ALE

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☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

or

☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
			For the transition period from ______________ to ______________

Commission File Number 1-3548

(Exact name of registrant as specified in its charter)

Minnesota						41-0418150
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

Title of each class			Trading symbol			Name of each exchange on which registered
Common Stock, without par value			ALE			New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   ☒ Yes   ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   ☒ Yes   ☐ No

         Large Accelerated Filer    ☒             Accelerated Filer    ☐

         Non-Accelerated Filer    ☐         Smaller Reporting Company    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  ☐ Yes   ☒ No

Definitions									3
Forward-Looking Statements									5
Part I.			Financial Information
			Item 1.			Consolidated Financial Statements - Unaudited			6
						Consolidated Balance Sheet			6
						Consolidated Statement of Income			7
						Consolidated Statement of Comprehensive Income			8
						Consolidated Statement of Cash Flows			9
						Consolidated Statement of Equity			10
						Notes to Consolidated Financial Statements			11
						Note 1. Operations and Significant Accounting Policies			11
						Note 2. Regulatory Matters			14
						Note 3. Equity Investments			16
						Note 4. Fair Value			16
						Note 5. Short-Term and Long-Term Debt			18
						Note 6. Commitments, Guarantees and Contingencies			19
						Note 7. Earnings Per Share and Common Stock			25
						Note 8. Income Tax Expense			25
						Note 9. Pension and Other Postretirement Benefit Plans			26
						Note 10. Business Segments			27
			Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			28
						Comparison of the Three Months Ended			30
						Critical Accounting Policies			33
						Outlook			34
						Liquidity and Capital Resources			36
						Other			37
			Item 3.			Quantitative and Qualitative Disclosures about Market Risk			38
			Item 4.			Controls and Procedures			39
Part II.			Other Information
			Item 1.			Legal Proceedings			39
			Item 1A.			Risk Factors			39
			Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			39
			Item 3.			Defaults Upon Senior Securities			39
			Item 4.			Mine Safety Disclosures			39
			Item 5.			Other Information			39
			Item 6.			Exhibits			40
Signatures									41

Abbreviation or Acronym			Term
AFUDC			Allowance for Funds Used During Construction – the cost of both debt and equity funds used to finance regulated utility plant additions during construction periods
ALLETE			ALLETE, Inc.
ALLETE Clean Energy			ALLETE Clean Energy, Inc. and its subsidiaries
ALLETE Properties			ALLETE Properties, LLC and its subsidiaries
ALLETE South Wind			ALLETE South Wind, LLC
ALLETE Transmission Holdings			ALLETE Transmission Holdings, Inc.
ArcelorMittal			ArcelorMittal S.A.
ATC			American Transmission Company LLC
Basin			Basin Electric Power Cooperative, a North Dakota cooperative corporation
Bison			Bison Wind Energy Center
BNI Energy			BNI Energy, Inc. and its subsidiary
Boswell			Boswell Energy Center
Camp Ripley			Camp Ripley Solar Array
Cliffs			Cleveland-Cliffs Inc.
Company			ALLETE, Inc. and its subsidiaries
COVID-19			2019 novel coronavirus
CSAPR			Cross-State Air Pollution Rule
DC			Direct Current
EPA			United States Environmental Protection Agency
ESOP			Employee Stock Ownership Plan
FERC			Federal Energy Regulatory Commission
Form 10-K			ALLETE Annual Report on Form 10-K
Form 10-Q			ALLETE Quarterly Report on Form 10-Q
GAAP			Generally Accepted Accounting Principles in the United States of America
GHG			Greenhouse Gases
GNTL			Great Northern Transmission Line
Hibbing Taconite			Hibbing Taconite Co.
Husky Energy			Husky Energy Inc.
Invest Direct			ALLETE’s Direct Stock Purchase and Dividend Reinvestment Plan
IRP			Integrated Resource Plan
Item ___			Item ___ of this Form 10-Q
kV			Kilovolt(s)
kW / kWh			Kilowatt(s) / Kilowatt-hour(s)
Laskin			Laskin Energy Center
Lampert Capital Markets			Lampert Capital Markets, Inc.
Manitoba Hydro			Manitoba Hydro-Electric Board
Minnesota Power			An operating division of ALLETE, Inc.
Minnkota Power			Minnkota Power Cooperative, Inc.
MISO			Midcontinent Independent System Operator, Inc.
MMTP			Manitoba-Minnesota Transmission Project
Moody’s			Moody’s Investors Service, Inc.
MPCA			Minnesota Pollution Control Agency

Abbreviation or Acronym			Term
MPUC			Minnesota Public Utilities Commission
MW / MWh			Megawatt(s) / Megawatt-hour(s)
NAAQS			National Ambient Air Quality Standards
NDPSC			North Dakota Public Service Commission
New Energy			New Energy Equity LLC
Nobles 2			Nobles 2 Power Partners, LLC
NOL			Net Operating Loss
NOX			Nitrogen Oxides
Northshore Mining			Northshore Mining Company, a wholly-owned subsidiary of Cleveland-Cliffs Inc.
Note ___			Note ___ to the Consolidated Financial Statements in this Form 10-Q
NPDES			National Pollutant Discharge Elimination System
NTEC			Nemadji Trail Energy Center
Oliver Wind I			Oliver Wind I Energy Center
Oliver Wind II			Oliver Wind II Energy Center
PPA / PSA			Power Purchase Agreement / Power Sales Agreement
PPACA			Patient Protection and Affordable Care Act of 2010
PSCW			Public Service Commission of Wisconsin
SEC			Securities and Exchange Commission
Silver Bay Power			Silver Bay Power Company, a wholly-owned subsidiary of Cleveland-Cliffs Inc.
SO2			Sulfur Dioxide
Square Butte			Square Butte Electric Cooperative, a North Dakota cooperative corporation
South Shore Energy			South Shore Energy, LLC
ST Paper			ST Paper LLC
SWL&P			Superior Water, Light and Power Company
Taconite Harbor			Taconite Harbor Energy Center
U.S.			United States of America
USS Corporation			United States Steel Corporation
WTG			Wind Turbine Generator

