Xcel Energy agrees to $80 million contract with Anterix

Xcel Energy—an electric and natural-gas utility that operates in eight states—has agreed to pay $80 million for the right to operate a private broadband network supporting smart-grid applications for at least 20 years on 900 MHz broadband spectrum licensed to Anterix, the companies announced this week.

Anterix CEO Rob Schwartz said that the deal gives Xcel Energy exclusive access to the 6 MHz of broadband spectrum licensed to Anterix (936.5-939.5 MHz, paired with 897.5-900.5 MHz) throughout the utility’s eight-state territory. Minneapolis-based Xcel Energy boasts 3.7 million electricity customers and 2.1 million natural-gas customers in Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin.

This deal is the first large publicly announced agreement for Anterix in more than a year. Schwartz said that Xcel Energy is viewed as an innovative leader in the utility industry, which could help Anterix finalize more contracts in the future.

“Because of their industry leadership, we expect this to really have a big impact on other utilities’ decision making,” Schwartz said during an interview with IWCE’s Urgent Communications.

“For us, the first utilities were kind of the pioneers, demonstrating the value [of leveraging spectrum licensed to Anterix]. Now that we’re up to our fourth customer, we really see it as an inflection point, where not moving forward [with private broadband is perceived as a risk. With a risk-averse audience like utilities, that’s something we’re really excited about.”

After conducting limited pilot deployments that began last year, Xcel Energy now plans to deploy 4G LTE on the 900 MHz to provide broadband communications for personnel in the field and to support advanced metering infrastructure (AMI), Schwartz said.

Tim Peterson, Xcel Energy senior vice president and chief technology officer (CTO), noted the important role that broadband communications will play in the utility’s future.

“Xcel Energy is focused on delivering reliable, affordable and sustainable energy to the states, the communities and the customers we serve,” Peterson said in a prepared statement. “Our commitment to a clean-energy future requires a modern grid capable of integrating a significant influx of distributed, renewable energy resources. Secure, robust broadband communications is a critical element of the modern grid.”

Under the agreement, Xcel Energy will pay $80 million to Anterix for exclusive access for 20 years, and the deal includes two 10-year options that the utility can exercise to extend usage of the spectrum.

Schwartz said that Anterix already has cleared most of the spectrum for Xcel Energy to use, but the utility will access the airwaves only as it deploys its private broadband network in stages.

“We’re going to be delivering the spectrum over the next several years—the vast majority of it will be by 2024,” Schwartz said during the interview with IWCE’s Urgent Communications. “The payments come in with the delivery of spectrum.

“We’re delivering it when they need it. [Utilities] don’t want to be paying for things that they’re not using in the near term, so we deliver it over a reasonable period of time, for their benefit.”

During a call with financial analysts on Monday, Anterix CFO Timothy Gray said company officials expect Xcel Energy to pay about $30 million by mid-2023 and another $35 million by the middle of 2024, with the remaining amount—about $15 million—being paid as spectrum is needed between 2024 and 2028.

Anterix has signed three other long-term contracts with utilities, with the last previous deal being in September 2021 with Evergy, which agreed to pay $30.2 million for its 20-year lease of spectrum licensed to Anterix. Evergy recently announced that it has selected Ericsson to build its private broadband network.

Ameren was the first utility to sign a long-term deal with Anterix—a $48 million agreement signed in January 2021—and quickly was followed by a San Diego Gas & Electric deal in February 2021 worth $50 million.

Schwartz noted that an Xcel Energy senior executive will join the Utility Strategic Advisory Board, and the utility participated in the recent Utility Broadband Alliance (UBBA) event conducted in California.