ALLETE'S CEO Discusses Q4 2013 Results - Earnings Call Transcript

Feb.14.14 | About: ALLETE, Inc. (ALE)

ALLETE, Inc. (NYSE:ALE)

Q4 2013 Results Earnings Conference Call

February 14, 2014 10:00 AM ET

Executives

Al Hodnik - President and CEO

Mark Schober - Chief Financial Officer

Steve DeVinck - Controller, VP of Business Support

Analysts

Paul Ridzon - KeyBanc

Bernard Horn - Polaris

Brian Russo - Ladenburg Thalmann

Chris Ellinghaus - Williams Capital

Operator

Good day and welcome to the ALLETE Fourth Quarter 2013 Financial Results Conference Call. Today’s call is being recorded.

Certain statements contained in this conference call that are not descriptions of historical facts are forward-looking statements, such as terms defined in the Private Securities Litigation Reform Act of 1995. Because such statements can include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.

Factors that could cause results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, those discussed in filings made by the company with the Securities and Exchange Commission.

Many of the factors that will determine the company’s future results are beyond the ability of management to control or predict. Listeners should not place undue reliance on forward-looking statements, which reflect management's views only as the date hereof. The company undertakes no obligation to revise or update [any] forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events, or otherwise.

For opening remarks and introductions, I’d now like to turn the call over to ALLETE President and Chief Executive Officer, Al Hodnik. Please go ahead.

Al Hodnik

Well thank you and good morning everyone. Joining me today are Mark Schober, ALLETE's current Chief Financial Officer and Steve DeVinck who will become ALLETE’s Chief Financial Officer in March. Steve is seasoned veteran and brings the wealth of business expertise, financial acumen and leadership skills to the CFO role. The transition has been very thoughtful and orderly which is an ALLETE hallmark and a testament I think to the type of individuals Steve and Mark are.

Before getting into our year-end results I wish to recognize Mark Schober who’ll be retiring in the later spring. Mark has left and indelible mark on both the financial health and corporate culture of ALLETE to his leadership, integrity and strategic positioning. His career [expand] the days when the company will be pure play electric utility through active execution of ALLETE’s high successful diversification strategy and into this era where ALLETE is now wholly focused on energy. To at all Mark navigated challenges, championed opportunities and has been an outstanding leader of his team of employees all to the continued success of our company and its shareholder.

Mark your leadership of audit, finance, accounting and Investor Relations over the past 7 years as CFO and in support to me as I transitioned to CEO several years ago was and is very much appreciated by the ALLETE’s Board and by me. As your planned retirement draws nearing the spring I wish for many happy adventures on the trails ahead. This morning we released our year end financial results and I am pleased to reporting that in 2013 ALLETE earned $2.63 per share. As we indicated in our press release the 2013 results include about $1 million after tax or $0.03 per share of acquisition costs related to the recent ALLETE Clean Energy purchase of three wind generating facilities.

I will ask mark to give you the financial details in a moment, but before he does let me say that I am very well pleased with our 2013 financial and operational performance. ALLETE achieves a number of significant milestones during 2013 and they are very important landmarks as we execute our multiyear and multifaceted strategy designed to grow earnings and deliver a solid return on new investment in our company.

In the past year, we unveiled our energy strategy which we call Energy Forward. The plan provides the foundation for various capital investments we will be making related to environmental upgrades renewable energy and transmissions reliability. Our Energy Forward initiatives were included in the Minnesota Power 2013 integrated resource plan that was approved by the Minnesota Public Utilities Commission in November.

Also in 2013, we announced our plans to build the 205 megawatt Bison 4 wind facility in North Dakota. This $345 million expansion is part of our Energy Forward vision and construction has already commenced. We anticipate it would be in service by the end of this year.

Additionally the Minnesota Public Utilities Commission approved our environmental upgrade proposal for the Boswell Unit 4 generating station. Work continues on this $310 million project with an anticipated completion date in early 2016. On the transmission infrastructure front, Minnesota Power filed a certificated need with the Minnesota Public Utilities Commission for the approximately 240 mile 500kV Great Northern Transmission Line. This international transmission line will be used to carry renewable hydroelectric power from Manitoba Hydro to Minnesota Power’s service territory in the Iron Range.

Minnesota Power’s capital expenditures for this project are expected to be approximately 51% of the total project cost of the U.S. portion of the line. We expect to invest about $300 million, depending on the final route of this mine. A couple of weeks ago, we announced the completion of a transaction in the ALLETE Clean Energy acquired 231 megawatts of wind generation at three facilities.

