Power companies have long had a reputation for being stable, if unsexy, investments. They’re typically granted exclusive operating rights in their service districts and have a tried-and-true playbook for skirting accountability from the state-level public utilities commissions tasked with regulating them. While today this status quo allows utility investors to reap billions in profits annually on the backs of ratepayers, it brought stable electricity to the vast majority of American households for relatively affordable prices throughout the twentieth century.
But in Northeast Minnesota, this hundred-year-old arrangement came to an end in October 2025, when the Minnesota Public Utilities Commission voted to hand the reins of Minnesota Power, an electric company serving about 150,000 customers, over to private equity investors—despite warnings from consumer advocacy groups, environmental organizations, and an administrative law judge. These groups expressed concerns about the potential for large rate hikes down the line, a decline in service quality due to cost cutting measures, and the possibility of investors saddling the utility company with debt before making an untimely exit.
On December 15, Allete, Minnesota Power’s parent company, announced that the acquisition was complete, with 60 percent going to a BlackRock subsidiary called Global Infrastructure Partners (GIP), and the remaining 40 percent going to the Canada Pension Plan Investment Board, a government-owned pension fund, marking a turning point in the history of American energy.
The majority of American power companies, including Minnesota Power prior to its acquisition, are investor-owned and typically operate as regulated monopolies, meaning they are the sole provider within a specific region, unencumbered by competition. Each state’s investor-owned utility companies are regulated by a public utilities commission—a state-level government agency, whose members are either elected or appointed by the governor or legislature, tasked with protecting consumers from blackouts and unnecessary rate hikes. But as a recent report from the Harvard Electricity Law Initiative indicates, investor-owned utilities use a number of strategies to convince or even trick state regulators into approving unnecessary rate hikes and subsidizing expensive industrial infrastructure projects. Experts say the shift to private equity ownership will only exacerbate the power imbalance between power companies and public utilities commissions.
To understand private equity’s sudden interest in Minnesota Power, just look seven miles west of the company’s Duluth headquarters to Hermantown, Minnesota, where an unnamed Fortune 50 tech company is reportedly planning to build a 1.8 million-square-foot data center campus directly adjacent to a Minnesota Power substation. Large hyperscale data centers like the one proposed in this area can easily consume 7.2 million kilowatt-hours of electricity per month—nearly 500 times as much as the average Minnesota resident consumes in an entire year.
Given private equity’s recent interest in data centers and artificial intelligence (AI), it’s perhaps unsurprising that these firms would widen their focus to encompass power companies as well. As Alissa Jean Schafer, climate and energy director at the Private Equity Stakeholder Project, told the American Prospect about the Allete buyout, “We see BlackRock positioning itself very aggressively to take advantage of the entire supply chain when it comes to AI and data centers, and power generation is a really key part of that.”
Duluth local Buddy Robinson, who spent his career advocating for Minnesota Power customers with the Minnesota Citizens Federation and now sits on the board of a consumer advocacy nonprofit called the Citizens Utility Board of Minnesota, tells The Progressive he believes Minnesota Power had a clear interest in making up for future revenue loss in its industrial sector. The taconite mines in Minnesota Power’s service district have long made up a significant portion of its retail energy usage, but the industry is on a downward trajectory, with two mines pausing operations in the last year. Between 2024 and 2025, taconite customers went from 35 percent of Allete’s total energy sales to 28 percent.
With no indication that this trend will reverse, Robinson says, “The extremely logical thing in Minnesota Power’s interest is to find some other industrial source that could use a huge amount of electricity and basically compensate for the loss of these others. Bingo: a data center.” Robinson’s theory was confirmed in September 2025 by a publicly released email in which Hermantown City Administrator John Mulder directly states Minnesota Power introduced the data center project to Hermantown City Officials, despite claims by Allete’s manager of financial planning that, “the company does not have any specific plans related to data centers.”
In response to Mulder’s email, which was sent in September 2024 and discovered through a public records request, citizens advocacy group CURE formally petitioned the Minnesota Public Utilities Commission to reassess its approval of the Allete sale. In a January 6, 2026, press release, Hudson Kingston, legal director for CURE, said, “The official record is incomplete, and the utility should account for what it hasn’t told the [public utilities commission] and the public regarding its plans” for the Hermantown data center.
Robinson says he suspects Minnesota Power colluded with GIP/BlackRock to secure the data center proposal in Hermantown. “There is great competition for data centers around the country and not as many will get built as everyone hopes will,” he says. “If [Minnesota Power] made a deal with [GIP], ‘Hey you buy us out and promise that you will get us a data center,’ then the problem’s solved for their long term future.” While GIP’s involvement in the Hermantown data center remains unconfirmed, CURE’s petition hints at possible conflicts of interest, noting that, in the time since the October 3 vote, GIP/BlackRock has announced several billion-dollar investments in data center projects around the world, on top of their large previous investments.
For Allete’s board of directors, the last year has been a massive success: Board members received a multimillion-dollar windfall from the sale and, by bringing a data center to Hermantown, secured the company’s financial future. (Allete has not responded to a request for comment.) And for GIP and the Canadian Pension Plan, the proposed data center—which would necessitate new infrastructure projects to fuel it—all but guarantees returns on investment.
