An experiment giving 150 homes control over what electricity they use tended to level out peaks and valleys in electrical demand. It also saved consumers an average of 10% on their monthly bills, according to a two-year study conducted by the Department of Energy and Pacific Northwest National Lab.

Eliminating peaks in demand is a vital change in power consumption because utilities must build generating capacity to meet those peaks. In many cases, extra power plants are built to stand idle until a known peak use periods approach. Lowering peaks, reducing their number or minimizing them translates into fewer new power plants and a large savings to the economy, said Ron Ambrosio, global research leader for IBM's Energy & Utilities unit. IBM supplied software for the experiment.

The experiment allowed consumers to buy cheaper power during off peak periods and avoid buying power during peak periods, when the actual cost of generation is highest. The experiment in that sense did not reflect the real world, where consumers buy electricity at one fixed price, regardless of its cost of generation.

Rob Pratt, manager of the experiment at Pacific Northwest National Laboratory in Richland, Wash., said in a teleconference Wednesday that added technology to consumer appliances, heating systems and water heaters would allow them to be configured to bid for power automatically. Consumers who wanted cheaper power would hear their washers and dryers turn on in the middle of the night, when consumption is low. Consumers who want to keep the house at 80 degrees during a cold snap would have to pay the price of power when demand is high.

Such decisions, spread across thousands of households, tend to level out peak demand, a move that's essential to slowing global warming and keeping electricity available and relatively inexpensive, Ambrosio said.

In the experiment, peak demand "was reduced 15%," said Pratt. In a period of severe constraint [such as a hot spell, generating a high demand for air conditioning], demand was cut to 50% of what it was normally by households avoiding unnecessary use of electricity, he added.

In addition, a circuit board added to appliances can recognize in a fraction of a second that demand exceeds supply and shut down any non-essential uses in a household. In a clothes dryer, the drum might keep rotating but the heating element shut down temporarily. That capability acts "as a shock absorber," reducing demand when the electrical grid is in danger of a black out, Pratt said.

"We've had five major black outs in 40 years, three in the last nine years. They've cost the economy billions," he warned. A black out that started in Ohio in 2003 spread to New York City in nine seconds, shutting everything down.

Households would retain control over their heating and cooling systems and appliances through a user interface that lets them pre-set the price level at which they wish to use power. If a load of wash, often done in the middle of the night, needed to be done right away, the consumer could dial up the price he's willing to pay. If lowering the electrical bill had become a concern, the consumer could dial the price downward.

Such two-way communication would be a far cry from the one-way delivery system currently in use throughout much of the United States. In effect, appliances would bid for power through a periodic signal to the power grid, transmitted over the Internet. They would get power that power when it became available.

"We could save $70 billion by offsetting the cost of new [power generation] infrastructure" by enabling such consumer decision making, said Pratt. Consumers would not be forced to stick with a pre-chosen level of consumption but would retain the right to reset their preferences based on household needs.

But much will have to change before such a flexible system can be put in place. "Our normal appliances, the white goods, are dumb as stones when it comes to electrical grid intelligence," Pratt said.

California and specific locations in other states are starting to require two-way communications in meters. Appliance manufacturers would have to add electronics to the management controls of their products, Ambrosio added.

Retrofitting heating systems and water heaters might be a possibility, but installing new controls on old appliances is probably impractical. "The cost of an appliance serviceman visiting the home is probably prohibitive," Pratt said.

In addition, the regulatory climate would have to change to reward utilities for trying to level out peaks in demand. Utilities currently earn a higher rate of return from public utility commissions when they build new power plants, Pratt said.

Jerry Brous, a 67-year-old homeowner in Sequim, Wash., was a participant in the study and said his household found power available at a price it was willing to pay "99% of the time." He said adjustments were needed to the pre-set price level only occasionally and could be accomplished by visiting a computer that had a Web interface to the power grid system.

Ambrosio said consumers averaged a 10% savings by managing the price of power they wanted to buy for particular appliances and uses.