By: James Heider

In a recent turn of events, private equity giant BlackRock has purchased Allete for $6.2 billion. Allete is the parent company of Minnesota Power, which provides electricity to 150,000 residents around northeastern Minnesota. BlackRock is known for being a global powerhouse in private equity and asset management. BlackRock will be the majority shareholder of Allete with 60 percent, while Canada Pension Plan Investment Board will own the other 40 percent. Minnesotans statewide are worried about rising prices and damage to the environment, while Americans around the country are concerned about the precedent this might set.

All five members of Minnesota’s Public Utilities Commission (PUC) voted in favor of the deal despite warnings from a local judge who claimed this deal will only hurt Minnesotans by raising costs and straining the environment. Experts are afraid BlackRock is looking to capitalize on the AI boom by building expensive infrastructure like high-powered data centers around the state. Data centers are needed for pure computing power, with servers constantly running for AI assistance worldwide. According to McKinsey Quarterly, it will cost $5.2 trillion to fund AI-processing data centers by 2030. Data centers strain the environment by demanding large amounts of water and energy to maintain these 24/7 facilities. The Environmental and Energy Institute states, “Larger data centers can consume up to 5 million gallons of water per day to cool the computers and prevent overheating.” Despite BlackRock’s promises to continue Minnesota’s clean energy initiative, citizens are concerned over the firm’s track record. BlackRock invests in fossil fuels, opposes many climate initiatives, and has withdrawn from international environmental groups.

Critics across the nation believe BlackRock will utilize its ownership of Minnesota Power to enact pricing strategies that ensure it always turns a profit off the immense cost of operating and maintaining data centers. Due to the general business model of short-term profits over long-term investments commonly found among private equity firms, it will negatively impact consumers. With potential price gouging and electricity prices rising by 4 percent across the nation, activists are speaking up, like Alissa Jean Schafer of the Private Equity Stakeholder Group, a group looking to hold them accountable: “Private equity ownership of Minnesota Power will likely mean higher bills, less accountability, and more risk for Minnesotans.” Americans are afraid this will open the door for other financial powerhouses to purchase state utility companies across the nation for their own personal gain.