ST. PAUL — The Minnesota Public Utilities Commission is expected to vote on Oct. 3 on whether Minnesota Power’s parent company should be sold to a pair of private investment firms, marking a potentially historic shift in how the state’s energy infrastructure is owned and operated.
The proposed $6.2 billion acquisition would transfer Duluth-based ALLETE, the parent company of Minnesota Power, to Global Infrastructure Partners — a subsidiary of BlackRock, the world’s largest asset manager — and the Canada Pension Plan Investment Board. Minnesota Power provides electricity to nearly 150,000 customers in the northeastern and north-central regions of the state.
The deal has sparked fierce opposition from environmental groups, consumer advocates, the state Attorney General’s office, and the utility’s largest industrial customers, who warn that private equity ownership could lead to higher bills, reduced transparency, and a slower transition to clean energy.
An administrative law judge in July recommended that the PUC reject the deal as it wasn’t in the public interest. Yet PUC Chair Katie Sieben said the deal has improved since it was first presented to the commission 16 months ago, noting that because of the amended process, more parties are “supportive of the overall plan” and “we’re at a much better place to say that the overall package is in the public’s interest.”
The PUC board met Thursday with both proponents and opponents of the deal.
Utility defends deal as path to clean energy
Bethany Owen, president and CEO of ALLETE, told regulators, “Minnesota Power and our partners are making significant, meaningful and even historic commitments benefiting our customers, our communities and our employees.”
ALLETE has maintained that going private under the ownership of GIP and CPP would allow it to more quickly and reliably access the money needed to fund its transition away from coal and carbon emissions and reach Minnesota’s law requiring 100 percent of the state’s electricity to be carbon-free by 2040.
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, because you know how that’s going to end at some point.”
Last-minute
concessions offered
During the meeting, Minnesota Power and its prospective buyers outlined new commitments. Customers would receive $50 million in bill credits by 2032, the company would not charge ratepayers for acquisition costs for five years, and it would agree to a one-year rate freeze.
Opponents warn of private equity model
Critics remain deeply skeptical 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. “BlackRock and GIP are not interested in funding the necessary transition to clean energy. They are interested in recouping returns from ratepayers like me. We shouldn’t have to pay more for an essential service that keeps the lights on while private equity executives rake in profits at our expense.”
“Minnesota’s energy future should be built on the needs of communities and the long-term stability of the grid, not the short-term profit expectations of BlackRock’s investors,” said Alissa Jean Schafer, climate and energy director, Private Equity Stakeholder Project. “Handing a monopoly utility over to a Wall Street private equity fund means risking higher bills and a slower clean energy transition. BlackRock’s own documents show they are seeking double-digit returns while captive utility customers are stuck footing the bill.”
Peter Scholtz of the Office of the Attorney General’s Residential Utilities Division suggested new owners could bypass the five-year safeguard on ratepayers by having Minnesota Power enter into expensive contracts with companies in which the new owners already have ownership interests.
“Saying there will be no impacts in the next five years assumes no vertical coordination between these companies,” added Hudson Kingston, legal director of environmental group CURE.
“Clearly if this deal goes through, private equity interests … they’re going to know that our utility sector across the country is ‘open for business,’” Maggie Schuppert, director of strategic initiatives for CURE, said.
Nearly 500 public commenters asked the PUC to reject the private equity takeover. The commission’s decision Friday will determine not only the future of Minnesota Power but could set a precedent for utility regulation as private equity increasingly targets essential infrastructure nationwide.