ALE - NYSE

Good day, and welcome to the ALLETE Third Quarter Financial Results Call. Today's call is being recorded. Certain statements contained in this conference call 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 put undue reliance on forward-looking statements, which reflect management reviews only as of 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. Welcome to ALLETE's conference call announcing third quarter 2022 financial results. Later in the call, we will have a Q&A session and instructions will follow at that time. As a reminder, this call is being recorded. I would now like to hand the call over to Bethany Owen, Chair, President and CEO. You may begin.

Thanks, operator, and good morning, everyone, and thanks for joining us. With me are ALLETE's Senior Vice President and Chief Financial Officer, Steve Morris; as well as Frank Frederickson, Minnesota Power's Vice President of Customer Experience and Engineering Services; and Jeff Scissons, ALLETE Clean Energy's Chief Financial and Strategy Officer. Corresponding slides for this morning's call can be found on our website at allete.com in the Investors section. To follow along, we'll call out each slide number as we go through today's presentation. This morning, ALLETE reported third quarter 2022 earnings of $0.59 per share. These results were in line with our expectations and support our view that our full year results will be near the midpoint of our $3.60 to $3.90 per share guidance range provided earlier this year. Steve will be sharing more details from the quarter and comments on 2022 guidance in a moment. I'll start with important updates on our key strategic initiatives. An exciting news we announced and filed on Monday, Minnesota Power reached a proposed agreement with a broad coalition of stakeholder groups on its integrated resource plan. If the agreement is approved by the Minnesota Public Utilities Commission, Minnesota Power would significantly increase the amount of renewable energy it provides over the next 15 years. In the proposed settlement, Minnesota Power outlined its plans to add up to 400 megawatts of wind energy and 300 megawatts of regional solar energy. That's nearly twice the amount the company proposed in its initial IRP filing in early 2021. Also included in the proposed settlement is energy storage to support our renewable investments. In addition, Minnesota Power will continue to evaluate the transition of Boswell 4 as the company commits to cease coal operations by the end of 2029 at Boswell 3 and 2035 at Boswell 4. Under the agreement, the Nemadji Trail Energy Center and important grid reliability projects, including those set forth in the MISO long-range transmission plan would be deferred to future regulatory filings. Minnesota Power's integrated resource plan and this latest agreement reflect our commitment to the climate, our customers and our communities as well as our employees. Our team has done a tremendous job of listening to our many stakeholders, including our customers, community leaders and organizations and prioritizing their feedback. I'm very pleased that this coalition of diverse stakeholders came to an agreement that allows us to continue on our path to provide 100% carbon free energy by 2050. In hearings over the next two weeks, the commission will consider the next steps in Minnesota Power's Energy Forward plan with a decision on the company's IRP expected on November 22. Moving to ALLETE's capital investment plan on Slide 3. We've updated this table to reflect a significant increase in capital expenditures over the next five years. The additions include transmission and clean energy projects as part of our sustainability in action growth strategy. It's important to note that this update does not yet include the additional renewables and energy storage from the proposed IRP agreement filed with the commission on Monday. So we're confident there is more to come. In addition to renewable generation, a key part of this CapEx plan is significant transmission investments to support reliability throughout our region. These investments include expanding and modernizing Minnesota Power's existing 550 megawatt HVDC transmission line and investment in MISO's long range transmission plan tranche one projects. Next, please refer to Slides 4 through 6. As we look beyond 2027, we believe there are significant investment opportunities in addition to those reflected in this five year CapEx plan. Specifically, the additional wind, solar and