Counterpoint: Sale of Allete/Minnesota Power is in the public interest

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Aaron Brown’s April 21 column “Capital for companies, consequences for us,” about Allete/Minnesota Power’s pending purchase by the Canadian pension fund and Global Infrastructure Partners, carries weight because Aaron is an important voice for northern Minnesota. But I dissent that the risks of the sale outweigh the benefits, and I urge Minnesota state agencies to approve the purchase plan.

Minnesota Power — which serves northeastern Minnesota — is doing a lot of things right, and folks like Aaron are concerned whether that will continue under new ownership. Some large industrials on the Iron Range are concerned that change is too fast, and some environmental groups fear a new owner will slow down the energy transition. But I believe that the sale of its parent company Allete is definitely in the public interest.

In 2007, when the first renewable-electricity standard gained support of Gov. Tim Pawlenty and 90% of legislators, Minnesota Power had no renewable energy except the hydro dam at Jay Cooke State Park. At that time, Minnesota Power’s fuel mix was 95% coal. By 2030, its fuel mix will be 80% wind and solar and batteries, supported by energy efficiency and transmission and managing electricity loads. It is the only Minnesota utility that has exceeded state energy efficiency goals 15 years in a row. This is one of the most remarkable clean-energy transitions of any utility in America.

In January 2023, when the 100% clean-electricity standard was ready for debate in the Minnesota Legislature, Minnesota Power did not oppose it. Instead, it offered improvements to the bill to assure continued reliability and affordability for customers. The very moment the 2040 carbon-free-electricity bill was signed into law, Minnesota Power needed a new owner. Practically speaking, the small utility’s balance sheet was not able to handle all the new investment required.

But Minnesota Power’s parent company did not just put itself up for sale on the auction block. The board and management sought out two strategic partners they admired and could work with: the pension funds of Canadian public employees, the very definition of a long-term public-interest investor; and Global Infrastructure Partners (GIP), a unit of BlackRock. GIP is one of the largest and most sophisticated infrastructure investors in the world.

As big a task as Minnesota Power faces in winding down its coal fleet to create an all-new sustainable supply, the challenge ahead is much greater than that.

The electric sector is also being called upon for additional needs obvious to all well-informed people: Transport and buildings must electrify for energy security and the climate imperative. That could double the amount of electricity needed over the next decade or two. On top of that, new industries such as better iron mining, and potentially green iron or steel production on the Range, plus new data centers, could drive a tripling of electricity loads or even more. Both these industries of the future need abundant carbon-free electricity. Northern Minnesota is ready to do big things again, including on-shoring industries, jump-starting hydrogen-based industries and electrifying everything we can.

Minnesota Power’s current management will stay in place, committed to place and to culture. CEO Bethany Owen is one of America’s few women utility CEOs, and she has gender balance on her board and senior management. With this sale, she brings exactly what northern Minnesota needs — top-level expertise and deep pockets in infrastructure. Everyone wants shared prosperity and abundance for northern Minnesota.

The company will be regulated by Minnesota’s excellent regulators just as it is now, with transparency on costs and earnings, and just and reasonable rates. If Minnesota Power’s new owners want to make more money, they will have to help grow industries of the future on the Iron Range and in the Arrowhead. Over the past decades, electricity use in northern Minnesota has been flat, but new clean electricity will be the engine for a better future. The watchdogs in the state agencies will look at this deal with a steely eye, but a Minnesota electric utility in the north can help Minnesota do big things — and Minnesota Power with a new ownership group is that utility.

Michael Noble is an energy and environment consultant to industry, government and philanthropy.