Dear Friends,

These are interesting and challenging times. Everyone who lives and works in the

Northland has been touched by the recession, personally or through someone they

know. As one of the region’s largest corporate citizens, Minnesota Power, an ALLETE

company, is eager to help lead recovery.

We don’t believe in standing still. Energy in Motion—Minnesota Power’s 2009-2010

Community Investment Report details steps we are taking as a company and as committed

individuals to move communities forward to a bright future. These include:

Major investments in emission-reduction technologies, new and expanded wind and

biomass developments, and transmission upgrades to ensure a robust, reliable and

environmentally responsible power supply—while creating hundreds of well-paying

construction jobs

Responsible land management, thoughtful use of natural resources, and a commitment

to help customers make choices that conserve energy and save money in their homes,

businesses and communities

Innovative conservation programs that encourage greater understanding of energy

usage and provide practical tools to help customers use energy more efficiently—saving

energy, offsetting rising costs, and benefitting the environment

Workforce development partnerships that connect the region’s industries and

educators, plus scholarships to reward college students for pursuing fields that match

regional workforce needs

Leadership in economic development efforts that stimulate sustainable business growth

and expansion

Charitable giving through the Minnesota Power Foundation that preserves the

environment, advances education, supports health and human services, encourages

community involvement, and promotes arts and culture

Employee volunteerism, civic engagement and participation in the United Way and

other campaigns to help those in need

Health, wellness and safety programs that ensure the wellbeing of our employees and

their families, contractor training for injury-free worksites, energy education in area

schools, and teacher workshops that promote energy safety and conservation

Please join me in thanking all of Minnesota Power’s employees, customers, shareholders

and partners who live their values every day and put their energy toward making our

region the best it can be.

Sincerely,

Don Shippar, Chairman and CEO, ALLETE

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Cover: Photo of runner courtesy of Jeff Frey & Associates

r e l i a b i l i t y

s t e w a r d s h i p

c o n s e r v a t i o n

o p p o r t u n i t y

s a f e t y

v a l u e s i n m o t i o n

p r o s p e r i t y

Energy

p h i l a n t h r o p y

reliability M e e t i n g F u t u r e D e m a n d

S h a p i n g R e s p o n s i b l e E n e r g y P o l i c y

“People need power to ensure their quality of life. Customers have a certain expectation.

When it is not there, they rely on us to get out and return it as quickly as we can.”

John Muehlbauer, Line Operations Superintendent, “Minnesota Values”

2

E lectricity is more than an essential commodity. It provides comfort, security,

convenience and a high quality of life. It brightens homes and offices, warms

living spaces, powers appliances, drives industry and delivers information. People

in the Northland depend on electricity—and they depend on Minnesota Power

to deliver it.

Minnesota Power and its affiliated Wisconsin utility, Superior Water, Light & Power,

generate and transmit reliable, competitively priced electric power to 155,000

retail customers and 16 municipalities in northern Minnesota and Douglas County,

Wisconsin. Customers include hundreds of businesses and several large industrial

operations, including taconite producers, paper mills and pipeline companies.

Reliability is crucial to keep businesses operating smoothly and residential customers

satisfied. Minnesota Power continually works to monitor, understand and improve

reliability in a cost-effective way and is proud of its performance.

“We are committed to reliability and spend time and money efficiently to meet

the expectations of our customers,” said Steve Benoit, director of distribution,

Minnesota Power.

One recent effort has focused on integrating Minnesota Power’s interactive voice

response and outage management systems. This allows the utility to collect and

understand outages faster so it can respond and restore service quickly. Speed and

efficiency depend on customers using the automated voice system or Web site to

report outages.

Smart meters also are being tested for residential and commercial use. This new

technology will provide unprecedented communication between Minnesota Power

and its customers, improving reliability while helping customers better understand

and manage the way they use electricity.

�

M e e t i n g F u t u r e D e m a n d

E lectric power is a key component of mining, papermaking and pipeline industries—

some of Minnesota Power’s largest key customers. Major industrial projects in

various stages of planning and development promise well-paying jobs and a boost to

the region’s economy. These include the new Mesabi Nugget plant in Hoyt Lakes, Essar

Steel Minnesota’s proposed integrated steel mill, and an Enbridge pipeline expansion that

will link Alberta, Canada, with Murphy Oil Refinery’s growing operations in Superior,

Wisconsin. Minnesota Power is prepared to meet the energy needs of these resource-

based industries and customers of all sizes for decades to come.

Over the past three years, Minnesota Power has invested nearly one billion dollars in its

electric system to ensure safe, reliable service and meet mandates for lower emissions

and increased renewable energy. It remains competitive by managing costs, adhering to

its values, and investing for the long term.

Minnesota Power has joined a consortium of Upper Midwest utilities in an initiative called

CapX2020 to upgrade the region’s transmission grid. The acronym stands for capacity

expansion needed by 2020.

CapX2020 utilities are spearheading one of the largest multi-state transmission grid

upgrades in the country. It includes four projects that will be “shovel ready” in 2010.

These expansions will add 700 miles of transmission line in Minnesota and Wisconsin and

create thousands of manufacturing, construction and engineering jobs. The utility group

is working closely with local governments and landowners to communicate the need and

minimize impacts on the environment.