storage just mentioned in connection with the IRP as well as additional investments in generation and infrastructure needed as we responsibly and reliably transition our Boswell Units 3 and 4. We also expect to participate in MISO's Tranche 2 transmission projects, and as part of our high voltage transmission strategy to leverage our strategic geographical position to advance interregional transmission projects that support reliability and the clean energy transformation. As we execute in the near term, we are always planning for the future. And these very important parts of our transformational long term investment strategy are already in motion. Turning to Slide 7. We're also very excited about the Inflation Reduction Act, and we believe all of ALLETE's businesses are well positioned to benefit from this important legislation. The production tax and investment tax credit extensions provide new options for investment and the transferability of tax credits provides monetization options for ALLETE's businesses, improving cash flow and credit metrics as we continue to be a market leader in clean energy investments. The IRA will also benefit ALLETE's customers as the new solar production tax credit makes company owned projects more affordable than the solar investment tax credit. For our newest business, New Energy Equity, the IRA has potential locational domestic material and low to moderate income subscription adders that could provide an up to 50% upside on the ITC. On the rate case front, Superior Water Light & Power's rate case is proceeding with a decision expected from the Public Service Commission of Wisconsin later this year. And Minnesota Power's rate case is also moving forward. Please refer to Slides 8 and 9. The administrative law judge recommendation in September was constructive and addressed key areas of our filing. While there are parts of the ALJ report we strongly disagree with, we continue to have confidence in our Minnesota Commission and in the regulatory process to deliver a rate case outcome that supports a financially healthy Minnesota Power, enabling us to continue our clean energy transition while providing safe, resilient, reliable and affordable service to our customers. The commission's current rate case hearing timeline has been extended to January of 2023 with a final order expected by the end of February. Also some exciting news on the Minnesota Power Industrial customer outlook. This summer, U.S. Steel announced plans to invest approximately $150 million in its Keetac Taconite facility to enable production of direct-reduced or DR grade pellets. These pellets will be feedstock for direct reduced iron or hot briquetted iron processes to support the growing demand for steelmaking in electric arc furnaces. Construction began this fall and upon completion, Keetac will be able to produce DR grade pellets while retaining the optionality to produce blast furnace grade pellets. U.S. Steel's Keetac facility has the capability of producing approximately 5 million tons annually. Moving to our newest elite company, New Energy Equity, we expect a solid fourth quarter. New Energy is on track with our original projections for the year and has increased its total pipeline of prospective projects well above 2,000 megawatts. Along with the IRA benefits mentioned earlier that could provide investment tax credit upside of up to 50%, the New Energy team's solid execution and strong pipeline of future projects have only enhanced our confidence in the resiliency and strength of this business. Please see Slide 10 for details. Finally, ALLETE Clean Energy's earnings this quarter were impacted by congestion at its Caddo wind energy facility, and our priority is to address the ramifications of these congestion issues in the Southwest Power Pool for both the Diamond Spring and Caddo projects. These sites are operating well and the wind resources are strong, and we firmly believe that ALLETE Clean Energy is well positioned to the clean energy transition in our country. The inflation Reduction Act will also provide increased incentives and flexibility for structuring and financing of new projects and for maximizing the value of the company's legacy fleet, where more than 400 megawatts have strong potential for redevelopment. Please see Slide 11 for more information on the opportunities we see at ALLETE Clean Energy. Now, I'll turn it over to Steve for additional details on our third quarter financial results and our full year earnings guidance. Steve?

