ALLETE secures customer rate freeze and clean energy investments under proposed acquisition

DULUTH — ALLETE Inc. and its acquisition partners have reached an agreement with the Minnesota Department of Commerce that promises immediate cost savings for Minnesota Power customers and expanded benefits for communities, the company announced Thursday.

The settlement agreement comes as ALLETE seeks regulatory approval for its proposed sale to Canada Pension Plan Investment Board (CPP Investments) and Global Infrastructure Partners (GIP). With the deal in place, the Department of Commerce, which represents the public interest in utility matters, has determined the acquisition is “consistent with the public interest” and is recommending approval by the Minnesota Public Utilities Commission.

“We are steadfast in our commitment to providing excellent service to our customers, supporting our communities and meeting the policy goals of the State of Minnesota, and we are pleased to have reached an agreement that will deliver enhanced benefits for our customers, our employees and the communities we serve,” said ALLETE Chair, President and CEO Bethany Owen. “This agreement demonstrates our commitment to listening and working collaboratively with our stakeholders, and we’ve appreciated the close collaboration with the Minnesota Department of Commerce to address matters raised by the Department and others through this process.”

Owen added, “The strong and growing local support we’ve received reflects a shared understanding that this transaction is the right step forward for Minnesota Power. With increasing clean energy and infrastructure needs now and well into the future, partnering with the two experienced, long-term investors we’ve chosen is crucial to advancing our company’s commitment to building a clean-energy future and achieving the state’s carbon reduction goals, while safeguarding reliable power and keeping customer bills as low as possible.”

The Department of Commerce joins a roster of organizations supporting the transaction, including the International Brotherhood of Electrical Workers Local 31, several other labor unions, the Minnesota Chamber of Commerce, local Duluth and Hermantown chambers, Energy CENTS Coalition and Head of the Lakes United Way.

“We are pleased with today’s announcement by the Minnesota Department of Commerce in support of the proposed transaction, which further ensures the needs of customers, communities and employees will continue to be at the center of ALLETE’s mission,” said Jonathan Bram, founding partner of Global Infrastructure Partners. “Given our long-term track record of successfully investing in high-performing critical infrastructure, we look forward to partnering with ALLETE’s management team to build a stronger foundation for Minnesota’s energy future.”

“The Minnesota Department of Commerce’s endorsement affirms that our partnership will create lasting value for customers and communities,” said James Bryce, managing director and head of infrastructure at CPP Investments. “By combining our long-term capital and sector expertise with ALLETE’s strong management team, we will help ensure Minnesota Power continues to provide safe, reliable, and affordable electricity today while advancing its transition to a sustainable, clean energy future.”

According to the settlement agreement, Minnesota Power customers would see a one-year base rate freeze and a reduction in the utility’s authorized Return on Equity from 9.78% to 9.65% following the transaction close, moves intended to deliver direct savings on bills. The pact also includes enforceable service quality and system reliability metrics, guaranteed funding for the company’s five-year capital plan, and the creation of a $50 million investor-funded Clean Firm Technology Fund to advance local energy projects.

ALLETE and its partners also agreed to establish a holding company structure that will help protect customers from risks tied to non-utility business ventures. Under the new arrangement, six members of the 14-seat board of directors will be independent, with several directors from Minnesota and Wisconsin to ensure strong regional influence.

The settlement builds on previously announced commitments by ALLETE, CPP Investments and GIP to retain ALLETE’s workforce and current compensation levels, honor and extend union contracts with IBEW Local 31, maintain ALLETE’s headquarters in Duluth with Bethany Owen continuing as CEO, and keep the existing management team in place. Additionally, CPP Investments and GIP plan to fund up to $3.5 million in residential customer arrearage forgiveness to help eligible low-income households.

Following the transaction close, Minnesota Power will remain locally managed and regulated by the Minnesota Public Utilities Commission, and transaction costs are not expected to impact customer rates. The proposed acquisition, which has already received approval from ALLETE shareholders, the Federal Energy Regulatory Commission and the Public Service Commission of Wisconsin, is expected to close in 2025, pending MPUC review.

More details are available at www.alleteforward.com.