| T | Quarterly      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934 |
|---|---------------------------------------------------------------------------------------------------|

| £ | Transition      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934 |
|--------|----------------------------------------------------------------------------------------------------|

| Minnesota                                                           |   | 41-0418150                             |
|---------------------------------------------------------------------|--------|----------------------------------------|
| (State      or other jurisdiction of incorporation or organization) |   | (IRS      Employer Identification No.) |

| Large      Accelerated Filer T    | Accelerated      Filer £              |
|-----------------------------------|--------------------------------------------|
| Non-Accelerated      Filer £ | Smaller      Reporting Company £ |

----

|                                                                                       |                                          |                                                                                            | Page   |
|--------------------------------------------------------------------------------------------|-----------------------------------------------|-------------------------------------------------------------------------------------------------|--------|
|                                                                                       |                                          |                                                                                            |   |
| Definitions                                                                                |                                          |                                                                                            | 3      |
|                                                                                       |                                          |                                                                                            |   |
| Safe Harbor Statement Under the Private      Securities Litigation Reform Act of 1995 | 5                                             |
|                                                                                       |                                          |                                                                                            |   |
| Part I.                                                                                    | Financial Information                         |                                                                                            |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Item 1.                                       | Financial Statements (Unaudited)                                                                |   |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Consolidated Balance Sheet -                  |                                                                                            |
|                                                                                       |                                          | September 30, 2009 and December 31, 2008                                                        | 6      |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Consolidated Statement of Income -            |                                                                                            |
|                                                                                       |                                          | Quarter and Nine Months Ended September 30, 2009 and      2008                                  | 7      |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Consolidated Statement of Cash Flows -        |                                                                                            |
|                                                                                       |                                          | Nine Months Ended September 30, 2009 and    2008                                                | 8      |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Notes to Consolidated Financial    Statements | 9                                                                                               |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Item 2.                                       | Management’s Discussion and Analysis of Financial      Conditionand Results of Operations | 25     |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Item 3.                                       | Quantitative and Qualitative Disclosures about Market      Risk                                 | 40     |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Item 4.                                       | Controls and Procedures                                                                         | 41     |
|                                                                                       |                                          |                                                                                            |   |
| Part II.                                                                                   | Other Information                             |                                                                                            |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Item 1.                                       | Legal Proceedings                                                                               | 41     |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Item 1A.                                      | Risk Factors                                                                                    | 41     |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Item 2.                                       | Unregistered Sales of Equity Securities and Use of      Proceeds                                | 42     |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Item 3.                                       | Defaults Upon Senior Securities                                                                 | 42     |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Item 4.                                       | Submission of Matters to a Vote of Security      Holders                                        | 42     |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Item 5.                                       | Other Information                                                                               | 42     |
|                                                                                       |                                          |                                                                                            |   |
|                                                                                       | Item 6.                                       | Exhibits                                                                                        | 43     |
|                                                                                       |                                          |                                                                                            |   |
| Signatures                                                                                 |                                          |                                                                                            | 44     |

----

Definitions

| Abbreviation      or Acronym | Term                                                                                                                                                                                        |
|------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| AFUDC                        | Allowance      for Funds Used During Construction – consisting of the cost of both the      debt and equity funds used to finance utility plant additions during      construction periods |
| ALLETE                       | ALLETE,      Inc.                                                                                                                                                                                |
| ALLETE      Properties       | ALLETE      Properties, LLC and its subsidiaries                                                                                                                                                 |
| ARS                          | Auction      Rate Securities                                                                                                                                                                     |
| ATC                          | American      Transmission Company LLC                                                                                                                                                           |
| Bison      I                 | Bison      I Wind Project                                                                                                                                                                        |
| BNI      Coal                | BNI      Coal, Ltd.                                                                                                                                                                              |
| BNSF                         | BNSF      Railway Company                                                                                                                                                                        |
| Boswell                      | Boswell      Energy Center                                                                                                                                                                       |
| Company                      | ALLETE,      Inc. and its subsidiaries                                                                                                                                                           |
| DC                           | Direct      Current                                                                                                                                                                              |
| EPA                          | Environmental      Protection Agency                                                                                                                                                             |
| ESOP                         | Employee      Stock Ownership Plan                                                                                                                                                               |
| FASB                         | Financial      Accounting Standards Board                                                                                                                                                        |
| FERC                         | Federal      Energy Regulatory Commission                                                                                                                                                        |
| Form      10-K               | ALLETE      Annual Report on Form 10-K                                                                                                                                                           |
| Form      10-Q               | ALLETE      Quarterly Report on Form 10-Q                                                                                                                                                        |
| FTR                          | Financial      Transmission Rights                                                                                                                                                               |
| GAAP                         | United      States Generally Accepted Accounting Principles                                                                                                                                      |
| GHG                          | Greenhouse      Gases                                                                                                                                                                            |
| IBEW      Local 31           | International      Brotherhood of Electrical Workers Local 31                                                                                                                                    |
| Invest      Direct           | ALLETE’s      Direct Stock Purchase and Dividend Reinvestment Plan                                                                                                                         |
| kV                           | Kilovolt(s)                                                                                                                                                                                      |
| Laskin                       | Laskin      Energy Center                                                                                                                                                                        |
| Minnesota      Power         | An      operating division of ALLETE, Inc.                                                                                                                                                       |
| Minnkota      Power          | Minnkota      Power Cooperative, Inc.                                                                                                                                                            |
| MISO                         | Midwest      Independent Transmission System Operator, Inc.                                                                                                                                      |
| MPCA                         | Minnesota      Pollution Control Agency                                                                                                                                                          |
| MPUC                         | Minnesota      Public Utilities Commission                                                                                                                                                       |
| MW      / MWh                | Megawatt(s)      / Megawatt-hour(s)                                                                                                                                                              |
| NDPSC                        | North      Dakota Public Service Commission                                                                                                                                                      |
| Non-residential              | Retail      commercial, non-retail commercial, office, industrial, warehouse, storage      and institutional                                                                                     |
| NOX                          | Nitrogen      Oxide                                                                                                                                                                              |
| Note      ___                | Note      ___ to the consolidated financial statements in this Form    10-Q                                                                                                                      |
| Oliver      Wind I           | Oliver      Wind I Energy Center                                                                                                                                                                 |
| Oliver      Wind II          | Oliver      Wind II Energy Center                                                                                                                                                                |