This acquisition establishes an important foundation upon which ALLETE Clean Energy can build while positioning ACE in new markets. Lastly, Minnesota Power and Boise recently finalized an amendment Boise’s electric service agreement which extends that contract by a full 10 years or through 2023. Boise was recently acquired by Packaging Corporation of America, PCA like other paper makers in the U.S. recently shed less efficient operating capacity at the Boise mill. The Boise mill is however now very well positioned to compete in both the packaging and office paper market.

It was an active and very successful year for our company. We believe the milestones achieved help set the stage for future growth at ALLETE. Our Board of Directors’ recent action to increase the common stock dividend reflects its confidence in our financial outlook going forward.

At this time, I will turn the call over to Mark Schober for the financial wrap up and then Steve DeVinck will make some comments about our expectations for 2014. I will have some concluding comments before we take your questions. Mark?

Mark Schober

Thanks Al and thank you very much very for the nice comments. Good morning everyone. I would like to remind you that we filed our 10-K this morning and I encourage you to refer to it for more details on our 2013 results.

For the year, ALLETE earned $2.63 per share, a net income of about $105 million and operating revenue of a little over $1 billion compared to $2.58 per share, a net income of $97 million and operating revenue of $961 million in 2012.

As Al mentioned earlier, included in the 2013 results are $1 million or $0.03 per share of after tax cost related to ALLETE Clean Energy’s acquisition of three wind firms. Income from ALLETE's regulated operation segment, which includes Minnesota Power, Superior Water, Light & Power, and our investment in the American Transmission Company was $105 million in 2013 compared to $96 million in 2012.

Operating revenue for this segment increased $51 million or 6% from 2012, primarily due to a 1.2% increase in total regulated utility kilowatt hour sales and higher fuel adjustment clause recoveries. Transmission, cost recovery rider, gas and municipal revenues were also up.

Fuel adjustment clause recoveries were $14 million more than last year, due to higher fuel and purchase power costs attributable to our retail and municipal customers. Transmission revenue rose $6 million, primarily due to recovery of our transmission system upgrade to support Essar’s project and higher MISO revenue related to our investment in CapEx 2020 projects.

Cost recovery rider revenues increased $5 million, primarily due to higher capital expenditures related to our Bison Wind Energy Centers, CapEx 2020 projects and the Boswell unit 4 environmental upgrades. Revenue from gas sales at Superior Water, Light & Power grew by $5 million due to colder weather in 2013 and also from higher purchase gas expenses.

Revenue from our municipal customers rose $4 million from 2012 as a result of higher rates under the cost based methodology due to higher capital expenditures as well as the annual true up the actual cost. Total regulated utility kilowatt hour sales were up 1.2% over last year, resulting in a $14 million revenue increase.

Kilowatt hour sales to other power suppliers increased 14%, but sales to industrial customer decreased 2.2% from 2012, primarily due to a 2012 short-term fixed price contract. Heating degree days in Duluth were approximately 22% higher in 2013 than in 2012.

I will now highlight a few items on the expense side of the business. Regulated operating and maintenance expense increased $12 million or 4% from 2012, primarily due to higher property tax expenses as a result of higher taxable plant and mill rates; higher MISO transmission expenses and higher operating and maintenance expenses related to our Bison Wind Energy Center which was on service all of 2013.

Purchased gas expenses increased due to higher sales and prices at Superior Water, Light and Power in 2013 as heating degree days in 2013 were higher than in 2012. Fuel and purchase power expense rose $26 million or 8% from 2012, primarily due to higher company generation and higher purchase power prices. A scheduled major outage in 2013 increased cost under the Square Butte purchase power contract.

Depreciation expense increased $16 million or 17% from 2012 and interest expense was up $2 million attributable to the significant capital investment program at our Regulated Operations. Earnings from our investment in ATC were slightly higher than in 2012. Income tax expense decreased $14 million from 2012, primarily due to higher federal production tax credits in 2013 related to the Bison Wind Energy Center.

ALLETE’s investment in other segments which includes results from BNI Coal, ALLETE Properties, ALLETE Clean Energy and other corporate income and expenditures reported a slight loss of $200,000 in 2013 compared to net income of $1 million in 2012.

