The Minnesota Public Utilities Commission approved the $6.2 billion sale of Allete to BlackRock’s Global Infrastructure Partners and the Canada Pension Plan Investment Board in a unanimous decision Oct. 3.

All five commissioners agreed that the transaction, which would make Allete a private company, is in the public interest (E-015/PA-24-198). Allete — which owns Minnesota Power; Allete Clean Energy; and Superior Water, Light and Power — said in 2024 that the buyout is necessary to fund the fleet transition necessary to hit clean energy targets. (See Canada Pension Board, Global Infrastructure Partners to Buy Allete.)

The Minnesota PUC will issue a written order later in 2025. It gave Minnesota Power until Jan. 15, 2026, to file an alternative resource plan that reflects its new owners’ commitments.

During deliberations at the commission’s Oct. 3 meeting, Assistant Attorney General Richard Dornfeld said provisions to the deal negotiated in summer allowed it to cross the threshold of the public interest.

GIP and CPPIB agreed to several settlement provisions, including $50 million in rate credits for customers; another $50 million in clean energy funding for future resources that cannot be recovered in rates; $10 million in home efficiency improvements for low-income customers; up to $3.5 million in residential customer arrearage forgiveness; a reduction in return on equity from 9.78% to 9.65%, with a future cap of 9.78% through Dec. 31, 2030; a pledge to maintain local employment levels and seek local staffing on future projects; an agreement to participate in audits conducted by the Minnesota Department of Commerce; and penalties for noncompliance with commitments.

Additionally, GIP and CPPIB have guaranteed Allete will have access to capital to fund its five-year transmission and renewable energy plans. Allete is set to retain its Duluth, Minn., headquarters and be governed by a majority independent board of directors, with multiple seats reserved for residents of Minnesota and Wisconsin.

Minnesota regulators addressed Minnesota Power’s new ties to BlackRock before their vote. BlackRock, the world’s largest asset manager at more than $12 trillion in accounts, acquired GIP in a $12.5 billion deal in 2024. Consumer advocacy groups are apprehensive that GIP, motivated by profit, would raise rates.

The sale is the latest in a trend of private equity snapping up public utilities. GIP is reportedly exploring the purchase of AES. Blackstone Infrastructure, on the other hand, announced intentions to close on TXNM Energy, the parent of the Public Service Co. of New Mexico and Texas-New Mexico Power, for $11.5 billion.

Commissioners Tell Firms to Build Trust

All five commissioners said they had reservations about the sale but were assuaged by the firms’ additional promises.

Vice Chair Joseph Sullivan said that while he didn’t know what would happen in the long term, the near- and medium-term benefits of the transaction are undeniable over Minnesota Power’s status quo. He said the sale likely would “take a very significant bite” out of the utility’s next rate case.

Sullivan advised Minnesota Power and its new owners to build credibility with its ratepayers and those who opposed the sale.

“If you don’t build that credibility, that will redound unfavorably to everybody, including this commission,” Sullivan said. “My hope is you take that seriously. … In the world right now, in this country, there’s a significant amount of uncertainty and concern, and I think for a lot of people in northern Minnesota right now, a lot of people in the state, they’re probably saying, ‘Well, just another crappy thing that’s happened today.’”

Sullivan told GIP and CPPIB to leverage the current doubt surrounding the sale, calling “trust the currency of the realm.”

Commissioner Audrey Partridge said she was pessimistic about the motivations of private equity and examined the deal assuming “the absolute worst” of GIP and CPPIB. Partridge said in every scenario she tested, she could not see a way that the investors would simultaneously profit while harming the utility and its customers.

“I cannot remark on the character of these investors before us, but I was unable to maintain my cynicism as I went through the exercise of applying these commitments to all of the possible scenarios raised in the docket of how they might take advantage of customers and our communities,” Partridge said.

PUC Chair Katie Sieben said Minnesota Power needs “massive investment,” not only because of the state’s 100% carbon-free energy mandate by 2040, but because many resources in the utility’s fleet are aging out and need investment.

