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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2025


☐			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

ALLETE, Inc.

(Exact name of registrant as specified in its charter)


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

30 West Superior Street

Duluth, Minnesota 55802-2093

(Address of principal executive offices)

(Zip Code)

(218) 279-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated Filer ☐

Non-Accelerated Filer ☐ Smaller Reporting Company ☐

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Common Stock, without par value,

58,098,399 shares outstanding

as of September 30, 2025

Index




Definitions			3

Forward-Looking Statements			5

Part I.	Financial Information

	Item 1.	Consolidated Financial Statements - Unaudited	7

		Consolidated Balance Sheet	7


		Consolidated Statement of Income	8


		Consolidated Statement of Comprehensive Income	9


		Consolidated Statement of Cash Flows	10


		Consolidated Statement of Equity	11


		Notes to Consolidated Financial Statements	12

		Note 1. Operations and Significant Accounting Policies	12

		Note 2. Regulatory Matters	15

		Note 3. Equity Investments	18

		Note 4. Fair Value	18
		Note 5. Short-Term and Long-Term Debt	20
		Note 6. Commitments, Guarantees and Contingencies	21
		Note 7. Earnings Per Share and Common Stock	29
		Note 8. Income Tax Expense	29

		Note 9. Pension and Other Postretirement Benefit Plans	31
		Note 10. Business Segments	32
		Note 11. Agreement and Plan of Merger	36
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
		Comparison of the Quarters Ended	40
		Comparison of the Nine Months Ended	43
		Critical Accounting Policies	46
		Outlook	47
		Liquidity and Capital Resources	50
		Other	52
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	53

	Item 4.	Controls and Procedures	54

Part II.	Other Information

	Item 1.	Legal Proceedings	54

	Item 1A.	Risk Factors	54

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

	Item 3.	Defaults Upon Senior Securities	54

	Item 4.	Mine Safety Disclosures	54

	Item 5.	Other Information	55

	Item 6.	Exhibits	55

Signatures			56

ALLETE, Inc. Third Quarter 2025 Form 10-Q

Definitions

The following abbreviations or acronyms are used in the text. References in this report to “we,” “us” and “our” are to ALLETE, Inc., and its subsidiaries, collectively.


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.

Alloy Merger Sub			Alloy Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of Alloy Parent.
Alloy Parent			Alloy Parent LLC, a Delaware limited liability company which, upon closing, will be jointly owned by a wholly owned subsidiary of Canada Pension Plan Investment Board and affiliates of investment vehicles affiliated with one or more funds, accounts, or other entities managed or advised by Global Infrastructure Management, LLC
ATC			American Transmission Company LLC



BNI Energy			BNI Energy, Inc. and its subsidiary
Boswell			Boswell Energy Center
Caddo			ALLETE Clean Energy’s Caddo Wind Energy Facility


CCR			Coal Combustion Residuals from Electric Utilities
CFIUS			The Committee on Foreign Investment in the United States
Cliffs			Cleveland-Cliffs Inc.

Company			ALLETE, Inc. and its subsidiaries


CSAPR			Cross-State Air Pollution Rule

Diamond Spring			ALLETE Clean Energy’s Diamond Spring Wind Energy Facility


ECO			Energy Conservation and Optimization Plan
EPA			United States Environmental Protection Agency

ESOP			Employee Stock Ownership Plan
ESPP			Employee Stock Purchase Plan
Executive Officers of ALLETE			Chair, President and Chief Executive Officer; Vice President and President of ALLETE Clean Energy; Vice President, Chief Legal Officer and Corporate Secretary; Vice President, Chief Financial Officer, and Corporate Treasurer; Vice President and Chief Operating Officer of Minnesota Power; and Vice President, Chief Accounting Officer, and Controller

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




HVDC			High-Voltage Direct-Current
IBEW			International Brotherhood of Electrical Workers
Invest Direct			ALLETE’s Direct Stock Purchase and Dividend Reinvestment Plan
Item ___			Item ___ of this Form 10-Q
kV			Kilovolt(s)
kWh			Kilowatt-hour(s)
Lampert Capital Markets			Lampert Capital Markets, Inc.
Laskin			Laskin Energy Center

ALLETE, Inc. Third Quarter 2025 Form 10-Q


Abbreviation or Acronym			Term
Merger			Pursuant to the Merger Agreement, on the terms and subject to the conditions set forth therein, Alloy Merger Sub will merge with and into ALLETE (the “Merger”), with ALLETE continuing as the surviving corporation in the Merger and becoming a subsidiary of Alloy Parent
Merger Agreement			Agreement and Plan of Merger, dated as of May 5, 2024, by and among ALLETE, Alloy Parent, and Alloy Merger Sub
Minnesota Power			An operating division of ALLETE, Inc.
Minnkota Power			Minnkota Power Cooperative, Inc.
MISO			Midcontinent Independent System Operator, Inc.


Moody’s			Moody’s Investors Service, Inc.
MPCA			Minnesota Pollution Control Agency
MPUC			Minnesota Public Utilities Commission
MW			Megawatt(s)
NAAQS			National Ambient Air Quality Standards
NDPSC			North Dakota Public Service Commission
New Energy			New Energy Equity LLC
Nippon Steel			Nippon Steel Corporation
Nobles 2			Nobles 2 Power Partners, LLC


NOX			Nitrogen Oxides


Note ___			Note ___ to the consolidated financial statements in this Form 10-Q
NPDES			National Pollutant Discharge Elimination System
NTEC			Nemadji Trail 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
RSOP			Retirement Savings and Stock Ownership Plan

SEC			Securities and Exchange Commission

SO2			Sulfur Dioxide
South Shore Energy			South Shore Energy, LLC
Square Butte			Square Butte Electric Cooperative, a North Dakota cooperative corporation

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

ALLETE, Inc. Third Quarter 2025 Form 10-Q

Forward-Looking Statements

Statements in this report that are not statements of historical facts are considered “forward-looking” and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there can be no assurance that the expected results will be achieved. Any statements that express, or involve discussions as to, future expectations, risks, beliefs, plans, objectives, assumptions, events, uncertainties, financial performance, or growth strategies (often, but not always, through the use of words or phrases such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “projects,” “likely,” “will continue,” “could,” “may,” “potential,” “target,” “outlook” or words of similar meaning) are not statements of historical facts and may be forward-looking.

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, we are providing this cautionary statement to identify important factors that could cause our actual results to differ materially from those indicated in forward-looking statements made by or on behalf of ALLETE in this Form 10-K, in presentations, on our website, in response to questions or otherwise. These statements are qualified in their entirety by reference to, and are accompanied by, the following important factors, in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements that could cause our actual results to differ materially from those indicated in the forward-looking statements:

•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, the direct and indirect effects of new or changes in existing tariffs, or changes in tax rates or policies;

•changes in rates of inflation or availability of key materials and suppliers;

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

•weather conditions, natural disasters and pandemic diseases;

•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;

•population growth rates and demographic patterns;

•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;

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

•the risk that Alloy Parent or ALLETE may be unable to obtain governmental and regulatory approvals required for the Merger, or that required governmental and regulatory approvals or agreements with other parties interested therein may delay the Merger, may subject the Merger to or impose adverse conditions or costs, or may cause the parties to abandon the Merger;

•the timing and costs incurred to consummate the Merger;

•the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement or could otherwise cause the failure of the Merger to be consummated on the timeline anticipated;

ALLETE, Inc. Third Quarter 2025 Form 10-Q

Forward Looking Statements (Continued)

•the announcement and pendency of the Merger, during which ALLETE is subject to certain operating restrictions, could have an adverse effect on ALLETE’s businesses, results of operations, financial condition or cash flows; and

•The consummation of the Merger, subject to a final written order, could result in commitments agreed to with counterparties in the state of Minnesota that may have an impact on ALLETE’s results of operations or cash flows.

Additional disclosures regarding factors that could cause our results or performance to differ from those anticipated by this report are discussed in Part I, Item 1A. Risk Factors of our 2024 Form 10-K. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which that statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all of these factors, nor can it assess the impact of each of these factors on the businesses of ALLETE or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement. Readers are urged to carefully review and consider the various disclosures made by ALLETE in this Form 10-Q and in other reports filed with the SEC that attempt to identify the risks and uncertainties that may affect ALLETE’s business.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

ALLETE

CONSOLIDATED BALANCE SHEET

Unaudited


	September 30, 2025	December 31, 2024
Millions
Assets
Current Assets
Cash and Cash Equivalents	$78.7	$32.8
Accounts Receivable (Less Allowance of $1.7 and $1.7)	146.1	148.1
Inventories – Net	184.9	154.6
Prepayments and Other	75.3	99.7
Total Current Assets	485.0	435.2
Property, Plant and Equipment – Net	5,528.8	5,181.5
Regulatory Assets	360.4	371.7
Equity Investments	357.7	340.1

Goodwill and Intangible Assets – Net	155.2	155.3
Other Non-Current Assets	265.8	270.5
Total Assets	$7,152.9	$6,754.3
Liabilities, Redeemable Non-Controlling Interest and Equity
Liabilities
Current Liabilities
Accounts Payable	$116.7	$113.6
Accrued Taxes	56.9	54.6
Accrued Interest	26.1	23.4
Long-Term Debt Due Within One Year	138.1	94.7

Other	75.4	117.9
Total Current Liabilities	413.2	404.2
Long-Term Debt	2,098.9	1,704.7
Deferred Income Taxes	291.7	253.4
Regulatory Liabilities	593.5	570.5
Defined Benefit Pension and Other Postretirement Benefit Plans	99.6	118.2
Other Non-Current Liabilities	312.1	312.8
Total Liabilities	3,809.0	3,363.8
Commitments, Guarantees and Contingencies (Note 6)
Redeemable Non-Controlling Interest	0.7	0.4
Equity
ALLETE Equity
Common Stock Without Par Value, 80.0 Shares Authorized, 58.1 and 57.9 Shares Issued and Outstanding	1,839.0	1,823.2

Accumulated Other Comprehensive Loss	(18.1)	(18.1)
Retained Earnings	1,031.0	1,042.9
Total ALLETE Equity	2,851.9	2,848.0
Non-Controlling Interest in Subsidiaries	491.3	542.1
Total Equity	3,343.2	3,390.1
Total Liabilities, Redeemable Non-Controlling Interest and Equity	$7,152.9	$6,754.3

The accompanying notes are an integral part of these statements.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

ALLETE

CONSOLIDATED STATEMENT OF INCOME

Unaudited


	Quarter Ended		Nine Months Ended
	September 30,		September 30,
	2025	2024	2025	2024
Millions Except Per Share Amounts
Operating Revenue
Contracts with Customers – Utility	$320.2	$310.5	$958.1	$928.6
Contracts with Customers – Non-utility	53.3	95.4	173.0	232.6
Other – Non-utility	1.5	1.3	4.4	3.8

Total Operating Revenue	375.0	407.2	1,135.5	1,165.0
Operating Expenses
Fuel, Purchased Power and Gas – Utility	120.4	116.5	356.7	357.3
Transmission Services – Utility	19.2	19.6	57.5	43.9
Cost of Sales – Non-utility	26.0	47.0	75.2	103.2
Operating and Maintenance	90.7	92.7	280.3	286.5
Depreciation and Amortization	72.5	70.8	215.4	201.8
Taxes Other than Income Taxes	16.6	15.3	49.8	50.3
Total Operating Expenses	345.4	361.9	1,034.9	1,043.0
Operating Income	29.6	45.3	100.6	122.0
Other Income (Expense)
Interest Expense	(25.6)	(20.3)	(70.1)	(60.8)
Equity Earnings	5.6	5.1	17.5	16.5

Other	5.3	5.5	15.1	20.0
Total Other Expense	(14.7)	(9.7)	(37.5)	(24.3)
Income Before Income Taxes	14.9	35.6	63.1	97.7
Income Tax Expense (Benefit)	1.6	2.9	8.5	8.3
Net Income	13.3	32.7	54.6	89.4
Net Loss Attributable to Non-Controlling Interest	(13.8)	(12.3)	(60.5)	(39.3)
Net Income Attributable to ALLETE	$27.1	$45.0	$115.1	$128.7
Average Shares of Common Stock
Basic	58.1	57.8	58.0	57.7
Diluted	58.2	57.9	58.1	57.8
Basic Earnings Per Share of Common Stock	$0.47	$0.78	$1.98	$2.23
Diluted Earnings Per Share of Common Stock	$0.46	$0.78	$1.98	$2.23

The accompanying notes are an integral part of these statements.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

ALLETE

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Unaudited


	Quarter Ended		Nine Months Ended
	September 30,		September 30,
	2025	2024	2025	2024
Millions
Net Income	$13.3	$32.7	$54.6	$89.4
Other Comprehensive Loss


Unrealized Gain (Loss) on Securities
Net of Income Tax Expense of $—, $—, $— and $—	(0.1)	0.1	(0.1)	0.1


Defined Benefit Pension and Other Postretirement Benefit Plans
Net of Income Tax Benefit of $—, $(0.1), $— and $(0.3)	0.1	(0.2)	0.1	(0.6)
Total Other Comprehensive Loss	—	(0.1)	—	(0.5)
Total Comprehensive Income	13.3	32.6	54.6	88.9
Net Loss Attributable to Non-Controlling Interest	(13.8)	(12.3)	(60.5)	(39.3)
Total Comprehensive Income Attributable to ALLETE	$27.1	$44.9	$115.1	$128.2

The accompanying notes are an integral part of these statements.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

ALLETE

CONSOLIDATED STATEMENT OF CASH FLOWS

Unaudited


	Nine Months Ended
	September 30,
	2025	2024
Millions
Operating Activities
Net Income	$54.6	$89.4
Adjustments to Reconcile Net Income to Cash provided by Operating Activities:
AFUDC – Equity	(4.0)	(4.0)
Income from Equity Investments – Net of Dividends	1.7	0.1
Gain on Investments and Property, Plant and Equipment	(1.8)	(0.5)
Depreciation Expense	215.3	201.7
Amortization of PSAs	(4.4)	(3.8)
Amortization of Other Intangible Assets and Other Assets	5.0	5.2
Deferred Income Tax Benefit	(2.9)	(7.2)
Share-Based and ESOP Compensation Expense	6.2	5.5

Defined Benefit Pension and Other Postretirement Plan Benefit	(2.6)	(10.3)

Fuel Adjustment Clause	1.1	6.7
Bad Debt Expense	0.8	1.1

Provision (Payments) for Interim Rate Refund	(23.0)	17.0
Changes in Operating Assets and Liabilities
Accounts Receivable	1.2	1.7
Inventories	(24.0)	2.5
Prepayments and Other	10.4	(2.0)
Accounts Payable	(0.1)	(3.1)
Other Current Liabilities	(10.3)	(11.7)
Renewable Tax Credit Sales	27.2	58.4
Cash Contributions to Defined Benefit Pension Plans	(19.1)	(25.0)
Changes in Regulatory and Other Non-Current Assets	5.0	38.5
Changes in Regulatory and Other Non-Current Liabilities	16.7	7.1
Cash provided by Operating Activities	253.0	367.3
Investing Activities
Proceeds from Sale of Available-for-sale Securities	3.0	1.7
Payments for Purchase of Available-for-sale Securities	(2.7)	(1.9)

Payments for Equity Method Investments	(18.3)	(5.8)


Additions to Property, Plant and Equipment	(540.3)	(230.3)


Other Investing Activities	2.0	16.4
Cash used in Investing Activities	(556.3)	(219.9)
Financing Activities
Proceeds from Issuance of Common Stock	9.6	9.9

Proceeds from Issuance of Short-Term and Long-Term Debt	685.0	628.0

Repayments of Short-Term and Long-Term Debt	(245.4)	(633.0)
Proceeds from Non-Controlling Interest in Subsidiaries – Net	12.1	4.1


Distributions to Non-Controlling Interest	(2.1)	(0.9)
Dividends on Common Stock	(127.0)	(122.0)
Other Financing Activities	(2.9)	(1.9)
Cash provided by (used in) Financing Activities	329.3	(115.8)
Change in Cash, Cash Equivalents and Restricted Cash	26.0	31.6
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	55.2	79.4
Cash, Cash Equivalents and Restricted Cash at End of Period	$81.2	$111.0

The accompanying notes are an integral part of these statements.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

ALLETE

CONSOLIDATED STATEMENT OF EQUITY

Unaudited


	Quarter Ended		Nine Months Ended
	September 30,		September 30,
	2025	2024	2025	2024
Millions Except Per Share Amounts
Equity
Common Stock
Balance, Beginning of Period	$1,833.7	$1,813.8	$1,823.2	$1,803.7
Common Stock Issued	5.3	5.3	15.8	15.4

Balance, End of Period	1,839.0	1,819.1	1,839.0	1,819.1

Accumulated Other Comprehensive Loss
Balance, Beginning of Period	(18.1)	(20.9)	(18.1)	(20.5)
Other Comprehensive Income – Net of Income Taxes
Unrealized Gain on Debt Securities	(0.1)	0.1	(0.1)	0.1
Defined Benefit Pension and Other Postretirement Benefit Plans	0.1	(0.2)	0.1	(0.6)
Balance, End of Period	(18.1)	(21.0)	(18.1)	(21.0)

Retained Earnings
Balance, Beginning of Period	1,046.3	1,028.8	1,042.9	1,026.4
Net Income Attributable to ALLETE	27.1	45.0	115.1	128.7
Common Stock Dividends	(42.4)	(40.7)	(127.0)	(122.0)

Balance, End of Period	1,031.0	1,033.1	1,031.0	1,033.1

Non-Controlling Interest in Subsidiaries
Balance, Beginning of Period	504.4	573.0	542.1	597.0
Proceeds from Non-Controlling Interest in Subsidiaries – Net	—	—	2.0	1.4
Net Loss Attributable to Non-Controlling Interest	(11.6)	(12.1)	(50.9)	(36.8)

Distributions to Non-Controlling Interest	(1.5)	(0.2)	(1.9)	(0.9)
Balance, End of Period	491.3	560.7	491.3	560.7

Total Equity	$3,343.2	$3,391.9	$3,343.2	$3,391.9

Redeemable Non-Controlling Interest
Balance, Beginning of Period	$0.8	$0.9	$0.4	$0.5
Proceeds from Non-Controlling Interest in Subsidiaries	2.2	—	10.1	2.7
Net Loss Attributable to Non-Controlling Interest	(2.2)	(0.2)	(9.6)	(2.5)
Distributions to Non-Controlling Interest	(0.1)	—	(0.2)	—
Total Redeemable Non-Controlling Interest	$0.7	$0.7	$0.7	$0.7

Dividends Per Share of Common Stock	$0.73	$0.705	$2.19	$2.115

The accompanying notes are an integral part of these statements.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and do not include all of the information and notes required by GAAP for complete financial statements pursuant to such rules and regulations. Similarly, the December 31, 2024, Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. The presentation of certain prior period amounts on the Consolidated Financial Statements have been adjusted for comparative purposes. In management’s opinion, these unaudited financial statements include all adjustments necessary for a fair statement of financial results. All adjustments are of a normal, recurring nature, except as otherwise disclosed. Operating results for the nine months ended September 30, 2025, are not necessarily indicative of results that may be expected for any other interim period or for the year ending December 31, 2025. For further information, refer to the Consolidated Financial Statements and notes included in our 2024 Form 10-K.

NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

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

On October 3, 2025, the MPUC held a public hearing in which the MPUC voted in favor of approval of the Merger. In connection with the MPUC’s public hearing, a written order is expected to follow. The consummation of the Merger remains subject to the satisfaction of certain closing conditions, including the receipt of the MPUC’s written order approving the Merger. (See Note 11. Agreement and Plan of Merger.)

On October 23, 2025, the MPUC held a public hearing at which the MPUC approved Minnesota Power’s request for deferred accounting relating to the CCR legacy rule. (See Note 2. Regulatory Matters.)

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 September 30, 2025, restricted cash amounts included in Other Non-Current Assets represent collateral deposits required under an ALLETE Clean Energy PSA. 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	September 30, 2025	December 31, 2024	September 30, 2024	December 31, 2023
Millions
Cash and Cash Equivalents	$78.7	$32.8	$101.9	$71.9
Restricted Cash included in Prepayments and Other	—	19.9	6.6	5.1
Restricted Cash included in Other Non-Current Assets	2.5	2.5	2.5	2.4
Cash, Cash Equivalents and Restricted Cash on the Consolidated Statement of Cash Flows	$81.2	$55.2	$111.0	$79.4

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 and New Energy segments as well as our Corporate and Other businesses are carried at an average cost, first-in, first-out or specific identification basis.


Inventories – Net	September 30, 2025	December 31, 2024
Millions
Fuel (a)	$22.1	$22.5
Materials and Supplies	133.6	107.6
Renewable Energy Facilities Under Development (b)	29.2	24.5



Total Inventories – Net	$184.9	$154.6

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

(b) Renewable Energy Facilities Under Development as of September 30, 2025, consists primarily of project costs related to renewable energy development projects at New Energy.

Prepayments and Other Current Assets. Prepayments and Other on the Consolidated Balance Sheet included $22.5 million of costs in excess of billings at New Energy as of September 30, 2025 ($32.4 million as of December 31, 2024).

Goodwill. The aggregate carrying amount of goodwill was $154.9 million as of September 30, 2025 ($154.9 million as of December 31, 2024). There have been no changes to goodwill by reportable segment for the nine months ended September 30, 2025.


Other Non-Current Assets	September 30, 2025	December 31, 2024
Millions
Other Postretirement Benefit Plans	$100.7	$107.6
Contract Assets (a)	14.2	15.9


ALLETE Properties	9.1	10.3
Restricted Cash	2.5	2.5

Other	139.3	134.2
Total Other Non-Current Assets	$265.8	$270.5

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


Other Current Liabilities	September 30, 2025	December 31, 2024
Millions
Provision for Interim Rate Refund	—	$23.0
Customer Deposits	$9.3	7.8
PSAs	5.8	5.9







Other	60.3	81.2
Total Other Current Liabilities	$75.4	$117.9

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)


Other Non-Current Liabilities	September 30, 2025	December 31, 2024
Millions
Asset Retirement Obligation (a)	$263.6	$261.3
PSAs	10.7	15.1




Other	37.8	36.4
Total Other Non-Current Liabilities	$312.1	$312.8

(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 $42.3 million in Other Non-Current Assets on the Consolidated Balance Sheet as of September 30, 2025 ($42.3 million as of December 31, 2024).


	Quarter Ended		Nine Months Ended
	September 30,		September 30,
Other Income (Expense)	2025	2024	2025	2024
Millions
Pension and Other Postretirement Benefit Plan Non-Service Credits (a)	$1.7	$3.0	$5.0	$11.0
Interest and Investment Income	2.3	1.2	6.7	3.9
AFUDC - Equity	1.3	1.5	4.0	4.0

Other Income (Expense)	—	(0.2)	(0.6)	1.1
Total Other Income	$5.3	$5.5	$15.1	$20.0

(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.)


	Nine Months Ended
	September 30,
Supplemental Statement of Cash Flows Information	2025	2024
Millions
Cash Paid for Interest – Net of Amounts Capitalized	$64.0	$59.5
Cash Paid for Income Taxes – Net	$15.9	$7.0
Noncash Investing and Financing Activities

Increase in Accounts Payable for Capital Additions to Property, Plant and Equipment	$3.4	$13.5

Capitalized Asset Retirement Costs	$2.6	$51.0
AFUDC–Equity	$4.0	$4.0

New Accounting Pronouncements and Disclosure Rules.

See Note 1. Operations and Significant Accounting Policies to the Consolidated Financial Statements in our 2024 Form 10-K. There are no other new accounting pronouncements or rules that we anticipate having a material effect on the presentation of ALLETE’s consolidated financial statements.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 2. REGULATORY MATTERS

Regulatory matters are summarized in Note 4. Regulatory Matters to the Consolidated Financial Statements in our 2024 Form 10-K, with additional disclosure provided in the following paragraphs.

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 $35.2 million for the nine months ended September 30, 2025 ($15.1 million for the nine months ended September 30, 2024).

2024 Minnesota General Rate Case. On November 1, 2023, Minnesota Power filed a retail rate increase request with the MPUC that sought an average increase of approximately 12.00 percent for retail customers, net of rider revenue incorporated into base rates. The rate filing sought a return on equity of 10.30 percent and a 53.00 percent equity ratio. On an annualized basis, the requested final rate increase would have generated approximately $89 million in additional revenue. In separate orders dated December 19, 2023, the MPUC accepted the filing as complete and approved an annual interim rate increase of approximately $64 million, net of rider revenue, beginning January 1, 2024, subject to refund.

On May 3, 2024, Minnesota Power entered into a settlement agreement with the Minnesota Department of Commerce, Minnesota Office of the Attorney General, Residential Utilities Division, and Large Power Intervenors to settle the retail rate increase request. As part of the settlement agreement, the parties agreed on all issues, including an overall rate increase of $33.97 million, net of rider revenue and amounts transferring to the fuel adjustment clause, a return on equity of 9.78 percent, all non-financial items and cost allocation. In an order dated November 25, 2024, the MPUC approved the settlement agreement. Final rates were implemented in the first quarter of 2025; interim rates were collected through this period with reserves recorded as necessary, which were refunded to customers in the second quarter of 2025.

2022 Minnesota General Rate Case. Minnesota Power appealed with the Minnesota Court of Appeals (Court) specific aspects of the MPUC’s February 2023 and May 2023 rate case orders for the ratemaking treatment of Taconite Harbor and Minnesota Power’s prepaid pension asset. On September 9, 2024, the Court affirmed the MPUC’s Taconite Harbor treatment, but reversed and remanded the treatment of Minnesota Power’s prepaid pension asset back to the MPUC. The Court directed the MPUC to determine the amount of Minnesota Power’s prepaid pension asset to be included in rate base. On June 26, 2025, the MPUC held a hearing and decided to reopen the record to address whether Minnesota Power has met its burden to prove the size and source of the prepaid pension asset, contributions required by Federal law, and possible allocation between ratepayers and shareholders. We are unable to predict the outcome of this proceeding.

Solar Cost Recovery Rider. Minnesota Power has an approved cost recovery rider in place to charge retail customers on a current basis for solar costs related to investments and expenditures for meeting the state of Minnesota’s solar energy standard. Current customer billing rates were approved by the MPUC in an order dated February 13, 2025. On August 26, 2025, Minnesota Power submitted its latest solar factor filing. Following approval of the filing by the MPUC, Minnesota Power will be authorized to include updated billing rates on customer bills.

Transmission Cost Recovery Rider. Minnesota Power has an approved cost recovery rider in place to charge retail customers on a current basis for certain transmission investments and expenditures, including a return on the capital invested. Current customer billing rates are based on an MPUC order dated March 5, 2024. On November 13, 2024, Minnesota Power submitted its latest transmission factor filing, which was subsequently withdrawn and resubmitted on August 19, 2025. Following approval of the filing by the MPUC, Minnesota Power will be authorized to include updated billing rates on customer bills.

Renewable Cost Recovery Rider. Minnesota Power has an approved cost recovery rider in place to charge retail customers on a current basis for the costs of certain renewable investments and expenditures, including a return on the capital invested. Current customer billing rates for the renewable cost recovery rider were approved by the MPUC in an order dated June 25, 2024. On October 1, 2025, Minnesota Power submitted its latest renewable factor filing. Following approval of the filing by the MPUC, Minnesota Power will be authorized to include updated billing rates on customer bills.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 2. REGULATORY MATTERS (Continued)

Fuel Adjustment Clause. Minnesota Power incurred higher fuel and purchased power costs in 2024 than those factored in its fuel adjustment forecast filed in May 2023 for 2024, which resulted in the recognition of a $4.5 million regulatory asset. Minnesota Power submitted its annual true-up filing to the MPUC on March 3, 2025. At a hearing on June 26, 2025, the MPUC approved the filing, and authorized Minnesota Power to recover the regulatory asset over 12 months beginning on September 1, 2025.

Minnesota Power has incurred lower fuel and purchased power costs in 2025 than those factored in its 2025 fuel adjustment forecast filed in May 2024, which resulted in the recognition of a $7.4 million regulatory liability as of September 30, 2025.

Minnesota Power filed its annual forecasted fuel and purchased energy rates for 2026 on May 1, 2025.

Deferred Accounting Petition. On December 30, 2024, Minnesota Power submitted a petition with the MPUC seeking deferral accounting treatment for investigative costs and the increase in depreciation expense resulting from compliance costs that will be incurred related to the new Coal Combustion Residuals (CCR) Legacy Rule, which was published in the Federal Register on May 8, 2024. (See Note 6. Commitments, Guarantees and Contingencies.) Compliance with the CCR Legacy Rule is expected to result in a significant increase to our MPUC-approved decommissioning costs for Boswell and Laskin. At a hearing on October 23, 2025, the MPUC approved Minnesota Power’s request for deferred accounting relating to the CCR legacy rule. We previously recorded depreciation expense related to this rule on the Consolidated Statement of Income of $4.4 million in 2024 and $4.8 million in 2025, respectively. The aggregate amount of $9.2 million pre-tax will be reclassified to a deferred tracking account within Regulatory Assets on the Consolidated Balance Sheet in the fourth quarter of 2025, the period in which the MPUC approved the filing. The amount and timing of recovery will be subject to MPUC review through a future rate case or other proceeding.

Energy Conservation and Optimization (ECO) Plan. On April 1, 2025, Minnesota Power submitted its 2024 ECO annual filing (formerly the Conservation Improvement Plan) detailing Minnesota Power’s ECO plan results and requesting a financial incentive of $2.6 million, which will be recognized upon approval by the MPUC. In 2024, a financial incentive of $2.2 million was recognized in the fourth quarter upon approval by the MPUC of the 2023 ECO annual filing. The financial incentives are recognized in the period in which the MPUC approves the filing.

Integrated Resource Plan. On March 3, 2025, Minnesota Power filed its 2025 IRP, which outlines Minnesota Power’s next steps to provide safe and reliable energy to customers while adding new resources, meeting increasing demand for energy and reducing carbon emissions. The 2025 IRP calls for adding renewable projects, customer-focused demand response, energy storage and natural gas generation, and positions Minnesota Power to cease coal use for its customers at the Boswell Energy Center in Cohasset and meet the requirements of the state of Minnesota’s carbon-free standard. As part of the 2025 IRP, Minnesota Power anticipates maximizing and expanding customer-focused programs including energy efficiency, energy conservation and demand response, adding 400 MW of new wind energy resources by 2035, in addition to the 700 MW of wind and solar announced in its 2021 IRP, expanding energy storage resources by 100 MW by 2035, and adding approximately 1,000 MW of natural gas capacity, including the refuel of Boswell Unit 3 to run solely on natural gas by 2030. Minnesota Power will continue to explore biomass fuel opportunities at Boswell Unit 3 and will develop natural gas replacement options for Boswell Unit 4. A final decision on the 2025 IRP is expected in 2026.

2021 Integrated Resource Plan. In 2021, Minnesota Power filed its 2021 IRP, which was approved by the MPUC in a January 2023 order. The approved 2021 IRP, which reflected a joint agreement reached with various stakeholders, outlined Minnesota Power’s clean-energy transition plans through 2035. Those plans included 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 those plans, Minnesota Power is adding up to 700 MW of new wind and solar energy resources, and ceasing coal operations at Boswell Units 3 and 4 by 2030 and 2035, respectively. Minnesota Power’s plans recognized that advances in technology will play a significant role in completing its transition to carbon-free energy supply, reliably and affordably.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 2. REGULATORY MATTERS (Continued)

Wind Energy Request For Proposals. On August 4, 2025, Minnesota Power announced plans to build a 200 MW wind project in North Dakota, which is expected to be in service in late 2027, subject to regulatory approvals in North Dakota and Minnesota. Minnesota Power also filed a petition with the MPUC on August 4, 2025, requesting approval of investments and expenditures in the wind project for recovery through Minnesota Power’s renewable resources rider.

Regulatory Assets and Liabilities. Our regulated utility operations are subject to accounting standards for the effects 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. 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	September 30, 2025	December 31, 2024
Millions
Current Regulatory Assets (a)
Fuel Adjustment Clause	$3.6	—
Other	1.6	$1.6
Total Current Regulatory Assets	$5.2	$1.6
Non-Current Regulatory Assets
Defined Benefit Pension and Other Postretirement Benefit Plans	$195.6	$200.3
Income Taxes	78.0	84.9
Asset Retirement Obligations	44.2	41.0
Cost Recovery Riders	19.5	5.5
Manufactured Gas Plant	10.5	11.6
Taconite Harbor	7.0	17.3
PPACA Income Tax Deferral	3.6	3.7
Fuel Adjustment Clause	0.2	4.5

Other	1.8	2.9
Total Non-Current Regulatory Assets	$360.4	$371.7


Current Regulatory Liabilities (b)
Provision for Interim Rate Refund	—	$23.0
Fuel Adjustment Clause	$0.5	7.2

Other	1.3	1.3
Total Current Regulatory Liabilities	$1.8	$31.5
Non-Current Regulatory Liabilities
Income Taxes	$277.8	$292.7
Wholesale and Retail Contra AFUDC	83.5	77.6
Non-Jurisdictional Land Sales	81.7	59.7
Plant Removal Obligations	80.4	74.2
Defined Benefit Pension and Other Postretirement Benefit Plans	35.5	40.7
Investment Tax Credits	17.3	17.8
Fuel Adjustment Clause	7.4	0.6
Boswell Units 1 and 2 Net Plant and Equipment	6.7	6.7


Other	3.2	0.5
Total Non-Current Regulatory Liabilities	$593.5	$570.5

(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, Inc. Third Quarter 2025 Form 10-Q

NOTE 3. EQUITY INVESTMENTS

Investment in ATC. Our wholly-owned subsidiary, ALLETE Transmission Holdings, owns approximately 8 percent of ATC, a Wisconsin-based utility that owns and maintains electric transmission assets in portions of Wisconsin, Michigan, Minnesota and Illinois. We account for our investment in ATC under the equity method of accounting.