Included in the results for 2013 were acquisition costs of $1 million after tax associated with the ALLETE Clean Energy acquisition of wind farms in Minnesota, Iowa and Oregon. Excluding these expenses, the segment recorded similar earnings year-over-year. Our effective tax rate in 2013 was 21.5%, compared to 28.1% in 2012, primarily from increased federal production tax credits related to additional wind generation during 2013. Earnings per share for 2013 were diluted by $0.15 due to the issuance of common shares to fund investments in renewable energy, environmental upgrade and energy transmission infrastructure.

In summary, we’re very satisfied with our financial results in 2013. ALLETE generated approximately $240 million in cash from operating activities and ended the year with cash and cash equivalents of around $97 million and carried a 45% debt to capital ratio.

I would like to turn the call over to Steve DeVinck who will provide some details regarding our 2014 financial expectations. Steve?

Steve DeVinck

Thank you Mark and good morning everybody. In December, we initiated our 2014 earnings guidance at a range of $2.75 to $2.95 per share, a net income of $120 million to $130 million. This guidance excludes any acquisition costs related to the ALLETE Clean Energy wind facility’s purchase that closed in January. The midpoint of our 2014 earnings guidance would represent year-over-year earnings per share growth of 8% and net income growth of 19%. With regard to 2014 revenue, we anticipate higher cost recovery revenue as a result of our Bison 4 and Boswell Unit 4 projects as well as our continued participation in CapEx 2020 transmission projects. Our planned capital expenditures for 2014 are $640 million and of that amount about $430 million is expected to qualify for current cost recovery treatment.

In addition, we expect the continuation of strong electricity sales to our current industrial customers. As we have previously indicated, Essar has stated they expect their operations to begin ramping up early 2015. Therefore, we do not anticipate any material electric sales to Essar in 2014.

We also expect increased power marketing sales in 2014 as we begin to sell a portion of our output from Square Butte to Minnkota Power Cooperative under a power sales agreement reached in connection with the 2009 purchase of the 465 mile DC transmission line from North Dakota to Duluth.

On the expense side, operating and maintenance expense will be higher in 2014, primarily due to increased transmission expense in property taxes as well as the addition of operating cost related to the ALLETE Clean Energy acquisition. The majority of the increase in transmission expense will be offset by higher transmission revenue.

Operating and maintenance expenses will also grow in 2014 due to general inflationary increases in labor, maintenance and material expenses. Depreciation and interest expenses will also be higher this year, resulting from the recent capital additions we’ve made.

You may recall that late last year we agreed to sell $250 million in bonds in the private placement market at favorable rates. The bonds are schedule to be issued in March and June. We also expect earnings per share dilution of between $0.25 and $0.35 due to share issuances in 2013 and 2014 to fund our capital expenditure program.

We generally expect earnings performance from BNI Coal in ALLETE properties to be similar in 2014 compared to 2013. This guidance does not include an assumption of any material land sales at ALLETE properties. Because of federal production tax credits relating to our wind generation we forecasted 2014 effective tax rate of about 22%.

I would like to close my remarks by saying we are very pleased about Moody’s recent upgrade of ALLETE’s credit rating to A3 reflecting a more favorable view of the relative credit supportiveness of the U.S. regulatory framework. Al?

Al Hodnik

Thank you Steve. ALLETE is an energy company executing a strategy that provides for multiyear multifaceted earnings growth opportunities that stretch through the end of this decade. In my opinion these opportunities differentiate our company from other within the industry. We have already mentioned our various capital investment projects, so I would like to give you some update on organic sales our top-line growth prospects within our service territory. Let me begin with PolyMet which is the first planned copper, nickel and precious metals mining operation in Minnesota Power’s service territory. PolyMet’s long awaited Supplemental Draft Environmental Impact Statement was released in December. The SDEIS addresses environmental issues that are key to the mine site development.

The release triggered a 90 day public comment period and the three scheduled public meetings have been completed. Assuming successful completion of the SDEIS process permits could be issued during the latter part of this year. Construction could commence immediately upon issuance of permits and Minnesota Power could begin to supply between 45 and 50 megawatts of load initially as early as 2016; this to a 10 year power supply contract that would begin at the startup of mining operation.

Construction progress continues at the Essar Steel Minnesota taconite facility in Nashwauk Minnesota. Essar is a customer of the Nashwauk Public Utilities Commission with which Minnesota Power has an electric sales contract that is effective through June of 2024. This facility will result in up to 110 megawatts of new additional load to Minnesota Power. Essar has indicated plans for start-up the early 2015 and they move towards full production capacity levels during 2015. Essar already has a 10 year pellet off-take agreement to supply ArcelorMittal with between 3 million and 4 million tones of pellets annually beginning with the Essar start-up in 2015.

