(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, 2015
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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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Part III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Part IV
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Item 15.
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Abbreviation or Acronym
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Term
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AFUDC
|
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
|
ALLETE, Inc.
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ALLETE Clean Energy
|
ALLETE Clean Energy, Inc. and its subsidiaries
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ALLETE Properties
|
ALLETE Properties, LLC and its subsidiaries
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ALLETE Transmission Holdings
|
ALLETE Transmission Holdings (formerly Rainy River Energy Corporation - Wisconsin)
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ArcelorMittal
|
ArcelorMittal USA, Inc.
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ATC
|
American Transmission Company LLC
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Basin
|
Basin Electric Power Cooperative
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Bison
|
Bison Wind Energy Center
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BNI Energy
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BNI Coal, Ltd. d/b/a BNI Energy
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Boswell
|
Boswell Energy Center
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CO
2
|
Carbon Dioxide
|
Company
|
ALLETE, Inc. and its subsidiaries
|
CSAPR
|
Cross-State Air Pollution Rule
|
DC
|
Direct Current
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EIS
|
Environmental Impact Statement
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Enbridge
|
Enbridge, Inc.
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EPA
|
Environmental Protection Agency
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ESOP
|
Employee Stock Ownership Plan
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FASB
|
Financial Accounting Standards Board
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FERC
|
Federal Energy Regulatory Commission
|
Form 8-K
|
ALLETE Current Report on Form 8-K
|
Form 10-K
|
ALLETE Annual Report on Form 10-K
|
Form 10-Q
|
ALLETE Quarterly Report on Form 10-Q
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GAAP
|
Accounting Principles Generally Accepted in the United States
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GHG
|
Greenhouse Gases
|
GNTL
|
Great Northern Transmission Line
|
IBEW
|
International Brotherhood of Electrical Workers
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Invest Direct
|
ALLETE’s Direct Stock Purchase and Dividend Reinvestment Plan
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IRP
|
Integrated Resource Plan
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Item ___
|
Item ___ of this Form 10-K
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kV
|
Kilovolt(s)
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kWh
|
Kilowatt-hour
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Laskin
|
Laskin Energy Center
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LIBOR
|
London Interbank Offered Rate
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MACT
|
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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Abbreviation or Acronym
|
Term
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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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Montana-Dakota Utilities
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Montana-Dakota Utilities Co., a division of MDU Resources Group, 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 and 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 Corp.
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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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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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Thomson
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Thomson 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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TransAlta
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TransAlta Energy Marketing (U.S.) Inc.
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U.S.
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United States of America
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U.S. Water Services
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U.S. Water Services Holding Company and its subsidiaries
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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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changes in and compliance with laws and regulations;
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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 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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changes in operating expenses and capital expenditures and our ability to raise revenues from our customers in regulated rates or sales price increases at our Energy Infrastructure and Related Services businesses;
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•
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the impacts of commodity prices on ALLETE and our customers;
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•
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our ability to attract 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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population growth rates and demographic patterns;
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•
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wholesale power market conditions;
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•
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federal and state regulatory and legislative actions that impact regulated utility economics, including 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 and utility infrastructure, recovery of purchased power, capital investments and other expenses, including present or prospective environmental matters;
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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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the impacts on our Regulated Operations segment of climate change and future regulation to restrict the emissions of greenhouse gases;
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•
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effects of increased deployment of distributed low-carbon electricity generation resources;
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•
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the impacts of laws and regulations related to renewable and distributed generation;
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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 current and potential industrial and municipal customers’ ability to execute announced expansion plans;
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•
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real estate market conditions where our legacy Florida real estate investment is located may not improve;
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•
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the success of efforts to realize value from, invest in, and develop new opportunities in, our Energy Infrastructure and Related Services businesses; and
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•
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factors affecting Energy Infrastructure and Related Services businesses, including fluctuations in the volume of customer orders, unanticipated cost increases, changes in legislation and regulations impacting the industries in which the customers served operate, the effects of weather, credit worthiness of customers, ability to obtain materials required to perform services, and changing market conditions.
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Year Ended December 31
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2015
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2014
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2013
|
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||||||
Consolidated Operating Revenue – Millions
(a)
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$1,486.4
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$1,136.8
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$1,018.4
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||||||
Percentage of Consolidated Operating Revenue
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||||||
Regulated Operations
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67
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%
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88
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%
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91
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%
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ALLETE Clean Energy
(a)(b)
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18
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%
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3
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%
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—
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U.S. Water Services
(c)
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8
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%
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—
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—
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Corporate and Other
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7
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%
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9
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%
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9
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%
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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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(a)
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Includes the construction and sale of a wind energy facility by ALLETE Clean Energy to Montana-Dakota Utilities for $197.7 million in 2015. (See Note 7. Acquisitions.)
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(b)
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Reflects operations acquired in conjunction with the ALLETE Clean Energy wind energy facilities acquisitions. (See Note 7. Acquisitions.)
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(c)
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U.S. Water Services was acquired on February 10, 2015. (See Note 7. Acquisitions.)
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Industrial Customer Kilowatt-hours Sold
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Year Ended December 31
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2015
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|
%
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2014
|
|
%
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2013
|
|
%
|
Millions
|
|
|
|
|
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Taconite/Iron Concentrate
|
4,000
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60
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4,880
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65
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4,851
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66
|
Paper, Pulp and Secondary Wood Products
|
1,456
|
|
22
|
1,499
|
|
20
|
1,505
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|
21
|
Pipelines and Other Industrial
|
1,179
|
|
18
|
1,108
|
|
15
|
982
|
|
13
|
Total Industrial Customer Kilowatt-hours Sold
|
6,635
|
|
100
|
7,487
|
|
100
|
7,338
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|
100
|
Minnesota Power Taconite Customer Production
|
||
Year
|
|
Tons (Millions)
|
2015*
|
|
30
|
2014
|
|
39
|
2013
|
|
37
|
2012
|
|
39
|
2011
|
|
39
|
2010
|
|
35
|
2009
|
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17
|
2008
|
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39
|
2007
|
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38
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2006
|
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39
|
Source: Minnesota Department of Revenue 2015 Mining Tax Guide for years 2006 - 2014.
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* Preliminary data from the Minnesota Department of Revenue.
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Customer
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Industry
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Location
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Ownership
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Earliest
Termination Date
|
ArcelorMittal USA, Inc. – Minorca Mine
(a)
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Taconite
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Virginia, MN
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ArcelorMittal S.A.
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December 31, 2025
|
Hibbing Taconite Co.
(b)
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Taconite
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Hibbing, MN
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62.3% ArcelorMittal S.A.
23.0% Cliffs Natural Resources Inc.
14.7% USS Corporation
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January 31, 2020
|
United Taconite LLC
(b)
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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, 2020
|
USS Corporation
(USS – Minnesota Ore)
(b)(c)
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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, 2020
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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
|
UPM, Blandin Paper Mill
(b)
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Paper
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Grand Rapids, MN
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UPM-Kymmene Corporation
|
January 31, 2020
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NewPage Corporation
(d)
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Paper and Pulp
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Duluth, MN
|
Verso Corporation
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December 31, 2022
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Sappi Cloquet LLC
(b)
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Paper and Pulp
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Cloquet, MN
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Sappi Limited
|
January 31, 2020
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Magnetation, LLC
(e)
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Iron Concentrate
|
Coleraine, MN and Bovey, MN
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50.1% Magnetation, Inc.
49.9% AK Steel Corporation
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December 31, 2025
|
(a)
|
In November 2015, Minnesota Power and ArcelorMittal USA, Inc. signed a new 10-year electric service agreement through December 31, 2025, which was approved by the MPUC in an order dated February 2, 2016.
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(b)
|
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, 2020.
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(c)
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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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(d)
|
On January 7, 2015, Verso Corporation acquired NewPage Corporation. This acquisition does not impact Minnesota Power’s electric service agreement with NewPage Corporation. On January 26, 2016, Verso Corporation announced that it had filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code. (See Item 7. Management’s Discussion and Analysis – Outlook – Industrial Customers and Prospective Additional Load.)
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(e)
|
On July 24, 2015, Minnesota Power filed a petition with the MPUC for approval of a new electric service agreement (Agreement) for service to both Magnetation’s Plant 2 and Plant 4 facilities, with a term through at least December 31, 2025. This Agreement was approved by the MPUC in an order dated February 2, 2016, and is subject to bankruptcy court approval. (See Item 7. Management’s Discussion and Analysis – Outlook – Industrial Customers and Prospective Additional Load.)
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Year Ended
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Unit
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Year
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Net
|
|
December 31, 2015
|
|||
Regulated Utility Power Supply
|
No.
|
Installed
|
Capability
|
|
Generation and Purchases
|
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MW
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MWh
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%
|
||
Coal-Fired
|
|
|
|
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Boswell Energy Center
|
1
|
1958
|
67
|
|
|
|
|
|
in Cohasset, MN
|
2
|
1960
|
67
|
|
|
|
|
|
|
3
|
1973
|
364
|
|
|
|
|
|
|
4
|
1980
|
468
|
|
(a)
|
|
|
|
|
|
|
966
|
|
|
6,265,756
|
|
42.8
|
Laskin Energy Center in Hoyt Lakes, MN
|
1 & 2
|
1953
|
—
|
|
(b)
|
86,046
|
|
0.6
|
Taconite Harbor Energy Center
|
1
|
1957
|
77
|
|
|
|
|
|
in Schroeder, MN
|
2
|
1957
|
77
|
|
|
|
|
|
|
3
|
1967
|
—
|
|
(b)
|
|
|
|
|
|
|
154
|
|
|
1,051,950
|
|
7.2
|
Total Coal-Fired
|
|
|
1,120
|
|
|
7,403,752
|
|
50.6
|
Biomass/Coal/Natural Gas
|
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|
|
|
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|
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Hibbard Renewable Energy Center in Duluth, MN
|
3 & 4
|
1949, 1951
|
63
|
|
|
973
|
|
—
|
Cloquet Energy Center in Cloquet, MN
|
5
|
2001
|
22
|
|
|
115,987
|
|
0.8
|
Laskin Energy Center in Hoyt Lakes, MN
(b)
|
1 & 2
|
1953
|
95
|
|
|
3,282
|
|
—
|
Total Biomass/Coal/Natural Gas
|
|
|
180
|
|
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120,242
|
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0.8
|
Hydro
(c)
|
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Group consisting of ten stations in MN
|
Multiple
|
Multiple
|
120
|
|
|
424,119
|
|
2.9
|
Wind
(d)
|
|
|
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Taconite Ridge Energy Center in Mt. Iron, MN
|
Multiple
|
2008
|
25
|
|
|
67,415
|
|
0.5
|
Bison Wind Energy Center in Oliver and Morton Counties, ND
|
Multiple
|
2010-2014
|
497
|
|
|
1,539,600
|
|
10.5
|
Total Wind
|
|
|
522
|
|
|
1,607,015
|
|
11.0
|
Total Company Generation
|
|
|
1,942
|
|
|
9,555,128
|
|
65.3
|
|
|
|
|
|
|
|
||
Long-Term Purchased Power
|
|
|
|
|
|
|
||
Lignite Coal - Square Butte near Center, ND
(e)
|
|
|
|
|
1,660,101
|
|
11.4
|
|
Wind - Oliver County, ND
|
|
|
|
|
334,836
|
|
2.3
|
|
Hydro - Manitoba Hydro in Manitoba, Canada
|
|
|
|
|
310,572
|
|
2.1
|
|
Total Long-Term Purchased Power
|
|
|
|
|
|
2,305,509
|
|
15.8
|
Other Purchased Power
(f)
|
|
|
|
|
2,771,470
|
|
18.9
|
|
Total Purchased Power
|
|
|
|
|
|
5,076,979
|
|
34.7
|
Total
|
|
|
1,942
|
|
|
14,632,107
|
|
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)
|
Laskin Energy Center was converted from coal to natural gas in June 2015 and Taconite Harbor Unit 3 was retired in May 2015 as outlined in Minnesota Power’s 2013 IRP. Future plans for Taconite Harbor are included in Minnesota Power’s EnergyForward plan which includes the economic idling of Taconite Harbor Units 1 and 2 in the fall of 2016 and the ceasing of coal-fired operations at Taconite Harbor in 2020. (See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Outlook – EnergyForward.)
|
(c)
|
Hydro consists of ten stations with 34 generating units and a total nameplate capacity of 120 MW. Thomson returned to full production in the fourth quarter of 2015.
|
(d)
|
Taconite Ridge consists of 10 wind turbine generator units with a total nameplate capacity of 25 MW. The Bison Wind Energy Center consists of 165 wind turbine generator units, with a total nameplate capacity of 497 MW.
|
(e)
|
Minnesota Power has a power sales agreement with Minnkota Power, which commenced June 1, 2014. Under the power sales agreement, Minnesota Power is selling a portion of its entitlement from Square Butte to Minnkota Power. (See Electric Sales / Customers.)
|
(f)
|
Includes short-term market purchases in the MISO market and from Other Power Suppliers.
|
Wind Energy Facility
|
Location
|
Capacity MW
|
PPA MW
|
PPA Expiration
|
Armenia Mountain
|
Pennsylvania
|
100.5
|
100%
|
2024
|
Chanarambie/Viking
|
Minnesota
|
97.5
|
|
|
PPA 1
|
|
|
12%
|
2018
|
PPA 2
|
|
|
88%
|
2023
|
Condon
|
Oregon
|
50
|
100%
|
2022
|
Lake Benton
|
Minnesota
|
104
|
100%
|
2028
|
Storm Lake I
|
Iowa
|
108
|
100%
|
2019
|
Storm Lake II
|
Iowa
|
77
|
|
|
PPA 1
|
|
|
90%
|
2019
|
PPA 2
|
|
|
10%
|
2032
|
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
|
27
|
Hydro
|
4 & 5
|
1917, 1948
|
2000
|
2
|
(a)
|
The net generation is primarily dedicated to the needs of one customer.
|
(b)
|
Rapids Energy Center’s fuel supply is supplemented by coal.
|
•
|
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.
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
|||||
Millions
|
|
|
|
|
|
||||||||||
Operating Revenue
(a)
|
|
$1,486.4
|
|
|
$1,136.8
|
|
|
$1,018.4
|
|
|
$961.2
|
|
|
$928.2
|
|
Operating Expenses
|
|
$1,275.7
|
|
|
$948.0
|
|
|
$864.3
|
|
|
$806.0
|
|
|
$778.2
|
|
Net Income
|
|
$141.5
|
|
|
$125.5
|
|
|
$104.7
|
|
|
$97.1
|
|
|
$93.6
|
|
Less: Non-Controlling Interest in Subsidiaries
(b)
|
0.4
|
|
0.7
|
|
—
|
|
—
|
|
(0.2
|
)
|
|||||
Net Income Attributable to ALLETE
|
|
$141.1
|
|
|
$124.8
|
|
|
$104.7
|
|
|
$97.1
|
|
|
$93.8
|
|
Common Stock Dividends
|
97.9
|
|
83.8
|
|
75.2
|
|
69.1
|
|
62.1
|
|
|||||
Earnings Retained in Business
|
|
$43.2
|
|
|
$41.0
|
|
|
$29.5
|
|
|
$28.0
|
|
|
$31.7
|
|
Shares Outstanding – Millions
|
|
|
|
|
|
||||||||||
Year-End
|
49.1
|
|
45.9
|
|
41.4
|
|
39.4
|
|
37.5
|
|
|||||
Average
(c)
|
|
|
|
|
|
||||||||||
Basic
|
48.3
|
|
42.9
|
|
39.7
|
|
37.6
|
|
35.3
|
|
|||||
Diluted
|
48.4
|
|
43.1
|
|
39.8
|
|
37.6
|
|
35.4
|
|
|||||
Diluted Earnings Per Share
|
|
$2.92
|
|
|
$2.90
|
|
|
$2.63
|
|
|
$2.58
|
|
|
$2.65
|
|
Total Assets
|
|
$4,907.1
|
|
|
$4,360.8
|
|
|
$3,476.8
|
|
|
$3,253.4
|
|
|
$2,876.0
|
|
Long-Term Debt
|
|
$1,568.7
|
|
|
$1,272.8
|
|
|
$1,083.0
|
|
|
$933.6
|
|
|
$857.9
|
|
Return on Common Equity
|
8.0
|
%
|
8.6
|
%
|
8.3
|
%
|
8.6
|
%
|
9.1
|
%
|
|||||
Common Equity Ratio
|
53
|
%
|
54
|
%
|
55
|
%
|
54
|
%
|
56
|
%
|
|||||
Dividends Declared per Common Share
|
|
$2.02
|
|
|
$1.96
|
|
|
$1.90
|
|
|
$1.84
|
|
|
$1.78
|
|
Dividend Payout Ratio
|
69
|
%
|
68
|
%
|
72
|
%
|
71
|
%
|
67
|
%
|
|||||
Book Value Per Share at Year-End
|
|
$37.18
|
|
|
$35.04
|
|
|
$32.43
|
|
|
$30.50
|
|
|
$28.77
|
|
Capital Expenditures by Segment
|
|
|
|
|
|
||||||||||
Regulated Operations
|
|
$224.4
|
|
|
$583.5
|
|
|
$326.3
|
|
|
$418.2
|
|
|
$228.0
|
|
ALLETE Clean Energy
|
8.6
|
|
4.2
|
|
—
|
|
—
|
|
—
|
|
|||||
U.S. Water Services
|
2.9
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Corporate and Other
|
15.9
|
|
16.6
|
|
13.2
|
|
14.0
|
|
18.8
|
|
|||||
Total Capital Expenditures
|
|
$251.8
|
|
|
$604.3
|
|
|
$339.5
|
|
|
$432.2
|
|
|
$246.8
|
|
(a)
|
In 2015, operating revenue included the construction and sale of a wind energy facility from ALLETE Clean Energy to Montana-Dakota Utilities for $197.7 million. (See Note 7. Acquisitions.)
|
(b)
|
In 2014 and 2015, non-controlling interest related to the January 2014 acquisition made by ALLETE Clean Energy. (See Note 7. Acquisitions.) In 2011, non-controlling interest related to ALLETE Properties was purchased during that year.
|
(c)
|
Excludes unallocated ESOP shares in each of the years 2011 through 2014. (See Note 13. Common Stock and Earnings Per Share.)
