XML 26 R11.htm IDEA: XBRL DOCUMENT
v3.21.2

Regulatory Matters | 6 Months Ended
--- | ---
Jun. 30, 2021
Regulated Operations [Abstract] |
Regulatory Matters [Text Block] | REGULATORY MATTERS Regulatory matters are summarized in Note 4. Regulatory Matters to the Consolidated Financial Statements in our 2020 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 $22.1 million for the six months ended June 30, 2021 ($14.9 million for the six months ended June 30, 2020). 2020 Minnesota General Rate Case. In November 2019, Minnesota Power filed a retail rate increase request with the MPUC seeking an average increase of approximately 10.6 percent for retail customers. The rate filing sought a return on equity of 10.05 percent and a 53.81 percent equity ratio. On an annualized basis, the requested final rate increase would have generated approximately $66 million in additional revenue. In December 2019 orders, the MPUC accepted the filing as complete and authorized an annual interim rate increase of $36.1 million beginning January 1, 2020. In April 2020, Minnesota Power filed a request with the MPUC that proposed a resolution of Minnesota Power’s 2020 general rate case. Key components of our proposal included removing the power marketing margin credit in base rates and reflecting actual power marketing margins in the fuel adjustment clause effective May 1, 2020; refunding to customers interim rates collected through April 2020; increasing customer rates 4.1 percent compared to the 5.8 percent increase reflected in interim rates; and a provision that Minnesota Power would not file another rate case until at least November 1, 2021, unless certain events occur. In a June 2020 order, the MPUC approved Minnesota Power’s petition and proposal to resolve and withdraw the general rate case. Effective May 1, 2020, customer rates were set at an increase of 4.1 percent with the removal of the power marketing margin credit from base rates. Actual power marketing margins will be reflected in the fuel adjustment clause. Reserves for interim rates of $11.7 million were recorded in the second quarter of 2020 and refunded in the third and fourth quarters of 2020. Environmental Improvement Rider. Minnesota Power has an approved environmental improvement rider for investments and expenditures related to the implementation of the Boswell Unit 4 mercury emissions reduction plan completed in 2015. Updated customer billing rates for the environmental improvement rider were approved by the MPUC in a November 2018 order. On January 19, 2021, Minnesota Power filed a petition seeking MPUC approval to end the environmental improvement rider, which was approved in an order dated April 20, 2021. NOTE 2. REGULATORY MATTERS (Continued) Electric Rates (Continued) Solar Cost Recovery Rider. In June 2020, Minnesota Power filed a petition seeking MPUC approval of a customer billing rate for solar costs related to investments and expenditures for meeting the state of Minnesota’s solar energy standard, which was approved by the MPUC in an order dated April 20, 2021. New customer billing rates for the solar cost recovery rider were implemented on June 1, 2021. Electric Vehicle Charging Infrastructure Petition. On April 8, 2021, Minnesota Power filed a petition seeking approval to install and own DC fast charger stations for electric vehicles across its service territory, implement accompanying rates for those stations, and track and recover investments and expenses for the project. COVID-19 Related Deferred Accounting. In an order dated March 24, 2020, the PSCW authorized public utilities, including SWL&P, to defer expenditures incurred by the utility resulting from its compliance with state government or regulator orders during Wisconsin’s declared public health emergency for COVID-19. On April 20, 2020, Minnesota Power along with other regulated electric and natural gas service providers in Minnesota filed a joint petition to request MPUC authorization to track incremental costs and expenses incurred as a result of the COVID-19 pandemic, and to defer and record such costs as a regulatory asset, subject to recovery in a future proceeding. In an order dated May 22, 2020, the MPUC approved the joint petition requiring the joint petitioners to track cost and revenue impacts resulting from the COVID-19 pandemic with review for recovery in a future rate proceeding. As of June 30, 2021, Minnesota Power has not deferred any costs or lost revenue, and SWL&P has deferred an immaterial amount of costs. Minnesota Power submitted