| For                  Release: | Oct.                  26, 2007 |
|-------------------------------|--------------------------------|
| *Contact:*                    | Eric                  Olson    |
|                          | 218-723-3947                   |
|                          | eolson@allete.com              |
|                          |                           |
| *Investor*                    | Tim                  Thorp     |
| *Contact:*                    | 218-723-3953                   |
|                          | tthorp@allete.com              |

**ALLETE        reports third quarter 2007 earnings of 58 cents per share**

*The        statements contained in this release and statements that ALLETE may make        orally        in connection with this release that are not historical facts, are        forward-looking statements. Actual results may differ materially from those        projected in the forward-looking statements. These forward-looking statements        involve risks and uncertainties, and investors are directed to the risks        discussed in documents filed by ALLETE with the Securities and Exchange        Commission.*

*###*

----

**ALLETE,        Inc.**

**Consolidated        Statement of Income**

**For        the Periods Ended September 30, 2007 and 2006**

|                                                                  |                                                           |                                          | **Quarter                  Ended** | **Year                  to Date** |
|-----------------------------------------------------------------------|----------------------------------------------------------------|-----------------------------------------------|------------------------------------|-----------------------------------|
|                                                                  |                                                           |                                          | **2007**                           | **2006**                          | **2007** | **2006** |
| **Operating                  Revenue**                                | $200.8                                                         | $199.1                                        | $629.4                             | $569.9                            |
| **Operating                  Expenses**                               |                                                           |                                          |                               |                              |
|                                                                  | Fuel                  and Purchased Power                      | 91.8                                          | 79.5                               | 262.4                             | 211.9 |
|                                                                  | Operating                  and Maintenance                     | 72.1                                          | 68.7                               | 231.3                             | 220.0 |
|                                                                  | Depreciation                                                   | 12.2                                          | 12.2                               | 35.8                              | 36.6 |
|                                                                  |                                                           | Total                  Operating Expenses     | 176.1                              | 160.4                             | 529.5 | 468.5 |
| **Operating                  Income from Continuing Operations**      | 24.7                                                           | 38.7                                          | 99.9                               | 101.4                             |
| **Other                  Income (Expense)**                           |                                                           |                                          |                               |                              |
|                                                                  | Interest                  Expense                              | (6.3)                                         | (7.3)                              | (18.7)                            | (20.1) |
|                                                                  | Equity                  Earnings in ATC                        | 3.2                                           | 1.0                                | 9.3                               | 1.0 |
|                                                                  | Other                                                          | 3.2                                           | 2.7                                | 11.9                              | 7.8 |
|                                                                  |                                                           | Total                  Other Income (Expense) | 0.1                                | (3.6)                             | 2.5 | (11.3) |
| **Income                  from Continuing Operations**                |                                                           |                                          |                               |                              |
|                                                                  | **Before                  Minority Interest and Income Taxes** | 24.8                                          | 35.1                               | 102.4                             | 90.1 |
| **Income                  Tax Expense**                               | 8.1                                                            | 12.1                                          | 35.4                               | 32.6                              |
| **Minority                  Interest**                                | 0.2                                                            | 1.1                                           | 1.6                                | 3.2                               |
| **Income                  from Continuing Operations**                | 16.5                                                           | 21.9                                          | 65.4                               | 54.3                              |
| **Income                  from Discontinued Operations - Net of Tax** | 0.0                                                            | (0.1)                                         | 0.0                                | (0.5)                             |
| **Net                  Income**                                       | $16.5                                                          | $21.8                                         | $65.4                              | $53.8                             |
|                                                                  |                                                           |                                          |                               |                              |   |   |
| **Average                  Shares of Common Stock**                   |                                                           |                                          |                               |                              |
|                                                                  | Basic                                                          | 28.5                                          | 27.8                               | 28.2                              | 27.7 |
|                                                                  | Diluted                                                        | 28.5                                          | 27.9                               | 28.3                              | 27.8 |
| **Basic                  Earnings Per Share of Common Stock**         |                                                           |                                          |                               |                              |
|                                                                  | Continuing                  Operations                         | $0.58                                         | $0.78                              | $2.31                             | $1.96 |
|                                                                  | Discontinued                  Operations                       | 0.00                                          | 0.00                               | 0.00                              | (0.02) |
|                                                                  |                                                           |                                          | $0.58                              | $0.78                             | $2.31 | $1.94 |
| **Diluted                  Earnings Per Share of Common Stock**       |                                                           |                                          |                               |                              |
|                                                                  | Continuing                  Operations                         | $0.58                                         | $0.78                              | $2.31                             | $1.95 |
|                                                                  | Discontinued                  Operations                       | 0.00                                          | 0.00                               | 0.00                              | (0.02) |
|                                                                  |                                                           |                                          | $0.58                              | $0.78                             | $2.31 | $1.93 |
| **Dividends                  Per Share of Common Stock**              | $0.4100                                                        | $0.3625                                       | $1.2300                            | $1.0875                           |

