Action Alert

Tell the MN PUC to REJECT the Sale of ALLETE/Minnesota Power to Private Equity

If you are concerned about the proposed sale of one of Minnesota’s largest electric utilities, Minnesota Power, to private equity firms Now is the time to act!

Whether you are a Minnesota Power customer or a Minnesotan anywhere else in the state This sale will impact you.

ALLETE—a publicly traded energy company headquartered in Duluth, MN—in May 2024 announced its plan to be acquired by two large, private investors: the Canada Pension Plan Investment Board (CPP Investments) and Global Infrastructure Partners (GIP). Among ALLETE’s other holdings, it owns Minnesota Power—a public utility serving 150,000 Minnesotan residents, 14 municipalities, and major industrial customers, including Minnesota’s iron mines and paper mills.

Adding fuel to the private equity fire, in October 2024, GIP was formally acquired by BlackRock, the largest private asset holder in the world.

The private equity business model is based on extracting the largest amount of profits from the companies they buy, usually by loading them with debt, reducing staffing costs, and cutting back services. This means big windfalls for their investors, but more often than not, this comes at the expense of customers, employees, and the public.

Before this deal can go through, it needs the approval of the Minnesota Public Utilities Commission (PUC) which has to find that it’s “consistent with the public interest.” Learn more here about why we think selling a critical public service off to giant private equity interests is clearly not in the public interest.

Minnesotans need to be heard on whether their public utilities should remain publicly owned. Now is your chance to tell the PUC what your questions and concerns are about this proposed deal. Minnesota Power customers—and all Minnesotans—stand to be most directly impacted if this sale goes through, so our voices deserve to be heard.

Why isn’t the acquisition of ALLETE and Minnesota Power by private equity in the public interest?

Risks to ratepayers and residents

CPP/GIP/BlackRock have agreed to purchase ALLETE for a substantial premium, which means that ALLETE shareholders stand to get a significant payout if the deal goes through. But Minnesota Power customers will inevitably face unreasonably higher electricity rates in future years as the buyers try to recoup their investment. Private equity bought a utility in the UP of Michigan decades ago, and that company has been hiking rates ever since – the UPPCO ratepayers pay more than other utility customers in the UP and more than customers of similar utilities elsewhere in Michigan.

Also, while regulated utilities like Minnesota Power are guaranteed a profit when they build or expand infrastructure (like building a new gas plant), they don’t make money on “operational” costs, like maintenance and customer service. Investors looking for a high rate of return aren’t incentivized to maximize the things that make their service safe and reliable, meaning customers would face deteriorating service reducing reliability. The new owners have much higher target profits than the normal rate of return for a Minnesota utility, and need to extract that value from the company somehow – cutting unprofitable activities would support this goal.

Reduced stability and less operational continuity

Private equity typically holds investments for only five to seven years, which is a relatively short timeframe in the utility sector. This means that in less than ten years, Minnesota Power might be put up for sale again, causing further disruption, uncertainty, and instability. Even the weak assurances that CPP/GIP/BlackRock are making now about their business plans and commitment to their employees and northern Minnesotan communities could be easily abandoned by any future buyer.

Debt

 Normally, to maximize profits, private equity owners saddle the companies they buy with new debt in order to extract short-term profit. But if this new debt goes too far it makes the company less credit-worthy or could even lead to bankruptcy. 

Lack of transparency and accountability

Private companies like CPP and GIP/BlackRock are not subject to the same public reporting and disclosure requirements as ALLETE/Minnesota Power currently follows as a publicly-traded company. Already, Minnesota Power and its proposed buyers have hidden many details behind “trade secret” designations, raising serious concerns about their willingness to be transparent with the public and their customers in the future.  

Uncertainty for a large number of utility employees is not consistent with the public interest

Minnesota Power’s workforce is an important part of the Minnesota economy, and these workers consistently do their best to help customers. GIP/CPP have only made short-term promises to maintain staffing levels and pay/benefits for a few years after this deal closes.

Puts Minnesota’s critical clean energy goals in the hands of private equity investors and risks slowing down Minnesota’s climate action

Minnesota law requires that our electric utilities be 100% carbon free by 2040. Already the Integrated Resource Plan (IRP) recently released by Minnesota Power shows that the utility wants to add 1,100 MW of new natural gas power, and is no longer committed to shutting down its coal-burning units without replacing them with fossil fuel or biomass burners. In addition, GIP and BlackRock’s actions and investments in the United States and abroad show their deep ties the fossil fuel industry and undermines their purported clean energy focus.

ACT NOW

Use this form to send an email to the PUC by 4:30 pm on April 17.

Make it Personal | Your story makes a big impact on decision-makers. Share who you are, why you care about this issue, and what concerns you most. Our friends at CUB have additional guidance for preparing an effective comment. Note that everything included in your comment will become part of the public record.