REGIONAL—The Minnesota Public Utilities Commission voted unanimously last Friday to approve the $6.2 billion sale of ALLETE, the parent company of Minnesota Power, to a pair of private investment firms. The landmark decision transfers ownership of the utility that serves nearly 150,000 customers in northeastern and north-central Minnesota to Global Infrastructure Partners, a subsidiary of BlackRock, and the Canada Pension Plan Investment Board.
The five-member commission concluded the sale was in the public interest, despite significant opposition from environmental groups, consumer advocates, the state Attorney General’s office, and the utility’s largest industrial customers. In July, an administrative law judge had recommended that the PUC reject the deal, concluding it wasn’t in the public interest.
Several commissioners admitted they were initially highly skeptical of the proposal and only came around to supporting it after Minnesota Power and its purchasers agreed to several new conditions that the PUC says are “unprecedented.”
To secure approval, the buyers made several concessions totaling more than $200 million in customer benefits. The package includes a one-year rate freeze and $50 million in bill credits to customers by 2032. The new owners also committed not to charge ratepayers for acquisition costs for five years and to create a $50 million fund for new clean energy technologies. Additionally, they will allocate $10 million for energy efficiency upgrades for low-income customers and spend up to $3.5 million to forgive customers’ unpaid bills.
Since the proposed acquisition was first announced more than a year and a half ago, Minnesota Power has argued the deal is needed to help finance massive requirements in infrastructure needed over the next several years to enable the transition to a carbon-free energy system as required by state law.
ALLETE has maintained that going private under the ownership of GIP and CPP would allow it to more quickly access the money needed to fund its transition away from coal.
During last week’s PUC meeting, Jonathan Bram, a founding partner of GIP, addressed concerns about rate increases directly, stating, “There’s a limit as to how much people can pay. And if a business plan was going to result in an enormous increase in rates, that would be something you wouldn’t want to get involved with.”
Commissioners said they were confident those risks could be mitigated, because the utility will continue to be regulated by the state.
“The risks can be managed through our regulatory process,” said Commissioner Hwikwon Ham. “We can deal with it in our rate case if they misbehave.”
“I’m concerned about what happens in the future, 10, 15, years from now,” said Commissioner Joe Sullivan, who said he opposed the deal until the past few days.
“I do think that the benefits in the near term and the medium term clearly outweigh the status quo and clearly show that the parties are taking very seriously the commitment to the state,” Sullivan told Minnesota Public Radio.
Critics remain unconvinced despite the concessions.
“This private equity acquisition threatens to control and put at risk a crucial part of Minnesotans’ everyday lives,” said Jenna Yeakle, central region campaign manager at Sierra Club.
“The very temporary protections, programs, and funding tacked onto this deal cannot offset the billions of dollars of profit the new owners intend to reap from northern Minnesota households and businesses,” said Hudson Kingston, legal director of the conservation group CURE.
The Minnesota PUC’s blessing is the final approval needed for the acquisition, which had already been approved by federal regulators. The transaction is expected to close later this year, with ALLETE maintaining its headquarters in downtown Duluth.