TXU Corp., Texas's largest utility, said on Monday it was teaming up with Current Communications Group to offer high-speed Internet access over power lines to about 2 million homes and businesses in the state.
The companies also said they plan to use Current's broadband over power line (BPL) technology to allow TXU to more actively monitor and manage its electrical grid.
TXU agreed to pay Current about $150 million over 10 years to use the "smart grid" capabilities of Current's BPL network. the companies said in a statement. TXU said the payments will not affect its previously disclosed financial forecasts.
Privately-held BPL provider Current, whose investors include Google Inc. and U.S. utility Cinergy Corp., will provide broadband and wireless Internet services to TXU's customers under the agreement.
TXU will also become an equity holder in Current as part of the agreement.
The companies plan to start deploying the broadband network in 2006.
Broadband service over power lines has been highly touted by equipment makers and federal regulators as a possible competitor to cable and telephone services that handle almost all of the roughly 40 million U.S. residential broadband connections.
But until recently U.S. utilities interested in the service have faced various financial and technical problems. The signals used to carry data over electrical lines can cause interference with radio equipment, and can travel only a short distance before weakening, requiring repeaters in many areas.
Some analysts have also said that most utilities don't have the skills to challenge companies that already have years of experience in the fiercely competitive Internet service business.
Nevertheless several top U.S. power companies, including Cinergy and CenterPoint Energy Inc., have recently made investments in BPL. Aside from the draw of additional revenue from providing Internet services, the companies have been attracted by the possibility of cost savings from enhancement of their electrical grids.
TXU said that it hopes to increase network reliability and power quality and efficiently implement automated meter reading through its partnership with Current. It said the technology should also help it prevent, detect and restore customer outages more effectively.
TXU's electric transmission unit, TXU Electric Delivery, provides power to over 2.9 million electric delivery points.
Copyright 2005 Reuters Limited.
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