----

| Definitions      (Continued)  |
|------------------------------------|
| Abbreviation      or Acronym       | Term  |
| Palm      Coast Park               | Palm      Coast Park development project in Florida |
| Palm      Coast Park District      | Palm      Coast Park Community Development District |
| PSCW                               | Public      Service Commission of Wisconsin |
| Rainy      River Energy            | Rainy      River Energy Corporation - Wisconsin |
| SEC                                | Securities      and Exchange Commission |
| SO2                                | Sulfur      Dioxide |
| Square      Butte                  | Square      Butte Electric Cooperative |
| SWL&P                          | Superior      Water, Light and Power Company |
| Taconite      Harbor               | Taconite      Harbor Energy Center |
| Town      Center                   | Town      Center at Palm Coast development project in Florida |
| Town      Center District          | Town      Center at Palm Coast Community Development District |
| WDNR                               | Wisconsin      Department of Natural Resources |

----

Safe 

| · | our      ability to successfully implement our strategic  objectives;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | our      ability to manage expansion and integrate acquisitions;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| · | prevailing      governmental policies, regulatory actions, and legislation including those      of the United States Congress, state legislatures, the FERC, the MPUC, the      PSCW, the NDPSC, and various local and county regulators, and city      administrators, about allowed rates of return, financings, industry and      rate structure, acquisition and disposal of assets and facilities, real      estate development, operation and construction of plant facilities,      recovery of purchased power, capital investments and other expenses,      present or prospective wholesale and retail competition (including but not      limited to transmission costs), zoning and permitting of land held for      resale and environmental matters; |
| · | the      potential impacts of climate change and future regulation to restrict the      emissions of GHG on our Regulated Operations;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| · | effects      of restructuring initiatives in the electric industry;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| · | economic      and geographic factors, including political and economic      risks;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| · | changes      in and compliance with laws and regulations;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| · | weather      conditions;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| · | natural      disasters and pandemic diseases;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| · | war      and acts of terrorism;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| · | wholesale      power market conditions;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| · | population      growth rates and demographic patterns;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| · | effects      of competition, including competition for retail and wholesale      customers;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| · | changes      in the real estate market;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| · | pricing      and transportation of commodities;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| · | changes      in tax rates or policies or in rates of inflation;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| · | project      delays or changes in project costs;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| · | availability      and management of construction      materials and skilled construction labor for capital    projects;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| · | changes      in operating expenses, capital and land      development expenditures;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| · | global      and domestic economic conditions affecting us or our      customers;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| · | our      ability to access capital markets and bank financing;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| · | changes      in interest rates and the performance of the financial      markets;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| · | our      ability to replace a mature workforce and retain qualified, skilled and      experienced personnel; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| · | the      outcome of legal and administrative proceedings (whether civil or      criminal) and settlements that affect the business and profitability of      ALLETE.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

----

|   | PART      I.  FINANCIAL INFORMATION |
|--------|-----------------------------------------------|

|   | ITEM 1.  FINANCIAL  STATEMENTS |
|--------|------------------------------------------|

ALLETE

|                                          |                                                                          |                                |  September      30, |  December      31, |
|-----------------------------------------------|-------------------------------------------------------------------------------|-------------------------------------|--------------------------|-------------------------|
|                                          |                                                                          |                                | 2009                     | 2008                    |
|                                          |                                                                          |                                |                     |                    |
| Assets                                        |                                                                          |                                |                     |
| Current      Assets                           |                                                                          |                                |
|                                          | Cash      and Cash Equivalents                                                | $54.3                               | $102.0                   |
|                                          | Accounts      Receivable (Less Allowance of $0.9 at September 30, 2009        |                                |                     |
|                                          |                                                                          | and      $0.7 at December 31, 2008) | 79.3                     | 76.3                    |
|                                          | Inventories                                                                   | 54.4                                | 49.7                     |
|                                          | Prepayments      and Other                                                    | 24.5                                | 24.3                     |
|                                          |                                                                          | Total      Current Assets           | 212.5                    | 252.3                   |
| Property,      Plant and Equipment - Net      | 1,530.5                                                                       | 1,387.3                             |
| Investment      in ATC                        | 85.1                                                                          | 76.9                                |
| Other      Investments                        | 138.8                                                                         | 136.9                               |
| Other      Assets                             | 288.2                                                                         | 281.4                               |
| Total      Assets                             | $2,255.1                                                                      | $2,134.8                            |
|                                          |                                                                          |                                |                     |                    |
| Liabilities      and Equity                   |                                                                          |                                |
| Liabilities                                   |                                                                          |                                |
| Current      Liabilities                      |                                                                          |                                |
|                                          | Accounts      Payable                                                         | $54.8                               | $75.7                    |
|                                          | Accrued      Taxes                                                            | 15.9                                | 12.9                     |
|                                          | Accrued      Interest                                                         | 9.9                                 | 8.9                      |
|                                          | Long-Term      Debt Due Within One Year                                       | 12.0                                | 10.4                     |
|                                          | Notes      Payable                                                            | 5.3                                 | 6.0                      |
|                                          | Other                                                                         | 44.2                                | 36.8                     |
|                                          |                                                                          | Total      Current Liabilities      | 142.1                    | 150.7                   |
| Long-Term      Debt                           | 628.4                                                                         | 588.3                               |
| Deferred      Income Taxes                    | 217.5                                                                         | 169.6                               |
| Other      Liabilities                        | 352.0                                                                         | 389.3                               |
|                                          | Total      Liabilities                                                        | 1,340.0                             | 1,297.9                  |
|                                          |                                                                          |                                |                     |                    |
| Commitments      and Contingencies (Note 14)  |                                                                          |                                |
|                                          |                                                                          |                                |                     |                    |
| Equity                                        |                                                                          |                                |
| ALLETE’s      Equity                    |                                                                          |                                |
|                                          | Common      Stock Without Par Value, 80.0 Shares Authorized, 34.9 and    32.6 |                                |                     |
|                                          |                                                                          | Shares      Outstanding             | 601.4                    | 534.1                   |
|                                          | Unearned      ESOP Shares                                                     | (46.9)                              | (54.9)                   |
|                                          | Accumulated      Other Comprehensive Loss                                     | (30.4)                              | (33.0)                   |
|                                          | Retained      Earnings                                                        | 381.5                               | 380.9                    |
|                                          |                                                                          | Total      ALLETE’s Equity    | 905.6                    | 827.1                   |
| Non-Controlling      Interest in Subsidiaries | 9.5                                                                           | 9.8                                 |
|                                          | Total      Equity                                                             | 915.1                               | 836.9                    |
| Total      Liabilities and Equity             | $2,255.1                                                                      | $2,134.8                            |

The accompanying notes are an integralpart of these statements.

