Private equity sees profits in power utilities as electric bills rise and Big Tech seeks more energy - By Marc Levy, Associated Press
Private investment firms that are helping finance America's artificial intelligence race and the huge buildout of energy-hungry data centers are getting interested in the local utilities that deliver electricity to regular customers — and the servers that power AI.
Billions of dollars from such firms are now flowing toward electric utilities in places including New Mexico, Texas, Wisconsin and Minnesota that deliver power to more than 150 million customers across millions of miles of power lines.
"The reason is very simple: because there's a lot of money to be made," said Greg Brown, a University of North Carolina at Chapel Hill professor of finance who researches private equity and hedge funds.
Private investment firms that have done well investing in infrastructure over the last 15 years now have strong incentives to add data centers, power plants and the services that support them at a time of rapid expansion and spiking demand ignited by the late 2022 debut of OpenAI's ChatGPT, Brown said.
BlackRock's CEO Larry Fink said as much in a July interview on CNBC, saying infrastructure is "at the beginning of a golden age."
"We believe that there's a need for trillions of dollars investing in infrastructure related to our power grids, AI, the whole digitization of the economy" and energy, Fink said.
Deals are in the works
In recent weeks, private equity firm Blackstone has sought regulatory approval to buy out a pair of utilities, Albuquerque-based Public Service Company of New Mexico and Lewisville, Texas-based Texas New Mexico Power Co.
Wisconsin earlier this year granted the buyout of the parent of Superior Water, Light and Power and the owner of Northern Indiana Public Service Co. last year sold a 19.9% stake in the utility to Blackstone.
However, a fight has erupted in Minnesota over the buyout of the parent of Duluth-based Minnesota Power and the outcome could determine how such firms expand their holdings in an industry that's a nexus between regular people, gargantuan data centers and the power sources they share.
Under the proposed deal, a BlackRock subsidiary and the Canada Pension Plan Investment Board would buy out the publicly traded Allete, parent of Minnesota Power, which provides power to 150,000 customers and owns a variety of power sources, including coal, gas, wind and solar.
Both sides of the fight have attracted influential players ahead of a possible Oct. 3 vote by the Minnesota Public Utilities Commission. Raising the stakes is the potential that Google could build a data center there, a lucrative prospect for whoever owns Minnesota Power.
Opponents of the acquisition suspect that BlackRock is only interested in squeezing bigger profits from regular ratepayers. Allete makes the opposite argument, that BlackRock can show more patience because it is free of the short-term burdens of publicly traded companies.
More buyouts worry opponents
Opponents also worry that a successful Minnesota Power buyout will launch more such deals around the U.S. and drive up electric bills for homes.
"It's no secret that private equity is extremely aggressive in chasing profits, and when it comes to utilities, the profit motive lands squarely on the backs of ratepayers who don't have a choice of who they buy their electricity from," said Karlee Weinmann of the Energy and Policy Institute, which pushes utilities to keep rates low and use renewable energy sources.
The buyout proposals come at a time when electricity bills are rising fast across the U.S., and growing evidence suggests that the bills of some regular Americans are rising to subsidize the rapid buildout of power plants and power lines to supply the gargantuan energy needs of Big Tech's data centers.
Mark Ellis, a former utility executive-turned-consumer advocate who gave expert testimony against the Minnesota Power buyout, said he's talked to private equity firms that want to get into the business of electric utilities.
"It's just a matter of what's the price and will the regulator approve it," Ellis said. "The challenge is they're not going to come up for sale very often."
That's because electric utilities are seen as valuable long-term investments that earn around 10% returns not on the electricity they deliver, but the upcharge that utility regulators allow on capital investments, like upgrading poles, wires and substations.
That gives utility owners the incentive to spend more so they can make more money, critics say.
Big players on both sides
The fight over Minnesota Power resembles some of the battles erupting around the U.S. where residents don't want a data center campus plunked down next to them.
Building trades unions and the administration of Democratic Gov. Tim Walz, who appointed or reappointed all five utility commissioners, are siding with Allete and BlackRock.
On the other side are the state attorney general's office and the industrial interests that buy two-thirds of Minnesota Power's electricity, including U.S. Steel and other owners of iron ore mines, Enbridge-run oil pipelines and pulp and paper mills.
In its petition, Allete told regulators that, under BlackRock's ownership, Minnesota Power's operations, strategy and values wouldn't change and that it doesn't expect the buyout price — $6.2 billion, including $67 a share for stockholders at a 19% premium — to affect electric rates.
In essence, Allete — which solicited bids for a buyout — argues that BlackRock's ownership will benefit the public because, under it, the utility will have an easier time raising the money it needs to comply with Minnesota's law requiring utilities to get 100% of their electricity from carbon-free sources by 2040.
Allete has projected needing to spend $4.3 billion on transmission and clean energy projects over five years.
However, opponents say Allete's suggestion that it'll struggle to raise money is unfounded, and undercut by its own filings with the U.S. Securities and Exchange Commission in which it says it is "well positioned" to meet its financing needs.