•our ability to successfully implement our strategic objectives;

•global and domestic economic conditions affecting us or our customers;

•changes in and compliance with laws and regulations;

•changes in tax rates or policies or in rates of inflation;

•the outcome of legal and administrative proceedings (whether civil or criminal) and settlements;

•weather conditions, natural disasters and pandemic diseases, including the ongoing COVID-19 pandemic;

•our ability to access capital markets, bank financing and other financing sources;

•changes in interest rates and the performance of the financial markets;

•project delays or changes in project costs;

•changes in operating expenses and capital expenditures and our ability to raise revenues from our customers;

•the impacts of commodity prices on ALLETE and our customers;

•our ability to attract and retain qualified, skilled and experienced personnel;

•effects of emerging technology;

•war, acts of terrorism and cybersecurity attacks;

•our ability to manage expansion and integrate acquisitions;

•wholesale power market conditions;

•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;

•effects of competition, including competition for retail and wholesale customers;

•effects of restructuring initiatives in the electric industry;

•the impacts on our businesses of climate change and future regulation to restrict the emissions of GHG;

•effects of increased deployment of distributed low-carbon electricity generation resources;

•the impacts of laws and regulations related to renewable and distributed generation;

•pricing, availability and transportation of fuel and other commodities and the ability to recover the costs of such commodities;

•our current and potential industrial and municipal customers’ ability to execute announced expansion plans;

•real estate market conditions where our legacy Florida real estate investment is located may deteriorate; and

•the success of efforts to realize value from, invest in, and develop new opportunities.

			March 31, 2022						December 31, 2021
Millions
Assets
Current Assets
Cash and Cash Equivalents			$60.1						$45.1
Accounts Receivable (Less Allowance of $1.9 and $1.8)			118.4						123.7
Inventories – Net			196.6						97.7
Prepayments and Other			105.4						24.8
Total Current Assets			480.5						291.3
Property, Plant and Equipment – Net			5,078.3						5,100.2
Regulatory Assets			464.2						511.8
Equity Investments			320.6						318.0
Other Non-Current Assets			212.4						213.7
Total Assets			$6,556.0						$6,435.0
Liabilities and Equity
Liabilities
Current Liabilities
Accounts Payable			$75.9						$111.0
Accrued Taxes			78.5						65.1
Accrued Interest			15.3						20.1
Long-Term Debt Due Within One Year			278.1						214.2
Other			108.8						133.0
Total Current Liabilities			556.6						543.4
Long-Term Debt			1,669.4						1,763.2
Deferred Income Taxes			188.3						185.7
Regulatory Liabilities			533.4						536.1
Defined Benefit Pension and Other Postretirement Benefit Plans			177.2						179.5
Other Non-Current Liabilities			287.6						280.8
Total Liabilities			3,412.5						3,488.7
Commitments, Guarantees and Contingencies (Note 6)
Equity
ALLETE Equity
Common Stock Without Par Value, 80.0 Shares Authorized, 53.3 and 53.2 Shares Issued and Outstanding			1,541.3						1,536.7
Accumulated Other Comprehensive Loss			(24.0)						(23.8)
Retained Earnings			932.0						900.2
Total ALLETE Equity			2,449.3						2,413.1
Non-Controlling Interest in Subsidiaries			694.2						533.2
Total Equity			3,143.5						2,946.3
Total Liabilities and Equity			$6,556.0						$6,435.0

									Three Months Ended
									March 31,
												2022			2021
Millions Except Per Share Amounts
Operating Revenue
Contracts with Customers – Utility												$329.0			$293.0
Contracts with Customers – Non-utility												51.7			43.4
Other – Non-utility												2.8			2.8
Total Operating Revenue												383.5			339.2
Operating Expenses
Fuel, Purchased Power and Gas – Utility												137.4			120.4
Transmission Services – Utility												19.9			17.7
Cost of Sales – Non-utility												17.0			16.8
Operating and Maintenance												75.3			66.3
Depreciation and Amortization												61.7			58.0
Taxes Other than Income Taxes												18.8			18.0
Total Operating Expenses												330.1			297.2
Operating Income												53.4			42.0
Other Income (Expense)
Interest Expense												(18.3)			(17.1)
Equity Earnings												5.5			4.8
Other												2.0			3.3
Total Other Expense												(10.8)			(9.0)
Income Before Income Taxes												42.6			33.0
Income Tax Benefit												(3.9)			(10.4)
Net Income												46.5			43.4
Net Loss Attributable to Non-Controlling Interest												(19.8)			(8.4)
Net Income Attributable to ALLETE												$66.3			$51.8
Average Shares of Common Stock
Basic												53.3			52.1
Diluted												53.3			52.2
Basic Earnings Per Share of Common Stock												$1.24			$0.99
Diluted Earnings Per Share of Common Stock												$1.24			$0.99

									Three Months Ended
									March 31,
															2022						2021
Millions
Net Income															$46.5						$43.4
Other Comprehensive Income (Loss)
Unrealized Loss on Securities
Net of Income Tax Expense of $– and $–															(0.3)						—
Defined Benefit Pension and Other Postretirement Benefit Plans
Net of Income Tax Expense of $0.1 and $0.1															0.1						0.4
Total Other Comprehensive Income (Loss)															(0.2)						0.4
Total Comprehensive Income															46.3						43.8
Net Loss Attributable to Non-Controlling Interest															(19.8)						(8.4)
Total Comprehensive Income Attributable to ALLETE															$66.1						$52.2