Although rate increases have been necessary to offset rising costs of producing and

delivering energy, Minnesota Power customers still enjoy some of the most competitively

priced electricity in the country.

�

S h a p i n g R e s p o n s i b l e E n e r g y P o l i c y

E nergy policy is being debated at all levels of government. Minnesota Power’s legislative

team works to ensure that federal, state and local lawmakers understand the full

impacts of proposed laws and regulations on the company and the region it serves.

“The overarching goal is to make sure elected public officials have solid information so

they can make informed decisions when it comes to energy and environmental policy

matters,” said Bill Libro, director of federal affairs, ALLETE/Minnesota Power.

Being involved in national organizations, such as the Lignite Energy Council (LEC), helps

Minnesota Power leverage resources and educate policymakers. Minnesota Power owns

BNI Coal, a lignite mine in North Dakota. Most electricity produced in North Dakota

is exported, primarily to Minnesota. Federal climate change initiatives to reduce carbon

emissions from power plants were main topics at the LEC’s 2009 annual meeting. Libro

provided industry perspective as a panelist with other energy experts and government

officials.

In 2009, Minnesota Power hosted numerous lawmakers at its northern Minnesota

facilities, including U. S. Senator Al Franken, U. S. Senator Amy Klobuchar and the Legislative-

Citizen Commission on Minnesota Resources (LCCMR). The LCCMR is made up of 10

state legislators and seven private citizens. Members and their staffs toured Minnesota

Power’s Fond du Lac Dam and participated in an Iron Range visit that highlighted Taconite

Ridge Wind Energy Center. The experience helped lawmakers understand Minnesota

Power’s progress toward meeting state renewable energy mandates and the costs

associated with purchasing required technology and building necessary infrastructure.

5

stewardshipR e d u c i n g E m i s s i o n s

A d v a n c i n g R e n e w a b l e E n e r g y

M a n a g i n g L a n d s & L a k e s

“We think it is just good business to take care of the environment. It is not taken for granted.

It is an expectation that environmental stewardship is a core value.”

Mike Polzin, Renewable Fuels Coordinator, “Minnesota Values”

E c o Te a m — L e a d i n g b y E x a m p l e

6

A clean, healthy environment is important to everyone. Minnesota Power

is committed to further reducing emissions at its coal-fired power

plants. Over the past few years, it has invested hundreds of millions of dollars

in advance of governmental mandates to upgrade its generating facilities with

state-of-the-art emission-control technology and equipment.

This includes $�00 million in retrofits at Boswell Energy Center in Cohasset

to improve efficiency and reduce mercury, sulfur dioxide, nitrogen oxide

(NOx) and particulate emissions by up to 90 percent on some units. The

largest component was an overhaul of Boswell Unit �. The mammoth

project required eight stories of scaffolding inside a huge boiler and

created approximately 1,000 construction jobs at the peak of activity. It was

completed on schedule in November 2009 with minimal downtime and an

outstanding safety record.

“We were very pleased with the quality of work and the flexibility of the

construction schedule,” said Josh Skelton, operations manager, Minnesota

Power. “Well over one million hours of work were completed with virtually

zero injuries.”

With its new environmental controls, Boswell Unit � rivals any new coal-fired

plant being built today at a far lower cost. Upgrades on Boswell Units 1, 2

and � also have been completed and will significantly reduce NOx emissions.

A turbine replacement on Unit � will improve efficiency, generating an

additional 60 MW of electricity with no net increase in emissions.

R e d u c i n g E m i s s i o n s

7

wind North Dakota’s powerful winds are a rich source

of renewable energy. Minnesota Power plans to harness that

potential with a new 75 MW commercial wind project near

Center, North Dakota. The $180 million Bison I Wind Energy

Center will be constructed over two years and completed in

2011. It will feature �� enormous turbines with an annual energy

output of �00,000 MWh—enough to power 25,000 homes per

year. Blades, towers and nacelles for the project will be shipped

through the Port of Duluth-Superior, providing jobs for port

workers and ground transportation companies that specialize

in oversized cargo.

Minnesota Power has long-term agreements to purchase 98 MW

of electric output from two other wind farms in Oliver County,

North Dakota. It recently acquired a �65-mile, 250-kilovolt direct

current transmission line to deliver this renewable wind energy

from North Dakota to customers in Minnesota. Recycling an

existing line rather than building new is a strategic move that will

bring long-term cost savings for customers.

Minnesota Power was producing and distributing renewable energy long before it was cool to be “green.” It has operated the

largest hydropower system in Minnesota for more than a century and continues to expand its renewable energy portfolio

with major investments in wind power and biomass projects. Under Minnesota law, the state’s electric utilities must produce

25 percent of their energy from renewable sources by 2025. Minnesota Power is nearly halfway to achieving this ambitious goal

and on track to meet it well ahead of schedule.

A d v a n c i n g R e n e w a b l e E n e r g y

8

Meanwhile, Minnesota Power’s 25 MW Taconite Ridge

Wind Energy Center is meeting expectations and generating

renewable energy on the Iron Range. The facility is a model of

sustainable design. Minnesota Power is seeking Leadership in

Energy and Environmental Design (LEED) Gold Certification

for the Taconite Ridge operations and maintenance building,

which houses the wind turbine controls.