ALLETE’s Investment in ATC
Millions
Equity Investment Balance as of December 31, 2024			$194.4
Cash Investments			18.3
Equity in ATC Earnings			19.7
Distributed ATC Earnings			(17.6)
Amortization of the Remeasurement of Deferred Income Taxes			1.0
Equity Investment Balance as of September 30, 2025			$215.8

The FERC issued a Notice of Proposed Rulemaking in 2021 proposing to limit the 0.50 percent incentive adder for participation in a regional transmission organization to only the first three years of membership in such an organization. If this proposal is adopted, our equity in earnings from ATC would be reduced by approximately $1 million pre-tax annually.

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, 2024			$145.7

Equity in Nobles 2 Earnings (a)			(2.2)
Distributed Nobles 2 Earnings			(1.6)
Equity Investment Balance as of September 30, 2025			$141.9

(a)The Company also recorded earnings from net loss attributable to non-controlling interest of $8.7 million related to its investment in Nobles 2.

NOTE 4. FAIR VALUE

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We utilize market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. We primarily apply the market approach for recurring fair value measurements and endeavor to utilize the best available information. Accordingly, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs, which are used to measure fair value, are prioritized through the fair value hierarchy. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Descriptions of the three levels of the fair value hierarchy are discussed in Note 7. Fair Value to the Consolidated Financial Statements in our 2024 Form 10-K.

The following tables set forth, by level within the fair value hierarchy, our assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2025, and December 31, 2024. Each asset and liability is classified based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, which may affect the valuation of these assets and liabilities and their placement within the fair value hierarchy levels. The estimated fair value of Cash and Cash Equivalents listed on the Consolidated Balance Sheet approximates the carrying amount and therefore is excluded from the recurring fair value measures in the following tables.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 4. FAIR VALUE (Continued)


	Fair Value as of September 30, 2025
Recurring Fair Value Measures	Level 1	Level 2	Level 3	Total
Millions
Assets
Investments (a)
Available-for-sale – Equity Securities	$5.6	—	—	$5.6
Available-for-sale – Corporate and Governmental Debt Securities (b)	—	$6.2	—	6.2
Cash Equivalents	17.0	—	—	17.0
Total Fair Value of Assets	$22.6	$6.2	—	$28.8

Liabilities
Deferred Compensation (c)	—	$20.0	—	$20.0


Total Fair Value of Liabilities	—	$20.0	—	$20.0



	Fair Value as of December 31, 2024
Recurring Fair Value Measures	Level 1	Level 2	Level 3	Total
Millions
Assets
Investments (a)
Available-for-sale – Equity Securities	$8.6	—	—	$8.6
Available-for-sale – Corporate and Governmental Debt Securities	—	$6.8	—	6.8
Cash Equivalents	8.5	—	—	8.5
Total Fair Value of Assets	$17.1	$6.8	—	$23.9

Liabilities
Deferred Compensation (c)	—	$21.1	—	$21.1

Total Fair Value of Liabilities	—	$21.1	—	$21.1

(a)Included in Other Non-Current Assets on the Consolidated Balance Sheet.

(b)As of September 30, 2025, the aggregate amount of available-for-sale corporate and governmental debt securities maturing in one year or less was $1.3 million, in one year to less than three years was $2.7 million, in three years to less than five years was $1.7 million and in five or more years was $0.5 million.

(c)Included in Other Non-Current Liabilities on the Consolidated Balance Sheet.

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 for 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)
September 30, 2025	$2,247.5	$2,182.0
December 31, 2024	$1,808.0	$1,668.0

(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, goodwill, intangible assets, 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 quarter and nine months ended September 30, 2025, and the year ended December 31, 2024, there were no indicators of impairment for these non-financial assets.

We continue to monitor changes in the broader energy markets along with wind resource expectations that could indicate impairment at ALLETE Clean Energy wind energy facilities upon contract expirations. A decline or volatility in energy prices, change in operational plans or lower wind resource expectations could result in a future impairment.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 5. SHORT-TERM AND LONG-TERM DEBT

The following tables present the Company’s short-term and long-term debt as of September 30, 2025, and December 31, 2024:


September 30, 2025	Principal	Unamortized Debt Issuance Costs	Total
Millions
Short-Term Debt	$138.1	—	$138.1
Long-Term Debt	2,109.4	$(10.5)	2,098.9
Total Debt	$2,247.5	$(10.5)	$2,237.0


December 31, 2024
Millions
Short-Term Debt	$94.7	—	$94.7
Long-Term Debt	1,713.3	$(8.6)	1,704.7
Total Debt	$1,808.0	$(8.6)	$1,799.4

We had $16.2 million outstanding standby letters of credit and $95.0 million outstanding draws under our lines of credit as of September 30, 2025 ($16.2 million in standby letters of credit and $20.0 million outstanding draws on our lines of credit as of December 31, 2024). We also have standby letters of credit outstanding under other letter of credit facilities. (See Note 6. Commitments, Guarantees and Contingencies.)

On March 25, 2025, ALLETE issued and sold $150 million of senior unsecured notes (“Notes”) to certain institutional buyers in the private placement market. The Notes were sold in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, to institutional accredited investors. Of the Notes issued and sold, $120 million of the Notes bear interest at a rate of 5.38 percent and mature on March 25, 2030, and $30 million of the Notes bear interest at a rate of 5.82 percent and mature on March 25, 2035. Interest on the Notes will be payable semi-annually on April 1 and October 1 of each year, commencing on October 1, 2025. ALLETE has the option to prepay all or a portion of the Notes at its discretion, subject to a make-whole provision. The Notes are subject to additional terms and conditions which are customary for these types of transactions. Proceeds from the sale of the Notes were used for refinancing of debt and general corporate purposes.

On July 9, 2025, ALLETE issued $250 million of first mortgage bonds ("Bonds") to certain institutional buyers in the private placement market. The Bonds were sold in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended, to institutional accredited investors.

The Bonds were issued in four series as follows:


Maturity Date	Principal Amount	Interest Rate
July 9, 2032	$50 million	5.37%
July 9, 2035	$75 million	5.69%
July 9, 2037	$50 million	5.79%
July 9, 2055	$75 million	6.34%

Interest on the Bonds is payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2026. ALLETE has the option to prepay all or a portion of the Bonds at its discretion, subject to a make-whole provision; however, each series of bonds is redeemable at par, including, in each case, accrued and unpaid interest, three months prior to the maturity date of the series maturing in 2032, 2035 and 2037, and six months prior to the maturity date of the series maturing in 2055. The Bonds will be subject to additional terms and conditions which are customary for these types of transactions. ALLETE plans to use the proceeds from the sale of the Bonds to fund utility capital expenditures.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 5. SHORT-TERM AND LONG-TERM DEBT (Continued)

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 September 30, 2025, our ratio was approximately 0.41 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; however, under the Merger Agreement, the Company has agreed not to declare or pay dividends except for quarterly cash dividends payable by us in respect of shares of our common stock on a schedule consistent with our past practices in an amount not to exceed 5 percent per share more than the dividend payable during the prior 12-month period, subject to certain other exceptions. (See Note 11. Agreement and Plan of Merger.) As of September 30, 2025, ALLETE was in compliance with its financial covenants.

NOTE 6. COMMITMENTS, GUARANTEES AND CONTINGENCIES

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.

Our PPAs are summarized in Note 9. Commitments, Guarantees and Contingencies to the Consolidated Financial Statements in our 2024 Form 10-K, with additional disclosure provided in the following paragraphs.

Square Butte PPA. As of September 30, 2025, Square Butte had total debt outstanding of $151.6 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 nine months ended September 30, 2025, was $62.4 million ($66.0 million for the same period in 2024). 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 $3.1 million ($3.8 million for the same period in 2024). 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 46 percent in 2025 and 41 percent in 2024.

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 2027. Minnesota Power also has coal transportation agreements in place for the delivery of a significant portion of its coal requirements through December 2027. The costs of fuel and related transportation costs for Minnesota Power’s generation are recoverable from Minnesota Power’s utility customers through the fuel adjustment clause.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

Environmental Matters.

Our businesses are subject to regulation of environmental matters by various federal, state, and local authorities. A number of regulatory changes to the Clean Air Act, the Clean Water Act and various waste management requirements have been promulgated by both the EPA and state authorities over the past several years. Minnesota Power’s facilities are subject to additional requirements under many of these regulations. Minnesota Power is reshaping its generation portfolio, over time, to reduce its reliance on coal, has installed cost-effective emission control technology, and advocates for sound science and policy during rulemaking implementation.

We consider our businesses to be in substantial compliance with currently applicable environmental regulations and believe all necessary permits have been obtained. We anticipate that with many state and federal environmental regulations and requirements finalized, or to be finalized in the near future, potential expenditures for future environmental matters may be material and require significant capital investments. Minnesota Power has evaluated various environmental compliance scenarios using possible outcomes of environmental regulations to project power supply trends and impacts on customers.

We review environmental matters on a quarterly basis. Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on current law and existing technologies. Accruals are adjusted as assessment and remediation efforts progress, or as additional technical or legal information becomes available. Accruals for environmental liabilities are included in the Consolidated Balance Sheet at undiscounted amounts and exclude claims for recoveries from insurance or other third parties. Costs related to environmental contamination treatment and cleanup are expensed unless recoverable in rates from customers.

Federal Environmental Regulatory Agenda. On March 12, 2025, the EPA announced its intent to reevaluate or reconsider numerous environmental regulations. This list includes various air, water, and waste environmental regulatory actions, many of which apply at the Company. The specific timing or outcome of this initiative is not yet known, but regular required rulemaking processes and procedures still apply, and litigation may also occur. The following disclosures do not attempt to discern potential impacts of these deregulatory actions until and unless formal rulemaking or other regulatory actions are announced and the potential impacts to ALLETE operations can be discerned. We are unable to predict the outcome of the reevaluation or reconsideration of these environmental regulations.

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, as well as natural gas and biomass. 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 as well as consideration of current rules, we currently expect generation levels and emission rates will result in continued compliance with the CSAPR. Minnesota Power will continue to monitor ongoing CSAPR rulemakings and compliance implementation, including the EPA’s Good Neighbor Rule which modifies certain aspects of the CSAPR’s program scope and extent (see EPA Good Neighbor Plan for 2015 Ozone NAAQS).

National Ambient Air Quality Standards (NAAQS). The EPA is required to review each 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 the EPA has recently reassessed several primary and secondary NAAQS for NOx, SO2, and particulate matter. Implementation of the EPA’s February 2024 final rule lowering the annual primary standard for fine particulate matter began on May 6, 2024. On December 27, 2024, the EPA published a final rule in the Federal Register revising the secondary SO2 NAAQS while retaining the NOX and particulate matter secondary standards, with a final rule effective date of January 27, 2025. Anticipated timelines and compliance costs related to this and other potential NAAQS revisions cannot yet be estimated but costs could be material. Minnesota Power would seek recovery of additional costs through a rate proceeding.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 6. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued)

Environmental Matters (Continued)

EPA Good Neighbor Plan for 2015 Ozone NAAQS. On June 5, 2023, after disapproving state implementation plans, the EPA published a final Federal Implementation Plan (FIP) rule in the Federal Register, the Good Neighbor Plan, to address regional ozone transport for the 2015 Ozone NAAQS by reducing NOX emissions during the period of May 1 through September 30 (ozone season). In its justification for the final rule, the EPA asserted that 23 states, including Minnesota, were modeled as significant contributors to downwind states’ challenges in attaining or maintaining ozone NAAQS compliance within their state borders. The Good Neighbor Plan is designed 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. The final rule imposed restrictions on fossil-fuel fired power plants in 22 states and on certain industrial sources in 20 states, with implementation occurring through changes to the existing CSAPR program for power plants.

Since the EPA partially disapproved the Good Neighbor State Implementation Plans (SIPs) for the states of Minnesota and Wisconsin, among others, Minnesota became subject to the final Good Neighbor Plan. However, Minnesota Power and a coalition of other Minnesota utilities and industry (the parties) co-filed challenges to the EPA’s final Minnesota SIP disapproval, submitting a petition for reconsideration and stay to the EPA, and a petition for judicial review to the Eighth Circuit Court. The parties are challenging and requesting reconsideration of certain technical components of the EPA’s review and subsequent partial disapproval of the state of Minnesota’s SIP. In July 2023, the Eighth Circuit Court granted a stay of the SIP disapproval preventing the Good Neighbor Plan from taking effect in Minnesota; oral arguments occurred in October 2024. In April 2024, the EPA published a partial denial of several administrative reconsideration and stay petitions, including from the Minnesota coalition. On September 29, 2023, the EPA issued an updated final interim rule addressing the stays in Minnesota and five other states, formally delaying the effective date of the final FIP for states with active stays in place. The state of Minnesota therefore did not become subject to compliance obligations for the 2023, 2024, or 2025 ozone seasons.

Future compliance obligations will depend on resolution of the stay and outcomes of related litigation. Additional challenges have been filed against the final FIP rule by the Minnesota coalition parties and other entities, although the Minnesota coalition FIP challenge is currently in abeyance pending resolution of the SIP disapproval case. On June 27, 2024, the U.S. Supreme Court granted an emergency stay of the FIP rule requested by several states and industry groups, staying enforcement pending the D.C. Circuit’s review and any petition for writ of certiorari. In response to the U.S. Supreme Court’s stay order, the EPA published a third interim rule in the Federal Register on November 6, 2024, staying the effectiveness of the Good Neighbor FIP in the 10 remaining covered states, including Wisconsin. On March 10, 2025, the EPA filed a motion with the D.C. Circuit requesting a voluntary remand of its FIP, stating they anticipate completing replacement rulemaking by Fall 2026. The EPA’s current unified agenda outlines a two-phase rulemaking approach plan, beginning with draft Phase 1 and Phase 2 rules in August 2025 and October 2025, respectively; however no proposed rules have yet been published. Anticipated timelines and compliance costs related to final Good Neighbor Plan compliance cannot yet be estimated due to uncertainties about SIP approval resolution, implementation timing, FIP rule outcome, and allowance costs and facility emissions during the ozone season. 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. Additionally, final rates in Minnesota Power’s most recent rate case were implemented on March 1, 2025, allowing any necessary allowance purchase costs to transfer to the fuel adjustment clause.

EPA National Emission Standards for Hazardous Air Pollutants for Major Sources: Industrial, Commercial and Institutional Boilers and Process Heaters (Industrial Boiler MACT) Rule. A final rule issued by the EPA for Industrial Boiler MACT became effective in 2013 with compliance required at major existing sources in 2016, which applied to Minnesota Power’s Hibbard Renewable Energy Center and Rapids Energy Center. Compliance consisted largely of adjustments to fuels and operating practices and compliance costs were not material. After this initial rulemaking, litigation from 2016 through 2018 resulted in court orders directing that the EPA reconsider certain aspects of the regulation. A final rule incorporating these revisions became effective in December 2022, with a compliance deadline of October 6, 2025. Compliance costs are not expected to be material.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 6. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued)

Environmental Matters (Continued)

EPA Mercury and Air Toxics Standards (MATS) Rule. On May 7, 2024, the EPA promulgated a final rule to revise the existing 2012 MATS Rule, which regulates air emissions of hazardous air pollutants from coal- and oil-fired electric generating units (EGUs). The final rule eliminates certain MATS compliance flexibility, lowers the particulate emission standard for all coal-fired EGUs, and reduces the mercury emission standard for lignite-fired EGUs. The rule became effective July 8, 2024, with compliance required beginning July 6, 2027. The MATS regulation applies at Minnesota Power’s Boswell facility, which is currently well-controlled for these emissions and already complying with some of the new requirements. The Company anticipates the new rule will not have material impacts at Boswell. However, compliance costs cannot yet be fully estimated, and recovery of any additional costs would be sought through a rate proceeding. Litigation against the EPA’s latest MATS rule revision from a number of U.S. states, as well as several companies and industry groups, is ongoing. Motions to stay the rule were denied by the U.S. Court of Appeals for the D.C. Circuit on August 6, 2024, and the U.S. Supreme Court on October 4, 2024.

