Why Is BlackRock Gunning to Take Over a Minnesota Electric Utility?

Who will own our energy future? There’s a battle playing out in northern Minnesota with major ramifications for this question.

It centers on the region’s main investor-owned electric utility, Minnesota Power, whose parent company, Allete, struck a deal in May 2024 to be acquired and taken private for $6.2 billion by two entities: Global Infrastructure Partners (GIP), which is fully owned by the global asset management behemoth BlackRock, and the Canada Pension Plan Investment Board (CPP).

Minnesota Power, Allete’s core holding, says the deal will provide the capital needed to build new clean energy infrastructure to comply with Minnesota’s requirement for 100 percent carbon-free electricity sources by 2040.

But a broad coalition of customers, ratepayer advocates, watchdog organizations, climate groups, local heavy industry, and the Minnesota Attorney General’s Office and Department of Commerce is opposing the deal. They say its overall public benefit has not been demonstrated, and they worry it would impose private equity control over their utility, threatening affordability and transparency, and leave ratepayers and regulators at the mercy of far-off financial profiteers. Some also question the deal’s climate rationale.

The deal has been approved by the Federal Energy Regulatory Commission (FERC) and Wisconsin regulators, but it awaits a decision from Minnesota’s Public Utility Commission (PUC), likely coming in the fall. A Minnesota administrative law judge will make a nonbinding recommendation on the deal to the Minnesota PUC in July following public hearings earlier this year.

The stakes are high. Locally, the deal would place a vital utility in the private grip of a global financial juggernaut whose raison d’etre is securing big investor returns. More broadly, it signals an acceleration of the asset manager takeover of basic infrastructure everyone depends on — in this case, a monopoly utility meant to be managed for the public good. Truthout spoke with several organizations that have intervened to try to stop the acquisition.

“This deal represents the antithesis of local control,” said Maggie Schuppert, a Minnesota Power customer and organizer with CURE, a rural community advocacy group. “They’re buying the things that are the basis of our lives.”

BlackRock’s Infrastructure Grab

Under the deal, BlackRock, through its subsidiary GIP, would become a 60 percent owner of Allete. BlackRock is the world’s largest asset manager, overseeing $11.6 trillion in assets. That’s around the combined GDP of Germany, Japan, and France.

BlackRock’s billionaire CEO Larry Fink has insider access to U.S. presidents across the political spectrum and massive influence within the world of global finance. His annual letters to CEOs are seen as pacesetters for corporate governance.

BlackRock’s ascendency over the past two decades rested upon its sprawling empire of low-fee “passive” index funds that track market indexes. These have made BlackRock a top shareholder of virtually every publicly traded U.S. company and a “universal owner” of capital.

But recently, BlackRock has turned sharply toward private markets and “active” management of real assets like infrastructure. The center of this shift was BlackRock’s 2024 acquisition of GIP, the world’s second-largest infrastructure fund manager, for $12.5 billion.

The firm’s growing domination of the utility market is even setting alarm bells off for Trump-appointed regulators.

GIP is a global colossus with dozens of portfolio companies across almost every continent. GIP founder and CEO Adebayo Ogunlesi is also a director of OpenAI and, until recently, was the lead director of Goldman Sachs. He served on business advisory councils for both Presidents Donald Trump and Joe Biden.

BlackRock recently made waves when, through GIP, it struck a deal to acquire over 40 global shipping ports, including two in the Panama Canal.

Firms like BlackRock have turned to private ownership over real assets to diversify their holdings and secure steady profits from the infrastructure that undergirds our lives — hospitals, housing, telecommunications, and so on. Utilities, with their regulated returns, are a desirable target.

Scholar Brett Christophers has noted the perils of asset manager dominance over the real assets we all depend on. “While all private owners are trying to make a profit,” he told Truthout in a 2023 interview, “asset managers tend to be particularly ruthless and single-minded in extracting profit from the assets they oversee.”

In northern Minnesota, many worry what will happen if their local utility is swallowed up by BlackRock’s business kingdom. As energy expert Scott Hempling told the Minnesota PUC, the deal would make Minnesota Power a “minor asset within the multinational portfolios” of GIP and the CPP.

Questioning the Need to Go Private

Opponents of the deal question the utility’s claim that the deal is needed to attract sufficient capital to meet Minnesota’s clean energy requirements. Brian Edstrom, a senior regulatory advocate with the nonprofit Citizens Utility Board of Minnesota (CUB), told Truthout that Allete hasn’t demonstrated that it must abandon public markets to raise funds.

“Even accepting they need to raise more capital doesn’t mean that this avenue is a better way to do that,” Edstrom told Truthout. “It injects new risks, and they become solely reliant on those two partners for capital.”

Critics point out that Allete’s own Securities and Exchange Commission reports contradict its assertion that it must go private for financing. For example, Allete’s 2024 annual report stated that the utility was “well positioned to meet our financing needs due to adequate operating cash flows, available additional working capital and access to capital markets.”

Jim Baker, executive director of the Private Equity Stakeholder Project, a nonprofit watchdog group focused on private equity, testified on behalf of CURE to the Minnesota PUC that “private equity ownership of Minnesota Power may be a more expensive way to raise capital than through public markets investments because of the high target annual return and cash yield expected to be paid out to GIP Fund V investors.”

Baker noted that GIP Fund V, one of the two funds through which GIP will acquire its 60 percent stake in Allete, has advertised a gross investment return target of 15 to 20 percent, which Baker says is around double the average 8.36 percent return of publicly traded utilities over the past decade.