			Three Months Ended
			March 31,
			2022						2021
Millions
Operating Activities
Net Income			$46.5						$43.4
AFUDC – Equity			(0.9)						(0.5)
Income from Equity Investments – Net of Dividends			0.4						1.0
Loss (Gain) on Investments and Property, Plant and Equipment			0.1						(0.5)
Depreciation Expense			61.7						58.0
Amortization of PSAs			(2.8)						(2.8)
Amortization of Other Intangible Assets and Other Assets			2.1						2.5
Deferred Income Tax Benefit			(4.0)						(10.4)
Share-Based and ESOP Compensation Expense			1.3						1.7
Defined Benefit Pension and Postretirement Benefit Expense (Benefit)			(0.4)						1.1
Bad Debt Expense			0.4						0.4
Changes in Operating Assets and Liabilities
Accounts Receivable			4.9						(2.2)
Inventories			(98.9)						0.2
Prepayments and Other			(7.4)						(1.3)
Accounts Payable			(10.6)						(8.6)
Other Current Liabilities			(1.0)						23.5
Cash Contributions to Defined Benefit Pension Plans			—						(10.3)
Changes in Regulatory and Other Non-Current Assets			2.0						(0.6)
Changes in Regulatory and Other Non-Current Liabilities			1.8						(6.1)
Cash (used in) provided by Operating Activities			(4.8)						88.5
Investing Activities
Proceeds from Sale of Available-for-sale Securities			0.5						1.2
Payments for Purchase of Available-for-sale Securities			(0.4)						(0.6)
Payments for Equity Method Investments			(2.7)						(1.0)
Additions to Property, Plant and Equipment			(57.3)						(134.4)
Other Investing Activities			(0.2)						3.9
Cash used in Investing Activities			(60.1)						(130.9)
Financing Activities
Proceeds from Issuance of Common Stock			3.3						5.0
Proceeds from Issuance of Short-Term and Long-Term Debt			228.9						194.9
Repayments of Short-Term and Long-Term Debt			(259.2)						(41.4)
Proceeds from Non-Controlling Interest in Subsidiaries - Net			154.1						28.9
Dividends on Common Stock			(34.5)						(32.8)
Other Financing Activities			(0.4)						(0.4)
Cash provided by Financing Activities			92.2						154.2
Change in Cash, Cash Equivalents and Restricted Cash			27.3						111.8
Cash, Cash Equivalents and Restricted Cash at Beginning of Period			47.7						65.2
Cash, Cash Equivalents and Restricted Cash at End of Period			$75.0						$177.0

									Three Months Ended
									March 31,
												2022			2021
Millions Except Per Share Amounts
Common Stock
Balance, Beginning of Period												$1,536.7			$1,460.9
Common Stock Issued												4.6			6.7
Balance, End of Period												1,541.3			1,467.6
Accumulated Other Comprehensive Loss
Balance, Beginning of Period												(23.8)			(31.1)
Other Comprehensive Income - Net of Income Taxes
Unrealized Loss on Debt Securities												(0.3)			—
Defined Benefit Pension and Other Postretirement Plans												0.1			0.4
Balance, End of Period												(24.0)			(30.7)
Retained Earnings
Balance, Beginning of Period												900.2			864.8
Net Income Attributable to ALLETE												66.3			51.8
Common Stock Dividends												(34.5)			(32.8)
Balance, End of Period												932.0			883.8
Non-Controlling Interest in Subsidiaries
Balance, Beginning of Period												533.2			505.6
Proceeds from Non-Controlling Interest in Subsidiaries - Net of Issuance Costs												181.2			28.9
Net Loss Attributable to Non-Controlling Interest												(19.8)			(8.4)
Distributions to Non-Controlling Interest												(0.4)			(0.4)
Balance, End of Period												694.2			525.7
Total Equity												$3,143.5			$2,846.4
Dividends Per Share of Common Stock												$0.65			$0.63

Cash, Cash Equivalents and Restricted Cash. We consider all investments purchased with original maturities of three months or less to be cash equivalents. As of March 31, 2022, restricted cash amounts included in Prepayments and Other on the Consolidated Balance Sheet include collateral deposits required under ALLETE Clean Energy loan and tax equity financing agreements. The restricted cash amounts included in Other Non-Current Assets represent collateral deposits required under an ALLETE Clean Energy loan agreement as well as PSAs. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheet that aggregate to the amounts presented in the Consolidated Statement of Cash Flows.

Cash, Cash Equivalents and Restricted Cash			March 31, 2022						December 31, 2021						March 31, 2021						December 31, 2020
Millions
Cash and Cash Equivalents			$60.1						$45.1						$159.0						$44.3
Restricted Cash included in Prepayments and Other			7.1						0.3						7.1						0.8
Restricted Cash included in Other Non-Current Assets			7.8						2.3						10.9						20.1
Cash, Cash Equivalents and Restricted Cash on the Consolidated Statement of Cash Flows			$75.0						$47.7						$177.0						$65.2

Inventories – Net. Inventories are stated at the lower of cost or net realizable value. Inventories in our Regulated Operations segment are carried at an average cost or first-in, first-out basis. Inventories in our ALLETE Clean Energy segment and Corporate and Other businesses are carried at an average cost, first-in, first-out or specific identification basis.

Inventories – Net			March 31, 2022						December 31, 2021
Millions
Fuel (a)			$17.4						$18.7
Materials and Supplies			60.0						56.1
Construction of Wind Energy Facilities (b)			119.2						22.9
Total Inventories – Net			$196.6						$97.7

(a)    Fuel consists primarily of coal inventory at Minnesota Power.

(b)    Project costs related to ALLETE Clean Energy’s Northern Wind and Red Barn wind projects which are expected to be sold in late 2022 and 2023, respectively. (See Other Current Liabilities.)

NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Other Non-Current Assets			March 31, 2022						December 31, 2021
Millions
Contract Assets (a)			$22.7						$23.3
Operating Lease Right-of-use Assets			15.4						16.4
ALLETE Properties			19.4						19.4
Restricted Cash			7.8						2.3
Other Postretirement Benefit Plans			65.4						64.8
Other			81.7						87.5
Total Other Non-Current Assets			$212.4						$213.7

(a)    Contract Assets consist of payments made to customers as an incentive to execute or extend service agreements. The contract payments are being amortized over the term of the respective agreements as a reduction to revenue.     

Other Current Liabilities			March 31, 2022						December 31, 2021
Millions
Customer Deposits (a)			$28.9						$27.2
PSAs			12.6						12.6
Manufactured Gas Plant (b)			1.9						12.8
Fuel Adjustment Clause			4.1						5.0
Operating Lease Liabilities			4.4						4.8
Redeemable Non-Controlling Interest (c)			—						30.6
Other			56.9						40.0
Total Other Current Liabilities			$108.8						$133.0

(a) Primarily related to deposits received by ALLETE Clean Energy for the Northern Wind and Red Barn wind projects which are expected to be sold in late 2022 and 2023, respectively. (See Inventories – Net.)

