As the AI boom promises soaring electricity demand, private equity giant BlackRock is waging a scorched-earth campaign — with the help of suspiciously timed advocacy from labor allies and ostensible clean-energy groups — to acquire an electric supplier and get a slice of newfound energy profits.

BlackRock, the world’s largest asset manager, has its tentacles in all facets of American life. The behemoth is buying up grocery brands, dental practices, apartment buildings, and nursing homes. But the opaque industry of private equity has mostly stayed away from electric utilities, the regulated companies that supply power to homes and businesses, because they often don’t yield quick returns.

That’s changing. Last year, the BlackRock subsidiary Global Infrastructure Partners and a Canadian pension fund announced a $6.2 billion deal to buy Minnesota Power, an electric utility that serves more than 100,000 customers in northern Minnesota, including the city of Duluth. The proposal faced fierce opposition from consumer protection groups and environmental watchdogs, who worried the deal would lead to massive rate hikes and hamper efforts to shift the plant to renewables, given private equity’s extractive, short-term business model.

This spring, Blackstone, another private equity firm, announced plans to buy a major electric utility in Texas and New Mexico, if regulators give the green light. The spike in interest is emblematic of how the AI’s massive energy demands, which have boomed alongside data center construction across the country, are drawing Wall Street’s attention to electric utilities it once ignored.

In Minnesota, the final hurdle that BlackRock must clear to secure the deal is approval from the Minnesota Public Utilities Commission, the agency that oversees state utilities — the same body that allowed construction of Line 3, the Midwest oil pipeline that drew massive protests, to move forward in 2018.

For more than a year, the commission has borne witness to a tooth-and-nail fight over the proposed BlackRock takeover of Minnesota Power’s publicly traded parent company, Allete. But over the last several weeks, after a state judge issued a strongly worded ruling opposing the deal, the fight has taken on a new character, demonstrating the enormous political influence of private equity and electric utility companies — and how they can wield their power to quell opposition.

In the wake of the judge’s July ruling, several unions in the state swiftly proclaimed their support for the BlackRock deal. In at least one instance, union comments bear the fingerprints of an attorney working for BlackRock, document metadata shows.

What’s more, in recent weeks, a litany of “clean energy” advocacy groups in Minnesota have lined up to support the Wall Street acquisition, prompting skepticism from other energy watchdogs. One of these groups is currently advertising a benefit event sponsored by Minnesota Power and the law firm representing BlackRock in the deal.

If BlackRock is successful in muscling enough support for the takeover, it could prove historic. While it’s not the first instance of an electric utility being acquired by private equity, it’s the first such takeover, watchdogs say, by a global firm of this size.

“We’re viewing this as a precedent-setting case,” said Alissa Jean Schafer, climate director at the Private Equity Stakeholder Project, a private equity watchdog group, which opposes the BlackRock takeover. “This is a new thing, a new potential strategy.”

Who Wants to Buy a Power Plant

In the last several years, for most Americans, the cost to keep the lights on has spiked. Since 2022, residential electricity costs have outpaced inflation, and they show no sign of slowing.

Utility watchdogs argue that privately owned utilities are at the heart of the problem. These power companies are typically regulated monopolies; ratepayers are captive to whatever electricity company serves their home. As Karlee Weinmann, research manager at the utility watchdog Energy and Policy Institute, explained to the Lever, “Customers do not have a choice in who they buy their electricity from.”

Across the country, from Maine to Arizona, movements have sprung up in support of public power — replacing private power companies with publicly owned utilities and returning their governance to the hands of the people.

But many of these movements have been stymied by the enormous political influence that private electric utilities have developed in local communities. As in Minnesota, electric utilities across the country often operate charitable foundations, which give generously to community groups and local organizations and later cash in on political goodwill, along with copious lobbying, to advance their agenda.For more than a year, the commission has borne witness to a tooth-and-nail fight over the proposed BlackRock takeover of Minnesota Power’s publicly traded parent company, Allete.

These power plays have implications for the climate crisis, which necessitates an energy transition to renewable power sources like solar and wind. In Minnesota, regulators have set the goal of creating a clean energy electric grid by 2040 — but this plan relies on the state’s electric utilities complying. Minnesota Power says it has plans to do so, but its reliance on natural gas, among other elements of its plan, has drawn skepticism from climate advocates.

Enter data centers, which are sprouting up in Minnesota, as in other states, with enormous energy needs. Climate watchdogs worry that the strain on Minnesota’s electric grid could hamper its already sluggish progress toward climate goals.

