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OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended
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Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES | OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Subsequent Events. The Company performed an evaluation of subsequent events for potential recognition and disclosure through the date of the financial statements issuance. 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, 2024, restricted cash amounts included in Prepayments and Other on the Consolidated Balance Sheet include collateral deposits required under an ALLETE Clean Energy loan. The restricted cash amounts included in Other Non-Current Assets represent collateral deposits required under an ALLETE Clean Energy loan agreement 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, 2024 |  | December 31, 2023 |  | September 30, 2023 |  | December 31, 2022
Millions |  |  |  |  |  |  |
Cash and Cash Equivalents | $101.9 |  |  | $71.9 |  |  | $125.5 |  |  | $36.4 |
Restricted Cash included in Prepayments and Other | 6.6 |  |  | 5.1 |  |  | 3.3 |  |  | 1.5 |
Restricted Cash included in Other Non-Current Assets | 2.5 |  |  | 2.4 |  |  | 2.4 |  |  | 2.3 |
Cash, Cash Equivalents and Restricted Cash on the Consolidated Statement of Cash Flows | $111.0 |  |  | $79.4 |  |  | $131.2 |  |  | $40.2 |
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, 2024 |  | December 31, 2023
Millions |  |  |
Fuel (a) | $21.7 |  |  | $27.2 |
Materials and Supplies | 115.5 |  |  | 115.7 |
Renewable Energy Facilities Under Development (b) | 29.4 |  |  | 32.5 |
Total Inventories – Net | $166.6 |  |  | $175.4 |
(a) Fuel consists primarily of coal inventory at Minnesota Power. (b) Renewable Energy Facilities Under Development as of September 30, 2024, consists primarily of project costs related to renewable energy development projects at New Energy. Goodwill. The aggregate carrying amount of goodwill was $154.9 million as of September 30, 2024 ($154.9 million as of December 31, 2023). There have been no changes to goodwill by reportable segment for the quarter and nine months ended September 30, 2024. NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Other Non-Current Assets | September 30, 2024 |  | December 31, 2023
Millions |  |  |
Other Postretirement Benefit Plans | $101.1 |  |  | $106.3 |
Contract Assets (a) | 16.6 |  |  | 18.5 |
Operating Lease Right-of-use Assets | 10.8 |  |  | 10.7 |
ALLETE Properties | 10.4 |  |  | 10.8 |
Restricted Cash | 2.5 |  |  | 2.4 |
Finance Lease Right-of-use Assets | 2.0 |  |  | 2.1 |
Other | 118.3 |  |  | 112.1 |
Total Other Non-Current Assets | $261.7 |  |  | $262.9 |
(a) Contract Assets consist of payments made to customers as an incentive to execute or extend service agreements. The payments are being amortized over the term of the respective agreements as a reduction to revenue.
Other Current Liabilities | September 30, 2024 |  | December 31, 2023
Millions |  |  |
Provision for Interim Rate Refund | $17.0 |  |  | — |
Customer Deposits | 9.2 |  |  | $7.4 |
PSAs | 5.9 |  |  | 6.0 |
Operating Lease Liabilities | 3.4 |  |  | 3.0 |
Finance Lease Liabilities | 0.4 |  |  | 0.4 |
Other | 66.6 |  |  | 75.1 |
Total Other Current Liabilities | $102.5 |  |  | $91.9 |
Other Non-Current Liabilities | September 30, 2024 |  | December 31, 2023
Millions |  |  |
Asset Retirement Obligation (a)(b) | $258.9 |  |  | $202.9 |
PSAs | 16.5 |  |  | 20.9 |
Operating Lease Liabilities | 7.5 |  |  | 7.7 |
Finance Lease Liabilities | 1.4 |  |  | 1.6 |
Other | 30.1 |  |  | 31.2 |
Total Other Non-Current Liabilities | $314.4 |  |  | $264.3 |
(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 $37.2 million in Other Non-Current Assets on the Consolidated Balance Sheet as of September 30, 2024 ($37.2 million as of December 31, 2023). (b)The increase in Asset Retirement Obligation in 2024 reflects the impact of estimated compliance costs related to the EPA’s CCR Legacy Impoundment Rule finalized in May 2024. (See Note 6. Commitments, Guarantees and Contingencies.) NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
