Aug 7 (Reuters) - U.S. utility Allete ( ALE ) posted a

fall in second-quarter profit on Thursday, weighed down by lower

industrial margins along with higher operating and interest

expenses.

Higher-for-longer interest rates can weigh on utilities as

it makes investing in the construction and maintenance of

critical infrastructure such as electrical grids more expensive.

The company reported interest expenses of $23.1 million in

the reported quarter, up almost 15% from a year ago, while total

operating expenses were up 5% at $342.3 million.

The quarterly results "were impacted primarily by lower

industrial margins as a result of lower sales to taconite

customers at Minnesota Power which are expected to continue

through 2025," said CFO Jeff Scissons.

"Minnesota Power would be filing a rate case to account

for reduced revenue, increased depreciation from capital

investments and inflationary pressures," he added.

U.S. utilities have been constantly looking to raise

customer power bills to upgrade infrastructure, as the country's

electrical grids face extreme weather and growing demand from

industry electrification and data center expansions.

Regulated utilities use rate case proceedings to determine

the amount that customers need to pay for electricity, natural

gas, private water and steam services.

Minnesota Power, a utility division of Allete ( ALE ), also said

earlier this month it plans to build the 200-megawatt Longspur

Wind project in North Dakota as part of its EnergyForward

transition toward a carbon-free energy future.

Allete's ( ALE ) regulated operations segment fell 31% to $23

million.

The company's net income fell 3% to $31.9 million, or 55

cents per share, in the quarter ended June 30.