On April 8, 2025, President Trump issued a proclamation entitled Regulatory Relief for Certain Stationary Sources to Further Promote American Energy. Pursuant to this proclamation, a two-year compliance extension deadline was granted on April 14, 2025, to 47 specific listed sources subject to the 2024 MATS rule, exempting those sources from compliance obligations of the 2024 rule until July 8, 2029; another proclamation was subsequently issued for several additional sources on July 17, 2025. Minnesota Power did not request a deadline extension. On June 17, 2025, the EPA published a proposed rule repealing the majority of the 2024 final MATS rule. A final rule is expected to be issued in December 2025. The Company anticipates this rulemaking will not have material impacts at Boswell.

Climate Change. The scientific community generally accepts that emissions of GHGs 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; increased risk of wildfires; 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. On April 25, 2024, the EPA issued several final greenhouse gas regulations to establish emissions standards and guidelines for fossil fuel-fired electric generating units (EGUs) under Section 111 of the Clean Air Act (CAA). The final rules revise new source performance standards (NSPS) for new, modified and reconstructed EGUs (Section 111(b) of the CAA) and creates new emission guidelines for existing EGUs (Section 111(d) of the CAA). The action also officially repeals the predecessor regulation “Affordable Clean Energy Rule”, first issued in 2019 and later vacated in 2021. Compliance will be required beginning January 1, 2030, for existing sources, and upon commencing operation of new units. The 111(d) rule also requires states to submit plans to provide for the establishment, implementation and enforcement of performance standards for existing sources. States must submit either a state plan or negative declaration letter to the EPA by May 11, 2026.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 6. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued)

Environmental Matters (Continued)

The final Section 111 rules apply to several Company assets, including existing EGUs at the Boswell and Laskin facilities as well as the proposed combined cycle natural gas-fired generating facility, Nemadji Trail Energy Center. The Company anticipates compliance with the rules may require operational or planning adjustments. The state implementation plan process for Section 111(d) existing units will also be a factor in determining specific requirements and timing. We are unable to predict compliance costs at this time; however, the costs could be material. Minnesota Power would seek recovery of additional costs through a rate proceeding. The Company is also monitoring endangerment finding evaluations by the EPA, as well as litigation of the final Section 111 rules. Litigation began when the rules were published in the Federal Register on May 9, 2024, and continues in federal court. Both the D.C. Circuit and the U.S. Supreme Court have declined requests to block the rule from becoming effective while litigation is ongoing. Oral arguments in the D.C. Circuit occurred on December 6, 2024, with a merits decision expected in mid-2025; however, currently the case remains in continued abeyance at the EPA’s request while the EPA reconsiders the Section 111 regulations. The EPA has stated it anticipates issuing a final reconsideration rule by December 2025.

On June 17, 2025, the EPA published a proposed rule titled Repeal of Greenhouse Gas Emissions Standards for Fossil Fuel-Fired Electric Generating Units (reconsideration rule) that, if finalized, would repeal either all or certain aspects of the 2024 Section 111 rules. Outcomes from ongoing litigation over the 2024 Section 111 rules, the outcome of the proposed reconsideration rule, and the effects of future litigation will determine the timing of rule effectiveness and the ultimate compliance obligations required by the rule. The EPA also released a proposed rule on July 29, 2025, titled Reconsideration of 2009 Greenhouse Gas Endangerment Finding and Greenhouse Gas Standards seeking to repeal all greenhouse gas emissions standards for vehicles and engines as well as to rescind the EPA’s 2009 endangerment finding related to greenhouse gases. The Company cannot predict the outcome of this rulemaking initiative at this point, but resolution of this matter also has the potential to affect federal greenhouse gas regulations at stationary sources such as power plants.

Water. The Clean Water Act requires NPDES permits be obtained from the EPA or delegated state 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 Best Available Control Technology (BACT) for several wastewater streams, including flue gas desulphurization (FGD) water, bottom ash transport water and coal combustion landfill leachate. In October 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 set 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.

On May 9, 2024, the EPA finalized revisions to the 2020 ELG rule. The final rule establishes zero discharge limitations for bottom ash transport water, FGD wastewater, and combustion residual leachate. A definition for legacy wastewater was established, with deferral to state permit programs for setting discharge limits based on best professional judgment. The rule maintains exemptions for units permanently ceasing coal combustion by 2028 and adds a new subcategory for units that are retiring by 2032 and have already complied with either the 2015 or 2020 ELG rules. Additionally, the rule establishes mercury and arsenic limitations for functionally equivalent discharges of leachate via groundwater to surface water. Compliance deadlines are determined by the applicable state permitting authority through permit incorporation as soon as July 8, 2024, but no later than December 31, 2029.

Bottom ash transport and FGD wastewater ELGs are not expected to have a significant impact on Minnesota Power operations. Zero leachate discharge requirements have the potential to impact dewatering associated with the closed Taconite Harbor dry ash landfill. New limitations for arsenic and mercury related to functionally equivalent (groundwater to surface water) discharges are not currently anticipated to impact Minnesota Power facilities.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 6. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued)

Environmental Matters (Continued)

We estimate no additional material compliance costs for ELG bottom ash water and FGD requirements. Compliance costs we might incur related to other ELG waste streams (e.g., leachate) or other potential future water discharge regulations at Minnesota Power facilities cannot be estimated; however, the costs could be material, including costs associated with wastewater treatment and re-use. Minnesota Power would seek recovery of additional costs through a rate proceeding. On June 30, 2025, the EPA announced its intent to update the 2024 final ELG Rule by extending certain compliance deadlines and exploring other potential compliance flexibility for sources, such as reconsidering technology-based effluent limitations and requirements. To accomplish this, the EPA released proposed deadline extensions in the form of both a direct final rule and a proposed rule on September 29, 2025. Additional proposed reconsideration rulemaking is expected to occur by November 2025, with final action anticipated by May 2026.

Permitted Water Discharges – Sulfate. In 2017, the MPCA released a draft water quality standard in an attempt to update Minnesota’s existing 10 mg/L sulfate limit for waters used for the production of wild rice with the proposed rulemaking heard before an administrative law judge (ALJ). In 2018, the ALJ rejected significant portions of the proposed rulemaking and the MPCA subsequently withdrew the rulemaking. The existing 10 mg/L limit remains in place, and primarily affects Boswell’s discharge. Boswell received a NPDES Wastewater Permit that includes site specific sulfate limits that will not materially impact operations. We are unable to determine the specific impacts these requirements may have on other Minnesota Power operations or its customers, if any.

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.

Boswell Ash Wastewater Spill. On August 12, 2024, Minnesota Power received a Notice of Violation (NOV) from the MPCA, related to the spill at Boswell from a pipeline carrying ash wastewater from an inactive onsite storage pond to the plant for reuse. The spill, which reached the north bay of Blackwater Lake, was reported by the Company on July 16, 2024. Minnesota Power responded to the MPCA NOV, clarifying certain statements made by the MPCA, as well as providing a written report and required plans. Minnesota Power continues to work with state and federal agencies to evaluate and remediate the impacts from this event. We incurred remediation costs of approximately $2.4 million through the first three quarters of 2025. We are unable to predict the total amount of remediation and other costs or potential financial penalties related to the ash wastewater spill at this time; however, the amounts could be material.

Coal Combustion Residuals from Electric Utilities. In 2015, the EPA published a final rule (2015 Rule) regulating CCR as nonhazardous waste under Subtitle D of the Resource Conservation and Recovery Act (RCRA) in the Federal Register. The rule included 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 12 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.

Minnesota Power continues to work on minimizing compliance costs through evaluation of beneficial re-use and recycling of CCR. In 2018, a U.S. District Court for the District of Columbia decision vacated specific provisions of the CCR rule, which resulted in a change to the status of existing clay-lined impoundments at Boswell being considered unlined. In September 2020, the EPA finalized the CCR Part A Rule, which required all unlined impoundments to cease disposal and initiate closure. Upon completion of dry ash conversion activities, Boswell ceased disposal in both impoundments in September 2022. Both impoundments are now inactive and have initiated closure.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 6. COMMITMENTS, GUARANTEES AND CONTINGENCIES (Continued)

Environmental Matters (Continued)

On May 8, 2024, the EPA's final CCR Legacy Impoundment Rule was published in the Federal Register. The final rule expands the scope of units regulated under the CCR rule to include legacy ponds (inactive surface impoundments at inactive facilities) and creates a new category of units called CCR management units (CCRMU), which includes inactive and closed impoundments and landfills as well as other non-containerized accumulations of CCR at active facilities. The final rule requires all regulated generating facilities to evaluate and identify past deposits of CCR materials on their sites and close or re-close existing CCR units to meet current closure standards, as well as install groundwater monitoring systems, conduct groundwater monitoring, and implement groundwater corrective actions as necessary. The Final Rule requires a final Facility Evaluation Report by February 2027, which will identify regulated units and applicable requirements. Additionally, the EPA finalized portions of the proposed CCR Part B Rule, which allows CCR units to certify closure while conducting groundwater remediation activities. On July 22, 2025, the EPA published a proposed CCRMU Deadline Extension Rule to extend certain CCRMU compliance deadlines by at least one year, including reporting, groundwater monitoring, and closure requirements. We are unable at this time to predict the total impact of compliance relief if the extension rule is finalized; however, any lessened costs are not expected to be material.

Impacts to previously closed CCR units at Boswell and Laskin are anticipated from the CCR Legacy Rule. Compliance costs for Minnesota Power’s Boswell and Laskin facilities are estimated to be between approximately $50 million and $85 million and are expected to be incurred over the next 10 years based on our preliminary assessment. These estimates may be revised as Minnesota Power completes the required facility evaluations. Minnesota Power is expected to seek recovery of these costs through a rate proceeding. The Company included in its 2024 Remaining Life Depreciation Petition filed with the MPUC on September 24, 2024, an additional $67.8 million, the average of the estimated cost range, for the expected investigative costs and the increase in depreciation expense for these facilities. Furthermore, a petition seeking approval of deferred cost accounting treatment for these CCR Legacy Rule compliance costs was filed with the MPUC on December 30, 2024. We recorded depreciation expense related to this rule on the Consolidated Statement of Income through September 30, 2025. At a hearing on October 23, 2025, the MPUC approved Minnesota Power’s request for deferred accounting relating to the CCR legacy rule. (See Note 2. Regulatory Matters.)

Additionally, the EPA released a proposed CCR Part B rulemaking in February 2020 addressing options for beneficial reuse of CCR materials, alternative liner demonstrations and other CCR regulatory revisions. Portions of the Part B rule addressing alternative liner equivalency standards were finalized in November 2020. A final rule establishing the remaining CCR beneficial reuse requirements is expected but has been moved to EPA’s long-term rulemakings, without a publication target date currently. According to its latest Unified Agenda, the EPA plans to publish the final CCR federal permit rule implementing a permitting program for tribal lands and nonparticipating states in December 2026.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

Other Matters

Letters of Credit, Surety Bonds and Other Indemnifications.

We have multiple credit facility agreements in place that provide the ability to issue standby letters of credit to satisfy contractual security requirements across our businesses. As of September 30, 2025, we had $136.8 million of outstanding letters of credit issued, including those issued under our revolving credit facility, and $133.2 million in outstanding surety bonds. We do not believe it is likely that any of these outstanding letters of credit or surety bonds will be drawn upon.

In 2024 and 2025, under the tax credit transferability provision of the Inflation Reduction Act, we entered into agreements with third parties to sell a portion of our renewable tax credits; to date, under these agreements we have indemnified the parties for approximately $93.3 million of renewable tax credits. ALLETE has indemnified the parties for specified claims for reduction, loss, or disallowance of the transferred tax credits on an after-tax basis.

Regulated Operations. As of September 30, 2025, we had $33.9 million outstanding in standby letters of credit and surety bonds at our Regulated Operations which are pledged as security to MISO, the NDPSC and state agencies.

ALLETE Clean Energy. ALLETE Clean Energy is party to PSAs that expire in various years between 2027 and 2039. As of September 30, 2025, ALLETE Clean Energy has $86.2 million outstanding in standby letters of credit and surety bonds, the majority of which are pledged as security under these PSAs.

New Energy. As of September 30, 2025, New Energy had standby letters of credit outstanding of $10.4 million related to the development of renewable energy projects.

Corporate and Other.

BNI Energy. As of September 30, 2025, BNI Energy had surety bonds outstanding of $99.7 million related to the reclamation liability for closing costs associated with its mine and mine facilities. Although its coal supply agreements obligate the customers to provide for the closing costs, additional assurance is required by federal and state regulations. BNI Energy’s total reclamation liability is currently estimated at $99.5 million. BNI Energy does not believe it is likely that any of these outstanding surety bonds 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 September 30, 2025, ALLETE South Wind has $29.7 million outstanding in standby letters of credit, related to its portion of the security requirements relative to its ownership in Nobles 2.

South Shore Energy. As of September 30, 2025, South Shore Energy had $10.1 million outstanding in standby letters of credit pledged as security in connection with the development of NTEC.

Legal Proceedings.

We are involved in litigation arising in the normal course of business. Also in the normal course of business, we are involved in tax, regulatory and other governmental audits, inspections, investigations and other proceedings that involve state and federal taxes, safety, and compliance with regulations, rate base and cost of service issues, among other things. We do not expect the outcome of these matters to have a material effect on our financial position, results of operations or cash flows.

Three complaints have been filed against ALLETE and its directors. The first was filed on July 1, 2024, in the U.S. District Court for the Southern District of New York, alleging violation of Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, disclosure deficiency in the Preliminary Proxy, and seeking to enjoin the transaction until certain disclosures are corrected. On September 3, 2024, that complaint was voluntarily dismissed without prejudice. Two additional complaints were filed on August 6, 2024, and August 7, 2024, in the New York State Supreme Court, alleging negligent misrepresentation and negligence related to alleged deficiencies in the Preliminary Proxy. Those complaints have not been served on any defendant. The Company believes that the remaining complaints are without merit.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 7. EARNINGS PER SHARE AND COMMON STOCK

We compute basic earnings per share using the weighted average number of shares of common stock outstanding during each period. The difference between basic and diluted earnings per share, if any, arises from non-vested restricted stock units and performance share awards granted under our Executive Long-Term Incentive Compensation Plan.


		2025			2024
Reconciliation of Basic and Diluted		Dilutive			Dilutive
Earnings Per Share	Basic	Securities	Diluted	Basic	Securities	Diluted
Millions Except Per Share Amounts
Quarter ended September 30,
Net Income Attributable to ALLETE	$27.1		$27.1	$45.0		$45.0
Average Common Shares	58.1	0.1	58.2	57.8	0.1	57.9
Earnings Per Share	$0.47		$0.46	$0.78		$0.78
Nine Months Ended September 30,
Net Income Attributable to ALLETE	$115.1		$115.1	$128.7		$128.7
Average Common Shares	58.0	0.1	58.1	57.7	0.1	57.8
Earnings Per Share	$1.98		$1.98	$2.23		$2.23

NOTE 8. INCOME TAX EXPENSE


	Quarter Ended		Nine Months Ended
	September 30,		September 30,
	2025	2024	2025	2024
Millions
Current Income Tax
Federal (a)	$(0.3)	$1.5	$4.0	$8.3
State	1.3	0.6	7.4	7.2
Total Current Income Tax Expense	$1.0	$2.1	$11.4	$15.5
Deferred Income Tax
Federal (b)	$0.2	$(2.7)	$(4.0)	$(12.7)
State	0.6	3.6	1.7	6.1
Investment Tax Credit Amortization	(0.2)	(0.1)	(0.6)	(0.6)
Total Deferred Income Tax Expense (Benefit)	$0.6	$0.8	$(2.9)	$(7.2)
Total Income Tax Expense	$1.6	$2.9	$8.5	$8.3

(a)For the nine months ended September 30, 2025 and 2024, the federal current tax expense is partially offset by tax credits.

(b)For the nine months ended September 30, 2025 and 2024, the federal deferred income tax benefit is primarily due to tax credits.

The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, the Company updates its estimate of the annual effective tax rate and if the estimated annual effective tax rate changes, the Company would make a cumulative adjustment in that quarter.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 8. INCOME TAX EXPENSE(Continued)


	Quarter Ended				Nine Months Ended
Reconciliation of Taxes from Federal Statutory	September 30,				September 30,
Rate to Total Income Tax Expense	2025		2024		2025		2024
Millions
Income Before Income Taxes	$14.9		$35.6		$63.1		$97.7
Statutory Federal Income Tax Rate	21	%	21	%	21	%	21	%
Income Taxes Computed at Statutory Federal Rate	$3.2		$7.5		$13.3		$20.5
Increase (Decrease) in Income Tax Due to:
State Income Taxes – Net of Federal Income Tax Benefit	1.4		3.4		7.1		10.5
Production Tax Credits (a)	(1.7)		(8.3)		(8.1)		(25.0)
Investment Tax Credits (a)	(2.0)		(0.4)		(5.6)		(1.6)
Regulatory Differences – Excess Deferred Tax	(2.5)		(2.0)		(7.0)		(7.7)
Non-Controlling Interest in Subsidiaries	2.6		2.4		11.5		7.6
AFUDC – Equity	(0.4)		(0.4)		(1.1)		(1.3)
Nondeductible Portion of Transaction Costs	0.6		0.7		1.4		4.0
Other	0.4		—		(3.0)		1.3
Total Income Tax Expense	$1.6		$2.9		$8.5		$8.3

(a)For the quarter and nine months ended September 30, 2025 and 2024, the credits are presented net of any estimated discount on the sale of certain credits.