|
Year Ended December 31
|
2015
|
|
2014
|
|
||
Millions
|
|
|
||||
Operating Revenue
|
|
$991.2
|
|
|
$1,003.5
|
|
Fuel and Purchased Power
|
328.1
|
|
356.1
|
|
||
Transmission Services
|
54.1
|
|
45.6
|
|
||
Cost of Sales
|
7.9
|
|
17.3
|
|
||
Operating and Maintenance
|
229.6
|
|
240.8
|
|
||
Depreciation and Amortization
|
135.1
|
|
118.0
|
|
||
Taxes Other than Income Taxes
|
46.2
|
|
41.9
|
|
||
Operating Income
|
190.2
|
|
183.8
|
|
||
Interest Expense
|
(53.9
|
)
|
(49.2
|
)
|
||
Equity Earnings in ATC
|
16.3
|
|
19.6
|
|
||
Other Income
|
3.4
|
|
7.8
|
|
||
Income Before Income Taxes
|
156.0
|
|
162.0
|
|
||
Income Tax Expense
|
24.4
|
|
39.0
|
|
||
Net Income Attributable to ALLETE
|
$131.6
|
|
$123.0
|
|
Year Ended December 31
|
2015
|
|
2014
|
|
||
Millions
|
|
|
||||
Operating Revenue
|
|
$262.1
|
|
|
$33.2
|
|
Net Income Attributable to ALLETE
|
$29.9
|
|
$3.3
|
|
|
Year Ended December 31,
|
|||||||||
|
2015
|
2014
|
||||||||
Production and Operating Revenue
|
kWh
|
Revenue
|
kWh
|
Revenue
|
||||||
Millions
|
|
|
|
|
||||||
Wind Energy Facility
|
|
|
|
|
||||||
Lake Benton
|
265.1
|
|
|
$13.5
|
|
264.7
|
|
|
$13.4
|
|
Storm Lake II
|
186.4
|
|
11.7
|
|
169.4
|
|
11.1
|
|
||
Condon
|
84.1
|
|
7.8
|
|
91.5
|
|
8.2
|
|
||
Storm Lake I
|
230.7
|
|
12.1
|
|
9.0
|
|
0.5
|
|
||
Chanarambie/Viking
|
199.1
|
|
9.8
|
|
—
|
|
—
|
|
||
Armenia Mountain
|
111.6
|
|
9.5
|
|
—
|
|
—
|
|
||
Construction Profit
|
—
|
|
197.7
|
|
—
|
|
—
|
|
||
Total
|
1,077.0
|
|
$262.1
|
534.6
|
|
|
$33.2
|
|
For the period February 10, 2015 through December 31
|
2015
|
|
|
Millions
|
|
||
Operating Revenue
|
|
$119.8
|
|
Net Income Attributable to ALLETE
|
$0.9
|
Year ended December 31
|
2014
|
|
2013
|
|
||
Millions
|
|
|
||||
Operating Revenue
|
|
$1,003.5
|
|
|
$925.5
|
|
Fuel and Purchased Power
|
356.1
|
|
334.8
|
|
||
Transmission Services
|
45.6
|
|
32.3
|
|
||
Cost of Sales
|
17.3
|
|
12.6
|
|
||
Operating and Maintenance
|
240.8
|
|
239.1
|
|
||
Depreciation and Amortization
|
118.0
|
|
110.2
|
|
||
Taxes Other than Income Taxes
|
41.9
|
|
38.4
|
|
||
Operating Income
|
183.8
|
|
158.1
|
|
||
Interest Expense
|
(49.2
|
)
|
(44.4
|
)
|
||
Equity Earnings in ATC
|
19.6
|
|
20.3
|
|
||
Other Income
|
7.8
|
|
4.7
|
|
||
Income Before Income Taxes
|
162.0
|
|
138.7
|
|
||
Income Tax Expense
|
39.0
|
|
35.1
|
|
||
Net Income Attributable to ALLETE
|
$123.0
|
$103.6
|
Year ended December 31,
|
2014
|
|
2013
|
|
|
Millions
|
|
|
|||
Operating Revenue
|
|
$33.2
|
|
—
|
|
Net Income (Loss) Attributable to ALLETE
|
$3.3
|
$(3.4)
|
|
‘
Year Ended
December 31, 2014
|
||||
Production and Operating Revenue
|
kWh
|
Revenue
|
|||
Millions
|
|
|
|||
Wind Energy Facility
|
|
|
|||
Lake Benton
|
264.7
|
|
|
$13.4
|
|
Storm Lake II
|
169.4
|
|
11.1
|
|
|
Condon
|
91.5
|
|
8.2
|
|
|
Storm Lake I
|
9.0
|
|
0.5
|
|
|
Total
|
534.6
|
|
|
$33.2
|
|
Minnesota Power Taconite Customer Production
|
||
Year
|
|
Tons (Millions)
|
2015*
|
|
30
|
2014
|
|
39
|
2013
|
|
37
|
2012
|
|
39
|
2011
|
|
39
|
2010
|
|
35
|
2009
|
|
17
|
2008
|
|
39
|
2007
|
|
38
|
2006
|
|
39
|
Source: Minnesota Department of Revenue 2015 Mining Tax Guide for years 2006 - 2014.
|
||
* Preliminary data from the Minnesota Department of Revenue.
|
•
|
Major wind investments in North Dakota. The Bison Wind Energy Center added 205 MW of capacity in the fourth quarter of 2014, bringing total capacity to 497 MW. (See
Renewable Energy.
)
|
•
|
The installation of emissions control technology at Boswell Unit 4 completed in December 2015 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 which was completed in June 2015.
|
•
|
Retirement of Taconite Harbor Unit 3, one of three coal-fired units at Taconite Harbor, which was retired in May 2015.
|
•
|
Economic idling of Taconite Harbor Units 1 and 2 in the fall of 2016 and the ceasing of coal-fired operations there in 2020.
|
•
|
Adding between 200 MW and 300 MW of cleaner and flexible natural gas-fired generation to Minnesota Power’s portfolio within the next decade.
|
•
|
Building both large and small scale solar generation.
|
•
|
Expanding the potential for additional energy efficiency savings.
|
Wind Energy Facility
|
Location
|
Capacity MW
|
PPA MW
|
PPA Expiration
|
Armenia Mountain
|
Pennsylvania
|
100.5
|
100%
|
2024
|
Chanarambie/Viking
|
Minnesota
|
97.5
|
|
|
PPA 1
|
|
|
12%
|
2018
|
PPA 2
|
|
|
88%
|
2023
|
Condon
|
Oregon
|
50
|
100%
|
2022
|
Lake Benton
|
Minnesota
|
104
|
100%
|
2028
|
Storm Lake I
|
Iowa
|
108
|
100%
|
2019
|
Storm Lake II
|
Iowa
|
77
|
|
|
PPA 1
|
|
|
90%
|
2019
|
PPA 2
|
|
|
10%
|
2032
|
Summary of Projects
|
|
|
|
Residential
|
|
Non-residential
|
|||
As of December 31, 2015
|
|
Acres
(a)
|
|
Units
(b)
|
|
Sq. Ft.
(b)
|
|||
Projects
|
|
|
|
|
|
|
|||
Town Center
|
|
958
|
|
|
2,359
|
|
|
2,236,700
|
|
Palm Coast Park
|
|
3,582
|
|
|
3,554
|
|
|
3,096,800
|
|
Ormond Crossings
|
|
2,883
|
|
|
2,950
|
|
|
3,215,000
|
|
Total Projects
|
|
7,423
|
|
|
8,863
|
|
|
8,548,500
|
|
Other
|
|
|
|
|
|
|
|||
Lake Swamp Wetland Mitigation Bank
|
|
3,050
|
|
|
(c)
|
|
|
(c)
|
|
Total of Projects
|
|
10,473
|
|
|
8,863
|
|
|
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)
|
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
|
2015
|
|
%
|
2014
|
|
%
|
2013
|
|
%
|
|||
Millions
|
|
|
|
|
|
|
||||||
ALLETE Equity
|
|
$1,820.2
|
|
53
|
|
$1,609.4
|
|
54
|
|
$1,342.9
|
|
55
|
Non-Controlling Interest
|
2.2
|
|
—
|
1.8
|
|
—
|
—
|
|
—
|
|||
Long-Term Debt (Including Current Maturities)
|
1,605.0
|
|
47
|
1,373.5
|
|
46
|
1,110.2
|
|
45
|
|||
Notes Payable
|
1.6
|
|
—
|
3.7
|
|
—
|
—
|
|
—
|
|||
|
|
$3,429.0
|
|
100
|
|
$2,988.4
|
|
100
|
|
$2,453.1
|
|
100
|
Year Ended December 31
|
2015
|
|
2014
|
|
2013
|
|
|||
Millions
|
|
|
|
||||||
Cash and Cash Equivalents at Beginning of Period
|
|
$145.8
|
|
|
$97.3
|
|
|
$80.8
|
|
Cash Flows from (used for)
|
|
|
|
||||||
Operating Activities
|
340.1
|
|
269.8
|
|
239.4
|
|
|||
Investing Activities
|
(618.8
|
)
|
(625.7
|
)
|
(336.6
|
)
|
|||
Financing Activities
|
229.9
|
|
404.4
|
|
113.7
|
|
|||
Change in Cash and Cash Equivalents
|
(48.8
|
)
|
48.5
|
|
16.5
|
|
|||
Cash and Cash Equivalents at End of Period
|
|
$97.0
|
|
|
$145.8
|
|
|
$97.3
|
|
|
Payments Due by Period
|
||||||||||||||
Contractual Obligations
(a)
|
|
Less than
|
1 to 3
|
4 to 5
|
After
|
||||||||||
As of December 31, 2015
|
Total
|
1 Year
|
Years
|
Years
|
5 Years
|
||||||||||
Millions
|
|
|
|
|
|
||||||||||
Long-Term Debt
|
|
$2,447.2
|
|
|
$100.8
|
|
|
$377.9
|
|
|
$266.0
|
|
|
$1,702.5
|
|
Pension
(b)
|
421.1
|
|
39.8
|
|
81.6
|
|
83.5
|
|
216.2
|
|
|||||
Other Postretirement Benefit Plans
(b)
|
92.1
|
|
8.3
|
|
17.4
|
|
18.4
|
|
48.0
|
|
|||||
Operating Lease Obligations
|
77.7
|
|
14.0
|
|
23.7
|
|
16.8
|
|
23.2
|
|
|||||
PPA Obligations
(c)
|
466.7
|
|
60.4
|
|
175.8
|
|
136.0
|
|
94.5
|
|
|||||
Other Purchase Obligations
|
114.7
|
|
57.0
|
|
55.9
|
|
1.8
|
|
—
|
|
|||||
Total Contractual Obligations
|
|
$3,619.5
|
|
|
$280.3
|
|
|
$732.3
|
|
|
$522.5
|
|
|
$2,084.4
|
|
(a)
|
Excludes $2.4 million of non-current unrecognized tax benefits due to uncertainty regarding the timing of future cash payments related to uncertain tax positions.
|
(b)
|
Represents the estimated future benefit payments for our defined benefit pension and other postretirement plans through 2025.
|
(c)
|
Excludes the agreement with Manitoba Hydro expiring in 2022, as this contract is for surplus energy only, and the agreements with Manitoba Hydro commencing in 2020, as our obligations under these contracts are 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 Minnesota Power only pays for energy as it is delivered. (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
|
First Mortgage Bonds
|
A
|
A1
|
Capital Expenditures
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Total
|
|
|||||||
Millions
|
|
|
|
|
|
|
|||||||||||||
Regulated Utility Operations
|
|
|
|
|
|
|
|||||||||||||
|
Base and Other
|
|
$120
|
|
|
$140
|
|
|
$175
|
|
|
$105
|
|
|
$100
|
|
|
$640
|
|
|
Cost Recovery
(a)
|
|
|
|
|
|
|
||||||||||||
|
Environmental
|
20
|
|
—
|
|
—
|
|
—
|
|
—
|
|
20
|
|
||||||
|
Renewable
|
—
|
|
5
|
|
—
|
|
—
|
|
—
|
|
5
|
|
||||||
|
Transmission
(b)
|
25
|
|
95
|
|
80
|
|
85
|
|
50
|
|
335
|
|
||||||
|
Total Cost Recovery
|
45
|
|
100
|
|
80
|
|
85
|
|
50
|
|
360
|
|
||||||
Regulated Utility Capital Expenditures
|
165
|
|
240
|
|
255
|
|
190
|
|
150
|
|
1,000
|
|
|||||||
Other
|
|
30
|
|
40
|
|
35
|
|
35
|
|
30
|
|
170
|
|
||||||
Total Capital Expenditures
|
|
$195
|
|
|
$280
|
|
|
$290
|
|
|
$225
|
|
|
$180
|
|
|
$1,170
|
|
(a)
|
Estimated capital expenditures eligible for cost recovery outside of a rate case.
|
(b)
|
Our portion of transmission capital expenditures related to construction of the GNTL is estimated at approximately $330 million through 2020. (See Item 1. Business – Regulated Operations – Transmission and Distribution.)
|
|
Expected Maturity Date
|
|||||||||||||||||||||||
Interest Rate Sensitive
Financial Instruments
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
Thereafter
|
|
Total
|
|
Fair Value
|
|||||||||
Dollars in Millions
|
|
|
|
|
|
|
|
|
||||||||||||||||
Long-Term Debt
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fixed Rate
|
|
$33.7
|
|
|
$63.3
|
|
|
$63.4
|
|
|
$56.3
|
|
|
$89.4
|
|
|
$1,123.7
|
|
|
$1,429.8
|
|
|
$1,500.8
|
|
Average Interest Rate – %
|
6.3
|
|
5.6
|
|
2.3
|
|
7.2
|
|
4.0
|
|
4.4
|
|
4.5
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Variable Rate
|
|
$2.6
|
|
|
$130.3
|
|
|
$0.7
|
|
|
$0.2
|
|
|
$13.6
|
|
|
$27.8
|
|
|
$175.2
|
|
|
$175.2
|
|
Average Interest Rate – %
|
5.0
|
|
1.0
|
|
4.8
|
|
4.8
|
|
0.1
|
|
0.1
|
|
0.9
|
|
|
•
|
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 “Corporate Governance” section and the “Audit Committee Report” section;
|
•
|
Audit Committee Members.
The identity of the Audit Committee members will be included in the “Corporate Governance” section and 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
|
||||||
*4(b)1
|
—
|
|
Mortgage and Deed of Trust, dated as of March 1, 1943, between Superior Water, Light and Power Company and Chemical Bank & Trust Company and Howard B. Smith, as Trustees, both succeeded by U.S. Bank National Association, as Trustee (filed as Exhibit 7(c), File No. 2-8668).
|
|||
*4(b)2
|
—
|
|
Supplemental Indentures to Superior Water, Light and Power Company’s Mortgage and Deed of Trust:
|
|||
|
|
Number
|
Dated as of
|
Reference File
|
Exhibit
|
|
|
|
First
|
March 1, 1951
|
2-59690
|
2(d)(1)
|
|
|
|
Second
|
March 1, 1962
|
2-27794
|
2(d)1
|
|
|
|
Third
|
July 1, 1976
|
2-57478
|
2(e)1
|
|
|
|
Fourth
|
March 1, 1985
|
2-78641
|
4(b)
|
|
|
|
Fifth
|
December 1, 1992
|
1-3548 (1992 Form 10-K)
|
4(b)1
|
|
|
|
Sixth
|
March 24, 1994
|
1-3548 (1996 Form 10-K)
|
4(b)1
|
|
|
|
Seventh
|
November 1, 1994
|
1-3548 (1996 Form 10-K)
|
4(b)2
|
|
|
|
Eighth
|
January 1, 1997
|
1-3548 (1996 Form 10-K)
|
4(b)3
|
|
|
|
Ninth
|
October 1, 2007
|
1-3548 (2007 Form 10-K)
|
4(c)3
|
|
|
|
Tenth
|
October 1, 2007
|
1-3548 (2007 Form 10-K)
|
4(c)4
|
|
|
|
Eleventh
|
December 1, 2008
|
1-3548 (2008 Form 10-K)
|
4(c)3
|
|
|
|
Twelfth
|
December 2, 2013
|
1-3548 (2013 Form 10-K)
|
4(c)3
|
|
*4(c)
|
—
|
|
Note Purchase Agreement, dated as of June 8, 2007, between ALLETE and Thrivent Financial for Lutherans and The Northwestern Mutual Life Insurance Company (filed as Exhibit 10(a) to the June 30, 2007, Form 10-Q, File No. 1-3548).
|
|||
*4(d)
|
—
|
|
Term Loan Agreement dated as of August 25, 2015, among ALLETE, as Borrower, the Lenders party hereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and J.P. Morgan Securities LLC, as Sole Lead Arranger and Sole Book Runner (filed as Exhibit 4 to the August 28, 2015, Form 8-K, File No. 1-3548).
|
|||
*4(e)
|
—
|
|
Note Purchase and Guarantee Agreement dated as of November 5, 2015, among Armenia Mountain Wind LLC, AMW I Holding, LLC and the purchasers named therein (filed as Exhibit 4 to the November 12, 2015, Form 8-K, File No. 1-3548).
|
|||
*10(a)
|
—
|
|
Power Purchase and Sale Agreement, dated as of May 29, 1998, between Minnesota Power, Inc. (now ALLETE) and Square Butte Electric Cooperative (filed as Exhibit 10 to the June 30, 1998, Form 10-Q, File No. 1-3548).
|
|||
*10(b)
|
—
|
|
Credit Agreement dated as of November 4, 2013 among ALLETE, as Borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and J.P. Morgan Securities LLC, as Sole Lead Arranger and Sole Book Runner (filed as Exhibit 10 to the November 4, 2013, Form 8-K, File No. 1-3548).
|
|||
*10(c)1
|
—
|
|
Financing Agreement between Collier County Industrial Development Authority and ALLETE dated as of July 1, 2006 (filed as Exhibit 10(b)1 to the June 30, 2006, Form 10-Q, File No. 1-3548).
|
|||
*10(c)2
|
—
|
|
Amended and Restated Letter of Credit Agreement, dated as of June 3, 2011, among ALLETE, the participating banks and Wells Fargo Bank, National Association, as Administrative Agent and Issuing Bank (filed as Exhibit 10(b) to the June 30, 2011, Form 10-Q, File No. 1-3548).
|
|||
*10(c)3
|
—
|
|
First Amendment to Amended and Restated Letter of Credit Agreement, dated as of June 1, 2013, between ALLETE and Wells Fargo Bank, National Association, as Issuing Bank, Administrative Agent and Sole Participating Bank (filed as Exhibit 10(b) to the June 30, 2013, Form 10-Q, File No. 1-3548).
|
|||
*10(d)
|
—
|
|
Agreement dated December 16, 2005, among ALLETE, Wisconsin Public Service Corporation and WPS Investments, LLC (filed as Exhibit 10(g) to the 2009 Form 10-K, File No. 1-3548).
|
|||
+*10(e)1
|
—
|
|
ALLETE Executive Annual Incentive Plan, as amended and restated, effective January 1, 2011 (filed as Exhibit 10(h)1 to the 2010 Form 10-K, File No. 1-3548).
|
|||
+*10(e)2
|
—
|
|
ALLETE Executive Annual Incentive Plan Form of Award Effective 2012 (filed as Exhibit 10(h)4 to the 2011 Form 10‑K, File No. 1-3548).
|
|||
+*10(e)3
|
—
|
|
ALLETE Executive Annual Incentive Plan Form of Award Effective 2013 (filed as Exhibit 10(f)5 to the 2012 Form 10‑K, File No. 1-3548).
|
|||
+*10(e)4
|
—
|
|
ALLETE Executive Annual Incentive Plan Form of Award Effective 2014 (filed as Exhibit 10(e)6 to the 2013 Form 10‑K, File No. 1-3548).
|
|||
+*10(e)5
|
—
|
|
ALLETE Executive Annual Incentive Plan Form of Award Effective 2015 (filed as Exhibit 10(e)6 to the 2014 Form 10‑K, File No. 1-3548).
|
|||
+10(e)6
|
—
|
|
ALLETE Executive Annual Incentive Plan Form of Award Effective 2016.
|
|||
+*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, 2015 (filed as Exhibit 10(f)3 to the 2014 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).
|
Exhibit Number
|
||||||
+*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 2010 (filed as Exhibit 10(m)8 to the 2009 Form 10-K, File No. 1-3548).
|
|||
+*10(j)4
|
—
|
|
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)5
|
—
|
|
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)6
|
—
|
|
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)7
|
—
|
|
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)8
|
—
|
|
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)9
|
—
|
|
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)10
|
—
|
|
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)11
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2014 (filed as Exhibit 10(j)14 to the 2013 Form 10-K, File No. 1-3548).
|
|||
+*10(j)12
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Restricted Stock Unit Grant Effective 2014 (filed as Exhibit 10(j)15 to the 2013 Form 10-K, File No. 1-3548).
|
|||
+*10(j)13
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2015 (filed as Exhibit 10(j)16 to the 2014 Form 10-K, File No. 1-3548).
|
|||
+*10(j)14
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Restricted Stock Unit Grant Effective 2015 (filed as Exhibit 10(j)17 to the 2014 Form 10-K, File No. 1-3548).
|
|||
+*10(k)1
|
—
|
|
ALLETE Executive Long-Term Incentive Compensation Plan effective January 1, 2016 (filed November 6, 2015, as Exhibit 99 to Form S-8, File No. 333-207846).
|
|||
+10(k)2
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Restricted Stock Unit Grant Effective 2016.
|
|||
+10(k)3
|
—
|
|
Form of ALLETE Executive Long-Term Incentive Compensation Plan Performance Share Grant Effective 2016.
|
|||
+*10(l)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(l)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).
|
|||
+*10(l)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(l)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(l)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(l)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).
|
Exhibit Number
|
||||||
+*10(l)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(l)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(m)1
|
—
|
|
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(m)2
|
—
|
|
ALLETE Non-Management Director Compensation Summary effective January 1, 2014 (filed as Exhibit 10(l)4 to the 2013 Form 10-K, File No. 1-3548).
|
|||
+*10(m)3
|
—
|
|
ALLETE Non-Employee Director Compensation Summary effective January 1, 2015 (filed as Exhibit 10(l)5 to the 2014 Form 10-K, File No. 1-3548).
|
|||
+*10(n)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(n)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(n)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(n)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(n)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(o)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(o)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(p)
|
—
|
|
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(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 18, 2016, announcing earnings for the year ended December 31, 2015.