Thanks, Bethany, and good morning, everyone. I would like to remind you that we filed our 10-Q this morning and I encourage you to refer to it from our details. Please refer to Slides 12 and 13 for significant variances and other items for comparison consideration. Today, ALLETE reported third quarter 2022 earnings of $0.59 per share on a net income of $33.7 million. Earnings in 2021 were $0.53 per share on net income of $27.6 million. Results for the quarter reflect higher net income for the regulated operations segment, primarily due to interim rate revenue at Minnesota Power. This increase was partially offset by a reserve of $2.9 million after tax or $0.05 per share for an anticipated loss on the sale of ALLETE Clean Energy's Northern Wind project, a negative impact of $1.7 million after tax, or $0.03 per share to reflect changes in the American Transmission company's estimate of a refund liability related to the ongoing MISO return on equity complaints. A few details from our business segments. ALLETE's regulated operations segment recorded third quarter 2022 net income of $38.3 million compared to $32.9 million in 2021. Earnings reflect higher net income at Minnesota Power, primarily due to the implementation of interim rates at the beginning of the year. This increase was partially offset by lower kilowatt hour sales to retail customers and higher costs on our 250 megawatt purchase power agreement. ALLETE's earnings in the American Transmission Company were lower due to period over period changes in ITC's estimate of a refund liability related to MISO return on equity complaints mentioned earlier. ALLETE Clean Energy recorded a third quarter 2022 net loss of $7.3 million compared to a net loss of $800,000 in 2021. The net loss reflects a reserve of $2.9 million after tax for anticipated loss on the sale of its Northern Wind project, losses under the Caddo Wind Energy Facility's power sales agreements resulting from market volatility and transmission congestion in the Southwest Power Pool and lower wind resources compared to 2021. Our Corporate and Other businesses, which include New Energy, BNI Energy and our investment in the Nobles 2 Wind Energy Facility recorded net income of $2.7 million compared to a net loss of $4.5 million in 2021. Results in 2022 reflect higher earnings from our investment in the Nobles 2 wind energy facility, reflecting higher wind resources, net income of $1.3 million from New Energy which included purchase price accounting adjustments of $1.7 million after tax as well as the benefit from the timing of income taxes. Earnings per share dilution in the third quarter was approximately $0.05 due to additional shares of common stock outstanding. Next, I'll turn to our 2022 earnings guidance. We are updating our earnings guidance and expect earnings to be near the midpoint of our guidance range of $3.60 to $3.90 per share. This reflects year-to-date results and the timing of a portion of a solar project that has shifted into 2023, in part due to timing of solar panel deliveries. However, we now expect to take advantage of the IRA for this project. We also expect strong fourth quarter earnings from new energy with growing momentum in the project pipeline and significant project closings in October and into the end of the year. Keep in mind that on Elite’s ownership, New Energy's partial year financial results for 2022 will be affected by transaction costs and purchase price accounting. Excluding these items, New Energy is expected to be accretive this year and we do anticipate meaningful accretion in the first full year of our ownership in 2023. Turning to ALLETE Clean Energy. Despite inflationary increases and significant cost pressures resulting in the reserve taken in the third quarter, the Northern Wind project and the Rock Aetna project both continued to progress, and we are expected -- and they are expected to be completed by the end of this year and early 2023, respectively. ALLETE Clean Energy also continues to advance the 92 megawatt Red Barn Build Transfer project and is on track for a 2023 closing. As Bethany mentioned earlier, we have updated our five year capital expenditure plan through 2027, which can be seen on Slide 3. This update reflects additional transmission for Minnesota Power's participation and MISO's Tranche 1 projects as well as 400 megawatts of additional wind and solar, reflected in the Minnesota Power's initial IRP. Minnesota Power and Great River Energy intend to build a transmission line from Northern Minnesota to Central Minnesota as part of MISO's Tranche 1 projects. We filed a Notice of Intent with the Minnesota Public Utilities Commission on August 1, and a combined certificate of need and route permit filing will follow within the next 18 months. The transmission line is expected to be in service in 2030 supporting and strengthening the reliability and resilience of the grid in the Upper Midwest, as we continue our clean energy transition. With Minnesota Power's approximate 50% share of the $970 million project and additional capital investments of 200 megawatts of solar and 200 megawatts of a wind partnership, ALLETE now expects capital expenditures of approximately $2.7 billion through 2027. These clean energy supporting investments will provide additional optionality, resiliency and reliability benefits for our customers while delivering rate base growth of approximately 8% using 2022 as a base year. We also expect to update our capital expenditure plan once the integrated resource plan has been approved by the commission later this month. In addition, the American Transmission Company recently updated its 10 year capital investment forecast, which calls for approximately $5 billion to $6 billion in system improvements, which would result in additional investment for ALLETE. Finally, ALLETE's financial position is supported by a strong balance sheet that includes cash and cash equivalents of $42 million, $387 million in available consolidated lines of credit and a debt to capital ratio of 37% as of September 30, 2022. I'll now turn it back to Bethany for her closing remarks. Bethany?

