ALLETE, Inc. Expects 2009 Earnings to Range from $2.10 to $2.35 Per Share

  
    
  
  
    
      ALLETE, Inc. (NYSE:ALE) today announced it expects 2009 earnings per 
      share to be within a range of $2.10 to $2.35 from net income of between 
      $67 to $75 million, and identified the major assumptions used in its 
      forecast.
    
    
      The company expects an order on its retail rate case now before the 
      Minnesota Public Utility Commission to be issued in April, with new 
      rates anticipated to be in effect mid-2009. Minnesota Power has asked 
      for a $40 million annual increase, and is currently collecting interim 
      rates amounting to $35 million on an annualized basis.
    
    
      While the company cannot determine what the final rates will be, for the 
      purpose of providing 2009 earnings guidance it has included rates 
      equivalent to the current interim rates for the entire year. However, 
      once the case has been completed, the company will adjust its earnings 
      outlook to include the impact of final approved rates, which may be 
      higher or lower than interim rates now being collected.
    
    
      Minnesota Power expects a decline in taconite production on Minnesota’s 
      Iron Range in 2009 from 2008 levels, resulting in lower electricity 
      usage by its industrial customers. The company intends to remarket 
      available power to other power suppliers in an effort to mitigate the 
      earnings impact of lower retail sales. The profitability of these 
      efforts will be dependent on energy market and economic conditions at 
      that time. Minnesota Power also expects to sell electricity to a new 
      industrial customer, Mesabi Nugget, which is anticipated to begin 
      operations in the second half of 2009. Mesabi Nugget has signed a 15MW 
      contract with Minnesota Power.
    
    
      The company is basing its 2009 earnings guidance on other assumptions, 
      including:
    
    
      
        the expectation of a rate increase for Minnesota Power’s wholesale 
        customers beginning in the first quarter of 2009.
      
      
        an expected Superior Water, Light and Power retail rate increase 
        beginning January 1.
      
      
        anticipated higher expenses in 2009 for operation and maintenance 
        (including labor and benefits), interest, and depreciation.
      
      
        little or no earnings from ALLETE Properties in 2009.
      
      
        investment of an additional $5 to $7 million in the American 
        Transmission Company.
      
      
        capital expenditures of approximately $325 million in 2009, about half 
        of which will be investments in environmental and renewable energy 
        projects.
      
      
        an increase in average common shares outstanding due to equity 
        issuances in 2008 and projected issuances in 2009 as the company 
        pre-funds its growth.
      
    
    
      ALLETE will finance its capital expenditure program through a 
      combination of internally generated cash, debt and equity issuances. The 
      mix will be determined based on financial market conditions and the 
      timing of funding needs during the year. “We’ll begin 2009 in a 
      favorable financial condition; we have good liquidity and a relatively 
      low debt to capital ratio on our balance sheet,” said Chairman and CEO 
      Don Shippar.
    
    
      “After 2009, we expect strong annual earnings growth for a number of 
      years due to continuing investments in utility rate base,” Shippar said. 
      “We’ll maintain our focus on earning a financial return that rewards our 
      shareholders and sustains growth prospects. Additionally, we expect to 
      increase our dividend when the Board of Directors meets in January 2009.”
    
    
      ALLETE’s corporate headquarters are located in Duluth, Minnesota. More 
      information about the company is available on ALLETE’s Web site at www.allete.com.
    
    
      The statements contained in this release and statements that ALLETE 
      may make orally in connection with this release that are not historical 
      facts, are forward-looking statements. Actual results may differ 
      materially from those projected in the forward-looking statements. These 
      forward-looking statements involve risks and uncertainties and investors 
      are directed to the risks discussed in documents filed by ALLETE with 
      the Securities and Exchange Commission.