
—
|
|
|
0.7
|
|
|
—
|
|
|
0.7
|
|
|||
Total Fair Value of Liabilities
|
—
|
|
|
|
$14.7
|
|
|
—
|
|
|
|
$14.7
|
|
|
Total Net Fair Value of Assets (Liabilities)
|
|
$38.7
|
|
|
$(5.9)
|
|
—
|
|
|
|
$32.8
|
|
Financial Instruments
|
Carrying Amount
|
Fair Value
|
||||
Millions
|
|
|
||||
Long-Term Debt, Including Current Portion
|
|
|
||||
December 31, 2013
|
|
$1,110.2
|
|
|
$1,131.7
|
|
December 31, 2012
|
|
$1,018.1
|
|
|
$1,143.7
|
|
Long-Term Debt
|
|
|
||||
As of December 31
|
2013
|
|
2012
|
|
||
Millions
|
|
|
||||
First Mortgage Bonds
|
|
|
||||
4.86% Series Due 2013
|
—
|
|
|
$60.0
|
|
|
6.94% Series Due 2014
|
$18.0
|
18.0
|
|
|||
1.83% Series Due 2018
|
50.0
|
|
—
|
|
||
7.70% Series Due 2016
|
20.0
|
|
20.0
|
|
||
8.17% Series Due 2019
|
42.0
|
|
42.0
|
|
||
5.28% Series Due 2020
|
35.0
|
|
35.0
|
|
||
4.85% Series Due 2021
|
15.0
|
|
15.0
|
|
||
4.95% Pollution Control Series F Due 2022
|
111.0
|
|
111.0
|
|
||
6.02% Series Due 2023
|
75.0
|
|
75.0
|
|
||
4.90% Series Due 2025
|
30.0
|
|
30.0
|
|
||
5.10% Series Due 2025
|
30.0
|
|
30.0
|
|
||
3.20% Series Due 2026
|
75.0
|
|
75.0
|
|
||
5.99% Series Due 2027
|
60.0
|
|
60.0
|
|
||
3.30% Series Due 2028
|
40.0
|
|
—
|
|
||
5.69% Series Due 2036
|
50.0
|
|
50.0
|
|
||
6.00% Series Due 2040
|
35.0
|
|
35.0
|
|
||
5.82% Series Due 2040
|
45.0
|
|
45.0
|
|
||
4.08% Series Due 2042
|
85.0
|
|
85.0
|
|
||
4.21% Series Due 2043
|
60.0
|
|
—
|
|
||
SWL&P First Mortgage Bonds 7.25% Series Due 2013
|
—
|
|
10.0
|
|
||
SWL&P First Mortgage Bonds 4.15% Series Due 2028
|
15.0
|
|
—
|
|
||
Senior Unsecured Notes 5.99% Due 2017
|
50.0
|
|
50.0
|
|
||
Variable Demand Revenue Refunding Bonds Series 1997 A, B, and C Due 2013 – 2020
|
24.6
|
|
27.5
|
|
||
Industrial Development Variable Rate Demand Refunding Revenue Bonds Series 2006 Due 2025
|
27.8
|
|
27.8
|
|
||
Unsecured Term Loan Variable Rate Due 2015
|
75.0
|
|
75.0
|
|
||
Other Long-Term Debt, 0.15% – 7.50% Due 2014 – 2037
|
41.8
|
|
41.8
|
|
||
Total Long-Term Debt
|
1,110.2
|
|
1,018.1
|
|
||
Less: Due Within One Year
|
27.2
|
|
84.5
|
|
||
Net Long-Term Debt
|
|
$1,083.0
|
|
|
$933.6
|
|
•
|
Expanding our renewable energy supply;
|
•
|
Providing energy conservation initiatives for our customers and engaging in other demand side efforts;
|
•
|
Improving efficiency of our energy generating facilities;
|
•
|
Supporting research of technologies to reduce carbon emissions from generation facilities and carbon sequestration efforts; and
|
•
|
Evaluating and developing less carbon intensive future generating assets such as efficient and flexible natural gas generating facilities.
|
Summary of Common Stock
|
Shares
|
Equity
|
|||
|
Thousands
|
Millions
|
|||
Balance as of December 31, 2010
|
35,817
|
|
|
$636.1
|
|
Employee Stock Purchase Program
|
20
|
|
0.8
|
|
|
Invest Direct
|
437
|
|
17.2
|
|
|
Options and Stock Awards
|
109
|
|
6.7
|
|
|
Equity Issuance Program
|
400
|
|
16.0
|
|
|
Purchase of Non-Controlling Interest
|
222
|
|
8.8
|
|
|
Contributions to Pension
|
508
|
|
20.0
|
|
|
Balance as of December 31, 2011
|
37,513
|
|
|
$705.6
|
|
Employee Stock Purchase Program
|
20
|
|
0.8
|
|
|
Invest Direct
|
474
|
|
19.2
|
|
|
Options and Stock Awards
|
95
|
|
6.0
|
|
|
Equity Issuance Program
|
1,275
|
|
53.1
|
|
|
Balance as of December 31, 2012
|
39,377
|
|
|
$784.7
|
|
Employee Stock Purchase Program
|
16
|
|
0.7
|
|
|
Invest Direct
|
395
|
|
18.5
|
|
|
Options and Stock Awards
|
301
|
|
17.9
|
|
|
Equity Issuance Program
|
1,312
|
|
63.4
|
|
|
Balance as of December 31, 2013
|
41,401
|
|
|
$885.2
|
|
Reconciliation of Basic and Diluted
|
|
|
|
|||||
Earnings Per Share
|
|
|
Dilutive
|
|
|
|
||
Year Ended December 31
|
Basic
|
|
Securities
|
|
Diluted
|
|
||
Millions Except Per Share Amounts
|
|
|
|
|||||
2013
|
|
|
|
|||||
Net Income Attributable to ALLETE
|
|
$104.7
|
|
|
|
|
$104.7
|
|
Average Common Shares
|
39.7
|
|
0.1
|
|
39.8
|
|
||
Earnings Per Share
|
|
$2.64
|
|
|
|
|
$2.63
|
|
2012
|
|
|
|
|||||
Net Income Attributable to ALLETE
|
|
$97.1
|
|
|
|
|
$97.1
|
|
Average Common Shares
|
37.6
|
|
—
|
|
37.6
|
|
||
Earnings Per Share
|
|
$2.59
|
|
|
|
|
$2.58
|
|
2011
|
|
|
|
|||||
Net Income Attributable to ALLETE
|
|
$93.8
|
|
|
|
|
$93.8
|
|
Average Common Shares
|
35.3
|
|
0.1
|
|
35.4
|
|
||
Earnings Per Share
|
|
$2.66
|
|
|
|
|
$2.65
|
|
Year Ended December 31
|
2013
|
|
2012
|
|
2011
|
|
|||
Millions
|
|
|
|
||||||
AFUDC – Equity
|
|
$4.6
|
|
|
$5.1
|
|
|
$2.5
|
|
Gain on Sale of Available-for-sale Securities
|
2.2
|
|
—
|
|
—
|
|
|||
Investments and Other Income
|
2.5
|
|
0.9
|
|
1.9
|
|
|||
Total Other Income
|
|
$9.3
|
|
|
$6.0
|
|
|
$4.4
|
|
Income Tax Expense
|
|
|
|
||||||
Year Ended December 31
|
2013
|
|
2012
|
|
2011
|
|
|||
Millions
|
|
|
|
||||||
Current Tax Expense (Benefit)
|
|
|
|
||||||
Federal
(a)
|
—
|
|
—
|
|
$1.4
|
||||
State
(a)
|
$0.1
|
$0.5
|
(1.6
|
)
|
|||||
Total Current Tax Expense (Benefit)
|
0.1
|
|
0.5
|
|
(0.2
|
)
|
|||
Deferred Tax Expense
|
|
|
|
||||||
Federal
(b)
|
22.9
|
|
37.0
|
|
27.4
|
|
|||
State
(b)
|
6.5
|
|
1.4
|
|
9.3
|
|
|||
Investment Tax Credit Amortization
|
(0.8
|
)
|
(0.9
|
)
|
(0.9
|
)
|
|||
Total Deferred Tax Expense
|
28.6
|
|
37.5
|
|
35.8
|
|
|||
Total Income Tax Expense
|
|
$28.7
|
|
|
$38.0
|
|
|
$35.6
|
|
(a)
|
For the years ended December 31, 2013, 2012 and 2011, the federal and state current tax expense (benefit) was due to NOLs which resulted primarily from the bonus depreciation provision of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, and the American Taxpayer Relief Act of 2012. The federal and state NOLs will be carried forward to offset future taxable income.
