ALLETE, Inc. (NYSE: ALE) on Wednesday reported second quarter 2020 earnings of 39 cents per share on net income of $20.1 million. Last year’s results were 66 cents per share on net income of $34.2 million. Results during Q2 included a 16 cent per share charge for the recent Minnesota Power rate case resolution. Results in the second quarter of 2019 included 2 cents per share of a U.S. Water Services gain on sale adjustment.
“We’re proud of the resourcefulness demonstrated in our ability to provide essential quality of life services while delivering a fair level of financial results even against the challenging backdrop of the COVID-19 pandemic,” ALLETE President and CEO Bethany Owen said in the quarterly report.
ALLETE’s Regulated Operations segment, which includes Minnesota Power, Superior Water, Light and Power and the company’s investment in the American Transmission Co., recorded net income of $11.1 million compared with $30.3 million in the second quarter of 2019. Earnings reflect lower net income at Minnesota Power primarily due to the rate case settlement, lower kilowatt-hour sales to commercial and industrial customers due to COVID-19 impacts, lower sales to municipal customers and other power suppliers due to the expiration of related contracts, and timing impacts of fuel adjustment clause recoveries, the corporation said. These decreases were partially offset by lower operating and maintenance expense, higher sales to residential customers and higher equity earnings in the American Transmission Co.
ALLETE Clean Energy recorded second quarter 2020 net income of $4.0 million compared to $1.9 million in 2019. Net income in 2020 reflects additional production tax credits and earnings from the new Glen Ullin and South Peak wind energy facilities, partially offset by higher depreciation expense.
Corporate and other businesses, which include BNI Energy and ALLETE Properties, recorded net income of $5.0 million in 2020 compared to net income of $2 million in 2019. Net income in 2020 included higher earnings from marketable equity securities held in certain benefit trusts and additional income tax benefit which varies quarter to quarter based on an estimated annual effective tax rate. Net income in 2019 included a gain on the sale of U.S. Water Services adjustment of $1.2 million after-tax.
“Although results for the quarter reflect obvious negative economic impacts of the COVID-19 pandemic, on a year to date comparison, our financial results are similar to those in 2019, excluding the second quarter rate case resolution impact,” said ALLETE Senior Vice President and Chief Financial Officer Bob Adams. “With constructive indications of improving production from Minnesota Power’s industrial customers, ALLETE’s 2020 annual adjusted earnings guidance (non-GAAP) is expected to be in the range of $3.25 to $3.45 per share, excluding the 16 cent per share charge related to the Minnesota Power rate case resolution, net of tax. This guidance reflects year to date results along with several expectations and assumptions into the end of the year. These primarily include, lower power demands related to taconite and paper customers that remain idled, and lower kilowatt-hour sales to commercial, industrial and municipal customers, both due to the impacts of the COVID-19 pandemic, offset by lower operating and maintenance expense.”