When Allete, Minnesota Power’s parent company headquartered in Duluth, announced the proposed deal with BlackRock and the Canada Pension Plan Investment Board last year, executives put the climate transition at the center of their pitch. Minnesota Power claimed that the deal was necessary for “improved access to capital” in order to “support [Allete’s] investment in the clean energy transition.”

Allete, which is a publicly traded company, has disclosed in Securities and Exchange Commission filings that it projects a need for $4.6 billion in outside investment over the next five years to meet its clean energy goals. The utility’s deal with private equity investors, which would in theory provide that capital, is therefore critical to its climate plans, Allete argues.

Yet there are indications that Allete has been overstating Minnesota Power’s capital needs in order to justify the BlackRock takeover. As Megan J. McKenzie, a Minnesota judge, wrote in her recent ruling against the deal, Minnesota Power’s capital needs “are likely overstated.”

An Allete representative told the Lever in an email that the company “has no additional comments beyond what the Company has already said publicly.”

Allete has been prospecting for potential buyers for some time, beginning in at least late 2022. Several other parties expressed interest, according to the evidence presented in McKenzie’s ruling, but ultimately, the highest bids came from Global Infrastructure Partners and the Canadian pension fund.

Although Allete has claimed it selected the buyers in part because they were “aligned” with the company’s “vision . . . to advance the State of Minnesota’s clean energy goals,” McKenzie argued that the buyers were picked “based on their willingness to pay a stock premium,” per internal corporate documents.

In the final deal, BlackRock, through Global Infrastructure Partners, would receive 60 percent of the company, making it the controlling shareholder; the remaining 40 percent would go to the pension fund. As Allete trumpeted to its shareholders, the firms agreed to pay $67 a share, a $1.5 billion premium over the company’s book value.

Environmental groups like the Sierra Club swiftly intervened to stop the deal, as did many of Minnesota Power’s largest commercial customers, who suspected that the deal would lead to future rate hikes. Over the last year, the litigants have been fighting it out before the five-person Minnesota Public Utilities Commission, which is expected to vote on the matter this fall.

In July, over a year into the proceedings, McKenzie issued her ruling, a stark warning of the harms of the deal. Minnesota Power and its buyers “have not met their burden of proof to show the transaction is consistent with the public interest,” she wrote.

Because of private equity’s business model — which aims to quickly secure high returns for its investors — McKenzie noted that Minnesota Power, under BlackRock, would likely go to significant lengths to hike rates and boost profits. Internal documents she reviewed, she added, “establish that the partners are planning on significant rate increases.” She recommended that the commission reject the deal.

Commissioners are not bound to follow McKenzie’s guidance. But it appears that BlackRock and Allete took her opposition as a threat. Since her ruling, a bevy of groups — many associated with the utility — have rushed to defend the deal and push it through the public utilities commission.

Strange Bedfellows and Digital Fingerprints

In the wake of the ruling, a half-dozen unions submitted new comments supporting BlackRock’s takeover. In joint comments submitted on August 4, the International Union of Operating Engineers Local 49 and the North Central States Regional Council of Carpenters argued that the acquisition would “uphold commitments to a union workforce, safe workplaces, and investment in local infrastructure” in Minnesota’s climate transition.

Yet the metadata on the PDF indicates the creator of the comment letter is Dan Lipschultz, a former Minnesota public utilities commissioner who is now working as an attorney for BlackRock and the Canada Pension Plan Investment Board in the ongoing litigation. According to opponents, the finding suggests BlackRock’s representatives worked with labor groups on the pressure campaign.

The authorship “raises a lot of questions about the coordination or influence happening behind the scenes to create an appearance of support for the transaction,” said Weinmann with the Energy and Policy Institute, which first brought the underlying metadata to the Lever’s attention.

In an interview with the Lever, Richard Kolodziejski, director of government affairs at the North Central States Regional Council of Carpenters, said that he had written the letter himself and that, to his knowledge, Lipschultz had no involvement with it.McKenzie noted that Minnesota Power, under BlackRock, would likely go to significant lengths to hike rates and boost profits.

“I know for a fact he had no involvement,” Kolodziejski said. “I wrote it. . . . I have zero relationship with Dan. I do not know the guy personally.”