Also under construction is Magnetation’s newest iron concentrate facility near, Coleraine, Minnesota. Magnetation which produces iron ore concentrate from low grade natural tailings basins already mined stockpiles and newly mined iron formation already has two other facilities that consume about 15 megawatts of power from Minnesota Power. Production at their newest facility is expected to commence by the end of this year and we will supply it with about 20 megawatts of power. I am pleased to announce that Magnetation has just signed a 10 year oil requirements large power contract with Minnesota Power, the first new large power customer in 7 years.

We are very excited about these new projects and the production for scale others such as a direct reduced iron and/or steel mill at the Essar site, additional facilities for Magnetation and other copper nickel and precious metal mines and mineral rich at our Eastern Minnesota. These opportunities, combined with additional potential regulated capital and energy centric investments truly make ALLETE a unique company now and going forward.

At this time, I will ask the operator to open up the lines for your questions.

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from the line of Paul Ridzon from KeyBanc.

Paul Ridzon - KeyBanc

Good morning.

Steve DeVinck

Good morning Paul.

Al Hodnik

Good morning, Paul.

Paul Ridzon - KeyBanc

When you purchased the wind assets at ACE, I think you had an option on more turbines, what’s the status of that option and when to be exercise it?

Steve DeVinck

What you are referring to Paul is the Pennsylvania assets that we can take that option exists and that will be a 2015 event, so that’s something we will be looking at, as we move into early 2015. So nothing has changed since the last time we met.

Paul Ridzon - KeyBanc

Okay, thank you very much.

Al Hodnik

Thanks Paul.

Operator

Thank you. And our next question comes from the line of Bernard Horn from Polaris.

Bernard Horn - Polaris

Good morning.

Al Hodnik

Good morning.

Steve DeVinck

Good morning.

Bernard Horn - Polaris

Just a quick question. I noticed on the kilowatt hours sold to year-over-year in the fourth quarter was down slightly. And I am curious obviously it’s been a very cold winter. I assume it’s been that way as well. So I am wondering if you might comment on either heating degree days. And secondly I am also noticing that on the operating income level, if you look at the percentage of our operating income to sales, it declined in the fourth quarter and for the year. And I am just wondering if you might comment on what’s going on there are you possibly having the payout for purchase power in the spot market while you don’t have the pass throughs yet in the revenue line? Those two questions.

Mark Schober

Bernie, this is Mark, I’ll touch first on the kilowatt hours sold. So, if you look at the quarter, you are correct, total kilowatt hour sales are down, but to look at our residential, our commercial, they’re up a bit and those are the ones that are weather sensitive. So, we did experience a colder or a more normal Q4 in 2013 versus what we did in 2012. The total sales are down and that’s primarily in the industrial and that’s the contract I referred to that was a one-time contract but not one of our larger power customers that took some energy last year that did not take energy in 2013. So, that’s the primary driver in the decrease in kilowatt hour sales.

As far as operating income, I don’t think there is anything unusual in the quarter. As I mentioned, if you look at it in total, there is some ACE expenditures that are in thee that maybe driving it a little bit. Our fuel and purchase power expenses are up and those deferred and we match those as we run them -- those incremental costs through to our customers. So there's really nothing unusual in the quarter that jumps all at me.

Bernard Horn - Polaris

Okay, thanks. That’s all I had.

Al Hodnik

Thanks

Operator

Thank you. And our next question comes from the line of Brian Russo from Ladenburg Thalmann.

Brian Russo - Ladenburg Thalmann

Hi, good morning.

Al Hodnik

Good morning Brian.

Brian Russo - Ladenburg Thalmann

Just in the 10-K, you indicated property sale of 293 acres for a total of $4.4 million of revenue, could you just elaborate a little bit on that?

Al Hodnik

Yes, we’ve talked a little bit about that already when we closed the Q3 plan. So, that was the land that we sold obviously down in Florida for a bit of a gain. So, it’s one of those indicators that the market is starting to pick up. So, we continue to see people looking more activity at our preprimary site down in Florida and hopefully that will continue into 2014. So, the sale that we had is at that margins that we expected and that margins that we had back in the early 2000 when before we had the run up in prices in 2006, 2007, 2008, 2009.

