May 3 (Reuters) - U.S. power utility and renewable energy developer Allete said on Friday that its Minnesota electric utility has reached a settlement on its 2024 electric rate proposal with the Minnesota Department of Commerce, the state's Attorney General's Office and large power customers.

If approved by the Minnesota Public Utilities Commission (MPUC), the agreement would set the final rate increases of about 4.9% for residential and small business customers and about 4.4% for industrial and large commercial customers.

Minnesota Power provides electric service in northeastern Minnesota for 150,000 customers, 14 municipalities and some of the largest industrial customers in the United States.

The utility had filed its rate proposal in November 2023, asking for an increase of $89 million in revenues to support investments for a clean-energy transition.

The MPUC has approved an interim rate increase, which went into effect on Jan. 1, of 8.6%, or about $8 per month for the average residential customer over the 2023 rates.

With the final approved rate being lower than the interim rate, the company said it would refund the difference to customers with interest.

(Reporting by Roshia Sabu in Bengaluru; Editing by Tasim Zahid)