FERC has granted Allete permission to sell several hundred million dollars in securities to raise funds for its clean energy transition.
In a May 23 order, FERC said Allete is clear to issue stock and up to $977 million in short-term debt, up to $275 million in long-term debt and a maximum of $516 million in the sale of tax credits and tax equity financing (ES23-71). The commission’s authorizations are good for two years.
Allete’s ask to FERC predated its acquisition announcement this month. The company said it needs money for continued investments in renewable energy, “environmental technology” for its generating units, transmission investments and distribution grid modernization, and other business expenses.
FERC said Allete’s request to raise money appeared consistent with the public interest and “reasonably” necessary for Allete’s utility services.
Allete said it filed for FERC permission out of an “abundance of caution” because its utility, Minnesota Power, owns and operates wind generation in North Dakota. Last year, the Minnesota Public Utilities Commission authorized the company to issue long- and short-term debt.
At the time of filing, Allete said it expects its affiliates’ capital expenses to overtake its internal cash flow from January 2023 through June 2024.
Allete said with “internally generated cash insufficient to fund the planned capital outlays,” it will need to turn to issuances of long- and short-term debt and common stock alongside tax equity financing. Allete also noted in the filing it had been exploring acquisition “and other investment opportunities to diversify [its] revenue base in order to reduce its dependence on revenues from a concentrated industrial base of taconite and paper customers in northeastern Minnesota.”
Allete’s hunt for a buyer proved successful. Weeks ago, it announced an agreement to be acquired by Canada’s pension investment board and private equity firm Global Infrastructure Partners for more than $6 billion. The acquisition and ensuing transition to a private company would help it access even more capital to navigate fleet transition, the company said. (See Canada Pension Board, Global Infrastructure Partners to Buy Allete.)
Allete said it hopes to finalize the deal in 2025. The sale requires approvals from FERC, Minnesota and Wisconsin regulators, the Federal Trade Commission and company shareholders.