**Consolidated        Balance Sheet**

|                                             | **Sep.                  30,** | **Dec.                  31,**       |                                                            | **Sep.                  30,**       | **Dec.                  31,**       |
|--------------------------------------------------|-------------------------------|-------------------------------------|-----------------------------------------------------------------|-------------------------------------|-------------------------------------|
|                                             | **2007**                      | **2006**                            |                                                            | **2007**                            | **2006**                            |
| **Assets**                                       |                          |                                | **Liabilities                  and Shareholders' Equity**       |                                |                                |
| Cash                  and Short-Term Investments | $131.8                        |  $  149.3            | Current                  Liabilities                            |  $  129.6            |  $  143.5            |
| Other                  Current Assets            | 135.8                         |      138.4 | Long-Term                  Debt                                 |      409.0 |      359.8 |
| Property,                  Plant and Equipment   | 1,033.8                       |      921.6 | Other                  Liabilities                              |      383.4 |      364.3 |
| Investments                                      | 206.4                         |      189.1 | Shareholders'                  Equity                           |      724.5 |      665.8 |
| Other                                            | 138.7                         |      135.0 |                                                            |                                |                                |
| **Total                  Assets**                | $1,646.5                      |  $1,533.4                      | **Total                  Liabilities and Shareholders' Equity** |  $1,646.5                      |  $1,533.4                      |

