A funny thing happened on the way to BlackRock’s takeover of Minnesota Power: the environmentalist movement was split. From Walker Orenstein at the Minnesota Star Tribune,
Northern Minnesota power company sale has clean energy groups bitterly divided.
The New York City-based BlackRock is the world’s largest asset manager. The CEO of BlackRock is Larry Fink.
The Duluth-based Minnesota Power is a smallish electric utility serving 150,000 customers in northeast Minnesota and northwest Wisconsin. The private equity powerhouse BlackRock, along with a Canadian pension fund, is in the process of taking the utility’s publicly-traded holding company (Allete) private in a $6.2 billion deal.
The state Public Utilities Commission (MPUC) will decide the matter in October. As the MPUC weighs the viewpoints of different parties, the utility put out a press release back on August 6 under the headline,
ALLETE’s proposed acquisition gains new support
The new support? MP explains,
Statewide clean energy advocates unite with local business, labor and community groups
Orenstein explains the motivation for the BlackRock/MP deal,
The parent company of Minnesota Power [Allete] says its proposed sale to a private equity group would supply cash for the state’s carbon-free law.
The utility needs to raise another $4 billion to pay for all of those solar panels and windmills mandated by Minnesota’s 100 percent renewable energy by 2040 law. MP does not own any nuclear power plants. State law prohibits the building of any new ones.
Some environmental groups see BlackRock as the vehicle for supplying the cash needed to pay for more renewable power. On the pro side,
“We very much see the clean energy goals directly tied to having the ability to have financing and the capital to build those projects,” said Allen Gleckner, chief policy officer for Fresh Energy, a St. Paul-based nonprofit that supports carbon-free power.
Others see the situation differently, Orenstein explains,
Others want to block private equity, for them a symbol of capitalism run amok, from getting control of a power company.
To use a crude metaphor, for some, environmentalism is a watermelon movement: green on the outside, red on the inside. But still, they may have a point. The Star Tribune,
“Do we want regulated monopolies that provide an essential service like electricity that we all depend on to be owned by huge private equity firms?” said Brian Edstrom, an attorney for the Citizens Utility Board of Minnesota, which opposes the sale.
I may also answer “no” to his question. Not because I think BlackRock represents “capitalism run amok” (to the extent it represents capitalism at all), but because I think the transaction represents government-granted monopolies run amok.
Under the terms of the proposed deal, a BlackRock private equity subsidiary (the delightfully-named GIP), would own the utility.
Last week, the left-leaning outlet Minnesota Reformer ran a similar piece under the headline,
BlackRock’s bid for Minnesota Power worries consumer advocates: Some environmentalists are optimistic the large private equity firm could accelerate the state’s transition to carbon-free power.
And, of course, there is an AI angle to the whole deal,
Earlier this year, private equity firm Blackstone — no relation to BlackRock — said it would buy the largest investor-owned utility in New Mexico, where Blackstone already has big infrastructure investment plans and which requires all utilities to be carbon-free by 2050. That utility’s parent company, TXNM Power, also serves parts of Texas, a fast-growing data center market.
Private equity, renewable energy, data centers for AI, BlackRock says that it’s “the beginning of a golden age.”
Your mileage may vary.