The wind energy industry has potential to benefit northern

Minnesota beyond providing “green” power. It could be a

source of new jobs and manufacturing. A number of wind

energy component manufacturers have visited the region,

working with Minnesota Power and other members of

the Area Partnership for Economic Expansion to explore

opportunities for expansion or relocation. A reception held

during the 2009 American Wind Energy Association meeting

in Chicago introduced more than 100 industry representatives

to the Northland’s strategic benefits. Minnesota Power played

a key role in organizing that networking event and brought a

credible electric utility perspective to the conversation.

9

wood Northland forests present growing opportunities for biomass, or

renewable fuel made from organic matter. Fast growing tree species, forest

residue and wood waste are viable sources of energy, and Minnesota Power is

investing in projects that convert these products into electricity. In September

2009, the company purchased steam boilers and wood-handling facilities at the

Hibbard Renewable Energy Center on Duluth’s waterfront from the City of

Duluth. The Hibbard plant burns wood waste to produce steam for NewPage

Corporation’s pulp and paper mill. Minnesota Power plans to invest $22 million

in upgrading the facility. This will triple its biomass production capacity from

70,000 MWh to 210,000 MWh and supply renewable energy to both the paper

mill and other Minnesota Power customers.

Minnesota Power operates a similar biomass facility in Grand Rapids, providing

steam and electricity to the UPM Blandin paper mill using wood waste from

area loggers for fuel. Rapids Energy Center is stockpiling timber and brush being

cleared for a major Enbridge pipeline expansion through northern Minnesota

and will burn it to generate additional electricity. It illustrates how developing

key partnerships can contribute to meeting environmental goals.

Managing area forests to support a sustainable biomass industry is very important

to Minnesota Power. Staff members recently traveled with a �0-member

coalition to sites in Minnesota, Canada, Finland and Sweden as part of the

Blandin Foundation’s Vital Forests Vital Communities initiative. This “Seeing

the Forest AND the Trees” tour raised awareness of how other countries

successfully manage forests and forest productivity.

“We need to understand how to use our forest resources for the highest value,”

said Steve Betzler, key account manager, Minnesota Power, who participated in

the international forest productivity tour. “Finland has similar weather, trees and

soil, but its forests are managed more extensively and are far more productive.

Some of their strategies are transferable to our region.”

Minnesota Power also is interested in the carbon implications of biomass. It has

provided research funding to the University of Minnesota and the Minnesota

Forest Resource Council to advance knowledge of carbon science as it relates

to biomass and reforestation.

10

water The power of moving water has been generating electricity

in the Northland for more than a century. Minnesota Power is the largest

hydroelectric producer in Minnesota and owns and operates 11 hydropower

facilities. It continually maintains and modernizes its system to ensure a steady

flow of clean, renewable energy, while considering conservation, fish and

wildlife habitat protection, recreational opportunities and other beneficial uses

of rivers.

Schools and community groups often schedule guided tours of the Thomson

Hydroelectric Station in Jay Cooke State Park to learn more about this powerful

resource. Other facilities, including the Little Falls Hydroelectric Station, are

opened to the public on special occasions, such as the annual Little Falls Dam

Festival. Along with generating its own hydroelectricity, Minnesota Power has

long-term agreements to purchase supplies from Manitoba Hydro in Canada.

11

M a n a g i n g L a n d s & L a k e s

M innesota Power is privileged to be one of the largest private property owners

in northern Minnesota. Its hydroelectric system includes reservoir lakes that

feature some of the region’s most beautiful shorelines, islands and wildlife habitats. Much of

the lakefront property is leased to Northland families for homes and cabins, maintained as

public boat launches and recreation areas, and preserved for environmental education. Large

tracts have been designated for conservation so these treasured resources are available to

future generations.

Stewardship is a core value at Minnesota Power. The company strives to balance a variety

of uses, demands and expectations on its own property and encourages others to do the

same with woodland management programs for landowners and logger education. The

Boulder Lake Management Area, established in 1991, is an 8,250-acre outdoor classroom

that demonstrates integrated management through interpretive trails, public programs and

formal environmental education activities. The goal is to protect lands that have important

natural resources while encouraging their responsible use for other public benefits.

Spruc ing up Boswe l l A team of 20 Minnesota Power employees joined local high school

and college students for a special Arbor Day event at Boswell Energy Center. The group planted

an additional 4,000 white spruce seedlings to a tree windbreak originally planted in 2008. The

wall of trees will help prevent erosion and assist in managing blowing dust at the site. Tree planting

also removes greenhouse gases from the atmosphere.

12

E c o Te a m — L e a d i n g b y E x a m p l e

E nergy and resource efficiency begins at home. At Minnesota Power, an employee-

led Eco Team continually looks for ways to consume less energy and minimize waste

by educating workers and families about energy efficiency, recycling, water conservation

and other sustainability practices.

“The Eco Team was formed by a group of concerned employees who wanted to make

positive changes without spending a lot of money,” said Karen Virta, call center supervisor,

who helps coordinate Eco Team activities at Herbert Service Center in Duluth.

