Our Businesses

REGULATED UTILITY

Minnesota Power, an operating division of ALLETE serving customers since 1906, generates, transmits and distributes electricity in a 26,000-square-mile region of northern Minnesota rich with mineral deposits and timber.

Power Supply

Our energy supply in Minnesota is a mix of company generation and purchased power. Our generation sources are primarily coal-fired, but also include 112 megawatts of hydroelectric power generated from nine hydro stations in Minnesota and 25 MWs of wind generation. We purchase power from Square Butte Electric Cooperative in North Dakota, from two wind facilities totaling 98 megawatts in Oliver County, N.D. operated by FPL Energy LLC, and from other energy suppliers.

Large Industrial Customers

Minnesota Power sells a high percentage of its electric power to large industrial facilities. Eleven of our customers require 10 megawatts or more of generating capacity. Among these are four taconite producers, four paper mills and two petroleum pipeline companies. Taconite is an iron-bearing rock important as a source of raw material for steel.

New Industrial Projects Will Need Electricity

Several natural resource-based companies are developing new projects in northeastern Minnesota. These potential customers of Minnesota Power could require up to 400 megawatts of new electric service if the projects are completed. These include the Mesabi Nugget plant now under construction and the Polymet Mining and Minnesota Steel Industry projects.

Major Emission-Reduction Effort Underway

Minnesota Power is engaged in a major air emission control upgrade involving three of its coal-fired generating stations: Laskin, Taconite Harbor and Boswell. When the work is completed, environmental retrofits will have dramatically cut emissions of mercury, particulates, sulfur dioxide and nitrogen oxide. Current cost recovery from retail customers by way of billing adjustments is being used to pay for, and earn a return on, construction costs for these retrofits. The environmental improvements for all three plants will cost approximately $260 million.

More Renewable Energy

A 50-megawatt wind energy facility, built in 2006 by FPL Energy near Center, N.D., was augmented by an adjacent 48- megawattt wind farm constructed in 2007 to provide Minnesota Power a long-term source of renewable purchased power. Another wind generation facility of 25 megawatts was built in 2008 by Minnesota Power in Mountain Iron, Minn. on property owned by U.S. Steel, a major customer.

New Strategic Wind Initiative

An agreement was signed in September, 2008 to purchase a 250-kilovolt direct current (D.C.) transmission line between Center, N.D. and Hermantown, Minn. and phase out a long-term contract to buy coal-generated electricity now transmitted over the line. As part of a deal expected to be closed in 2009, Minnesota Power will gradually replace the coal-based electricity now transported by the 465-mile line with renewable energy to be generated by wind turbines that will be constructed by Minnesota Power near Center.

American Transmission Company

ALLETE has an ownership interest of about eight percent in ATC, a public utility based in Wisconsin that owns and maintains electric transmission assets in four states. ALLETE’s investment in ATC was about $76 million at the beginning of 2009.

OTHER ALLETE INVESTMENTS

ALLETE Properties owns real estate in several desirable Florida locations. Most of the land now held by ALLETE Properties is located in three mixed-use projects being developed in Flagler and Volusia Counties in northeast Florida: Town Center, Palm Coast Park and Ormond Crossings.

BNI Coal operates a lignite mine in Center, N.D., producing about four million tons annually. Two electric generating cooperatives, Minnkota Power and Square Butte, consume virtually all of BNI Coal’s lignite production under agreements extending through 2026. The mining process disturbs and reclaims approximately 200 acres per year.