ALLETE Inc.’s (ALE - Free Report) business ancillary Minnesota Power concluded installation work on a handful of midstream and electric infrastructure assets in Nashwauk County, Minn. These include new substations and transmission lines that will meet the lofty power demands of Essar Steel Minnesota’s taconite mine and processing facility.
The 230 Kilovolt ("KV") program was completed on Mar 8, 2013 while the remaining job on the 115 KV line will be wrapped up in two weeks.
In Feb last year, ALLETE signed a long-term contract to deliver power to Nashwauk County till Jun 30, 2024. Later, Nashwauk County officials entered into a deal with Essar to fulfill the company’s electric needs for the taconite facility. The county also agreed to provide power services to accommodate future growth.
Per the agreement, ALLETE will build three 230 KV transmission lines which include a five-mile segment of double circuit 230 KV and 115 KV lines. The company constructed and installed the first key transmission assets in the Iron Range region. It took two years for ALLETE to finish the job on the $35 million transmission infrastructure. Overall, it constructed 28 miles of lines and re-routed or detached 21 miles.
Essar is currently building a mine, concentrator and a taconite production complex which has a maximum output capacity of 7 million metric tons. Essar’s electric demand is expected to reach 110 megawatts when the facility goes into full production and might increase further given its plans to expand production of other by-products.
Meanwhile, the substations – McCarthy Lake and Calumet – recently completed will together offer services to the mine. Both ALLETE and Nashwauk County share the ownership and costs associated with these facilities.
ALLETE has been aggressively investing its resources for the development of its utility-scale assets. Minnesota Power earlier disclosed its strategic Energy Forward plan which will focus on offering clean, sustainable, affordable and reliable energy services to the residents of Minnesota.
To achieve a balanced mix in its asset basket, the company has been seeking options to enlarge its renewable business. This will prove favorable with the gradual rise in renewable consumption in the U.S. going forward.
We believe these broad initiatives will encourage customer retention in Minnesota and attract non-ALLETE customers as well. Presently, ALLETE retains a Zacks Rank #2 (Buy).
Other utility stocks that are worth a look include Zacks Ranked #1 (Strong Buy) Brookfield Infrastructures Partners L.P. (BIP - Free Report) , Pike Electric Corporation and Edison International (EIX - Free Report) .
Based in Duluth, Minn., ALLETE along with its subsidiaries engages in the generation, transmission, and distribution of coal-fired, hydro, wind, and biomass co-fired power in the United States.