Herbert Service Center has a culture of conservation. There are traditional recycling

bins at many locations, energy-efficient lights with occupancy sensors, an e-waste trailer

for obsolete electronics, and collection sites for old office equipment, oil, cable, wire and

wood pallets that could be recycled or reused. People turn off computers at the end of

the day, dry their hands with super-efficient blowers, and print on two sides of a page

instead of one. Fluorescent light bulbs are used and disposed of following Environmental

Protection Agency and Minnesota Pollution Control Agency guidelines.

Similar efforts are underway at Minnesota Power’s general office building and other

facilities—customized by employees at each site.

“Saving energy and reducing waste are really up to each individual,” Virta said. “A lot of

small victories add up.”

1�

conservation O n e H o m e

O n e B u s i n e s s

“Conservation needs to be a personal choice. Each one of us has to make a decision to save

energy and get the most out of our energy dollars. Minnesota Power’s role is to help you

make a difference in your home, business and community.”

George Agriesti, Senior Marketing Analyst, Conservation Improvement Program, “Minnesota Values”

O n e C o m m u n i t y

1�

O n e H o m e

T he first step toward using energy more efficiently is to understand how it currently

is used. Your Home Energy Report is a new tool developed by Minnesota Power

to help residential customers save energy. Households that complete an online survey

at www.mnpower.com/homeenergyreport receive a customized report with strategies

for immediate and long-term home energy savings. The response may lead to a smart

metering pilot program that would give homeowners even more control of their energy

decisions.

“In times of increasing energy costs, it is important to give customers information about

how they use energy and advice to use it more efficiently,” said Tina Koecher, Conservation

Improvement Program administrator, Minnesota Power.

Another tool developed in 2009 and planned for broad implementation in 2010 is Home

Performance, an expanded energy-audit program that includes sophisticated benchmarking

tools and building diagnostics. Early results show many homeowners could reduce annual

energy consumption (combined gas and electric) 20 to �0 percent by implementing cost-

effective measures. Collaborative efforts with Duluth and Park Rapids and the gas utilities

serving these areas are underway. Both cities plan to establish low interest revolving loan

funds for residential energy-efficiency improvements using federal stimulus dollars. This

would complement current conservation program offerings and has the potential to

remove hurdles to implementing efficiency improvements.

Minnesota Power has a history of educating home construction professionals about energy

efficiency and offering incentives for high performance housing. For 20 years, it has hosted

the annual Energy Design Conference & Expo in Duluth, an event that draws nationally

recognized presenters, dozens of vendors, and more than 1,000 attendees each year to

learn about cutting-edge conservation topics involving construction products, systems and

related issues.

The utility’s Triple E New Construction Program provides rebates for homes that meet

stringent standards for energy efficiency, including those set by ENERGY STAR® for new

homes. In 2009, Minnesota Power was honored for these efforts with an ENERGY STAR®

Leadership in Housing Award.

It may seem strange, but Minnesota Power wants customers

to use less energy. Conservation is necessary to meet the region’s future

energy needs. It saves money, offsets rising energy costs, and is good for the

environment. It is also crucial to achieving government-mandated targets for

renewable energy and greenhouse gas emissions.

Every household, business and community has the power to make positive

energy choices in their daily lives. Minnesota Power helps customers achieve

their conservation goals by providing information and incentives that make

energy-saving choices easy, affordable and comfortable.

15

O n e B u s i n e s s

I n today’s economy, businesses of all sizes are looking for ways to save

energy, improve productivity, lower costs and boost environmental

performance. Minnesota Power helps commercial customers accomplish these

goals with resources and incentives for energy conservation improvements. It

provides design review, energy auditing and PowerGrant rebates for energy-

saving projects, plus research grants to test innovative technology.

First National Plaza in Cloquet, Minn., recently was renovated to include one of

the most advanced heating, cooling and ventilation systems in the world. It uses

variable refrigerant flow zoning (VRFZ) to capture heat from areas that are too

warm and pipe it to zones where heat is needed. The technology is common in

Asia, Europe and other parts of the world. A research grant through Minnesota

Power’s conservation program helped fund the project to determine if energy-

efficient VRFZ is effective in northern Minnesota.

Outdoor induction lighting is another energy-efficient technology being tested

in the Northland. It was installed at the Minnesota Air National Guard base in

Duluth. Base officials worked with Minnesota Power to reinvest PowerGrant

rebates from other conservation projects to pay for the new lights—saving

taxpayers thousands of dollars.

The Duluth Entertainment Convention Center expansion is the subject of another

Minnesota Power research study, on the energy-saving impact of commissioning

and retro-commissioning. It will determine whether a systematic process of

verifying and documenting that all building systems are installed properly and

interact with each other as planned improves energy performance.

16

Communities across the Northland are learning energy choices make a

difference. One example is Crosby-Ironton School District. The district is

engaged in a pilot program that connects Schools for Energy Efficiency (SEE),

an award-winning K-12 energy conservation program, with utility rebates for

measurable, verifiable results. Minnesota Power and the district’s gas supplier are

monitoring and comparing quarterly energy usage against baseline information.

They are rebating energy savings, building an account the school district can use

for additional energy-efficiency improvements.