|
(b)
|
For the year ended December 31, 2013, federal deferred tax expense is lower than the prior year primarily due to higher renewable tax credits. For the years ended December 31, 2013, 2012, and 2011, state deferred tax expense includes state renewable tax credits earned, net of valuation allowance, which will be carried forward to offset future state income taxes. The year ended December 31, 2011, included an income tax benefit for the reversal 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 and a benefit of
$2.9 million
related to the MPUC approval of our request to defer the retail portion of the tax charge taken in 2010 as a result of the PPACA.
|
Reconciliation of Taxes from Federal Statutory
|
|
|
|
||||||
Rate to Total Income Tax Expense
|
|
|
|
||||||
Year Ended December 31
|
2013
|
|
2012
|
|
2011
|
|
|||
Millions
|
|
|
|
||||||
Income Before Non-Controlling Interest and Income Taxes
|
|
$133.4
|
|
|
$135.1
|
|
|
$129.2
|
|
Statutory Federal Income Tax Rate
|
35
|
%
|
35
|
%
|
35
|
%
|
|||
Income Taxes Computed at 35 percent Statutory Federal Rate
|
|
$46.7
|
|
|
$47.3
|
|
|
$45.2
|
|
Increase (Decrease) in Tax Due to:
|
|
|
|
||||||
State Income Taxes – Net of Federal Income Tax Benefit
|
4.3
|
|
1.2
|
|
6.0
|
|
|||
Deferred Accounting for Retail Portion of the PPACA
|
—
|
|
—
|
|
(2.9
|
)
|
|||
2010 Rate Case Stipulation Agreement - Deferred Tax Reversal
|
—
|
|
—
|
|
(6.2
|
)
|
|||
Regulatory Differences for Utility Plant
|
(2.2
|
)
|
(2.2
|
)
|
(1.2
|
)
|
|||
Production Tax Credits
|
(19.2
|
)
|
(7.6
|
)
|
(4.3
|
)
|
|||
Other
|
(0.9
|
)
|
(0.7
|
)
|
(1.0
|
)
|
|||
Total Income Tax Expense
|
|
$28.7
|
|
|
$38.0
|
|
|
$35.6
|
|
Deferred Tax Assets and Liabilities
|
|
|
||||
As of December 31
|
2013
|
|
2012
|
|
||
Millions
|
|
|
||||
Deferred Tax Assets
|
|
|
||||
Employee Benefits and Compensation
|
|
$66.3
|
|
|
$120.2
|
|
Property Related
|
82.2
|
|
59.8
|
|
||
NOL Carryforwards
|
112.8
|
|
90.8
|
|
||
Tax Credit Carryforwards
|
55.1
|
|
28.3
|
|
||
Other
|
16.9
|
|
24.6
|
|
||
Gross Deferred Tax Assets
|
333.3
|
|
323.7
|
|
||
Deferred Tax Asset Valuation Allowance
|
(8.0
|
)
|
(2.4
|
)
|
||
Total Deferred Tax Assets
|
|
$325.3
|
|
|
$321.3
|
|
Deferred Tax Liabilities
|
|
|
||||
Property Related
|
|
$656.2
|
|
|
$577.1
|
|
Regulatory Asset for Benefit Obligations
|
58.7
|
|
104.3
|
|
||
Unamortized Investment Tax Credits
|
11.1
|
|
11.9
|
|
||
Partnership Basis Differences
|
36.7
|
|
28.6
|
|
||
Other
|
22.7
|
|
30.1
|
|
||
Total Deferred Tax Liabilities
|
|
$785.4
|
|
|
$752.0
|
|
Net Deferred Income Taxes
|
|
$460.1
|
|
|
$430.7
|
|
Recorded as:
|
|
|
||||
Net Current Deferred Tax Assets
(a)
|
|
$19.0
|
|
—
|
|
|
Net Current Deferred Tax Liabilities
(b)
|
—
|
|
|
$6.9
|
|
|
Net Long-Term Deferred Tax Liabilities
|
479.1
|
|
423.8
|
|
||
Net Deferred Income Taxes
|
|
$460.1
|
|
|
$430.7
|
|
(a)
|
In 2013, Current Deferred Tax Assets reflect the expectation of using federal NOL carryforward deductions in 2014.
|
(b)
|
Included in Other Current Assets and Other Current Liabilities.
|
NOL and Tax Credit Carryforwards
|
|
|
||
Year Ended December 31
|
2013
|
2012
|
|
|
Millions
|
|
|
||
Federal NOL Carryforwards
(a)
|
$279.8
|
|
$244.1
|
|
Federal Tax Credit Carryforwards
|
$35.5
|
$16.0
|
||
State NOL Carryforwards
(a)
|
$156.3
|
$90.6
|
||
State Tax Credit Carryforwards
(b)
|
$11.9
|
$10.3
|
(a)
|
Pretax amounts
|
(b)
|
Net of
$7.7 million
valuation allowance.
|
Gross Unrecognized Income Tax Benefits
|
2013
|
|
2012
|
|
2011
|
|
|||
Millions
|
|
|
|
||||||
Balance at January 1
|
|
$2.7
|
|
|
$11.4
|
|
|
$12.3
|
|
Additions for Tax Positions Related to the Current Year
|
0.1
|
|
—
|
|
—
|
|
|||
Additions for Tax Positions Related to Prior Years
|
1.3
|
|
—
|
|
—
|
|
|||
Reductions for Tax Positions Related to Prior Years
|
—
|
|
(8.7
|
)
|
(0.9
|
)
|
|||
Reductions for Settlements
|
(2.9
|
)
|
—
|
|
—
|
|
|||
Balance as of December 31
|
|
$1.2
|
|
|
$2.7
|
|
|
$11.4
|
|
|
Unrealized Gains
and Losses on
Available-for-sale
Securities
|
Defined Benefit
Pension, Other
Postretirement
Items
|
Gains and
Losses on
Cash Flow
Hedge
|
Total
|
||||
Millions
|
|
|
|
|
||||
For the Year Ended December 31, 2013
|
|
|
|
|
||||
Beginning Accumulated Other Comprehensive Loss
|
$(0.1)
|
$(21.5)
|
$(0.4)
|
$(22.0)
|
||||
Other Comprehensive Income Before Reclassifications
|
1.3
|
|
3.2
|
|
0.1
|
|
4.6
|
|
Amounts Reclassified From Accumulated Other Comprehensive Income (Loss)
|
(1.3
|
)
|
1.6
|
|
—
|
|
0.3
|
|
Net Other Comprehensive Income
|
—
|
|
4.8
|
|
0.1
|
|
4.9
|
|
Ending Accumulated Other Comprehensive Loss
|
$(0.1)
|
$(16.7)
|
$(0.3)
|
$(17.1)
|
|
Year Ended
|
|
Amount Reclassified from Accumulated Other Comprehensive Loss
|
December 31,
|
|
|
2013
|
|
Millions
|
|
|
Unrealized Gains on Available-for-sale Securities
(a)
|
$2.2
|
|
Income Taxes
(b)
|
(0.9
|
)
|
Total, Net of Income Taxes
|
$1.3
|
|
|
|
|
Amortization of Defined Benefit Pension and Other Postretirement Items
|
|
|
Prior Service Costs
(c)
|
$0.8
|
|
Actuarial Gains and Losses
(c)
|
(3.5
|
)
|
Total
|
(2.7
|
)
|
Income Taxes
(b)
|
1.1
|
|
Total, Net of Income Taxes
|
$(1.6)
|
|
Total Reclassifications
|
$(0.3)
|
(a)
|
Included in Other Income (Expense) – Other on the Consolidated Statement of Income.
