COLDER WITH KNOW.

>> WHEN IN DOUBT, BE VAGUE.

TAKE IT TO THE BANK >> ERIC: THIS WEEK, THE PUBLIC UTILITIES COMMISSION HELD A DAY OF PROCEEDINGS ABOUT A PROPOSED BUYOUT THAT WOULD TAKE A NORTHERN PUBLIC UTILITY PRIVATE.

ALLETE AND MINNESOTA POWER IS TRYING TO SELL ITSELF TO TWO PRIVATE EQUITY PARTNERS.

THE DULUTH UTILITY SAYS IT NEEDS ACCESS TO CASH TO TRANSITION TO 100% CLEAN ENERGY BY 2040.

REPORTER KAOMI LEE WAS AT THE HEARING.

>> Kaomi: IT WAS HIGH DRAMA AT THE STATE PUBLIC TILITIES COMMISSION THURSDAY.

>> MINNESOTA POWER AND OUR PARTICIPATES ARE MAKING SIGNIFICANT, MEANINGFUL, HISTORIC COMMITMENTS.

>> THE DEAL ITSELF ISN'T SPECIAL.

IT'S ABOUT MAKING MONEY FOR ALLETE'S SHAREHOLDERS AND ABOVE MARKET PROFITS.

>> Kaomi: THE CASE BEFORE THE P.U.C.

INVOLVES DULUTH BASED ALLETE AND ITS DIVISION, MINNESOTA POWER.

ALLETE IS A PUBLIC UTILITY AND PROVIDES ELECTRICITY TO 150,000 CUSTOMERS IN NORTHERN MINNESOTA.

IT WANTS THE COMMISSION TO APPROVE A $6.2 BILLION SALE TO PRIVATE EQUITY PARTNERS OUT OF STATE.

>> WE'RE CHOOSING A PATH THAT LETS US STAY WHO WE ARE.

WE CAN STAY HEADQUARTERED IN DULUTH AND ALL OF OUR EMPLOYEES CAN STAY WORKING IN THEIR COMMUNITIES.

WE KEEP OUR PRESENCE.

WHICH IS DIFFERENT THAN A UTILITY MERGER.

>> Kaomi: ALLETE IS THE EIGHTH SMALLEST PUBLIC UTILITY UNTIL THE COUNTRY.

ABOUT 70% OF ITS CUSTOMERS ARE INDUSTRIAL, INCLUDING MINING AND PAPER PLANTS.

ECONOMIC VITALITY ON THE IRON RANGE IS UNSTABLE.

VICE PRESIDENT OF EXTERNAL AFFAIRS, JENNIFER KATY SAYS THE COMPANY NEEDS MORE ACCESS TO CAPITAL.

>> OUR COMPANY NEEDS TO RAISE MORE CAPITAL IN THE NEXT FIVE YEARS THAN WE HAVE IN THE LAST 75 YEARS.

AS A PUBLICLY TRADED COMPANY.

>> Kaomi: DRIVE >> Kaomi: DRIVING THAT IS THE STATE'S GOAL OF CARBON FREE ELECTRICITY BY 20406789 KATY SAIDS $5 BILLION IS NEEDED TO MAKE THOSE KINDS OF INVESTMENTS.

SHE SAYS THEY SIMPLY CAN'T RAISE THE MONEY IN THE PUBLIC MARKET.

>> SO E INTENTIONAL SOUGHT OUT PARTNERS IN A FURTHER DISCUSSION FUND, IN A PENSION FUND WHO ARE MUCH MORE ALIGNED WITH THE UTILITY MODEL IN TERMS OF LONG-TERM INVESTMENTS LIKE TRANSMISSION LINES.

>> Kaomi: THOSE CHOSEN PARTNERS ARE THE CANADIAN PENSION PLAN AND GLOBAL INFRASTRUCTURE PARTNERS.

G.I.P.

WAS BOUGHT BY PRIVATE EQUITY FUND BLACK ROOK IN 2024 FOR $12.5 BILLION.

IT WOULD OWN 60% OF ALLETE.

>> I WAS SURPRISED WHEN I GOT THE INFORMATION.

FROM THEM THAT THEY WERE LOOKING AT SELLING.

>> Kaomi: DULUTH RESIDENT BETH IS A LONG TIME ELITE SHAREHOLDER.

SHE VOTED AGAINST THE SALE.

SHE DOESN'T BELIEVE ALLETE'S CLAIM IT CAN'T OTHERWISE RAISE THE CASH.

>> THEY HAVE OBJECTED AT EVERY STEP AND THEY HAVE MET THE GOALS.

AND THEY'RE TELLING THE SEC THAT THEY HAVE THE MOST TO DO THAT ON THE OPEN MARKET.

THEY HAVE A LOT OF CAPITAL ACCESS ACROSS THE OPEN MARKETS.

