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May 7, 2015

ALLETE, Inc. first quarter earnings per share rise by six percent

ALLETE, Inc. first quarter earnings per share rise by six percent

DULUTH, Minn. - ALLETE, Inc. (NYSE:ALE) today reported first quarter 2015 earnings of 85 cents per share on net income of $39.9 million and operating revenue of $320.0 million, compared to first quarter 2014 earnings of 80 cents per share on net income of $33.5 million and operating revenue of $296.5 million. Included in this year's quarterly results were transaction fees of $3.0 million after-tax, or six cents per share, related to the acquisition of U.S. Water Services. The first quarter of 2014 included transaction fees of $1.4 million after-tax, or three cents per share, for the ALLETE Clean Energy acquisition of three wind facilities.

"These strong financial results continue the earnings momentum we have had over the past few years," said ALLETE Chairman, President and CEO Al Hodnik. "Looking forward, we believe our recent acquisitions of U.S. Water Services and by ALLETE Clean Energy will complement our core regulated utility, balance exposure to business cycles and changing demand, and provide long-term earnings growth."

ALLETE's Regulated Operations segment, which includes Minnesota Power, Superior Water, Light and Power and the company's investment in the American Transmission Co., recorded net income of $41.4 million, an increase of $7.5 million over the first quarter of 2014. Total regulated utility sales increased 7.4 percent from the first quarter a year ago, primarily due to the commencement of the Minnkota Power sales agreement in June of 2014. Increases in cost recovery rider revenue and production tax credits were partially offset by increased depreciation and interest expense.

The Investments and Other segment, which includes the newly-acquired U.S. Water Services, ALLETE Clean Energy and BNI Coal, recorded a net loss of $1.5 million, which included the $3.0 million after-tax U.S. Water Services transaction fees. Net income at ALLETE Clean Energy increased from last year due to a full quarter of operations in 2015 from acquisitions it made last year. Last year's results also included the aforementioned ACE transaction fees of $1.4 million after-tax.

First quarter 2015 earnings also included 11 cents of dilution due to additional shares of common stock outstanding as of March 31, 2015. The additional shares were primarily used to finance construction and acquisition activity.

Financial results were in line with Company expectations, and ALLETE's full-year earnings guidance range of $3.00 to $3.20 per share, excluding transaction fees, remains unchanged. More details about earnings guidance for the year will be discussed in our conference call scheduled for today.

ALLETE Chairman, Chief Executive Officer and President Alan R. Hodnik and Chief Financial Officer Steven Q. DeVinck will present an overview of results and discuss other factors affecting performance during a conference call beginning today at 10 a.m. Eastern time.

Interested parties may listen to the conference live by calling (877) 303-5852, or by accessing the webcast on ALLETE's Web site, www.allete.com. A replay of the call will be available through May 9, 2015 by dialing (855) 859-2056, pass code 22647307. The webcast will be accessible for one year at www.allete.com.

ALLETE is an energy company headquartered in Duluth, Minn. In addition to its electric utilities, Minnesota Power and Superior Water, Light and Power of Wisconsin, ALLETE owns BNI Coal in Center, N.D., ALLETE Clean Energy, based in Duluth, U.S. Water Services headquartered in St. Michael, Minn. and has an eight percent equity interest in the American Transmission Co. More information about ALLETE is available 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.

ALLETE's press releases and other communications may include certain non-Generally Accepted Accounting Principles (GAAP) financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the company's financial statements

Non-GAAP financial measures utilized by the Company include presentations of earnings (loss) per share. ALLETE's management believes that these non-GAAP financial measures provide useful information to investors by removing the effect of variances in GAAP reported results of operations that are not indicative of changes in the fundamental earnings power of the Company's operations. Management believes that the presentation of the non-GAAP financial measures is appropriate and enables investors and analysts to more accurately compare the company's ongoing financial performance over the periods presented.

Investor Contacts:

Tim Thorp

Vince Meyer