|
(b)
|
Included in Income Tax Expense on the Consolidated Statement of Income.
|
(c)
|
Defined benefit pension and other postretirement items excluded from our Regulated Operations are recognized in accumulated other comprehensive loss and are subsequently reclassified out of accumulated other comprehensive loss as components of net periodic pension and other postretirement benefit expense (See Note 17. Pension and Other Postretirement Benefit Plans).
|
Pension Obligation and Funded Status
|
||||||
Year Ended December 31
|
2013
|
|
2012
|
|
||
Millions
|
|
|
||||
Accumulated Benefit Obligation
|
|
$577.6
|
|
|
$598.7
|
|
Change in Benefit Obligation
|
|
|
|
|
||
Obligation, Beginning of Year
|
|
$652.1
|
|
|
$597.5
|
|
Service Cost
|
9.9
|
|
9.1
|
|
||
Interest Cost
|
26.0
|
|
26.4
|
|
||
Actuarial (Gain) Loss
|
(49.2
|
)
|
38.5
|
|
||
Benefits Paid
|
(33.5
|
)
|
(30.9
|
)
|
||
Participant Contributions
|
17.5
|
|
11.5
|
|
||
Obligation, End of Year
|
|
$622.8
|
|
|
$652.1
|
|
Change in Plan Assets
|
|
|
|
|
||
Fair Value, Beginning of Year
|
|
$460.1
|
|
|
$432.4
|
|
Actual Return on Plan Assets
|
56.5
|
|
38.7
|
|
||
Employer Contribution
(a)
|
18.5
|
|
19.9
|
|
||
Benefits Paid
|
(33.5
|
)
|
(30.9
|
)
|
||
Fair Value, End of Year
|
|
$501.6
|
|
|
$460.1
|
|
Funded Status, End of Year
|
$(121.2)
|
$(192.0)
|
||||
|
|
|
||||
Net Pension Amounts Recognized in Consolidated Balance Sheet Consist of:
|
|
|
|
|
||
Current Liabilities
|
$(1.1)
|
$(1.1)
|
||||
Non-Current Liabilities
|
$(120.1)
|
$(190.9)
|
(a)
|
Includes participant contributions noted above.
|
Unrecognized Pension Costs
|
||||||
Year Ended December 31
|
2013
|
|
2012
|
|
||
Millions
|
|
|
||||
Net Loss
|
|
$194.9
|
|
|
$286.8
|
|
Prior Service Cost
|
0.4
|
|
0.7
|
|
||
Total Unrecognized Pension Costs
|
|
$195.3
|
|
|
$287.5
|
|
Other Changes in Pension Plan Assets and Benefit Obligations Recognized in
Other Comprehensive Income and Regulatory Assets
|
|||||
Year Ended December 31
|
2013
|
|
2012
|
|
|
Millions
|
|
|
|||
Net (Gain) Loss
|
$(70.4)
|
|
$35.2
|
|
|
Amortization of Prior Service Cost
|
(0.3
|
)
|
(0.3
|
)
|
|
Amortization of Loss
|
(21.5
|
)
|
(17.5
|
)
|
|
Total Recognized in Other Comprehensive Income and Regulatory Assets
|
$(92.2)
|
|
$17.4
|
|
Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets
|
||||||
Year Ended December 31
|
2013
|
|
2012
|
|
||
Millions
|
|
|
||||
Projected Benefit Obligation
|
|
$622.8
|
|
|
$652.1
|
|
Accumulated Benefit Obligation
|
|
$577.6
|
|
|
$598.7
|
|
Fair Value of Plan Assets
|
|
$501.6
|
|
|
$460.1
|
|
Postretirement Health and Life Obligation and Funded Status
|
||||||
Year Ended December 31
|
2013
|
|
2012
|
|
||
Millions
|
|
|
||||
Change in Benefit Obligation
|
|
|
||||
Obligation, Beginning of Year
|
|
$168.8
|
|
|
$210.6
|
|
Service Cost
|
3.9
|
|
4.2
|
|
||
Interest Cost
|
6.8
|
|
9.4
|
|
||
Actuarial Gain
|
(18.8
|
)
|
(43.2
|
)
|
||
Participant Contributions
|
2.7
|
|
2.6
|
|
||
Plan Amendments
|
—
|
|
(5.3
|
)
|
||
Benefits Paid
|
(9.9
|
)
|
(9.5
|
)
|
||
Settlements
(a)
|
(1.6
|
)
|
—
|
|
||
Obligation, End of Year
|
|
$151.9
|
|
|
$168.8
|
|
Change in Plan Assets
|
|
|
||||
Fair Value, Beginning of Year
|
|
$131.0
|
|
|
$121.0
|
|
Actual Return on Plan Assets
|
21.4
|
|
14.3
|
|
||
Employer Contribution
|
11.7
|
|
2.3
|
|
||
Participant Contributions
|
2.7
|
|
2.5
|
|
||
Benefits Paid
|
(9.8
|
)
|
(9.1
|
)
|
||
Fair Value, End of Year
|
|
$157.0
|
|
|
$131.0
|
|
Funded Status, End of Year
|
$5.1
|
$(37.8)
|
||||
|
|
|
||||
Net Postretirement Health and Life Amounts Recognized in Consolidated Balance Sheet Consist of:
|
|
|
||||
Non-Current Assets
|
$19.4
|
—
|
|
|||
Current Liabilities
|
$(0.9)
|
$(0.8)
|
||||
Non-Current Liabilities
|
$(13.4)
|
$(37.0)
|
(a)
|
Result of the exit from a legacy benefit plan.
|
Unrecognized Postretirement Health and Life Costs
|
|||||
Year Ended December 31
|
2013
|
|
2012
|
|
|
Millions
|
|
|
|||
Net (Gain) Loss
|
$(9.0)
|
|
$23.5
|
|
|
Prior Service Credit
|
(10.1
|
)
|
(13.1
|
)
|
|
Total Unrecognized Postretirement Health and Life Costs (Credit)
|
$(19.1)
|
|
$10.4
|
|
(a)
|
Result of the exit from a legacy benefit plan.
|
Other Changes in Postretirement Benefit Plan Assets and Benefit Obligations
Recognized in Other Comprehensive Income and Regulatory Assets
|
||||
Year Ended December 31
|
2013
|
|
2012
|
|
Millions
|
|
|
||
Net Gain
|
$(30.2)
|
$(47.5)
|
||
Prior Service Credit Arising During the Period
|
—
|
|
(5.3
|
)
|
Amortization of Prior Service Credit
|
2.5
|
|
1.7
|
|
Amortization of Transition Obligation
|
—
|
|
(0.1
|
)
|
Amortization of Loss
|
(1.6
|
)
|
(7.5
|
)
|
Amount Recognized due to Plan Settlement
(a)
|
(0.2
|
)
|
—
|
|
Total Recognized in Other Comprehensive Income and Regulatory Assets
|
$(29.5)
|
$(58.7)
|
(a)
|
Result of the exit from a legacy benefit plan.