(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.)
|
|||
101.INS
|
—
|
|
XBRL Instance
|
|||
101.SCH
|
—
|
|
XBRL Schema
|
|||
101.CAL
|
—
|
|
XBRL Calculation
|
|||
101.DEF
|
—
|
|
XBRL Definition
|
|||
101.LAB
|
—
|
|
XBRL Label
|
|||
101.PRE
|
—
|
|
XBRL Presentation
|
•
|
$38,995,000 original principal amount, of City of Cohasset, Minnesota, Variable Rate Demand Revenue Refunding Bonds (ALLETE, formerly Minnesota Power & Light Company, Project) Series 1997A ($13,500,000 remaining principal balance);
|
•
|
$27,800,000 of Collier County Industrial Development Authority, Industrial Development Variable Rate Demand Refunding Revenue Bonds Series 2006;
|
•
|
$6,370,000 of City of Superior, Wisconsin, Collateralized Utility Revenue Refunding Bonds Series 2007A; and
|
•
|
$6,130,000 of City of Superior, Wisconsin, Collateralized Utility Revenue Bonds Series 2007B.
|
*
|
Incorporated herein by reference as indicated.
|
+
|
Management contract or compensatory plan or arrangement pursuant to Item 15(b).
|
|
|
ALLETE, Inc.
|
|
|
|
||
|
|
||
Dated:
|
February 22, 2016
|
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 22, 2016
|
Alan R. Hodnik
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Steven Q. DeVinck
|
|
Senior Vice President and Chief Financial Officer
|
|
February 22, 2016
|
Steven Q. DeVinck
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ Steven W. Morris
|
|
Controller
|
|
February 22, 2016
|
Steven W. Morris
|
|
(Principal Accounting Officer)
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Kathryn W. Dindo
|
|
Director
|
|
February 22, 2016
|
Kathryn W. Dindo
|
|
|
|
|
|
|
|
|
|
/s/ Sidney W. Emery, Jr.
|
|
Director
|
|
February 22, 2016
|
Sidney W. Emery, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ George G. Goldfarb
|
|
Director
|
|
February 22, 2016
|
George G. Goldfarb
|
|
|
|
|
|
|
|
|
|
/s/ James S. Haines, Jr.
|
|
Director
|
|
February 22, 2016
|
James S. Haines, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ James J. Hoolihan
|
|
Director
|
|
February 22, 2016
|
James J. Hoolihan
|
|
|
|
|
|
|
|
|
|
/s/ Heidi E. Jimmerson
|
|
Director
|
|
February 22, 2016
|
Heidi E. Jimmerson
|
|
|
|
|
|
|
|
|
|
/s/ Madeleine W. Ludlow
|
|
Director
|
|
February 22, 2016
|
Madeleine W. Ludlow
|
|
|
|
|
|
|
|
|
|
/s/ Douglas C. Neve
|
|
Director
|
|
February 22, 2016
|
Douglas C. Neve
|
|
|
|
|
|
|
|
|
|
/s/ Leonard C. Rodman
|
|
Director
|
|
February 22, 2016
|
Leonard C. Rodman
|
|
|
|
|
As of December 31
|
2015
|
|
2014
|
|
||
Millions
|
|
|
||||
Assets
|
|
|
||||
Current Assets
|
|
|
||||
Cash and Cash Equivalents
|
|
$97.0
|
|
|
$145.8
|
|
Accounts Receivable (Less Allowance of $1.0 and $1.1)
|
121.2
|
|
103.0
|
|
||
Inventories
|
117.1
|
|
80.5
|
|
||
Prepayments and Other
|
35.7
|
|
82.0
|
|
||
Deferred Income Taxes
|
—
|
|
7.5
|
|
||
Total Current Assets
|
371.0
|
|
418.8
|
|
||
Property, Plant and Equipment – Net
|
3,669.1
|
|
3,284.8
|
|
||
Regulatory Assets
|
372.0
|
|
357.3
|
|
||
Investment in ATC
|
124.5
|
|
121.1
|
|
||
Other Investments
|
74.6
|
|
114.4
|
|
||
Goodwill and Intangible Assets – Net
|
215.2
|
|
4.8
|
|
||
Other Non-Current Assets
|
80.7
|
|
59.6
|
|
||
Total Assets
|
|
$4,907.1
|
|
|
$4,360.8
|
|
Liabilities and Equity
|
|
|
||||
Liabilities
|
|
|
||||
Current Liabilities
|
|
|
||||
Accounts Payable
|
|
$88.8
|
|
|
$134.1
|
|
Accrued Taxes
|
44.0
|
|
38.7
|
|
||
Accrued Interest
|
18.6
|
|
18.0
|
|
||
Long-Term Debt Due Within One Year
|
36.3
|
|
100.7
|
|
||
Notes Payable
|
1.6
|
|
3.7
|
|
||
Other
|
86.1
|
|
120.8
|
|
||
Total Current Liabilities
|
275.4
|
|
416.0
|
|
||
Long-Term Debt
|
1,568.7
|
|
1,272.8
|
|
||
Deferred Income Taxes
|
579.8
|
|
510.7
|
|
||
Regulatory Liabilities
|
105.0
|
|
94.2
|
|
||
Defined Benefit Pension and Other Postretirement Benefit Plans
|
206.8
|
|
190.9
|
|
||
Other Non-Current Liabilities
|
349.0
|
|
265.0
|
|
||
Total Liabilities
|
3,084.7
|
|
2,749.6
|
|
||
Commitments, Guarantees and Contingencies (Note 12)
|
|
|
||||
Equity
|
|
|
||||
ALLETE’s Equity
|
|
|
||||
Common Stock Without Par Value, 80.0 Shares Authorized, 49.1 and 45.9 Shares Outstanding
|
1,271.4
|
|
1,107.6
|
|
||
Unearned ESOP Shares
|
—
|
|
(7.2
|
)
|
||
Accumulated Other Comprehensive Loss
|
(24.5
|
)
|
(21.1
|
)
|
||
Retained Earnings
|
573.3
|
|
530.1
|
|
||
Total ALLETE Equity
|
1,820.2
|
|
1,609.4
|
|
||
Non-Controlling Interest in Subsidiaries
|
2.2
|
|
1.8
|
|
||
Total Equity
|
1,822.4
|
|
1,611.2
|
|
||
Total Liabilities and Equity
|
|
$4,907.1
|
|
|
$4,360.8
|
|
Year Ended December 31
|
2015
|
|
2014
|
|
2013
|
|
|||
Millions Except Per Share Amounts
|
|
|
|
||||||
Operating Revenue
|
|
$1,486.4
|
|
|
$1,136.8
|
|
|
$1,018.4
|
|
Operating Expenses
|
|
|
|
||||||
Fuel and Purchased Power
|
328.1
|
|
356.1
|
|
334.8
|
|
|||
Transmission Services
|
54.1
|
|
45.6
|
|
32.3
|
|
|||
Cost of Sales
|
302.3
|
|
77.9
|
|
71.2
|
|
|||
Operating and Maintenance
|
333.5
|
|
287.1
|
|
267.7
|
|
|||
Depreciation and Amortization
|
170.0
|
|
135.7
|
|
116.6
|
|
|||
Taxes Other than Income Taxes
|
51.4
|
|
45.6
|
|
41.7
|
|
|||
Impairment of Real Estate
|
36.3
|
|
—
|
|
—
|
|
|||
Total Operating Expenses
|
1,275.7
|
|
948.0
|
|
864.3
|
|
|||
Operating Income
|
210.7
|
|
188.8
|
|
154.1
|
|
|||
Other Income (Expense)
|
|
|
|
||||||
Interest Expense
|
(64.9
|
)
|
(54.8
|
)
|
(50.3
|
)
|
|||
Equity Earnings in ATC
|
16.3
|
|
19.6
|
|
20.3
|
|
|||
Other
|
4.7
|
|
8.6
|
|
9.3
|
|
|||
Total Other Expense
|
(43.9
|
)
|
(26.6
|
)
|
(20.7
|
)
|
|||
Income Before Non-Controlling Interest and Income Taxes
|
166.8
|
|
162.2
|
|
133.4
|
|
|||
Income Tax Expense
|
25.3
|
|
36.7
|
|
28.7
|
|
|||
Net Income
|
141.5
|
|
125.5
|
|
104.7
|
|
|||
Less: Non-Controlling Interest in Subsidiaries
|
0.4
|
|
0.7
|
|
—
|
|
|||
Net Income Attributable to ALLETE
|
|
$141.1
|
|
|
$124.8
|
|
|
$104.7
|
|
Average Shares of Common Stock
|
|
|
|
||||||
Basic
|
48.3
|
|
42.9
|
|
39.7
|
|
|||
Diluted
|
48.4
|
|
43.1
|
|
39.8
|
|
|||
Basic Earnings Per Share of Common Stock
|
|
$2.92
|
|
|
$2.91
|
|
|
$2.64
|
|
Diluted Earnings Per Share of Common Stock
|
|
$2.92
|
|
|
$2.90
|
|
|
$2.63
|
|
Dividends Per Share of Common Stock
|
|
$2.02
|
|
|
$1.96
|
|
|
$1.90
|
|
|
|
|
|
||||||
|
|
|
|
||||||
Year Ended December 31
|
2015
|
|
2014
|
|
2013
|
|
|||
Millions
|
|
|
|
||||||
Net Income
|
|
$141.5
|
|
|
$125.5
|
|
|
$104.7
|
|
Other Comprehensive Income (Loss)
|
|
|
|
||||||
Unrealized Loss on Securities
|
|
|
|
||||||
Net of Income Taxes of $(0.3), $(0.2) and $–
|
(0.5
|
)
|
(0.2
|
)
|
—
|
|
|||
Unrealized Gain on Derivatives
|
|
|
|
||||||
Net of Income Taxes of $0.1, $0.1 and $–
|
0.1
|
|
0.2
|
|
0.1
|
|
|||
Defined Benefit Pension and Other Postretirement Benefit Plans
|
|
|
|
||||||
Net of Income Taxes of $(2.2), $(2.8) and $3.3
|
(3.0
|
)
|
(4.0
|
)
|
4.8
|
|
|||
Total Other Comprehensive Income (Loss)
|
(3.4
|
)
|
(4.0
|
)
|
4.9
|
|
|||
Total Comprehensive Income
|
138.1
|
|
121.5
|
|
109.6
|
|
|||
Less: Non-Controlling Interest in Subsidiaries
|
0.4
|
|
0.7
|
|
—
|
|
|||
Comprehensive Income Attributable to ALLETE
|
|
$137.7
|
|
|
$120.8
|
|
|
$109.6
|
|
Year Ended December 31
|
2015
|
|
2014
|
|
2013
|
|
|||
Millions
|
|
|
|
||||||
Operating Activities
|
|
|
|
||||||
Net Income
|
|
$141.5
|
|
|
$125.5
|
|
|
$104.7
|
|
Allowance for Funds Used During Construction – Equity
|
(3.3
|
)
|
(7.8
|
)
|
(4.6
|
)
|
|||
Income from Equity Investments – Net of Dividends
|
(1.8
|
)
|
(2.6
|
)
|
(4.2
|
)
|
|||
Impairment of Real Estate
|
36.3
|
|
—
|
|
—
|
|
|||
Gain on Sales of Investments and Property, Plant and Equipment
|
(0.2
|
)
|
(0.2
|
)
|
(2.6
|
)
|
|||
Depreciation Expense
|
165.9
|
|
135.7
|
|
116.6
|
|
|||
Amortization of Power Purchase Agreements
|
(23.2
|
)
|
(12.7
|
)
|
—
|
|
|||
Amortization of Other Intangible Assets and Other Assets
|
5.6
|
|
0.7
|
|
1.0
|
|
|||
Deferred Income Tax Expense
|
25.1
|
|
32.7
|
|
28.6
|
|
|||
Share-Based Compensation Expense
|
2.6
|
|
2.3
|
|
2.4
|
|
|||
ESOP Compensation Expense
|
9.0
|
|
9.1
|
|
8.4
|
|
|||
Defined Benefit Pension and Other Postretirement Benefit Expense
|
15.4
|
|
12.8
|
|
21.0
|
|
|||
Bad Debt Expense
|
1.6
|
|
1.8
|
|
1.3
|
|
|||
Changes in Operating Assets and Liabilities
|
|
|
|
||||||
Accounts Receivable
|
1.1
|
|
(3.5
|
)
|
(8.6
|
)
|
|||
Inventories
|
(22.1
|
)
|
(17.5
|
)
|
10.5
|
|
|||
Prepayments and Other
|
3.7
|
|
4.8
|
|
(1.4
|
)
|
|||
Accounts Payable
|
(19.3
|
)
|
10.9
|
|
1.1
|
|
|||
Other Current Liabilities
|
5.1
|
|
(3.5
|
)
|
1.4
|
|
|||
Cash Contributions to Defined Benefit Pension and Other
Postretirement Plans
|
—
|
|
—
|
|
(10.8
|
)
|
|||
Changes in Regulatory and Other Non-Current Assets
|
0.6
|
|
(21.3
|
)
|
(18.3
|
)
|
|||
Changes in Regulatory and Other Non-Current Liabilities
|
(3.5
|
)
|
2.6
|
|
(7.1
|
)
|
|||
Cash from Operating Activities
|
340.1
|
|
269.8
|
|
239.4
|
|
|||
Investing Activities
|
|
|
|
||||||
Proceeds from Sale of Available-for-sale Securities
|
1.7
|
|
3.6
|
|
16.1
|
|
|||
Payments for Purchase of Available-for-sale Securities
|
(2.3
|
)
|
(5.0
|
)
|
(4.7
|
)
|
|||
Acquisitions of Subsidiaries – Net of Cash Acquired
|
(333.3
|
)
|
(60.3
|
)
|
—
|
|
|||
Investment in ATC
|
(1.6
|
)
|
(3.9
|
)
|
(3.1
|
)
|
|||
Changes to Other Investments
|
3.1
|
|
33.0
|
|
(12.3
|
)
|
|||
Additions to Property, Plant and Equipment
|
(286.8
|
)
|
(572.8
|
)
|
(328.5
|
)
|
|||
Construction Costs for Development Project
|
—
|
|
(25.7
|
)
|
—
|
|
|||
Cash in Escrow for Acquisition
|
—
|
|
5.4
|
|
(5.4
|
)
|
|||
Proceeds from Sale of Property, Plant and Equipment
|
0.4
|
|
—
|
|
1.3
|
|
|||
Cash for Investing Activities
|
(618.8
|
)
|
(625.7
|
)
|
(336.6
|
)
|
|||
Financing Activities
|
|
|
|
||||||
Proceeds from Issuance of Common Stock
|
161.2
|
|
200.6
|
|
98.2
|
|
|||
Proceeds from Issuance of Long-Term Debt
|
324.5
|
|
375.0
|
|
169.8
|
|
|||
Changes in Restricted Cash
|
8.5
|
|
(1.8
|
)
|
—
|
|
|||
Changes in Notes Payable
|
(2.1
|
)
|
3.7
|
|
—
|
|
|||
Repayments of Long-Term Debt
|
(160.2
|
)
|
(134.5
|
)
|
(77.7
|
)
|
|||
Acquisition of Non-Controlling Interest
|
—
|
|
(6.0
|
)
|
—
|
|
|||
Construction Deposits Received for Development Project
|
—
|
|
54.3
|
|
—
|
|
|||
Debt Issuance Costs
|
(4.1
|
)
|
(3.1
|
)
|
(1.4
|
)
|
|||
Dividends on Common Stock
|
(97.9
|
)
|
(83.8
|
)
|
(75.2
|
)
|
|||
Cash from Financing Activities
|
229.9
|
|
404.4
|
|
113.7
|
|
|||
Change in Cash and Cash Equivalents
|
(48.8
|
)
|
48.5
|
|
16.5
|
|
|||
Cash and Cash Equivalents at Beginning of Period
|
145.8
|
|
97.3
|
|
80.8
|
|
|||
Cash and Cash Equivalents at End of Period
|
|
$97.0
|
|
|
$145.8
|
|
|
$97.3
|
|
|
Total
Shareholders’
Equity
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Unearned
ESOP
Shares
|
Common
Stock
|
||||||||
Millions
|
|
|
|
|
|
||||||||
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
|
|
|||
Comprehensive Income
|
|
|
|
|
|
||||||||
Net Income
|
125.5
|
|
125.5
|
|
|
|
|
||||||
Other Comprehensive Income – Net of Tax
|
|
|
|
|
|
||||||||
Unrealized Loss on Securities – Net
|
(0.2
|
)
|
|
(0.2
|
)
|
|
|
||||||
Unrealized Gain on Derivatives – Net
|
0.2
|
|
|
0.2
|
|
|
|
||||||
Defined Benefit Pension and Other Postretirement Plans – Net
|
(4.0
|
)
|
|
(4.0
|
)
|
|
|
||||||
Total Comprehensive Income
|
121.5
|
|
|
|
|
|
|||||||
Non-Controlling Interest in Subsidiaries
|
(0.7
|
)
|
(0.7
|
)
|
|
|
|
||||||
Total Comprehensive Income Attributable to ALLETE
|
120.8
|
|
|
|
|
|
|||||||
Common Stock Issued – Net
|
222.4
|
|
|
|
|
222.4
|
|
||||||
Dividends Declared
|
(83.8
|
)
|
(83.8
|
)
|
|
|
|
||||||
ESOP Shares Earned
|
7.1
|
|
|
|
7.1
|
|
|
||||||
Balance as of December 31, 2014
|
1,609.4
|
|
530.1
|
|
(21.1
|
)
|
(7.2
|
)
|
1,107.6
|
|
|||
Comprehensive Income
|
|
|
|
|
|
||||||||
Net Income
|
141.5
|
|
141.5
|
|
|
|
|
||||||
Other Comprehensive Income – Net of Tax
|
|
|
|
|
|
||||||||
Unrealized Loss on Securities – Net
|
(0.5
|
)
|
|
(0.5
|
)
|
|
|
||||||
Unrealized Gain on Derivatives – Net
|
0.1
|
|
|
0.1
|
|
|
|
||||||
Defined Benefit Pension and Other Postretirement Plans – Net
|
(3.0
|
)
|
|
(3.0
|
)
|
|
|
||||||
Total Comprehensive Income
|
138.1
|
|
|
|
|
|
|||||||
Non-Controlling Interest in Subsidiaries
|
(0.4
|
)
|
(0.4
|
)
|
|
|
|
||||||
Total Comprehensive Income Attributable to ALLETE
|
137.7
|
|
|
|
|
|
|||||||
Common Stock Issued – Net
|
163.8
|
|
|
|
|
163.8
|
|
||||||
Dividends Declared
|
(97.9
|
)
|
(97.9
|
)
|
|
|
|
||||||
ESOP Shares Earned
|
7.2
|
|
|
|
7.2
|
|
|
||||||
Balance as of December 31, 2015
|
|
$1,820.2
|
|
|
$573.3
|
|
$(24.5)
|
—
|
|
|
$1,271.4
|
|
Consolidated Statement of Cash Flows
|
|
|
|
||||||
Year Ended December 31
|
2015
|
|
2014
|
|
2013
|
|
|||
Millions
|
|
|
|
||||||
Cash Paid During the Period for Interest – Net of Amounts Capitalized
|
|
$59.0
|
|
|
$51.3
|
|
|
$47.5
|
|
Cash Paid During the Period for Income Taxes
|
|
$0.4
|
|
|
$5.1
|
|
|
$0.5
|
|
Noncash Investing and Financing Activities
|
|
|
|
||||||
Increase (Decrease) in Accounts Payable for Capital Additions to Property, Plant and Equipment
|
$(40.6)
|
|
$21.7
|
|
|
$8.3
|
|
||
Capitalized Asset Retirement Costs
|
|
$12.4
|
|
|
$22.4
|
|
$(0.7)
|
||
AFUDC–Equity
|
|
$3.3
|
|
|
$7.8
|
|
|
$4.6
|
|
ALLETE Common Stock Contributed to the Defined Benefit Pension Plan
|
—
|
|
|
$19.5
|
|
—
|
|
||
Contingent Consideration
|
|
$35.7
|
|
—
|
|
—
|
|
Accounts Receivable
|
|
|
|
||||
As of December 31
|
2015
|
|
|
2014
|
|
||
Millions
|
|
|
|
||||
Trade Accounts Receivable
|
|
|
|
||||
Billed
|
|
$105.3
|
|
|
|
$85.5
|
|
Unbilled
|
16.9
|
|
|
18.6
|
|
||
Less: Allowance for Doubtful Accounts
|
1.0
|
|
|
1.1
|
|
||
Total Accounts Receivable
|
|
$121.2
|
|
|
|
$103.0
|
|
Inventories
|
|
|
|
||||
As of December 31
|
2015
|
|
|
2014
|
|
||
Millions
|
|
|
|
||||
Fuel
(a)
|
|
$58.1
|
|
|
|
$29.0
|
|
Materials and Supplies
|
49.1
|
|
|
51.5
|
|
||
Raw Materials
|
2.7
|
|
|
—
|
|
||
Finished Goods
|
7.5
|
|
|
—
|
|
||
Reserve for Obsolescence
|
(0.3
|
)
|
|
—
|
|
||
Total Inventories
|
|
$117.1
|
|
|
|
$80.5
|
|
(a)
|
Fuel consists primarily of coal inventory at Minnesota Power. During 2015, Minnesota Power increased its coal inventory to take advantage of favorable pricing.
