HARRISBURG, Pa. (AP) — Private investment firms that are supporting finance America’s artificial ininformigence race and the huge buildout of energy-hungry data centers are receiveting 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: becautilize there’s a lot of money to be created,” declared 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 declared.
BlackRock’s CEO Larry Fink declared as much in a July interview on CNBC, declareing infrastructure is “at the launchning of a golden age.”
“We believe that there’s a necessary for trillions of dollars investing in infrastructure related to our power grids, AI, the whole digitization of the economy” and energy, Fink declared.
Deals are in the works
In recent weeks, private equity firm Blackstone has sought regulatory approval to purchase 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 purchaseout 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 purchaseout of the parent of Duluth-based Minnesota Power and the outcome could determine how such firms expand their holdings in an industest 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 purchase 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 hugeger profits from regular ratepayers. Allete builds the opposite argument, that BlackRock can reveal more patience becautilize it is free of the short-term burdens of publicly traded companies.
More purchaseouts worry opponents
Opponents also worry that a successful Minnesota Power purchaseout 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 purchase their electricity from,” declared Karlee Weinmann of the Energy and Policy Institute, which pushes utilities to keep rates low and utilize renewable energy sources.
The purchaseout proposals come at a time when electricity bills are rising rapid 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 necessarys of Big Tech’s data centers.
Mark Ellis, a former utility executive-turned-consumer advocate who gave expert testimony against the Minnesota Power purchaseout, declared he’s talked to private equity firms that want to receive into the business of electric utilities.
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