Thanks for that update, Steve. I'm very proud of our amazing and talented team of employees throughout ALLETE, and we're pleased with our execution and positioning thus far this year with more to come in the final quarter of 2022, including the results of Minnesota Power's IRP, the Superior Water Light & Power rate case; the addition of significant solar capabilities from New Energy Equity, as well as ALLETE Clean Energy's progress on build transfer projects and optimization of its portfolio. And all of this sets the stage for ALLETE's future growth over the near and longer term. The foundation of our strategy is sustainability in all aspects, and we're delivering on our commitment to transparency. Please refer to Slide 14 with some highlights of our sustainability and action strategy, and Slide 15, which contains links to important ESG information, including our recently updated corporate sustainability report for 2021. We look forward to sharing more with you in February as we report on the last quarter of this year and as ALLETE continues putting sustainability into action, leading the way to a sustainable clean energy future. Thank you for your interest and your investment in ALLETE. And at this time, I'll ask the operator to open the line for your questions.

[Operator Instructions] And our first question comes from Brian Russo of Sidoti. Your line is open.

Hi. Good morning.

Good morning, Brian.

Hey. Just a follow-up on the expectation for the fourth quarter given your confidence in the midpoint of your guidance. It looks like a pretty big step up or improvement from the fourth quarter of 2021. And I just wanted to -- if you can provide more insight, is it mostly driven by the New Energy contribution and/or are there other drivers, plus or minus?

Yeah. Hi, Brian, Steve Morris. So I can take that on. So a little bit from New Energy, so we do expect some contribution from New Energy in the fourth quarter as we talked about a strong fourth quarter. So that will be helpful. We do expect a higher earnings from Noble, which has been performing very well. Regulated operations is going to be higher than our expectation as well. Property taxes and depreciation expense has been favorable to our plan. We've had -- we do expect a little favorable increase from income tax timing and we do expect higher industrial sales and margins versus our plan as well.

Okay. Got it. And then just on the New Energy more than 2,000 megawatt pipeline -- project pipeline. Is there any way to kind of profile that? Are these early or late stage development projects and or those that are closer to monetization?

Hey, Brian. This is Jeff Scissons. Thanks for the question. I think the 2,000 megawatts captures all stages of development, Brian. So there's a probability weighted that is -- that would be smaller than that. But what we've said kind of we pointed back to the 100 megawatts that was closed. So what we really want to reference is our confidence in their ability to meet the plan, and it's based on that, it's based on that pipeline and the fact that it's growing, and so we're pleased with the performance to-date. We're pleased with the progress that they've made.

Okay. Great. And then just on the CapEx, the increase of the $1 billion. It looks like a pretty big bump up in '24 and '25. Is that the 200 megawatt solar project and is that separate from the original proposed IRP and then the update IRP that you discussed earlier?

Yeah. I'll take that, Brian, Steve Morris, again. So it is the original or initial IRP for those two projects. I think that's on Slide 3, you can see '24, '25, 200 megawatts the wind partnership. And those were the items that Bethany and I mentioned that we will look to update depending on the outcome of this IRP in November. So we've noted that it's nearly double that. So stay tuned for some potential updates once we get the decision on the IRP.

Okay. Got it. So that $300 million of investment, that's pending obviously MPUC review and/or approval?

That is correct.

Okay. And then just lastly on the IRP. You mentioned a coalition of diverse stakeholders involved in this new settlement to be submitted to the commission. Can you share with us who some of those stakeholders are?

Yes. This is Bethany, Brian. It's a public filing that we filed on Monday, so you'll be able to see the exact lift, but it's a great diverse coalition of clean energy organizations, host communities, so the city of Coast the county task County Economic Development Corporation as well as labor, a variety of labor organizations, including IBEW Local 31. So it's a good, diverse coalition, and we're really proud of the fact that we were able to reach that proposed agreement and very hopeful that the commission will take it.

Okay. Great. Thank you very much.

Of course.

One moment. And our next question will come from Chris Ellinghaus of Siebert Williams Shank & Co. Your line is open.

Hey, everybody. How are you? Vis-a-vis the additions to the CapEx budget to come, what are your thoughts on the cost of solar and wind relative to what's in your budget? A, how much of that is kind of fixed at this point and additional projects in this inflationary environment, would you expect them to be proportionately higher than what you have for the existing IRP projects or would you expect them to be materially higher?

Yeah. Hi, Chris, Steve Morris. So these are updates or updated costs with today's dollars to the extent that inflation impacts us when we build these in '24, '25 they certainly -- they could go higher, but we are reflecting current costs in this recent capital update. So we'll just have to stay tuned. Of course, we'll do whatever we can do to keep costs low for our customers.

Do you have any idea when you think you may make an additional provision to the budget for the IRP?

So the IRP will be decided with the hearing on the 22, and we would do it after that. Of course, it might take some time to analyze it. I would expect, though, by February, when we come out with our earnings guidance for '23, that we would have our -- an updated capital plan at that point in time.

Okay. The ALJ's recommendation really is pretty good from a top line perspective, but do you have any thoughts on what the commission might think about the industrial mechanism relative to the ALJ's recommendation? Is there potential there still?

Well, yeah, you saw the ALJ recommendation, which opposed the sales true up, I don't have any indication of the direction that the commission will go. We are not giving up on the sales true up mechanism though, Brian (ph). And we will continue to push for that in this particular rate case. So more to follow on that. Again, a hearing will be end of January.

Okay. Is there vis-a-vis the additional wind and solar resources from the IRP? Is there any additional transmission required for any of that potential capacity?