The partnership also includes Minnesota Power’s Learn & Earn, an energy education

program that teaches students about home energy conservation and raises money

for schools through the sale of energy-efficient lighting products. A similar tool is

available for higher educational institutions. The University of Minnesota Duluth

(UMD) and Minnesota Power have partnered on multiple “A Brighter UMD”

energy events to promote energy-efficient lighting on campus and raise money for

U-Pass, which allows students and employees to ride city buses for free.

Linking energy education and conservation incentives to worthy community

causes supports Minnesota Power’s role as a corporate citizen. Save & Benefit—

Ending Homelessness in St. Louis County was a partnership between Minnesota

Power, St. Louis County, the United Way and area congregations. The campaign

challenged churches and synagogues to address social concerns of homelessness

by conserving energy in their own homes. Minnesota Power provided rebates

and incentives to encourage people to buy ENERGY-STAR®-rated light bulbs and

appliances and to turn in old refrigerators and freezers for recycling. United Way

organizations received donations for every item sold or collected. The effort raised

$7,800 for programs that help the homeless in St. Louis County. An earlier Great

Refrigerator Roundup partnership between Minnesota Power, St. Louis County

and the Salvation Army raised $10,000 for HeatShare, a program that assists low

income households pay winter heating bills.

These two community events saved enough energy to power �9 homes for a

year. The carbon equivalent would be taking 106 cars off the road. As world-

renowned anthropologist Margaret Meade once said, “Never doubt that a small

group of committed citizens can change the world.”

O n e C o m m u n i t y

17

opportunityP r o m o t i n g P e e r P o w e r

I n s p i r i n g S u c c e s s

E n c o u r a g i n g C i v i c L e a d e r s h i p

“We have a supportive work environment where employees are encouraged to believe in

themselves and help one another learn and grow.”

Deb Amberg, Senior Vice President, General Counsel and Secretary

H o n o r i n g S e r v i c e

C o n n e c t i n g Vo l u n t e e r s

18

M innesota Power employees are talented, committed and dedicated.

The company works hard to provide a safe, supportive, healthy work

environment where people thrive.

Those with leadership potential and interest are given opportunities to advance.

That explains why senior management at Minnesota Power and ALLETE tends to

be “homegrown.” Offering employees experiences that help them grow and a

framework of shared values create thoughtful, principled leaders who are confident

in their abilities and responsibilities.

I n s p i r i n g S u c c e s s

M innesota Power is a large complex organization with many departments

and multiple sites. An informal program called Peer Power helps

women of various ages and occupations in the company stay connected and build

community.

Inspired by a similar leadership circle started by Deb Amberg, senior vice president,

general counsel and secretary, Bethany Owen, director of transmission regulatory

compliance and business support, sponsors Peer Power to encourage and inspire

women working outside the general office building who might be interested in

leadership positions. The group meets to network, discuss formal leadership

training, and learn from successful women in the company and community.

“Peer Power is creating an encouraging environment for women of very diverse

backgrounds and experiences,” Amberg said. “Participants in this and other

leadership groups are excited about the culture of success at Minnesota Power.”

P r o m o t i n g P e e r P o w e r

19

E n c o u r a g i n g C i v i c L e a d e r s h i p

Community involvement is a hallmark of true leadership. Minnesota Power and its parent company,

ALLETE, encourage employees to share their leadership skills in ways that move communities

forward. Men and women at all levels of the company are sought after as volunteer members of

nonprofit boards.

Some serve in high profile roles with broad influence. For example, Dave McMillan, senior vice

president of marketing, regulatory and public affairs, ALLETE, chairs the Minnesota Chamber of

Commerce board of directors for 2009-2010. The board sets public policy priorities for the statewide

business community, communicates business interests to state lawmakers, and develops strategies to

ensure Minnesota businesses can grow and succeed.

Inez Wildwood, manager of workforce and talent development, ALLETE, serves on the Minnesota

Governor’s Workforce Development Council, the Minnesota Job Skills Partnership Board, and

numerous other workforce-related initiatives. That tireless energy earned her a 2009 Trailblazer

Exemplary Business Leadership Award from the Insight Center for Community Economic Development

and the National Network of Sector Partners. The award recognized her as an outstanding force in

building and promoting workforce initiatives and creating new opportunities for workers.

Creating new opportunities for the entire region is the goal of Nancy Aronson Norr, manager of

regional development, Minnesota Power. She serves in many capacities, including chair of the Duluth

Airport Authority. She helped lead the board through multiple years of planning for a new $65 million

terminal that broke ground in fall 2009.

“This new terminal project will give our area an economic boost, both in the short term with the

200-plus construction jobs that it creates and also in the long term by supporting competitive air

service and globally engaged businesses that sustain our community,” Aronson Norr said at the

groundbreaking.

20

H o n o r i n g S e r v i c e

M ilitary service is a proud tradition. Minnesota Power is honored to support

employees and their family members who are engaged around the world

and at home in the armed forces. The North Dakota National Guard recently

recognized BNI Coal, a Minnesota Power affiliate, as a patriotic employer. BNI

General Manager Wade Boeshans also received an individual Freedom Team Salute

Commendation from the U. S. Army, honoring his outstanding support and sacrifice

as an Army employer. He was nominated by SPC Scott W. Becknell, one of three BNI

employees serving tours in Kosovo.

