The Minnesota Public Utilities Commission unanimously approved the $6.2 billion sale of Allete, parent of Minnesota Power, to the Canada Pension Plan Investment Board and BlackRock-owned Global Infrastructure Partners. Despite initial opposition over private equity utility ownership and potential rate hikes, the deal was sanctioned after the buyers committed to significant concessions, including a one-year rate hike pause, a capped return on equity, $50 million in customer bill credits, and dedicated funding for clean energy initiatives and low-income support. This approval enables Allete to access necessary capital for its clean energy transition and infrastructure upgrades, while the imposed conditions aim to mitigate risks for ratepayers and ensure progress toward Minnesota's carbon-free energy mandate.
ST. PAUL — Minnesota regulators signed off on the final approval needed to sell Allete to a pair of private investment firms. The five-member Minnesota Public Utilities Commission on Friday voted unanimously to approve the sale of Minnesota Power’s Duluth-based parent company to Canada Pension Plan Investment Board and BlackRock-owned Global Infrastructure Partners. ADVERTISEMENT The $6.2 billion deal, announced in May 2024, drew concern over private equity’s ownership of a utility and the potential for rising electricity rates. “We are grateful to the Minnesota Public Utilities Commission for their thorough review and approval of this important and strategic partnership, and recognition that this is in the public interest,” Bethany Owen, chair, president and CEO of Allete, said in a news release following the decision. “Today’s decision caps a comprehensive public process and positions ALLETE well to meet the significant infrastructure demands of the clean-energy transition without compromising the high-quality service and commitments to reliability and affordability that define our company,” Owen said. The Minnesota Attorney General’s Office, a consumer advocacy group, several environmental groups and Minnesota Power’s largest industrial customers were opposed to the sale, and an administrative law judge in July recommended, in a nonbinding opinion, that the PUC reject the deal as it wasn’t in the public interest. The role of BlackRock, the world’s largest asset manager, came under particular scrutiny. Groups opposed to the deal feared Minnesota Power would favor deals that would benefit other BlackRock-owned companies at the expense of ratepayers. But Commissioner Hwikwom Ham disagreed, arguing that the fiduciary responsibility of CPP and BlackRock-owned GIP would prevent that and that the PUC itself could protect ratepayers from this in future rate cases. “The Commission’s confidence that they have the capacity, authority, and objectivity to regulate the likes of BlackRock — a financial behemoth that has tentacles in every part of the global economy — rings hollow, especially when they already oversee regular utility rate hikes that families struggle to afford,” said Maggie Schuppert, director of strategic intiatives for CURE, one of the environmental groups opposed to the deal. ADVERTISEMENT “It will fall on community and ratepayer advocates, utility watchdogs, and the public itself to hold these entities and the PUC to account and mitigate the harms of this decision,” Schuppert said. Meanwhile, the Minnesota Department of Commerce, unions, a different consumer advocacy group and several clean energy groups supported the deal. Allen Gleckner, chief policy officer of clean energy group Fresh Energy, said the group lent its support for the sale of Minnesota Power when it decided the deal “would significantly mitigate risk to the transition to clean energy in Minnesota.” “We applaud the Commission for remaining focused on the substance of the issues at hand and what’s in the public interest of Minnesotans,” Gleckner said. Allete, which has long been publicly traded on the stock market, 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% of the state’s electricity to be carbon-free by 2040. PUC Chair Katie Sieben said that while it “drove me nuts” to hear that the acquisition was needed to meet that law, she believed the PUC should approve the deal because investment was necessary to ensure reliability and affordability. “Whether Minnesota Power is publicly traded or privately held, it needs to comply with the laws of the state of Minnesota, including the state's 2040 carbon-free law. … Minnesota Power does need massive amounts of investment,” Sieben said. “That's not due to the state's carbon-free law necessarily, but also due to the fact that many of the utilities' assets are at end of age and need investment.” ADVERTISEMENT She added that support from commissioners came at different stages of the process, as parties involved in the proceedings reached agreements that got “it over the net benefit threshold of what would be in the public interest.” Throughout the nearly year and a half that the deal was in front of the PUC, and in particular the last few weeks, Allete, GIP and CPP have agreed to a series of commitments, including: - Pausing rate hikes for a year. - Reducing its return on equity from 9.78% to 9.65% after the deal closes and then capping future ROE at 9.78% through 2030 to limit rate increases over the next five years. - Paying $50 million, from CPP and GIP, to customers in the form of bill credits by 2032. - Considering alternatives to its recent plan to bring another 750 megawatts of new natural gas energy capacity online as it seeks to retire its last coal-fired units at the Boswell Energy Center in Cohasset. - Reconsidering the proposed Nemadji Trail Energy Center natural gas power plant in Superior. - Dedicating $50 million to fund new clean energy technologies. - Dedicating $10 million to fund energy efficiency upgrades for low-income customers. - Forgiving up to $3.5 million in unpaid bills and providing $20 monthly bill credits to qualifying low-income customers. Some PUC members said Friday that they had originally been skeptical about the deal, and Commissioner Joseph Sullivan said he had been opposed to the deal as recently as the Sept. 25 oral arguments but ultimately supported the sale Friday. “I still do have concerns in the out years … I’m concerned about what happens in the future, 10-15 years from now,” Sullivan said. “But I do think that the benefits in the near term and medium term clearly outweigh the status quo and clearly show that the partners, the parties, are taking very serious their commitment to the state.” He acknowledged the concerns residents of Northeastern Minnesota have about the deal and instructed Minnesota Power, GIP and CPP to build credibility with the public and customers. “If you don’t build that credibility,” Sullivan said, “that will redound unfavorably to everybody.” This story was updated at 2:40 p.m. Oct. 3 with details from Friday's meeting and reaction to the deal's approval. It was originally posted at 11:24 a.m. Oct. 3. The Minnesota Public Utilities Commission's unanimous approval of the $6.2 billion acquisition of Allete (ALE) by Canada Pension Plan Investment Board and BlackRock-owned Global Infrastructure Partners removes the final regulatory hurdle for the transaction. This approval was secured despite initial opposition from the Minnesota Attorney General's Office and a non-binding recommendation for rejection, indicating the weight of the concessions made by the acquirers. These commitments were substantial, including a one-year pause on rate hikes, a reduction in the allowed return on equity from 9.78% to 9.65% with a cap through 2030, and over $100 million in direct customer credits and dedicated funding for clean energy and low-income support. For Allete, the deal provides access to significant private capital to fund its transition to meet Minnesota's 2040 carbon-free mandate and upgrade aging infrastructure. However, the intense scrutiny faced by BlackRock (BLK), reflected in its negative per-ticker sentiment score of -0.4, highlights a key risk for large asset managers in the regulated utility space, as public and regulatory pushback can lead to material concessions that impact investment returns.
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