----

|                                            |                                                 |                                            |        |                                        | **Quarter                  Ended**            | **Year                  to Date**                                               |
|-------------------------------------------------|------------------------------------------------------|-------------------------------------------------|-------------|---------------------------------------------|-----------------------------------------------|---------------------------------------------------------------------------------|
|                                            |                                                 |                                            |        |                                        | **September                  30,**            | **September                  30,**                                              |
| **ALLETE,                  Inc.**               |                                                 | **2007**                                        | **2006**    | **2007**                                    | **2006**                                      |
| **Income                  (Loss)**              |                                                 |                                            |        |                                        |                                          |
| Millions                                        |                                                 |                                            |        |                                        |                                          |                                                                            |   |
|                                            | Regulated                  Utility                   | $13.0                                           | $13.7       | $37.9                                       | $33.5                                         |
|                                            | Nonregulated                  Energy Operations      | 0.6                                             | 1.1         | 3.4                                         | 2.9                                           |
|                                            | ATC                                                  |                                            |        | 1.9                                         | 0.6                                           | 5.6                                                                             | 0.6 |
|                                            | Real                  Estate                         |                                            | 0.6         | 5.1                                         | 15.2                                          | 15.7                                                                            |
|                                            | Other                                                |                                            |        | 0.4                                         | 1.4                                           | 3.3                                                                             | 1.6 |
|                                            | Income                  from Continuing Operations   | 16.5                                            | 21.9        | 65.4                                        | 54.3                                          |
|                                            | Loss                  from Discontinued Operations   | 0.0                                             | 0.1         | 0.0                                         | 0.5                                           |
|                                            | Net                  Income                          |                                            | $16.5       | $21.8                                       | $65.4                                         | $53.8                                                                           |
| **Diluted                  Earnings Per Share** |                                                 |                                            |        |                                        |
|                                            | Continuing                  Operations               | $0.58                                           | $0.78       | $2.31                                       | $1.95                                         |
|                                            | Discontinued                  Operations             | 0.0                                             | 0.0         | 0.0                                         | (0.02)                                        |
|                                            |                                                 |                                            |        |                                        | $0.58                                         | $0.78                                                                           | $2.31 | $1.93 |
|                                            |                                                 |                                            |        |                                        |                                          |                                                                            |   |   |
| **Statistical                  Data**           |                                                 |                                            |        |                                        |                                          |
| Corporate                                       |                                                 |                                            |        |                                        |                                          |                                                                            |
|                                            | Common                  Stock                        |                                            |        |                                        |                                          |
|                                            |                                                 | High                                            |        | $50.05                                      | $49.30                                        | $51.30                                                                          | $49.30 |
|                                            |                                                 | Low                                             |        | $38.60                                      | $43.26                                        | $38.60                                                                          | $42.99 |
|                                            |                                                 | Close                                           |        | $44.76                                      | $43.45                                        | $44.76                                                                          | $43.45 |
|                                            | Book                  Value                          |                                            | $23.50      | $21.26                                      | $23.50                                        | $21.26                                                                          |
|                                            |                                                 |                                            |        |                                        |                                          |                                                                            |   |   |
| **Kilowatthours                  Sold**         |                                                 |                                            |        |                                        |
| Millions                                        |                                                 |                                            |        |                                        |                                          |                                                                            |   |
|                                            | Regulated                  Utility                   |                                            |        |                                        |                                          |
|                                            |                                                 | Retail                  and Municipals          |        |                                        |                                          |                                                                            |
|                                            |                                                 |                                            | Residential | 258.8                                       | 263.0                                         | 832.1                                                                           | 800.1 |
|                                            |                                                 |                                            | Commercial  | 360.5                                       | 361.7                                         | 1,033.6                                                                         | 1,005.9 |
|                                            |                                                 |                                            | Municipals  | 255.7                                       | 248.6                                         | 751.3                                                                           | 684.0 |
|                                            |                                                 |                                            | Industrial  | 1,775.8                                     | 1,836.9                                       | 5,215.2                                                                         | 5,429.1 |
|                                            |                                                 |                                            | Other       | 21.5                                        | 20.8                                          | 62.8                                                                            | 59.4 |
|                                            |                                                 |                                            |        | Total                  Retail and Municipal | 2,672.3                                       | 2,731.0                                                                         | 7,895.0 | 7,978.5 |
|                                            |                                                 | Other                  Power Suppliers          | 571.9       | 584.3                                       | 1,608.8                                       | 1,604.9                                                                         |
|                                            |                                                 |                                            |        | Total                  Regulated Utility    | 3,244.2                                       | 3,315.3                                                                         | 9,503.8 | 9,583.4 |
|                                            | Nonregulated                  Energy Operations      | 60.7                                            | 60.4        | 184.2                                       | 181.3                                         |
|                                            |                                                 |                                            |        | Total                  Kilowatthours Sold   | 3,304.9                                       | 3,375.7                                                                         | 9,688.0 | 9,764.7 |
|                                            |                                                 |                                            |        |                                        |                                          |                                                                            |   |   |
| **Real                  Estate**                |                                                 |                                            |        |                                        |                                          |                                                                            |
|                                            | Town                  Center Development Project     |                                            |        |                                        |                                          |
|                                            |                                                 | Commercial                  Square Footage Sold | 50,000      | 114,300                                     | 474,476                                       | 364,995                                                                         |
|                                            |                                                 | Residential                  Units              | –     | 356                                         |        130 |        542                                   |
|                                            |                                                 |                                            |        |                                        |                                          |                                                                            |   |   |
|                                            | Palm                  Coast Park Development Project |                                            |        |                                        |                                          |
|                                            |                                                 | Commercial                  Square Footage Sold | –     | –                                     |   40,000                            |             – |
|                                            |                                                 | Residential                  Units              | –     | 200                                         |        406 |        200                                   |
|                                            |                                                 |                                            |        |                                        |                                          |                                                                            |   |   |
|                                            | Other                  Land                          |                                            |        |                                        |                                          |                                                                            |
|                                            |                                                 | Acres                  Sold                     | 83          | 242                                         |        450 |        708                                   |

----