Backroom pressure campaign exposed in BlackRock’s utility takeover

Investigation uncovers how the world’s largest asset manager is leveraging political pressure and conflicts of interest in its bid for Minnesota Power

A new investigation by The Lever has revealed troubling details about the political pressure campaign behind BlackRock’s effort to acquire Minnesota Power through its subsidiary, Global Infrastructure Partners (GIP). The reporting uncovered that a statement filed in favor of the deal by two unions includes metadata identifying the initial creator of the statement was a lawyer representing the would-be buyers — raising serious questions about transparency.

The piece also raises alarms about the growing chorus of support from organizations branding themselves as clean energy advocates. One of those groups is throwing a benefit in September sponsored by Minnesota Power and the very law firm representing BlackRock, raising concerns that the appearance of broad community backing is being orchestrated rather than organic.

Additionally, the story highlights how the world’s largest asset manager is using its considerable influence to push through a deal that would hand control of a public utility over to Wall Street. Advocates warn this takeover could have far-reaching consequences for Minnesotans’ energy costs, reliability, and democratic oversight.

“The Lever’s reporting raises questions about just how much political muscle and behind-the-scenes dealmaking BlackRock and its partners are willing to deploy to gain control of a public utility,” said Alissa Jean Schafer, Climate and Energy Director at the Private Equity Stakeholder Project (PESP). “Minnesota regulators and elected officials should be alarmed by the differences in what BlackRock is saying publicly and privately, as noted in Judge McKenzie’s recommendation against the deal. Decisions about who owns and operates Minnesota Power should be made with the public’s best interest at heart — not dictated by shady Wall Street insiders working behind closed doors.

“Minnesota Power ratepayers are at risk of their local power company being beholden to the private equity business model, notorious for cost-cutting and raising prices for consumers to generate high profits in a short amount of time. If this deal is approved, BlackRock, the largest asset manager in the world, would be making decisions that affect the price people in Duluth pay to light and heat their homes.”

PESP also fully endorses Administrative Law Judge Megan J. McKenzie’s decision recommending against the acquisition, underscoring the fact that BlackRock has nothing good to offer Minnesota. For more on PESP’s views and this decision, see the PESP statement here.

“In considering the true risks and benefits of the Acquisition, it is critical that the Petitioner’s agreements and private discussions do not comport with their public statements,” Judge McKenzie wrote in her decision. “The nonpublic evidence reveals the Partner’s intent to do what private equity is expected to do – pursue profit in excess of public markets through company control. The Partners themselves have carefully committed to do very little, instead largely making commitments through expected holding companies or Minnesota Power itself…Access to capital is the primary benefit touted by the Petitioners. However, the Partners have not, in fact, promised to provide capital to ALLETE. ALLETE did not even ask for some commitment to provide equity… and the merger agreement did not require the Partners to provide ALLETE with any additional equity.”

The full investigation can be read here: This Is How Wall Street Could Buy Your Power Company.