ALLETE, Inc. (ALE): Business Model Canvas [Dec-2025 Updated]

You're trying to make sense of ALLETE, Inc.'s (ALE) business right as a major acquisition is on the table, so I've distilled their current model into the nine-block canvas you need for late 2025. Honestly, the core tension is clear: they are balancing the steady, regulated electric service that generated $1.50 billion in total operating revenue over the last twelve months ending Q3 2025 with an aggressive, forward-looking $5.005 billion clean-energy CapEx plan targeting a 2040 carbon-free goal. This breakdown shows you exactly where their key resources-like guaranteed capital from CPP/GIP-are being deployed across regulated operations, utility-scale wind, and distributed solar projects. Take a look below to see the full structure that underpins their value proposition and cost drivers right now.

ALLETE, Inc. (ALE) - Canvas Business Model: Key Partnerships

You're looking at the hard numbers behind ALLETE, Inc.'s most critical alliances as of late 2025. These aren't just names on a slide; they represent capital commitments and regulatory sign-offs that define the company's path forward.

Canada Pension Plan Investment Board (CPP Investments) and Global Infrastructure Partners (GIP) for acquisition

The acquisition by the partnership led by CPP Investments and GIP, which is part of BlackRock, was a massive undertaking, valued at over $6 billion, or $8.45 billion including debt assumption when announced. The deal secured unanimous approval from the Minnesota Public Utilities Commission (MPUC) on October 3, 2025, with an expected closing in late 2025. This partnership is set to provide ALLETE, Inc. with guaranteed access to capital for its five-year plan.

Here's a breakdown of the financial commitments and ratepayer benefits secured through this partnership:

Commitment/Metric	Value/Term
Total Acquisition Value (Inclusive of Debt)	$8.45 billion
Cash Payment Per Share	$67
Premium Over Dec 4, 2023 Share Price	19.1%
Total Customer Benefits Value	Approximately $200 million
Minnesota Power Base Rate Freeze	One-year
Post-Close Authorized Return on Equity (ROE)	9.65% (down from 9.78%)
Future ROE Cap	9.78% through December 31, 2030
Residential Customer Arrearage Forgiveness	Up to $3.5 million
Additional Customer Rate Credits	$50 million
Long-term Residential Energy Bill Mitigation Fund	$10 million
Clean Firm Technology Fund	$50 million

GIP, one of the partners, manages over $189 billion in assets.

Minnesota Public Utilities Commission (MPUC) for regulatory approval

The MPUC's unanimous approval on October 3, 2025, was the final major hurdle for the transaction to close. The settlement agreement included specific financial terms that directly impact customer rates, such as the ROE reduction and the rate freeze. Costs related to the transaction will not impact retail or municipal rates.

American Transmission Company (ATC) for grid investment equity

ALLETE, Inc.'s investment in the American Transmission Company (ATC) is a key part of its Regulated Operations segment. The financial results reflect the strength of this relationship.

• After-tax equity earnings in the American Transmission Company were higher in the first quarter of 2025 compared to 2024.
• This increase was attributed primarily to additional equity investments.

State and local leaders for lead service line replacement funding at SWLP

Superior Water, Light and Power (SWLP), an ALLETE Company, is actively replacing lead service lines (LSLs) with support from state legislation and federal programs.

• SWLP was awarded up to $11,450,320 in funding for 2025 LSL replacements.
• Approximately 1,000 lead service lines are scheduled for replacement in South Milwaukee during 2025.
• Minnesota's statewide LSLR Program combines $243 million in state general funds with an estimated $350 million in federal funds.
• The Public Facilities Authority (MPFA) awarded $96 million through 25 contracts to replace approximately 4,672 LSLs in a recent reporting period.

Clean energy advocates and labor groups supporting the partnership

The deal gained support from several key stakeholder groups, which was instrumental in securing regulatory sign-off. These groups were focused on job continuity and the clean energy transition goals.