----

ALLETE

|                                                                   |                                                |                              | Quarter      Ended |   | Nine      Months Ended |
|------------------------------------------------------------------------|-----------------------------------------------------|-----------------------------------|--------------------|--------|------------------------|
|                                                                   |                                                |                              | September      30, |   | September      30,     |
|                                                                   |                                                |                              | 2009               | 2008   |                   | 2009 | 2008 |
|                                                                   |                                                |                              |               |   |                   |   |   |
| Operating      Revenue                                                 |                                                |                              |               |   |                   |
|                                                                   | Operating      Revenue                              | $178.8                            | $201.7             |   | $550.7                 | $604.9 |
|                                                                   | Prior      Year Rate Refunds                        | –                           | –            |   | (7.6)                  | – |
|                                                                   |                                                | Total      Operating Revenue      | 178.8              | 201.7  |                   | 543.1 | 604.9 |
|                                                                   |                                                |                              |               |   |                   |   |   |
| Operating      Expenses                                                |                                                |                              |               |   |                   |
|                                                                   | Fuel      and Purchased Power                       | 69.8                              | 81.0               |   | 199.4                  | 242.3 |
|                                                                   | Operating      and Maintenance                      | 67.5                              | 74.0               |   | 224.7                  | 241.5 |
|                                                                   | Depreciation                                        | 16.1                              | 13.5               |   | 46.8                   | 39.1 |
|                                                                   |                                                | Total      Operating Expenses     | 153.4              | 168.5  |                   | 470.9 | 522.9 |
|                                                                   |                                                |                              |               |   |                   |   |   |
| Operating      Income                                                  | 25.4                                                | 33.2                              |               | 72.2   | 82.0                   |
|                                                                   |                                                |                              |               |   |                   |   |   |
| Other      Income (Expense)                                            |                                                |                              |               |   |                   |
|                                                                   | Interest      Expense                               | (8.3)                             | (6.9)              |   | (25.4)                 | (19.5) |
|                                                                   | Equity      Earnings in ATC                         | 4.4                               | 4.2                |   | 12.9                   | 11.2 |
|                                                                   | Other                                               | 0.8                               | 2.8                |   | 3.8                    | 13.9 |
|                                                                   |                                                | Total      Other Income (Expense) | (3.1)              | 0.1    |                   | (8.7) | 5.6 |
|                                                                   |                                                |                              |               |   |                   |   |   |
| Income      Before Non-Controlling Interest and  IncomeTaxes | 22.3                                                | 33.3                              |               | 63.5   | 87.6                   |
| Income      Tax Expense                                                | 6.5                                                 | 8.4                               |               | 21.5   | 28.3                   |
| Net      Income                                                        | 15.8                                                | 24.9                              |               | 42.0   | 59.3                   |
|                                                                   | Less:      Non-Controlling Interest in Subsidiaries | (0.2)                             | 0.2                |   | (0.3)                  | 0.3 |
| Net      Income Attributable to ALLETE                                 | $16.0                                               | $24.7                             |               | $42.3  | $59.0                  |
|                                                                   |                                                |                              |               |   |                   |   |   |
| Average      Shares of Common Stock                                    |                                                |                              |               |   |                   |
|                                                                   | Basic                                               | 32.8                              | 29.1               |   | 31.8                   | 28.9 |
|                                                                   | Diluted                                             | 32.9                              | 29.3               |   | 31.9                   | 29.0 |
|                                                                   |                                                |                              |               |   |                   |
| Basic      and Diluted Earnings Per Share of Common Stock              | $0.49                                               | $0.85                             |               | $1.33  | $2.04                  |
|                                                                   |                                                |                              |               |   |                   |   |   |
| Dividends      Per Share of Common Stock                               | $0.44                                               | $0.43                             |               | $1.32  | $1.29                  |

----

ALLETE

|                                                  | Nine      Months Ended                                      |
|-------------------------------------------------------|-------------------------------------------------------------|
|                                                  | September      30,                                          |
|                                                  |                                                        |   | 2009 | 2008 |
|                                                  |                                                        |   |   |   |
| Operating      Activities                             |                                                        |   |
|                                                  | Net      Income                                             | $42.0 | $59.3 |
|                                                  | Allowance      for Funds Used During Construction           | (4.5) | (2.6) |
|                                                  | Income      from Equity Investments, Net of Dividends       | (0.2) | (2.4) |
|                                                  | Gain      on Sale of Assets                                 | (0.1) | (4.7) |
|                                                  | Gain      on Sale of Available-for-Sale Securities          | – | (6.5) |
|                                                  | Depreciation      Expense                                   | 46.8 | 39.1 |
|                                                  | Amortization      of Debt Issuance Costs                    | 0.7 | 0.6 |
|                                                  | Deferred      Income Tax Expense                            | 38.9 | 18.4 |
|                                                  | Stock      Compensation Expense                             | 1.6 | 1.3 |
|                                                  | Bad      Debt Expense                                       | 1.2 | 0.9 |
|                                                  | Changes      in Operating Assets and Liabilities            |   |   |
|                                                  |                                                        | Accounts      Receivable | (4.1) | 13.6 |
|                                                  |                                                        | Inventories | (4.7) | (10.4) |
|                                                  |                                                        | Prepayments      and Other | (0.3) | 20.2 |
|                                                  |                                                        | Accounts      Payable | (4.4) | (13.0) |
|                                                  |                                                        | Other      Current Liabilities | 11.4 | 1.5 |
|                                                  | Other      Assets                                           | (7.0) | (10.2) |
|                                                  | Other      Liabilities                                      | (11.0) | (3.3) |
|                                                  |                                                        | Cash      from Operating Activities | 106.3 | 101.8 |
|                                                  |                                                        |   |   |   |
| Investing      Activities                             |                                                        |   |
|                                                  | Proceeds      from Sale of Available-for-Sale Securities    | 1.0 | 58.5 |
|                                                  | Payments      for Purchase of Available-for-Sale Securities | (1.8) | (45.1) |
|                                                  | Investment      in ATC                                      | (5.4) | (5.2) |
|                                                  | Changes      to Other Investments                           | (0.5) | (0.7) |
|                                                  | Additions      to Property, Plant and Equipment             | (200.1) | (210.0) |
|                                                  | Proceeds      from Sale of Assets                           | 0.3 | 20.3 |
|                                                  | Other                                                       | – | 1.9 |
|                                                  |                                                        | Cash      for Investing Activities | (206.5) | (180.3) |
|                                                  |                                                        |   |   |   |
| Financing      Activities                             |                                                        |   |
|                                                  | Proceeds      from Issuance of Common Stock                 | 53.7 | 35.2 |
|                                                  | Proceeds      from Issuance of Long-Term Debt               | 44.7 | 140.1 |
|                                                  | Reductions      of Long-Term Debt                           | (3.0) | (8.4) |
|                                                  | Debt      Issuance Costs                                    | (0.5) | (1.1) |
|                                                  | Dividends      on Common Stock                              | (41.7) | (38.5) |
|                                                  | Changes      in Notes Payable                               | (0.7) | 6.0 |
|                                                  |                                                        | Cash      from Financing Activities | 52.5 | 133.3 |
|                                                  |                                                        |   |   |   |
| Change      in Cash and Cash Equivalents              | (47.7)                                                      | 54.8 |
| Cash      and Cash Equivalents at Beginning of Period | 102.0                                                       | 23.3 |
|                                                  |                                                        |   |   |   |
| Cash      and Cash Equivalents at End of Period       | $54.3                                                       | $78.1 |

