EXHIBIT 12
MINNESOTA POWER, INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND
SUPPLEMENTAL RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SIX MONTHS
ENDED
JUNE 30,
1995 1996 1997 1998 1999 2000
--------- --------- --------- ---------- -------- ---------
(millions except ratios)
<S> <C> <C> <C> <C> <C> <C>
Income from Continuing Operations Per
Consolidated Statement of Income $ 61.9 $ 69.2 $ 77.6 $ 88.5 $ 68.0 $ 94.6
Add (Deduct)
Current Income Tax Expense 13.4 31.4 44.7 52.9 70.5 72.3
Deferred Income Tax Expense (Benefit) (11.3) (9.8) 3.2 2.7 (11.3) (12.2)
Deferred Investment Tax Credits (0.9) (2.0) (1.3) (1.6) (1.5) (0.7)
Undistributed Income From Less Than
50% Owned Equity Investments (9.1) (11.0) (13.9) (14.1) (0.6) -
Minority Interest 0.2 3.3 2.3 2.0 1.8 -
--------- --------- --------- ---------- -------- ---------
54.2 81.1 112.6 130.4 126.9 154.0
--------- --------- --------- ---------- -------- ---------
Fixed Charges
Interest on Long-Term Debt 45.7 52.4 50.4 48.5 48.4 25.3
Capitalized Interest 1.4 1.5 1.5 1.0 0.7 0.4
Other Interest Charges - Net 7.9 10.2 14.3 17.1 12.0 6.9
Interest Component of All Rentals 3.7 2.5 3.7 5.7 4.8 3.9
Distributions on Redeemable Preferred
Securities of Subsidiary - 4.7 6.0 6.0 6.0 3.0
--------- --------- --------- ---------- -------- ---------
Total Fixed Charges 58.7 71.3 75.9 78.3 71.9 39.5
--------- --------- --------- ---------- -------- ---------
Earnings Before Income Taxes and Fixed
Charges (Excluding Capitalized Interest)$ 111.5 $ 150.9 $ 187.0 $ 207.7 $ 198.1 $ 193.1
========= ========= ========= ========== ======== =========
Ratio of Earnings to Fixed Charges 1.90 2.12 2.46 2.65 2.76 4.89
========= ========= ========= ========== ======== =========
Earnings Before Income Taxes and Fixed
Charges (Excluding Capitalized Interest)$ 111.5 $ 150.9 $ 187.0 $ 207.7 $ 198.1 $ 193.1
Supplemental Charges 13.5 14.4 12.0 14.5 15.4 7.4
--------- --------- --------- ---------- -------- ---------
Earnings Before Income Taxes and Fixed
and Supplemental Charges (Excluding
Capitalized Interest) $ 125.0 $ 165.3 $ 199.0 $222.2 $ 213.5 $ 200.5
========= ========= ========= ========== ======== =========
Total Fixed Charges $ 58.7 $ 71.3 $ 75.9 $ 78.3 $ 71.9 $ 39.5
Supplemental Charges 13.5 14.4 12.0 14.5 15.4 7.4
--------- --------- --------- ---------- -------- ---------
Fixed and Supplemental Charges $ 72.2 $ 85.7 $ 87.9 $ 92.8 $ 87.3 $ 46.9
========= ========= ========= ========== ======== =========
Supplemental Ratio of Earnings to
Fixed Charges (1) 1.73 1.93 2.26 2.39 2.45 4.28
========= ========= ========= ========== ======== =========
</TABLE>
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(1) The supplemental ratio of earnings to fixed charges includes Minnesota
Power's obligation under a contract with Square Butte Electric
Cooperative which extends through 2027, pursuant to which Minnesota
Power is entitled to approximately 71% of the output of a 455-megawatt
coal-fired generating unit. Minnesota Power is obligated to pay its pro
rata share of Square Butte's costs based on output entitlement from the
unit. Minnesota Power's payment obligation is suspended if Square Butte
fails to deliver any power, whether produced or purchased, for a period
of one year. Square Butte's fixed costs consist primarily of debt
service. Variable operating costs include the price of coal purchased
from BNI Coal, Ltd., under a long-term contract.