• Supporters included the Minnesota Chamber of Commerce.
• Labor support came from the International Brotherhood of Electrical Workers Local 31 and the Laborers' International Union of Minnesota & North Dakota.
• The merger agreement included commitments to workforce retention and honoring union contracts.

Finance: draft 13-week cash view by Friday.

ALLETE, Inc. (ALE) - Canvas Business Model: Key Activities

You're looking at the core engine of ALLETE, Inc. (ALE) right now, which is all about executing massive, long-term energy infrastructure plans while managing the day-to-day realities of regulated utility service and merchant clean energy development. The key activities here are where the rubber meets the road for their entire strategy.

Regulated electric power generation and distribution via Minnesota Power is the bedrock. Minnesota Power delivers electricity across a 26,000-square-mile service territory in northeastern Minnesota, serving 150,000 customers, including 14 municipal systems and some of the largest industrial users in the US. The utility is deep into its transition; its latest Integrated Resource Plan, filed in March 2025, sets the course for an annual energy portfolio that is 90% renewable by 2035, aiming to cease coal use for its customers at the Boswell Energy Center by 2035. The Regulated Operations segment, which houses Minnesota Power, recorded a third quarter 2025 net income of $32.5 million. Anyway, the recent MPUC approval of the CPP Investments/GIP partnership brings immediate customer benefits, including a one-year base rate freeze and $50 million in additional rate credits. That ROE reduction from 9.78% to 9.65% is a concrete financial outcome of that regulatory win.

The commitment to this transition is quantified by executing the $5.005 billion EnergyForward clean-energy CapEx plan (2025-2029). This is the single largest financial commitment driving the company's near-term capital deployment. To support this, Minnesota Power is actively planning additions like two solar projects in northern Minnesota totaling more than 200 megawatts and the 200-megawatt Longspur Wind project in North Dakota. This massive investment is designed to secure the grid for future demand, which is growing, and meet state carbon-free standards.

For the non-regulated side, developing and operating utility-scale wind and solar projects (ALLETE Clean Energy) is a major activity. ALLETE Clean Energy has built out a significant footprint, currently holding more than 1,200 megawatts of nameplate wind capacity across seven states. They also have another three projects totaling more than 360 megawatts in various stages of development. The financial performance here is dynamic; for instance, Q1 2025 saw net income of $7.4 million, but Q3 2025 resulted in a net loss of $3.6 million, reflecting lower production and pricing in the SPP market.

Next up is developing and selling distributed solar projects (New Energy Equity). This business has a strong track record, having successfully completed more than 250 solar projects, which total more than 310 megawatts. Their pipeline is robust, with prospective solar projects now well above 2,000 megawatts. The quarterly earnings show the lumpy nature of project sales; Q1 2025 net income hit $9.2 million, but Q3 2025 was down to $1.3 million due to the timing of project closings. Still, higher earnings from tax equity financed solar facilities provided some offset.

Finally, the legacy activity of lignite mining operations for long-term fuel supply (BNI Energy) continues to support the Milton R. Young Generating Station under long-term agreements. BNI Energy mines about 4.5 million tons of lignite coal annually, and they sit on reserves of 600 million tons. While the overall Corporate and Other segment (which includes BNI Energy) posted a Q3 2025 net loss of $3.1 million, the Q2 2025 net income for this group was $3.3 million, showing the variability in non-regulated results, partially influenced by merger-related expenses.

Here's a quick look at the recent non-regulated segment performance:

Business Unit	Reporting Period	Net Income (Loss)
ALLETE Clean Energy	Q3 2025	($3.6 million)
ALLETE Clean Energy	Q1 2025	$7.4 million
New Energy Equity	Q3 2025	$1.3 million
New Energy Equity	Q1 2025	$9.2 million
Corporate and Other (incl. BNI Energy)	Q3 2025	($3.1 million)
Corporate and Other (incl. BNI Energy)	Q2 2025	$3.3 million

The key operational metrics for the regulated and fuel supply businesses are:

• Minnesota Power service territory: 26,000 square miles.
• Minnesota Power customers: 150,000.
• BNI Energy annual lignite production: about 4.5 million tons.
• BNI Energy reserves: 600 million tons.
• ALLETE Clean Energy current wind capacity: over 1,200 megawatts.
• New Energy Equity completed solar projects: over 250.