|
Prepayments and Other Current Assets
|
|
|
|
||||
As of December 31
|
2015
|
|
|
2014
|
|
||
Millions
|
|
|
|
||||
Deferred Fuel Adjustment Clause
|
|
$10.6
|
|
|
|
$16.3
|
|
Construction Costs for Development Project
(a)
|
—
|
|
|
48.2
|
|
||
Restricted Cash
(b)
|
5.6
|
|
|
2.7
|
|
||
Other
|
19.5
|
|
|
14.8
|
|
||
Total Prepayments and Other Current Assets
|
|
$35.7
|
|
|
|
$82.0
|
|
(a)
|
Construction Costs for Development Project related to ALLETE Clean Energy’s project to construct a wind energy facility which was sold in 2015. (See Note 7. Acquisitions.)
|
(b)
|
Restricted Cash includes collateral deposits required under ALLETE Clean Energy’s loan agreements and collateral deposits required for U.S. Water Services’ standby letters of credit.
|
Other Current Liabilities
|
|
|
|
||||
As of December 31
|
2015
|
|
|
2014
|
|
||
Millions
|
|
|
|
||||
Customer Deposits
|
|
$15.1
|
|
|
|
$19.7
|
|
Power Purchase Agreements
(a)
|
23.3
|
|
|
19.4
|
|
||
Construction Deposits Received for Development Project
(b)
|
—
|
|
|
54.3
|
|
||
Other
(c)
|
47.7
|
|
|
27.4
|
|
||
Total Other Current Liabilities
|
|
$86.1
|
|
|
|
$120.8
|
|
(a)
|
Power Purchase Agreements acquired in conjunction with the ALLETE Clean Energy wind energy facilities acquisitions. (See Note 7. Acquisitions.)
|
(b)
|
Construction Deposits Received for Development Project relate to ALLETE Clean Energy’s project to construct a wind energy facility which was sold in 2015. (See Note 7. Acquisitions.)
|
(c)
|
Increase in 2015 includes customer refund liabilities of approximately
$7 million
, pending regulatory approval.
|
Other Non-Current Liabilities
|
|
|
|
||||
As of December 31
|
2015
|
|
|
2014
|
|
||
Millions
|
|
|
|
||||
Asset Retirement Obligation
|
|
$131.4
|
|
|
|
$109.2
|
|
Power Purchase Agreements
(a)
|
138.1
|
|
|
110.7
|
|
||
Contingent Consideration
(b)
|
36.6
|
|
|
—
|
|
||
Other
|
42.9
|
|
|
45.1
|
|
||
Total Other Non-Current Liabilities
|
|
$349.0
|
|
|
|
$265.0
|
|
(a)
|
Power Purchase Agreements acquired in conjunction with the ALLETE Clean Energy wind energy facilities acquisitions. (See Note 7. Acquisitions.)
|
(b)
|
Contingent Consideration relates to the estimated fair value of the earnings-based payment resulting from the U.S. Water Services acquisition. (See Note 7. Acquisitions and Note 10. Fair Value.)
|
Year Ended December 31
|
2015
|
|
2014
|
|
2013
|
|
|||
Millions
|
|
|
|
||||||
Operating Revenue
|
|
|
|
||||||
Regulated Operations
|
|
$991.2
|
|
|
$1,003.5
|
|
|
$925.5
|
|
|
|
|
|
||||||
Energy Infrastructure and Related Services
|
|
|
|
||||||
ALLETE Clean Energy
|
262.1
|
|
33.2
|
|
—
|
|
|||
U.S. Water Services
|
119.8
|
|
—
|
|
—
|
|
|||
|
|
|
|
||||||
Corporate and Other
|
113.3
|
|
100.1
|
|
92.9
|
|
|||
Total Operating Revenue
|
|
$1,486.4
|
|
|
$1,136.8
|
|
|
$1,018.4
|
|
Net Income (Loss) Attributable to ALLETE
|
|
|
|
||||||
Regulated Operations
(a)
|
|
$131.6
|
|
|
$123.0
|
|
|
$103.6
|
|
|
|
|
|
||||||
Energy Infrastructure and Related Services
|
|
|
|
||||||
ALLETE Clean Energy
|
29.9
|
|
3.3
|
|
(3.4
|
)
|
|||
U.S. Water Services
|
0.9
|
|
—
|
|
—
|
|
|||
|
|
|
|
||||||
Corporate and Other
(a)
|
(21.3
|
)
|
(1.5
|
)
|
4.5
|
|
|||
Total Net Income Attributable to ALLETE
|
|
$141.1
|
|
|
$124.8
|
|
|
$104.7
|
|
Depreciation and Amortization
|
|
|
|
||||||
Regulated Operations
|
|
$135.1
|
|
|
$118.0
|
|
|
$110.2
|
|
|
|
|
|
||||||
Energy Infrastructure and Related Services
|
|
|
|
||||||
ALLETE Clean Energy
|
18.7
|
|
10.1
|
|
—
|
|
|||
U.S. Water Services
|
7.3
|
|
—
|
|
—
|
|
|||
|
|
|
|
||||||
Corporate and Other
|
8.9
|
|
7.6
|
|
6.4
|
|
|||
Total Depreciation and Amortization
|
|
$170.0
|
|
|
$135.7
|
|
|
$116.6
|
|
Impairment of Real Estate
|
|
|
|
||||||
Corporate and Other
|
$36.3
|
—
|
|
—
|
|
||||
Interest Expense
|
|
|
|
||||||
Regulated Operations
(a)
|
$53.9
|
$49.2
|
$44.4
|
||||||
|
|
|
|
||||||
Energy Infrastructure and Related Services
|
|
|
|
||||||
ALLETE Clean Energy
|
3.3
|
|
0.8
|
|
—
|
|
|||
U.S. Water Services
|
1.4
|
|
—
|
|
—
|
|
|||
|
|
|
|
||||||
Corporate and Other
(a)
|
8.6
|
|
7.1
|
|
8.2
|
|
|||
|
|
|
|
||||||
Eliminations
(a)
|
(2.3
|
)
|
(2.3
|
)
|
(2.3
|
)
|
|||
Total Interest Expense
|
$64.9
|
$54.8
|
$50.3
|
||||||
Equity Earnings in ATC
|
|
|
|
||||||
Regulated Operations
|
$16.3
|
$19.6
|
$20.3
|
||||||
Income Tax Expense (Benefit)
|
|
|
|
||||||
Regulated Operations
|
|
$24.4
|
|
|
$39.0
|
|
|
$35.1
|
|
|
|
|
|
||||||
Energy Infrastructure and Related Services
|
|
|
|
||||||
ALLETE Clean Energy
|
21.0
|
|
2.3
|
|
(2.3
|
)
|
|||
U.S. Water Services
|
0.9
|
|
—
|
|
—
|
|
|||
|
|
|
|
||||||
Corporate and Other
|
(21.0
|
)
|
(4.6
|
)
|
(4.1
|
)
|
|||
Total Income Tax Expense
|
|
$25.3
|
|
|
$36.7
|
|
|
$28.7
|
|
(a)
|
During 2015, an intercompany loan agreement was entered into and interest expense was allocated to certain subsidiaries. The amounts are eliminated in consolidation. Prior period segment results have been revised to conform to the current presentation as if the intercompany loan existed as of January 1, 2013.
|
As of December 31
|
2015
|
|
2014
|
|
||
Millions
|
|
|
||||
Assets
|
|
|
||||
Regulated Operations
|
$3,862.6
|
$3,709.6
|
||||
|
|
|
||||
Energy Infrastructure and Related Services
|
|
|
||||
ALLETE Clean Energy
|
504.6
|
|
291.9
|
|
||
U.S. Water Services
|
258.3
|
|
—
|
|
||
|
|
|
||||
Corporate and Other
|
281.6
|
|
359.3
|
|
||
Total Assets
|
|
$4,907.1
|
|
|
$4,360.8
|
|
Capital Expenditures
|
|
|
||||
Regulated Operations
|
$224.4
|
$583.5
|
||||
|
|
|
||||
Energy Infrastructure and Related Services
|
|
|
||||
ALLETE Clean Energy
|
8.6
|
|
4.2
|
|
||
U.S. Water Services
|
2.9
|
|
—
|
|
||
|
|
|
||||
Corporate and Other
|
15.9
|
|
16.6
|
|
||
Total Capital Expenditures
|
|
$251.8
|
|
|
$604.3
|
|
Property, Plant and Equipment
|
|
|
|
||||
As of December 31
|
2015
|
|
|
2014
|
|
||
Millions
|
|
|
|
||||
Regulated Operations
|
|
$4,336.7
|
|
|
|
$3,903.3
|
|
Construction Work in Progress
|
101.2
|
|
|
355.4
|
|
||
Accumulated Depreciation
|
(1,323.8
|
)
|
|
(1,260.2
|
)
|
||
Regulated Operations – Net
|
3,114.1
|
|
|
2,998.5
|
|
||
ALLETE Clean Energy
|
467.3
|
|
|
203.7
|
|
||
Construction Work in Progress
|
4.0
|
|
|
1.3
|
|
||
Accumulated Depreciation
|
(24.0
|
)
|
|
(8.4
|
)
|
||
ALLETE Clean Energy – Net
|
447.3
|
|
|
196.6
|
|
||
U.S. Water Services
|
15.6
|
|
|
—
|
|
||
Accumulated Depreciation
|
(3.4
|
)
|
|
—
|
|
||
U.S. Water Services – Net
|
12.2
|
|
|
—
|
|
||
Corporate and Other
(a)
|
165.6
|
|
|
152.5
|
|
||
Construction Work in Progress
|
4.5
|
|
|
4.6
|
|
||
Accumulated Depreciation
|
(74.6
|
)
|
|
(67.4
|
)
|
||
Corporate and Other – Net
|
95.5
|
|
|
89.7
|
|
||
Property, Plant and Equipment – Net
|
|
$3,669.1
|
|
|
|
$3,284.8
|
|
(a)
|
Primarily includes BNI Energy and a small amount of non-rate base generation.
|
Asset Retirement Obligations
|
|
|
||
Millions
|
|
|
||
Obligation as of December 31, 2013
|
|
|
$81.8
|
|
Accretion
|
|
5.5
|
|
|
Liabilities Recognized
(a)
|
|
23.0
|
|
|
Liabilities Settled
|
|
(0.5
|
)
|
|
Revisions in Estimated Cash Flows
|
|
(0.6
|
)
|
|
Obligation as of December 31, 2014
|
|
109.2
|
|
|
Accretion
|
|
7.3
|
|
|
Liabilities Recognized
(b)
|
|
5.1
|
|
|
Liabilities Settled
|
|
(2.6
|
)
|
|
Revisions in Estimated Cash Flows
|
|
12.4
|
|
|
Obligation as of December 31, 2015
|
|
|
$131.4
|
|
(a)
|
The increase in 2014 is related to BNI Energy for coal mining expansion and ALLETE Clean Energy due to wind energy facilities acquisitions.(See Note 7. Acquisitions.)
|
(b)
|
The increase in 2015 is related to the ALLETE Clean Energy wind energy facilities acquisitions in 2015. (See Note 7. Acquisitions.)
|
Regulated Utility Plant As of December 31
|
Plant in Service
|
Accumulated Depreciation
|
Construction Work in Progress
|
% Ownership
|
|||||||
Millions
|
|
|
|
|
|||||||
2015
|
|
|
|
|
|||||||
Boswell Unit 4
|
|
$668.2
|
|
|
$195.0
|
|
|
$6.9
|
|
80
|
|
CapX2020 Projects
|
101.1
|
|
3.4
|
|
—
|
|
9.3 - 14.7
|
||||
Total
|
|
$769.3
|
|
|
$198.4
|
|
|
$6.9
|
|
|
|
2014
|
|
|
|
|
|||||||
Boswell Unit 4
|
|
$419.1
|
|
|
$209.1
|
|
|
$168.1
|
|
80
|
|
CapX2020 Projects
|
55.5
|
|
1.7
|
|
44.0
|
|
9.3 - 14.7
|
||||
Total
|
|
$474.6
|
|
|
$210.8
|
|
|
$212.1
|
|
|
Regulatory Assets and Liabilities
|
|
|
||||
As of December 31
|
2015
|
|
2014
|
|
||
Millions
|
|
|
||||
Current Regulatory Assets
(a)
|
|
|
||||
Deferred Fuel Adjustment Clause
|
|
$10.6
|
|
|
$16.3
|
|
Total Current Regulatory Assets
|
10.6
|
|
16.3
|
|
||
Non-Current Regulatory Assets
|
|
|
||||
Defined Benefit Pension and Other Postretirement Benefit Plans
(b)
|
219.3
|
|
223.9
|
|
||
Income Taxes
(c)
|
64.2
|
|
46.6
|
|
||
Cost Recovery Riders
(d)
|
58.0
|
|
59.7
|
|
||
Asset Retirement Obligations
(e)
|
21.6
|
|
17.8
|
|
||
PPACA Income Tax Deferral
|
5.0
|
|
5.0
|
|
||
Other
|
3.9
|
|
4.3
|
|
||
Total Non-Current Regulatory Assets
|
372.0
|
|
357.3
|
|
||
Total Regulatory Assets
|
|
$382.6
|
|
|
$373.6
|
|
|
|
|
||||
Non-Current Regulatory Liabilities
|
|
|
||||
Wholesale and Retail Contra AFUDC
(f)
|
|
$58.0
|
|
|
$42.9
|
|
Plant Removal Obligations
|
22.1
|
|
22.8
|
|
||
Income Taxes
(c)
|
6.1
|
|
13.4
|
|
||
Defined Benefit Pension and Other Postretirement Benefit Plans
(b)
|
0.9
|
|
3.5
|
|
||
Other
|
17.9
|
|
11.6
|
|
||
Total Non-Current Regulatory Liabilities
|
|
$105.0
|
|
|
$94.2
|
|
(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 as actuarial gains and losses as well as prior service costs and credits, are recognized as regulatory assets or regulatory liabilities on the Consolidated Balance Sheet. The asset or liability will decrease as the deferred items are amortized and recognized as components of net periodic benefit cost. (See Note 17. Pension and Other Postretirement Benefit Plans.)
|
(c)
|
These costs represent the difference between deferred income taxes recognized for financial reporting purposes and amounts previously billed to our customers. This balance will decrease over the remaining life of the related temporary differences and flow through current income taxes.
|
(d)
|
The cost recovery rider regulatory assets are revenues not yet collected from our customers primarily due to capital expenditures related to the Bison Wind Energy Center, investment in CapX2020 projects, and the Boswell Unit 4 environmental upgrade and are recognized in accordance with the accounting standards for alternative revenue programs. The cost recovery rider regulatory assets as of
December 31, 2015
will be recovered over the next two years.
|
(e)
|
Asset retirement obligations will accrete and be amortized over the lives of the related property with asset retirement obligations.