Well, we do know that transmission will -- and I mentioned, Brian (ph), the infrastructure that will be required as we transition Boswell 3 and 4. So we are always evaluating our system needs as more renewables come on, it's really important, critical that we maintain resiliency and reliability for our own customers, but also for the regional grid. And so we're always making those evaluations of system needs. And obviously, this is a more kind of late breaking news in connection with these additional renewables. But we are anticipating additional infrastructure as well.

And we're -- we have a significant amount of capital in our plan already for an upgrade of the DC line as well.

Okay. The storage pilot that you have in CapEx already, talk about adding storage for the IRP, is that sort of dependent on having the pilot operating for a few years? So could incremental storage be a little further out in the timeline?

Actually, the agreement that we filed on Monday really refers to implementing storage demonstration projects of relatively significant size by 2026, as we deem that practicable in connection with our system. So it's actually more near term as well.

Okay. So…

And not dependent on the pilot.

Okay. Got you. And lastly, Steve, you talked about win for ACE (ph) being lower. Can you give us a little more color there?

Yes. It wasn't a huge driver for the quarter. It was down about 1%, so it wasn't significant. Maybe it was probably penny or two. And also keep in mind that Northern Wind, which was in service last year, is now under construction, so there was an impact because of that earnings last year, which we did not have this year.

Okay. Great. Thanks for the details. Appreciate it, guys.

Thanks, Chris.

[Operator Instructions] And our next question will come from Andrew [indiscernible] of Bank of America. Andrew [indiscernible] your line is open.

Hi. Good morning. It's Julien. Can you hear me?

Good morning. We can, Julien.

Okay. Excellent. Thanks for the time. Appreciate it. So a lot to ask here, really well done again on this quarter here, but -- so just first off, if you can talk about the updated rate base here, 8%, you've got a 5% to 7% EPS growth outlook out there. And that rate base does not include the ACE kind of component here that could be upside, too. Can you talk about how you see that 5 to 7 positioned here? And how you think about updating it? I know you mentioned some specific data performance in 1Q next year, but can we kind of reconcile that and maybe some of the other data points that might be ahead still?

Yeah. So, good morning, Julien, Steve Morris here. So we are -- we would reaffirm our long term growth outlook at 5% to 7%. So we do have some work to do on our CapEx, as we talked about, the IRP being approved later this month. So and you pointed out the 8%, but we're going to wait for the IRP to be approved and which could be potentially higher. We do expect complementary earnings from our New Energy and ALLETE Clean Energy businesses. But we are going to reassess our 5 to 7. We wouldn't do that until next year. But we need some more information here on this rate base on this IRP and also on the rate case here that's really critical coming in January. And then we'll look at that and updating our long term outlook and get back to you on that. I would expect, if any, change or reaffirmation of our long term outlook would be in February when we do our '23 earnings guidance.

Right. But just to come back to the pieces of the pie here. The 8% rate base growth does not include the upside from the IRP that you talked about being approved maybe later this month. And then separately if I…

That’s Correct.

And if I remember the other side of the guidance here, ACE, the status quo prior to reflecting IRA, commitment was broadly mid-teens, 15%, if I recall, right?

Correct.

Okay. And presumably, that should be updated here as we roll forward into a fully flushed view of the opportunities, right?

Correct.

And then…

Julien, we will take all that in -- under consideration as we get the rate case, as we get our IRP flushed out and decided on with the commission and then reflect that in our long-term plan, and then we'll have the pieces and parts for you next year, early next year.

Absolutely. So those are the positives. Let's talk about some of the offsets here just quickly to make sure we've got our -- the piece -- the puts and takes here. What about equity needs here? How do you think about that positioning here? How do you think about balance sheet? And then also separately, let's maybe just tackle the inflationary question here. Obviously, you've got a rate case inflate. But prospectively, you likely have an accelerating inflation backdrop. How do you think about truing up dealing and mitigating those potential pressures here? How do you think about even another rate case pancake on this one, just in light of the backdrop that we're seeing today? Again, I don't want to be too presumptive here, but obviously, it's fairly dynamic given whether it's sales or cost structure pressures.

