Minnesota PUC approves ALLETE acquisition with unprecedented conditions protecting Minnesota Power ratepayers

St. Paul, Minn. – The Minnesota Public Utilities Commission (PUC) approved the acquisition of ALLETE, Inc., the company that operates Minnesota Power. As part of the acquisition, the Commission ordered a comprehensive set of conditions that will provide substantial benefits for customers – including more than $200 million in quantifiable savings, protections and benefits.

Through this agreement, Minnesota Power customers remain protected under the full oversight and authority of the Minnesota PUC.

The acquiring entities, Global Infrastructure Partners and Canada Pension Plan Investment Board (the Partners), along with ALLETE, the Minnesota Department of Commerce, and a broad coalition of organizations including labor, clean energy groups, and consumer advocates have agreed to the conditions imposed by the Commission.

“This decision underscores the Commission’s commitment to ensuring reliable utility service at reasonable rates and protecting the public interest,” said Commission Chair Katie Sieben. “Importantly, ratepayers will not pay for this acquisition. We required stronger terms to make sure Minnesota Power customers continue to benefit from some of the lowest bills in the nation. We know how important affordable electricity is – not only for families, but also for the industries that drive Northern Minnesota’s economy – and we only approved this sale after adding strong provisions to safeguard those priorities.”

The conditions that the Commission ordered will provide immediate financial relief for customers, ensure long-term stability to the utility and its customers, and direct critical investments in the state’s energy transition.

Financial relief and cost protections

• $50 million in bill credits: The Partners must pay $50 million in bill credits to Minnesota Power customers. Minnesota Power will distribute these credits by 2032 based on a future PUC-approved schedule.

• $20 monthly discount and $3.5 million in arrearage forgiveness: Eligible low-income residential customers will receive a $20 monthly bill discount, and arrearages will be reduced to pre-COVID-19 balances or lower.

• Caps on utility profitability: The Commission imposed caps on financial metrics to limit the utility’s profitability and help reduce potential rate increases. Minnesota Power’s Return on Equity is capped at 9.78% until December 31, 2030, and Minnesota Power’s equity ratio in its capital structure will be capped at 53.0% until December 31, 2030.

“Freezing the Return on Equity is a vital tool to ensure customer stability,” said Commissioner Hwikwon Ham. “By capping this, we are preventing the acquisition from being used as a justification for excessive profit-seeking at the expense of Minnesota Power ratepayers, guaranteeing that the utility focuses on necessary, prudent investments rather than maximizing returns from the change in ownership.”

Clean energy and customer investments

Minnesota Power is required to meet the state’s Carbon-Free Standard Law. The Commission is ensuring savings by requiring future planning to be done in a cost-effective manner.

• $10 Million for a long-term residential energy bill mitigation fund: The Partners will fund a $10 million program to support weatherization and electrification for Minnesota Power’s low- and moderate-income customers. Funding for this program will come from the Partners, not Minnesota Power customers.

• Clean-Firm Energy Plan: Minnesota Power will file a new “Clean Firm Plan” in its resource planning docket, that considers changes from the acquisition. The new plan will use $50 million in new funding from the Partners and will be developed in consultation with stakeholders representing consumer groups, labor and environmental organizations.

“The $10 million dedicated to home energy efficiency upgrades is critical because it will build upon temporary bill relief and provide a permanent solution to energy affordability for hundreds of families,” said Commissioner Audrey Partridge. “Home energy efficiency upgrades lower household bills month after month, and improve the health and safety of homes, which is especially important for our most vulnerable citizens who are disproportionately impacted by high heating costs.”

Long-term oversight and worker protections

The decision also ensures robust long-term regulatory oversight and mandates specific protections for Minnesota Power employees and operations.

• Service quality and reliability: The PUC has a new way to hold Minnesota Power accountable for customer service and reliability. If the company fails to meet specific benchmarks, such as service reliability, complaint levels, Cold Weather Rule protections, or timely call response, it will face $250,000 under-performance payments per violation, with half of the funds going back to customers as bill credits and half reinvested to fix the underlying issue.

• Workforce and community stability: Extension of employee protections from two to five years, a continued Duluth headquarters, requirements to maintain local staff levels, and Minnesota Power must continue to prioritize local, union labor and require contractors to pay prevailing wages.

• Oversight and accountability: Majority-independent Board governance with Minnesota representation, expanded reporting and transparency, and compliance tools.

The comprehensive conditions imposed by the Commission demonstrate a deep commitment to ensuring the Partners' responsibilities are strictly enforced, that ratepayers are protected, and that the acquisition results in meaningful benefits to customers, workers and the community served by Minnesota Power.

For further details and to view the full discussion, visit the PUC’s website: September 25 meeting, October 3 meeting.