C o n n e c t i n g Vo l u n t e e r s

I t feels good to volunteer. Minnesota Power employees get a lot of satisfaction

from using their time and talents to help area nonprofits, schools, churches and

other organizations serving area needs. A new initiative called Community Connections

makes it easier for employees to match their volunteer interests with the needs of

nonprofits. One click on an Intranet link, and people can access a whole database of

regional volunteer openings and opportunities.

21

safety P r o m o t i n g G o o d H e a l t h

“Over the past few years, we have seen businesses throughout Minnesota put

significant resources toward keeping their job sites and workplaces safe, but

Minnesota Power leads the way.”

Steve Sviggum, Commissioner, Minnesota Department of Labor and Industry

D e m a n d i n g S a f e t y

22

S afety is vital in the utility business. Minnesota Power’s outstanding safety record is no accident. Sending every

person home unhurt at the end of the day takes total commitment. Management, union leaders and employees

cooperate to ensure a safe working environment. Safety improvement teams review and audit each site for safety, identify

potential hazards, and make sure they are corrected.

This vigilance has earned Minnesota Power the right to display MNSTAR flags at all of its 28 sites through 201�. MNSTAR is

a certification program of the Minnesota Department of Labor and Industry. It recognizes excellence in safety and health

management that exceeds OSHA standards. Minnesota Power has been a MNSTAR corporation since 2000. Superior

Water, Light & Power, a Minnesota Power affiliate, also was honored for its safety performance in 2009. It was one of 17

Wisconsin companies to receive a Wisconsin Corporate Safety Award.

Many Minnesota Power employees are so well trained in safety, they serve as first responders in their local communities.

That high level of preparation saved a life in 2009, when a contractor working at Boswell Energy Center suffered a heart

attack and an employee acted quickly to assist. The Boswell Unit � retrofit project had an outstanding safety record with

more than one million work hours and virtually zero lost-time injuries.

Contractors who work near power lines and in Minnesota Power facilities need to recognize the potential dangers of

electricity and use precautions for their own safety and that of the community. Minnesota Power conducts extensive

contractor training and emergency response exercises. It supports community emergency preparedness. In 2009,

Minnesota Power Foundation awarded grants to support fire and ambulance services in two North Dakota counties and

in Cohasset, areas in which company operations are expanding.

D e m a n d i n g S a f e t y

H ealth and wellness are part of the daily routine at Minnesota Power. Employees often spend early mornings,

lunch hours or evenings exercising or enjoying fitness classes in onsite wellness centers. The company offers

flu shots, interest-free wellness loans, smoking cessation incentives and clubs dedicated to walking, running, skiing and

other team sports to encourage healthy, active lifestyles. It is widely recognized as a leader for its exceptional health and

wellness initiatives. “We invest in programs that keep our people active and involved,” said Glen Porter, vice president of

human resources, ALLETE. “Healthy, engaged workers are happier and more productive.”

P r o m o t i n g G o o d H e a l t h

2�

prosperityS t r e n g t h e n i n g I n d u s t r i e s

G r o w i n g B u s i n e s s e s

“In challenging economic times, it is vitally important for a region to strengthen its core

industries and cultivate new businesses with the potential for growth.”

Nancy Aronson Norr, Manager, Regional Development

C e l e b r a t i n g A b i l i t i e s

D e v e l o p i n g Ta l e n t s

2�

S t r e n g t h e n i n g I n d u s t r i e s

A new era in Iron Range mining began in December 2009 when Mesabi Nugget began

producing value-added iron nuggets at its new plant near Hoyt Lakes. The project,

located on the former site of LTV Steel, is a partnership between Steel Dynamics, Inc.,

and Kobe Steel. It has created around 70 permanent jobs.

Mesabi Nugget requires robust, reliable power to operate its plant. Minnesota Power

built a transmission line to the site and constructed a substation to meet the facility’s long-

term energy needs. It also drew upon the expertise of Superior Water, Light & Power to

help develop onsite infrastructure for natural gas.

Minnesota Power has supported redeveloping the property since LTV Steel closed its

plant in 2001, putting 1,�00 people out of work. It was a key partner in the East Range

Economic Response Team, formed to address the closure, and currently helps set strategy

for the Range Readiness Initiative. Range Readiness is a coordinated regional response to

meet the housing, workforce and infrastructure needs of Mesabi Nugget and other large

industrial projects.

Several of those projects are mining related, including PolyMet, which is poised to begin

mining copper, nickel and other nonferrous metals on the Iron Range. In 2009, Minnesota

Power joined the Minnesota Department of Employment and Economic Development,

Minnesota Mining, the Iron Mining Association and Iron Range Resources to commission

a new mining impact study, which will help decision makers understand the industry’s

potential for the region.

One benefit is its ability to attract vendors and service suppliers. Owners of Hydro-Klean,

an Iowa-based company, announced their intent to open a satellite office in Duluth while

in town for a Society of Mining Engineers event. The company provides hydro-blasting,

power vacuuming and other services to industrial and municipal clients.

Business owners researched the region through www.NorthlandConnection.com.

