Filed Pursuant to Rule 424(b)(3)
                                            Registration Statement No. 333-02109


PROSPECTUS SUPPLEMENT
(To prospectus dated February 14, 2005)


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This prospectus  supplement amends and supplements the prospectus dated February
14, 2005,  related to Invest  Direct (registered), ALLETE,  Inc.'s  direct stock
purchase and dividend  reinvestment  plan,  and should be read together with the
prospectus.

The  following  statements  update  the  discussion  in  "Description  of Common
Stock--Description  of Preferred Share Purchase Rights"  beginning on page 21 of
the prospectus.

On July 12,  2006,  the Board of  Directors  of ALLETE  approved the Amended and
Restated Rights  Agreement by and between ALLETE and the Corporate  Secretary of
ALLETE, as Rights Agent (Rights Agent) (Amended Rights Plan). The Amended Rights
Plan  modifies  ALLETE's  Rights  Agreement,  dated as of July 24, 1996  (Rights
Plan),  by and between ALLETE and the Rights Agent.  Capitalized  terms used but
not  defined  herein  shall have the  meanings  assigned  to them in the Amended
Rights Plan.

The Amended Rights Plan,  among other things,  extends the Final Expiration Date
of the Rights Plan to July 11, 2009,  unless the Rights are earlier  redeemed or
exchanged by ALLETE under certain  conditions as provided in the Amended  Rights
Plan. Further, the Amended Rights Plan provides that ALLETE may not consolidate,
merge,  or sell a majority of its assets or earning  power if (i) at the time of
or  immediately  after  such  consolidation,   merger  or  sale  there  are  any
instruments  or  securities  outstanding  or  agreements  in effect  which would
substantially  diminish  or  otherwise  eliminate  the  benefits  intended to be
afforded by the Rights, or (ii) such consolidation,  merger or sale would result
in the  distribution  of Rights to the  shareholders of the other parties to the
transaction.  Finally,  the Amended  Rights Plan  provides for the creation of a
committee of independent  directors to annually  review the terms and conditions
of the Amended  Rights  Plan,  as well as to  consider  whether  termination  or
modification  of the Amended  Rights Plan would be in the best  interests of the
shareholders and to make a  recommendation  based on such review to the Board of
Directors. The Amended Rights Plan was entered into and effective as of July 12,
2006.

The  foregoing  description  of the  Amended  Rights  Plan is  qualified  in its
entirety by the actual terms of the Amended Rights Plan,  which is  incorporated
by reference to Exhibit 4 of ALLETE's  Current Report on Form 8-K filed with the
Securities  and Exchange  Commission  on July 14, 2006.  All  references  in the
Prospectus to the Rights Plan are deemed to refer to the Amended Rights Plan.

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NEITHER  THE  SECURITIES  AND  EXCHANGE  COMMISSION  NOR  ANY  STATE  SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS  SUPPLEMENT OR THE  ACCOMPANYING  PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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           The date of this prospectus supplement is August 28, 2006.


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