(b) The manufactured gas plant represents the current liability for remediation of a former manufactured gas plant site located in Superior, Wisconsin, and formerly operated by SWL&P.

(c) Amount reclassified from Non-Controlling Interest in Subsidiaries resulting from the exercise of an option to buy out a non-controlling interest, which was paid in the first quarter of 2022.

Other Non-Current Liabilities			March 31, 2022						December 31, 2021
Millions
Asset Retirement Obligation (a)			$189.1						$184.5
PSAs			36.3						39.5
Manufactured Gas Plant (b)			16.1						5.2
Operating Lease Liabilities			10.9						11.6
Other			35.2						40.0
Total Other Non-Current Liabilities			$287.6						$280.8

(a)The asset retirement obligation is primarily related to our Regulated Operations and is funded through customer rates over the life of the related assets. Additionally, BNI Energy funds its obligation through its cost-plus coal supply agreements for which BNI Energy has recorded a receivable of $28.5 million in Other Non-Current Assets on the Consolidated Balance Sheet as of March 31, 2022, ($28.5 million as of December 31, 2021).

(b)The manufactured gas plant represents the non-current liability for remediation of a former manufactured gas plant site located in Superior, Wisconsin, and formerly operated by SWL&P.

NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Other Income
Three Months Ended March 31,			2022			2021
Millions
Pension and Other Postretirement Benefit Plan Non-Service Credits (a)			$2.6			$1.9
Interest and Investment Income			0.1			1.1
AFUDC - Equity			0.9			0.5
Other			(1.6)			(0.2)
Total Other Income			$2.0			$3.3

(a)These are components of net periodic pension and other postretirement benefit cost other than service cost. (See Note 9. Pension and Other Postretirement Benefit Plans.)

Three Months Ended March 31,			2022						2021
Millions
Cash Paid for Interest – Net of Amounts Capitalized			$22.4						$21.2
Noncash Investing and Financing Activities
Increase (Decrease) in Accounts Payable for Capital Additions to Property, Plant and Equipment			$(24.5)						$5.6
Capitalized Asset Retirement Costs			$3.0						$3.5
AFUDC–Equity			$0.9						$0.5

Non-Controlling Interest in Subsidiaries. Non-controlling interest in subsidiaries on the Consolidated Balance Sheet and net loss attributable to non-controlling interest on the Consolidated Statement of Income represent the portion of equity ownership and earnings, respectively, of subsidiaries that are not attributable to equity holders of ALLETE. These amounts are primarily related to the tax equity financing structures for ALLETE Clean Energy’s 106 MW Glen Ullin, 80 MW South Peak, 303 MW Diamond Spring and 303 MW Caddo wind energy facilities as well as ALLETE’s equity investment in the 250 MW Nobles 2 wind energy facility.

Subsequent Events. The Company performed an evaluation of subsequent events for potential recognition and disclosure through the date of the financial statements issuance.

Electric Rates. Entities within our Regulated Operations segment file for periodic rate revisions with the MPUC, PSCW or FERC. As authorized by the MPUC, Minnesota Power also recognizes revenue under cost recovery riders for transmission, renewable, and environmental investments and expenditures. Revenue from cost recovery riders was $6.5 million for the three months ended March 31, 2022 ($9.6 million for the three months ended March 31, 2021).

2022 Minnesota General Rate Case. On November 1, 2021, Minnesota Power filed a retail rate increase request with the MPUC seeking an average increase of approximately 18 percent for retail customers. The rate filing seeks a return on equity of 10.25 percent and a 53.81 percent equity ratio. On an annualized basis, the requested final rate increase would generate approximately $108 million in additional revenue. In orders dated December 30, 2021, the MPUC accepted the filing as complete and authorized an annual interim rate increase beginning January 1, 2022, with approximately $80 million expected to be collected in cash and approximately $8 million of interim rates for residential customers deferred with a final determination on recovery at the end of the rate case. We cannot predict the level of final rates that may be authorized by the MPUC.

2021 Integrated Resource Plan. On February 1, 2021, Minnesota Power filed its latest IRP with the MPUC, which outlines its clean-energy transition plans through 2035. These plans include expanding its renewable energy supply, achieving coal-free operations at its facilities by 2035, and investing in a resilient and flexible transmission and distribution grid. As part of these plans, Minnesota Power anticipates adding approximately 400 MW of new wind and solar energy resources, retiring Boswell Unit 3 by 2030 and transforming Boswell Unit 4 to be coal-free by 2035. Minnesota Power’s plans recognize that advances in technology will play a significant role in completing its transition to carbon-free energy supply, reliably and affordably. A final decision on the IRP is expected in the second half of 2022.

Regulatory Assets and Liabilities. Our regulated utility operations are subject to accounting guidance for the effect of certain types of regulation. Regulatory assets represent incurred costs that have been deferred as they are probable for recovery in customer rates. Regulatory liabilities represent obligations to make refunds to customers and amounts collected in rates for which the related costs have not yet been incurred. The Company assesses quarterly whether regulatory assets and liabilities meet the criteria for probability of future recovery or deferral. With the exception of the regulatory asset for Boswell Units 1 and 2 net plant and equipment, no other regulatory assets are currently earning a return. The recovery, refund or credit to rates for these regulatory assets and liabilities will occur over the periods either specified by the applicable regulatory authority or over the corresponding period related to the asset or liability.