Northland Connection staff helped them locate a site, and the Area Partnership for

Economic Expansion (APEX ) provided resumes and workforce assistance. Hydro-Klean

hopes to employ 25 to �0 workers in Duluth over the next few years. Minnesota Power is

an active investor and founder of both APEX and Northland Connection.

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Companies of all sizes need money to grow. Minnesota Power connects

commercial customers with regional resources, including loan funds,

equity capital and other gap financing. The Arrowhead Regional Development

Commission’s Revolving Loan Fund is one of those resources. In 2009, Minnesota

Power helped The Northspan Group write a grant to the U.S. Department of

Commerce Economic Development Administration to recapitalize the fund with

more than $2 million. This new funding will provide flexible low interest loans for

businesses engaged in manufacturing, value-added products, tourism, back office

operations and innovative technology.

Minnesota Power’s economic development team also is actively recruiting investors

for the Lake Superior Angel Network and supporting the Northland Foundation’s

efforts to connect area businesses with Granite Equity, a new source of equity capital

in the region. One of Granite Equity’s focus areas is business succession, an issue

facing many Northland companies as the population ages. A succession strategies

forum was held recently to educate regional business owners about options as they

consider selling or transferring ownership to a new generation.

G r o w i n g B u s i n e s s e s

P eople with the drive and motivation to overcome obstacles make terrific

workers. Disability Mentoring Day encourages employers to meet students

and job seekers with disabilities who are interested in exploring career opportunities.

The event marked its tenth year with a national launch and career fair in Duluth.

Minnesota Power was the lead local sponsor. Company representatives made

presentations, held mock interviews with students, and staffed a booth where job

seekers could learn more about the company and its workforce needs.

“Individuals with disabilities bring many skills and talents to the workforce,” said

Nicole Johnson, supervisor of human resources, ALLETE/Minnesota Power. “It is

exciting to see the number of students interested in finding jobs and their wealth of

self confidence and determination.”

Several Minnesota Power employees have joined E-Connect, a new program

through which they can mentor high school students with disabilities online and

via e-mail.

C e l e b r a t i n g A b i l i t i e s

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D e v e l o p i n g Ta l e n t s

R egional success depends on growing and developing a talented workforce,

so young people have the right skills to find rewarding jobs in the Northland.

Minnesota Power works with area high schools and college outreach programs to help

students assess their career options. Staff members attend job fairs, visit classrooms, make

presentations and arrange career shadowing.

Many jobs at Minnesota Power and other regional companies require specific technical skills

that take time to develop. Minnesota Power invests in innovative educational programs that

match the Northland’s current and future hiring needs. These include mobile engineering

and wind technology labs that bring cutting-edge resources to colleges and work sites,

creative degree programs and curriculum development.

Iron Range Engineering is a first-of-its-kind program in Minnesota. It allows students

who have finished two years of engineering prerequisites at state colleges in Northeast

Minnesota to complete their third and fourth years of a bachelor’s degree by working with

professional engineers at companies such as Minnesota Power. The program builds upon a

successful engineering program at Itasca Community College. It is hosted by Mesabi Range

Community & Technical College in Virginia, and four-year degrees are awarded through

Minnesota State University-Mankato.

Mesabi Range also has launched a new associate’s degree program called Energy Technical

Specialist-Wind to support renewable energy development in the region. Minnesota

Power personnel helped shape the curriculum and will provide internships and access to

Taconite Ridge Wind Energy Center. Minnesota Power partnered with Itasca Community

College to develop and launch a new associate in applied science degree in Industrial

Energy—Power Generation, which prepares students to work in generating facilities

across the region.

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philanthropy

“As a company, we are defined not only by the outstanding service and value we

provide customers and stakeholders but by our commitment to being a responsible

corporate citizen.”

Peggy Hanson, Director, Minnesota Power Foundation

S t i m u l a t i n g M i n d s

R a i s i n g E n e r g y A w a r e n e s s

R e w a r d i n g S t u d e n t A c h i e v e m e n t

B u i l d i n g H e a l t h y C o m m u n i t i e s

P r e s e r v i n g H i s t o r y & H e r i t a g e

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C ha r i t ab l e g i v i ng is vital ly impor tant

in today’s economic climate. Minnesota Power has a long history of

supporting organizations and programs that help cities, neighborhoods

and residents thrive. Through partnerships with the Salvation Army,

Arrowhead Economic Opportunity Agency and other financial

assistance programs, the company provides services to help low

income customers meet their basic needs and pay their utility bills.

Minnesota Power Foundation distributes hundreds of thousands of

dollars each year to qualified nonprofits and institutions that advance

education, the environment, community service, youth development,

arts and culture, and health and human services. These contributions,

along with corporate sponsorships, memberships and direct donations

mirror the company’s values and the priorities of its employees and

customers.

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2009 Community GivingArts & Community $220,70�

Education $188,865

Environment $�0,056

Health & Human Services $1�8,18�

United Way $260,000

Youth Development $12�,557

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B uilding radio-controlled airplanes and designing machines to sort

marbles by color were among the cool activities students enjoyed

during the Itasca Community College (ICC) Summer Engineering Camps

in 2009. The camps expose junior and senior high school students to the

fun and exciting world of engineering, while improving their problem-solving

skills and building teamwork. A grant from the Minnesota Power Foundation

helped ICC purchase new laptops, robo controllers, radio controllers and

other equipment for the camps.

