REGIONAL— State officials are in disagreement over the proposal by a Blackrock subsidiary and a Canadian pension fund to purchase ALLETE, the company that owns and operates Minnesota Power, which provides electrical service to about 145,000 customers in northern Minnesota.
ALLETE reached an agreement with Blackrock’s Global Infrastructure Partners venture capital fund and the Canada Pension Plan Investment Board greenlighting the purchase in May of 2024, but as a regulated utility the sale must be approved by the Minnesota Public Utilities Commission, or MPUC.
The merits of the proposed sale have been under review for months by both the state’s Commerce Department as well as an administrative law judge who has been weighing testimony and documents related to the deal.
This week, the Commerce Department announced its support for the acquisition of ALLETE, citing the company’s need for investment capital as it transitions to renewable sources of power production in order to meet the state’s 2040 clean energy goals.
Commerce officials also cited concessions by the two buyers, including agreeing to a reduced return on investment, allowing for independent directors based in Minnesota and Wisconsin, and accepting current labor practices and contracts for at least two years. The companies also agreed to new service quality standards designed to improve customer service.
Meanwhile, Judge Megan McKenzie, the administrative law judge, or ALJ, who has been reviewing the case, has recommended rejection of the deal based on her finding that ALLETE and its would-be purchasers had failed to make the case that the acquisition is in the public’s interest.
While commerce officials cited the potential benefits of greater access to capital, the ALJ concluded that the parties had not demonstrated that the acquisition would actually do so, nor that the company needed improved access to funds to meet the requirements of the 2040 renewable energy standard. The buyers had touted their expertise in utility management as another benefit of the purchase, but the ALJ noted that the buyer’s stated intent to maintain current ALLETE management sharply limits that potential benefit. “Weighing against these possible benefits, there are foreseeable risks of harm to the energy transition, ALLETE’s long-term financial health, and ratepayers,” concluded the ALJ. “On balance, the risks of the deal, as proposed, outweigh the possible benefits.”
The recommendations by both the Commerce Department and the ALJ will be taken under advisement by the MPUC, which will ultimately make the call on the proposed deal. The MPUC is expected to rule on the matter this fall.