Business Segments

9 Months Ended

Sep. 30, 2019

BUSINESS SEGMENTS

We present three reportable segments: Regulated Operations, ALLETE Clean Energy and U.S. Water Services. We measure performance of our operations through budgeting and monitoring of contributions to consolidated net income by each business 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. U.S. Water Services was our integrated water management company, which reflects operating results until the closing date of its sale on March 26, 2019. The ALLETE Clean Energy and U.S. Water Services reportable segments comprise our Energy Infrastructure and Related Services businesses. 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, other business development and corporate expenditures, unallocated interest expense, a small amount of non-rate base generation, approximately 4,000 acres of land in Minnesota, and earnings on cash and investments.

NOTE 11. BUSINESS SEGMENTS (Continued)



	Quarter Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Millions
Operating Revenue
Regulated Operations
Residential		$29.8			$30.8			$104.2			$102.2
Commercial	36.8			38.1			110.6			110.9
Municipal	11.8			14.2			39.4			41.9
Industrial	115.6			117.3			357.5			347.5
Other Power Suppliers	37.3			40.9			111.9			127.3
CIP Financial Incentive (a)	2.8			3.0			2.8			3.0
Other	20.0			17.0			59.7			56.5
Total Regulated Operations	254.1			261.3			786.1			789.3

Energy Infrastructure and Related Services

ALLETE Clean Energy
Long-term PSA	7.5			9.0			34.6			40.0
Other	2.9			6.0			8.7			17.9
Total ALLETE Clean Energy	10.4			15.0			43.3			57.9

U.S. Water Services (b)
Point-in-Time	—			29.0			19.0			77.0
Contract	—			9.7			9.2			28.7
Capital Project	—			6.3			5.2			19.0
Total U.S. Water Services	—			45.0			33.4			124.7

Corporate and Other
Long-term Contract	20.5			21.2			61.9			63.9
Other	3.3			5.5			11.2			14.5
Total Corporate and Other	23.8			26.7			73.1			78.4
Total Operating Revenue		$288.3			$348.0			$935.9			$1,050.3
Net Income (Loss)
Regulated Operations		$32.4			$29.8			$114.2			$99.7

Energy Infrastructure and Related Services
ALLETE Clean Energy	(1.2		)	1.0			6.5			15.9
U.S. Water Services (b)	—			1.7			(1.1		)	0.5

Corporate and Other (b)	—			(1.8		)	16.3			(3.1		)
Total Net Income		$31.2			$30.7			$135.9			$113.0


(a)	See Note 2. Regulatory Matters.


(b)	On March 26, 2019, ALLETE completed the sale of U.S. Water Services. The Company recognized a gain on the sale of $11.1 million after-tax reflected in Corporate and Other in 2019. (See Note 1. Operations and Significant Accounting Policies.)

NOTE 11. BUSINESS SEGMENTS (Continued)



	September 30, 2019		December 31, 2018
Millions
Assets
Regulated Operations		$4,045.2		$3,952.5

Energy Infrastructure and Related Services
ALLETE Clean Energy	839.8		606.6
U.S. Water Services (a)	—		295.8

Corporate and Other	390.8		310.1
Total Assets		$5,275.8		$5,165.0

(a)

On March 26, 2019, ALLETE completed the sale of U.S. Water Services. (See Note 1. Operations and Significant Accounting Policies.)