Meanwhile, budding engineers and urban planners from Cook County

Middle School traveled to Washington, D.C. in 2009 to compete in the

National Engineers Week Future City Competition®. The students designed

Aquaterra, an eco-friendly city that incorporates vertical farming, fuel-

efficient transportation systems, water technologies, and wind and wave

energy to generate power. The competition engages students in creating

computer-generated and �-D models of a city of the future. Minnesota

Power Foundation provided a grant for the learning adventure.

“Aquaterra was the ‘greenest looking’ future city at both the state and

national competitions,” said Kaye Tavernier, teacher advisor. “The five-month

project was a growing and learning experience for all.”

S t i m u l a t i n g M i n d s

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H ockey is a northern Minnesota tradition, and the U.S. Hockey Hall of Fame in

Eveleth is a source of pride and major attraction for the region. A donation

from Minnesota Power has helped the facility take its show on the road. A colorful rolling

museum trailer, painted with murals and filled with traveling exhibits, is now a common

sight at area hockey games, tournaments and parades.

“The U.S. Hockey Hall of Fame is a landmark in our service territory,” said Dale Sundin,

regional account manager, Minnesota Power. “This exposure will draw new visitors and

share the history and passions of our region with others.”

P r e s e r v i n g H i s t o r y & H e r i t a g e

R a i s i n g E n e r g y A w a r e n e s s

“T he Electron” Energy Education Trailer is a popular attraction at Hartley

Nature Center in Duluth. It is a fun, hands-on way for kids of all ages to

learn about alternative energy sources and conservation using musical instruments and

gadgets powered by different energy sources. Minnesota Power helped fund “The

Electron” to demonstrate solar, wind, biodiesel, hydro and human energy potential.

Minnesota Power offers a full range of resources to educate customers about energy and its

safe, responsible use. These include K-12 classroom materials, such as interactive games,

experiments and activity books. A live, in-school safety education program featuring The

National Theatre for Children and Louie the Lightning Bug will begin visiting area schools

in 2010.

Each summer, area teachers are invited to learn about the Upper Midwest’s lignite coal

industry through a summer seminar called “Lignite: Our Regional Resource” at Bismarck

State College in North Dakota. Minnesota Power pays tuition and ground transportation

for 10 teachers to participate. The seminar includes a site visit to BNI Coal, a Minnesota

Power subsidiary.

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R e w a r d i n g S t u d e n t A c h i e v e m e n t

P aying for college becomes more challenging for families every

year. Minnesota Power Foundation assists area students with two

scholarship programs.

The Community Involvement Scholarship program provides 20 area high

school students with $2,500 scholarships, based on their commitment to

volunteerism and involvement in their communities. Over the years, it has

helped hundreds of civic-minded youth achieve their higher education goals.

The New Generation Scholarship program is designed to help current

students at colleges in Minnesota Power’s service territory complete degrees

that match regional workforce needs. It rewards committed individuals

who are positioning themselves to find jobs and live in the Northland.

The program provides $1,000 scholarships for students enrolled in two-

year associate degree programs and $2,500 for those enrolled in four-year

bachelor degree programs. In 2010, New Generation Scholarship eligibility

will extend into North Dakota, where BNI Coal is located and Minnesota

Power is building the Bison I Wind Energy Center.

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H ealthy, sustainable communities are great places to live, work,

do business and raise families. Neighborhoods across Duluth are

transforming themselves into vibrant communities of choice through At

Home in Duluth, a collaboration headed by Duluth Local Initiatives Support

Corporation (Duluth LISC).

Many positive activities were highlighted during At Home in Duluth’s

“Connecting the Dots” Neighborhood Showcase and Assembly in

September 2009. They included investments in housing, streetscapes,

storefronts, homeowner education programs, workforce training and

community safety initiatives. Five Neighborhood Heroes were honored,

as well. Minnesota Power is a longtime supporter of Duluth LISC’s

neighborhood revitalization efforts and was a key sponsor of “Connecting

the Dots.”

Central Minnesota communities also are taking a grassroots approach to

planning and development. The Healthy Communities Partnership (HCP),

a program of the Initiative Foundation in Little Falls, provides training and

resources to engage citizens and all segments of a community in creating

shared visions and action plans. Four to five communities can participate

each year, and those that complete the process are eligible for grants to

implement their ideas. Minnesota Power Foundation supports HCP and

other programs of the Initiative Foundation, including Youth as Resources,

which involves young people in community change.

B u i l d i n g H e a l t h y C o m m u n i t i e s

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Yo u r positive energy s e t s g r e a t t h i n g s i n m o t i o n .

Thank you to each and every Minnesota Power employee, customer, partner and stakeholder

for doing your part to move communities forward.

For more information, please contact:

Peggy Hanson | Community Relations & Minnesota Power Foundation Director

(218) �55-��80 | mhanson@mnpower.com

Visit our Web sites:

www.mnpower.com | www.mnpowerfoundation.org

Centura Silk paper manufactured by NewPage Corporation was used for the 2009-2010 Minnesota Power Community Investment Report. Minnesota Power is proud to use the high quality product of a valued customer in this report.

10% total recovered fiber/all post-consumer fiber