----

NOTES 

|                        | September      30, | December      31, |
|-----------------------------|--------------------|-------------------|
| Inventories                 | 2009               | 2008              |
| Millions                    |               |              |
|                        |               |              |
| Fuel                        | $21.8              | $16.6             |
| Materials      and Supplies | 32.6               | 33.1              |
|                        |               |              |
| Total      Inventories      | $54.4              | $49.7             |

|                            | September      30, | December      31, |
|---------------------------------|--------------------|-------------------|
| Other      Assets               | 2009               | 2008              |
| Millions                        |               |              |
|                            |               |              |
| Deferred      Regulatory Assets | $256.5             | $249.3            |
| Other                           | 31.7               | 32.1              |
|                            |               |              |
| Total      Other Assets         | $288.2             | $281.4            |

| Other      Liabilities                                                                                                |   |   |
|-----------------------------------------------------------------------------------------------------------------------|--------|--------|
| Millions                                                                                                              |   |   |
|                                                                                                                  |   |   |
| Future      Benefit Obligation Under Defined Benefit Pension and   Other      Postretirement Plans (a) | $211.8 | $251.8 |
| Deferred      Regulatory Liabilities                                                                                  | 46.0   | 50.0   |
| Asset      Retirement Obligation                                                                                      | 43.9   | 39.5   |
| Other                                                                                                                 | 50.3   | 48.0   |
|                                                                                                                  |   |   |
| Total      Other Liabilities                                                                                          | $352.0 | $389.3 |

|   | (a)    Future      Benefit Obligation Under Defined Benefit Pension and Other Postretirement      Plans declined primarily due to contributions. See Note 13. Pension and      Other Postretirement BenefitPlans. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| For      the Nine Months Ended September 30,                                               | 2009    | 2008    |
|--------------------------------------------------------------------------------------------|---------|---------|
| Millions                                                                                   |    |    |
|                                                                                       |    |    |
| Cash      Paid During the Period for                                                       |    |    |
| Interest      – Net of Amounts Capitalized                                           | $23.7   | $20.1   |
| Income      Taxes                                                                          | $1.1    | $4.9    |
|                                                                                       |    |    |
| Noncash      Investing and Financing Activities                                            |    |    |
| Change      in Accounts Payable for Capital Additions to Property Plant and      Equipment | $(16.5) | $(1.1)  |
| ALLETE      Common Stock contributed to the Pension Plan                                   | $(12.0) | – |

----

----

|                                                                                      | Regulated    | Investments |
|-------------------------------------------------------------------------------------------|--------------|-------------|
|                                                                                      | Consolidated | Operations  | and      Other |
| Millions                                                                                  |         |        |   |
| For      the Quarter Ended September 30, 2009                                             |         |        |   |
| Operating      Revenue                                                                    | $178.8       | $160.1      | $18.7 |
| Fuel      and Purchased Power                                                             | 69.8         | 69.8        | – |
| Operating      and Maintenance                                                            | 67.5         | 50.1        | 17.4 |
| Depreciation      Expense                                                                 | 16.1         | 15.0        | 1.1 |
| Operating      Income                                                                     | 25.4         | 25.2        | 0.2 |
| Interest      Expense                                                                     | (8.3)        | (7.0)       | (1.3) |
| Equity      Earnings in ATC                                                               | 4.4          | 4.4         | – |
| Other      Income (Expense)                                                               | 0.8          | 1.6         | (0.8) |
| Income      (Loss) Before Non-Controlling Interest and   Income      Taxes | 22.3         | 24.2        | (1.9) |
| Income      Tax Expense (Benefit)                                                         | 6.5          | 7.6         | (1.1) |
| Net      Income (Loss)                                                                    | 15.8         | 16.6        | (0.8) |
| Less:      Non-Controlling Interest in Subsidiaries                                       | (0.2)        | –     | (0.2) |
| Net      Income (Loss) Attributable to ALLETE                                             | $16.0        | $16.6       | $(0.6) |

|                                                         | Regulated    | Investments |
|--------------------------------------------------------------|--------------|-------------|
|                                                         | Consolidated | Operations  | and      Other |
| Millions                                                     |         |        |   |
| For      the Quarter Ended September 30, 2008                |         |        |   |
| Operating      Revenue                                       | $201.7       | $179.1      | $22.6 |
| Fuel      and Purchased Power                                | 81.0         | 81.0        | – |
| Operating      and Maintenance                               | 74.0         | 53.7        | 20.3 |
| Depreciation      Expense                                    | 13.5         | 12.4        | 1.1 |
| Operating      Income                                        | 33.2         | 32.0        | 1.2 |
| Interest      Expense                                        | (6.9)        | (6.1)       | (0.8) |
| Equity      Earnings in ATC                                  | 4.2          | 4.2         | – |
| Other      Income                                            | 2.8          | 0.6         | 2.2 |
| Income      Before Non-Controlling Interest and Income Taxes | 33.3         | 30.7        | 2.6 |
| Income      Tax Expense (Benefit)                            | 8.4          | 11.5        | (3.1) |
| Net      Income                                              | 24.9         | 19.2        | 5.7 |
| Less:      Non-Controlling Interest in Subsidiaries          | 0.2          | –     | 0.2 |
| Net      Income Attributable to ALLETE                       | $24.7        | $19.2       | $5.5 |

----

|                                                                    | Regulated    | Investments |
|-------------------------------------------------------------------------|--------------|-------------|
|                                                                    | Consolidated | Operations  | and      Other |
| Millions                                                                |         |        |   |
| For      the Nine Months Ended September 30, 2009                       |         |        |   |
| Operating      Revenue                                                  | $550.7       | $493.9      | $56.8 |
| Prior      Year Rate Refunds                                            | (7.6)        | (7.6)       | – |
| Total      Operating Revenue                                            | 543.1        | 486.3       | 56.8 |
| Fuel      and Purchased Power                                           | 199.4        | 199.4       | – |
| Operating      and Maintenance                                          | 224.7        | 169.8       | 54.9 |
| Depreciation      Expense                                               | 46.8         | 43.4        | 3.4 |
| Operating      Income (Loss)                                            | 72.2         | 73.7        | (1.5) |
| Interest      Expense                                                   | (25.4)       | (20.9)      | (4.5) |
| Equity      Earnings in ATC                                             | 12.9         | 12.9        | – |
| Other      Income (Expense)                                             | 3.8          | 4.5         | (0.7) |
| Income      (Loss) Before Non-Controlling Interest andIncome      Taxes | 63.5         | 70.2        | (6.7) |
| Income      Tax Expense (Benefit)                                       | 21.5         | 25.2        | (3.7) |
| Net      Income (Loss)                                                  | 42.0         | 45.0        | (3.0) |
| Less:      Non-Controlling Interest in Subsidiaries                     | (0.3)        | –     | (0.3) |
| Net      Income (Loss) Attributable to ALLETE                           | $42.3        | $45.0       | $(2.7) |
|                                                                    |         |        |   |
| As      of September 30, 2009                                           |         |        |   |
| Total      Assets                                                       | $2,255.1     | $2,005.3    | $249.8 |
| Property,      Plant and Equipment – Net                          | $1,530.5     | $1,478.9    | $51.6 |
| Accumulated      Depreciation                                           | $937.0       | $885.4      | $51.6 |
| Capital      Additions                                                  | $186.7       | $185.0      | $1.7 |