The company's focus is definitely shifting, but the regulated utility still drives the bulk of the stable earnings, even with industrial margin pressure. If onboarding the new owners takes longer than expected, the execution of that $5.005 billion CapEx plan could face defintely scrutiny from the new management team.

ALLETE, Inc. (ALE) - Canvas Business Model: Key Resources

You're looking at the foundational assets that keep ALLETE, Inc. running and power its transition strategy. These aren't just line items on a balance sheet; they are the physical and financial engines of the business as of late 2025.

Regulated Utility Assets and Transmission Infrastructure in the Upper Midwest

ALLETE, Inc. owns substantial regulated utility assets, primarily through its subsidiaries Minnesota Power and Superior Water, Light and Power of Wisconsin (SWL&P). A key physical asset supporting regional connectivity is the equity interest in the American Transmission Co.

The clean energy commitment is anchored by the regulated utility's resource plan. Minnesota Power filed its latest Integrated Resource Plan, which outlines a path to achieve a portfolio that includes 90 percent renewable energy by 2035. This involves adding wind, solar, natural gas generation, and innovative energy storage as the company works to cease coal on its system by 2035. The Regulated Operations segment, which includes these utilities and the transmission investment, recorded third quarter 2025 net income of $32.5 million.

Long-Term Debt Financing, Totaling $2,098.9 million as of Q3 2025

Financing the massive infrastructure needs of the energy sector requires significant leverage. As of the third quarter of 2025, ALLETE, Inc.'s balance sheet showed Long-Term Debt totaling $2,098.9 million. This compares to the prior period's figure of $1,704.7 million. The company's Property, Plant and Equipment - Net stood at $5,528.8 million in Q3 2025. The company has historically maintained a conservative leverage profile, with its ratio of indebtedness to total capitalization at approximately 0.38 to 1.00 as of March 31, 2025, which was well within its most restrictive covenant limit of 0.65 to 1.00.

Guaranteed Access to Capital from CPP/GIP to Fund the CapEx Plan

A major strategic development solidifying future resource access is the pending partnership with Canada Pension Plan Investment Board (CPP Investments) and Global Infrastructure Partners (GIP), which received unanimous Minnesota Public Utilities Commission (MPUC) approval on October 3, 2025, with closing expected in late 2025. This transaction, valued around $6.2 billion inclusive of debt, provides guaranteed access to capital to fund ALLETE's five-year plan for advancing transmission and renewable energy goals. This is crucial because, prior to this, Minnesota Power had revealed a five-year capital expenditure plan in transmission and clean energy of $4.3 billion.

The partnership also established specific funds and commitments:

• $50 million Clean Firm Technology Fund to support regional clean-energy projects.
• A one-year base rate freeze for Minnesota Power customers.
• Approximately $200 million in total Minnesota Power customer benefits.

Portfolio of Long-Term Power Purchase Agreements (PPAs) for Clean Energy

ALLETE Clean Energy's operations are underpinned by long-term contracts, though the company faced headwinds in Q3 2025. For instance, the Square Butte PPA is a key resource. For the six months ended June 30, 2025, Minnesota Power's cost of power purchased from Square Butte under this PPA was $40.9 million. ALLETE Clean Energy recorded a third quarter 2025 net loss of $3.6 million, reflecting lower production due to transmission network outages in the SPP market.