For the nine months ended September 30, 2025, the effective tax rate was 13.5 percent (8.5 percent for the nine months ended September 30, 2024). The effective tax rates for 2025 and 2024 were primarily impacted by tax credits.

Uncertain Tax Positions. As of September 30, 2025, we had gross unrecognized tax benefits of $1.1 million ($1.1 million as of December 31, 2024). 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 an increase to the net deferred tax liability on the Consolidated Balance Sheet.

ALLETE and its subsidiaries file a consolidated federal income tax return as well as combined and separate state income tax returns in various jurisdictions. ALLETE is currently under examination by the state of Minnesota for the tax years 2020 through 2022. ALLETE has no open federal audits and is no longer subject to federal examination for years before 2022 or new state examination for years before 2021. Additionally, the statute of limitations related to the federal tax credit carryforwards will remain open until those credits are utilized in subsequent returns.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 9. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS


Components of Net Periodic Benefit Cost (Credit)	Pension		Other Postretirement
	2025	2024	2025	2024
Millions
Quarter Ended September 30,
Service Cost	$1.6	$1.6	$0.4	$0.3
Non-Service Cost Components (a)
Interest Cost	10.0	9.7	1.0	1.0
Expected Return on Plan Assets	(10.9)	(11.2)	(2.6)	(2.7)
Amortization of Prior Service Credits	—	(0.1)	(1.5)	(2.9)
Amortization of Net Loss (Gain)	1.8	1.7	(0.7)	(0.8)

Net Periodic Benefit Cost (Credit)	$2.5	$1.7	$(3.4)	$(5.1)
Nine Months Ended September 30,
Service Cost	$4.8	$4.9	$1.3	$1.1
Non-Service Cost Components (a)
Interest Cost	29.9	29.0	3.0	2.9
Expected Return on Plan Assets	(32.7)	(33.6)	(8.0)	(8.3)
Amortization of Prior Service Credits	—	(0.1)	(4.4)	(8.7)
Amortization of Net Loss (Gain)	5.5	4.9	(2.0)	(2.4)

Net Periodic Benefit Cost (Credit)	$7.5	$5.1	$(10.1)	$(15.4)

(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 nine months ended September 30, 2025, we contributed $19.1 million in cash to the defined benefit pension plans ($25.0 million for the nine months ended September 30, 2024); we do not expect to make additional contributions to our defined benefit pension plans in 2025. For the nine months ended September 30, 2025 and 2024, 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 2025.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 10. BUSINESS SEGMENTS

During the first quarter of 2025, management updated our reportable segment presentation to reflect New Energy’s increased contribution to net income attributable to ALLETE. We now present three reportable segments: Regulated Operations, ALLETE Clean Energy and New Energy. Prior period amounts have been revised to conform with the current business segment presentation. We measure performance of our operations through budgeting and monitoring of contributions to net income attributable to ALLETE by each reportable segment.

Regulated Operations includes three operating segments which consist of our regulated utilities, Minnesota Power and SWL&P, as well as our investment in ATC. ALLETE Clean Energy is our business focused on developing, acquiring and operating clean and renewable energy projects. New Energy is a renewable energy company with a primary focus on developing solar and energy storage facilities for external sale and internal ownership while also offering comprehensive operations, maintenance and asset management services. We also present Corporate and Other which includes two operating segments, BNI Energy, our coal mining operations in North Dakota, and ALLETE Properties, our legacy Florida real estate investment, along with our investment in Nobles 2, South Shore Energy, our non-rate regulated, Wisconsin subsidiary developing NTEC, other business development and corporate expenditures, unallocated interest expense, a small amount of non-rate base generation, land holdings in Minnesota, and earnings on cash and investments.

Management has identified that the Chief Operating Decision Maker (CODM) for the Company is not an individual, but rather the Executive Officers of ALLETE. These individuals represent various areas of the Company and provide direction for the allocation of resources. They interact with one another on a regular basis, with more formal meetings quarterly to discuss company strategy. The group is provided with monthly and quarterly financial materials that show net income attributable to ALLETE by segment with variances compared to the budget and prior year. No other measure of segment profit or loss is provided regularly to this group or used to assess performance and allocate resources. The group reviews the segment profit and loss taking into account the Company’s goals and strategy, and provides direction for the allocation of resources.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 10. BUSINESS SEGMENTS (Continued)


	Quarter Ended		Nine Months Ended
	September 30,		September 30,
	2025	2024	2025	2024
Millions
Operating Revenue
Regulated Operations
Residential	$43.5	$41.9	$139.9	$130.5
Commercial	50.1	49.5	147.1	143.0
Municipal	9.4	9.2	27.2	25.6
Industrial	143.0	149.8	420.1	456.1
Other Power Suppliers	47.2	32.0	141.6	102.4

Other	27.0	28.1	82.2	71.0
Total Regulated Operations	320.2	310.5	958.1	928.6

ALLETE Clean Energy
Long-term PSA	10.8	9.9	39.7	42.2
Sale of Wind Energy Facilities	—	22.9	—	22.9
Other	1.5	1.3	4.4	3.8
Total ALLETE Clean Energy	12.3	34.1	44.1	68.9

New Energy
Sale of Renewable Development Projects	8.0	29.2	36.2	68.7
Other	7.9	2.6	15.7	8.5
Total New Energy	15.9	31.8	51.9	77.2

Corporate and Other
Long-term Contract	23.8	26.7	72.3	79.4

Other	2.8	4.1	9.1	10.9
Total Corporate and Other	26.6	30.8	81.4	90.3

Total Operating Revenue	$375.0	$407.2	$1,135.5	$1,165.0
Net Income (Loss) Attributable to ALLETE
Regulated Operations	$32.5	$34.0	$93.9	$111.9

ALLETE Clean Energy	(3.6)	3.9	4.7	10.1
New Energy	1.3	11.7	15.2	23.4

Corporate and Other	(3.1)	(4.6)	1.3	(16.7)
Total Net Income Attributable to ALLETE	$27.1	$45.0	$115.1	$128.7

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 10. BUSINESS SEGMENTS (Continued)


Quarter Ended September 30, 2025	Regulated Operations	ALLETE Clean Energy	New Energy	Total Reportable Segments	Corporate and Other / Eliminations	Consolidated
Millions
Contracts with Customers – Utility	$320.2	—	—	$320.2	—	$320.2
Contracts with Customers – Non-utility	—	$10.8	$15.9	26.7	$26.6	53.3
Other – Non-utility	—	1.5	—	1.5	—	1.5
Total Operating Revenue	320.2	12.3	15.9	348.4	26.6	375.0

Significant Segment Expenses:
Fuel, Purchased Power and Gas – Utility	121.1	—	—	121.1
Transmission Services – Utility	19.2	—	—	19.2
Cost of Sales – Non-utility	—	—	8.8	8.8
Operating and Maintenance	65.1	12.9	7.0	85.0
Depreciation and Amortization	53.3	14.5	0.9	68.7
Taxes Other than Income Taxes	13.4	2.7	—	16.1
Other Segment Income (Expense) Items (a)	(15.6)	14.2	2.1	0.7
Net Income (Loss) Attributable to ALLETE	$32.5	$(3.6)	$1.3	$30.2	$(3.1)	$27.1
Other Segment Information:
Depreciation and Amortization	$53.3	$14.5	$0.9	$68.7	$3.8	$72.5
Interest Expense	$(17.7)	—	$(1.3)	$(19.0)	$(6.6)	$(25.6)
Equity Earnings	$6.7	—	—	$6.7	$(1.1)	$5.6
Income Tax Expense (Benefit)	$7.9	$(3.3)	$(1.2)	$3.4	$(1.8)	$1.6
Assets	$4,864.8	$1,440.8	$411.7	$6,717.3	$435.6	$7,152.9
Equity Investment	$215.8	—	—	$215.8	$141.9	$357.7
Capital Expenditures	$237.4	$1.1	$20.0	$258.5	$3.6	$262.1


Quarter Ended September 30, 2024	Regulated Operations	ALLETE Clean Energy	New Energy	Total Reportable Segments	Corporate and Other / Eliminations	Consolidated
Millions
Contracts with Customers – Utility	$310.5	—	—	$310.5	—	$310.5
Contracts with Customers – Non-utility	—	$32.8	$31.8	64.6	$30.8	95.4
Other – Non-utility	—	1.3	—	1.3	—	1.3
Total Operating Revenue	310.5	34.1	31.8	376.4	30.8	407.2

Significant Segment Expenses:
Fuel, Purchased Power and Gas – Utility	117.2	—	—	117.2
Transmission Services – Utility	19.6	—	—	19.6
Cost of Sales – Non-utility	—	18.3	8.3	26.6
Operating and Maintenance	63.6	12.3	6.5	82.4
Depreciation and Amortization	52.2	14.4	0.5	67.1
Taxes Other than Income Taxes	12.4	2.2	—	14.6
Other Segment Income (Expense) Items (a)	(11.5)	17.0	(4.8)	0.7
Net Income (Loss) Attributable to ALLETE	$34.0	$3.9	$11.7	$49.6	$(4.6)	$45.0
Other Segment Information:
Depreciation and Amortization	$52.2	$14.4	$0.5	$67.1	$3.7	$70.8
Interest Expense	$(16.7)	—	$(1.0)	$(17.7)	$(2.6)	$(20.3)
Equity Earnings	$6.1	—	—	$6.1	$(1.0)	$5.1
Income Tax Expense (Benefit)	$5.0	$(4.8)	$4.2	$4.4	$(1.5)	$2.9
Assets	$4,410.3	$1,581.6	$333.3	$6,325.2	$412.0	$6,737.2
Equity Investment	$190.3	—	—	$190.3	$147.6	$337.9
Capital Expenditures	$73.8	$2.7	$8.2	$84.7	$1.1	$85.8

(a) Other Segment Income Items consist of interest expense, equity earnings, AFUDC – Equity and income tax expense for Regulated Operations, and interest expense, income tax benefit and net loss attributable to non-controlling interest for ALLETE Clean Energy and New Energy.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 10. BUSINESS SEGMENTS (Continued)


Nine Months Ended September 30, 2025	Regulated Operations	ALLETE Clean Energy	New Energy	Total Reportable Segments	Corporate and Other / Eliminations	Consolidated
Millions
Contracts with Customers – Utility	$958.1	—	—	$958.1	—	$958.1
Contracts with Customers – Non-utility	—	$39.7	$51.9	91.6	$81.4	173.0
Other – Non-utility	—	4.4	—	4.4	—	4.4
Total Operating Revenue	958.1	44.1	51.9	1,054.1	81.4	1,135.5

Significant Segment Expenses:
Fuel, Purchased Power and Gas – Utility	358.5	—	—	358.5
Transmission Services – Utility	57.5	—	—	57.5
Cost of Sales – Non-utility	—	—	22.4	22.4
Operating and Maintenance	202.4	40.6	19.2	262.2
Depreciation and Amortization	158.1	43.5	2.0	203.6
Taxes Other than Income Taxes	40.0	8.2	—	48.2
Other Segment Income (Expense) Items (a)	(47.7)	52.9	6.9	12.1
Net Income Attributable to ALLETE	$93.9	$4.7	$15.2	$113.8	$1.3	$115.1
Other Segment Information:
Depreciation and Amortization	$158.1	$43.5	$2.0	$203.6	$11.8	$215.4
Interest Expense	$(52.2)	—	$(2.9)	$(55.1)	$(15.0)	$(70.1)
Equity Earnings	$19.6	—	—	$19.6	$(2.1)	$17.5
Income Tax Expense (Benefit)	$23.3	$(8.5)	$(0.2)	$14.6	$(6.1)	$8.5
Assets	$4,864.8	$1,440.8	$411.7	$6,717.3	$435.6	$7,152.9
Equity Investment	$215.8	—	—	$215.8	$141.9	$357.7
Capital Expenditures	$489.2	$5.3	$36.1	$530.6	$7.2	$537.8


Nine Months Ended September 30, 2024	Regulated Operations	ALLETE Clean Energy	New Energy	Total Reportable Segments	Corporate and Other / Eliminations	Consolidated
Millions
Contracts with Customers – Utility	$928.6	—	—	$928.6	—	$928.6
Contracts with Customers – Non-utility	—	$65.1	$77.2	142.3	$90.3	232.6
Other – Non-utility	—	3.8	—	3.8	—	3.8
Total Operating Revenue	928.6	68.9	77.2	1,074.7	90.3	1,165.0

Significant Segment Expenses:
Fuel, Purchased Power and Gas – Utility	358.9	—	—	358.9
Transmission Services – Utility	43.9	—	—	43.9
Cost of Sales – Non-utility	—	18.3	25.3	43.6
Operating and Maintenance	197.1	37.5	18.9	253.5
Depreciation and Amortization	145.4	43.2	1.5	190.1
Taxes Other than Income Taxes	41.8	6.7	—	48.5
Other Segment Income (Expense) Items (a)	(29.6)	46.9	(8.1)	9.2
Net Income (Loss) Attributable to ALLETE	$111.9	$10.1	$23.4	$145.4	$(16.7)	$128.7
Other Segment Information:
Depreciation and Amortization	$145.4	$43.2	$1.5	$190.1	$11.7	$201.8
Interest Expense	$(49.0)	$(0.2)	$(3.3)	$(52.5)	$(8.3)	$(60.8)
Equity Earnings	$17.8	—	—	$17.8	$(1.3)	$16.5
Income Tax Expense (Benefit)	$13.7	$(13.3)	$7.8	$8.2	$0.1	$8.3
Assets	$4,410.3	$1,581.6	$333.3	$6,325.2	$412.0	$6,737.2
Equity Investment	$190.3	—	—	$190.3	$147.6	$337.9
Capital Expenditures	$203.8	$4.3	$13.3	$221.4	$8.1	$229.5

(a) Other Segment Items consist of interest expense, equity earnings, AFUDC – Equity and income tax expense for Regulated Operations, and interest expense, income tax benefit and net loss attributable to non-controlling interest for ALLETE Clean Energy and New Energy.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 11. AGREEMENT AND PLAN OF MERGER

On May 5, 2024, ALLETE entered into the Merger Agreement. The Merger Agreement provides that, on the terms and subject to the conditions set forth therein, Alloy Merger Sub will merge with and into ALLETE, with ALLETE continuing as the surviving corporation in the Merger and becoming a subsidiary of Alloy Parent.

Subject to the terms and conditions set forth in the Merger Agreement, which has been unanimously approved by the board of directors of ALLETE and approved and adopted by the shareholders of ALLETE, at the effective time of the Merger (Effective Time), each share of common stock, without par value, of ALLETE (ALLETE common stock) issued and outstanding immediately prior to the Effective Time (other than shares of ALLETE common stock held by any holder who properly exercises dissenters’ rights under Minnesota law in respect of such shares and any shares of ALLETE common stock held by an affiliate of Alloy Parent) shall be converted into the right to receive $67.00 in cash, without interest (Merger Consideration). The aggregate equity value of the ALLETE common stock acquired by Parent will be approximately $3.9 billion as calculated as of May 5, 2024.

In addition, at the Effective Time, each restricted stock unit (RSU) with respect to ALLETE common stock subject to time-based vesting that is outstanding immediately prior to the Effective Time will be cancelled and converted into a contingent right to receive an amount in cash, without interest, equal to the Merger Consideration, payable (i) in the case of such right converted from unvested RSUs, upon the same vesting conditions as applied to the corresponding RSU or (ii) in the case of such right converted from vested RSUs, as soon as reasonably practicable following the closing date of the Merger (the Closing Date). Each performance share award with respect to ALLETE common stock that is outstanding and unvested immediately prior to the Effective Time and was issued prior to the execution of the Merger Agreement will be cancelled and converted into a right to receive, without interest, the Merger Consideration multiplied by the number of shares of ALLETE common stock subject to the award, determined based on attainment of the greater of target and actual performance as of the last business day immediately preceding the Closing Date. A pro rata portion (based on the elapsed portion of the performance period at that time) of these converted performance share awards will be paid out as soon as reasonably practicable following the Closing Date, with the remainder of the award being subject to time-vesting for the remainder of the applicable performance period. Performance share awards issued following the signing of the Merger Agreement will also be cancelled and converted into a contingent right to receive, without interest, the Merger Consideration multiplied by the number of shares of ALLETE common stock subject to the performance share award, determined at the target level of performance, and shall be subject to time-based vesting following the Merger. Further, purchase rights accumulated during the offering period in effect under the Company’s ESPP immediately prior to closing will be automatically exercised into shares of ALLETE common stock no later than five business days prior to the Closing Date, and the ESPP will be terminated as of immediately prior to the Closing Date.