Yeah. So the equity needs here. As you know, many of these projects are related to the regulated operations. So we generally look at our maintaining our capital structure. So if you throw out 50% equity debt, we will take advantage if we can, and we expect to on the IRA as far as tax credits. We do have some PTCs that we are going to try to monetize here even into 2023 for the next several years. It's about $45 million to $50 million which would help lower equity needs as well as we have a strong balance sheet to rely on as well. So although we can do to reduce those equity needs. But generally, we would start with our cap structure with generally a 50-50 debt to equity. Inflationary increases, of course, we're not immune to inflationary increases. We're doing what we can to lower our costs. Not committing on a timing of a rate case right now, Julien, until we get the outcome of this rate case.

Excellent. Thank you so much. And then if I may, just 1 more here. Just as you're thinking about the outlook, why are you got into the midpoint without narrowing here for the guidance, right? I just want to come back to that. As you think about the uncertainty in the environment today, I get that I would love to hear your thoughts. I mean, as we get closer to the end of the year, typically, we think about narrowing ranges, does that kind of signify any kind of pressures here?

No, I don't think so. I think if the midpoint is $3.75, so you can flex around that, if you want, plus or minus $0.05 is the way I would look at it. And it is a big quarter. So fourth quarter is a lot is a significant quarter for us. Third quarter, not so much as you know. So there's some variability with weather and wind that we're watching closely. But -- so no more than that, Julien. So you can flex around that plus or minus $0.05.

Got it. All right. Excellent. That's great. And then maybe, sorry, if I can throw in one last one here, just to come back to the IRP. MISO has been talking about changes in seasonal capacity and then ELCC effective load-carrying capacity of various resources here. What are you seeing out there? If you can speak to that about even the IRP that you're putting forth right now? And would that actually be a further revision on expectations?

Well, obviously, we're very involved with MISO and certainly the Tranche 1 projects and expect to participate in Tranche 2. I would say that just in connection with our current IRP those transmission projects are deferred to another regulatory filing, but we believe transmission is critical, and that's why it's such a huge part of our strategy going forward. And obviously, we're very closely linked with MISO on all of that.

Got it. All right. Thank you, guys. Appreciate you bear with me on a few questions here. Good luck this quarter. I will speak to you soon.

Thanks, Julien.

And our next question will come from Richard Sunderland of JPMorgan. Your line is open.

All right. Good morning and thank you for the time today. I wanted to start at a high level, thinking about financing considerations and funding needs with this latest growth update. How do you see ACE sitting strategically in the picture given the regulated outlook continues to tick up? Several of your peers are looking to monetize some more assets. Is this potentially a source for reinvestment into the utility notwithstanding that there are IRA benefits on the ACE side going forward as well?

Yes. Thanks for the question, Richard. We believe ACE is a very important part of ALLETE's future and our strategy. So we're really confident in our ability to address some of the challenges that we mentioned in connection with congestion in the SPP market that we're seeing in connection with Caddo. But we believe longer term, no question that ACE is an important part of ALLETE's future and our strategy.

Understood. That's very clear. And then digging down specifically into the congestion issues. Could you speak a little bit to what is needed to remediate that and how long it could take?

Hi. This is Jeff. Thanks for the question. So again, as a reminder, the Caddo wind farm has reached commercial operation date in 2022. So it's relatively new. So some of these issues we're digging into. There is some planned infrastructure upgrades in the area that we believe will help. And then we'll also look at other, whether it's technology or working with customers, this is one of the primary focuses for us. So we're learning as we go here and there'll be more to come.

Okay. Understood. And then maybe just to go out broadly, again, you spoke a little bit about IRA benefits in a number of ways, including weeks potential tax credit monetization, which would lower equity needs. Just also curious kind of what you're seeing, particularly on the ACE side around market discussions, counterparty interest and sort of the overall sentiment in terms of new project development there?

Yeah. We continue to see a robust market and the clean energy goals, both local, regional, national and on the corporate side, they continue to be strong. I think we're seeing some constraints in the infrastructure, and we try to indicate that our legacy fleet that's greater than 400 megawatts, it's a mature fleet, and we think there's -- it's prime for redevelopment opportunities, and the IRA is really a tailwind for that, especially with the clarity of the rules versus the cliffs that we've had to deal with in the past. So we still see it as a strong market and demand is there.

Great. Thanks for the time today.

Thank you, Richard.

And I'm showing no further questions. I would now like to turn the call back to Bethany for closing remarks.

So thank you for your questions today and your interest in ALLETE. We look forward to speaking with many of you at upcoming investor venues and at EEI Financial next week. We hope you have a great rest of your day.