Brian Russo - Ladenburg Thalmann

Okay. So, was that up some sort of multiple to book value?

Mark Schober

Yes, it’s typical, while we sell our real estate down there in the past that it’s multiples of 2 to 4 times book. Yes.

Brian Russo - Ladenburg Thalmann

2 to 4 times book. Okay, great. And then could you also talk about ALLETE Clean Energy’s positioning in the DC corridor between North Dakota and Minnesota and maybe your ability to get involved in the infrastructure build out in the Bakken?

Al Hodnik

This is Al, Brian. Yes, we continue to work closely with the state of North Dakota of course on the sort of notion of permitting that entire corridor for a multipurpose sort of energy pipeline and energy delivery thesis. We continue to also try to talk and work with other partners out there. Our company’s had a rich history of partnering with people not only in North Dakota, but in energy in general. And so at this point in time, it’s sort of still background work that we’re doing and certainly the Bakken continues to of course discover more gas and certainly the railroad issues in and out of the Bakken with trendy [realms] by the Burlington Northern and whatever else, they certainly caught attention. And so we continue to work on it, we don’t have anything specifically more to talk about directly with you right now. But ALLETE Clean Energy continues to work very diligently on it.

Brian Russo - Ladenburg Thalmann

Okay. So you use the DC line that moves from North Dakota and wind into Minnesota. You also have the rights of ways that you could conceptually lay pipe next to that line, is that accurate?

Al Hodnik

We have right away that the line sits on right now that’s regulated asset of Minnesota Powers. Our thesis is to expand that right away acquiring additional land, work with the North Dakota Public Service Commission to have that right away on designated sort of route of choice if you will for multiple energy watts if you will or multiple pipelines gas, oil or perhaps carbonate one day, who knows what else. But again it’s declared by the PSC as a more if you go out, suitable right away for multiple use, reduce land owner fatigue, reducing multiple permitting process and so on and so forth. So, we would acquire additional land along in additional or existing right away, the whole idea of co-location if you will, putting everything in sort of one area that is already if you will designated as an energy corridor broadly.

Brian Russo - Ladenburg Thalmann

Okay, great. And then the 101MW Armenia Mountain wind project, that you have the option to purchase in June of 2015, should we assume like a similar price to the recent week concluded wind asset acquisitions?

Mark Schober

Probably not. As we look at the Armenia Mountain acquisition that’s a newer asset in a different market, so that’s something that’s under negotiation. So, the pricing in that will be a bit different than the three wind farms we already took.

Brian Russo - Ladenburg Thalmann

Okay, probably something higher than that?

Mark Schober

Probably, yes.

Brian Russo - Ladenburg Thalmann

Yes, okay. And then lastly, just any outlook on the demand nominations, you were at 100% through April of this year, but just any anecdotal evidence that we should feel comfortable with the 100% demand nominations throughout 2014?

Al Hodnik

Well, of course, it’ll also be made on March 1 for the summer months. But at this point Brian, we’re really not seeing anything, both locally here or natural in the U.S. that would suggest it would be anything less than sort of full nominations on both the paper side and also on the manual side. And certainly auto demand, steel, appliance, rebound in housing that all bode well for additional steel consumption in the U.S. And of course Minnesota TechNet all stays primarily U.S. So, we see prospects for a strong operating summer for our large industrials.

Brian Russo - Ladenburg Thalmann

Okay great. Thank you very much. And best of luck Mark.

Mark Schober

Okay. Thanks Brian.

Al Hodnik

Thank you, Brian.

Operator

Thank you. (Operator Instructions). Our next question comes from the line of Chris Ellinghaus from Williams Capital.

Chris Ellinghaus - Williams Capital

Hey guys, how are you?

Al Hodnik

Hey Chris.

Chris Ellinghaus - Williams Capital

Congratulations on the retirement, Mark, we’ll miss you.

Mark Schober

Thank you.

Chris Ellinghaus - Williams Capital

Not that much. Don’t get too excited.

Mark Schober

That sounds fun like a Chris I know.

Chris Ellinghaus - Williams Capital

There you go. Can you give us a little flavor for real state; you had some sales in the year. What kind of results real estate put out in ‘13?

Mark Schober

Yes. As we look at real estate, they came in pretty much as we expected. So they came in at a lot, or million $2 million, $2 million to $3 million and that's really what we anticipate going into next year. So, we continue as I mentioned already, to see increase in the traffic down there. We are optimistic that we’ll be able to close some transactions next year, but we are not anticipating anything significant. So, as Steve went through, the 24 expectations there is no material land sales in there.