Here's a look at the financial performance of the key energy generation and development components in Q3 2025:

Segment	Q3 2025 Net Income/(Loss)	Q3 2024 Net Income/(Loss)
ALLETE Clean Energy	($3.6 million)	$3.9 million
New Energy Equity	$1.3 million	$11.7 million
Corporate and Other	($3.1 million)	($4.6 million)

Water and Natural Gas Distribution Systems (Superior Water, Light and Power)

SWL&P is a regulated utility asset that saw operational improvements due to rate adjustments. New rates implemented in 2025 contributed to higher net income for SWL&P in Q1 and Q2 2025 compared to the prior year. The utility had sought rate increases, effective January 2025, to cover infrastructure work, including:

• Electric: $2.03 million requested increase.
• Natural gas: $3.44 million requested increase.
• Water: $1.82 million requested increase.

Furthermore, SWL&P leadership successfully advanced legislation in 2025 to allow access to federal grants for lead service line replacement costs, which helps offset customer expenses. The utility is seeking to retain a return on equity of 10.0 percent in its current rate case filings.

ALLETE, Inc. (ALE) - Canvas Business Model: Value Propositions

You're looking at the core promises ALLETE, Inc. makes to its stakeholders right now, late in 2025, especially following the recent acquisition news. These aren't just mission statements; they are backed by concrete regulatory commitments and operational figures.

Reliable, Regulated Electric Service

ALLETE, Inc. delivers essential, regulated power through its utility subsidiaries. Minnesota Power serves approximately 150,000 retail customers across northeastern Minnesota, plus 14 non-affiliated municipal customers. Also, Superior Water, Light and Power of Wisconsin (SWLP) provides service to about 15,000 electric customers in the state's northwest region. The Regulated Operations segment, which bundles these utilities with the American Transmission Company investment, posted a third quarter 2025 net income of $32.5 million. SWLP specifically saw higher net income than in 2024 because of new rates that went into effect in 2025. That's the foundation of their regulated value.

Carbon-Free Energy Commitment for Minnesota Power

Minnesota Power has a firm commitment to reach a 100% carbon-free energy supply by 2040. They've already made serious headway, achieving a 55% renewable energy supply in 2024. The Integrated Resource Plan (IRP) filed in March 2025 lays out a realistic course to hit 90% renewable by 2035, which aligns with the state's carbon-free standard milestones. This transition involves adding significant new capacity.

Here's a snapshot of the generation strategy underpinning this goal:

• Target renewable energy supply of 70% by 2030.
• Plan to add up to 700 MW of new wind and solar resources.
• Proposing to add approximately 1,000 MW of natural gas capacity to replace the last coal unit at Boswell Energy Center.
• Commitment to cease all coal use by 2035.

Rate Stability Through Acquisition Commitments

A key element of the late 2025 value proposition is rate predictability, secured through the acquisition agreement. Minnesota Power committed to a one-year base rate freeze for customers. This follows a settlement on the 2024 rate proposal where the final rate increase was approved at about 4.9% for residential customers, which was actually lower than the interim increase of 8.6% that began in January 2024. Post-closing, the Return on Equity (ROE) is set to drop from 9.78% to 9.65% until the next rate case, which directly translates to lower customer costs.

Acquisition-Driven Customer Benefits

The approved acquisition by CPP Investments and Global Infrastructure Partners comes with a guaranteed package of customer value, totaling approximately $200 million. You need to see the breakdown of where that value lands for the ratepayer.

Benefit Category	Financial Amount/Detail
Total Customer Benefits	$200 million
Rate Credits	$50 million (to be credited by 2032)
Energy Efficiency Fund	$10 million investor-funded program.
Arrearage Forgiveness	Up to $3.5 million for eligible low-income customers.
Low-Income Discount	A $20 monthly discount for eligible households.

The agreement also includes a rate case stay-out provision, which is a material benefit for customers extending rate stability beyond the initial one-year freeze.