Consummation of the Merger is subject to various closing conditions, including: (1) approval of the shareholders of ALLETE; (2) receipt of all required regulatory approvals without the imposition of a Burdensome Condition (as defined in the Merger Agreement); (3) absence of any law or order prohibiting the consummation of the Merger; (4) subject to materiality qualifiers, the accuracy of each party’s representations and warranties; (5) each party’s compliance in all material respects with its obligations and covenants under the Merger Agreement; and (6) the absence of a material adverse effect with respect to the Company. The Merger Agreement contains certain termination rights for ALLETE and Alloy Parent, which were described in a Current Report of Form 8-K filed by ALLETE on May 6, 2024. In the Merger Agreement, among other things, ALLETE has agreed, subject to certain exceptions, to, and to cause each of its subsidiaries to conduct its business in the ordinary course, consistent with past practice, from the date of the Merger Agreement until the Effective Time, and not to take certain actions prior to the closing of the Merger without the prior written consent of Alloy Parent (which consent shall not be unreasonably withheld, conditioned or delayed, except where ALLETE seeks Alloy Parent’s consent to enter into a material new line of business or cease operations of an existing material line of business). The Merger Agreement also provides that ALLETE may notify Alloy Parent of our intent to raise equity capital of up to a total of $300 million in the second half of 2025, subject to certain parameters. If Alloy Parent declines to participate in the equity capital raises or fails to provide timely notice with respect thereto, ALLETE will have the right to issue ALLETE common stock in the public markets for an amount equal to any unfunded amounts under such equity capital raises.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

NOTE 11. AGREEMENT AND PLAN OF MERGER (Continued)

On July 10, 2024, ALLETE filed a definitive proxy statement relating to the special meeting of the shareholders held on August 21, 2024. At the special meeting, the shareholders of ALLETE voted to approve and adopt the Merger Agreement and approve the transactions contemplated thereby, including the Merger, among other matters.

On July 19, 2024, ALLETE filed requests for approval of the Merger with the MPUC, PSCW and FERC. On October 7, 2024, the MPUC issued an order referring the docket to the Minnesota Office of Administrative Hearings for a contested case proceeding and requesting the Administrative Law Judge (ALJ) issue a report and recommendation by July 15, 2025. On July 11, 2025, ALLETE announced a settlement agreement with the Minnesota Department of Commerce (MN DOC). As part of the agreement, the MN DOC will support the acquisition of ALLETE as being consistent with the public interest and recommend approval by the MPUC. On July 15, 2025, the ALJ issued its report, which included a non-binding recommendation to deny the acquisition of ALLETE. On October 3, 2025, the MPUC held a public hearing in which the MPUC voted in favor of approval of the Merger. In connection with the MPUC’s public hearing, a written order is expected to follow. The consummation of the Merger remains subject to the satisfaction of certain closing conditions, including the receipt of the MPUC’s written order approving the Merger. The transaction is expected to close in late 2025 following issuance of the MPUC’s written order.

ALLETE also received approval from FERC on December 19, 2024, and in an order dated June 3, 2025, the PSCW approved the acquisition. ALLETE also received approval from CFIUS and all required international approvals in the third quarter of 2024. On January 31, 2025, ALLETE filed notification and report forms with the Antitrust Division of the Department of Justice and the Federal Trade Commission under the HSR Act with the applicable waiting periods expiring in the first quarter of 2025. Approval of the Merger from these and other regulators is required for consummation of the Merger.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The following discussion should be read in conjunction with our Consolidated Financial Statements and notes to those statements, Management’s Discussion and Analysis of Financial Condition and Results of Operations from our 2024 Form 10-K and the other financial information appearing elsewhere in this report. In addition to historical information, the following discussion and other parts of this Form 10-Q contain forward-looking information that involves risks and uncertainties. Readers are cautioned that forward-looking statements should be read in conjunction with our disclosures in this Form 10-Q and our 2024 Form 10-K under the headings: “Forward-Looking Statements” and “Risk Factors” located in Part I, Item 1A of our 2024 Form 10-K. The risks and uncertainties described in this Form 10-Q and our 2024 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties that we are not presently aware of, or that we currently consider immaterial, may also affect our business operations. Our business, financial condition or results of operations could suffer if the risks are realized.

Basis of Presentation. During the first quarter of 2025, management updated our reportable segment presentation to reflect New Energy’s increased contribution to net income attributable to ALLETE. We now present three reportable segments: Regulated Operations, ALLETE Clean Energy and New Energy. Prior period amounts have been revised to conform with the current business segment presentation.

Regulated Operations includes our regulated utilities, Minnesota Power and SWL&P, as well as our investment in ATC, a Wisconsin-based regulated utility that owns and maintains electric transmission assets in portions of Wisconsin, Michigan, Minnesota and Illinois. Minnesota Power provides regulated utility electric service in northeastern Minnesota to approximately 150,000 retail customers. Minnesota Power also has 14 non-affiliated municipal customers in Minnesota. SWL&P is a Wisconsin utility and a wholesale customer of Minnesota Power. SWL&P provides regulated utility electric, natural gas and water service in northwestern Wisconsin to approximately 15,000 electric customers, 13,000 natural gas customers and 10,000 water customers. Our regulated utility operations include retail and wholesale activities under the jurisdiction of state and federal regulatory authorities. (See Note 2. Regulatory Matters.)

ALLETE Clean Energy focuses on developing, acquiring, and operating clean and renewable energy projects. ALLETE Clean Energy currently owns, operates, or has developed more than 1,600 megawatts of wind energy generation in five major energy markets and eight states across the U.S. with a majority contracted under PSAs of various durations. In addition, ALLETE Clean Energy engages in the development of wind energy facilities to operate under long-term PSAs or for sale to others upon completion.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (Continued)

Corporate and Other is comprised of our investment in Nobles 2, an entity that owns and operates a 250 MW wind energy facility in southwestern Minnesota; South Shore Energy, our non-rate regulated, Wisconsin subsidiary developing NTEC, an approximately 600 MW proposed combined-cycle natural gas-fired generating facility; BNI Energy, our coal mining operations in North Dakota; ALLETE Properties, our legacy Florida real estate investment; other business development and corporate expenditures; unallocated interest expense; a small amount of non-rate base generation; land holdings in Minnesota; and earnings on cash and investments.

ALLETE is incorporated under the laws of Minnesota. Our corporate headquarters are in Duluth, Minnesota. Statistical information is presented as of September 30, 2025, unless otherwise indicated. All subsidiaries are wholly-owned unless otherwise specifically indicated. References in this report to “we,” “us” and “our” are to ALLETE and its subsidiaries, collectively.

On May 5, 2024, ALLETE entered into the Merger Agreement. The Merger Agreement provides that, on and subject to the conditions set forth therein, Alloy Merger Sub will merge with and into ALLETE, with ALLETE continuing as the surviving corporation in the Merger and becoming a subsidiary of Alloy Parent. (See Note 11. Agreement and Plan of Merger.)

Financial Overview

The following net income discussion summarizes a comparison of the nine months ended September 30, 2025, to the nine months ended September 30, 2024.

Net income attributable to ALLETE for the nine months ended September 30, 2025, was $115.1 million, or $1.98 per diluted share, compared to $128.7 million, or $2.23 per diluted share, for the same period in 2024. Net income in 2025 includes merger-related expenses of $8.5 million after-tax, or $0.15 per share. Net income in 2024 included merger-related expenses of $19.5 million after-tax, or $0.34 per share. (See Note 11. Agreement and Plan of Merger.)

Regulated Operations net income attributable to ALLETE was $93.9 million for the nine months ended September 30, 2025, compared to $111.9 million for the same period in 2024. Net income at Minnesota Power was lower than 2024 reflecting lower margins from industrial customers, lower transmission margins, higher operating and maintenance expense and higher depreciation expense. These decreases were partially offset by higher margins from residential and municipal customers. Net income at SWL&P was higher than 2024 reflecting new rates implemented in 2025 as well as higher kWh and gas sales. Our after-tax equity earnings in ATC were higher than 2024 primarily due to additional equity investments. (See Note 3. Equity Investments.)

ALLETE Clean Energy net income attributable to ALLETE was $4.7 million for the nine months ended September 30, 2025, compared to $10.1 million for the same period in 2024. Net income in 2024 also included a $3.5 million after-tax gain on the sale of the Whitetail wind project. Net income in 2025 reflects higher operating expenses, partially offset by higher production at ALLETE Clean Energy’s tax equity financed wind energy facilities. Net income in 2024 was negatively impacted by a network outage located near the Caddo wind energy facility.

New Energy net income attributable to ALLETE was $15.2 million for the nine months ended September 30, 2025, compared to net income of $23.4 million for the same period in 2024. Net income in 2025 includes lower sales of renewable energy projects due to the timing of project closings. This decrease was partially offset by higher earnings from tax equity financed solar energy facilities and higher investment tax credits.

Corporate and Other net income attributable to ALLETE was $1.3 million for the nine months ended September 30, 2025, compared to a net loss of $16.7 million for the same period in 2024. Net income in 2025 reflects lower merger-related expenses compared to 2024 and lower income tax expense resulting from period over period differences in recording income tax expense at the effective tax rate. Merger-related expenses were $8.5 million after-tax in 2025 and $19.5 million in 2024. (See Note 11. Agreement and Plan of Merger.)

ALLETE, Inc. Third Quarter 2025 Form 10-Q

COMPARISON OF THE QUARTER ENDED SEPTEMBER 30, 2025 AND 2024

(See Note 10. Business Segments for financial results by segment.)

Regulated Operations


Quarter Ended September 30,	2025	2024
Millions
Operating Revenue – Utility	$320.2	$310.5
Fuel, Purchased Power and Gas – Utility	121.1	117.2
Transmission Services – Utility	19.2	19.6

Operating and Maintenance	65.1	63.6
Depreciation and Amortization	53.3	52.2
Taxes Other than Income Taxes	13.4	12.4
Operating Income	48.1	45.5
Interest Expense	(17.7)	(16.7)
Equity Earnings	6.7	6.1
Other Income	3.3	4.1
Income Before Income Taxes	40.4	39.0
Income Tax Expense	7.9	5.0


Net Income Attributable to ALLETE	$32.5	$34.0

Operating Revenue – Utility increased $9.7 million from 2024 primarily due to higher cost recovery rider revenue and higher revenue from kWh sales, partially offset by lower fuel adjustment clause recoveries compared to 2024.

Cost recovery rider revenue increased $8.7 million primarily due to fewer production tax credits generated by Minnesota Power in 2025 compared to 2024. If production tax credits are generated at a level below those assumed in Minnesota Power’s retail rates, an increase in cost recovery rider revenue is recognized to offset the impact of higher production tax credits on income tax expense.

Revenue from kWh sales increased by $8.3 million from 2024 reflecting higher sales and favorable pricing to other power suppliers, partially offset by lower sales to residential, commercial, industrial, and municipal customers. Sales to other power suppliers, which are sold at market-based prices into the MISO market on a daily basis or through PSAs of various durations, increased reflecting additional energy available for sale resulting from lower industrial sales. Sales to residential, commercial, and municipal customers decreased from 2024 primarily due to milder weather in 2025 compared to 2024. Sales to industrial customers decreased primarily due to lower sales to taconite customers in 2025 compared to 2024. (See Outlook – Industrial Customers.)


Kilowatt-hours Sold			Variance
Quarter Ended September 30,	2025	2024	Quantity	%
Millions
Regulated Utility
Retail and Municipal
Residential	259	262	(3)	(1.1)	%
Commercial	346	354	(8)	(2.3)	%
Industrial	1,573	1,715	(142)	(8.3)	%
Municipal	118	120	(2)	(1.7)	%
Total Retail and Municipal	2,296	2,451	(155)	(6.3)	%
Other Power Suppliers	725	616	109	17.7	%
Total Regulated Utility Kilowatt-hours Sold	3,021	3,067	(46)	(1.5)	%

Revenue from electric sales to taconite customers accounted for 29 percent of regulated operating revenue in 2025 (32 percent in 2024). Revenue from electric sales to paper, pulp and secondary wood product customers accounted for 5 percent of regulated operating revenue in 2025 (5 percent in 2024). Revenue from electric sales to pipelines and other industrial customers accounted for 10 percent of regulated operating revenue in 2025 (11 percent in 2024).

ALLETE, Inc. Third Quarter 2025 Form 10-Q

COMPARISON OF THE QUARTER ENDED SEPTEMBER 30, 2025 AND 2024 (Continued)

Regulated Operations (Continued)

Fuel adjustment clause revenue decreased $10.0 million primarily due to lower fuel and purchased power costs attributable to retail and municipal customers. (See Fuel, Purchased Power and Gas – Utility.)

Operating Expenses increased $7.1 million, or 3 percent, from 2024.

Fuel, Purchased Power and Gas – Utility expense increased $3.9 million from 2024 primarily due to higher kWh sales to other power suppliers and higher purchased power prices, partially offset by lower sales to retail customers.

Operating and Maintenance expense increased $1.5 million, or 2 percent, from 2024 primarily due to higher energy conservation and optimization plan expenses compared to 2024.

Depreciation and Amortization expense increased $1.1 million, or 2 percent, from 2024 primarily due to a higher plant in service balance in 2025 compared to 2024.

Taxes Other than Income Taxes increased $1 million, or 8 percent, from 2024 primarily due to higher property tax expense.

Interest Expense increased $1 million from 2024 reflecting higher interest rates and average debt balances in 2025 compared to 2024.

Income Tax Expense increased $2.9 million from 2024 primarily due to lower production tax credits.

ALLETE Clean Energy


Quarter Ended September 30,	2025	2024
Millions
Operating Revenue
Contracts with Customers – Non-utility	$10.8	$32.8
Other – Non-utility (a)	1.5	1.3
Cost of Sales – Non-utility	—	18.3
Operating and Maintenance	12.9	12.3
Depreciation and Amortization	14.5	14.4
Taxes Other than Income Taxes	2.7	2.2
Operating Loss	(17.8)	(13.1)

Other Income	0.7	2.0
Loss Before Income Taxes	(17.1)	(11.1)
Income Tax Benefit	(3.3)	(4.8)
Net Loss	(13.8)	(6.3)
Net Loss Attributable to Non-Controlling Interest	(10.2)	(10.2)
Net Income (Loss) Attributable to ALLETE	$(3.6)	$3.9

(a)Represents non-cash amortization of differences between contract prices and estimated market prices on assumed PSAs.

Operating Revenue decreased $21.8 million, or 64 percent, from 2024. Operating revenue in 2024 reflecting revenue of $22.9 million for the sale of ALLETE Clean Energy’s Whitetail wind project in 2024.

Cost of Sales – Non-utility decreased $18.3 million from 2024 reflecting the sale of ALLETE Clean Energy’s Whitetail wind project in 2024.

Operating and Maintenance expense increased $0.6 million from 2024 primarily due to business interruption insurance proceeds at Diamond Spring in 2024 related to a transformer outage in the first half of 2024.

Other Income decreased $1.3 million from 2024 primarily due to lower interest income in 2025 compared to 2024.

Income Tax Benefit decreased $1.5 million from 2024 primarily due to lower production tax credits.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

COMPARISON OF THE QUARTER ENDED SEPTEMBER 30, 2025 AND 2024 (Continued)

New Energy

Operating Revenue decreased $15.9 million, or 50 percent, from 2024 primarily due to lower sales of renewable energy projects reflecting the timing of project sales.

Net Income Attributable to ALLETE was $1.3 million in 2025 compared to net income of $11.7 million in 2024. Net income in 2025 includes lower sales of renewable energy projects compared to 2024 due to timing of project closings. These decreases were partially offset by higher earnings from tax equity financed solar energy facilities and higher investment tax credits.

Corporate and Other

Operating Revenue decreased $4.2 million, or 14 percent, from 2024 primarily due to lower revenue at BNI Energy, which operates under cost-plus fixed fee contracts, as a result of lower expenses and fewer tons sold in 2025 compared to 2024.

Net Loss Attributable to ALLETE of $3.1 million in 2025 compared to a net loss of $4.6 million in 2024. The net loss in 2025 reflects lower merger-related expenses compared to 2024 and lower income tax expense resulting from period over period differences in recording income tax expense at the effective tax rate. Merger-related expenses were $3.1 million after-tax in 2025 and $3.8 million after-tax in 2024. (See Note 11. Agreement and Plan of Merger.)

Income Taxes – Consolidated

For the quarter ended September 30, 2025, the effective tax rate was a expense of 10.7 percent (expense of 8.1 percent for the quarter ended September 30, 2024). The lower effective tax rate is primarily due to lower pre-tax income.