So again I’d continue to get more comfortable with the business. There are more activities, there is more focus on-site. But hopefully we’ll close more. So, we’ll continue to update you Chris as we go quarter-to-quarter on the activity in our plant gross area.

Chris Ellinghaus - Williams Capital

Okay. Let me just make sure I understand, you did have some sales in ‘13, which still led to a loss, but you are expecting similar results for ‘14. Does that mean you are expecting some more immaterial sales and you’re calling what you did in ‘13 kind of immaterial?

Al Hodnik

Correct.

Chris Ellinghaus - Williams Capital

Okay. As far as -- can you give us a little color on the ACE acquisition and maybe some thought on what kind of returns and kind of equity investment -- and I’m just trying to think about what's embedded in guidance in terms of the ACE acquisition?

Mark Schober

We think that as we closed out that the ACE transaction here, we just closed it in January, so the numbers that we've already shared with you it’s about equity investments of ACE of about $27 million, so [dissuading] with ACE strategy that we've already communicated to you.

Clean Energy, we like the geographic diversity, we like the market diversity that it gives us. The three wind farms that we are taking already have long-term PPAs in place. So for your modelling purposes, Chris, I would treat it very similar to what we do with the regulated utility $0.7 million use our cash structure and then probably returns a little bit higher than we get with the regulated utility.

Chris Ellinghaus - Williams Capital

And then PTCs are largely expired on all those projects, is that correct?

Mark Schober

That's correct.

Chris Ellinghaus - Williams Capital

Okay. So that’s not going to be a needle move around the tax rate or anything?

Mark Schober

No, but again I want to reiterate that it will be accretive to earnings in 2014.

Chris Ellinghaus - Williams Capital

Okay. Will that acquisition get to ACE to sort of breakeven?

Mark Schober

Yes. We believe it will.

Chris Ellinghaus - Williams Capital

Okay. And given what’s happened with congress and wind tax issues, can you just give us a little thought about obviously ACE has agreed to you of wind potential still left to develop in North Dakota. What are they doing, what are their thoughts in terms of future wind development given the current tax situation?

Al Hodnik

Well, ACE’s strategy occurs as multi-fascinate on the Clean Energy side, but not just wind, but solar, Bio-math, Clean Energy, natural gas and of course the [corridor] which I spoke about earlier. So they think about their investment prospects broadly.

With respect to the PTC or ATC, of course we’re watching that very closely, both at an industry level and EEI level. And also just in terms of tax reform and congress in general, I don’t know what the appetite of congress will be for tax reform, but we’re certainly watching that very, very closely.

Some have a view that the PTC and ATC are somewhat going to be extended at some point in time for one last time of course others view it often going to stay of. But certainly, ALLETE Clean Energy has been busy as has Minnesota Power been busy acquiring additional real estate in North Dakota at least in a lease sense. We have excellent land owner relations in North Dakota that is the currency value of relationship in North Dakota, what you are talking oil, gas or renewable. And of course we have the outlet, the DC line which also is the beneficial in the sense we don’t have to build necessarily new transition infrastructure at least right away.

So that's how it start-up more broadly and the upper planes are certainly are partnership with Minnesota Power and Manitoba Hydro in terms of export of Canadian Hydro into the U.S. or (inaudible) wind and hydro that’s certainly on the mines and not only Minnesota Power, but certainly ALLETE Clean Energy as well. So all sorts of those kinds of things are possible and we are looking for a carbon outcome from the federal government some kind summer on existing call, on existing carbon from the EPA that will also potentially then provide another market signal if you will, with respect to where carbon might be go in longer term. That's all started about broadly, Chris.

Chris Ellinghaus - Williams Capital

Okay, great. Thank you very much. I appreciate the feedback.

Al Hodnik

Okay. Thank you very much.

Operator

Thank you. And I have no further questions at this time. I would like to turn the conference back to management for any concluding comments.

Al Hodnik

Well, thank you again for taking time to be with us this morning and you are investment if that's the case. We look forward to seeing many of you at our Analyst Meeting in New York upcoming by near the end of the month or somewhere else throughout the year. Thank you very much. And have a good day.

Operator

Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program. And you may now disconnect. Everyone have a good day.

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ALLETE, Inc. (ALE): Q4 EPS of $0.82 misses by $0.01. Revenue of $268M (+4.7% Y/Y) beats by $7.1M.