a petition in November 2020 to the MPUC requesting authority to track and record as a regulatory asset lost large industrial customer revenue resulting from the idling of USS Corporation’s Keetac plant and Verso Corporation’s paper mill in Duluth, Minnesota. Keetac and Verso Corporation represent revenue of approximately $30 million annually, net of associated expense savings such as fuel costs. Minnesota Power proposed in this petition to defer any lost revenue related to the idling of the Keetac facility and the Verso Corporation paper mill to its next general rate case or other proceeding for review for recovery by the MPUC. In an order dated May 13, 2021, the MPUC denied Minnesota Power’s request. Fuel Adjustment Clause. In March 2020, Minnesota Power filed its fuel adjustment clause report covering the period July 2018 through December 2019. In a September 2020 order, the MPUC referred the review of Minnesota Power’s forced outage costs during the period of the report, which totaled approximately $8 million, to an administrative law judge for a contested case hearing to recommend to the MPUC if any of those costs should be returned to customers. A recommendation by the administrative law judge is expected in the third quarter of 2021. We cannot predict the outcome of this proceeding. Conservation Improvement Program. On April 1, 2021, Minnesota Power submitted its 2020 consolidated filing detailing Minnesota Power’s CIP program results and requesting a CIP financial incentive of $2.4 million based upon MPUC procedures. CIP financial incentives are recognized in the period in which the MPUC approves the filing. 2021 Integrated Resource Plan. On February 1, 2021, Minnesota Power filed its latest IRP with the MPUC, which outlines its clean-energy transition plans through 2035. These plans include 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 these plans, Minnesota Power anticipates adding approximately 400 MW of new wind and solar energy resources, retiring Boswell Unit 3 by 2030 and transforming Boswell Unit 4 to be coal-free by 2035. Minnesota Power’s plans recognize that advances in technology will play a significant role in completing its transition to carbon-free energy supply, reliably and affordably. A final decision on the IRP is expected in early 2022. NOTE 2. REGULATORY MATTERS (Continued) Nemadji Trail Energy Center. In 2017, Minnesota Power submitted a resource package to the MPUC which included requesting approval of a 250 MW natural gas capacity dedication and other affiliated-interest agreements for NTEC, a proposed 525 MW to 550 MW combined-cycle natural gas-fired generating facility which will be jointly owned by Dairyland Power Cooperative and a subsidiary of ALLETE. Minnesota Power would purchase approximately 50 percent of the facility's output starting in 2025. In a January 2019 order, the MPUC approved Minnesota Power’s request for approval of the NTEC natural gas capacity dedication and other affiliated-interest agreements. In 2019, the Minnesota Court of Appeals reversed and remanded the MPUC’s decision to approve certain affiliated-interest agreements. The MPUC was ordered to determine whether NTEC may have the potential for significant environmental effects and, if so, to prepare an environmental assessment before reassessing the agreements. On January 22, 2020, Minnesota Power filed a petition for further review with the Minnesota Supreme Court requesting that it review and overturn the Minnesota Court of Appeals decision. On April 21, 2021, the Minnesota Supreme Court reversed the Minnesota Court of Appeal’s decision by ruling that the MPUC is not required to conduct a review under the Minnesota Environmental Policy Act before approving affiliated-interest agreements that govern construction and operation of a Wisconsin power plant by a Minnesota utility, and remanded the case back to the Minnesota Court of Appeals for review of remaining issues on appeal. In January 2019, an application for a certificate of public convenience and necessity for NTEC was submitted to the PSCW, which was approved by the PSCW at a hearing in January 2020. 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 ALLETE’s portion is expected to be approximately $350 million. ALLETE’s portion of NTEC project costs incurred through June 30, 2021, is approximately $15 million. Regulatory Assets and Liabilities. Our regulated utility operations are subject to accounting guidance for the effect 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. With the exception of the regulatory asset for Boswell Units 1 and 2 net plant and equipment, no other regulatory assets are currently earning a return. 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. NOTE 2. REGULATORY MATTERS (Continued) Regulatory Assets and Liabilities (Continued)
