When Wall Street bets on utilities, data centers become the new gold rush—and ratepayers may pay the price.

Large Wall Street investment firms are moving to acquire U.S. utility companies in an effort to benefit from the rising demand for electricity from data centers. But the deals are increasingly being contested by consumer groups who say they will lead to higher energy costs for residents.

BlackRock, the world’s largest asset manager, last year proposed buying Minnesota Power, a utility that owns several power plants and thousands of miles of power lines that could help technology companies secure energy for their data centers.

But a state administrative law judge recommended late Tuesday that Minnesota utility regulators deny the proposed acquisition sought by BlackRock’s Global Infrastructure Partners division and the Canada Pension Plan Investment Board. The utility provides power to 150,000 residential and business customers, largely in northern Minnesota, including Duluth and Grand Rapids.

The acquisition appeared to be on a smoother glide path late last week when the Minnesota Department of Commerce removed its opposition to the deal and entered an agreement with the parties involved in the transaction.

The recommendation of the administrative law judge, Megan J. McKenzie, is not binding, but it could sway the Minnesota Public Utilities Commission, whose approval is necessary for the acquisition to advance.

She highlighted concerns of opponents of the deal that the investment firms would prioritize making money over ensuring reliable electricity service, potentially harming consumers.

“The nonpublic evidence reveals the partners’ intent to do what private equity is expected to do — pursue profit in excess of public markets through company control,” Judge McKenzie wrote. “The partners themselves have carefully committed to do very little.”

BlackRock did not immediately respond to requests for comment.

Minnesota is one of many states where technology companies plan to build data centers. The energy-hungry facilities typically require local utilities to make significant upgrades to their systems. Such upgrades can be a financial boon to utilities, which typically make a guaranteed rate of return on every dollar they spend on power plants and lines.

BlackRock is not alone in seeking to acquire utilities. In May, Blackstone, a private equity firm, announced an agreement to buy Albuquerque-based TXNM Energy, which operates utilities with 800,000 residential and business customers in New Mexico and Texas.

Blackstone already was moving rapidly into the clean energy business in New Mexico and to develop data centers in the state.

Federal and state regulators are reviewing the deal. Blackstone said it expected to complete the overall transaction by the second half of 2026, if it receives all the required approvals.

“We will continue to collaborate with customers, communities, legislators and regulators to achieve our shared goals for a reliable, resilient grid to support economic prosperity and clean energy,” Pat Collawn, chief executive of TXNM, said in a statement announcing the deal.

Some consumer and progressive groups contend that investment firms shouldn’t own electric utilities because they generally seek to maximize profits, often by burdening the company’s finances with large amounts of debt. That approach, the critics argue, could lead to much higher electricity rates and less reliable service.

“No one in northern Minnesota wants higher utility bills solely to line the pockets of Wall Street-based private equity firms,” said Nichole Heil, senior researcher and campaign director for climate at the Private Equity Stakeholder Project, a research and advocacy organization that is critical of the private equity industry.

Electricity rates are already rising quickly across much of the country. Some of the increases are tied to upgrades that utilities are making to harden their networks to withstand extreme weather linked to climate change.

The average monthly electricity bill for a typical household that uses 1,000 kilowatt-hours of energy a month rose almost 4 percent in April from a year earlier, to $175, according to the Energy Information Administration.

Rates are also rising because electricity demand has been climbing for the first time in more than a decade, in large part because of the growth of data centers, factories, electric vehicles and heat pumps. The prospect of that growth, and upgrades needed to support it, could be good for some utilities, which stand to earn higher profits.

U.S. utilities typically receive a guaranteed rate of return of around 11 percent on the investments they make in their grids. Utilities also have state-sanctioned monopolies in their service areas, making them stable and lucrative investments.

Those factors have made utilities attractive to investment firms.

Some state officials have backed acquisitions of utilities by Wall Street firms under certain conditions.

The Minnesota Department of Commerce initially opposed BlackRock’s purchase of Minnesota Power, a division of Allete. But the department said in a filing on Friday that it had reached an agreement with BlackRock that it said would protect residents.

The agreement forbids BlackRock to pass acquisition costs on to utility customers, and requires assurances that programs such as those for low-income consumers would remain in place.

“These commitments include a substantial array of additional public interest benefits, risk-mitigation tools and customer protections beyond those originally proposed by petitioners in this proceeding,” the state’s Commerce Department said in the agreement.

https://www.nytimes.com/2025/07/17/business/energy-environment/blackrock-minnesota-power.html