The Citizens Utility Board of Minnesota said in a statement following the decision that it continued to agree with an administrative law judge who reviewed evidence in docket in July and concluded that risks of an earlier version of the deal “outweigh the possible benefits.”

“Though we disagree with the commission’s decision, we genuinely hope they are correct in their assessment. We also appreciate the commission’s efforts to impose conditions that help mitigate risk of harm to ratepayers,” CUB said. Regardless of Minnesota Power’s owners, the organization would continue to advocate for ratepayers, it said.

The Sierra Club predicted the sale would “pad private equity investors’ pockets.”

“BlackRock and predatory private equity firms have long proven that their mission will always be to relentlessly pursue profit, no matter the harm it causes to communities,” said Jenna Yeakle, with the Sierra Club’s Beyond Coal campaign.

Before the approval, Minnesota environmentalist advocacy group CURE had said, “Short-term and illusory commitments do not mitigate taking this utility into the shadows of private equity management and cannot fully remedy the harms to transparency, reliability, affordability and public confidence that will flow from an approval of this deal.”

‘Valuable’ Pushback

Commissioner Hwikwon Ham said overall, the PUC had to balance Allete’s continued risk exposure to the financial market and its industrial customers’ susceptibility to business cycles against the potential risk of partners’ misbehavior. He said GIP and the CPPIB offered a higher probability of providing Minnesota Power with more stable equity.

Ham urged all the opposing parties in the docket to stay vigilant and participate in Minnesota Power’s upcoming rate cases, resource planning and other financial filings.

“You guys develop the record; bring it to us. If there’s any misbehavior, we can deal with it. So, a lot of those risks can be managed through our regulatory process,” Ham said. He also asked stakeholders not to hold preconceived notions that the new ownership will be bad.

Ham noted a potential abuse of affiliated interests but said he believes existing U.S. Securities and Exchange Commission regulations are adequate to manage BlackRock.

“I started with very strong skepticism in this transaction,” Ham said. He thanked opposing parties and ratepayers for their arguments and said he was surprised by the firms’ flexibility to agree to new provisions.

Ham also advised GIP and CPPIB against making “Minnesota Power ratepayers mad.”

Commissioner John Tuma likewise said he was uneasy about what the deal would mean for Minnesota’s regulatory compact and that the concerns around affiliated interests are “real.” However, he said if the deal grows Minnesota Power as promised, it would be a win for ratepayers.

“This is a new, different way of doing it, as opposed to, say, some of the other mergers we’ve seen in the past,” Tuma said. He said the “pushback” from CUB was valuable and asked it to continue to serve as a watchdog.

“It’s a new path; there’s a lot more bramble-clearing to be done. And we want you to help clear that bramble so we can cut a new path,” Tuma said.

GIP founding partner Jonathan Bram told the commission the company’s fiduciary duty means it would not disadvantage Allete to benefit another company under BlackRock’s umbrella.

“Trust … is our stock in trade, and establishing that trust, maintaining that trust, is paramount to how we will … manage this. It is essential,” Bram said.

Bram also said the SEC and “international equivalents” regulate what GIP does, even before the BlackRock acquisition.

Andrew Alley, CPPIB’s head of infrastructure for North America, said the board could face “significant ramifications” if it tried to benefit one account at the expense of another.

“By our research, no other utility acquisition in America is generating this amount of value per customer, which we estimate to be approximately $200 million,” Jennifer Cady, Allete vice president of public policy and external affairs, told the commission before the vote. “None of these financial benefits exist without this transaction.”

Sieben said she was proud of the work the firms, environmental groups, labor unions and other stakeholders did to hammer out the final terms of the transaction.

“I think it’s pretty clear that because of the collective work of the agency, of us, our staff, the process we’ve engaged in a public and legal manner, we have made the petition better, and it will be to the betterment of Minnesota Power customers,” Sieben said.