Skepticism from regulators
It hasn't been smooth sledding for BlackRock.
In July, an administrative law judge, Megan J. McKenzie, recommended that the commission reject the deal, saying that the evidence reveals the buyout group's "intent to do what private equity is expected to do – pursue profit in excess of public markets through company control."
In recent days, a utility commission staff analysis echoed McKenzie's concerns.
They suggested that private investors could simply load up Minnesota Power's parent with massive debts, borrow at a relatively low interest rate and turn a fat profit margin from the utility commission granting a generous rate of return.
"For the big investors in private equity, this is a win-win," the staff wrote. "For the ratepayers of the highly leveraged utility, this represents paying huge profits to the owners if the private equity 'wins' and dealing with a bankrupt utility provider if it loses – it is a lose-lose."
LANL Tritium venting complete, state environment officials say no concern for public exposure - Danielle Prokop, Source New Mexico
Los Alamos National Laboratory and federal officials completed the depressurization of four containers that were potentially building up pressure, and released only a small amount of the radioactive gas tritium into the air, state environment officials said on Friday.
In 2016, LANL officials discovered the drums were building pressure, could potentially explode and, in a worst-case scenario, release tritium at a rate double the airborne radiation limit for the whole year.
Tritium, a radioactive isotope of hydrogen, can be naturally occurring or a byproduct from nuclear research.
The EPA characterizes the gas as a lower threat, emitting radiation that often cannot penetrate the skin, and is only considered hazardous in large quantities from inhalation, skin absorption or consumed in tritiated water — a replacement of one of the hydrogen molecules with tritium.
Instead, officials found the containers were fully sealed and intact, according to reports from the National Nuclear Security Administration to the New Mexico Environment Department and U.S. Environmental Protection Agency, which monitored the release. Depressurization was delayed several times by rain, and started on Sept. 16 and ended on Sept. 23.
“From the data we collected, received and reviewed, we really just don’t have any belief that there was any concerns for public exposure to the tritium at levels above background in the area,” Hazardous Waste Bureau Chief, John-David Nance told Source NM.
The NNSA reported total emissions to be around 0.005 millirems — much lower than radiation exposure of 3.7 millirems from a cross-country flight.
Anti-nuclear and indigenous groups criticized LANL and federal officials for a lack of transparency around the plan to depressurize the containers and said their safety concerns were ignored.
The state required LANL to have a stricter “hard stop limit” as a nod to the concerns for exposure limits for children and pregnant women.
NMED posted daily updates on social media about the release, as Nance said the state wasn’t “exactly satisfied with LANL’s communications,” in the days leading up to the releases.
The NNSA and laboratory are required by state officials to issue a report about the depressurization and hold a meeting within the 30 days as part of the requirements from the state.
Nance said additional samples collected off-site by the New Mexico Environment Department will be released to the public in three to five weeks, after being verified.
“Recorded emissions we have were very low, but we're working to verify that with a third-party,” Nance said.
Journal Poll: Tim Keller holds lead in Albuquerque mayoral race but many voters still undecided - Dan Boyd, Albuquerque Journal
With early voting set to begin in just over a week, Albuquerque Mayor Tim Keller has a solid lead in his bid for an unprecedented third straight term, a new Journal Poll found.
The survey of proven and likely voters also found former Bernalillo County Sheriff Darren White leading a pack of six challengers, potentially positioning himself for a run-off election against Keller.
However, more than one-third of voters surveyed said they still had not decided who they would vote for, which could give hope to Keller’s challengers in the run-up to the Nov. 4 local election.
“On the one hand, Tim Keller has a comfortable lead in a seven-way race,” said Brian Sanderoff, the president of Albuquerque-based Research & Polling Inc., which conducted the poll. “On the other hand, he’s a two-term mayor and there are still more voters who are undecided than there are voters who are planning to vote for him.”
In all, 29% of voters surveyed said they planned to vote for Keller, while 16% said they would vote for White. Trailing further back, Albuquerque city councilor Louie Sanchez and former U.S. attorney for New Mexico Alex Uballez both received support from 6% of voters surveyed.
The three remaining candidates — Eddie Varela, Mayling Armijo and Daniel Chavez — all had smaller support levels.
Keller, a former state senator and state auditor, has served as Albuquerque’s mayor since December 2017. He easily won reelection in 2021 and is seeking to be the first person to serve three consecutive terms as mayor.
But Keller has faced a steady stream of criticism from his opponents, specifically on the issues of homelessness and crime.
The mayor’s administration has touted a drop in violent crime rates over the last several years, but his police chief, Harold Medina, asked Gov. Michelle Lujan Grisham in March to deploy New Mexico National Guard members to Albuquerque to assist local law enforcement officers.
The governor granted the request, while declaring an emergency in the state’s largest city.
In his State of the City speech in August, Keller acknowledged the challenges posed by crime, homelessness, rising housing costs and guns in schools.