We expect our annual effective tax rate in 2025 to be lower than 2024 primarily due to lower estimated pre-tax income. The estimated annual effective tax rate can differ from what a quarterly effective tax rate would otherwise be on a standalone basis, and this may cause quarter to quarter differences in the timing of income taxes. (See Note 8. Income Tax Expense.)

ALLETE, Inc. Third Quarter 2025 Form 10-Q

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024

(See Note 10. Business Segments for financial results by segment.)

Regulated Operations


Nine Months Ended September 30,	2025	2024
Millions
Operating Revenue – Utility	$958.1	$928.6
Fuel, Purchased Power and Gas – Utility	358.5	358.9
Transmission Services – Utility	57.5	43.9

Operating and Maintenance	202.4	197.1
Depreciation and Amortization	158.1	145.4
Taxes Other than Income Taxes	40.0	41.8
Operating Income	141.6	141.5
Interest Expense	(52.2)	(49.0)
Equity Earnings	19.6	17.8
Other Income	8.2	15.3
Income Before Income Taxes	117.2	125.6
Income Tax Expense	23.3	13.7


Net Income Attributable to ALLETE	$93.9	$111.9

Operating Revenue – Utility increased $29.5 million from 2024 primarily due to higher revenue from kWh sales, cost recovery rider revenue, transmission revenue and gas sales. This increase was partially offset by lower fuel adjustment clause recoveries compared to 2024.

Revenue from kWh sales increased $20.5 million from 2024 reflecting higher sales to residential, commercial and municipal customers as well as higher sales to other power suppliers, partially offset by lower sales to industrial customers. Sales to residential, commercial and municipal customers increased from 2024 primarily due to colder weather in the first quarter of 2025 compared to 2024. Sales to other power suppliers, which are sold at market-based prices into the MISO market on a daily basis or through PSAs of various durations, increased reflecting higher market sales in 2025 compared to 2024. Sales to industrial customers decreased primarily due to lower sales to taconite customers in 2025 compared to 2024. (See Outlook – Industrial Customers.)


Kilowatt-hours Sold			Variance
Nine Months Ended September 30,	2025	2024	Quantity	%
Millions
Regulated Utility
Retail and Municipal
Residential	822	793	29	3.7	%
Commercial	1,004	999	5	0.5	%
Industrial	4,677	5,242	(565)	(10.8)	%
Municipal	358	350	8	2.3	%
Total Retail and Municipal	6,861	7,384	(523)	(7.1)	%
Other Power Suppliers	2,632	1,952	680	34.8	%
Total Regulated Utility Kilowatt-hours Sold	9,493	9,336	157	1.7	%

Revenue from electric sales to taconite customers accounted for 28 percent of regulated operating revenue in 2025 (33 percent in 2024). Revenue from electric sales to paper, pulp and secondary wood product customers accounted for 5 percent of regulated operating revenue in 2025 (5 percent in 2024). Revenue from electric sales to pipelines and other industrial customers accounted for 10 percent of regulated operating revenue in 2025 (11 percent in 2024).

Cost recovery rider revenue increased $20.0 million reflecting fewer production tax credits generated by Minnesota Power in 2025 compared to 2024. If production tax credits are generated at a level below those assumed in Minnesota Power’s retail rates, an increase in cost recovery rider revenue is recognized to offset the impact of higher production tax credits on income tax expense.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 (Continued)

Regulated Operations (Continued)

Transmission revenue increased $11.2 million primarily due to higher MISO-related revenue. Transmission revenue in 2024 included the refund of MISO transmission payments that were over collected during 2023. (See Transmission Services – Utility).

Revenue from gas sales at SWL&P increased $4.7 million reflecting the implementation of new rates beginning January 1, 2025, higher gas sales resulting from colder winter weather and higher gas prices in 2025 compared to 2024. (See Fuel, Purchased Power and Gas – Utility.)

Fuel adjustment clause revenue decreased $31.5 million primarily due to lower fuel and purchased power costs attributable to retail and municipal customers. (See Fuel, Purchased Power and Gas – Utility.)

Operating Expenses increased $29.4 million, or 4 percent, from 2024.

Fuel, Purchased Power and Gas – Utility expense decreased $0.4 million, from 2024 primarily due to lower fuel costs and more company-owned generation in 2025 compared to 2024 resulting in fewer sales being supplied through higher cost purchased power. These decreases were partially offset by higher kWh sales as well as higher gas sales and prices.

Transmission Services – Utility expense increased $13.6 million, or 31 percent, from 2024 primarily due to higher MISO-related expense. Transmission Services – Utility expense in 2024 included the refund of MISO transmission payments that were over billed during 2023 (See Operating Revenue – Utility).

Operating and Maintenance expense increased $5.3 million, or 3 percent, from 2024 primarily due to mitigation costs related to the ash wastewater spill at Boswell. (See Note 6. Commitments, Guarantees and Contingencies.) Operating and Maintenance expense in 2025 also reflected higher energy conservation and optimization plan expenses compared to 2024.

Depreciation and Amortization expense increased $12.7 million, or 9 percent, from 2024 primarily due to a higher plant in service balance in 2025 and the impact of estimated compliance costs related to the EPA’s CCR Legacy Impoundment Rule finalized in May 2024. (See Note 2. Regulatory Matters and Note 6. Commitments, Guarantees and Contingencies.)

Taxes Other than Income Taxes decreased $1.8 million, or 4 percent, from 2024 primarily due to lower property tax expense.

Interest Expense increased $3.2 million from 2024 reflecting higher interest rates and average debt balances in 2025 compared to 2024.

Other Income decreased $7.1 million from 2024 reflecting higher pension and other postretirement benefit plan non-service costs.

Income Tax Expense increased $9.6 million from 2024 primarily due to lower production tax credits.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 (Continued)

ALLETE Clean Energy


Nine Months Ended September 30,	2025	2024
Millions
Operating Revenue
Contracts with Customers – Non-utility	$39.7	$65.1
Other – Non-utility (a)	4.4	3.8
Cost of Sales – Non-utility	—	18.3
Operating and Maintenance	40.6	37.5
Depreciation and Amortization	43.5	43.2
Taxes Other than Income Taxes	8.2	6.7
Operating Loss	(48.2)	(36.8)
Interest Expense	—	(0.2)
Other Income	2.2	5.4
Loss Before Income Taxes	(46.0)	(31.6)
Income Tax Benefit	(8.5)	(13.3)
Net Loss	(37.5)	(18.3)
Net Loss Attributable to Non-Controlling Interest	(42.2)	(28.4)
Net Income Attributable to ALLETE	$4.7	$10.1

(a)Represents non-cash amortization of differences between contract prices and estimated market prices on assumed PSAs.

Operating Revenue decreased $24.8 million from 2024. Operating revenue in 2024 reflecting revenue of $22.9 million for the sale of ALLETE Clean Energy’s Whitetail wind project in 2024. Operating revenue in 2025 reflected less favorable pricing at the Diamond Spring wind energy facility in 2025 compared to 2024, partially offset by higher kWh sales at various wind energy facilities. Operating revenue in 2024 was negatively impacted by a network outage located near Caddo. The network outage began in the fourth quarter of 2023 resulting from a forced outage of a substation and the transmission lines feeding that substation. This forced outage increased congestion experienced by Caddo resulting in lower kWh sales and pricing in 2024. The forced outage was resolved in June 2024.

Cost of Sales – Non-utility decreased $18.3 million from 2024 reflecting the sale of ALLETE Clean Energy’s Whitetail wind project in 2024.

Operating and Maintenance expense increased $3.1 million from 2024 primarily due to business interruption insurance proceeds at Diamond Spring in 2024 related to a transformer outage in the first half of 2024.

Taxes Other Than Income Taxes increased $1.5 million from 2024 primarily due to higher property tax expense.

Other Income decreased $3.2 million from 2024 primarily due to lower interest income in 2025 compared to 2024.

Income Tax Benefit decreased $4.8 million from 2024 primarily due to lower production tax credits.

Net Loss Attributable to Non-Controlling Interest increased $13.8 million from 2024 reflecting higher production at ALLETE Clean Energy’s tax equity financed wind energy facilities. Net Loss Attributable to Non-Controlling Interest in 2024 reflected the impact of a network outage near Caddo.

New Energy

Operating Revenue decreased $25.3 million, or 33 percent, from 2024 primarily due to lower sales of renewable energy projects reflecting the timing of project sales.

Net Income Attributable to ALLETE was $15.2 million in 2025 compared to net income of $23.4 million in 2024. Net income in 2025 includes lower sales of renewable energy projects due to the timing of project closings. This decrease was partially offset by higher earnings from tax equity financed solar energy facilities and higher investment tax credits.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 2025 AND 2024 (Continued)

Corporate and Other

Operating Revenue decreased $8.9 million, or 10 percent, from 2024 primarily due to lower revenue at BNI Energy, which operates under cost-plus fixed fee contracts, as a result of lower expenses and fewer tons sold in 2025 compared to 2024.

Net Income Attributable to ALLETE was $1.3 million in 2025 compared to a net loss of $16.7 million in 2024. Net income in 2025 reflects lower merger-related expenses compared to 2024 and lower income tax expense resulting from period over period differences in recording income tax expense at the effective tax rate. Merger-related expenses were $8.5 million after-tax in 2025 and $19.5 million in 2024. (See Note 11. Agreement and Plan of Merger.)

Income Taxes – Consolidated

For the nine months ended September 30, 2025, the effective tax rate was an expense of 13.5 percent (8.5 percent for the nine months ended September 30, 2024). The higher effective tax rate for 2025 is primarily due to higher loss attributable to non-controlling interest and lower tax credits.

We expect our annual effective tax rate in 2025 to be higher than 2024 primarily due to higher loss attributable to non-controlling interest and higher estimated pre-tax income. The estimated annual effective tax rate can differ from what a quarterly effective tax rate would otherwise be on a standalone basis, and this may cause quarter to quarter differences in the timing of income taxes. (See Note 8. Income Tax Expense.)

CRITICAL ACCOUNTING POLICIES

Certain accounting measurements under GAAP involve management’s judgment about subjective factors and estimates, the effects of which are inherently uncertain. Accounting measurements that we believe are most critical to our reported results of operations and financial condition include: regulatory accounting, pension and postretirement health and life actuarial assumptions, goodwill, impairment of long-lived assets, and taxation. These policies are reviewed with the Audit Committee of our Board of Directors on a regular basis and summarized in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2024 Form 10-K.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

OUTLOOK

For additional information see our 2024 Form 10-K.

On May 5, 2024, ALLETE entered into the Merger Agreement. (See Note 11. Agreement and Plan of Merger.) As a result of the Merger, transaction costs are expected to be material in 2025. On October 3, 2025, the MPUC held a public hearing in which the MPUC voted in favor of approval of the Merger. In connection with the MPUC’s public hearing, a written order is expected to follow.

ALLETE is an energy company committed to earning a financial return that rewards our shareholders, allows for reinvestment in our businesses, and sustains growth. The Company has a long-term objective of achieving consolidated earnings per share growth within a range of 5 percent to 7 percent.

ALLETE is predominately a regulated utility through Minnesota Power, SWL&P, and an investment in ATC. ALLETE’s strategy is to remain predominately a regulated utility while investing in ALLETE Clean Energy and New Energy and its Corporate and Other businesses to complement its regulated businesses, balance exposure to the utility’s industrial customers, and provide potential long-term earnings growth. ALLETE expects net income from Regulated Operations to be approximately 75 percent of total consolidated net income in 2025. ALLETE expects its businesses to generally provide regulated, contracted or recurring revenues, and to support sustained growth in net income and cash flow.

Minnesota Carbon-Free Legislation. In February 2023, the Minnesota Governor signed a law that updated the state’s renewable energy standard and requires Minnesota electric utilities to source retail sales with 100 percent carbon-free energy by 2040. The law increases the renewable energy standard from 25 percent renewable by 2025 to 55 percent renewable by 2035, and requires investor-owned Minnesota utilities to provide 80 percent carbon-free energy by 2030, 90 percent carbon-free energy by 2035 and 100 percent carbon-free energy by 2040. The law utilizes renewable energy credits as the means to demonstrate compliance with both the carbon-free and renewable standards, includes an off-ramp provision that enables the MPUC to protect reliability and customer costs through modification or delay of either the renewable energy standard, the carbon-free standard, or both, and streamlines development and construction of wind energy projects and transmission in Minnesota. Ongoing progress towards compliance with Minnesota's Carbon Free Standard is evaluated in the IRP proceedings at the MPUC. Minnesota Power's most recent IRP was filed on March 3, 2025, and discusses progress towards compliance with the 2040 law. (See Note 2. Regulatory Matters - Integrated Resource Plan.)

Budget Reconciliation Bill H.R. 1. On July 4, 2025, the budget reconciliation bill H.R. 1 was enacted, which includes various tax reform provisions including provisions modifying, terminating, and accelerating the phase out of a wide range of energy tax credits enacted by the Inflation Reduction Act of 2022. We have evaluated the impacts of this legislation on our businesses and consolidated financial statements and determined that it did not have a material impact.

Regulated Operations. Minnesota Power’s long-term strategy is to be the leading electric energy provider in northeastern Minnesota by providing safe, reliable and cost-competitive electric energy, while complying with environmental permit conditions and renewable energy requirements. Keeping the cost of energy production competitive enables Minnesota Power to effectively compete in the wholesale power markets and minimizes retail rate increases to help maintain customer viability. As part of maintaining cost competitiveness, Minnesota Power intends to reduce its exposure to possible future carbon and GHG legislation by reshaping its generation portfolio, over time, to reduce its reliance on coal. In 2021, Minnesota Power announced its vision of delivering 100 percent carbon-free energy by 2050. We will monitor and review proposed environmental regulations and may challenge those that add considerable cost with limited environmental benefit. Minnesota Power will continue to pursue customer growth opportunities and cost recovery rider approvals for transmission, renewable and environmental investments, as well as work with regulators to earn a fair rate of return.

Integrated Resource Plan. On March 3, 2025, Minnesota Power filed its 2025 IRP, which outlines Minnesota Power’s next steps to provide safe and reliable energy to customers while adding new resources, meeting increasing demand for energy and reducing carbon emissions. The 2025 IRP calls for adding renewable projects, customer-focused demand response, energy storage and natural gas generation, and positions Minnesota Power to cease coal use for its customers at the Boswell Energy Center in Cohasset and meet the requirements of the state of Minnesota’s carbon-free standard. As part of the 2025 IRP, Minnesota Power anticipates maximizing and expanding customer-focused programs including energy efficiency, energy conservation and demand response, adding 400 MW of new wind energy resources by 2035, in addition to the 700 MW announced in its 2021 IRP, expanding energy storage resources by 100 MW by 2035, and adding approximately 1,000 MW of natural gas capacity, including the refuel of Boswell Unit 3 to run solely on natural gas by 2030. Minnesota Power will continue to explore biomass fuel opportunities at Boswell Unit 3 and will develop natural gas replacement options for Boswell Unit 4. A final decision on the 2025 IRP is expected in 2026.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

OUTLOOK (Continued)

Regulated Operations (Continued)

Industrial Customers.

Industrial Customers. Electric power is one of several key inputs in the taconite mining, paper, pulp and secondary wood products, pipeline and other industries. Approximately 49 percent of our regulated utility kWh sales in the nine months ended September 30, 2025, were made to our industrial customers (56 percent in the nine months ended September 30, 2024). We expect industrial sales for the full year of 2025 to be approximately 6.3 million MWh reflecting lower sales to taconite customers. (See Taconite – Cleveland-Cliffs, Inc.)

Taconite.

USS Corporation. In December 2023, USS Corporation announced it entered into a definitive agreement in which Nippon Steel will acquire all of the shares of USS Corporation. On January 3, 2025, President Biden issued an order blocking the transaction, a decision currently being challenged in court. On April 7, 2025, President Trump issued an order to direct CFIUS to conduct a new review of the acquisition of USS Corporation by Nippon Steel. President Trump signed an executive order on June 13, 2025 allowing the partnership between Nippon and USS Corporation to proceed subject to a national security agreement (NSA), and the transaction was finalized on June 18, 2025. The NSA signed by the companies also calls for $11 billion in new investments to be made by 2028, with $800 million earmarked for Minnesota ore operations, among other commitments.

On January 27, 2025, USS Corporation exercised its rights under its electric service agreement with Minnesota Power to provide a four-year notice of termination. Minnesota Power and USS Corporation are working together to meet USS Corporation’s evolving energy needs. Absent any other action by the parties, the termination of the current electric service agreement would be effective January 27, 2029, and USS Corporation would become a non-contract large power customer of Minnesota Power. USS Corporation has the capability to annually produce approximately 15 million tons of blast furnace-grade pellets at its Minntac plant and 5 million tons of blast-furnace grade pellets, or 4 million tons of DR-grade pellets, at its Keetac plant.