|
Estimated Future Benefit Payments
|
||||||
|
Pension
|
Postretirement Health and Life
|
||||
Millions
|
|
|
|
|||
2014
|
|
$33.9
|
|
|
$7.7
|
|
2015
|
|
$34.9
|
|
|
$8.4
|
|
2016
|
|
$35.8
|
|
|
$8.8
|
|
2017
|
|
$36.9
|
|
|
$9.2
|
|
2018
|
|
$37.8
|
|
|
$9.4
|
|
Years 2019 – 2023
|
|
$200.2
|
|
|
$50.6
|
|
|
Pension
|
Postretirement
Health and Life
|
||||
Millions
|
|
|
||||
Net Loss
|
|
$14.2
|
|
|
$0.5
|
|
Prior Service Cost (Credit)
|
0.3
|
|
(2.5
|
)
|
||
Total Pension and Postretirement Health and Life Cost (Credit)
|
|
$14.5
|
|
$(2.0)
|
(a)
|
The expected long-term rate of return used to determine net periodic benefit expense for 2014 has been reduced to 8.00 percent.
|
Sensitivity of a One-Percentage-Point Change in Health Care Trend Rates
|
||||
|
One Percent
Increase
|
One Percent
Decrease
|
||
Millions
|
|
|
||
Effect on Total of Postretirement Health and Life Service and Interest Cost
|
|
$1.6
|
|
$(1.3)
|
Effect on Postretirement Health and Life Obligation
|
|
$16.0
|
|
$(13.4)
|
(a)
|
Includes VEBAs and irrevocable grantor trusts.
|
(a)
|
Includes VEBAs and irrevocable grantor trusts.
|
|
Fair Value as of December 31, 2013
|
|||||||||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Millions
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Equity Securities:
|
|
|
|
|
||||||||
U.S. Large-cap
(a)
|
|
$20.9
|
|
|
$59.3
|
|
—
|
|
|
$80.2
|
|
|
U.S. Mid-cap Growth
(a)
|
9.4
|
|
26.7
|
|
—
|
|
36.1
|
|
||||
U.S. Small-cap
(a)
|
9.9
|
|
28.2
|
|
—
|
|
38.1
|
|
||||
International
|
61.2
|
|
43.5
|
|
—
|
|
104.7
|
|
||||
Debt Securities:
|
|
|
|
|
|
|
|
|
||||
Mutual Funds
|
130.1
|
|
—
|
|
—
|
|
130.1
|
|
||||
Fixed Income
|
—
|
|
36.4
|
|
—
|
|
36.4
|
|
||||
Cash Equivalents
|
2.7
|
|
—
|
|
—
|
|
2.7
|
|
||||
Other Types of Investments:
|
|
|
|
|
|
|
|
|
||||
Private Equity Funds
|
—
|
|
—
|
|
|
$46.8
|
|
46.8
|
|
|||
Real Estate
|
—
|
|
—
|
|
26.5
|
|
26.5
|
|
||||
Total Fair Value of Assets
|
|
$234.2
|
|
|
$194.1
|
|
|
$73.3
|
|
|
$501.6
|
|
(a)
|
The underlying investments classified under U.S. Equity Securities consist of money market funds (Level 1) and actively-managed funds (Level 2), which are combined with futures, and settle daily, to achieve the returns of the U.S. Equity Securities Large-cap, Mid-cap Growth, and Small-cap funds. Our exposure with respect to these investments includes both the futures and the underlying investments.
|
Recurring Fair Value Measures
|
|
|
||||
Activity in Level 3
|
Private Equity Funds
|
Real Estate
|
||||
Millions
|
|
|
||||
Balance as of December 31, 2012
|
|
$58.9
|
|
|
$24.9
|
|
Actual Return on Plan Assets
|
2.3
|
|
2.1
|
|
||
Purchases, sales, and settlements, net
|
(14.4
|
)
|
(0.5
|
)
|
||
Balance as of December 31, 2013
|
|
$46.8
|
|
|
$26.5
|
|
|
Fair Value as of December 31, 2012
|
|||||||||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Millions
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Equity Securities:
|
|
|
|
|
||||||||
U.S. Large-cap
(a)
|
|
$43.0
|
|
|
$36.0
|
|
—
|
|
|
$79.0
|
|
|
U.S. Mid-cap Growth
(a)
|
18.3
|
|
15.3
|
|
—
|
|
33.6
|
|
||||
U.S. Small-cap
(a)
|
18.3
|
|
15.3
|
|
—
|
|
33.6
|
|
||||
International
|
50.5
|
|
45.9
|
|
—
|
|
96.4
|
|
||||
Debt Securities:
|
|
|
|
|
|
|
|
|
||||
Mutual Funds
|
72.5
|
|
—
|
|
—
|
|
72.5
|
|
||||
Fixed Income
|
10.4
|
|
50.8
|
|
—
|
|
61.2
|
|
||||
Other Types of Investments:
|
|
|
|
|
|
|
|
|
||||
Private Equity Funds
|
—
|
|
—
|
|
|
$58.9
|
|
58.9
|
|
|||
Real Estate
|
—
|
|
—
|
|
24.9
|
|
24.9
|
|
||||
Total Fair Value of Assets
|
|
$213.0
|
|
|
$163.3
|
|
|
$83.8
|
|
|
$460.1
|
|
(a)
|
The underlying investments classified under U.S. Equity Securities consist of money market funds (Level 1) and actively-managed funds (Level 2), which are combined with futures, and settle daily, to achieve the returns of the U.S. Equity Securities Large-cap, Mid-cap Growth, and Small-cap funds. Our exposure with respect to these investments includes both the futures and the underlying investments.
|
Recurring Fair Value Measures
|
|
|
|
||||
Activity in Level 3
|
|
Private Equity Funds
|
Real Estate
|
||||
Millions
|
|
|
|
||||
Balance as of December 31, 2011
|
|
|
$69.0
|
|
|
$21.7
|
|
Actual Return on Plan Assets
|
|
(9.7
|
)
|
3.4
|
|
||
Purchases, sales, and settlements, net
|
|
(0.4
|
)
|
(0.2
|
)
|
||
Balance as of December 31, 2012
|
|
|
$58.9
|
|
|
$24.9
|
|
|
Fair Value as of December 31, 2013
|
|||||||||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Millions
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Equity Securities:
|
|
|
|
|
||||||||
U.S. Large-cap
(a)
|
|
$28.3
|
|
—
|
|
—
|
|
|
$28.3
|
|
||
U.S. Mid-cap Growth
(a)
|
17.6
|
|
—
|
|
—
|
|
17.6
|
|
||||
U.S. Small-cap
(a)
|
18.2
|
|
—
|
|
—
|
|
18.2
|
|
||||
International
|
33.4
|
|
—
|
|
—
|
|
33.4
|
|
||||
Debt Securities:
|
|
|
|
|
|
|
|
|
||||
Mutual Funds
|
30.8
|
|
—
|
|
—
|
|
30.8
|
|
||||
Fixed Income
|
—
|
|
|
$15.5
|
|
—
|
|
15.5
|
|
|||
Cash Equivalents
|
0.1
|
|
—
|
|
—
|
|
0.1
|
|
||||
Other Types of Investments:
|
|
|
|
|
|
|
|
|
||||
Private Equity Funds
|
—
|
|
—
|
|
|
$13.1
|
|
13.1
|
|
|||
Total Fair Value of Assets
|
|
$128.4
|
|
|
$15.5
|
|
|
$13.1
|
|
|
$157.0
|
|
(a)
|
The underlying investments classified under U.S. Equity Securities consist of mutual funds (Level 1).
