Operations and Significant Accounting Policies

9 Months Ended

Sep. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Operations and Significant Accounting Policies [Text Block]

OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

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, 2021, restricted cash amounts included in Prepayments and Other on the Consolidated Balance Sheet include collateral deposits required under an ALLETE Clean Energy loan agreement. The restricted cash amounts included in Other Non-Current Assets represent collateral deposits required under ALLETE Clean Energy loan and tax equity financing agreements as well as PSAs. 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, 2021	December 31, 2020	September 30, 2020	December 31, 2019
Millions
Cash and Cash Equivalents	$59.0	$44.3	$79.0	$69.3
Restricted Cash included in Prepayments and Other	4.1	0.8	3.2	2.8
Restricted Cash included in Other Non-Current Assets	2.3	20.1	2.9	20.4
Cash, Cash Equivalents and Restricted Cash on the Consolidated Statement of Cash Flows	$65.4	$65.2	$85.1	$92.5

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 segment and Corporate and Other businesses are carried at an average cost, first-in, first-out or specific identification basis.

Inventories – Net	September 30, 2021	December 31, 2020
Millions
Fuel (a)	$12.4	$23.1
Materials and Supplies	55.2	51.1
Construction of Wind Energy Facilities (b)	22.0	—
Total Inventories – Net	$89.6	$74.2

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

(b) Project costs related to ALLETE Clean Energy’s Northern Wind and Red Barn wind projects which are expected be sold in late 2022. (See Other Current Liabilities.)

NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Other Non-Current Assets	September 30, 2021	December 31, 2020
Millions
Contract Assets (a)	$23.4	$25.5
Operating Lease Right-of-use Assets	17.7	22.4
ALLETE Properties	17.6	18.2
Restricted Cash	2.3	20.1
Other Postretirement Benefit Plans	35.8	34.2
Other	82.9	86.4
Total Other Non-Current Assets	$179.7	$206.8

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

Other Current Liabilities	September 30, 2021	December 31, 2020
Millions
Customer Deposits (a)	$27.5	$7.4
PSAs	12.6	12.5
Fuel Adjustment Clause	2.6	3.7
Operating Lease Liabilities	5.0	5.9
Other	36.3	37.2
Total Other Current Liabilities	$84.0	$66.7

(a) Primarily related to deposits received by ALLETE Clean Energy for the Northern Wind and Red Barn wind projects which are expected be sold in late 2022. (See Inventories – Net.)

Other Non-Current Liabilities	September 30, 2021	December 31, 2020
Millions
Asset Retirement Obligation (a)	$170.9	$166.6
PSAs	42.6	52.1
Operating Lease Liabilities	12.7	16.5
Other	51.9	50.1
Total Other Non-Current Liabilities	$278.1	$285.3

(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 $25.0 million in Other Non-Current Assets on the Consolidated Balance Sheet as of September 30, 2021, and December 31, 2020.

Other Income
Nine Months Ended September 30,	2021	2020
Millions
Pension and Other Postretirement Benefit Plan Non-Service Credits (a)	$4.4	$6.5
Interest and Investment Income	1.7	0.4
AFUDC - Equity	1.7	1.8
Other	(1.7)	0.4
Total Other Income	$6.1	$9.1

(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.)

NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Supplemental Statement of Cash Flows Information.

Nine Months Ended September 30,	2021	2020
Millions
Cash Paid for Interest – Net of Amounts Capitalized	$54.9	$48.8
Noncash Investing and Financing Activities
Increase in Accounts Payable for Capital Additions to Property, Plant and Equipment	$(12.1)	$(88.4)
Capitalized Asset Retirement Costs	$3.5	$2.1
AFUDC–Equity	$1.7	$1.8

Non-Controlling Interest in Subsidiaries. Non-controlling interest in subsidiaries on the Consolidated Balance Sheet and net loss attributable to non-controlling interest on the Consolidated Statement of Income represent the portion of equity ownership and earnings, respectively, of subsidiaries that are not attributable to equity holders of ALLETE. These amounts are primarily related to the tax equity financing structures for ALLETE Clean Energy’s 106 MW Glen Ullin, 80 MW South Peak and 303 MW Diamond Spring wind energy facilities as well as ALLETE’s equity investment in the 250 MW Nobles 2 wind energy facility.

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

On September 22, 2021, South Shore Energy, ALLETE’s non-rate regulated, Wisconsin subsidiary, entered into an agreement with a wholly-owned subsidiary of Basin pursuant to which South Shore Energy agreed to sell to Basin a portion of its interest in NTEC for approximately $20 million representing reimbursement of current costs plus a fee for prior development costs and risks incurred. Pursuant to this transaction, which closed on October 1, 2021, South Shore Energy sold a portion of its undivided ownership interest in NTEC to Basin, such that, South Shore Energy now owns a 20 percent undivided ownership interest in NTEC, Basin owns a 30 percent undivided ownership interest in NTEC and Dairyland Power Cooperative continues to own a 50 percent undivided ownership interest in NTEC. The closing of the transaction resulted in the recognition of an approximately $8.5 million after-tax gain recorded in Corporate and Other in the fourth quarter of 2021, related to prior development costs and risks incurred. NTEC is an approximately 600 MW proposed combined-cycle natural gas-fired generating facility to be built in Superior, Wisconsin. Construction of NTEC is subject to obtaining additional permits from local, state and federal authorities. The total project cost is estimated to be approximately $700 million, of which South Shore Energy’s portion is expected to be approximately $140 million. South Shore Energy’s portion of NTEC project costs incurred through September 30, 2021, is approximately $15 million of which approximately $8 million related to development costs sold to Basin.