Opponents of the deal say investor demands for big returns like these will come at the expense of ratepayers. “Private equity investors demand higher profits than normal market investors,” Jenna Yeakle, an organizer with the Sierra Club and a Minnesota Power customer, told Truthout. “That means higher rates for residential and small business customers.”

Concentrated Private Equity Ownership

Intervenors also say private equity ownership will add pressure on regulators who may fear the new owners unloading their investment if it isn’t deemed profitable enough.

Experts brought up examples of troublesome private equity takeovers of utilities to the PUC, such as with the Michigan Upper Peninsula Power Company (UPPCO), which Baker testified had significantly higher rates than the Michigan state average following two private acquisitions with multiple rate increases.

“The prospect of a utility that so many folks rely on for access to energy being taken over by a shadowy private equity firm is incredibly concerning,” Alissa Jean Schafer, climate director at Private Equity Stakeholder Project, told Truthout.

Some believe customers will have to pay for the deal’s acquisition premium, which CUB estimates at around $600 million and one utility expert testifying on behalf of CURE estimates at around $1.5 billion — money that will go to Allete’s shareholders, including the current executives running the company.

“The captive customers who’ve been paying rates to grow the company don’t receive any of that literal financial benefit associated with the sale,” said Edstrom. “But they do inherit the potential risk of private equity now owning the utility that they have no choice to get their electricity from.”

Opponents say the deal will concentrate control over a community asset, with just two private owners focused on extracting profits and operating with less transparency. Between their control over the board — GIP and CPP can appoint 10 of Allete’s 13 directors — and becoming Allete’s sole source of capital, these two private owners will dominate the utility.

“That’s control from two different sides,” says Edstrom.

If taken private, Allete will face less regulatory scrutiny, and opponents of the deal worry about a greater lack of transparency.

“We don’t have any ability to know what this deal actually looks like and what its ramifications will be,” said Schuppert. “All we really have to go on is what we know private equity always does, which doesn’t inspire a lot of confidence.”

“They’re invested in what makes them money and don’t care if it’s fossil fuels or renewables.”

BlackRock has big stakes in other U.S. utilities through its passive funds. The firm’s growing domination of the utility market is even setting alarm bells off for Trump-appointed regulators.

In May, FERC Chairman Mark Christie warned of “the specter of a huge asset manager, such as BlackRock, using its substantial holdings to exert control over the operational decisions of a public utility,” adding that “a public utility has public service obligations; it is not just another company seeking to maximize returns to its shareholders.”

Questioning Climate Claims

Opponents also question Minnesota Power’s claim that the deal is necessary to meet its climate commitments under state law and say the utility’s own filings contradict this claim.

They point to the utility’s new integrated resource plan that proposes adding around 1,000 megawatts of natural gas capacity. Natural gas is a fossil fuel that emits large amounts of methane, one of the most potent greenhouse gases.

“At the same time they’re saying they need this deal to fund the clean energy transition, they’re presenting a plan that isn’t geared toward clean energy, but largely natural gas,” said Schuppert.

Truthout reached out to Allete for comment. “As we move forward to remove coal generation from our system, we need to replace it with a reliable 24/7 available resource and natural gas is a flexible important resource,” an Allete representative said, also referring Truthout to a press release on the company’s integrated resource plan.

Some critics of the deal worry that private equity ownership could slow down Minnesota Power’s retirement of its Boswell coal plant.

BlackRock has backtracked on previous climate commitments. It recently withdrew from a major net-zero initiative, while the CPP was lambasted for dropping its net-zero commitment in May. GIP is also a big investor in fossil fuel projects, including the Rio Grande LNG facility under construction in Brownsville, Texas, which has faced major community opposition.

“All this should raise a lot of concern,” said Schafer. “There’s no reason that customers in Minnesota should have faith that BlackRock and GIP are going to do the right thing.”

Critics say there’s nothing legally binding the new owners to provide clean energy funding to Minnesota Power. “The commitment to provide that capital is a big pinky swear they’re making in the context of this proceeding, but it’s not legally enforceable,” Edstrom says.

Because utilities garner profits from investing in new infrastructure, there are also worries that the new owners could saddle ratepayers with the costs of unnecessary projects while skimping on the operational side.

Some wonder whether BlackRock’s interest in Allete relates to its growing focus on data centers, which are major utility customers. There’s speculation that a new data center is being proposed outside of Duluth.

Truthout reached out for comment to BlackRock, GlP, CPP, and Allete on the multiple criticisms of the acquisition discussed in this article, but only received a response from Allete. An Allette representative shared a press release and other materials on, they said, “why this transaction is necessary and is the best path forward for our employees, customers and communities as we build a clean-energy future.”

Corporate Control or Energy Democracy?

Even if the new ownership follows through with clean energy investments, there’s a larger question at stake: Will the energy transition be controlled by far-off private investors, or can it be something more democratic and accountable?

“They’re invested in what makes them money and don’t care if it’s fossil fuels or renewables,” Schuppert says. “I don’t want these entities controlling my green energy either.”

Even if the Minnesota PUC rejects the acquisition of Minnesota Power, Allete would remain a for-profit investor-owned utility, albeit with more transparency than a private utility owned by giant asset managers.

From New York to Washington, D.C. to San Diego, movements for democratic and decommodified public power are growing.

“Rather than handing power and profits to private equity,” Schuppert and Yeakle wrote in a recent op-ed, “we could begin to develop a system that keeps every dollar of revenue from the electric power system in our communities and reinvested for our long-term, beneficial interests.”