Cleveland-Cliffs, Inc. (Cliffs). Cliffs is the largest flat-rolled steel producer and the largest iron ore pellet producer in North America, and has several iron ore pellet facilities served by Minnesota Power. In March 2025, Cliffs announced it would temporarily idle its Minorca Mine in Virginia, Minnesota, and partially idle Hibbing Taconite in Hibbing, Minnesota. Both of these plants are Large Power industrial customers of Minnesota Power. The Hibbing Taconite plant has the capability to annually produce approximately 8 million tons of blast furnace-grade pellets and the Minorca plant has the capability to produce approximately 3 million tons of blast-furnace grade pellets.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

OUTLOOK (Continued)

Transmission.

We continue to make investments in transmission opportunities that strengthen or enhance the transmission grid or take advantage of our geographical location between sources of renewable energy and end users. These include investments to enhance our own transmission facilities and investments in other transmission assets (individually or in combination with others) and our investment in ATC. Transmission investments are summarized in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Outlook – Transmission in our 2024 Form 10-K, with additional disclosure provided in the following paragraphs.

HVDC Transmission System Project. On June 1, 2023, Minnesota Power submitted an application for a certificate of need and route permit with the MPUC to replace aging critical infrastructure and modernize the terminal stations of its HVDC transmission line. In an October 25, 2024, order, the MPUC approved the certificate of need and route permit. Minnesota Power uses the 465-mile, 250-kV HVDC transmission line that runs from Center, North Dakota, to Duluth, Minnesota, to transport wind energy from North Dakota while gradually phasing out coal-based electricity delivered to its system over this transmission line from Square Butte’s lignite coal-fired generating unit. On March 17, 2025, the FERC approved Minnesota Power's request to recover on construction work in progress related to this project from Minnesota Power’s wholesale customers for project assets in Minnesota and conditionally approved its request related to project assets located in North Dakota. The HVDC transmission system project is expected to improve reliability of the transmission system, improve system resiliency, expand the operating capacity of the HVDC terminals, and replace critical infrastructure. Construction on the Minnesota end of the project began in 2025. Construction on the North Dakota end of the project will begin later in 2025, pending regulatory approvals in North Dakota. The project will be placed in-service between 2028 and 2030. The project is estimated to cost between $800 million and $940 million. On October 2, 2025, and October 17, 2025, Minnesota Power received notice from the U.S. Department of Energy (DOE) stating that the DOE had terminated a $50 million grant originally selected for award on October 18, 2023, for the HVDC transmission system project. Minnesota Power is currently reviewing its options to contest the asserted DOE grant termination. In addition, this project was awarded $15 million in state funding as part of an energy and climate budget bill passed by the Minnesota Legislature in 2023. Further, Minnesota Power’s application to the Minnesota Department of Commerce (MN DOC) State Competitiveness Fund Match Program received notification the MN DOC is reserving $10 million as a cost share for the project.

ALLETE Clean Energy.

ALLETE Clean Energy will pursue growth through acquisitions or project development. ALLETE Clean Energy is targeting acquisitions of existing operating portfolios which have a mix of long-term PSAs in place and/or available for repowering and recontracting. Further, ALLETE Clean Energy will evaluate actions that will lead to the addition of complimentary clean energy products and services. At this time, ALLETE Clean Energy is focused on actions that will optimize its clean energy project portfolio of operating and development projects, which may include recontracting, repowering, entering into partnerships and divestitures along with continued acquisitions or development of new projects including wind, solar, energy storage or storage ready facilities across North America.

New Energy.

New Energy is a renewable energy company with a primary focus on developing solar and energy storage facilities for external sale and internal ownership while also offering comprehensive operations, maintenance and asset management services. New Energy is a leading developer of community, commercial and industrial, and small utility-scale renewable energy projects that has completed more than 600 MW in its history, totaling more than $1.5 billion of capital. New Energy currently has a robust project pipeline with greater than 2,000 MW of renewable projects in development across over 20 different states. New Energy adds value through cost effective development and economies of scale on project implementation, bringing national capabilities to regional co-development partners. New Energy is involved in greenfield development as well as acquiring and completing mid-stage and late-stage renewable energy projects. New Energy will continue its current strategy of developing, owning and operating renewable energy projects.

Corporate and Other.

Corporate and Other includes BNI Energy, our coal mining operations in North Dakota and ALLETE Properties, our legacy Florida real estate investment, along with our investment in Nobles 2, South Shore Energy, our non-rate regulated, Wisconsin subsidiary developing NTEC, other business development and corporate expenditures, unallocated interest expense, a small amount of non-rate base generation, land in Minnesota, and earnings on cash and investments.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

LIQUIDITY AND CAPITAL RESOURCES

Liquidity Position. ALLETE is well-positioned to meet the Company’s liquidity needs. As of September 30, 2025, we had cash and cash equivalents of $78.7 million, $250.8 million in available consolidated lines of credit, 2.1 million original issue shares of common stock available for issuance through a distribution agreement with Lampert Capital Markets, the option (per the Merger Agreement) to request that Alloy Parent purchase up to a total of $300 million of preferred stock of ALLETE in the second half of 2025 (see Securities), and a debt-to-capital ratio of 40 percent.

Capital Structure. ALLETE’s capital structure is as follows:


	September 30, 2025	%	December 31, 2024	%
Millions
ALLETE Equity	$2,851.9	51	$2,848.0	55
Non-Controlling Interest in Subsidiaries	491.3	9	542.1	10
Short-Term and Long-Term Debt (a)	2,247.5	40	1,808.0	35
Redeemable Non-Controlling Interest	0.7	—	0.4	—
	$5,591.4	100	$5,198.5	100

(a)Excludes unamortized debt issuance costs.

Cash Flows. Selected information from the Consolidated Statement of Cash Flows is as follows:


For the Nine Months Ended September 30,	2025	2024
Millions
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	$55.2	$79.4
Cash Flows provided by (used in)
Operating Activities	253.0	367.3
Investing Activities	(556.3)	(219.9)
Financing Activities	329.3	(115.8)
Change in Cash, Cash Equivalents and Restricted Cash	26.0	31.6
Cash, Cash Equivalents and Restricted Cash at End of Period	$81.2	$111.0

Operating Activities. Cash provided by operating activities was lower in 2025 compared to 2024 reflecting the payment of interim rate refunds to customers by Minnesota Power and higher cash payments for inventory in 2025.

Investing Activities. Cash used in investing activities was higher in 2025 compared to 2024 reflecting more payments for additions to property, plant and equipment compared to 2024 primarily due to capital expenditures for Minnesota Power solar and transmission projects.

Financing Activities. Cash provided by financing activities in 2025 reflected higher proceeds from the issuance of long-term debt, partially offset by higher repayments of long-term debt compared to cash used in financing activities in 2024.

Working Capital. Additional working capital, if and when needed, generally is provided by consolidated bank lines of credit and the issuance of securities, including long-term debt, common stock and commercial paper. As of September 30, 2025, we had consolidated bank lines of credit aggregating $362.0 million ($362.0 million as of December 31, 2024), the majority of which expire in January 2028. (See Note 5. Short-Term and Long-Term Debt.) We had $16.2 million outstanding standby letters of credit and $95.0 million outstanding draws under our lines of credit as of September 30, 2025 ($16.2 million in standby letters of credit and $20.0 million outstanding draws on our lines of credit as of December 31, 2024). As of September 30, 2025, we also had $120.6 million outstanding in standby letters of credit under other credit facility agreements.

In addition, as of September 30, 2025, we had 2.3 million original issue shares of our common stock available for issuance through Invest Direct, our direct stock purchase and dividend reinvestment plan, and 2.1 million original issue shares of common stock available for issuance through a distribution agreement with Lampert Capital Markets. (See Securities.) The amount and timing of future sales of our securities will depend upon market conditions and our specific needs.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

LIQUIDITY AND CAPITAL RESOURCES (Continued)

Securities. The Merger Agreement also provides that ALLETE may notify Alloy Parent of our intent to raise equity capital of up to a total of $300 million in the second half of 2025, subject to certain parameters. If Alloy Parent declines to participate in the equity capital raises or fails to provide timely notice with respect thereto, ALLETE will have the right to issue ALLETE common stock in the public markets for an amount equal to any unfunded amounts under such equity capital raises up to certain limits. (See Note 11. Agreement and Plan of Merger.)

During the nine months ended September 30, 2025, we issued 0.2 million shares of common stock through Invest Direct, ESPP, and RSOP, resulting in net proceeds of $9.6 million (0.3 million shares were issued for the nine months ended September 30, 2024, resulting in net proceeds of $9.9 million).

Financial Covenants. See Note 5. Short-Term and Long-Term Debt for information regarding our financial covenants.

Pension and Other Postretirement Benefit Plans. Management considers various factors when making funding decisions, such as regulatory requirements, actuarially determined minimum contribution requirements and contributions required to avoid benefit restrictions for the defined benefit pension plans. (See Note 9. Pension and Other Postretirement Benefit Plans.)

Off-Balance Sheet Arrangements. Off-balance sheet arrangements are summarized in our 2024 Form 10-K, with additional disclosure in Note 6. Commitments, Guarantees and Contingencies.

Credit Ratings. Access to reasonably priced capital markets is dependent in part on credit and ratings. Our securities have been rated by S&P Global Ratings and by Moody’s. Rating agencies use both quantitative and qualitative measures in determining a company’s credit rating. These measures include business risk, liquidity risk, competitive position, capital mix, financial condition, predictability of cash flows, management strength and future direction. Some of the quantitative measures can be analyzed through a few key financial ratios, while the qualitative ones are more subjective. Our current credit ratings are listed in the following table:


Credit Ratings	S&P Global Ratings (a)	Moody’s
Issuer Credit Rating	BBB	Baa1
Commercial Paper	A-2	P-2
First Mortgage Bonds	(b)	A2

(a) On May 7, 2024, S&P Global Ratings revised its outlook on ALLETE to negative from stable and affirmed all of its ratings on ALLETE. S&P Global Ratings cited the possibility for higher leverage and weaker financial measures because of the Merger as its rationale for issuing the negative outlook.

(b) Not rated by S&P Global Ratings.

The disclosure of these credit ratings is not a recommendation to buy, sell or hold our securities. Ratings are subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated independently of any other rating.

Capital Requirements. Our capital expenditures for 2025 are now expected to be approximately $850 million reflecting higher capital expenditures at Minnesota Power primarily related to timing of expenditures for the HVDC transmission system project. For the nine months ended September 30, 2025, capital expenditures totaled $537.8 million ($229.5 million for the nine months ended September 30, 2024). The expenditures were primarily made in the Regulated Operations segment.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

OTHER

Environmental Matters.

Our businesses are subject to regulation of environmental matters by various federal, state and local authorities. A number of regulatory changes to the Clean Air Act, the Clean Water Act and various waste management requirements have been promulgated by both the EPA and state authorities over the past several years. Minnesota Power’s facilities are subject to additional requirements under many of these regulations. Minnesota Power is reshaping its generation portfolio, over time, to reduce its reliance on coal, has installed cost-effective emission control technology, and advocates for sound science and policy during rulemaking implementation. (See Note 6. Commitments, Guarantees and Contingencies.)

Employees.

As of September 30, 2025, ALLETE had 1,642 employees, of which 1,597 were full-time.

Minnesota Power and SWL&P have an aggregate of 499 employees covered under collective bargaining agreements, of which most are members of International Brotherhood of Electrical Workers (IBEW) Local 31. The current labor agreements with IBEW Local 31 expire on April 30, 2028, for Minnesota Power and January 31, 2029, for SWL&P.

BNI Energy has 179 employees, of which 133 are subject to a labor agreement with IBEW Local 1593. The current labor agreement with IBEW Local 1593 expires on March 31, 2026.

NEW ACCOUNTING PRONOUNCEMENTS

New accounting pronouncements are discussed in Note 1. Operations and Significant Accounting Policies.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

SECURITIES INVESTMENTS

Available-for-Sale Securities. As of September 30, 2025, our available-for-sale securities portfolio consisted primarily of securities held in other postretirement plans to fund employee benefits.

COMMODITY PRICE RISK

Our regulated utility operations incur costs for power and fuel (primarily coal and related transportation) in Minnesota, and power and natural gas purchased for resale in our regulated service territory in Wisconsin. Minnesota Power’s exposure to price risk for these commodities is significantly mitigated by the current ratemaking process and regulatory framework, which allows recovery of fuel costs in excess of those included in base rates or distribution of savings in fuel costs to ratepayers. SWL&P’s exposure to price risk for natural gas is significantly mitigated by the current ratemaking process and regulatory framework, which allows the commodity cost to be passed through to customers. We seek to prudently manage our customers’ exposure to price risk by entering into contracts of various durations and terms for the purchase of power and coal and related transportation costs (Minnesota Power), and natural gas (SWL&P).

POWER MARKETING

Minnesota Power’s power marketing activities consist of: (1) purchasing energy in the wholesale market to serve its regulated service territory when energy requirements exceed generation output; and (2) selling excess available energy and purchased power. From time to time, Minnesota Power may have excess energy that is temporarily not required by retail and municipal customers in our regulated service territory. Minnesota Power actively sells any excess energy to the wholesale market to optimize the value of its generating facilities.

We are exposed to credit risk primarily through our power marketing activities. We use credit policies to manage credit risk, which includes utilizing an established credit approval process and monitoring counterparty limits.

INTEREST RATE RISK

We are exposed to risks resulting from changes in interest rates as a result of our issuance of variable rate debt. We manage our interest rate risk by varying the issuance and maturity dates of our fixed rate debt, limiting the amount of variable rate debt, and continually monitoring the effects of market changes in interest rates. We may also enter into derivative financial instruments, such as interest rate swaps, to mitigate interest rate exposure. Interest rates on variable rate long-term debt are reset on a periodic basis reflecting prevailing market conditions. Based on the variable rate debt outstanding as of September 30, 2025, an increase of 100 basis points in interest rates would impact the amount of pre-tax interest expense by $1.2 million. This amount was determined by considering the impact of a hypothetical 100 basis point increase to the average variable interest rate on the variable rate debt outstanding as of September 30, 2025.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. As of September 30, 2025, evaluations were performed, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, on the effectiveness of the design and operation of ALLETE’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (Exchange Act)). Based upon those evaluations, our principal executive officer and principal financial officer have concluded that such disclosure controls and procedures are effective to provide assurance that information required to be disclosed in ALLETE’s reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Changes in Internal Controls. There has been no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For information regarding material legal and regulatory proceedings, see Note 4. Regulatory Matters and Note 9. Commitments, Guarantees and Contingencies to the Consolidated Financial Statements in our 2024 Form 10-K and Note 2. Regulatory Matters and Note 6. Commitments, Guarantees and Contingencies herein. Such information is incorporated herein by reference.

ITEM 1A. RISK FACTORS

Our 2024 Form 10-K includes a detailed discussion of our risk factors. There have been no material changes from the risk factors disclosed in Part I, Item 1A. Risk Factors of our 2024 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) requires issuers to include in periodic reports filed with the SEC certain information relating to citations or orders for violations of standards under the Federal Mine Safety and Health Act of 1977 (Mine Safety Act). Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Act and this Item are included in Exhibit 95 to this Form 10-Q.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

ITEM 5. OTHER INFORMATION

Trading Plans. During the quarter ended September 30, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

ITEM 6. EXHIBITS


Exhibit						Description
2						Agreement and Plan of Merger by and among ALLETE, Inc., Alloy Parent LLC and Alloy Merger Sub LLC, dated as of May 5, 2024 (filed as Exhibit 2.1 to the May 6, 2024, Form 8-K, File No. 1-3548).*


31(a)						Rule 13a-14(a)/15d-14(a) Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31(b)						Rule 13a-14(a)/15d-14(a) Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32						Section 1350 Certification of Periodic Report by the Chief Executive Officer and the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
95						Mine Safety.
99						ALLETE News Release dated October 31, 2025, announcing 2025 third quarter earnings. (This exhibit has been furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.)

101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Schema
101.CAL						XBRL Calculation
101.DEF						XBRL Definition
101.LAB						XBRL Label
101.PRE						XBRL Presentation
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedules will be furnished supplementally to the SEC upon request; provided, however, that the parties may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any document so furnished.

ALLETE agrees to furnish to the SEC upon request any instrument with respect to long-term debt that ALLETE has not filed as an exhibit pursuant to the exemption provided by Item 601(b)(4)(iii)(A) of Regulation S-K.

ALLETE, Inc. Third Quarter 2025 Form 10-Q

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


						ALLETE, INC.




October 31, 2025						/s/ Jeffrey J. Scissons
						Jeffrey J. Scissons
						Vice President, Chief Financial Officer and Corporate Treasurer
						(Principal Financial Officer)




October 31, 2025						/s/ Colin B. Anderson
						Colin B. Anderson
						Vice President, Chief Accounting Officer, and Controller
						(Principal Accounting Officer)

ALLETE, Inc. Third Quarter 2025 Form 10-Q

ALLETE INC 10-Q