Adams new Allete CFO

Adams
Bob Adams has assumed the role of chief financial officer at Allete, the company announced today. He succeeds Steve DeVinck, who last fall announced his plan to retire in the spring of 2017.

“I’ve been very pleased by the thoughtful handoff between these two leaders and the smooth transition,” said Allete Chairman, President and CEO Al Hodnik. “Bob has been directly engaged over the years with Allete strategy formation and positioning. I look forward to Bob fully assuming the role of CFO and focusing on his new responsibilities, while we continue to execute our strategy.”

Adams joined the Duluth-based company in 1987 as a financial analyst. He was involved in several successful startups, including Enventis Telecommunications and Split Rock Energy. He also led Reach-All Manufacturing for a period in the early 1990s.

He was named chief risk officer and vice president of business development in 2008, promoted to vice president of energy-centric businesses in 2014 and added the title of senior vice president of energy-centric businesses in 2015. The role of CFO is familiar to Adams, having served in that capacity in the past for Minnesota Power and Split Rock Energy.

As Allete CFO, Adams will have overarching responsibility and broad oversight of all aspects of accounting, financial reporting, internal audit and controls, treasury, risk, business development and investor relations.

“I look forward to this exciting new role and believe ALLETE is uniquely positioned to succeed in the rapidly evolving energy industry by virtue of our solid business platforms, strategies, people and strong financial position,” Adams said. “We are a highly disciplined company and have consistently demonstrated an ability to execute and deliver solid results and outcomes for all of our key stakeholders, shareholders, customers and employees alike.”

Adams holds an undergraduate accounting degree and an MBA with a finance concentration from the University of Minnesota. He also is a certified public accountant and a member of the American Institute of Certified Public Accountants. He has served on a multitude of boards including Lakeshore Assisted Living.

Allete reports 2016 earnings of $3.14 per share

Allete today reported 2016 earnings of $3.14 per share on net income of $155.3 million and operating revenue of $1.34 billion. Results from 2015 were $2.92 per share on net income of $141.1 million and operating revenue of $1.49 billion.

Operating revenue in 2015 included $197.7 million for Allete Clean Energy’s construction of a wind energy facility which was sold to Montana-Dakota Utilities in 2015.

Net income for 2016 was impacted by a gain related to the change in fair value of the U.S. Water Services contingent consideration liability, offset by the impact of an adverse November 2016 Minnesota Public Utilities Commission order on the allocation of North Dakota investment tax credits, a goodwill impairment charge related to Allete Clean Energy and expense related to the repayment of long-term debt.

Net income for 2015 was impacted by a non-cash impairment charge related to the real estate assets of Allete Properties, the recognition of profit for the construction of a wind energy facility sold to Montana-Dakota Utilities and acquisition costs related to U.S. Water Services and Allete Clean Energy.

“I am pleased with the company’s position and outlook as we move into 2017,” said Allete Chairman, President and CEO Al Hodnik. “Minnesota Power’s industrial customers start the year on a strong note, and our energy infrastructure and related services businesses are well positioned to capitalize on renewed growth and investment initiatives.”

Allete Clean Energy plans expansion of North Dakota wind farm

Phase one of Thunder Spirit wind development, completed in December 2015, Hettinger, ND. Submitted

Allete Clean Energy today announced its plan to work with Montana-Dakota Utilities to expand the Thunder Spirit wind farm in North Dakota, reaching the 150-megawatt permitted capacity of the facility Allete Clean Energy developed in 2014 and 2015.

Allete Clean Energy secured a 25-year power purchase agreement with MDU to purchase energy from the expansion near Hettinger, North Dakota, about 100 miles southwest of Bismarck.

Under the agreement, MDU, a division of MDU Resources Group (NYSE: MDU), also has the option to purchase the expansion when it is complete as it did with the first phase of Thunder Spirit.

In 2014, Allete Clean Energy acquired the rights to build the 107.5-megawatt first phase of Thunder Spirit, which comprises 43 turbines and generates enough electricity to power about 30,000 homes. After the project was completed in 2015, MDU bought Thunder Spirit from Allete Clean Energy for $200 million and operates the wind farm for its customers.

