May 19, 2025

Rehearing of FERC Approval of BlackRock Blanket Authorization

By Tyson Slocum

Today in Federal Energy Regulatory Commission docket EC25-12, we request rehearing of the Commission’s April 17, 2025 Order extending BlackRock’s blanket authorization to acquire up to 20% of the voting securities of public utilities. The Commission’s Order is inconsistent with the Federal Power Act. The Order admits that BlackRock’s acquisitions of Global Infrastructure Partners and ALLETE makes the company’s blanket authorization “unique” and  presents a “novel degree of influence”, but yet imposes unmodified mitigation. The Commission “one size fits all” approach appears to have the regulator simply throwing up its hands in surrender because BlackRock has become Too Big To Regulate. The Federal Power Act requires a hearing to resolve the contradictions and fatal errors in the Order.

Statement of Issues

1. Congress instructs any entity seeking to acquire voting securities of a public utility to first secure “an order of the Commission authorizing it to do so.” Congress further commands that “[a]fter notice and opportunity for hearing, the Commission shall approve the proposed disposition, consolidation, acquisition, or change in control, if it finds that the proposed transaction will be consistent with the public interest”.
2. The Federal Power Act mandate is clear: it imposes proscriptive protections, in part by requiring the Commission to ensure the satisfaction of the public interest prior to approving a transaction. The statute does not authorize the Commission to approve a transaction with a caveat that “hey, this is really complicated with a bunch of moving parts involving a massive, unique corporation, but we’ll approve the transaction, and then grab some popcorn, apply the same exact mitigation procedures we’ve always used, and take the next few years to wait and see whether the transaction will be consistent with the public interest.”
3. But yet that is precisely what the Commission has done here. And it is simply impermissible under the plain language of the Federal Power Act.
4. BlackRock is one of the largest and most influential corporations because of the unprecedented size and scope of its operations. It is, by far, the world’s biggest asset manager, with a record $11.6 trillion under management. American workers and wealthy institutional investors alike give their savings to BlackRock, entrusting it to manage their portfolios. Founded in 1988, the company grew from an 8-person startup to the world’s biggest asset manager, primarily through aggressive acquisitions.
5. Indeed, it was one of those acquisitions, of Barclays’ asset management division in 2009, that led to BlackRock’s first blanket authorization order in 2010.
6. The Commission’s blanket authorization policy is appropriate and fair treatment for those entities solely engaged in passive asset management.
7. But BlackRock is no longer primarily a passive asset manager. Again, due to aggressive acquisitions, BlackRock has fundamentally transformed its core business from a passive manager to an active one with its $12.5 billion acquisition of Global Infrastructure Partners, in part because during the transaction GIP moved to acquire ALLETE, which controls franchised public utilities with captive customers.
8. As FERC Chairman Mark C. Christie noted in his concurring statement: “a public utility has public service obligations; it is not just another company seeking to maximize returns to its shareholders. Many have been granted monopoly franchises by state governments in return for serving the public within their territories. One threat is that asset managers, like BlackRock, will use their ownership of competing assets to exert market power in wholesale energy, capacity, and ancillary services markets. This is consistent with the concerns expressed by Public Citizen and the Private Equity Stakeholder Project in this proceeding, and I share those concerns.”
9. As we clearly noted in our November 21, 2024 Second Protest in this docket: “The application is silent on how BlackRock can navigate the myriad conflicts of interests that arise when it controls ALLETE simultaneously with its control of voting shares in excess of 10% of nearly two dozen utilities, as well as ALLETE’s two largest industrial customers.” We had earlier informed the Commission that BlackRock controls more than 10% of “Cleveland Cliffs and US Steel … two industrial taconite facility customers of ALLETE representing 70% of Minnesota Power’s entire industrial demand. BlackRock’s control of … more than 10% of two of its largest customers raises concerns about horizontal competition and conflict of interest that are ignored in the application. The application is silent on how BlackRock can simultaneously manage its non-controlling ownership of voting shares of utilities that compete with its active, direct holdings—an income prioritization conflict for BlackRock that threatens competition, rates and regulation.”
10. The Commission admits in its order that “Notwithstanding our approval, given the extent of Applicants’ holdings, we are nonetheless sensitive to protestors’ requests for heightened scrutiny of Applicants’ Blanket Authorization request. Specifically, the extent of Applicants’ holdings under the Blanket Authorizations … when combined with the controlling interests in public utilities that Applicants have recently acquired as a result of the [Global Infrastructure Partners] and ALLETE Transactions, put Applicants in a unique position compared to other asset managers that have received FPA section 203 blanket authorizations.” [emphasis added].
11. Here the Commission recognizes that BlackRock’s acquisition of Global Infrastructure Partners and ALLETE makes the company “unique” relative to other asset managers receiving blanket authorization.
12. The Commission continues that “we have some concern that the breadth of Applicants’ holdings under their Blanket Authorizations, along with their growing controlling holdings in [Global Infrastructure Partners], ALLETE and other public utility assets, may allow for a novel degree of influence over both their non-controlling and controlling holdings” while claiming—with no evidence—that the terms and conditions of the blanket authorization mitigate those concerns. [emphasis added]
13. But despite admitting that BlackRock’s aggressive forays into active management of public utilities is different than all other asset managers under blanket authorization, the Commission’s mitigation strategy remains unchanged.
14. The Commission confirms “concern” that BlackRock’s acquisitions of Global Infrastructure Partners and ALLETE “put Applicants in a unique position compared to other asset managers” and “may allow for a novel degree of influence over both their non-controlling and controlling holdings”, but yet the Commission relies on unmodified mitigation: “[t]he conditions that Applicants provide here are the same as those accepted in the 2022 Extension Order. We find that these conditions are sufficient to ensure that Applicants are not able to influence or exert control over the public utilities they hold interests in. At the same time, we do not wish to impose unnecessary or overly restrictive conditions that may unduly limit investment in the industry, nor do we wish to impose conditions on Applicants that would not be applied to other similarly situated investment companies.” [emphasis added]
15. The Commission not only fails to detail what additional “conditions” could be applied to BlackRock to effectively mitigate the described harm, but it provides no evidence whatsoever that imposing “overly restrictive conditions” would stifle capital investment in public utilities. What are these alleged “overly restrictive conditions”? No one knows, because FERC literally does not discuss a single one, because the Commission elected to not subject the blanket authorization for a full hearing.
16. The Commission acknowledges that BlackRock’s acquisitions of Global Infrastructure Partners and ALLETE are “unique” and therefore unlike other investment companies. And the Commission confirms that its proposed mitigation strategy remains unchanged. So it appears the Commission is failing to impose needed mitigation measures because BlackRock has become too large to effectively regulate.
17. Subjecting BlackRock’s blanket authorization extension to an evidentiary hearing is the only effective means of enforcing the Federal Power Act.