In a controversial move, the Minnesota Public Utilities Commission (PUC), a five-member regulatory body appointed by Governor Walz, has voted to approve BlackRock’s proposed acquisition of ALLETE, the parent company of Minnesota Power. This decision has raised significant concerns among consumer advocates, environmental organizations, and thousands of Minnesotans who have expressed their opposition to the utility takeover deal.
Today’s ruling contradicts the recommendations made by Administrative Law Judge Megan McKenzie, who cautioned that BlackRock's acquisition could lead to substantial rate increases surpassing the long-run rate of inflation. “By ignoring a lengthy record of opposition and choosing to approve this BlackRock deal, the Minnesota PUC made the wrong choice today,” stated Alissa Jean Schafer, Climate and Energy Director at the Private Equity Stakeholder Project (PESP). She further emphasized that private equity ownership of Minnesota Power could result in higher bills, diminished accountability, and increased risks for residents.
BlackRock’s profit-driven model is perceived as being incompatible with the long-term needs of a public utility. Administrative Law Judge McKenzie’s report highlighted the potential for "significant rate increases" and warned of an "unacceptable risk of rate increase and rate shock" in economically vulnerable areas of Minnesota. Across the nation, private equity firms, including BlackRock’s Global Infrastructure Partners, have been known to implement aggressive cost-cutting measures and accumulate high debt to deliver outsized returns, often leaving consumers to bear the financial burden.
“What’s at stake is simple: Minnesotans could see their power bills rise while Wall Street investors collect profits,” Schafer warned. Despite the PUC’s decision to disregard the ALJ’s recommendations and the concerns voiced by the Attorney General’s office, large power interveners, and local public opposition, the responsibility now lies with the PUC to ensure BlackRock's accountability.
“BlackRock made lofty promises in order to win approval for this deal. It will now be on the PUC to enforce those promises,” Schafer commented. She assured that many organizations and Minnesotans who opposed this takeover would closely monitor BlackRock's actions to ensure that profits do not take precedence over public welfare.
The risks associated with this acquisition are well-documented and concerning:
Higher bills: The ALJ's assessment of BlackRock’s confidential financial information raised plausible concerns that the firm might resort to significant rate increases to satisfy investor return targets. Less transparency: Private equity firms typically operate under confidential structures and maintain short investment horizons, which could hinder regulators and the public's ability to oversee their operations effectively. Clean energy uncertainty: Despite assurances to the contrary, there is no guarantee that BlackRock's ownership will further Minnesota's commitment to a carbon-free mandate by 2040.“By approving this sale, Gov. Walz’s PUC has signaled to Wall Street that even essential public services are on the auction block,” Schafer concluded. “Approving this deal was the wrong decision, and Minnesotans could be left to pay the price.”
As the implications of this decision unfold, it remains crucial for residents to stay informed and engaged in the conversation surrounding the future of Minnesota Power and the potential impact on their energy bills and public utility oversight.
