Allete quarterly profit drops on higher operating, interest expense
Higher-for-longer interest rates can weigh on utilities as it makes investing in the construction and maintenance of critical infrastructure such as electrical grids more expensive.
The company reported interest expenses of $23.1 million in the reported quarter, up almost 15% from a year ago, while total operating expenses were up 5% at $342.3 million.
The quarterly results "were impacted primarily by lower industrial margins as a result of lower sales to taconite customers at Minnesota Power which are expected to continue through 2025," said CFO Jeff Scissons.
"Minnesota Power would be filing a rate case to account for reduced revenue, increased depreciation from capital investments and inflationary pressures," he added.
U.S. utilities have been constantly looking to raise customer power bills to upgrade infrastructure, as the country's electrical grids face extreme weather and growing demand from industry electrification and data center expansions.
Regulated utilities use rate case proceedings to determine the amount that customers need to pay for electricity, natural gas, private water and steam services.
Minnesota Power, a utility division of Allete, also said earlier this month it plans to build the 200-megawatt Longspur Wind project in North Dakota as part of its EnergyForward transition toward a carbon-free energy future.
Allete's regulated operations segment fell 31% to $23 million.
The company's net income fell 3% to $31.9 million, or 55 cents per share, in the quarter ended June 30.
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