ALLETE: ALLETE : 2024 Corporate Sustainability Report

2024 Corporate Sustainability Report This report encompasses data from 2023 unless otherwise noted. INTRODUCTION CLIMATE ENVIRONMENTAL MANAGEMENT ENERGY EFFICIENCY SECURITY RELIABILITY CULTURE & ENGAGEMENT CORPORATE GOVERNANCE SASB 2023 EEI REPORT 2023 STATEMENT Table of Contents Cautionary Statement - Forward-Looking Statements CEO Letter Cautionary Statement - Forward-Looking Statements Statements in this report that are not statements of historical facts are considered "forward-looking" and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there can be no assurance that the expected results will be achieved. Any statements that express, or involve discussions as to, future expectations, risks, beliefs, plans, objectives, assumptions, events, uncertainties, financial performance, or growth strategies (often, but not always, through the use of words or phrases such as "anticipates," "believes," "estimates," "expects," "intends," "plans," "projects," "likely," "will continue," "could," "may," "potential," "target," "outlook," "vision" or words of similar meaning) are not statements of historical facts and may be forward-looking. In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, we are providing this cautionary statement to identify important factors that could cause our actual results to differ materially from those indicated in forward-looking statements made by or on behalf of ALLETE in this report, in presentations, on our website, in response to questions or otherwise. These statements are qualified in their entirety by reference to, and are accompanied by, the following important factors, in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements that could cause our actual results to differ materially from those indicated in the forward-looking statements: Our ability to successfully implement our strategic objectives; Global and domestic economic conditions affecting us or our customers; Changes in and compliance with laws and regulations, or changes in tax rates or policies; Changes in rates of inflation or availability of key materials and supplies; The outcome of legal and administrative proceedings (whether civil or criminal) and settlements; Weather conditions, natural disasters and pandemic diseases; Our ability to access capital markets, bank financing and other financing sources; Changes in interest rates and the performance of the financial markets; Project delays or changes in project costs; Changes in operating expenses and capital expenditures and our ability to raise revenues from our customers; The impacts of commodity prices on ALLETE and our customers; Our ability to attract and retain qualified, skilled and experienced personnel; Effects of emerging technology; War, acts of terrorism and cybersecurity attacks; Our ability to manage expansion and integrate acquisitions; Population growth rates and demographic patterns; Wholesale power market conditions; Federal and state regulatory and legislative actions that impact regulated utility economics, including our allowed rates of return, capital structure, ability to secure financing, industry and rate structure, acquisition and disposal of assets and facilities, operation and construction of plant facilities and utility infrastructure, recovery of purchased power, capital investments and other expenses, including present or prospective environmental matters; Effects of competition, including competition for retail and wholesale customers; Effects of restructuring initiatives in the electric industry; The impacts on our businesses of climate change and future regulation to restrict the emissions of greenhouse gases; Effects of increased deployment of distributed low-carbon electricity generation resources; The impacts of laws and regulations related to renewable and distributed generation; Pricing, availability and transportation of fuel and other commodities and the ability to recover the costs of such commodities; Our current and potential industrial and municipal customers' ability to execute announced expansion plans; Real estate market conditions where our legacy Florida real estate investment is located may deteriorate; and The success of efforts to realize value from, invest in, and develop new opportunities. Additional disclosures regarding factors that could cause our results or performance to differ from those anticipated by this report are discussed in Part I, Item 1A. Risk Factors of ALLETE's Annual Report are on the most recent Form 10-K and updated quarterly in subsequent Form 10-Qs. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward- looking statement to reflect events or circumstances after the date on which that statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all of these factors, nor can it assess the impact of each of these factors on the businesses of ALLETE or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward- looking statement. Readers are urged to carefully review and consider the various disclosures made by ALLETE in reports filed by ALLETE with the Securities and Exchange Commission that attempt to identify the risks and uncertainties that may affect ALLETE's business. Statement on Rounding Due to rounding, numbers throughout this report may not add up precisely to the totals indicated, and percentages may not precisely reflect the absolute figures for the same reason. ALLETE 2024 Corporate Sustainability Report 1 INTRODUCTION CLIMATE ENVIRONMENTAL MANAGEMENT ENERGY EFFICIENCY SECURITY RELIABILITY CULTURE & ENGAGEMENT CORPORATE GOVERNANCE SASB 2023 EEI REPORT 2023 STATEMENT Table of Contents Cautionary Statement - Forward-Looking Statements CEO Letter We Are Putting Sustainability into Action for an Equitable Clean-Energy Future Dear customers and investors, At ALLETE, sustainability in action is the foundation of our strategy, and we're working closely with our diverse stakeholders as we advance the clean-energy future. Our strategy is designed to provide value to our customers, meaningful investment in our communities, opportunities for our employees, and earnings for our shareholders. All of that is what we mean when we say we at ALLETE are leading the way to a truly sustainable clean-energy future. Our strategy also recognizes the impacts of climate change are already upon us-and we are taking action to reduce carbon emissions. In 2023, ALLETE was the No. 1 investor in renewable energy among U.S. investor-owned utilities relative to market cap, and we are poised to add significantly more clean energy in the coming years while ensuring reliable, resilient energy delivery to our customers. We are enhancing and growing our businesses by providing sustainable energy solutions to meet evolving societal expectations and regulations, and each of our companies plays an important role in this strategy. Minnesota Power continues to advance its Integrated Resource Plan (IRP) approved by the Minnesota Public Utilities Commission in 2023. The IRP lays out ambitious goals of reducing carbon emissions by 80% by 2035 and achieving more than 70% renewable energy in 2030. Already delivering more than 50% renewable energy, the company will add up to 700 megawatts of solar and wind resources to meet these goals. An important part of ALLETE's strategy includes major investments in transmission needed to safeguard a reliable and resilient grid during the clean-energy transition. Minnesota Power is advancing regulatory review of two significant transmission projects-a modernization of its existing high-voltagedirect-current (HVDC) line and the Northland Reliability Project, a new 180- mile transmission line from northern Minnesota to central Minnesota. ALLETE and Grid United also continue to make progress on the first-of-its-kind North Plains Connector project that will enhance inter-regional reliability and transfer capacity between the middle of the country and energy markets to the west. As we pursue these projects, we understand the importance of keeping costs affordable for customers. We've worked hard to mitigate the impacts by pursuing federal and state funding for all eligible projects. We're happy that governments recognized the value of our HVDC and North Plains Connector projects. The HVDC project, recently approved by the MPUC, received a $50 million federal grant and a $15 million state grant, with work expected to begin in 2025. And the U.S. Department of Energy in August awarded a $700 million grant to the Montana Department of Commerce Grid Resilience and Innovation Partnership to support the North Plains Connector. Our other utility company, Superior Water, Light & Power, receives its energy from Minnesota Power and shares in these carbon-reduction and climate goals, and has added its first community solar garden to provide an additional renewable energy option to customers. New Energy Equity, one of the nation's leading distributed solar developers, continues its strong performance in delivering solar projects across Bethany Owen the country. Their growing and robust solar project pipeline gives us great confidence in the very bright future for our newest company. ALLETE Clean Energy has more than 1,200 megawatts of operating nameplate wind capacity across seven states and has other wind projects in various stages of development. BNI Energy's focus on sustainability involves supporting its customer to advance an ambitious project to