|
(f)
|
Wholesale and Retail Contra AFUDC represents amortization to offset AFUDC Equity and Debt recorded during the construction period of our cost recovery rider projects prior to placing the projects in service. The regulatory liability will decrease over the remaining depreciable life of the related asset.
|
ALLETE’s Investment in ATC
|
|
|
||||
Year Ended December 31
|
2015
|
2014
|
||||
Millions
|
|
|
||||
Equity Investment Beginning Balance
|
|
$121.1
|
|
|
$114.6
|
|
Cash Investments
|
1.6
|
|
3.9
|
|
||
Equity in ATC Earnings
|
16.3
|
|
19.6
|
|
||
Distributed ATC Earnings
|
(14.5
|
)
|
(17.0
|
)
|
||
Equity Investment Ending Balance
|
|
$124.5
|
|
|
$121.1
|
|
ATC Summarized Financial Data
|
|
|
||||
Balance Sheet Data
|
|
|
||||
As of December 31
|
2015
|
2014
|
||||
Millions
|
|
|
||||
Current Assets
|
|
$80.5
|
|
|
$66.4
|
|
Non-Current Assets
|
3,957.6
|
|
3,728.7
|
|
||
Total Assets
|
|
$4,038.1
|
|
|
$3,795.1
|
|
Current Liabilities
|
|
$330.3
|
|
|
$313.1
|
|
Long-Term Debt
|
1,800.0
|
|
1,701.0
|
|
||
Other Non-Current Liabilities
|
245.0
|
|
163.8
|
|
||
Members’ Equity
|
1,662.8
|
|
1,617.2
|
|
||
Total Liabilities and Members’ Equity
|
|
$4,038.1
|
|
|
$3,795.1
|
|
Income Statement Data
|
|
|
|
||||||
Year Ended December 31
|
2015
|
2014
|
2013
|
||||||
Millions
|
|
|
|
||||||
Revenue
|
|
$615.8
|
|
|
$635.0
|
|
|
$626.3
|
|
Operating Expense
|
319.3
|
|
307.4
|
|
295.1
|
|
|||
Other Expense
|
96.1
|
|
88.9
|
|
83.6
|
|
|||
Net Income
|
|
$200.4
|
|
|
$238.7
|
|
|
$247.6
|
|
ALLETE’s Equity in Net Income
|
|
$16.3
|
|
|
$19.6
|
|
|
$20.3
|
|
Millions
|
|
||
Assets Acquired
|
|
||
Cash and Cash Equivalents
|
|
$0.9
|
|
Accounts Receivable
|
16.8
|
|
|
Inventories
(a)
|
13.4
|
|
|
Other Current Assets
(b)
|
5.3
|
|
|
Property, Plant and Equipment
|
10.6
|
|
|
Intangible Assets
(c)
|
83.0
|
|
|
Goodwill
(d)
|
122.9
|
|
|
Other Non-Current Assets
|
0.2
|
|
|
Total Assets Acquired
|
|
$253.1
|
|
Liabilities Assumed
|
|
||
Current Liabilities
|
|
$19.2
|
|
Non-Current Liabilities
|
31.6
|
|
|
Total Liabilities Assumed
|
|
$50.8
|
|
Net Identifiable Assets Acquired
|
|
$202.3
|
|
(a)
|
Included in Inventories was
$2.7 million
of fair value adjustments relating to work in progress and finished goods inventories which will be recognized as Cost of Sales within one year from the acquisition date.
|
(b)
|
Included in Other Current Assets was
$1.6 million
relating to the fair value of sales backlog. Sales backlog will be recognized as Cost of Sales within one year from the acquisition date. Also included in Other Current Assets was restricted cash of
$2.1 million
relating to cash pledged as collateral for standby letters of credit.
|
(c)
|
Intangible Assets include customer relationships, patents, non-compete agreements, and trademarks and trade names. (See Note 8. Goodwill and Intangible Assets.)
|
(d)
|
For tax purposes, the purchase price allocation resulted in
$2.9 million
of deductible goodwill.
|
Millions
|
|
||
Assets Acquired
|
|
||
Current Assets
|
|
$4.8
|
|
Property, Plant and Equipment
|
103.0
|
|
|
Other Non-Current Assets
(a)
|
1.0
|
|
|
Total Assets Acquired
|
|
$108.8
|
|
Liabilities Assumed
|
|
||
Current Liabilities
(b)
|
|
$6.7
|
|
Power Purchase Agreements
|
49.0
|
|
|
Non-Current Liabilities
|
5.1
|
|
|
Total Liabilities Assumed
|
|
$60.8
|
|
Net Identifiable Assets Acquired
|
|
$48.0
|
|
(a)
|
Included in Other Non-Current Assets was
$0.3 million
of goodwill. For tax purposes, the purchase price allocation resulted in
no
allocation to goodwill.
|
(b)
|
Current Liabilities included
$5.9 million
related to the current portion of Power Purchase Agreements.
|
Millions
|
|
||
Assets Acquired
|
|
||
Current Assets
(a)
|
$9.0
|
||
Property, Plant and Equipment
|
156.2
|
|
|
Other Non-Current Assets
(b)
|
14.4
|
|
|
Total Assets Acquired
|
|
$179.6
|
|
Liabilities Assumed
|
|
||
Current Liabilities
|
|
$2.9
|
|
Long-Term Debt Due Within One Year
|
5.9
|
|
|
Long-Term Debt
|
55.0
|
|
|
Other Non-Current Liabilities
|
4.7
|
|
|
Total Liabilities Assumed
|
$68.5
|
||
Net Identifiable Assets Acquired
|
|
$111.1
|
|
(a)
|
Included in Current Assets was
$1.0 million
related to the current portion of Power Purchase Agreements and
$6.0 million
of restricted cash related to collateral deposits required under its loan agreement.
|
(b)
|
Included in Other Non-Current Assets was
$8.2 million
related to the non-current portion of Power Purchase Agreements,
$6.1 million
of restricted cash related to collateral deposits required under its loan agreements, and an
immaterial
amount of goodwill. For tax purposes, the purchase price allocation resulted in
no
allocation to goodwill.
|
Millions
|
|
||
Assets Acquired
|
|
||
Current Assets
|
$1.0
|
||
Property, Plant and Equipment
|
0.1
|
||
Intangible Assets
(a)
|
3.9
|
|
|
Goodwill
(b)
|
4.3
|
|
|
Total Assets Acquired
|
|
$9.3
|
|
Liabilities Assumed
|
|
||
Current Liabilities
|
|
$0.1
|
|
Total Liabilities Assumed
|
$0.1
|
||
Net Identifiable Assets Acquired
|
|
$9.2
|
|
(a)
|
Intangible Assets include customer relationships and non-compete agreements. (See Note 8. Goodwill and Intangible Assets.)
|
(b)
|
For tax purposes, the purchase price allocation resulted in
$4.3 million
of deductible goodwill.
|
Millions
|
|
||
Assets Acquired
|
|
||
Cash and Cash Equivalents
|
|
$3.8
|
|
Other Current Assets
|
14.3
|
|
|
Property, Plant and Equipment
|
156.9
|
|
|
Other Non-Current Assets
(a)
|
7.5
|
|
|
Total Assets Acquired
|
|
$182.5
|
|
Liabilities Assumed
|
|
||
Current Liabilities
(b)
|
|
$15.2
|
|
Long-Term Debt Due Within One Year
|
2.2
|
|
|
Long-Term Debt
|
21.1
|
|
|
Power Purchase Agreements
|
99.4
|
|
|
Other Non-Current Liabilities
|
10.6
|
|
|
Non-Controlling Interest
(c)
|
7.1
|
|
|
Total Liabilities and Non-Controlling Interest Assumed
|
$155.6
|
||
Net Identifiable Assets Acquired
|
|
$26.9
|
|
(a)
|
Included in Other Non-Current Assets was
$0.3
million for the option to purchase Armenia Mountain, and goodwill of
$2.9
million. For tax purposes, the purchase price allocation resulted in
no
allocation to goodwill.
|
(b)
|
Current Liabilities included
$12.4
million related to the current portion of Power Purchase Agreements.
|
(c)
|
The purchase price accounting valued the non-controlling interest related to Lake Benton, Storm Lake II and Condon at fair value using the discounted cash flow method.
|
Millions
|
|
||
Assets Acquired
|
|
||
Cash and Cash Equivalents
|
|
$0.4
|
|
Other Current Assets
|
4.7
|
|
|
Property, Plant and Equipment
|
47.3
|
|
|
Other Non-Current Assets
(a)
|
11.4
|
|
|
Total Assets Acquired
|
|
$63.8
|
|
Liabilities Assumed
|
|
||
Current Liabilities
(b)
|
|
$8.2
|
|
Power Purchase Agreements
|
23.5
|
|
|
Non-Current Liabilities
|
17.0
|
|
|
Total Liabilities Assumed
|
$48.7
|
||
Net Identifiable Assets Acquired
|
|
$15.1
|
|
(a)
|
Included in Other Non-Current Assets was
$0.4 million
of restricted cash and an
immaterial
amount of goodwill. For tax purposes, the purchase price allocation resulted in
no
allocation to goodwill.
|
(b)
|
Current Liabilities included
$7.5 million
related to the current portion of Power Purchase Agreements.
|
|
ALLETE Clean Energy
|
|
|
U.S. Water Services
|
|
|
Total
|
|
|||
Millions
|
|
|
|
|
|
||||||
Balance as of December 31, 2014
|
|
$2.9
|
|
|
—
|
|
|
|
$2.9
|
|
|
Acquired Goodwill
|
0.4
|
|
|
|
$127.3
|
|
|
127.7
|
|
||
Balance as of December 31, 2015
|
|
$3.3
|
|
|
|
$127.3
|
|
|
|
$130.6
|
|
|
December 31,
2014 |
|
|
Additions
(a)
|
|
Amortization
|
|
Other
(b)
|
|
December 31,
2015 |
|
|||||
Millions
|
|
|
|
|
|
|
|
|
|
|||||||
Intangible Assets
|
|
|
|
|
|
|
|
|
|
|||||||
Definite-Lived Intangible Assets
|
|
|
|
|
|
|
|
|
|
|||||||
Customer Relationships
|
—
|
|
|
|
$64.0
|
|
|
$(3.2)
|
|
—
|
|
|
|
$60.8
|
|
|
Developed Technology and Other
(c)
|
|
$1.9
|
|
|
6.4
|
|
|
(0.8)
|
|
$(0.3)
|
|
7.2
|
|
|||
Total Definite-Lived Intangible Assets
|
1.9
|
|
|
70.4
|
|
|
(4.0)
|
|
(0.3)
|
|
68.0
|
|
||||
Indefinite-Lived Intangible Assets
|
|
|
|
|
|
|
|
|
|
|||||||
Trademarks and Trade Names
|
—
|
|
|
16.6
|
|
|
n/a
|
|
—
|
|
|
16.6
|
|
|||
Total Intangible Assets
|
|
$1.9
|
|
|
|
$87.0
|
|
|
$(4.0)
|
|
$(0.3)
|
|
|
$84.6
|
|
(a)
|
Additions are primarily the result of the U.S. Water Services acquisition. (See Note 7. Acquisitions.)
|
(b)
|
Armenia Mountain was acquired on July 1, 2015, at which time the purchase option intangible asset was reclassified as a component of the acquisition consideration.
|
(c)
|
Developed Technology and Other includes patents, non-compete agreements, and land easements.
|
Other Investments
|
|
|
||||
As of December 31
|
2015
|
|
2014
|
|
||
Millions
|
|
|
||||
ALLETE Properties
(a)
|
|
$50.1
|
|
|
$88.2
|
|
Available-for-sale Securities
(b)
|
18.5
|
|
18.9
|
|
||
Cash Equivalents
|
2.0
|
|
2.9
|
|
||
Other
|
4.0
|
|
4.4
|
|
||
Total Other Investments
|
|
$74.6
|
|
|
$114.4
|
|
(a)
|
In 2015, ALLETE Properties recorded a
$36.3 million
non-cash impairment charge related to its real estate assets. (See Note 1. Operations and Significant Accounting Policies.)
|
(b)
|
As of
December 31, 2015
, the aggregate amount of available-for-sale corporate debt securities maturing in one year or less was
none
, in one year to less than three years was
$1.0 million
, in three years to less than five years was
$3.2 million
, and in five or more years was
$6.7 million
.
|
|
Fair Value as of December 31, 2015
|
||||||||||||||
Recurring Fair Value Measures
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
||||
Millions
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments
(a)
|
|
|
|
|
|
|
|
||||||||
Available-for-sale – Equity Securities
|
|
$7.6
|
|
|
—
|
|
|
—
|
|
|
|
$7.6
|
|
||
Available-for-sale – Corporate Debt Securities
|
—
|
|
|
|
$10.9
|
|
|
—
|
|
|
10.9
|
|
|||
Cash Equivalents
|
2.0
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
||||
Total Fair Value of Assets
|
|
$9.6
|
|
|
|
$10.9
|
|
|
—
|
|
|
|
$20.5
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
(b)
|
|
|
|
|
|
|
|
||||||||
Deferred Compensation
|
—
|
|
|
|
$16.1
|
|
|
—
|
|
|
|
$16.1
|
|
||
U.S. Water Services Contingent Consideration
|
—
|
|
|
—
|
|
|
|
$36.6
|
|
|
36.6
|
|
|||
Total Fair Value of Liabilities
|
—
|
|
|
|
$16.1
|
|
|
|
$36.6
|
|
|
|
$52.7
|
|
|
Total Net Fair Value of Assets (Liabilities)
|
|
$9.6
|
|
|
$(5.2)
|
|
$(36.6)
|
|
$(32.2)
|
(a)
|
Included in Other Investments on the Consolidated Balance Sheet.
|
(b)
|
Included in Other Non-Current Liabilities on the Consolidated Balance Sheet.
|
|
Fair Value as of December 31, 2014
|
|||||||||||||
Recurring Fair Value Measures
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|||
Millions
|
|
|
|
|
|
|
|
|||||||
Assets:
|
|
|
|
|
|
|
|
|||||||
Investments
(a)
|
|
|
|
|
|
|
|
|||||||
Available-for-sale – Equity Securities
|
|
$8.1
|
|
|
—
|
|
|
—
|
|
|
|
$8.1
|
|
|
Available-for-sale – Corporate Debt Securities
|
—
|
|
|
|
$10.8
|
|
|
—
|
|
|
10.8
|
|
||
Cash Equivalents
|
2.9
|
|
|
—
|
|
|
—
|
|
|
2.9
|
|
|||
Total Fair Value of Assets
|
|
$11.0
|
|
|
|
$10.8
|
|
|
—
|
|
|
|
$21.8
|
|
|
|
|
|
|
|
|
|
|||||||
Liabilities:
|
|
|
|
|
|
|
|
|||||||
Deferred Compensation
(b)
|
—
|
|
|
|
$16.2
|
|
|
—
|
|
|
|
$16.2
|
|
|
Derivatives – Interest Rate Swap
(c)
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.3
|
|
|||
Total Fair Value of Liabilities
|
—
|
|
|
|
$16.5
|
|
|
—
|
|
|
|
$16.5
|
|
|
Total Net Fair Value of Assets (Liabilities)
|
|
$11.0
|
|
|
$(5.7)
|
|
—
|
|
|
|
$5.3
|
|
(a)
|
Included in Other Investments on the Consolidated Balance Sheet.
|
(b)
|
Included in Other Non-Current Liabilities on the Consolidated Balance Sheet.
|
(c)
|
Included in Current Liabilities - Other on the Consolidated Balance Sheet.
|
Recurring Fair Value Measures
|
|
||
Activity in Level 3
|
|
||
Millions
|
|
||
Balance as of December 31, 2014
|
—
|
|
|
Recognition of U.S. Water Services Contingent Consideration
|
|
$35.7
|
|
Accretion Expense
(a)
|
2.4
|
|
|
Changes in Cash Flow Projections
|
(1.5
|
)
|
|
Balance as of December 31, 2015
|
|
$36.6
|
|
(a)
|
Included in Interest Expense on the Consolidated Statement of Income.