Regulatory Assets and Liabilities			March 31, 2022						December 31, 2021
Millions
Current Regulatory Assets (a)
Fuel Adjustment Clause			$39.8						—
Total Current Regulatory Assets			39.8						—
Non-Current Regulatory Assets
Defined Benefit Pension and Other Postretirement Benefit Plans			223.2						$226.4
Income Taxes			101.5						104.7
Cost Recovery Riders			60.6						63.2
Asset Retirement Obligations			33.5						33.1
Fuel Adjustment Clause			18.5						56.4
Manufactured Gas Plant			17.4						17.0
PPACA Income Tax Deferral			4.3						4.3
Residential Customer Interim Rate Adjustment			2.0						—
Other			3.2						6.7
Total Non-Current Regulatory Assets			464.2						511.8
Total Regulatory Assets			$504.0						$511.8
Current Regulatory Liabilities (b)
Fuel Adjustment Clause			$4.1						$5.0
Transmission Formula Rates Refund			2.9						3.1
Other			0.7						0.5
Total Current Regulatory Liabilities			7.7						8.6
Non-Current Regulatory Liabilities
Income Taxes			344.8						353.4
Wholesale and Retail Contra AFUDC			83.0						83.7
Plant Removal Obligations			54.2						52.6
North Dakota Investment Tax Credits			13.7						12.2
Defined Benefit Pension and Other Postretirement Benefit Plans			26.5						28.1
Boswell Units 1 and 2 Net Plant and Equipment			1.6						0.4
Other			9.6						5.7
Total Non-Current Regulatory Liabilities			533.4						536.1
Total Regulatory Liabilities			$541.1						$544.7

(a)Current regulatory assets are presented within Prepayments and Other on the Consolidated Balance Sheet.

(b)Current regulatory liabilities are presented within Other Current Liabilities on the Consolidated Balance Sheet.

ALLETE’s Investment in ATC
Millions
Equity Investment Balance as of December 31, 2021			$154.5
Cash Investments			2.7
Equity in ATC Earnings			5.4
Distributed ATC Earnings			(4.4)
Amortization of the Remeasurement of Deferred Income Taxes			0.3
Equity Investment Balance as of March 31, 2022			$158.5

Investment in Nobles 2. Our subsidiary, ALLETE South Wind, owns 49 percent of Nobles 2, the entity that owns and operates a 250 MW wind energy facility in southwestern Minnesota pursuant to a 20-year PPA with Minnesota Power. We account for our investment in Nobles 2 under the equity method of accounting.

ALLETE’s Investment in Nobles 2
Millions
Equity Investment Balance as of December 31, 2021			$163.5
Equity in Nobles 2 Earnings (a)			0.1
Distributed Nobles 2 Earnings			(1.5)
Equity Investment Balance as of March 31, 2022			$162.1

(a)The Company also recorded net loss attributable to non-controlling interest of $3.2 million related to its investment in Nobles 2.

			Fair Value as of March 31, 2022
Recurring Fair Value Measures			Level 1						Level 2						Level 3						Total
Millions
Assets
Investments (a)
Available-for-sale – Equity Securities			$8.9						—						—						$8.9
Available-for-sale – Corporate and Governmental Debt Securities (b)			—						$5.5						—						5.5
Cash Equivalents			3.4						—						—						3.4
Total Fair Value of Assets			$12.3						$5.5						—						$17.8
Liabilities
Deferred Compensation (c)			—						$16.5						—						$16.5
Total Fair Value of Liabilities			—						$16.5						—						$16.5
			Fair Value as of December 31, 2021
Recurring Fair Value Measures			Level 1						Level 2						Level 3						Total
Millions
Assets
Investments (a)
Available-for-sale – Equity Securities			$8.9						—						—						$8.9
Available-for-sale – Corporate and Governmental Debt Securities			—						$6.2						—						6.2
Cash Equivalents			2.5						—						—						2.5
Total Fair Value of Assets			$11.4						$6.2						—						$17.6
Liabilities
Deferred Compensation (c)			—						$18.0						—						$18.0
Total Fair Value of Liabilities			—						$18.0						—						$18.0

(b)As of March 31, 2022, the aggregate amount of available-for-sale corporate and governmental debt securities maturing in one year or less was $0.8 million, in one year to less than three years was $2.7 million, in three years to less than five years was $1.5 million and in five or more years was $0.5 million.

Fair Value of Financial Instruments. With the exception of the item listed in the following table, the estimated fair value of all financial instruments approximates the carrying amount. The fair value of the item listed in the following table was based on quoted market prices for the same or similar instruments (Level 2).

Financial Instruments			Carrying Amount						Fair Value
Millions
Short-Term and Long-Term Debt (a)
March 31, 2022			$1,956.1						$1,962.9
December 31, 2021			$1,986.4						$2,192.6

(a)Excludes unamortized debt issuance costs.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis. Non-financial assets such as equity method investments, land inventory, and property, plant and equipment are measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment is recognized. For the three months ended March 31, 2022, and the year ended December 31, 2021, there were no indicators of impairment for these non-financial assets.

March 31, 2022			Principal						Unamortized Debt Issuance Costs						Total
Millions
Short-Term Debt			$278.3						$(0.2)						$278.1
Long-Term Debt			1,677.8						(8.4)						1,669.4
Total Debt			$1,956.1						$(8.6)						$1,947.5

December 31, 2021			Principal						Unamortized Debt Issuance Costs						Total
Millions
Short-Term Debt			$214.4						$(0.2)						$214.2
Long-Term Debt			1,772.0						(8.8)						1,763.2
Total Debt			$1,986.4						$(9.0)						$1,977.4

On February 28, 2022, ALLETE entered into an unsecured term loan agreement (February Term Loan) to borrow up to $175 million. No draws were made on the February Term Loan, which was subsequently terminated in April 2022.

On March 24, 2022, ALLETE entered into a $170 million unsecured term loan agreement (March Term Loan). The Term Loan is due March 23, 2023, and may be repaid at any time. Interest is payable monthly at a rate per annum equal to SOFR plus 0.75 percent. Proceeds from the Term Loan were used for general corporate purposes.