“If there were easy solutions to these long-term problems, I promise you, I would have fixed them in a heartbeat,” Keller said at the time, while insisting his administration was making progress on the issues.
Under Albuquerque’s city charter, the two top finishers in mayoral and City Council elections face off in a run-off election if the top finisher does not receive 50% or more of the votes cast. If it’s necessary, this year’s run-off election would take place Dec. 9.
Undecided voters could tip election
While some Albuquerque voters might be wary of another term for Keller, they haven’t necessarily flocked to other candidates.
White, who previously served as Albuquerque’s chief public safety officer and was a GOP congressional candidate, might also be having a hard time convincing some voters despite his second-place finish in the survey.
Despite being the best-known Republican in the race, White has struggled to consolidate the GOP vote in this year’s election, as only 38% of registered Republican voters surveyed said they planned to vote for White.
That could be due in part to White’s past ties to New Mexico’s cannabis industry — he sold his medical cannabis business four years ago — and the presence in the race of Sanchez, a conservative Democrat who received 12% of Republican support in the poll as he also appealed to voters concerned about crime, Sanderoff said.
Uballez, who has positioned himself as a progressive alternative to Keller, received more support from younger voters than did White. But Uballez’s support withered among voters age 50 and older, who tend to be more reliable voters.
Meanwhile, Sanderoff also said the fact that Keller was the only candidate to qualify for public campaign financing in this year’s race could also be a significant factor.
Buoyed by the more than $733,000 in public campaign funds he received after qualifying, Keller has maintained a significant advantage in campaign cash during this year’s election cycle.
The failure of other mayoral candidates to meet the qualifications for public campaign financing has made it harder for them to make their case to voters, Sanderoff said.
“The candidates who are not as well known lost the opportunity to spend money in August and September to increase their name recognition,” he said.
In all, the Journal Poll found 37% of voters were undecided or did not know who they planned to vote for.
When those undecided voters were asked which candidate they were leaning toward, most still said they were not sure. But with those who did express a “lean” factored in, Keller’s support in the survey rose to 35%, with White’s support at roughly 19%.
Early voting begins Oct. 7 at the Bernalillo County Clerk’s Annex only, with additional early voting sites opening Oct. 18.
Methodology
The Journal Poll is based on a random sample of 514 voters who cast ballots in the 2021 and/or 2023 local government election, and a sample of adults who registered to vote since January 2024 and who said they are likely to vote in the upcoming local government election.
To ensure a representative sample, Research & Polling Inc. sets quotas for race, gender and age, and weights by education level and party affiliation, if necessary, based on traditional voting patterns in local government elections.
The poll was conducted Sept. 19 through Sept. 26. The voter sample size of 514 has a margin of error of plus or minus 4.4 percentage points. The margin of error grows for subsamples.
All interviews were conducted by live, professional interviewers, based in Albuquerque, with multiple callbacks to individuals that did not initially answer the phone.
Both cellphone numbers (96%) and landlines (4%) of likely voters were used.
Mayoral candidate charged with inappropriately touching former campaign staffer Olivier Uyttebrouck, Albuquerque Journal
Albuquerque mayoral candidate Daniel Chavez faces a charge of misdemeanor battery for allegedly inappropriately touching a campaign staffer, according to court records discovered this week, a month and a half before the election.
The alleged battery occurred after a June 19 campaign-related meeting, court records revealed.
A week later, Chavez allegedly asked the staffer to sign a nondisclosure agreement, according to a criminal complaint filed in Bernalillo County Metropolitan Court. The staff member refused to sign the NDA and was terminated the following day on June 27, the complaint said.
Chavez, 55, the president of Parking Company of America, did not immediately respond to messages left on the company’s voicemail or to an email sent to his campaign. His attorney, Carter Harrison, declined to comment on the case.
Chavez is one of six mayoral hopefuls challenging Mayor Tim Keller in the Nov. 4 municipal election. It is unclear how the misdemeanor charge will impact Chavez’s campaign.
Chavez pleaded not guilty Aug. 18 to the petty misdemeanor charge and was released on his own recognizance. He is scheduled for a bench trial on Oct. 14 before Metropolitan Court Judge Renee Torres.
According to the criminal complaint, the incident occurred after Chavez attended a June 19 board meeting with the New Mexico Restaurant Association in Albuquerque.
The former staff worker told police that as they exited the meeting and were walking down a hallway with Chavez, he “grabbed and patted their buttocks twice without consent.” The reporting officer from the Albuquerque Police Department described the alleged victim as nonbinary, using the pronouns they and them throughout the complaint.
Carol Wight, CEO of the restaurant association, told police she was present during the time of the reported incident, but did not witness the alleged touching. Wight added there were no surveillance cameras in the hallway where the touching allegedly occurred.
The alleged victim described the contact to police as “unwelcome and nonconsensual.” The former staff worker told police they later confronted Chavez, who responded that he thought the staff worker “was his wife and apologized for the incident.”
Chavez had secured the staffer an apartment and was their primary source of income, the complaint said, which added the former staff worker said they were in a committed relationship with a partner.