ALLETE(US:ALE)2021-11-06 02:15Financial Data and Key Metrics Changes - ALLETE reported Q3 2021 earnings of $0.53 per share on net income of $27.6 million, which exceeded internal expectations by approximately 25% [6][17] - In comparison, Q3 2020 earnings were $0.78 per share on net income of $40.7 million, indicating a decline in earnings year-over-year [17] - The regulated operations segment recorded net income of $32.9 million, down from $42.4 million in Q3 2020, primarily due to increased operating and maintenance expenses [18] Business Line Data and Key Metrics Changes - ALLETE Clean Energy reported a net loss of $800,000 in Q3 2021, compared to net income of $1.1 million in Q3 2020, attributed to lower wind resources [19] - The corporate and other businesses segment recorded a net loss of $4.5 million in Q3 2021, compared to a net loss of $2.8 million in Q3 2020, due to higher expenses [20] Market Data and Key Metrics Changes - Minnesota Power filed its second integrated distribution plan, detailing a five-year investment plan and a ten-year outlook for its distribution system [7] - The Integrated Resource Plan aims for 70% renewable energy by 2030 and to be coal-free by 2035, with a vision for 100% carbon-free energy by 2050 [8][9] Company Strategy and Development Direction - ALLETE is focused on sustainability and clean energy transition, with significant investments planned in infrastructure and technology to enhance service reliability [6][7] - The company is expanding its service offerings beyond wind to include solar and storage solutions, capitalizing on the growing demand for renewable energy [15][16] - A general rate case was filed seeking a $108 million increase in annual revenue to support ongoing operations and clean energy transition [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving long-term annual average earnings per share growth of 5% to 7% through disciplined operations and clean energy investments [25] - The company anticipates significant investments in both regulated and non-regulated businesses, aligning with national and state clean energy goals [34][36] Other Important Information - The Minnesota Department of Commerce requested a three-month extension on initial comments for the Integrated Resource Plan, with final comments due by March 1, 2022 [9] - ALLETE Clean Energy is finalizing development plans for several projects, including a 200-megawatt wind project in North Dakota [31][32] Q&A Session Summary Question: Clarification on NTEC gain and guidance - The NTEC gain was confirmed to be $0.16, which was not included in the original guidance range of $3 to $3.30 [40] Question: Rate case history and sales true-up - The proposed sales true-up is a new mechanism aimed at addressing revenue volatility from large power customers, differing from past ROE true-ups [41][43] Question: Expansion into solar and storage - ALLETE is serious about expanding into solar and storage, with a multi-pronged approach including organic growth and potential acquisitions [44][46] Question: Land sale value and rate mitigation - The estimated value of the land surrounding hydro facilities is $100 million, which could help mitigate the proposed rate increase [50][52] Question: Current allowed ROE and interim rates - The current allowed ROE is 9.25%, which is the basis for interim rates [55] Question: Timeline for solar investment proposals - The timeline for solar investments could be accelerated due to evolving market conditions and technology advancements [58]