|                                                         | Regulated    | Investments |
|--------------------------------------------------------------|--------------|-------------|
|                                                         | Consolidated | Operations  | and      Other |
| Millions                                                     |         |        |   |
| For      the Nine Months Ended September 30, 2008            |         |        |   |
| Operating      Revenue                                       | $604.9       | $535.9      | $69.0 |
| Fuel      and Purchased Power                                | 242.3        | 242.3       | – |
| Operating      and Maintenance                               | 241.5        | 179.7       | 61.8 |
| Depreciation      Expense                                    | 39.1         | 35.6        | 3.5 |
| Operating      Income                                        | 82.0         | 78.3        | 3.7 |
| Interest      Expense                                        | (19.5)       | (17.5)      | (2.0) |
| Equity      Earnings in ATC                                  | 11.2         | 11.2        | – |
| Other      Income                                            | 13.9         | 2.8         | 11.1 |
| Income      Before Non-Controlling Interest and Income Taxes | 87.6         | 74.8        | 12.8 |
| Income      Tax Expense                                      | 28.3         | 28.3        | – |
| Net      Income                                              | 59.3         | 46.5        | 12.8 |
| Less:      Non-Controlling Interest in Subsidiaries          | 0.3          | –     | 0.3 |
| Net      Income Attributable to ALLETE                       | $59.0        | $46.5       | $12.5 |
|                                                         |         |        |   |
| As      of September 30, 2008                                |         |        |   |
| Total      Assets                                            | $1,847.6     | $1,565.9    | $281.7 |
| Property,      Plant and Equipment – Net               | $1,292.4     | $1,239.3    | $53.1 |
| Accumulated      Depreciation                                | $854.2       | $806.2      | $48.0 |
| Capital      Additions                                       | $211.1       | $207.3      | $3.8 |

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|                                 | September      30, | December      31, |
|--------------------------------------|--------------------|-------------------|
| Investments                          | 2009               | 2008              |
| Millions                             |               |              |
| ALLETE      Properties               | $88.9              | $84.9             |
| Available-for-Sale      Securities   | 35.7               | 32.6              |
| Emerging      Technology Investments | 4.8                | 7.4               |
| Other                                | 9.4                | 12.0              |
| Total      Investments               | $138.8             | $136.9            |

|                                                    | September      30, | December      31, |
|---------------------------------------------------------|--------------------|-------------------|
| ALLETE      Properties                                  | 2009               | 2008              |
| Millions                                                |               |              |
| Land      Held-for-Sale Beginning Balance               | $71.2              | $62.6             |
| Additions      During Period: Capitalized Improvements  | 2.1                | 10.5              |
| Deductions      During Period: Cost of Real Estate Sold | (0.6)              | (1.9)             |
| Land      Held-for-Sale Ending Balance                  | 72.7               | 71.2              |
| Long-Term      Finance Receivables                      | 13.3               | 13.6              |
| Other                                                   | 2.9                | 0.1               |
| Total      Real Estate Assets                           | $88.9              | $84.9             |

----

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|                                                             | Fair      Value as of September 30, 2009 |
|------------------------------------------------------------------|------------------------------------------|
| Recurring Fair Value      Measures                               | Level      1                             | Level      2 | Level      3 | Total |
| Millions                                                         |                                     |   |   |   |
| Assets:                                                          |                                     |   |   |   |
| Equity      Securities                                           | $16.2                                    | – | – | $16.2 |
| Corporate      Debt Securities                                   | –                                  | $7.3 | – | 7.3 |
| Derivatives                                                      | –                                  | – | $1.1 | 1.1 |
| Debt      Securities Issued by States of the United States (ARS) | –                                  | – | 14.3 | 14.3 |
| Money      Market Funds                                          | 4.9                                      | – | – | 4.9 |
| Total      Fair Value of Assets                                  | $21.1                                    | $7.3 | $15.4 | $43.8 |
|                                                             |                                     |   |   |   |
| Liabilities:                                                     |                                     |   |   |   |
| Deferred      Compensation                                       | –                                  | $14.8 | – | $14.8 |
| Total      Fair Value of Liabilities                             | –                                  | $14.8 | – | $14.8 |
|                                                             |                                     |   |   |   |
| Total      Net Fair Value of Assets (Liabilities)                | $21.1                                    | $(7.5) | $15.4 | $29.0 |

|                                                             | Fair      Value as of December 31, 2008 |
|------------------------------------------------------------------|-----------------------------------------|
| Recurring Fair Value      Measures                               | Level      1                            | Level      2 | Level      3 | Total |
| Millions                                                         |                                    |   |   |   |
| Assets:                                                          |                                    |   |   |   |
| Equity      Securities                                           | $13.5                                   | – | – | $13.5 |
| Corporate      Debt Securities                                   | –                                 | $3.3 | – | 3.3 |
| Debt      Securities Issued by States of the United States (ARS) | –                                 | – | $15.2 | 15.2 |
| Money      Market Funds                                          | 10.6                                    | – | – | 10.6 |
| Total      Fair Value of Assets                                  | $24.1                                   | $3.3 | $15.2 | $42.6 |
|                                                             |                                    |   |   |   |
| Liabilities:                                                     |                                    |   |   |   |
| Deferred      Compensation                                       | –                                 | $13.5 | – | $13.5 |
| Total      Fair Value of Liabilities                             | –                                 | $13.5 | – | $13.5 |
|                                                             |                                    |   |   |   |
| Total      Net Fair Value of Assets (Liabilities)                | $24.1                                   | $(10.2) | $15.2 | $29.1 |

| Recurring      Fair Value Measures                                      | Derivatives | Debt      Securities Issued by the States of the United States  (ARS) |
|-------------------------------------------------------------------------|-------------|-----------------------------------------------------------------------|
| Activity      in Level 3                                                | 2009        | 2008                                                                  | 2009 | 2008 |
| Millions                                                                |        |                                                                  |   |   |
| Balance      as of December 31, 2008 and December 31, 2007,respectively | –     | –                                                               | $15.2 | – |
| Purchases,      Sales, Issuances and Settlements, Net                   | $1.1        | –                                                               | (0.9) | $(5.9) |
| Level      3 Transfers In                                               | –     | –                                                               | – | 25.2 |
| Balance      as of September 30,                                        | $1.1        | –                                                               | $14.3 | $19.3 |

| Financial      Instruments                     | Carrying      Amount | Fair      Value |
|------------------------------------------------|----------------------|-----------------|
| Millions                                       |                 |            |
| Long-Term      Debt, Including Current Portion |                 |            |
| December      31, 2008                         | $598.7               | $561.6          |
| September      30, 2009                        | $640.4               | $629.2          |