In the terms of the sale, the two firms made a few concessions to consumers, including a one-year freeze on base electricity rates and $50 million in additional rate credits. But these protections are temporary and difficult to enforce. John Farrell, codirector of the Institute for Local Self-Reliance and the director of its Energy Democracy Initiative, tells The Progressive, “There were very few legally binding things that were in the settlement agreement or in the ultimate order that protect consumers over a long period of time.”
According to Robsinson, the Duluth community was left in the dark about the potential sale until it was nearly finalized. For many in the community, he says, the sale means the loss of local control over the utility. “Even though the company remains intact [with] the same management team,” he says, “the notion that the real control is now far removed . . . . That made people very concerned.”
But while Minnesota Power has a history of outreach and charitable giving in the community, it has never been under true local control. Like nearly 75 percent of electric utilities in the United States, it was an investor-owned, publicly traded for-profit company up until the recent buyout. “Prior to the acquisition,” Robinson says, “the vast majority of stock ownership in Minnesota Power was outside of Duluth, outside of Minnesota. So it’s very obvious that profits were being extracted through our rates to go outside of Duluth and outside of Minnesota.”
According to Farrell, the massive gap in resources, expertise, and information between utility companies and public utilities commissions makes it difficult for commissioners to adequately protect consumers. “Utilities have all the knowledge and information about the grid, and commissions only get it through pulling teeth,” he says. “[The commissioners] are political appointees, and they don’t know a whole lot. And I’m not saying they don’t try very hard. But . . . this is basically a job that nobody does well.”
The transition from investor ownership to private equity ownership, Farrell believes, is a turn from bad to worse. “This is a continuation of the privatization of a public good, and with less public scrutiny, because it’ll be harder to get information out,” he says. Like all publicly traded companies, investor-owned utilities are legally obligated to publish their finances, operations, and liabilities, while private firms are exempt from even the most basic disclosure requirements. “Once it’s private, it will just become more difficult to effectively regulate,” Farrell says.
What’s more, Farrell is skeptical of the idea that a clean energy transition can be made compatible with the rapid proliferation of data centers. On one hand, he points to home electrification nonprofit Rewiring America’s argument that, if hyperscale data center companies were to pay for household energy efficiency upgrades on a mass scale, the reduced residential energy consumption would sufficiently offset the electricity needed by those data centers, reducing strain on the power grid and keeping electric rates stable or lower for residential consumers. On the other hand, investor-owned power companies are disincentivized to promote energy efficiency and self-reliance, as it reduces their profits. “Our whole system is designed to be top-down and not to even consider it,” he says. “And the people who have the most power in the system also have no financial incentive to pursue it.”
In February 2023, Minnesota Governor Tim Walz signed a bill requiring public utilities to supply 100 percent carbon-free electricity by 2040. While the state was previously on track to meet its goals, the explosion in data center proposals and projects has threatened to stall its progress. Pete Wyckoff, a deputy commissioner at the Minnesota Department of Commerce, told utility regulators in October 2024, “My analysts are skeptical about rapidly delivering power of any sort, much less clean power, in the size and time frames that the data centers are likely to request.” Minnesota Power justified the buyout, in part, by arguing the company needed private equity’s access to capital in order to build the clean energy infrastructure needed to meet the state’s goals. However, the company had previously told shareholders it was poised to meet its capital needs through the public market. Further, the two firms made no binding commitments to fund clean energy projects.
BlackRock’s acquisition of Allete appears to be just the beginning of private equity’s increased interest in utility companies: Blackstone, the largest private equity firm in the world, is now vying to acquire TXNM Energy, which serves customers across Texas and New Mexico, for $11.5 billion. Just like BlackRock’s acquisition of Allete, Blackstone’s proposal coincides with plans to build an enormous new data center campus in the Texas and New Mexico service district.
Private equity firms aim for a higher rate of return than public market investors, and often unload their investments after just a few years, meaning they often take extreme cost cutting measures with little regard for the longevity of the company. In the case of Allete, the two firms overpaid for their shares by upwards of $1.5 billion, and must recoup this cost before they can begin turning a profit for stakeholders.
Robinson says he hopes that private equity’s negative reputation will galvanize Duluth residents and city leaders to be more skeptical of proposed infrastructure projects and rate hikes, but only time will tell how successfully they can hold the world’s largest asset manager accountable.
Farrell says that individual consumers concerned about rising electricity costs can guard against predatory utility companies by becoming energy self-sufficient through solar energy. “If [you] have the wherewithal to buy solar panels, now might be a good time,” Farrell says. “If you’re worried about your rates being jacked up a lot over time, making an investment now in solar is going to last twenty-five or thirty years.”
But there’s a limit to what individuals can accomplish in the face of an all-powerful monopoly. “You cannot, as an individual, boycott or a protest or petition in a way that is likely to make a meaningful difference,” he says. “You can do something on your own property to reduce your exposure, and then you can organize.”
Municipalization—the process by which an investor-owned utility is acquired and transformed into a public, community-owned power system—would be a tall order for consumer organizers, but Farrell has spent his career working to make it possible. Such an effort, he says, would require a strong coalition of residents, policy experts, labor unions, climate groups, and local nonprofits with the stamina to withstand fierce resistance from the utility company. Despite the challenge, municipalization efforts, “are really the only thing that focuses squarely on the problem,” Farrell says. “As long as you have a for-profit model in which the for-profit provider gets incentives to do things in only a particular way, you're going to keep paying too much.”