Diversified Energy and Water Solutions

ALLETE, Inc. isn't just about Minnesota Power's regulated electric service; it also provides water and natural gas solutions regionally. SWLP operates in Wisconsin, and its leadership successfully advanced legislation in 2025 to allow access to federal grants for lead service line replacement, directly helping their customers offset costs. Furthermore, the clean energy strategy involves diversification within the generation mix itself, as seen in Minnesota Power's IRP filing which calls for adding natural gas generation and 100 MW of energy storage by 2035.

Finance: draft 13-week cash view by Friday.

ALLETE, Inc. (ALE) - Canvas Business Model: Customer Relationships

The Customer Relationships for ALLETE, Inc. (ALE) are primarily managed through its regulated utility subsidiaries, Minnesota Power (MP) and Superior Water, Light and Power (SWL&P), which operate under state commission oversight.

The customer base for the regulated utilities as of late 2025 is detailed below:

Customer Segment	Utility	Count/Metric	Latest Data Point
Residential and Commercial Customers	Minnesota Power	150,000	Serviced in northeastern Minnesota
Municipal Customers	Minnesota Power	14	Non-affiliated municipal customers
Electric Customers	Superior Water, Light and Power (SWL&P)	Approximately 15,000	In northwestern Wisconsin
Natural Gas Customers	SWL&P	Approximately 12,000
Water Customers	SWL&P	Approximately 10,000

The Regulated Operations segment, which includes Minnesota Power, SWLP, and the investment in American Transmission Company, recorded third quarter 2025 net income of $32.5 million.

Minnesota Power is advancing its clean-energy transformation, with goals set in its 2025 Integrated Resource Plan filed with the Minnesota Public Utilities Commission (MPUC).

• Minnesota Power achieved 55% renewable energy supply in 2024.
• The goal is 70% renewable by 2030.
• The goal is 100% carbon-free by 2040.

Direct, managed relationships exist with large industrial customers, which are a significant component of Minnesota Power's revenue base. Net income at Minnesota Power was lower in Q1 2025 and Q3 2025 reflecting lower margins from industrial customers compared to the prior year periods.

Industrial customers accounted for 56% of total regulated utility kWh sales in 2024. Taconite customers alone represented 70% of industrial sales in 2024.

Customer	Industry	Location	Earliest Termination Date
Cliffs - Minorca Mine	Taconite	Virginia, MN	December 31, 2027
USS Corporation - Minntac Plant	Taconite	Minnesota's Iron Range	Not specified in latest available contract status
USS Corporation - Keetac Plant	Taconite	Minnesota's Iron Range	Not specified in latest available contract status

Minnesota Power provides electricity to six taconite plants. Eleven industrial customers require 10 megawatts or more of generating capacity.

Community engagement is highlighted by commitments made in connection with the pending acquisition by Canada Pension Plan Investment Board (CPP Investments) and Global Infrastructure Partners (GIP).

• The MPUC approval of the partnership is expected to result in historic benefits for customers, employees, and communities.
• The agreement contains meaningful commitments to retain the workforce, including compensation levels and benefits.
• The acquisition process involved support from EnergyCENTS Coalition, a respected low-income customer advocacy organization.

Customer service and billing for residential and commercial accounts are managed under the regulated framework. SWL&P implemented new rates in 2025, which contributed to higher net income in Q2 2025 compared to 2024.

• Minnesota Power serves 150,000 residential and commercial customers.
• The service territory for MP covers 26,000-square-mile area in northeastern Minnesota.

ALLETE, Inc. (ALE) - Canvas Business Model: Channels

You're looking at how ALLETE, Inc. (ALE) gets its services and products to its various customer groups, which is a mix of regulated utility service and non-regulated clean energy development. This is how the physical and transactional pathways look as of late 2025.

Owned and operated electric transmission and distribution grid

This channel is primarily managed through the regulated utility subsidiaries, Minnesota Power and Superior Water, Light and Power (SWL&P) in Wisconsin.

Minnesota Power serves over 145,000 residents across 14 municipalities, in addition to its large industrial customers.

The American Transmission Company is another key asset, where ALLETE holds an 8% equity interest.

