Exclusive report - U.S. lawmakers, including Senator Warren, urge energy regulator to reject AES's acquisition of electricity company

Paragraphs 5-16 provide additional details on the letter and regulatory background information.

Laila Kearney/Sumit Saha

Reuters, New York, September 29 - According to a letter obtained by Reuters, a group of U.S. lawmakers, including Senator Elizabeth Warren (Elizabeth Warren), this week urged the Federal Energy Regulatory Commission (link) to reject the proposed sale of the power company AES, valued at over $33 billion (link). The lawmakers said the deal could push up electricity rates and benefit data centers at the expense of utility customers.

U.S. electricity demand is being driven to record highs, mainly due to the surge in energy-intensive data centers, prompting a wave of mergers and acquisitions in the power sector. Some of these deals aim to privatize publicly traded utilities.

BlackRock's BLK.N Global Infrastructure Partners, together with Swedish private equity firm EQT EQTAB.ST and other investors, reached an agreement in March to acquire AES AES.N for about $33.4 billion (including debt), making it one of the largest power sector deals in recent years.

"As American families are facing record-high utility bills, private equity's entry into the utilities market has a significant impact on consumer energy costs," the letter dated September 28 to FERC Chair Laura Swett stated.

BlackRock (BlackRock) declined to comment. EQT has not yet responded to a request for comment.

In a statement issued via email, AES said the acquisition is not expected to affect regulated utility customers' electricity rates.

"Any costs associated with this acquisition—including any premiums paid or transaction-related fees—will not be borne by utility users, norwill they be the responsibility of the company’s power utility operations in Indiana and Ohio," the company added.

The sale of AES is still subject to approval by the Federal Energy Regulatory Commission (FERC), which is responsible for determining whether the transaction serves the public interest.

In their September 28 letter to FERC Chair Laura Swett, the lawmakers pointed out that the acquisition failed to pass the public interest test, partly because it could raise energy costs for households and businesses.

The letter was co-signed by bipartisan lawmakers including Indiana Democratic Representative André Carson, Republican Representative Victoria Spartz, Michigan Democratic Representative Rashida Tlaib, and Massachusetts Democratic Representative Ayanna Pressley.

As part of the acquisition, publicly traded AES will become a private company, while utility companies AES Indiana and AES Ohio will continue to operate as regulated subsidiaries.

The group stated that GIP typically targets internal rates of return of about 15% to 20%, which is roughly double the historical average return of regulated utilities, which stands at 10%. This would prompt the company to seek higher profits by raising electricity prices.

AES stated in public filings that the deal will not increase electricity rates for its utilities—which will remain subject to state regulation and operate locally—and that the acquisition will overall enhance its access to capital for investment in critical grid infrastructure.

The lawmakers noted that the acquisition could also increase the risk of “cross-subsidization” between BlackRock’s utility assets and its investments in data centers across the country.

The lawmakers argued that BlackRock’s growing ownership stakes in both electric infrastructure and data centers might prompt the company to make utility investments that primarily benefit related data centers, while shifting some costs to other customers.

“Even worse, if a data center fails, customers may still be forced to pay for unnecessary upgrades via increased utility bills,” the letter said.

AES shareholders have approved the deal, and Ohio regulators also approved the transfer of AES Ohio earlier this month. The parties said the deal is expected to be completed by late 2026 or early 2027, pending the remaining regulatory approvals, including from FERC.

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