ALLETE Reaches Landmark Agreement with Minnesota Department of Commerce to Deliver Cost Savings and Long-Term Benefits to Customers and Communities
ALLETE, Inc., a prominent U.S. energy company, has announced a significant breakthrough in its ongoing acquisition process. In collaboration with its transaction partners—the Canada Pension Plan Investment Board (CPP Investments) and Global Infrastructure Partners (GIP)—ALLETE has entered into a comprehensive settlement agreement with the Minnesota Department of Commerce. The agreement is a major milestone toward completing the proposed acquisition of ALLETE and ensures the transaction delivers tangible, immediate, and long-term benefits to Minnesota Power customers and local communities.
The settlement reflects extensive dialogue between the parties and addresses key regulatory priorities, customer protections, and forward-looking energy policy goals. It includes specific commitments to reduce customer costs, enhance service quality, and guarantee funding for Minnesota’s clean energy future. As a result, the Minnesota Department of Commerce—whose role is to protect the public interest in utility matters—has formally endorsed the proposed transaction and recommended its approval to the Minnesota Public Utilities Commission (MPUC).
Growing Support Across Stakeholder Groups
The Department of Commerce joins a rapidly expanding coalition of supporters advocating for the transaction. These include influential labor unions such as the International Brotherhood of Electrical Workers (IBEW) Local 31, which represents many ALLETE employees; the Laborers’ International Union of Minnesota and North Dakota; the International Union of Operating Engineers Local 49; and the North Central States Regional Council of Carpenters. The business community has also expressed strong backing, with support from the Minnesota Chamber of Commerce, regional chambers in Duluth and Hermantown, and organizations like the Energy CENTS Coalition and Head of the Lakes United Way.
These endorsements underscore a broad consensus that the partnership between ALLETE, CPP Investments, and GIP represents a unique opportunity to strengthen Minnesota’s energy infrastructure, modernize its energy systems, and create positive socio-economic impacts.
A Transformative Commitment to Stakeholders
In a statement, ALLETE Chair, President, and CEO Bethany Owen emphasized the company’s long-standing dedication to delivering value for customers and communities across Minnesota. “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,” said Owen. “We are pleased to have reached an agreement that will deliver enhanced benefits for our customers, our employees, and the communities we serve.”
Owen further highlighted that the agreement reflects months of collaborative engagement with stakeholders, including regulatory bodies, local organizations, and employees. “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 two experienced, long-term investors 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,” she said.
Strategic Endorsements from Partners
Jonathan Bram, a founding partner of GIP, echoed the optimism surrounding the agreement, praising the Minnesota Department of Commerce’s support as a pivotal moment. “We are pleased with today’s announcement, which ensures that the needs of customers, communities, and employees will continue to be at the center of ALLETE’s mission,” said Bram. “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.”
James Bryce, Managing Director and Head of Infrastructure at CPP Investments, also underscored the alignment between investor objectives and public benefit. “The Department of Commerce’s endorsement affirms that our partnership will create lasting value for customers and communities,” said Bryce. “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.”
Key Components of the Agreement
The settlement agreement outlines a range of enforceable commitments and financial mechanisms designed to protect consumers, enhance transparency, and promote Minnesota’s energy transition. Among the most significant commitments are:
1. Immediate Cost Savings for Customers
Minnesota Power has agreed to implement a one-year base rate freeze, delivering rate stability at a time of economic uncertainty. Furthermore, ALLETE will reduce its authorized Return on Equity (ROE) from 9.78% to 9.65% following the close of the transaction. This decrease in ROE directly translates to savings for customers through lower overall utility costs.
2. Maintaining Strong Customer Service and System Reliability
To uphold high service standards, ALLETE, CPP Investments, and GIP have agreed to enforce service quality metrics. These include system reliability performance standards to ensure Minnesota Power maintains its reputation for dependable energy service throughout the region.
3. Guaranteed Investment in Clean Energy Transition
CPP Investments and GIP have pledged to fully fund ALLETE’s five-year capital investment plan. This guarantees continued development of transmission upgrades, renewable energy projects, and other essential infrastructure needed to support Minnesota’s energy transformation and climate goals.
4. Creation of a $50 Million Clean Firm Technology Fund
As part of the settlement, ALLETE’s partners will establish a $50 million Clean Firm Technology Fund. This fund will support the development of innovative technologies and local projects critical to maintaining energy reliability while transitioning to lower-carbon power sources.
5. Corporate Transparency and Strong Governance Protections
To protect consumers from potential risk exposure linked to ALLETE’s non-utility operations, a new holding company structure will be created. This structural change ensures that Minnesota Power’s regulated operations remain financially ring-fenced from any unrelated business risks. Additionally, the new board structure will include 14 directors—six of whom will be independent, with several hailing from Minnesota and Wisconsin. This guarantees continued local oversight and input in corporate decisions affecting regional energy outcomes.
Reinforcement of Existing Commitments
In addition to the newly announced elements, the settlement reaffirms and expands upon previous commitments made by ALLETE, CPP Investments, and GIP. These include:
- Job Security: ALLETE’s workforce will be retained, and all current compensation and benefits structures will remain in place.
- Union Support: Existing union contracts, including those with IBEW Local 31, will be honored. Notably, the company will extend its collective bargaining agreement by two years.
- Leadership Continuity: ALLETE’s headquarters will remain in Duluth, Minnesota, with Bethany Owen continuing as CEO and the current executive team retained.
- Community Investment: The transaction partners will provide up to $3.5 million in funding for a residential customer arrearage forgiveness program. This initiative is specifically designed to assist low-income customers facing overdue utility bills.
Regulatory Oversight and Local Control Remain Intact
Following the transaction’s completion, Minnesota Power will continue to operate as a locally managed and regulated utility headquartered in Duluth. Oversight by the Minnesota Public Utilities Commission will remain unchanged, ensuring rate structures and energy planning continue to reflect Minnesota’s values and needs. Importantly, the transaction will not result in any costs being passed along to retail or municipal utility customers.
Final Steps Toward Transaction Completion
The proposed transaction is on track to close in 2025, pending final approval by the Minnesota Public Utilities Commission and the fulfillment of standard closing conditions. All other required approvals have already been secured, including endorsements from ALLETE shareholders, the Federal Energy Regulatory Commission, and the Public Service Commission of Wisconsin.
The comprehensive nature of this settlement—spanning financial, operational, environmental, and social aspects—positions ALLETE and its partners as key drivers in shaping a sustainable and resilient energy landscape for Minnesota. As the MPUC reviews the proposed transaction and accompanying settlement, stakeholders across sectors are now aligned in their vision of an energy future that balances innovation, affordability, reliability, and equity.