Financial Covenants. Our long-term debt arrangements contain customary covenants. In addition, our lines of credit and letters of credit supporting certain long-term debt arrangements contain financial covenants. Our compliance with financial covenants is not dependent on debt ratings. The most restrictive financial covenant requires ALLETE to maintain a ratio of indebtedness to total capitalization (as the amounts are calculated in accordance with the respective long-term debt arrangements) of less than or equal to 0.65 to 1.00, measured quarterly. As of March 31, 2022, our ratio was approximately 0.40 to 1.00. Failure to meet this covenant would give rise to an event of default if not cured after notice from the lender, in which event ALLETE may need to pursue alternative sources of funding. Some of ALLETE’s debt arrangements contain “cross-default” provisions that would result in an event of default if there is a failure under other financing arrangements to meet payment terms or to observe other covenants that would result in an acceleration of payments due. ALLETE has no significant restrictions on its ability to pay dividends from retained earnings or net income. As of March 31, 2022, ALLETE was in compliance with its financial covenants.

Power Purchase and Sale Agreements. Our long-term PPAs have been evaluated under the accounting guidance for variable interest entities. We have determined that either we have no variable interest in the PPAs or, where we do have variable interests, we are not the primary beneficiary; therefore, consolidation is not required. These conclusions are based on the fact that we do not have both control over activities that are most significant to the entity and an obligation to absorb losses or receive benefits from the entity’s performance. Our financial exposure relating to these PPAs is limited to our capacity and energy payments.

Square Butte PPA. As of March 31, 2022, Square Butte had total debt outstanding of $218.3 million. Fuel expenses are recoverable through Minnesota Power’s fuel adjustment clause and include the cost of coal purchased from BNI Energy under a long-term contract. Minnesota Power’s cost of power purchased from Square Butte during the three months ended March 31, 2022, was $20.3 million ($19.6 million for the same period in 2021). This reflects Minnesota Power’s pro rata share of total Square Butte costs based on the 50 percent output entitlement. Included in this amount was Minnesota Power’s pro rata share of interest expense of $1.0 million ($1.5 million for the same period in 2021). Minnesota Power’s payments to Square Butte are approved as a purchased power expense for ratemaking purposes by both the MPUC and the FERC.

Minnkota Power PSA. Minnesota Power has a PSA with Minnkota Power, which commenced in 2014. Under the PSA, Minnesota Power is selling a portion of its entitlement from Square Butte to Minnkota Power, resulting in Minnkota Power’s net entitlement increasing and Minnesota Power’s net entitlement decreasing until Minnesota Power’s share is eliminated at the end of 2025. Of Minnesota Power’s 50 percent output entitlement, Minnesota Power sold to Minnkota Power approximately 32 percent in 2022 and 28 percent in 2021.

Coal, Rail and Shipping Contracts. Minnesota Power has coal supply agreements providing for the purchase of a significant portion of its coal requirements through December 2022. Minnesota Power also has coal transportation agreements in place for the delivery of a significant portion of its coal requirements through December 2024. The costs of fuel and related transportation costs for Minnesota Power’s generation are recoverable from Minnesota Power’s retail and municipal utility customers through the fuel adjustment clause.

Air. The electric utility industry is regulated both at the federal and state level to address air emissions. Minnesota Power’s thermal generating facilities mainly burn low-sulfur western sub-bituminous coal. All of Minnesota Power’s coal-fired generating facilities are equipped with pollution control equipment such as scrubbers, baghouses and low NOX technologies. Under currently applicable environmental regulations, these facilities are substantially compliant with emission requirements.

Cross-State Air Pollution Rule (CSAPR). The CSAPR requires certain states in the eastern half of the U.S., including Minnesota, to reduce power plant emissions that contribute to ozone or fine particulate pollution in other states. The CSAPR does not require installation of controls but does require facilities have sufficient allowances to cover their emissions on an annual basis. These allowances are allocated to facilities from each state’s annual budget, and can be bought and sold. Based on our review of the NOX and SO2 allowances issued and pending issuance, we currently expect generation levels and emission rates will result in continued compliance with the CSAPR. The EPA’s CSAPR Update Rule issued in March 2021, to revise the 2016 CSAPR Update does not apply to the state of Minnesota and is therefore not currently projected to affect Minnesota Power’s CSAPR compliance. Minnesota Power will continue to monitor ongoing CSAPR rulemakings and compliance implementation.

National Ambient Air Quality Standards (NAAQS). The EPA is required to review the NAAQS every five years. If the EPA determines that a state’s air quality is not in compliance with the NAAQS, the state is required to adopt plans describing how it will reduce emissions to attain the NAAQS. Minnesota Power actively monitors NAAQS developments and compliance costs for existing standards or proposed NAAQS revisions are not currently expected to be material. The EPA is currently reviewing the secondary NAAQS for NOx and SO2, as well as particulate matter. In June 2021, the EPA announced it will reconsider the December 2020 final rule retaining the 2012 particulate matter NAAQS, with a proposed rulemaking anticipated in mid-2022. The EPA has not stated its intent with regard to the 2020 Ozone NAAQS rule finalized in December 2020.

EPA Good Neighbor Plan for 2015 Ozone NAAQS. On April 6, 2022, the EPA published a proposed rule, the Good Neighbor Plan, to address regional ozone transport for the 2015 Ozone NAAQS by reducing NOx emissions during the period of May 1st through September 30th (ozone season). This rule is intended to address certain good neighbor or interstate transport provisions of the Clean Air Act relative to the 2015 Ozone NAAQS. In the justification for the proposed rule, the EPA asserted that 26 states, including Minnesota, are modeled as significant contributors to downwind states’ challenges in attaining or maintaining ozone NAAQS compliance within their state borders. The Good Neighbor Plan proposes to resolve this interstate transport issue by implementing a variety of NOx reduction strategies, including federal implementation plan requirements, NOx emission limitations, and ozone season allowance program requirements, beginning with the 2023 ozone season. The proposed rule would apply to fossil-fuel fired power plants in 25 states and certain other industrial sources in 23 states. Implementation of the rule would occur in part through changes to the existing CSAPR program.

Minnesota Power is reviewing the proposed rule and assessing its potential impacts. Comments are due to the EPA by June 6, 2022. Anticipated compliance costs related to the Good Neighbor Plan cannot yet be estimated; however, the costs could be material, including costs of additional NOx controls, emission allowance program participation, or operational changes, if any are required. Minnesota Power would seek recovery of additional costs through a rate proceeding.