|
Recurring Fair Value Measures
|
|
||
Activity in Level 3
|
Private Equity Funds
|
||
Millions
|
|
||
Balance as of December 31, 2012
|
|
$13.5
|
|
Actual Return on Plan Assets
|
2.4
|
|
|
Purchases, sales, and settlements, net
|
(2.8
|
)
|
|
Balance as of December 31, 2013
|
|
$13.1
|
|
|
Fair Value as of December 31, 2012
|
|||||||||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Millions
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Equity Securities:
|
|
|
|
|
||||||||
U.S. Large-cap
(a)
|
|
$16.7
|
|
—
|
|
—
|
|
|
$16.7
|
|
||
U.S. Mid-cap Growth
(a)
|
13.2
|
|
—
|
|
—
|
|
13.2
|
|
||||
U.S. Small-cap
(a)
|
13.3
|
|
—
|
|
—
|
|
13.3
|
|
||||
International
|
30.3
|
|
—
|
|
—
|
|
30.3
|
|
||||
Debt Securities:
|
|
|
|
|
|
|
|
|
||||
Mutual Funds
|
25.5
|
|
—
|
|
—
|
|
25.5
|
|
||||
Fixed Income
|
0.2
|
|
|
$18.3
|
|
—
|
|
18.5
|
|
|||
Other Types of Investments:
|
|
|
|
|
|
|
|
|
||||
Private Equity Funds
|
—
|
|
—
|
|
|
$13.5
|
|
13.5
|
|
|||
Total Fair Value of Assets
|
|
$99.2
|
|
|
$18.3
|
|
|
$13.5
|
|
|
$131.0
|
|
(a)
|
The underlying investments classified under U.S. Equity Securities consist of mutual funds (Level 1).
|
Recurring Fair Value Measures
|
|
||
Activity in Level 3
|
Private Equity Funds
|
||
Millions
|
|
||
Balance as of December 31, 2011
|
|
$14.0
|
|
Actual Return on Plan Assets
|
0.2
|
|
|
Purchases, sales, and settlements, net
|
(0.7
|
)
|
|
Balance as of December 31, 2012
|
|
$13.5
|
|
Year Ended December 31
|
2013
|
|
2012
|
|
2011
|
|
|||
Millions
|
|
|
|
||||||
ESOP Shares
|
|
|
|
||||||
Allocated
|
2.0
|
|
2.2
|
|
2.2
|
|
|||
Unallocated
|
0.5
|
|
0.7
|
|
1.0
|
|
|||
Total
|
2.5
|
|
2.9
|
|
3.2
|
|
|||
Fair Value of Unallocated Shares
|
|
$24.1
|
|
|
$28.7
|
|
|
$42.0
|
|
Share-Based Compensation Expense
|
|||||||||
Year Ended December 31
|
2013
|
|
2012
|
|
2011
|
|
|||
Millions
|
|
|
|
||||||
Performance Shares
|
|
$1.7
|
|
|
$1.4
|
|
|
$1.1
|
|
Restricted Stock Units
|
0.7
|
|
0.7
|
|
0.5
|
|
|||
Total Share-Based Compensation Expense
|
|
$2.4
|
|
|
$2.1
|
|
|
$1.6
|
|
Income Tax Benefit
|
|
$1.0
|
|
|
$0.9
|
|
|
$0.7
|
|
|
2013
|
2012
|
2011
|
||||||||||||
|
Number of
Options
|
Weighted-Average
Exercise
Price
|
Number of
Options
|
Weighted-Average
Exercise
Price
|
Number of
Options
|
Weighted-Average
Exercise
Price
|
|||||||||
Outstanding as of January 1,
|
395,678
|
|
|
$42.28
|
|
460,234
|
|
|
$41.68
|
|
560,887
|
|
|
$40.69
|
|
Granted
(a)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Exercised
|
287,379
|
|
|
$41.60
|
|
49,075
|
|
|
$35.84
|
|
80,798
|
|
|
$34.25
|
|
Forfeited
|
—
|
|
—
|
|
15,481
|
|
|
$44.86
|
|
19,855
|
|
|
$43.96
|
|
|
Outstanding as of December 31,
|
108,299
|
|
|
$44.10
|
|
395,678
|
|
|
$42.28
|
|
460,234
|
|
|
$41.68
|
|
Exercisable as of December 31,
|
108,299
|
|
|
$43.17
|
|
395,678
|
|
|
$41.71
|
|
460,234
|
|
|
$41.59
|
|
(a)
|
Stock options have not been granted since 2008. The weighted-average grant-date intrinsic value of options granted in 2008 was
$6.18
.
|
|
Range of Exercise Price
|
|||||
As of December 31, 2013
|
$37.76 to $41.35
|
$44.15 to $48.65
|
||||
Options Outstanding and Exercisable:
|
|
|
||||
Number Outstanding and Exercisable
|
44,263
|
|
64,036
|
|
||
Weighted Average Remaining Contractual Life (Years)
|
2.6
|
|
2.7
|
|
||
Weighted Average Exercise Price
|
|
$40.18
|
|
|
$46.81
|
|
|
2013
|
2012
|
2011
|
||||||||||||
|
Number of
Shares
|
Weighted-
Average
Grant Date
Fair Value
|
Number of
Shares
|
Weighted-
Average
Grant Date
Fair Value
|
Number of
Shares
|
Weighted-
Average
Grant Date
Fair Value
|
|||||||||
Non-vested as of January 1,
|
107,899
|
|
|
$40.73
|
|
128,333
|
|
|
$36.54
|
|
122,489
|
|
|
$38.15
|
|
Granted
(a)
|
45,830
|
|
|
$52.15
|
|
38,764
|
|
|
$44.70
|
|
39,312
|
|
|
$41.00
|
|
Awarded
|
(18,605
|
)
|
|
$35.10
|
|
(41,009
|
)
|
|
$34.25
|
|
(32,368
|
)
|
|
$48.10
|
|
Unearned Grant Award
|
(18,606
|
)
|
|
$35.10
|
|
(17,575
|
)
|
|
$34.25
|
|
—
|
|
—
|
|
|
Forfeited
|
(1,753
|
)
|
|
$47.26
|
|
(614
|
)
|
|
$34.49
|
|
(1,100
|
)
|
|
$34.35
|
|
Non-vested as of December 31,
|
114,765
|
|
|
$47.02
|
|
107,899
|
|
|
$40.73
|
|
128,333
|
|
|
$36.54
|
|
|
2013
|
2012
|
2011
|
||||||||||||
|
Number of
Shares
|
Weighted- Average
Grant Date
Fair Value
|
Number of
Shares
|
Weighted- Average
Grant Date
Fair Value
|
Number of
Shares
|
Weighted- Average
Grant Date
Fair Value
|
|||||||||
Available as of January 1,
|
56,415
|
|
|
$36.61
|
|
63,464
|
|
|
$32.57
|
|
43,803
|
|
|
$30.61
|
|
Granted
(a)
|
21,440
|
|
|
$43.41
|
|
18,162
|
|
|
$40.83
|
|
20,136
|
|
|
$36.74
|
|
Awarded
|
(20,939
|
)
|
|
$32.03
|
|
(24,707
|
)
|
|
$29.43
|
|
(215
|
)
|
|
$30.30
|
|
Forfeited
|
(934
|
)
|
|
$41.02
|
|
(504
|
)
|
|
$31.80
|
|
(260
|
)
|
|
$29.41
|
|
Available as of December 31,
|
55,982
|
|
|
$40.85
|
|
56,415
|
|
|
