Allete’s downs and ups

During a recent stop in Duluth, a top official with the Minnesota Chamber of Commerce had some interesting observations about Allete.

"Allete is very different form other utilities," said William Blazar, the chamber’s senior vice president for public affairs and business development.  "Their customer base is dominated by very few customers."

He was referring to the  big manufacturing companies that use the bulk of Allete’s energy: six taconite companies on the Iron Range and several paper mills, he said.

"They probably use more than half the company’s load," he said.

Compare that to Xcel energy, which serves the Twin Cities and has hundreds, maybe thousands of major customers, Blazar said.

But when Minnesota’s taconite production plummeted more than 50 percent in 2009, Allete’s market also shrunk dramatically.

Blazar noted that Allete was able to recover most of its lost margin by selling power in the wholesale market, probably to other utilities.

So the taconite companies returning to full production has more repercussions than putting people back to work and boosting local economies. It means a returning market for Allete. Moreover, the addition of Mesabi Nugget as an Allete customer and potentially PolyMet and Essar Steel means even more market expansion for Allete, he said.