What the sale of Minnesota Power means for residents

Transcript

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HOST: You're listening to North Star Stories: Voices from Where We Live, a daily newscast about what it means to live in Minnesota.

ANCHOR: We look at the sale of Minnesota Power and what it means for Minnesotans. Then, why the state is reducing the number of Medicaid providers. And, the Iron Range mourns the loss of a longtime workforce leader. I’m Chantel SinGs.

Minnesota’s Department of Human Services is tightening oversight of the state’s Medicaid program. About 800 providers who haven’t billed for services in more than a year were disenrolled this month. The move aims to reduce fraud and focus resources on providers actively serving Minnesotans. The change follows Governor Walz’s executive order directing
agencies to remove inactive Medicaid providers. Additional rounds of disenrollment will continue.
Next, Minnesota Power is changing hands after state regulators approved the sale of its parent company to a private equity firm, a move that puts the Duluth-based utility under private ownership for the first time in its history. Xan Holston has more.

Xan Holston: The Minnesota Public Utilities Commission, or PUC, signed off earlier this month on a $6.2 billion sale of ALLETTE, the Duluth-based parent company of Minnesota Power. Minnesota Power provides electricity to about 150,000 customers in northeastern Minnesota, as well as some of the
state's biggest industrial users.

Katie Sieben: On Commissioner Hamm's motion, all in favor, please say aye.

Nat Sound: Aye.

Katie Sieben: Opposed? The motion is approved unanimously.

Xan Holston: The deal drew months of debate and strong opposition from the public, the state's Attorney General's office and environmental and consumer groups. The buyers are a partnership between the Canada Pension Plan Investment Board and Global Infrastructure Partners, a subsidiary of the world's largest private equity firm, BlackRock. PUC Chair Katie
Sieben said the commission approved the sale only after the buyers agreed to several conditions meant to protect customers.

Katie Sieben: And because of the collective work of partners, stakeholders, labor, environmental groups and others, we've made the overall package better.

Xan Holston: Those include the operation staying in Duluth, $50 million in customer rate credits and a year-long freeze on rate hikes, among other conditions.
Katie Sieben: And these benefits and credits would not happen, but if we approved the acquisition.

Xan Holston: Sieben also emphasized that the commission will continue to regulate Minnesota Power even after the sale closes.

Katie Sieben: Whether Minnesota Power is publicly traded or privately held, it needs to comply with the laws of the state of Minnesota.

Xan Holston: But not everyone supports the deal. Earlier this year, an administrative law judge who reviewed the proposal recommended the commission reject the sale. And opponents of the sale argue that private equity firms put profits ahead of consumers.

Hudson Kingston: By making it a private company instead of a publicly traded company, we're going to lose a lot of information that we would have about how they’re running it all.

Xan Holston: Hudson Kingston is legal director with the
environmental group CURE. He said there are a number of issues with private equity firms taking over public utilities, including reduced transparency and a demand on financial returns. And while he concedes that the concessions the PUC managed to get in the deal have value—

Hudson Kingston: Fifty million dollars is chump change
compared to the amount of rate payer money that they're going to spend and then expect to be paid back by rate payers.

Xan Holston: Kingston pointed to Michigan's Upper Peninsula Power Company, who in 2014 was purchased by a private equity firm and sold to another in 2011. Over that time, customers have seen their rates go up four times.

Hudson Kingston: So it really is putting off a rate increase a little bit down the road, as opposed to doing something that would stop the rate increase when it comes.

Xan Holston: There are also concerns about how new industry will affect rates. Nearby Hermantown recently approved the construction of a massive data center, which will drive up energy demand significantly. The sale still needs final federal approval, and if granted, the deal is expected to close later this year. For North Star Stories, I'm Xan Holston.

Chantel SinGs: You are listening to North Star Stories.
The Iron Range community is mourning the loss of Roy Smith, who passed away on October 14th after a short battle with cancer. Smith served as director of talent development for Minnesota North College and the Iron Range Resources and Rehabilitation Board since 2005. Colleagues say his advocacy for the region was unmatched. Smith spent more than 15 years as an educator and school administrator. He also chaired the
Northland Foundation board and led the workforce
development committee for the Iron Mining Association of Minnesota. Smith is survived by his wife Suzy and daughter Cheyenne.

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HOST: North Star Stories is produced by AMPERS, diverse radio for Minnesota's communities, with support from the McKnight Foundation and the State of Minnesota. Online at ampers dot org.