|
Financial Instruments
|
Carrying Amount
|
|
Fair Value
|
Millions
|
|
|
|
Long-Term Debt, Including Current Portion
|
|
|
|
December 31, 2015
|
$1,605.0
|
|
$1,676.0
|
December 31, 2014
|
$1,373.5
|
|
$1,484.5
|
Maturity Date
|
Principal Amount
|
Interest Rate
|
September 15, 2020
|
$40 Million
|
2.80%
|
September 16, 2030
|
$60 Million
|
3.86%
|
Long-Term Debt
|
|
|
||||
As of December 31
|
2015
|
|
2014
|
|
||
Millions
|
|
|
||||
First Mortgage Bonds
|
|
|
||||
7.70% Series Due 2016
|
$20.0
|
$20.0
|
||||
1.83% Series Due 2018
|
50.0
|
|
50.0
|
|
||
8.17% Series Due 2019
|
42.0
|
|
42.0
|
|
||
5.28% Series Due 2020
|
35.0
|
|
35.0
|
|
||
2.80% Series Due 2020
|
40.0
|
|
—
|
|
||
4.85% Series Due 2021
|
15.0
|
|
15.0
|
|
||
3.02% Series Due 2021
|
60.0
|
|
60.0
|
|
||
3.40% Series Due 2022
|
75.0
|
|
75.0
|
|
||
6.02% Series Due 2023
|
75.0
|
|
75.0
|
|
||
3.69% Series Due 2024
|
60.0
|
|
60.0
|
|
||
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
|
|
40.0
|
|
||
3.74% Series Due 2029
|
50.0
|
|
50.0
|
|
||
3.86% Series Due 2030
|
60.0
|
|
—
|
|
||
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
|
|
60.0
|
|
||
4.95% Series Due 2044
|
40.0
|
|
40.0
|
|
||
5.05% Series Due 2044
|
40.0
|
|
40.0
|
|
||
4.39% Series Due 2044
|
50.0
|
|
50.0
|
|
||
Unsecured Term Loan Variable Rate Due 2015
|
—
|
|
75.0
|
|
||
Unsecured Term Loan Variable Rate Due 2017
|
125.0
|
|
—
|
|
||
Senior Unsecured Notes 5.99% Due 2017
|
50.0
|
|
50.0
|
|
||
Variable Demand Revenue Refunding Bonds Series 1997 A Due 2015 – 2020
|
13.5
|
|
24.6
|
|
||
Industrial Development Variable Rate Demand Refunding Revenue Bonds Series 2006, Due 2025
|
27.8
|
|
27.8
|
|
||
Armenia Mountain Senior Secured Notes 3.26% Due 2024
|
83.3
|
|
—
|
|
||
SWL&P First Mortgage Bonds 4.15% Series Due 2028
|
15.0
|
|
15.0
|
|
||
Other Long-Term Debt, 0.08% – 7.45% Due 2016 – 2037
|
68.4
|
|
59.1
|
|
||
Total Long-Term Debt
|
1,605.0
|
|
1,373.5
|
|
||
Less: Due Within One Year
|
36.3
|
|
100.7
|
|
||
Net Long-Term Debt
|
|
$1,568.7
|
|
|
$1,272.8
|
|
•
|
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, 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
|
|
|
Employee Stock Purchase Program
|
18
|
|
0.8
|
|
|
Invest Direct
|
378
|
|
18.9
|
|
|
Options and Stock Awards
|
78
|
|
8.0
|
|
|
Equity Issuance Program
|
1,851
|
|
90.0
|
|
|
Forward Sale Agreement and Issuance
|
1,807
|
|
85.2
|
|
|
Contribution to Pension
|
396
|
|
19.5
|
|
|
Balance as of December 31, 2014
|
45,929
|
|
1,107.6
|
|
|
Employee Stock Purchase Program
|
18
|
|
0.9
|
|
|
Invest Direct
|
383
|
|
19.0
|
|
|
Options and Stock Awards
|
43
|
|
8.6
|
|
|
Equity Issuance Program
|
1,289
|
|
69.9
|
|
|
Forward Sale Agreement
|
1,413
|
|
65.4
|
|
|
Balance as of December 31, 2015
|
49,075
|
|
|
$1,271.4
|
|
Reconciliation of Basic and Diluted
|
|
|
|
|||||
Earnings Per Share
|
|
|
Dilutive
|
|
|
|
||
Year Ended December 31
|
Basic
|
|
Securities
|
|
Diluted
|
|
||
Millions Except Per Share Amounts
|
|
|
|
|||||
2015
|
|
|
|
|||||
Net Income Attributable to ALLETE
|
|
$141.1
|
|
|
|
|
$141.1
|
|
Average Common Shares
|
48.3
|
|
0.1
|
|
48.4
|
|
||
Earnings Per Share
|
|
$2.92
|
|
|
|
|
$2.92
|
|
2014
|
|
|
|
|||||
Net Income Attributable to ALLETE
|
|
$124.8
|
|
|
|
|
$124.8
|
|
Average Common Shares
|
42.9
|
|
0.2
|
|
43.1
|
|
||
Earnings Per Share
|
|
$2.91
|
|
|
|
|
$2.90
|
|
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
|
|
Year Ended December 31
|
2015
|
|
2014
|
|
2013
|
|
|||
Millions
|
|
|
|
||||||
AFUDC–Equity
|
|
$3.3
|
|
|
$7.8
|
|
|
$4.6
|
|
Gain on Sale of Available-for-sale Securities
|
0.1
|
|
0.2
|
|
2.2
|
|
|||
Investments and Other Income
|
1.3
|
|
0.6
|
|
2.5
|
|
|||
Total Other Income
|
|
$4.7
|
|
|
$8.6
|
|
|
$9.3
|
|
Income Tax Expense
|
|
|
|
||||||
Year Ended December 31
|
2015
|
|
2014
|
|
2013
|
|
|||
Millions
|
|
|
|
||||||
Current Tax Expense
|
|
|
|
||||||
Federal
(a)
|
—
|
|
$1.1
|
—
|
|
||||
State
(a)
|
$0.2
|
2.9
|
$0.1
|
||||||
Total Current Tax Expense
|
0.2
|
|
4.0
|
|
0.1
|
|
|||
Deferred Tax Expense
|
|
|
|
||||||
Federal
|
19.4
|
|
25.3
|
|
22.9
|
|
|||
State
|
6.5
|
|
8.2
|
|
6.5
|
|
|||
Investment Tax Credit Amortization
|
(0.8
|
)
|
(0.8
|
)
|
(0.8
|
)
|
|||
Total Deferred Tax Expense
|
25.1
|
|
32.7
|
|
28.6
|
|
|||
Total Income Tax Expense
|
|
$25.3
|
|
|
$36.7
|
|
|
$28.7
|
|
(a)
|
For the years ended December 31, 2015, 2014, and 2013, the federal and state current tax expense was minimal due to NOLs which resulted from the bonus depreciation provisions of the Protecting Americans from Tax Hikes Act of 2015, the Tax Increase Prevention Act of 2014 and the American Taxpayer Relief Act of 2012. The federal and state NOLs will be carried forward to offset future taxable income. The year ended December 31, 2014 includes the resolution of an Internal Revenue Service examination for tax years 2005 through 2009 and the impacts of initiatives implemented on the 2013 federal and state tax returns to utilize tax carryforwards that may have expired.
|
Reconciliation of Taxes from Federal Statutory
|
|
|
|
||||||
Rate to Total Income Tax Expense
|
|
|
|
||||||
Year Ended December 31
|
2015
|
|
2014
|
|
2013
|
|
|||
Millions
|
|
|
|
||||||
Income Before Non-Controlling Interest and Income Taxes
|
|
$166.8
|
|
|
$162.2
|
|
|
$133.4
|
|
Statutory Federal Income Tax Rate
|
35
|
%
|
35
|
%
|
35
|
%
|
|||
Income Taxes Computed at 35 percent Statutory Federal Rate
|
|
$58.4
|
|
|
$56.8
|
|
|
$46.7
|
|
Increase (Decrease) in Tax Due to:
|
|
|
|
||||||
State Income Taxes – Net of Federal Income Tax Benefit
|
4.4
|
|
7.2
|
|
4.3
|
|
|||
Regulatory Differences for Utility Plant
|
(0.6
|
)
|
(3.5
|
)
|
(2.2
|
)
|
|||
Production Tax Credits
|
(37.0
|
)
|
(23.7
|
)
|
(19.2
|
)
|
|||
Other
|
0.1
|
|
(0.1
|
)
|
(0.9
|
)
|
|||
Total Income Tax Expense
|
|
$25.3
|
|
|
$36.7
|
|
|
$28.7
|
|
Deferred Tax Assets and Liabilities
|
|
|
||||
As of December 31
|
2015
|
|
2014
|
|
||
Millions
|
|
|
||||
Deferred Tax Assets
|
|
|
||||
Employee Benefits and Compensation
|
|
$105.4
|
|
|
$102.2
|
|
Property Related
|
126.6
|
|
102.7
|
|
||
NOL Carryforwards
|
186.4
|
|
156.5
|
|
||
Tax Credit Carryforwards
|
164.8
|
|
95.7
|
|
||
Power Purchase Agreements
|
73.0
|
|
51.8
|
|
||
Other
|
21.8
|
|
17.0
|
|
||
Gross Deferred Tax Assets
|
678.0
|
|
525.9
|
|
||
Deferred Tax Asset Valuation Allowance
|
(31.6
|
)
|
(22.1
|
)
|
||
Total Deferred Tax Assets
|
|
$646.4
|
|
|
$503.8
|
|
Deferred Tax Liabilities
|
|
|
||||
Property Related
|
|
$1,053.0
|
|
|
$848.8
|
|
Regulatory Asset for Benefit Obligations
|
89.4
|
|
89.9
|
|
||
Unamortized Investment Tax Credits
|
26.0
|
|
10.3
|
|
||
Partnership Basis Differences
|
47.8
|
|
41.9
|
|
||
Other
|
10.0
|
|
16.1
|
|
||
Total Deferred Tax Liabilities
|
|
$1,226.2
|
|
|
$1,007.0
|
|
Net Deferred Income Taxes
|
|
$579.8
|
|
|
$503.2
|
|
Recorded as:
|
|
|
||||
Net Current Deferred Tax Assets
(a)
|
—
|
|
$7.5
|
|||
Net Long-Term Deferred Tax Liabilities
|
|
$579.8
|
|
510.7
|
|
|
Net Deferred Income Taxes
|
|
$579.8
|
|
|
$503.2
|
|
(a)
|
For discussion of classification of deferred income taxes see Note 1. Operations and Significant Accounting Policies - New Accounting Standards - Balance Sheet Classification of Deferred Taxes.
|
NOL and Tax Credit Carryforwards
|
|
|
||
As of December 31
|
2015
|
2014
|
|
|
Millions
|
|
|
||
Federal NOL Carryforwards
(a)
|
$493.0
|
|
$413.7
|
|
Federal Tax Credit Carryforwards
|
$113.6
|
$59.3
|
||
State NOL Carryforwards
(a)
|
$228.6
|
$184.7
|
||
State Tax Credit Carryforwards
(b)
|
$20.0
|
$14.7
|
(a)
|
Pretax amounts.
|
(b)
|
Net of a
$31.2 million
valuation allowance as of
December 31, 2015
(
$21.7 million
as of
December 31, 2014
).
|
Gross Unrecognized Income Tax Benefits
|
2015
|
|
2014
|
|
2013
|
|
|||
Millions
|
|
|
|
||||||
Balance at January 1
|
|
$2.0
|
|
|
$1.2
|
|
|
$2.7
|
|
Additions for Tax Positions Related to the Current Year
|
0.5
|
|
—
|
|
0.1
|
|
|||
Additions for Tax Positions Related to Prior Years
|
0.7
|
|
1.0
|
|
1.3
|
|
|||
Reductions for Tax Positions Related to Prior Years
|
(0.7
|
)
|
—
|
|
—
|
|
|||
Reductions for Settlements
|
—
|
|
—
|
|
(2.9
|
)
|
|||
Lapse of Statute
|
(0.1
|
)
|
(0.2
|
)
|
—
|
|
|||
Balance as of December 31
|
|
$2.4
|
|
|
$2.0
|
|
|
$1.2
|
|
|
Unrealized Gain (Loss) on
Available-for-sale
Securities
|
Defined Benefit
Pension, Other
Postretirement
Items
(a)
|
Gain
(Loss) on
Cash Flow
Hedge
|
Total
|
||||
Millions
|
|
|
|
|
||||
Balance as of December 31, 2012
|
$(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 Loss
|
(1.3
|
)
|
1.6
|
|
—
|
|
0.3
|
|
Net Other Comprehensive Income
|
—
|
|
4.8
|
|
0.1
|
|
4.9
|
|
Balance as of December 31, 2013
|
(0.1
|
)
|
(16.7
|
)
|
(0.3
|
)
|
(17.1
|
)
|
Other Comprehensive Income (Loss) Before Reclassifications
|
(0.3
|
)
|
(5.2
|
)
|
0.2
|
|
(5.3
|
)
|
Amounts Reclassified From Accumulated Other Comprehensive Loss
|
0.1
|
|
1.2
|
|
—
|
|
1.3
|
|
Net Other Comprehensive Income (Loss)
|
(0.2
|
)
|
(4.0
|
)
|
0.2
|
|
(4.0
|
)
|
Balance as of December 31, 2014
|
(0.3
|
)
|
(20.7
|
)
|
(0.1
|
)
|
(21.1
|
)
|
Other Comprehensive Income (Loss) Before Reclassifications
|
(0.4
|
)
|
(4.3
|
)
|
0.1
|
|
(4.6
|
)
|
Amounts Reclassified From Accumulated Other Comprehensive Loss
|
(0.1
|
)
|
1.3
|
|
—
|
|
1.2
|
|
Net Other Comprehensive Income (Loss)
|
(0.5
|
)
|
(3.0
|
)
|
0.1
|
|
(3.4
|
)
|
Balance as of December 31, 2015
|
$(0.8)
|
$(23.7)
|
—
|
|
$(24.5)
|
(a)
|
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
|
||||||
At December 31
|
2015
|
|
2014
|
|
||
Millions
|
|
|
||||
Accumulated Benefit Obligation
|
|
$665.0
|
|
|
$661.4
|
|
Change in Benefit Obligation
|
|
|
|
|
||
Obligation, Beginning of Year
|
|
$714.5
|
|
|
$622.8
|
|
Service Cost
|
10.1
|
|
8.3
|
|
||
Interest Cost
|
29.9
|
|
29.8
|
|
||
Actuarial (Gain) Loss
|
(31.2
|
)
|
72.6
|
|
||
Benefits Paid
|
(40.2
|
)
|
(36.9
|
)
|
||
Participant Contributions
|
26.7
|
|
17.9
|
|
||
Obligation, End of Year
|
|
$709.8
|
|
|
$714.5
|
|
Change in Plan Assets
|
|
|
|
|
||
Fair Value, Beginning of Year
|
|
$544.2
|
|
|
$501.6
|
|
Actual Return on Plan Assets
|
(10.8
|
)
|
41.0
|
|
||
Employer Contribution
(a)
|
28.1
|
|
38.5
|
|
||
Benefits Paid
|
(40.2
|
)
|
(36.9
|
)
|
||
Fair Value, End of Year
|
|
$521.3
|
|
|
$544.2
|
|
Funded Status, End of Year
|
$(188.5)
|
$(170.3)
|
||||
|
|
|
||||
Net Pension Amounts Recognized in Consolidated Balance Sheet Consist of:
|
|
|
|
|
||
Current Liabilities
|
$(1.3)
|
$(1.2)
|
||||
Non-Current Liabilities
|
$(187.2)
|
$(169.1)
|
(a)
|
Includes Participant Contributions noted above.
|
Unrecognized Pension Costs
|
||||||
As of December 31
|
2015
|
|
2014
|
|
||
Millions
|
|
|
||||
Net Loss
|
|
$252.7
|
|
|
$250.4
|
|
Prior Service Cost
|
—
|
|
0.2
|
|
||
Total Unrecognized Pension Costs
|
|
$252.7
|
|
|
$250.6
|
|
Other Changes in Pension Plan Assets and Benefit Obligations Recognized in
Other Comprehensive Income and Regulatory Assets or Liabilities
|
||||
Year Ended December 31
|
2015
|
|
2014
|
|
Millions
|
|
|
||
Net Loss
|
$20.2
|
$69.8
|
||
Amortization of Prior Service Cost
|
(0.2
|
)
|
(0.3
|
)
|
Amortization of Loss
|
(17.9
|
)
|
(14.2
|
)
|
Total Recognized in Other Comprehensive Income and Regulatory Assets or Liabilities
|
$2.1
|
$55.3
|
Information for Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets
|
||||||
As of December 31
|
2015
|
|
2014
|
|
||
Millions
|
|
|
||||
Projected Benefit Obligation
|
|
$709.8
|
|
|
$714.5
|
|
Accumulated Benefit Obligation
|
|
$665.0
|
|
|
$661.4
|
|
Fair Value of Plan Assets
|
|
$521.3
|
|
|
$544.2
|
|
Postretirement Health and Life Obligation and Funded Status
|
||||||
At December 31
|
2015
|
|
2014
|
|
||
Millions
|
|
|
||||
Change in Benefit Obligation
|
|
|
||||
Obligation, Beginning of Year
|
|
$170.9
|
|
|
$151.9
|
|
Service Cost
|
4.3
|
|
3.4
|
|
||
Interest Cost
|
7.2
|
|
7.3
|
|
||
Actuarial (Gain) Loss
|
(14.4
|
)
|
18.1
|
|
||
Benefits Paid
|
(10.7
|
)
|
(8.9
|
)
|
||
Participant Contributions
|
2.9
|
|
2.6
|
|
||
Plan Amendments
|
—
|
|
(2.9
|
)
|
||
Plan Curtailments
|
—
|
|
(0.6
|
)
|
||
Obligation, End of Year
|
|
$160.2
|
|
|
$170.9
|
|
Change in Plan Assets
|
|
|
||||
Fair Value, Beginning of Year
|
|
$163.2
|
|
|
$157.0
|
|
Actual Return on Plan Assets
|
(3.5
|
)
|
11.6
|
|
||
Employer Contribution
|
1.5
|
|
1.1
|
|
||
Participant Contributions
|
2.9
|
|
2.6
|
|
||
Benefits Paid
|
(10.7
|
)
|
(9.1
|
)
|
||
Fair Value, End of Year
|
|
$153.4
|
|
|
$163.2
|
|
Funded Status, End of Year
|
$(6.8)
|
$(7.7)
|
||||
|
|
|
||||
Net Postretirement Health and Life Amounts Recognized in Consolidated Balance Sheet Consist of:
|
|
|
||||
Non-Current Assets
|
$6.4
|
$6.6
|
||||
Current Liabilities
|
$(1.0)
|
$(0.9)
|
||||
Non-Current Liabilities
|
$(12.2)
|
$(13.4)
|
Components of Net Periodic Postretirement Health and Life Expense
|
|||||||||
Year Ended December 31
|
2015
|
|
2014
|
|
2013
|
|
|||
Millions
|
|
|
|
||||||
Service Cost
|
|
$4.3
|
|
|
$3.4
|
|
|
$3.9
|
|
Interest Cost
|
7.2
|
|
7.3
|
|
6.8
|
|
|||
Expected Return on Plan Assets
|
(10.9
|
)
|
(10.3
|
)
|
(9.7
|
)
|
|||
Amortization of Loss
|
0.4
|
|
0.5
|
|
1.6
|
|
|||
Amortization of Prior Service Credit
|
(3.0
|
)
|
(2.5
|
)
|
(2.5
|
)
|
|||
Effect of Plan Settlement
(a)
|
—
|
|
—
|
|
(1.6
|
)
|
|||
Net Postretirement Health and Life Credit
|
$(2.0)
|
$(1.6)
|
$(1.5)
|
(a)
|
Result of the termination of a legacy benefit plan.
|
Other Changes in Postretirement Benefit Plan Assets and Benefit Obligations
Recognized in Other Comprehensive Income and Regulatory Assets or Liabilities
|
|||||
Year Ended December 31
|
2015
|
|
2014
|
|
|
Millions
|
|
|
|
||
Net Loss
|
—
|
|
$16.4
|
||
Prior Service Credit Arising During the Period
|
—
|
|
(3.0
|
)
|
|
Amortization of Prior Service Credit
|
|
$3.0
|
|
2.5
|
|
Amortization of Loss
|
(0.4
|
)
|
(0.5
|
)
|
|
Total Recognized in Other Comprehensive Income and Regulatory Assets or Liabilities
|
$2.6
|
$15.4
|
Estimated Future Benefit Payments
|
Pension
|
Postretirement Health and Life
|
||||
Millions
|
|
|
|
|||
2016
|
|
$39.8
|
|
|
$8.3
|
|
2017
|
|
$40.6
|
|
|
$8.6
|
|
2018
|
|
$41.1
|
|
|
$8.8
|
|
2019
|
|
$41.7
|
|
|
$9.1
|
|
2020
|
|
$41.8
|
|
|
$9.3
|
|
Years 2021 – 2025
|
|
$216.2
|
|
|
$48.0
|
|
|
Pension
|
Postretirement
Health and Life
|
|
Millions
|
|
|
|
Net (Gain) Loss
|
$(8.4)
|
$0.2
|
|
Prior Service Credit
|
—
|
|
(2.9)
|
Total Pension and Postretirement Health and Life Credit
|
$(8.4)
|
$(2.7)
|
Assumptions Used to Determine Benefit Obligation
|
||
As of December 31
|
2015
|
2014
|
Discount Rate
|
|
|
Pension
|
4.72%
|
4.30%
|
Postretirement Health and Life
|
4.73%
|
4.33%
|
Rate of Compensation Increase
|
3.70 - 4.30%
|
3.70 - 4.30%
|
Health Care Trend Rates
|
|
|
Trend Rate
|
6.50%
|
6.75%
|
Ultimate Trend Rate
|
5.00%
|
5.00%
|
Year Ultimate Trend Rate Effective
|
2022
|
2022
|
Actual Plan Asset Allocations
|
Pension
|
Postretirement
Health and Life
(a)
|
||||||
|
2015
|
2014
|
2015
|
2014
|
||||
Equity Securities
|
47
|
%
|
48
|
%
|
57
|
%
|
58
|
%
|
Debt Securities
|
39
|
%
|
39
|
%
|
35
|
%
|
34
|
%
|
Private Equity
|
8
|
%
|
8
|
%
|
8
|
%
|
8
|
%
|
Real Estate
|
6
|
%
|
5
|
%
|
—
|
|
—
|
|
|
100
|
%
|
100
|
%
|
100
|
%
|
100
|
%
|
(a)
|
Includes VEBAs and irrevocable grantor trusts.
