Wall Street's Utility Power Grab

The gold rush is back, but this time it's flowing through power lines instead of California streams. Wall Street's biggest players are descending on America's utility infrastructure with checkbooks that would make Gilded Age robber barons blush. The question isn't whether they'll succeed—it's what happens to the rest of us when the lights are controlled by algorithms designed to maximize shareholder returns.

As Ivan Penn reports in The New York Times, large Wall Street investment firms are moving to acquire U.S. utility companies in an effort to benefit from the rising demand for electricity from data centers. But the deals are increasingly being contested by consumer groups who say they will lead to higher energy costs for residents.

The $17 Billion Feeding Frenzy

The numbers tell the story of an industry sensing opportunity. BlackRock's Global Infrastructure Partners division has proposed buying Minnesota Power for approximately $6.2 billion, while Blackstone announced an $11.5 billion agreement to acquire TXNM Energy, which operates utilities with 800,000 residential and business customers in New Mexico and Texas. This represents a coordinated assault on America's power grid by firms whose primary allegiance is to investment returns, not reliable electricity service.

The timing is hardly coincidental. As artificial intelligence data centers proliferate and grow to use record amounts of electricity, regulatory fights have emerged over who pays for additional infrastructure and upgrades needed for the giant energy consumers. Translation: Wall Street sees the AI boom as their personal ATM, with utility customers as unwitting depositors.

Minnesota offers a particularly stark example of this dynamic. The acquisition appeared to be on a smoother glide path late last week when the Minnesota Department of Commerce removed its opposition to the deal and entered an agreement with the parties involved in the transaction. But a state administrative law judge recommended late Tuesday that Minnesota utility regulators deny the proposed acquisition sought by BlackRock's Global Infrastructure Partners division and the Canada Pension Plan Investment Board.

The Private Equity Playbook Applied to Power

"The nonpublic evidence reveals the partners' intent to do what private equity is expected to do — pursue profit in excess of public markets through company control," Judge Megan J. McKenzie wrote. "The partners themselves have carefully committed to do very little." This isn't hyperbole—it's the judicial equivalent of reading Wall Street's diary out loud.

The private equity model depends on financial engineering that typically involves loading companies with debt, extracting fees, and optimizing for short-term returns. Some consumer and progressive groups contend that investment firms shouldn't own electric utilities because they generally seek to maximize profits, often by burdening the company's finances with large amounts of debt. That approach, the critics argue, could lead to much higher electricity rates and less reliable service.

This isn't theoretical concern-mongering. Experts brought up examples of troublesome private equity takeovers of utilities to the PUC, such as with the Michigan Upper Peninsula Power Company (UPPCO), which Baker testified had significantly higher rates than the Michigan state average following two private acquisitions with multiple rate increases.

The Data Center Smokescreen

The firms frame their utility acquisitions as essential infrastructure investment for the AI economy. Blackstone said it expected to complete the overall transaction by the second half of 2026, if it receives all the required approvals. But stakeholders evaluate Blackstone's $11.5 billion TXNM Energy deal with regulatory implications for data centers.

The data center angle deserves particular scrutiny. The regulated utilities under TXNM can power data centers, but they are barred by state regulations from developing, owning, or operating the centers for third parties. This regulatory constraint should theoretically limit direct conflicts of interest, but any transmission upgrades or power generation built to serve data centers would be paid for by the data center companies.

Yet consumer advocates remain skeptical. Some wonder whether BlackRock's interest in Allete relates to its growing focus on data centers, which are major utility customers. There's speculation that a new data center is being proposed outside of Duluth.

The Regulatory Resistance

The pushback has been swift and substantive. "No one in northern Minnesota wants higher utility bills solely to line the pockets of Wall Street-based private equity firms," said Nichole Heil, senior researcher and campaign director for climate at the Private Equity Stakeholder Project.

In Minnesota, the opposition coalition reads like a Who's Who of consumer protection. Parties to the case, including CURE, Sierra Club, the Minnesota Attorney General's Office, large industrial customers, and ratepayer protection advocates, oppose the acquisition because the evidence shows private equity ownership would have negative impacts for customers and utility operations.

"This is a strong precedent for protecting the people of Minnesota from utility owners that would otherwise put profit over people," said Hudson Kingston, Legal Director of CURE. The regulatory process is working as intended—questioning whether private ownership of public infrastructure serves the public interest.

The Transparency Problem

One of the most troubling aspects of these deals is the opacity they introduce. ALLETE would not have to meet the same reporting requirements set by the Securities and Exchange Commission, so there would be less information publicly available about the company and its plans. When utilities move from public to private ownership, they escape the disclosure requirements that allow public oversight of their operations.

Unfortunately, GIP and CPP have hidden from public view additional details about their proposed governance structure for ALLETE, claiming those details are trade secrets. Trade secrets? For a public utility? This is exactly the kind of corporate doublespeak that should trigger regulatory alarm bells.

The Conflict of Interest Web

The scale of these firms creates inherent conflicts that would be impossible to manage effectively. In addition to the above concerns, both buyers hold (either directly or through investment funds they manage) significant financial interests in many other companies that do business directly with Minnesota Power and/or work in utility-adjacent fields.

BlackRock is the single largest shareholder of Enbridge Energy, one of Minnesota Power's two pipeline customers. This presents a potential conflict of interest. When your utility's owner also owns your energy suppliers, competitive markets become academic exercises.

Utility Acquisitions

These utility acquisitions represent a fundamental shift in how we think about essential infrastructure. "This deal represents the antithesis of local control," said Maggie Schuppert, a Minnesota Power customer and organizer with CURE. "They're buying the things that are the basis of our lives."

The AI data center boom may be driving electricity demand, but it's also creating opportunities for financial engineering that puts profits before people. "Private equity investors demand higher profits than normal market investors," Jenna Yeakle, an organizer with the Sierra Club and a Minnesota Power customer, told Truthout. "That means higher rates for residential and small business customers."

Wall Street's utility shopping spree isn't about improving service or advancing the energy transition—it's about monetizing monopoly infrastructure in ways that would make the original robber barons proud. The question isn't whether these deals will generate returns for investors. It's whether Americans are willing to let private equity firms control the switches that power our lives.

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