The Minnesota Public Utilities Commission (PUC) has unanimously approved the $6.2 billion sale of Allete to BlackRock's Global Infrastructure Partners (GIP) and the Canada Pension Plan Investment Board (CPP Investments), concluding that the transaction's benefits to ratepayers outweigh the risks of private equity ownership.

Katie Sieben, chair of the Minnesota PUC, said the process improved the proposal and would ultimately benefit Minnesota Power customers. The Duluth-based Allete, parent of Minnesota Power and Superior Water, Light and Power, expects the deal to close later this year following a written order from regulators.

The PUC's decision comes after months of review and debate over whether private equity ownership of a public utility serves the public interest. A July administrative law judge recommendation had advised rejecting the deal, citing risk concerns.

Under a settlement with the Minnesota Department of Commerce, CPP Investments and GIP agreed to fund Allete's $5 billion, five-year capital plan, contribute $50 million toward firm clean power, and deliver $200 million in ratepayer benefits. Minnesota Power will also freeze base rates for one year and slightly reduce its return on equity from 9.78% to 9.65% until its next rate case.

The deal received support from labor and business groups, including the Minnesota Chamber of Commerce and International Brotherhood of Electrical Workers Local 31, while facing opposition from organizations such as the Citizens Utility Board of Minnesota and the Sierra Club.

Source: utilitydive.com