MINNEAPOLIS (AP) — Minnesota regulators voted unanimously Friday to approve an investment group's takeover of a power company over the objections of the state attorney general, big industrial electricity buyers and consumer advocates.
In voting for the takeover of Duluth-based Minnesota, the five members of the Minnesota Public Utilities Commission said they believe the conditions imposed on the deal will protect the public interest and shield customers
from rate increases. Opponents warned that the private equity group is only interested in squeezing bigger profits from regular ratepayers.
The approval came as electricity bills are rising fast across the U.S., and growing evidence suggests the bills of some residential customers are increasing to subsidize the rapid build-out of power plants and power lines to supply the gargantuan energy needs of Big Tech’s data centers and the boom in artificial intelligence.
Raising the stakes is the potential that Google could build a data center in Minnesota Power’s territory in the northern part of the state, a lucrative prospect for the utility's owner.
Opponents also expressed fear that the sale would encourage more such deals across the U.S.
Under the planned buyout, a BlackRock subsidiary and the Canada Pension Plan Investment Board will take over the publicly traded company Allete, parent of Minnesota Power, which provides power to 150,000 customers and owns a variety of power sources, including coal, gas, wind and solar.
The buyout price is $6.2 billion, including $67 a share for stockholders at a 19% premium, and assuming $2.3 billion in debt. In its petition, Allete told regulators that Minnesota Power’s operations, strategy and values wouldn’t change under BlackRock and that the deal’s cost wouldn't affect electric rates.
Building trades unions and the administration of Democratic Gov. Tim Walz, who appointed or reappointed all five of the utility commissioners, sided with Allete and BlackRock.
The state Department of Commerce, Minnesota Power and the investors negotiated a package of modifications this summer that included additional financial and regulatory safeguards. The department's attorney, Richard Dornfeld, told the commission the changes will protect the public interest.
The commission's chair, Katie Sieben, agreed.
“Because of the collective work of partners, stakeholders, labor, environmental groups and others, we’ve made the overall package better for Minnesota Power customers,” Sieben said.
Opposing the deal were the state attorney general’s office and industrial interests that buy two-thirds of Minnesota Power’s electricity, including U.S. Steel and other iron mine owners, Enbridge-run oil pipelines, and pulp and paper mills.
Allete argued that BlackRock will have an easier time raising the money that Minnesota Power needs to comply with a state law requiring utilities to get 100% of their electricity from carbon-free sources by 2040.
Previously, an administrative law judge recommended that the commission reject the deal, saying that the evidence revealed the buyout group’s “intent to do what private equity is expected to do — pursue profit in excess of public markets through company control.”
Commissioner Audrey Partridge said she started with “a high degree of skepticism and I would say even cynicism,” and “assumed the absolute worst in these investors.” But she said the added safeguards, and the over $100 million that the investors will provide for relief for ratepayers and investments in clean energy, will protect the public interest.
Opponents said they were dismayed by the approval.
“Private equity ownership of Minnesota Power will likely mean higher bills, less accountability, and more risk for Minnesotans," Alissa Jean Schafer, climate and energy director at the Private Equity Stakeholder Project, said in a statement. The national nonprofit says it seeks to bring transparency and accountability to the private equity industry.
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Levy reported from Harrisburg, Pennsylvania.