Financial performance through this regulated channel shows consistent, though fluctuating, income streams:

• Regulated Operations segment Q3 2025 net income was $32.5 million.
• Regulated Operations segment Q2 2025 net income was $23.0 million.
• Regulated Operations segment Q1 2025 net income was $38.4 million.
• Minnesota Power's Operating Revenue from Contracts with Customers - Utility for Q3 2025 reached $320.2 million.

Direct sales and contracts for large industrial power supply

This involves specific, negotiated service agreements with major industrial users, predominantly through Minnesota Power.

The channel has faced headwinds in 2025; results for the year have been negatively impacted by lower industrial margins due to lower sales to taconite customers at Minnesota Power, which are expected to continue through the remainder of 2025.

For example, a prior 10-year electric service agreement with ArcelorMittal was set to run through December 2025.

The impact of this channel is visible in segment results:

• Net income at Minnesota Power in Q3 2025 was lower than 2024, reflecting lower margins from industrial customers.
• Net income at Minnesota Power in Q1 2025 was lower than 2024, reflecting lower margins from industrial customers.

Regulatory filings and public hearings for rate adjustments and project approvals

This is a crucial, indirect channel that sets the terms for the regulated utility business, involving constant interaction with bodies like the Minnesota Public Utilities Commission (MPUC).

The MPUC voted unanimously on October 3, 2025, to approve the acquisition of ALLETE by Canada Pension Plan Investment Board (CPP Investments) and Global Infrastructure Partners (GIP), with closing expected in late 2025 upon written order issuance.

The settlement agreement leading to this approval established several customer benefits and rate structures:

• Total Minnesota Power customer benefits through the approval process were approximately $200 million.
• The agreement included a one-year base rate freeze for Minnesota Power customers.
• The final approved rate increase over 2023 rates was about 4.9% for residential/small business customers and about 4.4% for industrial/large commercial customers, effective early 2025.
• The settlement set Minnesota Power's Return on Equity (ROE) at 9.78%.
• Post-close, the ROE is set to reduce from 9.78% to 9.65% immediately, with a future ROE cap of 9.78% through December 31, 2030.
• The approval secured $50 million in additional rate credits for customers.

Direct-to-customer sales for distributed solar projects (New Energy Equity)

This channel involves New Energy Equity developing, financing, and selling distributed-generation solar facilities, often specializing in projects from 1 to 10 megawatts.

The business has a substantial pipeline, which has increased to well above 2,000 megawatts.

To date, New Energy Equity has completed more than 250 distributed solar projects across the nation, totaling more than 330 megawatts.

Here's a look at the quarterly financial contribution from this channel in 2025:

Metric	Q1 2025 Amount	Q2 2025 Amount	Q3 2025 Amount
Net Income	$9.2 million	$4.7 million	$1.3 million

Net income in Q1 2025 included higher sales of renewable energy projects and investment tax credits compared to 2024.

The Q3 2025 results included lower sales of renewable energy projects due to the timing of project closings.

Finance: draft 13-week cash view by Friday.

ALLETE, Inc. (ALE) - Canvas Business Model: Customer Segments

You're looking at the core groups ALLETE, Inc. (ALE) serves across its regulated and non-regulated businesses as of late 2025. It's a mix of heavy industry, local homes, and wholesale power buyers.

Large Industrial Customers, mainly the taconite mining sector in Minnesota

This group, served primarily through Minnesota Power, is a critical, though sometimes volatile, customer base. Results for 2025 have been negatively impacted by lower industrial margins as a result of lower sales to taconite customers at Minnesota Power, which are expected to continue through the remainder of 2025. For the six months ended June 30, 2025, net income at Minnesota Power was lower than 2024 reflecting lower margins from industrial customers. Back in 2024, taconite customers alone represented 70% of industrial sales for Minnesota Power.