Climate Change. The scientific community generally accepts that emissions of GHG are linked to global climate change which creates physical and financial risks. Physical risks could include, but are not limited to: increased or decreased precipitation and water levels in lakes and rivers; increased or other changes in temperatures; and changes in the intensity and frequency of extreme weather events. These all have the potential to affect the Company’s business and operations. We are addressing climate change by taking the following steps that also ensure reliable and environmentally compliant generation resources to meet our customers’ requirements:

•Expanding renewable power supply for both our operations and the operations of others;

•Providing energy conservation initiatives for our customers and engaging in other demand side management efforts;

•Improving efficiency of our generating facilities;

•Supporting research of technologies to reduce carbon emissions from generating facilities and carbon sequestration efforts;

•Evaluating and developing less carbon intensive future generating assets such as efficient and flexible natural gas-fired generating facilities;

•Managing vegetation on right-of-way corridors to reduce potential wildfire or storm damage risks; and

•Practicing sound forestry management in our service territories to create landscapes more resilient to disruption from climate-related changes, including planting and managing long-lived conifer species.

EPA Regulation of GHG Emissions. In 2019, the EPA finalized several separate rulemakings regarding regulating carbon emissions from electric utility generating units. These rulemakings included repealing the Clean Power Plan (CPP) and adopting the Affordable Clean Energy Rule under Section 111(d) of the Clean Air Act (CAA) to regulate CO2 emissions at existing coal-fired power plants. The CPP was first announced as a proposed rule under Section 111(d) of the CAA for existing power plants entitled “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Generating Units”. The Affordable Clean Energy Rule established emissions guidelines for states to use when developing plans to limit CO2 coal-fired power plants. The EPA also published regulations for the state implementation of the Affordable Clean Energy Rule and other Section 111(d) rules. Affected facilities for Minnesota Power included Boswell Units 3 and 4, and Taconite Harbor Units 1 and 2, which are currently economically idled.

Additionally on January 13, 2021, the EPA issued a rulemaking to apply CO2 emission New Source Performance Standards (NSPS) to new, modified and reconstructed fossil fuel-fired electric generating units under Section 111(b) of the CAA. Minnesota Power is monitoring the NSPS final rule and any further Section 111(b) developments including their potential impact to the Company. The proposed combined-cycle natural gas-fired generating facility, NTEC, is expected to meet these NSPS requirements.

Water. The Clean Water Act requires NPDES permits be obtained from the EPA (or, when delegated, from individual state pollution control agencies) for any wastewater discharged into navigable waters. We have obtained all necessary NPDES permits, including NPDES storm water permits for applicable facilities, to conduct our operations.

Steam Electric Power Generating Effluent Limitations Guidelines. In 2015, the EPA issued revised federal effluent limitation guidelines (ELG) for steam electric power generating stations under the Clean Water Act. It set effluent limits and prescribed BACT for several wastewater streams, including flue gas desulphurization (FGD) water, bottom ash transport water and coal combustion landfill leachate. In 2017, the EPA announced a two-year postponement of the ELG compliance date of November 1, 2018, to November 1, 2020, while the agency reconsidered the bottom ash transport water and FGD wastewater provisions. On April 12, 2019, the U.S. Court of Appeals for the Fifth Circuit vacated and remanded back to the EPA portions of the ELG that allowed for continued discharge of legacy wastewater and leachate. On October 13, 2020, the EPA published a final ELG Rule allowing re-use of bottom ash transport water in FGD scrubber systems with limited discharges related to maintaining system water balance. The rule sets technology standards and numerical pollutant limits for discharges of bottom ash transport water and FGD wastewater. Compliance deadlines depend on subcategory, with compliance generally required as soon as possible, beginning after October 13, 2021, but no later than December 31, 2025, or December 31, 2028, in some specific cases. The rule also established new subcategories for retiring high-flow and low-utilization units, and established a voluntary incentives program for FGD wastewater. In accordance with the January 2021 Executive Order 13990, the EPA was mandated to conduct a review of actions and polices taken during the prior administration, including the 2020 ELG Rule. On September 14, 2021, the EPA published a notice of availability for preliminary effluent guidelines program plan. In the plan, the EPA confirmed the agency is initiating a rulemaking process to strengthen wastewater pollution limitations from FGD and bottom ash transport water discharges while the 2020 ELG Rule remains in effect. The EPA is expected to publish a proposed rule in the fall of 2022.

Solid and Hazardous Waste. The Resource Conservation and Recovery Act of 1976 regulates the management and disposal of solid and hazardous wastes. We are required to notify the EPA of hazardous waste activity and, consequently, routinely submit reports to the EPA.

Coal Ash Management Facilities. Minnesota Power produces the majority of its coal ash at Boswell, with small amounts of ash generated at Hibbard Renewable Energy Center. Ash storage and disposal methods include storing ash in clay-lined onsite impoundments (ash ponds), disposing of dry ash in a lined dry ash landfill, applying ash to land as an approved beneficial use, and trucking ash to state permitted landfills.

Coal Combustion Residuals from Electric Utilities (CCR). In 2015, the EPA published the final rule regulating CCR as nonhazardous waste under Subtitle D of the Resource Conservation and Recovery Act (RCRA) in the Federal Register. The rule includes additional requirements for new landfill and impoundment construction as well as closure activities related to certain existing impoundments. Costs of compliance for Boswell and Laskin are expected to be incurred primarily over the next 15 years and be between approximately $65 million and $120 million. Compliance costs for CCR at Taconite Harbor are not expected to be material. Minnesota Power would seek recovery of additional costs through a rate proceeding.

Manufactured Gas Plant Site. We are reviewing and addressing environmental conditions at a former manufactured gas plant site located in Superior, Wisconsin, and formerly operated by SWL&P. SWL&P has been working with the Wisconsin Department of Natural Resources (WDNR) in determining the extent and location of contamination at the site and surrounding properties. As of March 31, 2022, we have recorded a liability of approximately $18 million for remediation costs at this site after further refining the scope of work and cost estimates as well as incorporating detailed design components specific to the site in 2021 (approximately $18 million as of December 31, 2021); however, SWL&P continues to work with the WDNR on the extent of contamination which may result in additional remediation costs being identified. SWL&P has also recorded an associated regulatory asset as we expect recovery of these remediation costs to be allowed by the PSCW. Remediation costs are expected to be incurred through 2024.