>> Kaomi: THAT I 69 PAGE RULING, AN ADMINISTRATIVE LAW JUDGE SAID THE SALE SHOULD BE REJECTED BECAUSE ALLETE HADN'T PROVEN THAT THE PUBLIC BENEFITS.

JUDGE MEGAN THAT SAËNS YEAR WROTE, THERE ARE NO PREVIOUS INSTANCES WHERE IT WAS UNABLE TO ACCESS CAPITAL FROM THE PUBLIC MARKET WHEN IT NEEDED TO.

AND THE JUDGE CITED ANNUAL REPORTS FROM 2003 REPORTS FROM 20 2023 AND 2004 WHERE ALLETE SAID IT WAS WELL POSITIONED TO, QUOTE, MEET OUR FINANCIAL NEEDS.

HUNTER KINGSTON IS -- WHICH IS AN INTERVENOR IN THE CASE.

HE SAYS THE SALE IS DANGEROUS.

>> THESE EQUITY INVESTORS HOLD ON TO COMPANIES FOR A SHORT PERIOD OF TIME.

THEY CHANGE THE WAY THAT THEY'RE RUN.

THEY SELL OFF ESSENTIAL ASSETS.

BUT WHAT THEY WOULD DO WITH A UTILITY VERY CLEAR IS THEY'RE GOING TO RAISE RATES.

>> I THINK IT'S UNFORTUNATE THAT AT THE 11TH HOUR WE'RE HEARING FROM OPPONENTS SOLELY BECAUSE BLACK ROCK AGUIRREED A SUBSIDIARY.

MINNESOTA POWER RIGHT NOW IS OWNED BY ALLETE WHICH IS PUBLICLY TRADED.

SO IT ALREADY IS BEHOLDEN TO THE SHAREHOLDERS.

TO MAKE IT SEEM LIKE WE'VE GOT THIS LOCALLY OWNED UTILITY IS NOT ACCURATE.

>> Kaomi: BLACK ROCK IS ALREADY THE LARGEST SHAREHOLDER OF ALLETE.

AND SUPPORTERS SAY UTILITY RATES WOULD STILL BE SUBJECT TO THE P.U.C.

>> AND SO THEY CAN'T RAISE RATES.

THEY CAN'T MAKE NEW INVESTMENTS.

THEY CAN'T CHANGE SERVICE QUALITY OR REALLY DO ANYTHING SIGNIFICANT WITHOUT APPROVAL OF THAT COMMISSION.

>> Kaomi: THERE'S A REASON WHY ALLETE IS SO ATTRACTIVE.

20 YEARS AGO, IT GOT ALMOST ALL ITS ENERGY FROM COAL.

NOW MORE THAN 50% COMES FROM RENEWABLES.

SOME SAY IT'S A TEST CASE.

>> WE ARE WHAT YOU CALL CAPTIVE CUSTOMERS OF A MONOPOLY UTILITY SYSTEM.

WE DON'T HAVE ANYWHERE ELSE TO GO.

>> BUDDY ROBINSON IS A LONG TIME RATE PAYER ADVOCATE IN DULUTH.

HE SAYS IF THE COMPANY GOES PRIVATE, CONSUMERS WILL LOSE TRANSPARENCY LIKE REGULAR SECURITIES FILINGS.

>> IN THE BACKGROUND OF ALL THIS IS THE DESIRE TO HAVE HUGE DATA ENTERS FOR ARTIFICIAL INTELLIGENCE THAT'LL CONSUME HUGE AMOUNTS OF ELECTRICITY.

>> Kaomi: GROUND WORK IS BEING LAID FOR A DATA CENTER IN NEARBY HERMANTOWN.

THE PROPOSED SITE IS NEXT TO THIS ALLETE SUB STATION, ALTHOUGH ALLETE SAYS IT'S NOT INVOLVED.

NOW THAT THE PUBLIC UTILITIES COMMISSION HAS WRAPPED ON ITS FIRST DAY OF PROCEEDINGS, A SECOND DAY IS SCHEDULED OCTOBER 3RD IN WHICH THE COMMISSION IS EXPECTED TO MAKE A DECISION.

THIS WEEK, ALLETE UPPED THE ANTE, PREVIOUSLY, IT OFFERED A ONE-YEAR RATE FREEZE AS PART OF A SETTLEMENT AGREEMENT WITH THE STATE DEPARTMENT OF COMMERCE.

THE LATEST OFFER INCLUDES A $50 MILLION RATE CREDIT, AND ONGOING OMPLIANCE REPORTING TO THE P.U.C.

SHAREHOLDER BETH IS NOT SWAYED.

>> $11 TRILLION CORPORATION CONTROLLING THIS VERSUS THE FIVE PEOPLE ON OUR P.U.C.

DOESN'T SEEM TO ME LIKE A BALANCED -- A BALANCE OF POWER OR A BALANCE OF INFLUENCE.