The document that bore Lipschultz’s name was a revised filing, corrected from a version that had mistakenly professed the unions’ support for McKenzie’s ruling. The original version, filed with the commission earlier the same day, did not show Lipschultz’s name. Kolodziejski said that the International Union of Operating Engineers Local 49, the other union represented in the letter, had added corrections to the revised document before it was refiled.

A representative for Local 49 told the Lever that “the letter was drafted by the North Central States Regional Council of Carpenters, and we were happy to sign on.” The representative did not respond to follow-up questions about the letter.

Lipschultz did not reply to multiple inquiries from the Lever.

In comments filed in the case this week, the Citizens Utility Board of Minnesota, a ratepayer advocacy group, said Lipschultz’s involvement in the union comments “creates the impression that the [unions’] support for the acquisition and proposed settlement may have been disproportionately influenced by the partners.”

Minnesota Power also appears to be exercising the political sway it has amassed through years of charitable giving to universities, food-assistance groups, and community groups. “Minnesota is a powerful entity up here, with a lot of influence,” explained Maggie Schuppert, director of strategic initiatives at CURE Minnesota, an advocacy group for rural environmental justice.

As part of her July ruling, McKenzie, the Minnesota judge overseeing the case, concluded that many of the public comments submitted in support of the BlackRock deal came from “nonprofit or community organizations that receive funds from Minnesota Power.”

“It is unclear whether these individuals felt obligated to support Minnesota Power due to the financial support they are provided by the company,” McKenzie wrote.

The proclamations of support often hewed closely to Minnesota Power’s narrative for why the sale was necessary — “leaning heavily on the story that they’ve been told by Minnesota Power,” Jenna Yeakle, a campaign manager with the Sierra Club in Minnesota, told the Lever.

“This is a strategy that we’ve seen elsewhere across the utility industry,” Weinmann said, “to harness charitable giving and ‘community relationships’ to solicit support that perhaps appears more authentic than it actually is.”

This dynamic could also be in play in the support of a variety of so-called clean-energy groups that have come out in favor of the deal since the judge’s ruling. The development has raised eyebrows, given that the groups had previously been silent on the proceedings. These groups include Clean Grid Alliance, the Center for Energy and Environment, and Clean Energy Economy Minnesota — organizations that appear frequently in front of the commission, some representing clean-energy business interests.

Fresh Energy, another clean-energy nonprofit that intervened after McKenzie’s ruling, is currently advertising a September “benefit breakfast” to raise money for its climate advocacy. In the materials on its website, Allete is listed as a “VIP” sponsor. Taft Law Firm, which is representing Minnesota Power, and Moss & Barnett, a law firm representing BlackRock and the Canada Pension Plan Investment Board, are also listed as sponsors of the event.

Fresh Energy did not return a request for comment from the Lever.

“What we’re seeing in this case is deeply frustrating but also part of a broader pattern where advocates for clean-energy growth seem very unconcerned with the form that growth takes, who controls it, and who bears the cost,” said Schuppert.

Fresh Energy, echoing the other clean-energy groups, argued in its statement of support that the deal “would significantly mitigate risk to the transition to clean energy in Minnesota.” It also cited a settlement reached between Minnesota Power and the Minnesota Department of Commerce in July, in which the state agency, which had originally opposed the deal, backed the acquisition. In exchange for the support, Allete and its buyers agreed to a one-year rate freeze and various climate commitments.

Ultimately, the deal’s final arbiter is the Minnesota Public Utilities Commission. In advance of the commission’s likely decision on the matter this fall, BlackRock has also been working the revolving door.

Lipschultz, the attorney working for BlackRock’s Global Infrastructure Partners, is a former Minnesota public utilities commissioner who departed in 2020 to establish his own consulting firm. Ryan Barlow, another attorney representing BlackRock, worked as the Minnesota Public Utilities Commission general counsel until April 2024, according to his LinkedIn page — one month before the BlackRock deal was announced.

Furthermore, a staffer who works in the Minnesota Public Utilities Commission’s executive leadership, Mike Bull, worked as a consultant and policy adviser to Minnesota Power from early 2023 to August 2024, during its preliminary negotiations with BlackRock.In advance of the commission’s likely decision on the matter this fall, BlackRock has also been working the revolving door.

Opponents of the deal say they hope that the utilities commission can look beyond these familiar faces and scrutinize what’s at stake in the potential utility sale.

“It’s a lot of posturing that we’re seeing around this sales pitch,” said Schafer with the Private Equity Stakeholder Project. “But if you look at the information that we have, there’s very little reason to trust that BlackRock is going to do the right thing here.”

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