$36.61
|
|
63,464
|
|
|
$32.57
|
|
Quarter Ended
|
Mar. 31
|
|
Jun. 30
|
|
Sept. 30
|
|
Dec. 31
|
|
||||
Millions Except Earnings Per Share
|
|
|
|
|
||||||||
2013
|
|
|
|
|
||||||||
Operating Revenue
|
|
$263.8
|
|
|
$235.6
|
|
|
$251.0
|
|
|
$268.0
|
|
Operating Income
|
|
$44.4
|
|
|
$24.4
|
|
|
$38.4
|
|
|
$46.9
|
|
Net Income Attributable to ALLETE
|
|
$32.5
|
|
|
$14.0
|
|
|
$25.2
|
|
|
$33.0
|
|
Earnings Per Share of Common Stock
|
|
|
|
|
||||||||
Basic
|
|
$0.83
|
|
|
$0.36
|
|
|
$0.63
|
|
|
$0.82
|
|
Diluted
|
|
$0.83
|
|
|
$0.35
|
|
|
$0.63
|
|
|
$0.82
|
|
2012
|
|
|
|
|
||||||||
Operating Revenue
|
|
$240.0
|
|
|
$216.4
|
|
|
$248.8
|
|
|
$256.0
|
|
Operating Income
|
|
$38.4
|
|
|
$23.3
|
|
|
$45.6
|
|
|
$47.9
|
|
Net Income Attributable to ALLETE
|
|
$24.4
|
|
|
$14.4
|
|
|
$29.4
|
|
|
$28.9
|
|
Earnings Per Share of Common Stock
|
|
|
|
|
||||||||
Basic
|
|
$0.66
|
|
|
$0.39
|
|
|
$0.78
|
|
|
$0.76
|
|
Diluted
|
|
$0.66
|
|
|
$0.39
|
|
|
$0.78
|
|
|
$0.75
|
|
|
Balance at
Beginning of
Period
|
Additions
|
Deductions
from
Reserves
(a)
|
Balance at
End of
Period
|
||||||||||
|
Charged to
Income
|
Other
Charges
|
||||||||||||
Millions
|
|
|
|
|
|
|||||||||
Reserve Deducted from Related Assets
|
|
|
|
|
|
|||||||||
Reserve For Uncollectible Accounts
|
|
|
|
|
|
|||||||||
2011 Trade Accounts Receivable
|
|
$0.9
|
|
|
$1.3
|
|
—
|
|
|
$1.3
|
|
|
$0.9
|
|
Finance Receivables – Long-Term
|
|
$0.8
|
|
|
$0.1
|
|
—
|
|
|
$0.3
|
|
|
$0.6
|
|
2012 Trade Accounts Receivable
|
|
$0.9
|
|
|
$1.0
|
|
—
|
|
|
$0.9
|
|
|
$1.0
|
|
Finance Receivables – Long-Term
|
|
$0.6
|
|
—
|
|
—
|
|
—
|
|
|
$0.6
|
|
||
2013 Trade Accounts Receivable
|
|
$1.0
|
|
1.3
|
|
—
|
|
1.2
|
|
|
$1.1
|
|
||
Finance Receivables – Long-Term
|
|
$0.6
|
|
—
|
|
—
|
|
—
|
|
|
$0.6
|
|
||
Deferred Asset Valuation Allowance
|
|
|
|
|
|
|||||||||
2011 Deferred Tax Assets
|
|
$0.5
|
|
$(0.1)
|
—
|
|
—
|
|
|
$0.4
|
|
|||
2012 Deferred Tax Assets
|
|
$0.4
|
|
$2.0
|
—
|
|
—
|
|
|
$2.4
|
|
|||
2013 Deferred Tax Assets
|
|
$2.4
|
|
|
$5.6
|
|
—
|
|
—
|
|
|
$8.0
|
|
(a)
|
Includes uncollectible accounts written off.
|
By:
|
/s/ Mark Nauman
|
|
By:
|
/s/ Mark A. Schober
|
Name:
|
Mark Nauman
|
|
Name:
|
Mark A. Schober
|
Title:
|
President
|
|
Title:
|
Senior Vice President and
Chief Financial Officer
|
By:
|
/s/ Eric Schweitzer
|
Name:
|
Eric Schweitzer
|
Title:
|
President
|
S
ECTION
|
H
EADING
|
PAGE
|
|
|
Parties
|
1
|
|
||
Recitals
|
1
|
|
||
ARTICLE I
|
BONDS OF THE ELEVENTH SERIES
|
7
|
|
|
|
Section 1.1
|
7
|
|
|
ARTICLE II
|
COVENANTS AND RESTRICTIONS.
|
10
|
|
|
|
Section 2.1
|
10
|
|
|
|
Section 2.2
|
11
|
|
|
|
Section 2.3
|
11
|
|
|
|
Section 2.4
|
11
|
|
|
|
Section 2.5
|
11
|
|
|
ARTICLE III
|
MISCELLANEOUS PROVISIONS
|
12
|
|
|
|
Section 3.1
|
12
|
|
|
|
Section 3.2
|
17
|
|
|
|
Section 3.3
|
17
|
|
|
|
Section 3.4
|
17
|
|
|
|
Section 3.5
|
17
|
|
|
|
Section 3.6
|
17
|
|
|
|
Section 3.7
|
17
|
|
|
Signature
|
18
|
|
By:
|
/s/ Bethany M. Owen
|
|
President
|
/s/ Janet A. Blake
|
Secretary
|
/s/ Kellie Damico
|
/s/ Teri Nielson
|
By:
|
/s/ Steven F. Posto
|
|
Steven F. Posto
|
|
Vice President
|
/s/ Peter M. Brennan
|
Peter M. Brennan
|
Vice President
|
/s/ Hollie L. Randolph
|
Hollie L. Randolph
|
Notary Public, State of Wisconsin
|
My Commission Expires 4/24/2016
|
/s/ Erin F. Graham
|
Erin F. Graham
|
Notary Public, State of Wisconsin
|
My Commission Expires 1/31/2016
|
By
|
|
|
Bethany M. Owen
|
|
President
|
By
|
|
|
Paul M. Holt
|
|
Treasurer
|
By
|
|
|
Janet A. Blake
|
|
Secretary
|
By
|
|
|
Authorized Officer
|
|
|
|
Notary Public
|
|
My Commission Expires
|
Base Salary
|
$
|
|
|
Times
|
|
|
|
Award Opportunity (percent of base salary)
|
%
|
|
|
Equals
|
|
|
|
Target Award
|
$
|
Goal Performance Level
|
Payout as Percent of
Target Award
|
Award Amount
|
Superior
|
200%
|
$
|
Target
|
100%
|
$
|
Threshold
|
37.5%
|
$
|
Below Threshold
|
0%
|
$
|
|
|
|
|
|
|
|
Goal
|
|
|
|
|
|
|
|
|
Weighting
|
|
|
Financial Goals
|
|
|
|
|
|
||
|
|
Net Income
|
50%
|
|||||
|
|
Cash from Operating Activities
|
|
25%
|
||||
|
|
|
|
|
|
|
|
|
|
Strategic & Operational Positioning Goals
|
|
|
|
25%
|
|||
|
|
|
|
|
|
|
100%
|
Number of Performance Shares Granted:
|
|
Date of Grant:
|
|
Performance Period:
|
|
Performance Goals:
|
See Annex B
|
By:
|
|
|
Chairman, President & CEO
|
(a)
|
unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months;
|
(b)
|
by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under the Employer’s accident and health plan;
|
(c)
|
determined to be totally disabled by the Social Security Administration; or
|
(d)
|
disabled pursuant to an Employer-sponsored disability insurance arrangement provided that the definition of disability applied under such disability insurance program complies with the foregoing definition of Disability.
