Item 7.01 Regulation FD Disclosure
ALLETE, Inc. (NYSE:ALE) today initiated its 2021 earnings guidance range of $3.00 to $3.30 per share on net income of $160 million to $175 million. This guidance range is comprised of our Regulated Operations earnings within a range of $2.30 to $2.50 per share, and ALLETE Clean Energy and Corporate and Other operations earnings within a range of $0.70 to $0.80 per share. ALLETE, Inc. also provided its preliminary 2022 estimated earnings guidance range of $3.70 to $4.00 per share, which ALLETE anticipates formally initiating in early 2022.
Key factors, expectations, considerations and assumptions impacting 2021 guidance are summarized below.
Regulated Operations
•Reflects a full year of a Minnesota Power rate increase as part of our 2020 rate case settlement (eight months in 2020).
•2021 industrial sales of approximately 6.0 million to 6.5 million megawatt-hours (MWh), which reflects anticipated production from our taconite customers of approximately 35 million tons in 2021.
•Continued impact from the COVID-19 pandemic impacting commercial, other industrial and municipal sales.
•Lower revenue due to a power sales agreement that expired in April 2020.
•2021 guidance excludes any favorable outcome of our deferred accounting filing for lost sales in 2020 and anticipated lost sales in 2021.
•Higher operating and maintenance expense of approximately 3 percent as compared to 2020.
•Higher depreciation and property tax expenses due to additional plant in-service.
•Additional investments in the American Transmission Company LLC of approximately $2 million.
•An effective income tax benefit of approximately 15 percent for our Regulated Operations primarily due to production tax credits (PTCs).
•2021 guidance assumes that we will achieve reasonable outcomes in regulatory proceedings.
•Minnesota Power anticipates filing a general rate case in November 2021 with a 2022 test year.
ALLETE Clean Energy
•ALLETE Clean Energy expects approximately 3.2 million MWh in 2021 (2.1 million MWh in 2020) in total wind generation, with the assumption of normal wind patterns.
•South Peak and Diamond Spring in-service full year (in-service April and December of 2020, respectively).
•Caddo in service by end of 2021 with no impact on earnings in 2021.
•PTCs are estimated to be approximately $21 million in 2021.
•Higher depreciation expense due to additional plant in-service.
•Higher operating expenses compared to 2020 due to investments in growth initiatives.
•Guidance does not include the impact, if any, of possible acquisitions of renewable energy facilities, additional construction and sale projects, and requalification projects other than those previously disclosed.
Corporate and Other
▪Similar results at BNI Energy, Inc. and ALLETE Properties, LLC.
▪Nobles 2 Power Partners, LLC wind energy facility in-service full year (in-service fourth quarter of 2020).
A consolidated effective income tax benefit of approximately 35 percent in 2021 primarily due to PTCs as a result of wind generation from our Bison Wind Energy Center and requalification of wind turbine generators at ALLETE Clean Energy.
Readers are cautioned that forward-looking statements should be read in conjunction with disclosures under the heading: “Forward-Looking Statements” located on page 2 of this Current Report on Form 8-K.
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ALLETE Form 8-K dated February 17, 2021
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 Current Report on Form 8-K (Form 8-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;
•changes in tax rates or policies or in rates of inflation;
•the outcome of legal and administrative proceedings (whether civil or criminal) and settlements;
•weather conditions, natural disasters and pandemic diseases, including the ongoing COVID-19 pandemic;
•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 not improve; and
•the success of efforts to realize value from, invest in, and develop new opportunities.
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ALLETE Form 8-K dated February 17, 2021
Forward-Looking Statements (Continued)
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 ALLETE’s Annual Report on Form 10-K for the year ended December 31, 2020. 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 8-K and in other reports filed with the SEC that attempt to identify the risks and uncertainties that may affect ALLETE’s business.
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ALLETE Form 8-K dated February 17, 2021