Residential and Commercial customers in northeastern Minnesota and northwestern Wisconsin

The regulated utilities, Minnesota Power and Superior Water, Light and Power (SWL&P), serve the local population. Minnesota Power serves approximately 150,000 retail customers in northeastern Minnesota. SWL&P provides services in northwestern Wisconsin to about 15,000 electric customers. Sales to residential, commercial, and municipal customers increased for the six months ended June 30, 2025, compared to 2024 primarily due to colder weather in 2025.

Here's a look at the customer counts reported for the second quarter of 2025, though you should note these figures might represent specific reporting categories:

Customer Type	Minnesota Power (Q2 2025)	SWL&P (Q2 2025)	Minnesota Power (Q2 2024)	SWL&P (Q2 2024)
Residential	231	225	563	531
Commercial	304	307	658	645
Industrial	1,530	1,729	3,104	3,527
Municipal	108	105	240	230

Municipalities and other power suppliers buying bulk electricity

This segment falls under the Regulated Operations umbrella, alongside residential and commercial sales. Minnesota Power serves 14 non-affiliated municipal customers. For the six months ended June 30, 2025, revenue from kWh sales increased reflecting higher sales to municipal customers and other power suppliers. Sales to other power suppliers, which are sold at market-based prices into the MISO market daily or through Power Sales Agreements (PSAs), increased reflecting higher market sales in 2025 compared to 2024.

Third-party utilities and corporations buying renewable energy projects and power

This is the domain of ALLETE Clean Energy and New Energy Equity. ALLETE Clean Energy has developed over 1,600 MW of wind energy generation across eight states. The revenue stream here is heavily influenced by the timing of project sales and development activity. For instance, New Energy Equity recorded Q3 2025 net income of $1.3 million, compared to net income of $11.7 million for the same period in 2024, due to lower sales of renewable energy projects. ALLETE Clean Energy recorded a Q3 2025 net loss of $3.6 million compared to net income of $3.9 million in 2024.

Here's how the clean energy equity businesses performed in Q3 2025 versus Q3 2024:

• ALLETE Clean Energy Q3 2025 Net Income/Loss: -$3.6 million
• ALLETE Clean Energy Q3 2024 Net Income: $3.9 million
• New Energy Equity Q3 2025 Net Income: $1.3 million
• New Energy Equity Q3 2024 Net Income: $11.7 million

Finance: draft 13-week cash view by Friday.

ALLETE, Inc. (ALE) - Canvas Business Model: Cost Structure

The Cost Structure for ALLETE, Inc. (ALE) is heavily weighted toward long-term asset investment and the operational costs associated with maintaining a regulated utility footprint alongside its clean energy development. This structure is defined by massive capital deployment necessary for the EnergyForward Transformation.

High capital expenditures, with a $5.005 billion plan for 2025-2029

ALLETE, Inc. has a projected capital expenditure plan spanning five years, from 2025 through 2029, totaling $5.005 billion. This outlay is primarily directed toward regulated operations and clean energy projects to support the transition to a carbon-free energy supply by 2040 for Minnesota Power. This is a massive commitment. The company is banking on leveraging tax credits from the Inflation Reduction Act to help mitigate these costs.

Operating and maintenance expenses for utility and generation assets

Operating and Maintenance (O&M) expenses reflect the day-to-day running of utility and generation assets, including costs that can fluctuate based on regulatory requirements. For instance, O&M expenses for the Regulated Operations segment in the third quarter of 2025 were higher than in the third quarter of 2024, partly due to inflationary pressures at Minnesota Power. The total Operating and Maintenance expense for all segments for the first nine months of 2025 was reported as $1,034.9 (units omitted, assumed millions based on context) in one filing, though a different segment breakdown showed a Q3 2025 O&M of $90.7 (units omitted, assumed millions).