|
TSR Rank
|
Perf. Level
|
Payout %
|
1
|
|
200%
|
2
|
|
200%
|
3
|
|
200%
|
4
|
Superior
|
200%
|
5
|
|
190%
|
6
|
|
180%
|
7
|
|
170%
|
8
|
|
160%
|
9
|
|
150%
|
10
|
|
140%
|
11
|
|
130%
|
12
|
|
120%
|
13
|
|
110%
|
14
|
Target
|
100%
|
15
|
|
90%
|
16
|
|
80%
|
17
|
|
70%
|
18
|
|
60%
|
19
|
Threshold
|
50%
|
20
|
|
0%
|
21
|
|
0%
|
22
|
|
0%
|
23
|
|
0%
|
24
|
|
0%
|
25
|
|
0%
|
26
|
|
0%
|
27
|
|
0%
|
28
|
|
0%
|
By:
|
|
|
Chairman, President & CEO
|
(i)
|
the date any one Person, or more than one Person acting as a group (as the term “group” is used in Treasury Regulations section 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Company that, together with stock previously held by the acquirer, constitutes more than fifty (50%) percent of the total fair market value or total voting power of Company stock. If any one Person, or more than one Person acting as a group, is considered to own more than fifty (50%) percent of the total fair market value or total voting power of Company stock, the acquisition of additional stock by the same Person or Persons acting as a group does not cause a Change in Control. An increase in the percentage of stock owned by any one Person, or Persons acting as a group, as a result of a transaction in which Company acquires its stock in exchange for property, is treated as an acquisition of stock;
|
(ii)
|
the date any one Person, or more than one Person acting as a group (as the term “group” is used in Treasury Regulations section 1.409A-3(i)(5)(v)(B)), acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by that Person or Persons) ownership of Company stock possessing at least thirty (30%) percent of the total voting power of Company stock;
|
(iii)
|
the date a majority of the members of the Company’s board of directors is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the board of directors prior to the date of appointment or election; or
|
(iv)
|
the date any one Person, or more than one Person acting as a group (as the term “group” is used in Treasury Regulations section 1.409A-3(i)(5)(v)(B)), acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by that Person or Persons) assets from the Company that have a total gross fair market value equal to at least forty (40%) percent of the total gross fair market value of all the Company’s assets immediately prior to the acquisition or acquisitions. For this purpose, “gross fair market value” means the value of the corporation’s assets, or the value of the assets being disposed of, without regard to any liabilities associated with these assets.
|
i.
|
unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months;
|
ii.
|
by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under the Employer’s accident and health plan;
|
iii.
|
determined to be totally disabled by the Social Security Administration; or
|
iv.
|
disabled pursuant to an Employer-sponsored disability insurance arrangement provided that the definition of disability applied under such disability insurance program complies with the foregoing definition of Disability.
|
Board Retainers
(1) (2)
Stock
Cash
|
$65,000
$50,000
|
Committee Cash Retainers
(1) (2)
Audit
Executive Compensation
Corporate Governance & Nominating
|
$9,000
$7,500
$7,500
|
Chair Cash Retainers
(1) (2)
Audit
Executive Compensation
Corporate Governance & Nominating
|
$10,000
$7,500
$5,000
|
Lead Director
(1) (2) (3)
Board Stock Retainer
Board Cash Retainer
Lead Director Cash Retainer
|
$65,000
$50,000
$25,000
|
Board Chairman
(1) (2) (3)
Board Stock Retainer
Board Cash Retainer
|
$90,000
$85,000
|
(1)
|
Cash and stock retainers may be deferred under the Director Compensation Deferral Plan II.
|
(2)
|
Cash retainers may be elected to be received in ALLETE stock.
|
(3)
|
Lead Director and Board Chairman are not eligible for other committee or chair retainers.
|
Year Ended December 31,
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||
Millions
|
|
|
|
|
|
|||||||||||
Earnings are defined:
|
|
|
|
|
|
|||||||||||
|
Pretax Income Before Non-Controlling Interest
|
|
$133.3
|
|
|
$135.0
|
|
|
$129.2
|
|
|
$119.1
|
|
|
$91.5
|
|
|
Add: Fixed Charges
|
56.7
|
|
51.2
|
|
47.6
|
|
43.4
|
|
38.3
|
|
|||||
|
Undistributed Income from Less than 50 percent Owned Equity Investment
|
4.1
|
|
3.8
|
|
3.8
|
|
3.4
|
|
3.7
|
|
|||||
|
Earnings as defined:
|
|
$185.9
|
|
|
$182.4
|
|
|
$173.0
|
|
|
$159.1
|
|
|
$126.1
|
|
|
|
|
|
|
|
|
||||||||||
Fixed Charges:
|
|
|
|
|
|
|||||||||||
|
Interest on Long-Term Debt
|
|
$50.9
|
|
|
$47.0
|
|
|
$43.1
|
|
|
$39.7
|
|
|
$34.2
|
|
|
Other Interest Charges
|
1.2
|
|
0.4
|
|
1.6
|
|
1.0
|
|
1.6
|
|
|||||
|
Interest Component of All Rentals
(a)
|
4.6
|
|
3.8
|
|
2.9
|
|
2.7
|
|
2.5
|
|
|||||
|
Total Fixed Charges
|
|
$56.7
|
|
|
$51.2
|
|
|
$47.6
|
|
|
$43.4
|
|
|
$38.3
|
|
Ratio of Earnings to Fixed Charges
|
3.28
|
|
3.56
|
|
3.63
|
|
3.67
|
|
3.29
|
|
(a)
|
Represents interest portion of rents estimated at 33 1/3 percent.
|
Name of Organization
|
State or Country
|
ALLETE, Inc.
(d.b.a. ALLETE; Minnesota Power; Minnesota Power, Inc.;
|
Minnesota
|
Minnesota Power & Light Company; MPEX; MPEX A Division of Minnesota Power)
|
|
ALLETE Automotive Services, LLC
|
Minnesota
|
ALLETE Capital II
|
Delaware
|
ALLETE Capital III
|
Delaware
|
ALLETE Properties, LLC
(d.b.a. ALLETE Properties)
|
Minnesota
|
ALLETE Commercial, LLC
|
Florida
|
Cape Coral Holdings, Inc.
|
Florida
|
Lake Swamp, LLC
|
Florida
|
Lehigh Acquisition Corporation
|
Delaware
|
Florida Landmark Communities, LLC
|
Florida
|
Lehigh Corporation
|
Florida
|
Mardem, LLC
|
Florida
|
Palm Coast Holdings, Inc.
|
Florida
|
Port Orange Holdings, LLC
|
Florida
|
Interlachen Lakes Estates, LLC
|
Florida
|
Palm Coast Land, LLC
|
Florida
|
Tomoka Holdings, LLC
|
Florida
|
ALLETE Water Services, Inc.
|
Minnesota
|
Florida Water Services Corporation
|
Florida
|
Energy Replacement Property, LLC
|
Minnesota
|
Energy Land, Incorporated
|
Wisconsin
|
Lakeview Financial Corporation I
|
Minnesota
|
Lakeview Financial Corporation II
|
Minnesota
|
Logistics Coal, LLC
|
Minnesota
|
Minnesota Power Enterprises, Inc.
|
Minnesota
|
ALLETE Clean Energy, Inc.
|
Minnesota
|
ACE Wind LLC
|
Delaware
|
ACE West Holdings, LLC
|
Delaware
|
ACE O&M, LLC
|
Delaware
|
ALLETE Renewable Resources, Inc.
|
North Dakota
|
BNI Coal, Ltd.
|
North Dakota
|
MP Affiliate Resources, Inc.
|
Minnesota
|
Rainy River Energy Corporation
|
Minnesota
|
Rainy River Energy Corporation - Wisconsin
|
Wisconsin
|
Upper Minnesota Properties, Inc.
|
Minnesota
|
Upper Minnesota Properties - Development, Inc.
|
Minnesota
|
Upper Minnesota Properties - Irving, Inc.
|
Minnesota
|
Upper Minnesota Properties - Meadowlands, Inc.
|
Minnesota
|
MP Investments, Inc.
|
Delaware
|
RendField Land Company, Inc.
|
Minnesota
|
Superior Water, Light and Power Company
|
Wisconsin
|
1.
|
I have reviewed this annual report on Form 10-K for the fiscal year ended
December 31, 2013
, of ALLETE, Inc.;
|
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:
|
February 14, 2014
|
/s/ Alan R. Hodnik
|
|
|
Alan R. Hodnik
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K for the fiscal year ended
December 31, 2013
, of ALLETE, Inc.;
|
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:
|
February 14, 2014
|
/s/ Mark A. Schober
|
|
|
Mark A. Schober
|
|
|
Senior Vice President and Chief Financial Officer
|
1.