Regulated Operations. As of March 31, 2022, we had $18.1 million outstanding in standby letters of credit at our Regulated Operations which are pledged as security to MISO and a state agency.

ALLETE Clean Energy. ALLETE Clean Energy’s wind energy facilities have PSAs in place for their entire output and expire in various years between 2022 and 2039. As of March 31, 2022, ALLETE Clean Energy has $93.4 million outstanding in standby letters of credit, the majority of which are pledged as security under these PSAs and PSAs for wind energy facilities under development. ALLETE Clean Energy does not believe it is likely that any of these outstanding letters of credit will be drawn upon.

Investment in Nobles 2. The Nobles 2 wind energy facility requires standby letters of credit as security for certain contractual obligations. As of March 31, 2022, ALLETE South Wind has $11.8 million outstanding in standby letters of credit, related to its portion of the security requirements relative to its ownership in Nobles 2. We do not believe it is likely that any of these outstanding letters of credit will be drawn upon.

									2022																		2021
Reconciliation of Basic and Diluted									Dilutive																		Dilutive
Earnings Per Share			Basic						Securities						Diluted						Basic						Securities						Diluted
Millions Except Per Share Amounts
Three Months Ended March 31,
Net Income Attributable to ALLETE			$66.3												$66.3						$51.8												$51.8
Average Common Shares			53.3						—						53.3						52.1						0.1						52.2
Earnings Per Share			$1.24												$1.24						$0.99												$0.99

												Three Months Ended
												March 31,
																		2022						2021
Millions
Current Income Tax Expense (a)
Federal																		—						—
State																		$0.1						—
Total Current Income Tax Expense																		$0.1						—
Deferred Income Tax Expense (Benefit)
Federal (b)																		$(8.6)						$(14.1)
State																		4.8						3.9
Investment Tax Credit Amortization																		(0.2)						(0.2)
Total Deferred Income Tax Benefit																		$(4.0)						$(10.4)
Total Income Tax Benefit																		$(3.9)						$(10.4)

(a)For the three months ended March 31, 2022 and 2021, the federal and state current tax expense was minimal due to NOLs which resulted from the bonus depreciation provisions of certain tax legislation. Federal and state NOLs are being carried forward to offset current and future taxable income.

(b)For the three months ended March 31, 2022 and 2021, the federal income tax benefit is primarily due to production tax credits.

						Three Months Ended
Reconciliation of Taxes from Federal Statutory						March 31,
Rate to Total Income Tax Expense												2022						2021
Millions
Income Before Income Taxes												$42.6						$33.0
Statutory Federal Income Tax Rate												21		%				21		%
Income Taxes Computed at Statutory Federal Rate												$8.9						$6.9
Increase (Decrease) in Income Tax Due to:
State Income Taxes (Credit) – Net of Federal Income Tax Benefit												3.9						3.1
Production Tax Credits												(17.6)						(18.6)
Regulatory Differences – Excess Deferred Tax												(3.8)						(3.2)
Non-Controlling Interest in Subsidiaries												3.8						1.8
Share-Based Compensation												0.5						0.5
Other												0.4						(0.9)
Total Income Tax Benefit												$(3.9)						$(10.4)

Uncertain Tax Positions. As of March 31, 2022, we had gross unrecognized tax benefits of $1.3 million ($1.3 million as of December 31, 2021). Of the total gross unrecognized tax benefits, $0.6 million represents the amount of unrecognized tax benefits included on the Consolidated Balance Sheet that, if recognized, would favorably impact the effective income tax rate. The unrecognized tax benefit amounts have been presented as reductions to the tax benefits associated with NOL and tax credit carryforwards on the Consolidated Balance Sheet.

			Pension												Other Postretirement
Components of Net Periodic Benefit Cost (Credit)			2022						2021						2022						2021
Millions
Three Months Ended March 31,
Service Cost			$2.4						$2.7						$0.8						$0.9
Non-Service Cost Components (a)
Interest Cost			6.7						6.1						1.1						1.1
Expected Return on Plan Assets			(10.4)						(10.8)						(2.4)						(2.4)
Amortization of Prior Service Credits			—						—						(1.9)						(1.9)
Amortization of Net Loss			3.2						4.7						0.1						0.7
Net Periodic Benefit Cost (Credit)			$1.9						$2.7						$(2.3)						$(1.6)

(a)These components of net periodic benefit cost (credit) are included in the line item “Other” under Other Income (Expense) on the Consolidated Statement of Income.

Employer Contributions. For the three months ended March 31, 2022, we made no contributions to the defined benefit pension plans ($10.3 million for the three months ended March 31, 2021); we do not expect to make any contributions to our defined benefit pension plans in 2022. For the three months ended March 31, 2022 and 2021, we made no contributions to our other postretirement benefit plans; we do not expect to make any contributions to our other postretirement benefit plans in 2022.

									Three Months Ended
									March 31,
												2022			2021
Millions
Operating Revenue
Regulated Operations
Residential												$56.0			$45.6
Commercial												48.3			39.7
Municipal												12.1			12.6
Industrial												147.8			129.0
Other Power Suppliers												41.0			38.4
Other												23.8			27.7
Total Regulated Operations												329.0			293.0
ALLETE Clean Energy
Long-term PSA												25.4			18.1
Other												2.8			2.8
Total ALLETE Clean Energy												28.2			20.9
Corporate and Other
Long-term Contract												22.6			21.7
Other												3.7			3.6
Total Corporate and Other												26.3			25.3
Total Operating Revenue												$383.5			$339.2
Net Income (Loss) Attributable to ALLETE
Regulated Operations												$51.5			$45.0
ALLETE Clean Energy												16.5			7.4
Corporate and Other												(1.7)			(0.6)
Total Net Income Attributable to ALLETE												$66.3			$51.8