Last August, the Center for Earth, Energy & Democracy (CEED) joined fourteen organizations in saying NO to the proposed takeover of Minnesota Power by private equity interests connected to BlackRock. Together, we urged the Minnesota Public Utilities Commission (PUC) to stand with environmental justice communities and reject the sale, because we believe that our energy future belongs to the people of Minnesota, not corporate polluters and Wall Street.
Despite widespread opposition from environmental groups and community leaders, the Minnesota PUC unanimously approved the sale of Minnesota Power’s parent company to BlackRock’s Global Infrastructure Partners (GIP) and the Canada Pension Plan Investment Board (CPP Investments).
But what exactly does that mean?
Private Equity
First, let’s talk about private equity.
“Private equity describes investment partnerships that buy and manage companies before selling them. Private equity firms operate these investment funds on behalf of institutional and accredited investors” (Private Equity Explained With Examples and Ways To Invest).
In other words, private equity firms buy or invest in companies with the intention of later selling them to other private equity firms or asset managers at a profit.
BlackRock is an asset manager and one of the world’s leading providers of investment with over $10 trillion in assets under management. In 2024, BlackRock acquired Global Infrastructure Partners (GIP), another fund manager that invests in infrastructure assets in the energy, transport, digital infrastructure, and water and waste management sectors.
When private equity firms or asset managers acquire companies, they are often finding ways to make money from those companies without requiring the company to make money itself. (How Private Equity Killed the American Dream).
Minnesota Power & the Proposed Buyout
This leads us into the proposed buyout of Minnesota Power.
Minnesota Power is a utility company based in Duluth, Minnesota. It is owned by ALLETE and delivers energy services to about 150,000 residential and commercial customers in northeastern Minnesota.
Recently, there has been interest by private equity to buy utilities as a way to profit from the demand for electricity from data centers, AI, and consumers.
In 2024, the proposed buyout of Minnesota Power started when ALLETE agreed to be acquired by GIP and CPP Investments. This prompted a regulatory process where the Minnesota Public Utilities Commission was tasked with making the decision of whether or not to approve this buyout.
On October 3rd, the MN PUC had its final hearing about the proposed buyout of Minnesota Power by GPI and CPP Investments. All five commissioners unanimously agreed to the acquisition.
Implications
Throughout the regulatory process, there were interventions from organizations such as CURE, the Citizens Utility Board of Minnesota (CUB), and the Sierra Club, encouraging the MN PUC to deny the proposal. The arguments made by these organizations stemmed from the belief that the overall harms of this acquisition would outweigh the benefits.
These organizations exist to ensure a just and equitable energy transition for all Minnesotans, keeping the community at the forefront of their advocacy. Earlier this year, 14 organizations, including CEED, wrote to the MN PUC commissioners to Say NO to BlackRock’s Takeover of Minnesota Power.
The proposed buyout has raised worries about the long-term effects of private equity regulating utilities in northeastern Minnesota. Part of the concern is rate increases among already high-rate consumers are paying. Additionally, this acquisition begs the question of the buildout of data centers in the area, increasing overall energy use and, again, putting additional burden on communities.
What Comes Next?
Although this is not the outcome that we hoped for, we will continue to monitor the situation and find ways to support our community. CEED remains committed to fighting for energy democracy and energy justice.
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Resources
- McKnight Statement on Acquisition of ALLETE, Parent Company of Minnesota Power
- CUB – Private Purchase of Minnesota Power
- STATE OF MINNESOTA OFFICE OF ADMINISTRATIVE HEARINGS
- Utility Dive – Minnesota PUC approves $6.2B Allete sale to private equity
- MPR – State regulators approve sale of northern MN public utility to private investors
- MN Reformer – BlackRock’s Minnesota Power takeover splits DFL coalition as corporate giant seeks bigger targets
- Private Equity Explained With Examples and Ways To Invest
- PBS Wisconsin – Private equity pursues profits in power utilities as data centers use more energy and electric bills rise
- BlackRock
- CPP Investments
- BlackRock Completes Acquisition of Global Infrastructure Partners
- About GPI
- WIRED – How Private Equity Killed the American Dream