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| ALLETE’s      Investment in ATC                   |   |
|---------------------------------------------------------|--------|
| Millions                                                |   |
| Equity      Investment Balance as of December 31, 2008  | $76.9  |
| Cash      Investments                                   | 5.4    |
| Equity      in ATC Earnings                             | 12.9   |
| Distributed      ATC Earnings                           | (10.1) |
| Equity      Investment Balance as of September 30, 2009 | $85.1  |

|                                     | Quarter      Ended |   | Nine      Months Ended |
|------------------------------------------|--------------------|--------|------------------------|
| ATC      Summarized Financial Data       | September      30, |   | September      30,     |
| Income      Statement Data               | 2009               | 2008   |                   | 2009 | 2008 |
| Millions                                 |               |   |                   |   |   |
| Revenue                                  | $132.3             | $119.9 |                   | $387.5 | $345.1 |
| Operating      Expense                   | 58.7               | 52.1   |                   | 172.3 | 156.2 |
| Other      Expense                       | 19.8               | 18.2   |                   | 57.8 | 51.1 |
| Net      Income                          | $53.8              | $49.6  |                   | $157.4 | $137.8 |
|                                     |               |   |                   |   |   |
| ALLETE’s      Equity in Net Income | $4.4               | $4.2   |                   | $12.9 | $11.2 |

|                                         | Quarter      Ended | Nine      Months Ended |
|----------------------------------------------|--------------------|------------------------|
|                                         | September      30, | September      30,     |
|                                         | 2009               | 2008                   | 2009 | 2008 |
| Millions                                     |               |                   |   |   |
| Loss      on Emerging Technology Investments | $(1.3)             | $(0.1)                 | $(2.6) | $(0.6) |
| AFUDC      –    Equity                 | 1.6                | 0.5                    | 4.5 | 2.6 |
| Investment      and Other Income (a)         | 0.5                | 2.4                    | 1.9 | 11.9 |
| Total      Other Income                      | $0.8               | $2.8                   | $3.8 | $13.9 |

| (a) | In      2008, Investment and Other Income included a gain from the sale of certain      available-for-sale securities. The gain was triggered when securities were      sold to reallocate investments to meet defined investment allocations      based upon an approved investmentstrategy. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | NOTE      10.  INCOME TAX EXPENSE |
|--------|---------------------------------------------|

|                               | Quarter      Ended                       | Nine      Months Ended |
|------------------------------------|------------------------------------------|------------------------|
|                               | September      30,                       | September      30,     |
|                               | 2009                                     | 2008                   | 2009 | 2008 |
| Millions                           |                                     |                   |   |   |
| Current      Tax Expense (Benefit) |                                     |                   |   |   |
|                               | Federal      (a)                         | $(7.9)                 | $2.2 | $(16.7) | $10.2 |
|                               | State                                    | (0.5)                  | (3.1) | (0.7) | (0.3) |
|                               | Total      Current Tax Expense (Benefit) | (8.4)                  | (0.9) | (17.4) | 9.9 |
| Deferred      Tax Expense          |                                     |                   |   |   |
|                               | Federal      (a)                         | 12.6                   | 6.9 | 33.5 | 15.0 |
|                               | State                                    | 2.5                    | 2.6 | 6.1 | 4.1 |
|                               | Deferred      Tax Credits                | (0.2)                  | (0.2) | (0.7) | (0.7) |
|                               | Total      Deferred Tax Expense          | 14.9                   | 9.3 | 38.9 | 18.4 |
| Total      Income Tax Expense      | $6.5                                     | $8.4                   | $21.5 | $28.3 |

| (a) | Due      to the bonus depreciation provisions in the American Recovery and      Reinvestment Act of 2009, we expect to be in a net operating loss position      for the current year. The loss will be utilized by carrying it back      against prior years’ taxableincome. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                | Quarter      Ended                                                                                                             | Nine      Months Ended |
|-----------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|------------------------|
| Other      Comprehensive Income                     | September      30,                                                                                                             | September      30,     |
| Net      of Tax                                     | 2009                                                                                                                           | 2008                   | 2009 | 2008 |
| Millions                                            |                                                                                                                           |                   |   |   |
| Net      Income                                     | $15.8                                                                                                                          | $24.9                  | $42.0 | $59.3 |
| Other      Comprehensive Income                     |                                                                                                                           |                   |   |   |
|                                                | Unrealized      Gain (Loss) on Securities                                                                                      | 1.0                    | (1.3) | 1.9 | (2.0) |
|                                                | Reclassification      Adjustment for Losses (Gains) Included      in        Income (a) | 0.1                    | – | – | (3.8) |
|                                                | Defined      Benefit Pension and Other Postretirement Plans                                                                    | 0.1                    | 0.2 | 0.7 | 1.5 |
| Total      Other Comprehensive Income (Loss)        | 1.2                                                                                                                            | (1.1)                  | 2.6 | (4.3) |
| Total      Comprehensive Income                     | $17.0                                                                                                                          | $23.8                  | $44.6 | $55.0 |
| Less:      Non-Controlling Interest in Subsidiaries | (0.2)                                                                                                                          | 0.2                    | (0.3) | 0.3 |
| Comprehensive      Income Attributable to ALLETE    | $17.2                                                                                                                          | $23.6                  | $44.9 | $54.7 |

| (a) | Reclassification      adjustment of $3.8 million in 2008 relates to the sale of certain      available-for-sale securities. |
|-----|-----------------------------------------------------------------------------------------------------------------------------|

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ShareholderRights Plan. OnJuly 25, 1996, ALLETE adopted a shareholder rights plan, which was amended andrestated on July 12, 2006 (collectively, the “Rights Plan”). The amendment tothe Rights Plan, among other things, extended the final expiration date of theRights Plan to July 11, 2009. The Rights Plan expired according to its terms onJuly 11, 2009. As a result, ALLETE’s preferred share purchase rights issued inaccordance with the Rights Plan are no longer outstanding.

