ALLETE, Inc. Reports First Quarter 2018 Earnings of 99 Cents Per Share

ALLETE, Inc. (NYSE: ALE) today reported first quarter 2018 earnings of
99 cents per share on net income of $51.0 million and operating revenue
of $358.2 million. Last year’s results were 97 cents per share on net
income of $49.0 million and operating revenue of $365.6 million.

“Our multifaceted growth strategy is evidenced in our financial results
for the quarter, and overall the results are in-line with our
expectations; our full-year earnings guidance range and expected
contribution ranges from our Regulated Operations segment, and Energy
Infrastructure and Related Services businesses and Corporate and Other
operations remain unchanged. ALLETE has delivered on growth initiatives
this quarter” said ALLETE Chairman, President and CEO Al Hodnik. “And we
are well positioned with ALLETE’s family of businesses to answer the
call for cleaner energy forms and water conservation, while creating
additional value for our shareholders.”

ALLETE’s Regulated Operations segment, which includes Minnesota Power,
Superior Water, Light and Power (SWL&P) and the Company’s investment in
the American Transmission Co. (ATC), recorded net income of $43.9
million, compared to $43.5 million in the first quarter a year ago.
Earnings reflect lower net income at Minnesota Power resulting from
reserves for an interim rate refund, discounts provided to
Energy-Intensive Trade-Exposed customers, lower transmission revenue and
higher property taxes. These declines were offset by lower depreciation
expense due to timing of the Minnesota Public Utilities Commission’s
decision to modify the Boswell Units 3 and 4 and common facilities
depreciable lives, lower operating and maintenance expense, higher sales
to industrial customers due to the start-up of Keewatin Taconite in
March 2017, and higher sales to residential customers due to colder
weather. Minnesota Power and the Minnesota Department of Commerce
separately requested reconsideration on rate case decision points that,
if granted, will impact 2018 revenue and expense. Net income at SWL&P
increased over last year due to the implementation of new rates
effective in August 2017 and higher sales attributable to colder
weather, while equity earnings from ATC were similar to last year.

ALLETE’s Energy Infrastructure and Related Services businesses, which
include ALLETE Clean Energy and U.S. Water Services, recorded net income
of $8.1 million and a net loss of $1.4 million in 2018, respectively.
Earnings at ALLETE Clean Energy increased $1.4 million, or 21 percent,
from 2017 primarily due to a lower federal income tax rate and
production tax credits generated by its ongoing wind turbine
refurbishment strategy. The net loss at U.S. Water Services increased
$1.1 million due to higher operating expenses, which were partially
offset by increased equipment revenue. Revenue increased 19 percent
primarily due to the September 2017 acquisition of Tonka Water; however,
revenue was negatively impacted by lower than expected equipment sales
due to timing of shipments, as well as colder weather which reduced
chemical sales. Earnings at U.S. Water Services reflect results from
selling certain products that are seasonal in nature, with higher demand
typically realized in warmer months.

Corporate and Other, which includes BNI Energy and ALLETE Properties,
recorded net income of $0.4 million for the quarter, compared to a net
loss of $0.9 million in 2017. The increase in 2018 reflects higher land
sales at ALLETE Properties and lower interest expense.

Earnings per share for the quarter was diluted by 2 cents due to
additional shares of common stock outstanding as of March 31, 2018.

ALLETE will host a conference call and webcast at 10 a.m. Eastern Time
this morning to discuss details of its financial performance. Interested
parties may listen live by calling (877) 303-5852, or by accessing the
webcast at www.allete.com.
A replay of the call will be available through May 6, 2018 by calling
(855) 859-2056, pass code 2193327. The webcast will be accessible for
one year at www.allete.com.

ALLETE is an energy company headquartered in Duluth, Minn. In addition
to its electric utilities, Minnesota Power and Superior Water, Light and
Power of Wisconsin, ALLETE owns ALLETE Clean Energy, based in Duluth,
BNI Energy in Bismarck, N.D., U.S. Water Services headquartered in St.
Michael, Minn., and has an eight percent equity interest in the American
Transmission Co. More information about ALLETE is available at www.allete.com.
ALE-CORP

The statements contained in this release and statements that ALLETE
may make orally in connection with this release that are not historical
facts, are forward-looking statements. Actual results may differ
materially from those projected in the forward-looking statements. These
forward-looking statements involve risks and uncertainties and investors
are directed to the risks discussed in documents filed by ALLETE with
the Securities and Exchange Commission.

ALLETE's press releases and other communications may include certain
non-Generally Accepted Accounting Principles (GAAP) financial measures.
A “non-GAAP financial measure” is defined as a numerical measure of a
company's financial performance, financial position or cash flows that
excludes (or includes) amounts that are included in (or excluded from)
the most directly comparable measure calculated and presented in
accordance with GAAP in the company's financial statements.

Non-GAAP financial measures utilized by the Company include
presentations of earnings (loss) per share. ALLETE's management believes
that these non-GAAP financial measures provide useful information to
investors by removing the effect of variances in GAAP reported results
of operations that are not indicative of changes in the fundamental
earnings power of the Company's operations. Management believes that the
presentation of the non-GAAP financial measures is appropriate and
enables investors and analysts to more accurately compare the company's
ongoing financial performance over the periods presented.

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