Here's a look at some of the key operating cost components for the third quarter of 2025 and year-to-date through Q3 2025, based on reported segment data:

Cost Component (Segment/Period)	Q3 2025 Amount	Year-to-Date (9 Months) 2025 Amount
Fuel, Purchased Power and Gas - Utility	$120.4	$356.7
Operating and Maintenance (Total Segments)	$90.7	$280.3
Operating and Maintenance (Non-utility, 6 Months Ended June 30)	N/A	$66.7

Interest expense on long-term debt, which was $2,098.9 million in Q3 2025

Financing the asset base requires significant interest expense. The required figure for this cost component is stated as $2,098.9 million for the third quarter of 2025. For comparison, the reported Interest Expense line item for the Regulated Operations segment in Q3 2025 was ($25.6) (units omitted, assumed millions).

Fuel costs for non-renewable generation, including lignite from BNI Energy

Fuel costs are a variable component, particularly for non-renewable generation managed by BNI Energy. The Fuel, Purchased Power and Gas - Utility expense for the third quarter of 2025 was $120.4 (units omitted, assumed millions). Revenue at BNI Energy, which operates under cost-plus fixed fee contracts, decreased in the first half of 2025 due to lower expenses and fewer tons sold compared to 2024.

Regulatory compliance and environmental remediation costs

Costs related to compliance and remediation are embedded within several line items. For example, Operating and Maintenance expense in the first half of 2025 reflected higher mitigation costs related to the ash wastewater spill at Boswell. Also, Depreciation and Amortization expense increased in the first half of 2025 due to the impact of estimated compliance costs related to the EPA's CCR Legacy Impoundment Rule finalized in May 2024. The company is also managing costs associated with the regulatory approval process for its partnership transaction.

Key cost drivers related to compliance and remediation include:

• Mitigation costs for the ash wastewater spill at Boswell.
• Estimated compliance costs for the EPA's CCR Legacy Impoundment Rule.
• Transaction-related expenses impacting net income in 2025.

ALLETE, Inc. (ALE) - Canvas Business Model: Revenue Streams

You're looking at the core ways ALLETE, Inc. brings in money as of late 2025. It's a mix of stable utility income and growth-oriented clean energy development.

The total operating revenue for the trailing twelve months ending Q3 2025 was reported at $1.50 billion USD. This figure shows a slight contraction from the $1.52 billion USD reported for the full year 2024.

A significant portion of this revenue comes from the regulated electric sales through its utilities, primarily Minnesota Power and Superior Water, Light and Power (SWL&P). These sales are categorized by customer type:

• Regulated electric sales to residential, commercial, and industrial customers form the bedrock of the utility revenue.
• For the nine months ending September 30, 2025, net income from the Regulated Operations segment was $93.9 million.
• Industrial customers, especially taconite sector sales, have been a major focus, though lower margins here negatively impacted Q3 2025 results.

We can see the volume shifts in the third quarter of 2025:

Total kilowatt-hours sold to retail and municipal customers decreased to 2,296 million in Q3 2025, down from 2,451 million in the same quarter last year. Industrial sales volume specifically dropped to 1,573 million kWh in Q3 2025, compared to 1,715 million kWh in Q3 2024.

Within the regulated operating revenue for 2025, the customer mix breakdown provides more detail:

Customer Category	Percentage of Regulated Operating Revenue (2025)
Paper, pulp and secondary wood product customers	5 percent
Pipelines and other industrial customers	10 percent

Long-term contracted power sales from ALLETE Clean Energy (ACE) wind and solar sites provide a more predictable revenue stream, though project timing impacts reported results. For the third quarter of 2025, ACE posted a net loss of $3.6 million, compared to net income of $3.9 million in 2024.

The sale of developed renewable energy projects by New Energy Equity (NEE) is another key component, though it is subject to the timing of project closings. NEE's third quarter 2025 net income was $1.3 million, a decrease from $11.7 million in the third quarter of 2024.

Finally, ALLETE holds an 8% equity interest in the American Transmission Co. (ATC). Equity earnings from this investment contribute to the overall Regulated Operations segment results, which recorded third quarter 2025 net income of $32.5 million.

Finance: draft 13-week cash view by Friday.