Regulatory Assets and Liabilities | June 30, 2021 |  | December 31, 2020 |  |
Millions |  |  |  |  |
Non-Current Regulatory Assets |  |  |  |  |
Defined Benefit Pension and Other Postretirement Benefit Plans | $252.0 |  |  | $259.7 |  |  |
Income Taxes | 109.4 |  |  | 113.7 |  |  |
Cost Recovery Riders | 63.2 |  |  | 54.0 |  |  |
Asset Retirement Obligations | 31.4 |  |  | 31.6 |  |  |
Manufactured Gas Plant | 6.0 |  |  | 8.8 |  |  |
Fuel Adjustment Clause | 18.3 |  |  | — |  |  |
PPACA Income Tax Deferral | 4.5 |  |  | 4.5 |  |  |
Boswell Units 1 and 2 Net Plant and Equipment | 2.2 |  |  | 5.0 |  |  |
Other | 4.9 |  |  | 3.6 |  |  |
Total Non-Current Regulatory Assets | $491.9 |  |  | $480.9 |  |  |
Current Regulatory Liabilities (a) |  |  |  |  |
Fuel Adjustment Clause | $3.7 |  |  | $3.7 |  |  |
Transmission Formula Rates Refund | 2.4 |  |  | 2.9 |  |  |
Other | 0.1 |  |  | 1.0 |  |  |
Total Current Regulatory Liabilities | 6.2 |  |  | 7.6 |  |  |
Non-Current Regulatory Liabilities |  |  |  |  |
Income Taxes | 364.5 |  |  | 375.3 |  |  |
Wholesale and Retail Contra AFUDC | 85.1 |  |  | 86.6 |  |  |
Plant Removal Obligations | 45.5 |  |  | 41.2 |  |  |
Defined Benefit Pension and Other Postretirement Benefit Plans | 2.4 |  |  | 4.4 |  |  |
North Dakota Investment Tax Credits | 12.4 |  |  | 12.0 |  |  |
Conservation Improvement Program | 1.3 |  |  | 1.5 |  |  |
Other | 3.7 |  |  | 3.8 |  |  |
Total Non-Current Regulatory Liabilities | 514.9 |  |  | 524.8 |  |  |
Total Regulatory Liabilities | $521.1 |  |  | $532.4 |  |  |
(a)Current regulatory liabilities are presented within Other Current Liabilities on the Consolidated Balance Sheet.
Regulatory Assets and Liabilities [Table Text Block] |
Regulatory Assets and Liabilities | June 30, 2021 |  | December 31, 2020 |  |
Millions |  |  |  |  |
Non-Current Regulatory Assets |  |  |  |  |
Defined Benefit Pension and Other Postretirement Benefit Plans | $252.0 |  |  | $259.7 |  |  |
Income Taxes | 109.4 |  |  | 113.7 |  |  |
Cost Recovery Riders | 63.2 |  |  | 54.0 |  |  |
Asset Retirement Obligations | 31.4 |  |  | 31.6 |  |  |
Manufactured Gas Plant | 6.0 |  |  | 8.8 |  |  |
Fuel Adjustment Clause | 18.3 |  |  | — |  |  |
PPACA Income Tax Deferral | 4.5 |  |  | 4.5 |  |  |
Boswell Units 1 and 2 Net Plant and Equipment | 2.2 |  |  | 5.0 |  |  |
Other | 4.9 |  |  | 3.6 |  |  |
Total Non-Current Regulatory Assets | $491.9 |  |  | $480.9 |  |  |
Current Regulatory Liabilities (a) |  |  |  |  |
Fuel Adjustment Clause | $3.7 |  |  | $3.7 |  |  |
Transmission Formula Rates Refund | 2.4 |  |  | 2.9 |  |  |
Other | 0.1 |  |  | 1.0 |  |  |
Total Current Regulatory Liabilities | 6.2 |  |  | 7.6 |  |  |
Non-Current Regulatory Liabilities |  |  |  |  |
Income Taxes | 364.5 |  |  | 375.3 |  |  |
Wholesale and Retail Contra AFUDC | 85.1 |  |  | 86.6 |  |  |
Plant Removal Obligations | 45.5 |  |  | 41.2 |  |  |
Defined Benefit Pension and Other Postretirement Benefit Plans | 2.4 |  |  | 4.4 |  |  |
North Dakota Investment Tax Credits | 12.4 |  |  | 12.0 |  |  |
Conservation Improvement Program | 1.3 |  |  | 1.5 |  |  |
Other | 3.7 |  |  | 3.8 |  |  |
Total Non-Current Regulatory Liabilities | 514.9 |  |  | 524.8 |  |  |
Total Regulatory Liabilities | $521.1 |  |  | $532.4 |  |  |
(a)Current regulatory liabilities are presented within Other Current Liabilities on the Consolidated Balance Sheet.

X
- Definition The entire disclosure for public utilities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 980 -URI http://asc.fasb.org/topic&trid=2156578 + Details
Name: | us-gaap_PublicUtilitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_RegulatedOperationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for detailed information about regulatory assets and liabilities, including current and noncurrent assets created when regulatory agencies permit the deferral of costs to the balance sheet that would otherwise be required to appear on the company's income statement and would be charged against current expenses or revenues, as well as current and noncurrent liabilities created when regulatory agencies permit. + References No definition available. + Details
Name: | us-gaap_ScheduleOfRegulatoryAssetsAndLiabilitiesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration