Bloomberg News

TXU Agrees to Upgrade Power Grid to Allow Broadband

December 19, 2005

TXU Corp., the largest power company in Texas, will spend $150 million for Current Communications Group's technology which allows broadband services to be offered over existing transmission lines.

Dallas-based TXU's Electric Delivery unit, the sixth-largest in the country and the biggest in the state, signed an agreement with Current Communications of Germantown, Maryland, to build and operate the nation's first broadband-enabled ``Smart Grid,'' the companies said today in a statement.

TXU will become an equity holder in Current, whose existing shareholders include Cinergy Corp., Goldman Sachs Group Inc. (GS:US), Google Inc. (GOOG:US), The Hearst Corporation, and Liberty Media Corp.'s Liberty Associated Partners LP. Texas and other states are looking at legislation to encourage investment in broadband-over- power-line technology, also known as BPL.

``That's a very reasonable and intelligent way to enter the business,'' said analyst Albert Lin of American Technology Research in San Francisco in a phone interview. Until now, BPL service has been limited to pilot programs due to technological obstacles and uncertainty over regulation, he said.

Current will use the network to offer voice, video and high- speed Internet services to about 2 million homes and businesses in TXU's north Texas service territory. The new service is expected to begin next year, the companies said.

In 2004, 29 percent of North American households had broadband service, up from 19 percent in 2003, according to Forrester Research Inc. in Cambridge, Massachusetts.

The addition to the lines will also allow TXU to improve its electric delivery service, said Tom Baker, chief executive of the unit, in the statement. ``BPL will enable us to respond more quickly and efficiently to outages of all magnitudes.''

Shares of TXU fell $1.49, or 2.8 percent, to $52.09 in composite trading on the New York Stock Exchange.

To contact the reporter on this story: Eileen O'Grady in Houston at eogrady1@bloomberg.net.

To contact the editor responsible for this story: Tony Cox in Houston at acox3@bloomberg.net.


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