|                                     |   | 2009       |    |   |   | 2008       |    |
|------------------------------------------|--------|------------|---------|--------|--------|------------|---------|
| Reconciliation      of Basic and Diluted |   | Dilutive   |    |   |   | Dilutive   |    |
| Earnings      Per Share                  | Basic  | Securities | Diluted |   | Basic  | Securities | Diluted |
| Millions      Except Per Share Amounts   |   |       |    |   |   |       |    |
| For      the Quarter Ended September 30, |   |       |    |   |   |       |    |
| Net      Income Attributable to ALLETE   | $16.0  | –    | $16.0   |   | $24.7  | –    | $24.7   |
| Common      Shares                       | 32.8   | 0.1        | 32.9    |   | 29.1   | 0.2        | 29.3    |
| Earnings      Per Share                  | $0.49  | –    | $0.49   |   | $0.85  | –    | $0.85   |

| For      the Nine Months Ended September 30, |   |    |   |   |   |    |   |
|----------------------------------------------|--------|---------|--------|--------|--------|---------|--------|
| Net      Income Attributable to ALLETE       | $42.3  | – | $42.3  |   | $59.0  | – | $59.0  |
| Common      Shares                           | 31.8   | 0.1     | 31.9   |   | 28.9   | 0.1     | 29.0   |
| Earnings      Per Share                      | $1.33  | – | $1.33  |   | $2.04  | – | $2.04  |

|                                            | Pension | Postretirement Health      and Life |
|-------------------------------------------------|---------|------------------------------------------|
| Components      of Net Periodic Benefit Expense | 2009    | 2008                                     | 2009 | 2008 |
| Millions                                        |    |                                     |   |   |
| For      the Quarter Ended September 30,        |    |                                     |   |   |
| Service      Cost                               | $1.4    | $1.5                                     | $1.0 | $1.0 |
| Interest      Cost                              | 6.5     | 6.3                                      | 2.5 | 2.4 |
| Expected      Return on Plan Assets             | (8.4)   | (8.1)                                    | (2.0) | (1.8) |
| Amortization      of Prior Service Costs        | 0.1     | 0.2                                      | – | – |
| Amortization      of Net Loss                   | 0.9     | 0.4                                      | 0.6 | 0.4 |
| Amortization      of Transition Obligation      | – | –                                  | 0.6 | 0.6 |
| Net      Periodic Benefit Expense               | $0.5    | $0.3                                     | $2.7 | $2.6 |

| For      the Nine Months Ended September 30, |    |    |    |    |
|----------------------------------------------|---------|---------|---------|---------|
| Service      Cost                            | $4.3    | $4.4    | $3.1    | $3.0    |
| Interest      Cost                           | 19.6    | 18.9    | 7.5     | 7.2     |
| Expected      Return on Plan Assets          | (25.3)  | (24.3)  | (6.2)   | (5.4)   |
| Amortization      of Prior Service Costs     | 0.4     | 0.5     | – | – |
| Amortization      of Net Loss                | 2.6     | 1.2     | 1.8     | 1.2     |
| Amortization      of Transition Obligation   | – | – | 1.9     | 1.8     |
| Net      Periodic Benefit Expense            | $1.6    | $0.7    | $8.1    | $7.8    |

----

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Coal, Railand Shipping Contracts. We have three primary coalsupply agreements with various expiration dates ranging from December 2009 toDecember 2011. We also have rail and shipping agreements for the transportationof all of our coal, with various expiration dates ranging from December 2009 toJanuary 2012. Our remaining minimum payment obligation as of September 30, 2009,under these coal, rail and shipping agreements for 2009 is $14.4 million. Annualpayment obligations for 2010 and 2011 are $12.5 million and $7.6 million,respectively, with no specific commitments beyond 2011. Our minimum annualpayment obligations will increase when annual nominations are made for coaldeliveries in future years.

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ITEM 

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| Kilowatt-hours      Sold                         |                       | Quantity    | %                                |
|--------------------------------------------------|----------------------------|-------------|----------------------------------|
| Quarter      Ended September 30,                 | 2009                       | 2008        | Variance                         | Variance |
| Millions                                         |                       |        |                             |   |
| Regulated      Utility                           |                       |        |                             |   |
|                                             | Retail      and Municipals |        |                             |   |   |
|                                             |                       | Residential | 240                              | 252 | (12) | (4.8)      % |
|                                             |                       | Commercial  | 352                              | 381 | (29) | (7.6)      % |
|                                             |                       | Industrial  | 984                              | 1,854 | (870) | (46.9)      % |
|                                             |                       | Municipals  | 243                              | 243 | – | –      % |
|                                             |                       |        | Total      Retail and Municipals | 1,819 | 2,730 | (911) |  (33.4)      % |
|                                             | Other      Power Suppliers | 1,051       | 465                              | 586 | 126.0      % |
| Total      Regulated Utility Kilowatt-hours Sold | 2,870                      | 3,195       | (325)                            | (10.2)      % |

----

| ALLETE      Properties                                | 2009     | 2008    |
|-------------------------------------------------------|----------|---------|
| Revenue      and Sales Activity                       | Quantity | Amount  | Quantity | Amount |
| Dollars      in Millions                              |     |    |   |   |
| Revenue      from Land Sales                          |     |    |   |   |
| Acres      (a)                                        | –  | – | 1 | $0.7 |
| Contract      Sales Price (b)                         |     | – |   | 0.7 |
| Revenue      Recognized for Previously Deferred Sales |     |    |   | 2.6 |
| Deferred      Revenue                                 |     | – |   | – |
| Revenue      from Land Sales                          |     | – |   | 3.3 |
| Other      Revenue                                    |     | $0.1    |   | 1.0 |
|  Total      ALLETE Properties Revenue            |     | $0.1    |   | $4.3 |

| (a) | Acreage      amounts are shown on a gross basis, including wetlands and non-controlling      interest. |
|-----|--------------------------------------------------------------------------------------------------------|

| (b) |   | Reflects      total contract sales price on closed land transactions. Land sales are      recorded using a percentage-of-completion  method. |
|-----|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| Kilowatt-hours      Sold                         |                       | Quantity    | %                                |
|--------------------------------------------------|----------------------------|-------------|----------------------------------|
| Nine      Months Ended September 30,             | 2009                       | 2008        | Variance                         | Variance |
| Millions                                         |                       |        |                             |   |
| Regulated      Utility                           |                       |        |                             |   |
|                                             | Retail      and Municipals |        |                             |   |   |
|                                             |                       | Residential | 857                              | 854 | 3 | 0.4      % |
|                                             |                       | Commercial  | 1,061                            | 1,090 | (29) |   (2.7)      % |
|                                             |                       | Industrial  | 3,182                            | 5,466 | (2,284) | (41.8)      % |
|                                             |                       | Municipals  | 729                              | 742 | (13) | (1.8)      % |
|                                             |                       |        | Total      Retail and Municipals | 5,829 | 8,152 | (2,323) |  (28.5)      % |
|                                             | Other      Power Suppliers | 3,075       | 1,244                            | 1,831 | 147.2      % |
| Total      Regulated Utility Kilowatt-hours Sold | 8,904                      | 9,396       | (492)                            | (5.2)      % |

