Wall Street investment giants are reportedly buying utilities amid the ongoing AI boom.
As the New York Times (NYT) reported Thursday (July 17), the goal is to benefit from increased electricity demand from data centers.
Among the investment groups engaged in this initiative is BlackRock, the world's largest asset manager who wants to acquire Minnesota power. The utility owns several power plants and thousands of miles of power lines that help artificial intelligence (AI) companies secure energy in their data centers.
However, the deal is facing a pushback, with a state administrative law judge recommending Minnesota utility regulators denying the proposed acquisition late this Tuesday.
Another investment group, private equity company Blackstone, announced a deal in May to purchase Albuquerque-based TXNM Energy. It provides power to 800,000 residential and business customers in New Mexico and Texas.
These efforts have attracted criticism from consumers and progressive groups who argue that investment companies should not own a utility company because investment companies typically want to maximize profits by burdening debts on the company's finances. Critics argue that this approach can lead to much higher fees and worse service.
“No one in northern Minnesota wants a higher utility bill to line up just the pockets of a Wall Street-based private equity company,” said Nicole Heil, senior climate researcher and campaign director for the Private Equity Stakeholder Project.
The report is part of an upgrade to address climate change, with electricity bills rising nationwide, some due to increased demand from AI data centers.
The news comes days after the announcement that Google, Meta, Blackstone and CoreWeave were planning to spend hundreds of millions of dollars on building new AI data centers.
Google told PYMNTS on Tuesday (July 15th) that it plans to spend $25 billion over the next two years on AI infrastructure in the data centers and PJM Electric Grid region.
“The Google investment announced today will expand and empower Americans with the skills needed to thrive in the AI era,” Alphabet and Google's Ruth Porat said in a statement provided to Pymnts.
A day ago, Meta CEO Mark Zuckerberg wrote in a Facebook post that his company will “invest hundreds of billions of dollars and invest in Compute to build something close.” Calculation refers to the computing power that covers chips, servers and connections in a data center.