|
Plan Asset Target Allocations
|
Pension
|
Postretirement
Health and Life
(a)
|
||
Equity Securities
|
56
|
%
|
60
|
%
|
Debt Securities
|
35
|
%
|
37
|
%
|
Real Estate
|
9
|
%
|
3
|
%
|
|
100
|
%
|
100
|
%
|
(a)
|
Includes VEBAs and irrevocable grantor trusts.
|
|
Fair Value as of December 31, 2015
|
|||||||||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Millions
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Equity Securities:
|
|
|
|
|
||||||||
U.S. Large-cap
(a)
|
|
$33.9
|
|
|
$42.1
|
|
—
|
|
|
$76.0
|
|
|
U.S. Mid-cap Growth
(a)
|
14.2
|
|
17.7
|
|
—
|
|
31.9
|
|
||||
U.S. Small-cap
(a)
|
14.5
|
|
17.9
|
|
—
|
|
32.4
|
|
||||
Mutual Funds
|
8.4
|
|
—
|
|
—
|
|
8.4
|
|
||||
International
|
44.7
|
|
42.0
|
|
—
|
|
86.7
|
|
||||
Debt Securities:
|
|
|
|
|
|
|
|
|
||||
Mutual Funds
|
0.1
|
|
—
|
|
—
|
|
0.1
|
|
||||
Fixed Income
|
2.7
|
|
185.3
|
|
—
|
|
188.0
|
|
||||
Cash and Cash Equivalents
|
25.6
|
|
—
|
|
—
|
|
25.6
|
|
||||
Other Types of Investments:
|
|
|
|
|
|
|
|
|
||||
Private Equity Funds
|
—
|
|
—
|
|
|
$43.3
|
|
43.3
|
|
|||
Real Estate
|
—
|
|
—
|
|
28.9
|
|
28.9
|
|
||||
Total Fair Value of Assets
|
|
$144.1
|
|
|
$305.0
|
|
|
$72.2
|
|
|
$521.3
|
|
(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, 2014
|
|
$43.3
|
|
|
$28.9
|
|
Actual Return on Plan Assets
|
2.6
|
|
2.9
|
|
||
Purchases, Sales, and Settlements – Net
|
(2.6
|
)
|
(2.9
|
)
|
||
Balance as of December 31, 2015
|
|
$43.3
|
|
|
$28.9
|
|
|
Fair Value as of December 31, 2014
|
|||||||||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Millions
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Equity Securities:
|
|
|
|
|
||||||||
U.S. Large-cap
(a)
|
|
$32.1
|
|
|
$56.4
|
|
—
|
|
|
$88.5
|
|
|
U.S. Mid-cap Growth
(a)
|
13.6
|
|
23.9
|
|
—
|
|
37.5
|
|
||||
U.S. Small-cap
(a)
|
13.9
|
|
24.4
|
|
—
|
|
38.3
|
|
||||
International
|
46.1
|
|
45.9
|
|
—
|
|
92.0
|
|
||||
Debt Securities:
|
|
|
|
|
|
|
|
|
||||
Mutual Funds
|
0.1
|
|
—
|
|
—
|
|
0.1
|
|
||||
Fixed Income
|
2.7
|
|
201.0
|
|
—
|
|
203.7
|
|
||||
Cash and Cash Equivalents
|
11.9
|
|
—
|
|
—
|
|
11.9
|
|
||||
Other Types of Investments:
|
|
|
|
|
|
|
|
|
||||
Private Equity Funds
|
—
|
|
—
|
|
|
$43.3
|
|
43.3
|
|
|||
Real Estate
|
—
|
|
—
|
|
28.9
|
|
28.9
|
|
||||
Total Fair Value of Assets
|
|
$120.4
|
|
|
$351.6
|
|
|
$72.2
|
|
|
$544.2
|
|
(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, 2013
|
|
|
$46.8
|
|
|
$26.5
|
|
Actual Return on Plan Assets
|
|
1.2
|
|
2.8
|
|
||
Purchases, Sales, and Settlements – Net
|
|
(4.7
|
)
|
(0.4
|
)
|
||
Balance as of December 31, 2014
|
|
|
$43.3
|
|
|
$28.9
|
|
|
Fair Value as of December 31, 2015
|
|||||||||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Millions
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Equity Securities:
|
|
|
|
|
||||||||
U.S. Large-cap
(a)
|
|
$28.2
|
|
—
|
|
—
|
|
|
$28.2
|
|
||
U.S. Mid-cap Growth
(a)
|
19.1
|
|
—
|
|
—
|
|
19.1
|
|
||||
U.S. Small-cap
(a)
|
12.1
|
|
—
|
|
—
|
|
12.1
|
|
||||
International
|
26.8
|
|
—
|
|
—
|
|
26.8
|
|
||||
Debt Securities:
|
|
|
|
|
|
|
|
|
||||
Mutual Funds
|
45.2
|
|
—
|
|
—
|
|
45.2
|
|
||||
Fixed Income
|
—
|
|
|
$8.4
|
|
—
|
|
8.4
|
|
|||
Cash and Cash Equivalents
|
1.6
|
|
—
|
|
—
|
|
1.6
|
|
||||
Other Types of Investments:
|
|
|
|
|
|
|
|
|
||||
Private Equity Funds
|
—
|
|
—
|
|
|
$12.0
|
|
12.0
|
|
|||
Total Fair Value of Assets
|
|
$133.0
|
|
|
$8.4
|
|
|
$12.0
|
|
|
$153.4
|
|
(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, 2014
|
|
$12.9
|
|
Actual Return on Plan Assets
|
1.2
|
|
|
Purchases, Sales, and Settlements – Net
|
(2.1
|
)
|
|
Balance as of December 31, 2015
|
|
$12.0
|
|
|
Fair Value as of December 31, 2014
|
|||||||||||
Recurring Fair Value Measures
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
Millions
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
||||||||
Equity Securities:
|
|
|
|
|
||||||||
U.S. Large-cap
(a)
|
|
$29.3
|
|
—
|
|
—
|
|
|
$29.3
|
|
||
U.S. Mid-cap Growth
(a)
|
20.0
|
|
—
|
|
—
|
|
20.0
|
|
||||
U.S. Small-cap
(a)
|
12.6
|
|
—
|
|
—
|
|
12.6
|
|
||||
International
|
30.6
|
|
—
|
|
—
|
|
30.6
|
|
||||
Debt Securities:
|
|
|
|
|
|
|
|
|
||||
Mutual Funds
|
44.5
|
|
—
|
|
—
|
|
44.5
|
|
||||
Fixed Income
|
—
|
|
|
$9.9
|
|
—
|
|
9.9
|
|
|||
Cash and Cash Equivalents
|
3.4
|
|
—
|
|
—
|
|
3.4
|
|
||||
Other Types of Investments:
|
|
|
|
|
|
|
|
|
||||
Private Equity Funds
|
—
|
|
—
|
|
|
$12.9
|
|
12.9
|
|
|||
Total Fair Value of Assets
|
|
$140.4
|
|
|
$9.9
|
|
|
$12.9
|
|
|
$163.2
|
|
(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, 2013
|
|
$13.1
|
|
Actual Return on Plan Assets
|
1.4
|
|
|
Purchases, Sales, and Settlements – Net
|
(1.6
|
)
|
|
Balance as of December 31, 2014
|
|
$12.9
|
|
As of December 31
|
2015
|
|
2014
|
|
2013
|
|
||
Millions
|
|
|
|
|||||
ESOP Shares
|
|
|
|
|||||
Allocated
|
1.8
|
|
1.9
|
|
2.0
|
|
||
Unallocated
|
—
|
|
0.3
|
|
0.5
|
|
||
Total
|
1.8
|
|
2.2
|
|
2.5
|
|
||
Fair Value of Unallocated Shares
|
—
|
|
|
$13.2
|
|
|
$24.1
|
|
Share-Based Compensation Expense
|
|||||||||
Year Ended December 31
|
2015
|
|
2014
|
|
2013
|
|
|||
Millions
|
|
|
|
||||||
Performance Shares
|
|
$1.8
|
|
|
$1.6
|
|
|
$1.7
|
|
Restricted Stock Units
|
0.8
|
|
0.7
|
|
0.7
|
|
|||
Total Share-Based Compensation Expense
|
|
$2.6
|
|
|
$2.3
|
|
|
$2.4
|
|
Income Tax Benefit
|
|
$1.1
|
|
|
$1.0
|
|
|
$1.0
|
|
|
2015
|
2014
|
2013
|
||||||||||||
|
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
|
66,279
|
|
|
$44.39
|
|
108,299
|
|
|
$44.10
|
|
395,678
|
|
|
$42.28
|
|
Granted
(a)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||
Exercised
|
(24,456
|
)
|
|
$44.52
|
|
(42,020
|
)
|
|
$43.65
|
|
(287,379
|
)
|
|
$41.60
|
|
Forfeited
|
(2,169
|
)
|
$42.93
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Outstanding as of December 31
|
39,654
|
|
|
$44.39
|
|
66,279
|
|
|
$44.39
|
|
108,299
|
|
|
$44.10
|
|
Exercisable as of December 31
|
39,654
|
|
|
$44.39
|
|
66,279
|
|
|
$44.39
|
|
108,299
|
|
|
$43.17
|
|
(a)
|
Stock options have not been granted since 2008. The weighted-average grant-date intrinsic value of options granted in 2008 was
$6.18
.
|
|
Exercise Price
|
||||||||
As of December 31, 2015
|
$39.10
|
$44.15
|
$48.65
|
||||||
Options Outstanding and Exercisable:
|
|
|
|
||||||
Number Outstanding and Exercisable
|
16,620
|
|
2,306
|
|
20,728
|
|
|||
Weighted Average Remaining Contractual Life (Years)
|
2.1
|
|
0.1
|
|
1.1
|
|
|||
Weighted Average Exercise Price
|
|
$39.10
|
|
|
$44.15
|
|
|
$48.65
|
|
Aggregate Intrinsic Value (Millions)
|
|
$0.2
|
|
—
|
|
|
$0.1
|
|
|
2015
|
2014
|
2013
|
||||||||||||
|
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
|
119,635
|
|
|
$48.26
|
|
114,765
|
|
|
$47.02
|
|
107,899
|
|
|
$40.73
|
|
Granted
(a)
|
43,583
|
|
|
$58.95
|
|
47,992
|
|
|
$46.47
|
|
45,830
|
|
|
$52.15
|
|
Awarded
|
—
|
|
—
|
|
(36,515
|
)
|
|
$42.01
|
|
(18,605
|
)
|
|
$35.10
|
|
|
Unearned Grant Award
|
(36,670
|
)
|
|
$45.41
|
|
—
|
|
—
|
|
(18,606
|
)
|
|
$35.10
|
|
|
Forfeited
|
(7,008
|
)
|
|
$53.49
|
|
(6,607
|
)
|
|
$48.29
|
|
(1,753
|
)
|
|
$47.26
|
|
Non-vested as of December 31
|
119,540
|
|
|
$52.72
|
|
119,635
|
|
|
$48.26
|
|
114,765
|
|
|
$47.02
|
|
|
2015
|
2014
|
2013
|
||||||||||||
|
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
|
53,888
|
|
|
$44.47
|
|
55,982
|
|
|
$40.85
|
|
56,415
|
|
|
$36.61
|
|
Granted
(a)
|
26,702
|
|
|
$54.81
|
|
19,645
|
|
|
$48.44
|
|
21,440
|
|
|
$43.41
|
|
Awarded
|
(19,464
|
)
|
|
$41.44
|
|
(18,860
|
)
|
|
$37.64
|
|
(20,939
|
)
|
|
$32.03
|
|
Forfeited
|
(3,432
|
)
|
|
$51.52
|
|
(2,879
|
)
|
|
$45.92
|
|
(934
|
)
|
|
$41.02
|
|
Available as of December 31
|
57,694
|
|
|
$49.86
|
|
53,888
|
|
|
$44.47
|
|
55,982
|
|
|
$40.85
|
|
Quarter Ended
|
Mar. 31
|
|
Jun. 30
|
|
Sept. 30
|
|
Dec. 31
|
|
||||
Millions Except Earnings Per Share
|
|
|
|
|
||||||||
2015
|
|
|
|
|
||||||||
Operating Revenue
|
|
$320.0
|
|
|
$323.3
|
|
|
$462.5
|
|
|
$380.6
|
|
Operating Income
|
|
$56.4
|
|
|
$39.5
|
|
|
$85.2
|
|
|
$29.6
|
|
Net Income Attributable to ALLETE
|
|
$39.9
|
|
|
$22.5
|
|
|
$60.4
|
|
|
$18.3
|
|
Earnings Per Share of Common Stock
|
|
|
|
|
||||||||
Basic
|
|
$0.85
|
|
|
$0.46
|
|
|
$1.24
|
|
|
$0.37
|
|
Diluted
|
|
$0.85
|
|
|
$0.46
|
|
|
$1.23
|
|
|
$0.37
|
|
2014
|
|
|
|
|
||||||||
Operating Revenue
|
|
$296.5
|
|
|
$260.7
|
|
|
$288.9
|
|
|
$290.7
|
|
Operating Income
|
|
$48.3
|
|
|
$28.2
|
|
|
$60.8
|
|
|
$51.5
|
|
Net Income Attributable to ALLETE
|
|
$33.5
|
|
|
$16.8
|
|
|
$41.6
|
|
|
$32.9
|
|
Earnings Per Share of Common Stock
|
|
|
|
|
||||||||
Basic
|
|
$0.81
|
|
|
$0.40
|
|
|
$0.97
|
|
|
$0.73
|
|
Diluted
|
|
$0.80
|
|
|
$0.40
|
|
|
$0.97
|
|
|
$0.73
|
|
|
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
|
|
|
|
|
|
|||||||||
2013 Trade Accounts Receivable
|
|
$1.0
|
|
|
$1.3
|
|
—
|
|
|
$1.2
|
|
|
$1.1
|
|
Finance Receivables – Long-Term
|
|
$0.6
|
|
—
|
|
—
|
|
—
|
|
|
$0.6
|
|
||
2014 Trade Accounts Receivable
|
|
$1.1
|
|
|
$1.8
|
|
—
|
|
|
$1.8
|
|
|
$1.1
|
|
Finance Receivables – Long-Term
|
|
$0.6
|
|
—
|
|
—
|
|
—
|
|
|
$0.6
|
|
||
2015 Trade Accounts Receivable
|
|
$1.1
|
|
|
$1.6
|
|
—
|
|
|
$1.7
|
|
|
$1.0
|
|
Finance Receivables – Long-Term
|
|
$0.6
|
|
—
|
|
—
|
|
—
|
|
|
$0.6
|
|
||
Deferred Asset Valuation Allowance
|
|
|
|
|
|
|||||||||
2013 Deferred Tax Assets
|
|
$2.4
|
|
$5.6
|
—
|
|
—
|
|
|
$8.0
|
|
|||
2014 Deferred Tax Assets
|
|
$8.0
|
|
$14.1
|
—
|
|
—
|
|
|
$22.1
|
|
|||
2015 Deferred Tax Assets
|
|
$22.1
|
|
|
$9.5
|
|
—
|
|
—
|
|
|
$31.6
|
|
(a)
|
Includes uncollectible accounts written off.
|
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)
|
Time Limits
. A Claimant seeking arbitration of any determination by the Claims Administrator must, within six (6) months of the date of the Claims Administrator’s final decision, file a demand for arbitration with the American Arbitration Association submitting the claim to resolution by arbitration. A Claimant waives any claim not filed timely in accordance with this Section.
|
(b)
|
Rules Applicable to Arbitration
. The arbitration process shall be conducted in accordance with the Commercial Law Rules of the American Arbitration Association.
|
(c)
|
Venue
. The arbitration shall be conducted in Minneapolis, Minnesota.
|
(d)
|
Binding Effect
. The decision of the arbitrator with respect to the claim will be final and binding upon the Company and the Claimant. BY PARTICIPATING IN THE PLAN, AND ACCEPTING THE GRANT, YOU, ON BEHALF OF YOURSELF AND ANY PERSON WITH A CLAIM RELATING TO YOUR GRANT, AGREE TO WAIVE ANY RIGHT TO SUE IN COURT OR TO PURSUE ANY OTHER LEGAL RIGHT OR REMEDY THAT MIGHT OTHERWISE BE AVAILABLE IN CONNECTION WITH THE RESOLUTION OF THE CLAIM.
|
(e)
|
Enforceability
. Judgment upon any award entered by an arbitrator may be entered in any court having jurisdiction over the parties.
|
(f)
|
Waiver of Class, Collective, and Representative Actions
. Any claim shall be heard without consolidation of such claims with any other person or entity. To the fullest extent permitted by law, whether in court or in arbitration, by participating in the Plan, you waive any right to commence, be a party to in any way, or be an actual or putative class member of any class, collective, or representative action arising out of or relating to any claim, and you agree that any claim may only be initiated or maintained and decided on an individual basis.
|
(g)
|
Standard of Review
. Any decision of an arbitrator on a claim shall be limited to determining whether the Claims Administrator’s decision or action was arbitrary or capricious or was unlawful. The arbitrator shall adhere to and apply the deferential standard of review set out in
Conkright v. Frommert
, 130 S. Ct. 1640 (2010),
Metropolitan Life Insurance Co. v.