|
The Annual Report on Form 10-K of ALLETE for the fiscal year ended
December 31, 2013
, (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:
|
February 14, 2014
|
/s/ Alan R. Hodnik
|
|
|
Alan R. Hodnik
|
|
|
President and Chief Executive Officer
|
Date:
|
February 14, 2014
|
/s/ Mark A. Schober
|
|
|
Mark A. Schober
|
|
|
Senior Vice President and Chief Financial Officer
|
Mine or Operating Name/MSHA Identification Number
|
Section 104 S&S Citations (#)
|
Section 104(b) Orders (#)
|
Section 104(d) Citations and Orders (#)
|
Section 110(b)(2) Violations (#)
|
Section 107(a) Orders (#)
|
Total Dollar Value of MSHA Assessments Proposed ($)
|
Total Number of Mining- Related Fatalities (#)
|
Received Notice of Pattern of Violation Under Section 104(e) (yes/no)
|
Received Notice of Potential to Have Pattern Under Section 104(e) (yes/no)
|
Legal Actions Pending as of Last Day of Period (#)
|
Legal Actions Initiated During Period (#)
|
Legal Actions Resolved During Period (#)
|
|
Center Mine / 3200218
|
4
|
—
|
—
|
—
|
—
|
$7,977
|
—
|
No
|
No
|
—
|
—
|
—
|
|
|
Exhibit 99
|
For Release:
|
February 14, 2014
|
|
Investor Contact:
|
Tim Thorp
|
|
|
218-723-3953
|
|
|
tthorp@allete.com
|
|
|
|
|
NEWS
|
|
|
|
Quarter Ended
|
Year to Date
|
||
|
2013
|
2012
|
2013
|
2012
|
|
|
|
|
|
Operating Revenue
|
$268.0
|
$256.0
|
$1,018.4
|
$961.2
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
Fuel and Purchased Power
|
89.1
|
80.0
|
334.8
|
308.7
|
Operating and Maintenance
|
101.7
|
102.3
|
412.9
|
397.1
|
Depreciation
|
30.3
|
25.8
|
116.6
|
100.2
|
Total Operating Expenses
|
221.1
|
208.1
|
864.3
|
806.0
|
|
|
|
|
|
Operating Income
|
46.9
|
47.9
|
154.1
|
155.2
|
|
|
|
|
|
Other Income (Expense)
|
|
|
|
|
Interest Expense
|
(12.5)
|
(12.1)
|
(50.3)
|
(45.5)
|
Equity Earnings in ATC
|
5.2
|
5.1
|
20.3
|
19.4
|
Other
|
1.8
|
2.6
|
9.3
|
6.0
|
Total Other Expense
|
(5.5)
|
(4.4)
|
(20.7)
|
(20.1)
|
|
|
|
|
|
Income Before Income Taxes
|
41.4
|
43.5
|
133.4
|
135.1
|
Income Tax Expense
|
8.4
|
14.6
|
28.7
|
38.0
|
Net Income
|
$33.0
|
$28.9
|
$104.7
|
$97.1
|
|
|
|
|
|
Average Shares of Common Stock
|
|
|
|
|
Basic
|
40.6
|
38.5
|
39.7
|
37.6
|
Diluted
|
40.7
|
38.6
|
39.8
|
37.6
|
|
|
|
|
|
Basic Earnings Per Share of Common Stock
|
$0.82
|
$0.76
|
$2.64
|
$2.59
|
Diluted Earnings Per Share of Common Stock
|
$0.82
|
$0.75
|
$2.63
|
$2.58
|
|
|
|
|
|
Dividends Per Share of Common Stock
|
$0.475
|
$0.46
|
$1.90
|
$1.84
|
|
Dec. 31,
|
Dec. 31,
|
|
|
Dec. 31,
|
Dec. 31,
|
|
2013
|
2012
|
|
|
2013
|
2012
|
Assets
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
Cash and Cash Equivalents
|
$97.3
|
$80.8
|
|
Current Liabilities
|
$230.2
|
$283.4
|
Other Current Assets
|
209.7
|
192.4
|
|
Long-Term Debt
|
1,083.0
|
933.6
|
Property, Plant and Equipment - Net
|
2,576.5
|
2,347.6
|
|
Deferred Income Taxes
|
479.1
|
423.8
|
Regulatory Assets
|
263.8
|
340.3
|
|
Regulatory Liabilities
|
81.0
|
60.1
|
Investment in ATC
|
114.6
|
107.3
|
|
Defined Benefit Pension & Other Postretirement Benefit Plans
|
133.4
|
228.2
|
Other Investments
|
146.3
|
143.5
|
|
Other Non-Current Liabilities
|
127.2
|
123.3
|
Other Non-Current Assets
|
68.6
|
41.5
|
|
Shareholders' Equity
|
1,342.9
|
1,201.0
|
Total Assets
|
$3,476.8
|
$3,253.4
|
|
Total Liabilities and Shareholders' Equity
|
$3,476.8
|
$3,253.4
|
|
Quarter Ended
|
Year to Date
|
||
ALLETE, Inc.
|
December 31,
|
December 31,
|
||
Income (Loss)
|
2013
|
2012
|
2013
|
2012
|
Millions
|
|
|
|
|
Regulated Operations
|
$31.9
|
$28.0
|
$104.9
|
$96.1
|
Investments and Other
|
1.1
|
0.9
|
(0.2)
|
1.0
|
Net Income Attributable to ALLETE
|
$33.0
|
$28.9
|
$104.7
|
$97.1
|
Diluted Earnings Per Share
|
$0.82
|
$0.75
|
$2.63
|
$2.58
|
Kilowatt-hours Sold
|
|
|
|
|
Millions
|
|
|
|
|
Regulated Utility
|
|
|
|
|
Retail and Municipals
|
|
|
|
|
Residential
|
313
|
303
|
1,177
|
1,132
|
Commercial
|
364
|
352
|
1,455
|
1,436
|
Municipals
|
258
|
262
|
999
|
1,020
|
Industrial
|
1,830
|
1,877
|
7,338
|
7,502
|
Total Retail and Municipal
|
2,765
|
2,794
|
10,969
|
11,090
|
Other Power Suppliers
|
530
|
512
|
2,278
|
1,999
|
Total Regulated Utility
|
3,295
|
3,306
|
13,247
|
13,089
|
Non-regulated Energy Operations
|
23
|
33
|
113
|
113
|
Total Kilowatt-hours Sold
|
3,318
|
3,339
|
13,360
|
13,202
|
Regulated Utility Revenue
|
|
|
|
|
||||||||
Millions
|
|
|
|
|
||||||||
Regulated Operations
|
|
|
|
|
||||||||
Retail and Municipals
|
|
|
|
|
||||||||
Residential
|
|
$29.2
|
|
|
$28.1
|
|
|
$110.0
|
|
|
$104.5
|
|
Commercial
|
30.3
|
|
29.0
|
|
120.4
|
|
116.2
|
|
||||
Municipals
|
16.4
|
|
15.6
|
|
66.4
|
|
60.6
|
|
||||
Industrial
|
101.6
|
|
100.1
|
|
400.2
|
|
393.4
|
|
||||
Total Retail and Municipals
|
177.5
|
|
172.8
|
|
697.0
|
|
674.7
|
|
||||
Other Power Suppliers
|
23.7
|
|
18.6
|
|
89.5
|
|
73.1
|
|
||||
Other
|
40.7
|
|
41.0
|
|
139.0
|
|
126.6
|
|
||||
Total Regulated Utility Revenue
|
|
$241.9
|
|
|
$232.4
|
|
|
$925.5
|
|
|
$874.4
|
|