Minnesota Power Finalizes Environmental Agreement with EPA

  Minnesota Power Finalizes Environmental Agreement with EPA

Business Wire

DULUTH, Minn. -- July 16, 2014

Minnesota Power, a utility division of ALLETE, Inc. (NYSE: ALE), has reached a
settlement agreement with the Environmental Protection Agency (EPA) and the
Minnesota Pollution Control Agency that resolves alleged violations of the New
Source Review provisions of the Clean Air Act. The agreement does not include
any admission of wrongdoing on the part of the company.

Minnesota Power is one of many utility companies in the U.S. whose investments
in electric generation facilities were reviewed as part of the EPA’s
Coal-Fired Power Plant Enforcement Initiative that began in 1999. The
initiative has resulted in more than 25 related settlements nationwide.

“The company has been in discussions with the EPA since 2008 to settle this
matter to avoid costly litigation, in the best interest of our customers and
other stakeholders,” said ALLETE Senior Vice President, General Counsel and
Secretary Deb Amberg. “We are pleased to have reached a settlement that
recognizes the significant investments we’ve already made to reduce emissions.
It is consistent with our EnergyForward resource strategy to reduce emissions,
diversify our energy mix and advance renewable energy.”

Since 2006, the company has invested or will invest more than $600 million to
reduce sulfur dioxide, nitrogen oxide, mercury and particulate matter
emissions at its thermal generation facilities. Retrofits to comply with state
and federal regulations at its two largest units – Boswell 3 and Boswell 4 –
will result in a 90 percent reduction in mercury emissions. Many of the
emission control measures were implemented during the six year discussions to
resolve the Notice of Violation (NOV).

“As a regulated utility providing an essential service, we must always take a
long-range planning view to meet our electric customers’ needs in the most
cost-competitive and reliable manner,” said Al Rudeck, Minnesota Power Vice
President of Strategy and Planning.

As part of its EnergyForward strategy toward achieving a diversified and more
flexible energy mix, the company has secured 600 megawatts of new wind
capacity, dramatically growing its carbon emission-free renewable portfolio.
By the end of 2014, Minnesota Power will be positioned to meet Minnesota’s
renewable standard of 25 percent by 2025 -- more than a decade earlier than
required by law.

The settlement agreement covers Minnesota Power’s Boswell, Laskin, Taconite
Harbor and Rapids Energy Centers and includes more stringent emissions limits
than in current air permits at all affected units, and the option of
refueling, retrofits and retirements at some units. It also includes the
addition of 200 megawatts of wind energy. Minnesota Power will also spend $4.2
million over the next five years in conservation and clean energy projects
benefitting local communities, which could potentially include a forest
restoration project, an electric car charging station in northeastern
Minnesota and a 1 megawatt solar installation on Fond du Lac Band of Lake
Superior Chippewa property. Under the terms of the settlement, the company
will also pay a $1.4 million civil penalty. In the second quarter of 2014,
ALLETE recorded an after-tax expense of $2.5 million, or $0.06 per share, to
reflecta liability associated with the conservation and clean energy
projects. Due to its non-recurring nature, the expense will be excluded from
2014 earnings guidance. A liability for the civil penalty was recognized in
2013.

In August 2008, and April 2011, Minnesota Power received NOVs from the EPA
alleging that Minnesota Power made past modifications at its Boswell, Laskin
and Rapids Energy Centers between 1981 and 2005 without following appropriate
pre-construction review and permitting (New Source Review) requirements.

While Minnesota Power believes the projects specified in the NOVs were in full
compliance with the Clean Air Act, NSR requirements and applicable permits, it
entered into the settlement agreement to avoid unnecessary costs and delays
associated with litigation. Settlement negotiations resulted in a consent
decree filed with the U.S. District Court for the District of Minnesota.
Before it will be effective, the settlement must be approved by the Court
after a 30-day public comment period.

Minnesota Power provides electric service within a 26,000-square-mile area in
northeastern Minnesota, supporting comfort, security and quality of life for
144,000 customers, 16 municipalities and some of the largest industrial
customers in the United States. More information can be found at
www.mnpower.com.

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.

Contact:

Minnesota Power/ALLETE
Amy Rutledge, 218-723-7400
Manager - Corporate Communications
arutledge@mnpower.com
 
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