Minnesota PUC Approves $6.2B Allete Sale to Private Equity Firm

The Minnesota Public Utilities Commission has approved the $6.2 billion sale of Allete to the Canada Pension Plan Investment Board and Blackrock's Global Infrastructure Partners, finding the benefits of the deal outweigh the risks of private equity ownership. The deal includes conditions such as funding Allete's $5 billion, five-year capital plan and providing $50 million for firm clean power. The PUC said the benefits to ratepayers total about $200 million.

The Minnesota Public Utilities Commission (PUC) has approved the $6.2 billion sale of Allete, the parent company of Minnesota Power, to a pair of private investment firms, the Canada Pension Plan Investment Board (CPP) and BlackRock-owned Global Infrastructure Partners (GIP). The commission found that the benefits of the deal outweigh the risks associated with private equity ownership.

The deal, announced in May 2024, has been subject to scrutiny and debate. The Minnesota Attorney General’s Office, several environmental groups, and Minnesota Power's largest industrial customers opposed the sale, citing concerns over potential rate increases and the influence of BlackRock. However, supporters, including the Minnesota Department of Commerce and clean energy groups, argued that the deal would facilitate Allete's transition to clean energy and provide necessary investment for infrastructure upgrades.

In response to these concerns, the parties to the deal agreed to a series of commitments. These include funding Allete's $5 billion, five-year capital plan, providing $50 million for firm clean power, pausing rate hikes for a year, and reducing Allete's return on equity from 9.78% to 9.65% after the deal closes. The deal also includes provisions to reconsider the proposed Nemadji Trail Energy Center natural gas power plant in Superior and dedicate $50 million to fund new clean energy technologies and $10 million for energy efficiency upgrades for low-income customers.

The PUC's decision was unanimous, with commissioners expressing confidence that the deal would benefit ratepayers and that the PUC could protect ratepayers from any potential misconduct by the new owners. The deal is expected to close later this year following the issuance of a written order by the PUC.