) Minnesota Power division divulged its plans for a balanced
energy portfolio to meet the rising demand for power in the U.S.
The strategy known as Energy
will focus on delivering clean, sustainable, affordable and
reliable energy services to the residents of Minnesota.
The driving factor behind the Energy
scheme is the gradual shift in the U.S. energy policy which is
expected to lean towards eco-friendly power generation in the
years ahead. Other motivations include technological upgrades,
broad economic fundamentals as well as stakeholders'
Under the plan, ALLETE will engage in renewable investments,
energy conservation projects and modernization of existing
facilities to make them emission-free. In addition, the company
will take upon the task of converting its small coal units to
natural gas fired parks thereby making more room for natural gas
resources in its asset basket. Its energy mix will comprise of
one-third renewables and one-third coal as well as natural
Current Renewable Activities
ALLETE's ongoing renewable projects are expected to provide a
significant jumpstart to its Energy
plan. Chief among these is the Bison Wind project in North Dakota
which completed three phases and is supplying over 400 megawatts
("MW") of wind energy. In addition, the company inked a deal with
Manitoba Hydro for the development of a 250 MW Hydroelectric
project to be concluded in 2020.
ALLETE intends to supply carbon-free energy through a proposed
500-Kilovolt transmission line spanning from the Canadian border
to northeastern Minnesota. The line is expected to be operational
by 2020. Other activities lined up are plans for upgrading the
company's largest hydro systems which include the Thomson and
Fond du Lac units as well as the continuation of its
Power of One
initiative, which proved successful in providing lower energy
usage to customers.
The prospects from wind energy look encouraging given ALLETE's
20% growth in wind generation in 2012 compared with a 5% increase
in 2005. Furthermore, the extension of the wind production tax
credits will give an impetus to the company to participate more
in wind initiatives.
Coal and Natural Gas Ventures
With increasing pressure from the environmental body, ALLETE
was compelled to arrive at a decision to refuel and replace
one-third of its coal-fired units. These include the transition
of the Laskin Energy Center in Hoyt Lakes to a natural gas
peaking unit which involves investment of $15 million and the
retirement of one of the units at Minnesota Power's 225 MW
Taconite Harbor facility in Schroeder.
The total changeover for the Laskin park is expected to be
completed by 2015 and will become ALLETE's first all-natural gas
fired facility. Units 1 and 2 of the Taconite plant will keep
running as these fulfilled environmental requisites. The measures
are anticipated to contribute to cost effectiveness for the
company. ALLETE aims to make further additions to natural gas
resources by 2020.
However, the company's proposals are subject to regulatory
approvals by the Minnesota Public Utilities Commission. It plans
to file a tender for the Integrated Resource Plan, which is a
part of Energy
, on Mar 1, 2013. The company expects a ruling by the end of the
In response to the Mercury Air Toxics Standard (MATS) and
Mercury Emission Reduction Act, Minnesota Power will make
investments of $350 million for the purpose of upgrading its
Boswell Energy Center Unit 4 to meet environmental standards.
This will lead to cutback in mercury emissions by 90% and
system-wide emission reduction of 85% by 2016.
We appreciate ALLETE's concerted initiatives in boosting its
renewable business. With an estimated 3.6% rise in renewable
consumption in 2013 in the U.S. as per Energy Information
Administration (EIA), we believe these strategic endeavors will
keep the growth momentum strong for ALLETE.
However, unplanned outages and price sensitivities are risks
that could thwart development opportunities. Presently, ALLETE
carries a Zacks Rank #3 (Hold).
Other utility stocks aggressively pushing for green energy
NextEra Energy Inc.
Dominion Resources Inc.
Based in Duluth, MN, ALLETE through its subsidiaries primarily
engages in the generation, transmission, and distribution of
coal-fired, hydro, wind, and biomass co-fired power in the United
ALLETE INC (ALE): Free Stock Analysis Report
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