Glenn
,
554 U.S. 105 (2008), and
Firestone Tire and Rubber Company v. Bruch,
489 U.S. 101 (1989), and shall accord due deference to the determinations, interpretations, and construction of the Plan document by the Claims Administrator.
|
(h)
|
General Procedures
.
|
i.
|
Arbitration Rules
. The arbitration hearing will be conducted under the AAA Commercial Arbitration Rules (as amended or revised from time to time by AAA) (hereinafter the “AAA Rules”), before one AAA arbitrator who is from the Large, Complex Case Panel and who has experience with matters involving executive compensation and equity compensation plans. The AAA Rules and the terms and procedures set forth here may conflict on certain issues. To the extent that the procedures set forth here conflict with the AAA Rules, the procedures set forth here shall control and be applied by the arbitrator. Notwithstanding the amount of the claim, the Procedures for Large, Complex Commercial Disputes shall not apply.
|
ii.
|
Substantive Law
. The arbitrator shall apply the substantive law (and the laws of remedies, if applicable), of Minnesota or federal law, or both, depending upon the claim. Except to the extent required by applicable law, the Claimant shall keep any arbitration decision or award strictly confidential and not disclose to anyone other than his or her spouse, attorney, or tax advisor.
|
iii.
|
Authority
. The arbitrator shall have jurisdiction to hear and rule on prehearing disputes and is authorized to hold prehearing conferences by telephone or in person as the arbitrator deems necessary. The arbitrator will have the authority to hear a motion to dismiss and/or a motion for summary judgment by any party and in doing so shall apply the standards governing such motions under the Federal Rules of Civil Procedure.
|
iv.
|
Pre-Hearing Procedures
. Each party may take the deposition of not more than one individual and the expert witness, if any, designated by another party. Each party will have the right to subpoena witnesses in accordance with the Federal Arbitration Act, Title 9 of the United States Code. Additional discovery may be had only if the arbitrator so orders, upon a showing of substantial need.
|
v.
|
Fees and Costs
. Administrative arbitration fees and arbitrator compensation shall be borne equally by the parties, and each party shall be responsible for its own attorney’s fees, if any; provided, however, that the Committee will authorize payment by the Company of all administrative arbitration fees, arbitrator compensation and attorney’s fees if the Committee concludes that a Claimant has substantially prevailed on his or her claims. Unless prohibited by statute, the arbitrator shall assess attorney’s fees against a party upon a showing that such party’s claim, defense or position is frivolous, or unreasonable, or factually groundless. If either party pursues a claim by any means other than those set forth in this Article, the responding party shall be entitled to dismissal of such action, and the recovery of all costs and attorney’s fees and losses related to such action, unless prohibited by statute.
|
(i)
|
Interstate Commerce and the Federal Arbitration Act
. The Company is involved in transactions involving interstate commerce, and the employee’s employment with the Company involves such commerce. Therefore, the Federal Arbitration Act, Title 9 of the United States Code, will govern the interpretation, enforcement, and all judicial proceedings regarding the arbitration procedures in this Section.
|
(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.
|
By:
|
|
|
Chairman, President & CEO
|
a)
|
Time Limits
. A Claimant seeking arbitration of any determination by the Claims Administrator must, within six (6) months of the date of the Claims Administrator’s final decision, file a demand for arbitration with the American Arbitration Association submitting the Claim to resolution by arbitration. A Claimant waives any claim not filed timely in accordance with this Section.
|
b)
|
Rules Applicable to Arbitration
. The arbitration process shall be conducted in accordance with the Commercial Law Rules of the American Arbitration Association.
|
c)
|
Venue
. The arbitration shall be conducted in Minneapolis, Minnesota.
|
d)
|
Binding Effect
. The decision of the arbitrator with respect to the claim will be final and binding upon the Company and the Claimant. BY PARTICIPATING IN THE PLAN, AND ACCEPTING THE GRANT, YOU, ON BEHALF OF YOURSELF AND ANY PERSON WITH A CLAIM RELATING TO YOUR GRANT, AGREE TO WAIVE ANY RIGHT TO SUE IN COURT OR TO PURSUE ANY OTHER LEGAL RIGHT OR REMEDY THAT MIGHT OTHERWISE BE AVAILABLE IN CONNECTION WITH THE RESOLUTION OF THE CLAIM.
|
e)
|
Enforceability
. Judgment upon any award entered by an arbitrator may be entered in any court having jurisdiction over the parties.
|
f)
|
Waiver of Class, Collective, and Representative Actions
. Any claim shall be heard without consolidation of such claims with any other person or entity. To the fullest extent permitted by law, whether in court or in arbitration, by participating in the Plan, you waive any right to commence, be a party to in any way, or be an actual or putative class member of any class, collective, or representative action arising out of or relating to any claim, and you agree that any claim may only be initiated or maintained and decided on an individual basis.
|
g)
|
Standard of Review
. Any decision of an arbitrator on a claim shall be limited to determining whether the Claims Administrator’s decision or action was arbitrary or capricious or was unlawful. The arbitrator shall adhere to and apply the deferential standard of review set out in
Conkright v. Frommert
, 130 S. Ct. 1640 (2010),
Metropolitan Life Insurance Co. v.
Glenn
,
554 U.S. 105 (2008), and
Firestone Tire and Rubber Company v. Bruch,
489 U.S. 101 (1989), and shall accord due deference to the determinations, interpretations, and construction of the Plan document by the Claim’s Administrator.
|
h)
|
General Procedures
.
|
i.
|
Arbitration Rules
. The arbitration hearing will be conducted under the AAA Commercial Arbitration Rules (as amended or revised from time to time by AAA) (hereinafter the “AAA Rules”), before one AAA arbitrator who is from the Large, Complex Case Panel and who has experience with matters involving executive compensation and equity compensation plans. The AAA Rules and the terms and procedures set forth here may conflict on certain issues. To the extent that the procedures set forth here conflict with the AAA Rules, the procedures set forth here shall control and be applied by the arbitrator. Notwithstanding the amount of the claim, the Procedures for Large, Complex Commercial Disputes shall not apply.
|
ii.
|
Substantive Law
. The arbitrator shall apply the substantive law (and the laws of remedies, if applicable), of Minnesota or federal law, or both, depending upon the claim. Except to the extent required by applicable law, the Claimant shall keep any arbitration decision or award strictly confidential and not disclose to anyone other than his or her spouse, attorney, or tax advisor.
|
iii.
|
Authority
. The arbitrator shall have jurisdiction to hear and rule on prehearing disputes and is authorized to hold prehearing conferences by telephone or in person as the arbitrator deems necessary. The arbitrator will have the authority to hear a motion to dismiss and/or a motion for summary judgment by any party and in doing so shall apply the standards governing such motions under the Federal Rules of Civil Procedure.
|
iv.
|
Pre-Hearing Procedures
. Each party may take the deposition of not more than one individual and the expert witness, if any, designated by another party. Each party will have the right to subpoena witnesses in accordance with the Federal Arbitration Act, Title 9 of the United States Code. Additional discovery may be had only if the arbitrator so orders, upon a showing of substantial need.
|
v.
|
Fees and Costs
. Administrative arbitration fees and arbitrator compensation shall be borne equally by the parties, and each party shall be responsible for its own attorney’s fees, if any; provided, however, that the Committee will authorize payment by the Company of all administrative arbitration fees, arbitrator compensation and attorney’s fees if the Committee concludes that a Claimant has substantially prevailed on his or her claims. Unless prohibited by statute, the arbitrator shall assess attorney’s fees against a party upon a showing that such party’s claim, defense or position is frivolous, or unreasonable, or factually groundless. If either party pursues a claim by any means other than those set forth in this Article, the responding party shall be entitled to dismissal of such action, and the recovery of all costs and attorney’s fees and losses related to such action, unless prohibited by statute.
|
(i)
|
Interstate Commerce and the Federal Arbitration Act
. The Company is involved in transactions involving interstate commerce, and the employee’s employment with the Company involves such commerce. Therefore, the Federal Arbitration Act, Title 9 of the United States Code, will govern the interpretation, enforcement, and all judicial proceedings regarding the arbitration procedures in this Section.
|
(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.
|
Year Ended December 31
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
|||||||
Millions
|
|
|
|
|
|
||||||||||||
Earnings as Defined
|
|
|
|
|
|
||||||||||||
|
Pretax Income Before Non-Controlling Interest
|
|
$166.8
|
|
|
$162.2
|
|
|
$133.3
|
|
|
$135.0
|
|
|
$129.2
|
|
|
|
Add:
|
Fixed Charges
|
71.9
|
|
62.5
|
|
56.7
|
|
51.2
|
|
47.6
|
|
|||||
|
Less:
|
Undistributed Income from Less than 50 percent Owned Equity Investment
|
1.8
|
|
2.6
|
|
4.1
|
|
3.8
|
|
3.8
|
|
|||||
|
Earnings as Defined
|
|
$236.9
|
|
|
$222.1
|
|
|
$185.9
|
|
|
$182.4
|
|
|
$173.0
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed Charges
|
|
|
|
|
|
||||||||||||
|
Interest on Long-Term Debt
|
|
$64.7
|
|
|
$55.6
|
|
|
$50.9
|
|
|
$47.0
|
|
|
$43.1
|
|
|
|
Other Interest Charges
|
1.4
|
|
2.0
|
|
1.2
|
|
0.4
|
|
1.6
|
|
||||||
|
Interest Component of All Rentals
(a)
|
5.8
|
|
4.9
|
|
4.6
|
|
3.8
|
|
2.9
|
|
||||||
|
Total Fixed Charges
|
|
$71.9
|
|
|
$62.5
|
|
|
$56.7
|
|
|
$51.2
|
|
|
$47.6
|
|
|
Ratio of Earnings to Fixed Charges
|
3.29
|
|
3.55
|
|
3.28
|
|
3.56
|
|
3.63
|
|
(a)
|
Represents interest portion of rents estimated at 33 1/3 percent.
|
Name of Organization
(a)
|
State or Country
|
ALLETE, Inc.
(d/b/a ALLETE; Minnesota Power; Minnesota Power, Inc.;
|
Minnesota
|
Minnesota Power & Light Company)
|
|
ALLETE Automotive Services, LLC
|
Minnesota
|
ALLETE Capital II
|
Delaware
|
ALLETE Capital III
|
Delaware
|
ALLETE Enterprises, Inc.
|
Minnesota
|
ALLETE Clean Energy, Inc.
|
Minnesota
|
ACE Wind LLC
|
Delaware
|
ACE Mid-West Holdings, LLC
|
Delaware
|
MWW Holdings, LLC
|
Delaware
|
Lake Benton Power Associates LLC
|
Delaware
|
Lake Benton Holdings LLC
|
Delaware
|
Lake Benton Power Partners L.L.C.
|
Delaware
|
Storm Lake Power Partners I LLC
|
Delaware
|
Storm Lake II Power Associates LLC
|
Delaware
|
Storm Lake II Holdings LLC
|
Delaware
|
Storm Lake Power Partners II LLC
|
Delaware
|
Northern Wind Energy, LLC
|
Delaware
|
Chanarambie Power Partners, LLC
|
Delaware
|
Viking Wind Holdings, LLC
|
Delaware
|
ACE West Holdings, LLC
|
Delaware
|
Condon Wind Power, LLC
|
Delaware
|
Armenia Holdings, LLC
|
Delaware
|
AMW I Holding, LLC
|
Delaware
|
Armenia Mountain Wind, LLC
|
Delaware
|
Armenia Mountain Wind II, LLC
|
Delaware
|
Thunder Spirit Wind, LLC
|
Delaware
|
ACE O&M, LLC
|
Delaware
|
ALLETE Renewable Resources, Inc.
|
North Dakota
|
ALLETE Transmission Holdings, Inc.
|
Wisconsin
|
BNI Coal, Ltd.
(d/b/a BNI Energy)
|
North Dakota
|
Global Water Services Holding Company, Inc.
|
Delaware
|
Global Water Services Holdings, Inc.
|
Delaware
|
Global Water Services, Inc.
|
Delaware
|
U.S. Water Services Holding Company
|
Delaware
|
U.S. Water Energy Services, Inc.
|
Delaware
|
U.S. Water Services – Canada, Inc.
|
Canada
|
U.S. Water Services, Inc.
|
Minnesota
|
MP Affiliate Resources, Inc.
|
Minnesota
|
Rainy River Energy Corporation
|
Minnesota
|
Upper Minnesota Properties, Inc.
|
Minnesota
|
Upper Minnesota Properties - Development, Inc.
|
Minnesota
|
ALLETE Properties, LLC
(d/b/a ALLETE Properties)
|
Minnesota
|
ALLETE Commercial, LLC
|
Florida
|
Lake Swamp, LLC
|
Florida
|
Lehigh Acquisition, LLC
|
Delaware
|
Florida Landmark Communities, LLC
|
Florida
|
Lehigh Corporation
|
Florida
|
Mardem, LLC
|
Florida
|
Palm Coast Holdings, Inc.
|
Florida
|
(a)
|
Certain insignificant subsidiaries are omitted.
|
Name of Organization
(a)
|
State or Country
|
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
|
MP Investments, Inc.
|
Delaware
|
RendField Land Company, Inc.
|
Minnesota
|
Superior Water, Light and Power Company
|
Wisconsin
|
(a)
|
Certain insignificant subsidiaries are omitted.
|
1.
|
I have reviewed this annual report on Form 10-K for the fiscal year ended
December 31, 2015
, 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 22, 2016
|
/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, 2015
, 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 22, 2016
|
/s/ Steven Q. DeVinck
|
|
|
Steven Q. DeVinck
|
|
|
Senior Vice President and Chief Financial Officer
|
1.
|
The Annual Report on Form 10-K of ALLETE for the fiscal year ended
December 31, 2015
, (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 22, 2016
|
/s/ Alan R. Hodnik
|
|
|
Alan R. Hodnik
|
|
|
President and Chief Executive Officer
|
Date:
|
February 22, 2016
|
/s/ Steven Q. DeVinck
|
|
|
Steven Q. DeVinck
|
|
|
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
|
—
|
—
|
—
|
—
|
—
|
$879
|
—
|
No
|
No
|
—
|
—
|
—
|
|
|
Exhibit 99
|
For Release:
|
February 18, 2016
|
|
Investor Contact:
|
Vince Meyer
|
|
|
218-723-3952
|
|
|
vmeyer@allete.com
|
|
|
|
|
NEWS
|
|
|
|
Quarter Ended
|
Year to Date
|
|||||||
|
2015
|
2014
|
2015
|
2014
|
|||||
|
|
|
|
|
|||||
Operating Revenue
|
$380.6
|
$290.7
|
$1,486.4
|
$1,136.8
|
|||||
Operating Expenses
|
|
|
|
|
|||||
Fuel and Purchased Power
|
85.2
|
|
87.4
|
|
328.1
|
|
356.1
|
|
|
Transmission Services
|
14.0
|
|
12.4
|
|
54.1
|
|
45.6
|
|
|
Cost of Sales
|
69.0
|
|
18.7
|
|
302.3
|
|
77.9
|
|
|
Operating and Maintenance
|
87.1
|
|
72.8
|
|
333.5
|
|
287.1
|
|
|
Depreciation and Amortization
|
46.5
|
|
36.2
|
|
170.0
|
|
135.7
|
|
|
Taxes Other than Income Taxes
|
12.9
|
|
11.7
|
|
51.4
|
|
45.6
|
|
|
Impairment of Real Estate
|
36.3
|
|
—
|
|
36.3
|
|
—
|
|
|
Total Operating Expenses
|
351.0
|
|
239.2
|
|
1,275.7
|
|
948.0
|
|
|
Operating Income
|
29.6
|
|
51.5
|
|
210.7
|
|
188.8
|
|
|
Other Income (Expense)
|
|
|
|
|
|||||
Interest Expense
|
(15.9
|
)
|
(15.3
|
)
|
(64.9
|
)
|
(54.8
|
)
|
|
Equity Earnings in ATC
|
2.2
|
|
4.0
|
|
16.3
|
|
19.6
|
|
|
Other
|
1.2
|
|
2.6
|
|
4.7
|
|
8.6
|
|
|
Total Other Expense
|
(12.5
|
)
|
(8.7
|
)
|
(43.9
|
)
|
(26.6
|
)
|
|
Income Before Income Taxes
|
17.1
|
|
42.8
|
|
166.8
|
|
162.2
|
|
|
Income Tax Expense (Benefit)
|
(1.7
|
)
|
9.6
|
|
25.3
|
|
36.7
|
|
|
Net Income
|
18.8
|
|
33.2
|
|
141.5
|
|
125.5
|
|
|
Less: Non-Controlling Interest in Subsidiaries
|
0.5
|
|
0.3
|
|
0.4
|
|
0.7
|
|
|
Net Income Attributable to ALLETE
|
|
$18.3
|
|
$32.9
|
$141.1
|
$124.8
|
|||
Average Shares of Common Stock
|
|
|
|
|
|||||
Basic
|
49.0
|
|
45.2
|
|
48.3
|
|
42.9
|
|
|
Diluted
|
49.1
|
|
45.4
|
|
48.4
|
|
43.1
|
|
|
Basic Earnings Per Share of Common Stock
|
$0.37
|
$0.73
|
$2.92
|
$2.91
|
|||||
Diluted Earnings Per Share of Common Stock
|
$0.37
|
$0.73
|
$2.92
|
$2.90
|
|||||
Dividends Per Share of Common Stock
|
$0.505
|
$0.49
|
$2.02
|
$1.96
|
|
Dec. 31,
|
Dec. 31,
|
|
|
Dec. 31,
|
Dec. 31,
|
|
2015
|
2014
|
|
|
2015
|
2014
|
Assets
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
Cash and Cash Equivalents
|
$97.0
|
$145.8
|
|
Current Liabilities
|
$275.4
|
$416.0
|
Other Current Assets
|
274.0
|
273.0
|
|
Long-Term Debt
|
1,568.7
|
1,272.8
|
Property, Plant and Equipment - Net
|
3,669.1
|
3,284.8
|
|
Deferred Income Taxes
|
579.8
|
510.7
|
Regulatory Assets
|
372.0
|
357.3
|
|
Regulatory Liabilities
|
105.0
|
94.2
|
Investment in ATC
|
124.5
|
121.1
|
|
Defined Benefit Pension & Other Postretirement Benefit Plans
|
206.8
|
190.9
|
Other Investments
|
74.6
|
114.4
|
|
Other Non-Current Liabilities
|
349.0
|
265.0
|
Goodwill and Intangibles - Net
|
215.2
|
4.8
|
|
Shareholders' Equity
|
1,822.4
|
1,611.2
|
Other Non-Current Assets
|
80.7
|
59.6
|
|
|
|
|
Total Assets
|
$4,907.1
|
$4,360.8
|
|
Total Liabilities and Shareholders' Equity
|
$4,907.1
|
$4,360.8
|
|
Quarter Ended
|
Year to Date
|
||||||
ALLETE, Inc.
|
December 31,
|
December 31,
|
||||||
Income (Loss)
|
2015
|
2014
|
2015
|
2014
|
||||
Millions
|
|
|
|
|
||||
Regulated Operations
|
$23.5
|
$31.4
|
$131.6
|
$123.0
|
||||
|
|
|
|
|
||||
Energy Infrastructure and Related Services
|
|
|
|
|
||||
ALLETE Clean Energy
|
11.2
|
2.1
|
29.9
|
3.3
|
||||
U.S. Water Services
|
(0.6
|
)
|
—
|
|
0.9
|
—
|
|
|
|
|
|
|
|
||||
Corporate and Other
|
(15.8
|
)
|
(0.6
|
)
|
(21.3
|
)
|
(1.5
|
)
|
Net Income Attributable to ALLETE
|
$18.3
|
$32.9
|
$141.1
|
$124.8
|
||||
Diluted Earnings Per Share
|
$0.37
|
$0.73
|
$2.92
|
$2.90
|
Regulated Utility Revenue
|
|
|
|
|
||||||||
Millions
|
|
|
|
|
||||||||
Regulated Operations
|
|
|
|
|
||||||||
Retail and Municipal
|
|
|
|
|
||||||||
Residential
|
|
$28.9
|
|
|
$32.2
|
|
|
$115.2
|
|
|
$124.6
|
|
Commercial
|
33.1
|
|
33.9
|
|
132.9
|
|
134.8
|
|
||||
Municipal
|
15.0
|
|
14.8
|
|
61.9
|
|
60.4
|
|
||||
Industrial
|
103.7
|
|
118.1
|
|
424.4
|
|
455.7
|
|
||||
Total Retail and Municipal
|
180.7
|
|
199.0
|
|
734.4
|
|
775.5
|
|
||||
Other Power Suppliers
|
43.9
|
|
30.6
|
|
154.7
|
|
115.5
|
|
||||
Other
|
23.6
|
|
24.3
|
|
102.1
|
|
112.5
|
|
||||
Total Regulated Utility Revenue
|
|
$248.2
|
|
|
$253.9
|
|
|
$991.2
|
|
|
$1,003.5
|
|