| Quarter Ended |  | Nine Months Ended
| September 30, |  | September 30,
Other Income (Expense) | 2024 | 2023 |  | 2024 | 2023
Millions |  |  |  |  |
Pension and Other Postretirement Benefit Plan Non-Service Credits (a) | $3.0 |  | $1.8 |  |  | $11.0 |  | $5.5 |
Interest and Investment Income (b) | 1.2 |  | 6.6 |  |  | 3.9 |  | 8.7 |
AFUDC - Equity | 1.5 |  | 1.1 |  |  | 4.0 |  | 2.5 |
Gain on Arbitration Award (c) | — |  | 58.4 |  |  | — |  | 58.4 |
Other Income (Expense) | (0.2) |  | 0.8 |  |  | 1.1 |  | 0.2 |
Total Other Income | $5.5 |  | $68.7 |  |  | $20.0 |  | $75.3 |
(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.) (b)Interest and Investment Income for the quarter and nine months ended September 30, 2023, reflects $5.1 million of interest income related to interest awarded as part of an arbitration ruling involving a subsidiary of ALLETE Clean Energy. (See Note 6. Commitments, Guarantees, and Contingencies.) (c)This reflects a gain recognized for the favorable outcome of an arbitration ruling involving a subsidiary of ALLETE Clean Energy. (See Note 6. Commitments, Guarantees, and Contingencies.)
| Nine Months Ended
| September 30,
Supplemental Statement of Cash Flows Information | 2024 |  | 2023
Millions |  |  |
Cash Paid for Interest – Net of Amounts Capitalized | $59.5 |  |  | $64.8 |
Cash Paid for Income Taxes – Net | $7.0 |  |  | $14.1 |
Noncash Investing and Financing Activities |  |  |
Increase in Accounts Payable for Capital Additions to Property, Plant and Equipment | $13.5 |  |  | $11.8
Capitalized Asset Retirement Costs (a) | $51.0 |  |  | $2.4 |
AFUDC–Equity | $4.0 |  |  | $2.5 |
(a)Capitalized asset retirement costs in 2024 reflect the impact of estimated compliance costs related to the EPA’s CCR Legacy Impoundment Rule finalized in May 2024. (See Note 6. Commitments, Guarantees and Contingencies.) New Accounting Pronouncements and Disclosure Rules. See Note 1. Operations and Significant Accounting Policies to the Consolidated Financial Statements in our 2023 Form 10-K, with additional disclosure provided in the following paragraphs. SEC Climate-related Disclosures Rule. On March 6, 2024, the SEC issued the final rules regarding the enhancement and standardization of climate-related disclosures for investors (Rule). The Rule requires registrants to provide certain climate-related information in their annual reports and registration statements. These requirements include disclosing climate-related risks that materially affect or are reasonably likely to materially affect a registrant’s business strategy, results of operations, or financial condition as well as certain disclosures related to greenhouse-gas emissions, and the effects of severe weather events and other natural conditions. The Rule provides that the disclosure requirements will begin phasing in for annual periods beginning in 2025. The Company is evaluating the final rule to determine its impact on the Company’s disclosures. The Rule is currently being challenged before the U.S. Court of Appeals for the Eighth Circuit (Eighth Circuit Court), and the SEC issued a voluntary stay of the Rule on April 4, 2024, pending judicial review. NOTE 1. OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Continued) Improvements to Reportable Segment Disclosures. In November 2023, the FASB issued Accounting Standards Update 2023-07, Improvements to Reportable Segment Disclosures (ASU 2023-07). ASU 2023-07 requires that an entity provide enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker, among other disclosures. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and for quarterly periods beginning after December 15, 2024, with early adoption permitted. We have assessed the impact of this updated guidance and expect to provide enhanced disclosures for our segments in our Form 10-K for the year ended December 31, 2024. There are no other new accounting pronouncements or rules that we anticipate having a material effect on the presentation of ALLETE’s consolidated financial statements.

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