ALLETE, Inc. (NYSE:ALE) Q3 2023 Earnings Call Transcript

Alex Mortimer: Make sense. All right. Thank you so much. Congrats again on the quarter and look forward to seeing you all soon.

Bethany Owen: Thanks Alex.

Operator: Thank you. One moment please for the next question. Our next question comes from the line of Brian Russo of Sidoti. Your line is now open.

Brian Russo: Yeah. Good morning.

Bethany Owen: Good morning, Brian.

Brian Russo: Just a follow-up on the RFP process. I assume ALLETE or Minnesota Power has submitted their own self-build options within these RFPs. And I was just wondering if you can remind us of the competitive advantages that you have and have those advantages been even more enhanced given kind of the macro environment issues facing a lot of third-party developers.

Steve Morris: Yeah. Good morning, Brian. It’s Steve Morris. So a couple of comments. So the RFPs have not been issued yet. So that is the solar one mid-November wind in the fourth quarter as well. So Minnesota Power does, in fact, tend to bid for both of these RFPs. We have talked about this on previous conference calls where the solar is regional solar. So we really think that in and around the Basel area where the Minnesota Power has the infrastructure in place. So we feel good about that. Other than that, I am not going to get into too much details on the call.

Brian Russo: Okay. Understood. I suppose that most of these potential RFP investments would be rider eligible and not really have to go through full general rate cases to get time…

Steve Morris: You are right.

Brian Russo: … to recovery?

Steve Morris: Yeah. That’s right. These would be rider projects, Brian.

Brian Russo: Okay. Great. And then also any insight into taconite demand, given what we have seen with the union strikes, the steel prices. I know you guys are or the demands are set through year-end, but I just thought maybe you could comment on that?

Frank Frederickson: Thanks, Brian. Frank Frederickson in here. So we have seen, as you mentioned, the strong nominations this year, since the restart in Northshore Mining and at a partial operation level in April. And we have seen our steel customers have made some commentary recently on terms of the impacts of the United autoworkers strike. We are really, as we look to 2024, we were projecting and filed in our rate case that average level of production right around 35 million tons as just balancing out what we have seen for actuals in 2022 and near final year projections here in 2023.

Brian Russo: Okay. Great. And then on ALLETE Clean Energy, could you just discuss any asset optimization opportunities you might have that could enhance your cash or liquidity position? I think maybe Whitetail and maybe Russell were two kinds of ranking higher on the list for maybe build on transfer or sale, et cetera?

Jeff Scissons: Good morning, Brian. This is Jeff. Yeah. And thank you did highlight two of the projects in our development pipeline, with Whitetail being much further along working on permitting and finding the right offtake. I also highlight that, we do — we call our legacy assets and we do believe that they are prime for repower and redevelopment, so working on those as well.

Brian Russo: Okay. Great. And just on New Energy, given what we have seen in the renewable sector due to the macroeconomic headwinds inflation, higher cost of capital. What are you seeing in what seems to be a rather unique distributed solar market for New Energy? What are you seeing in the competitive landscape or just the operating environment?