MDU granted Allete Clean Energy the right to develop the 13- to 16-turbine Thunder Spirit expansion, with major construction on the $85 million project expected to start in May 2018. Allee Clean Energy has qualified the Thunder Spirit expansion site for federal renewable energy production tax credits.

“We are pleased MDU has selected us to expand the Thunder Spirit Wind project and look forward to partnering with them, area landowners and Adams County officials as well as North Dakota regulators on this exciting project that will deliver additional carbon-free energy to serve its customers,” said Allan S. Rudeck Jr., President of Allete Clean Energy. “This transaction strengthens Allete Clean Energy’s renewable energy repertoire and is consistent with ACE’s multipronged growth strategy to expand its clean energy project portfolio by pursuing acquisitions and new builds with long-term power sales agreements, build-transfers and renewal investments of existing facilities.”

The Thunder Spirit expansion helps MDU meet its energy needs.

“Our relationship with Allete Clean Energy on the first phase of Thunder Spirit Wind proved to be a winning formula,” said MDU President and CEO Nicole Kivisto. “We are in need of additional energy to meet our growing demands, and with the easements, interconnection to the grid and permits already in place from the first phase of Thunder Spirit Wind, it makes this a great project for Montana-Dakota.”

In addition to developing this expansion for MDU, Allete Clean Energy owns and operates wind generation facilities in Minnesota, Iowa, Oregon and Pennsylvania. Allete Clean Energy was established in 2011 to acquire and develop capital projects to create energy solutions by way of wind, solar, biomass, hydro, natural gas, shale resources, clean coal technology and other emerging technologies.

Minnesota regulators set interim electricity rates for Minnesota Power

The Minnesota Public Utilities Commission today approved an interim rate increase of 5.6 percent for Minnesota Power customers as the first step of its broader review of the company’s recent rate request. Minnesota Power is a utility division of Allete Inc.

The increase on customers’ bills will be less than initially projected in November. Before the MPUC hearing, Minnesota Power lowered its interim rate request to $34.7 million from approximately $49 million to reflect a projected increase in energy sales to industrial customers.

In addition, the MPUC approved a separate request for a reduction in the current renewable resources rider, or line item, previously authorized by the MPUC to pay for investments in new sources of energy.

The increase from interim rates on residential customers on bills in early 2017 will be $4 per month for the average residential customer. For small business customers, the increase will be $15 per month for the average customer.

However, many customers may see a much smaller increase in their bill because the reduction in the renewable resources line item will significantly offset the interim rate increase.

“We’re pleased the MPUC agreed that an interim rate increase is appropriate, in light of the extensive investments we have made in our ambitious EnergyForward plan,” said David McMillan, executive vice president of Minnesota Power. “EnergyForward investments are providing our customers with safe and reliable energy while continuing our transformation to cleaner sources.”

The MPUC’s ruling to set interim rates is the first of two separate decisions in the review of Minnesota Power’s full rate request. Comments will be accepted from interested members of the public and stakeholder groups in the coming months, along with input from state agencies, and public hearings are likely this summer or early fall.

A final decision by regulators on the full request will occur in early 2018.

“The combination of an improved outlook for the regional economy and the MPUC decision on the renewable rider is good news for our customers,” McMillan said. “Keeping energy prices affordable is important to the quality of life for residents and businesses in this area of the state.”

The majority of the rate request is related to additional EnergyForward capital investments which include upgrades to transmission and distribution infrastructure, measures to protect against extreme weather events and enable the safe integration of renewable resources, and the continuation of efficiency and environmental improvements at the company’s existing power plants.

Other components of the rate request address lower sales revenues and pension investment costs. MP is also proposing to provide annual savings to customers by extending to 2050 the capital cost recovery on the Boswell Energy Center. Minnesota Power’s last general rate review was seven years ago.

The interim rate increase will take effect Jan. 1, 2017. Factors resulting in the company’s lower interim rate request may also impact the company’s final rate request. The company will file additional information with the Commission in February 2017.

To help customers manage and reduce their monthly bills, Minnesota Power offers conservation programs that provide helpful tools to lower energy use and obtain rebates for energy efficiency. For customers who find it difficult to pay bills each month, Minnesota Power partners with community programs that provide energy assistance.

Minnesota Power has established a special website — www.mnpower.com/2016RateReview — where
customers can get more information or ask questions about the rate request at AskUs@mnpower.com