----

| ALLETE      Properties                                 | 2009     | 2008    |
|--------------------------------------------------------|----------|---------|
| Revenue      and Sales Activity                        | Quantity | Amount  | Quantity | Amount |
| Dollars      in Millions                               |     |    |   |   |
| Revenue      from Land Sales                           |     |    |   |   |
| Acres      (a)                                         | 19       | $2.2    | 52 | $4.6 |
| Contract      Sales Price (b)                          |     | 2.2     |   | 4.6 |
| Revenue      Recognized from Previously Deferred Sales |     | – |   | 2.6 |
| Deferred      Revenue                                  |     | (0.6)   |   | – |
| Revenue      from Land Sales                           |     | 1.6     |   | 7.2 |
| Other      Revenue (c)                                 |     | 0.3     |   | 7.7 |
|  Total      ALLETE Properties Revenue             |     | $1.9    |   | $14.9 |

| (a) | Acreage      amounts are shown on a gross basis, including wetlands and non-controlling      interest. |
|-----|--------------------------------------------------------------------------------------------------------|

| (b) | Reflects      total contract sales price on closed land transactions. Land sales are      recorded using a percentage-of-completion  method. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Included      a $4.5 million pre-tax gain from the sale of a shopping center in Winter      Haven, Florida in 2008. |
|-----|---------------------------------------------------------------------------------------------------------------------|

----

ALLETE is committed to earning a financial return that rewards ourshareholders, allows for reinvestment in our businesses and sustainsgrowth. Minnesota Power’s industrial customers are facing weak conditionsin the markets for their products, and have and may continue to reduce theamount of energy they use; we will work to sell available energy in thewholesale markets. Our focus will be to maintain the competitively-pricedproduction of energy, while meeting environmental requirements. MinnesotaPower will also focus on maintaining competitive retail rates, as we believethis is important to the success of our customers.

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| ·   | Increased      system flexibility to adapt to volatile business cycles and varied future      industrial load scenarios; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | Reductions      in the emission of GHGs (primarily carbon dioxide);  and |
|--------------------|--------------------------------------------------------------------------|

| ·   | Compliance      with mandated renewable energystandards. |
|--------------------|----------------------------------------------------------|

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| Summary      of Development Projects    |      |           | Residential    | Non-residential          |
|-----------------------------------------|-----------|----------------|----------------|--------------------------|
| Land      Available-for-Sale            | Ownership | Acres      (a) | Units      (b) | Sq.      Ft. (b,      c) |
|                                    |      |           |           |                     |
| Current      Development Projects       |      |           |           |                     |
| Town      Center                        | 80%       | 991            | 2,289          | 2,228,200                |
| Palm      Coast Park                    | 100%      | 3,436          | 3,239          | 3,116,800                |
| Total      Current Development Projects |      | 4,427          | 5,528          | 5,345,000                |
|                                    |      |           |           |                     |
| Proposed      Development Project       |      |           |           |                     |
| Ormond      Crossings                   | 100%      | 5,968          | (d)            | (d)                      |
|                                    |      |           |           |                     |
| Total      of Development Projects      |      | 10,395         | 5,528          | 5,345,000                |

| (a) | Acreage      amounts are approximate and shown on a gross basis, including wetlands and      non-controlling interest. |
|-----|------------------------------------------------------------------------------------------------------------------------|

| (b) | Estimated      and includes non-controlling interest. Density at build out may differ      from these estimates. |
|-----|------------------------------------------------------------------------------------------------------------------|

| (c) | Depending      on the project, non-residential includes retail commercial, non-retail      commercial, office, industrial, warehouse, storage and      institutional. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | A development order approved      by the City of Ormond Beach includes up to 3,700 residential units and 5      million square feet of non-residential space. We estimate the first two      phases of Ormond Crossings will include 2,500-3,200 residential units and      2.5 million - 3.5 million square feet of various types of non-residential      space. Density of the residential and      non-residential components of the project will be determined based upon      market and traffic mitigation cost considerations. Approximately 2,000      acres will be devoted to a regionally significant wetlands mitigation      bank. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Other      Land Available-for-Sale (a) | Total  | Mixed      Use | Residential | Non-Residential | Agricultural |
|----------------------------------------|--------|----------------|-------------|-----------------|--------------|
| Acres      (b)                         |   |           |        |            |         |
| Other      Land                        | 1,327  | 353            | 114         | 376             | 484          |

| (a) | Other land      available-for-sale includes land located in Palm      Coast, Florida not included in development projects and land held by      Lehigh Acquisition Corporation and Cape Coral Holdings,      Inc. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Acreage      amounts are approximate and shown on a gross basis, including wetlands and      non-controlling interest. |
|-----|------------------------------------------------------------------------------------------------------------------------|

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ITEM 

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PART 

ITEM 

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ITEM 

ITEM 

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| ·   | Increased      system flexibility to adapt to volatile business cycles and varied future      industrial load scenarios; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | Reductions      in the emission of GHGs (primarily carbon dioxide);  and |
|--------------------|--------------------------------------------------------------------------|

| ·   | Compliance      with mandated renewable energystandards. |
|--------------------|----------------------------------------------------------|

ITEM 

|   | 31(a) |   | Rule 13a-14(a)/15d-14(a) Certification by the Chief      Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of      2002. |
|--------|-------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | 31(b) |   | Rule 13a-14(a)/15d-14(a) Certification by the Chief      Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of      2002. |
|--------|-------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | 32 |   | Section 1350 Certification of Periodic Report by the      Chief Executive Officer and Chief Financial Officer Pursuant to Section      906 of the Sarbanes-Oxley Act of2002. |
|--------|----|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | SIGNATURES |
|--------|------------|

|                  |   | ALLETE,      INC.                                      |
|-----------------------|--------|--------------------------------------------------------|
|                  |   |                                                   |
|                  |   |                                                   |
|                  |   |                                                   |
|                  |   |                                                   |
| November      3, 2009 |   | /s/      Mark A. Schober                               |
|                  |   | Mark      A. Schober                                   |
|                  |   | Senior      Vice President and Chief Financial Officer |
|                  |   |                                                   |
|                  |   |                                                   |
|                  |   |                                                   |
|                  |   |                                                   |
|                  |   |                                                   |
| November      3, 2009 |   | /s/      Steven Q. DeVinck                             |
|                  |   | Steven      Q. DeVinck                                 |
|                  |   | Controller                                             |

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