By giving utilities detailed information about energy use throughout the day, the device could allow utilities to charge different prices depending on how much it actually costs to provide electricity. During peaks in demand, such as hot summer afternoons, utilities rely on generators that can quickly ramp-up to meet the demand. These tend to be more polluting, less efficient, and more expensive to operate than ordinary generators. If utilities can charge much higher prices at these peak times, they can discourage energy use and reduce demand, reducing the need to use these generators. But almost all homes in the United States are charged a flat rate because utilities haven't installed the equipment needed to track energy use.

With a system like the one Tendril describes, utilities that charge nine cents per kilowatt-hour during ordinary times might charge a much higher price--say 75 cents--when demand peaks, says Harvey Michaels, an energy efficiency scientist and lecturer at MIT. Consumers could save money by using energy-intensive appliances when prices are lower, and the shift in demand could significantly reduce costs for utilities. Indeed, if pricing schemes could be used to redistribute demand equally throughout the day, no new electricity-generating capacity would need to be installed for as long as 28 years, according to an article appearing soon in the new journal Service Science by Richard Larson, a professor of civil and environmental engineering at MIT.

Tendril also has developed a group of devices, including smart outlets and thermostats, that make it possible to monitor and control the energy use of individual appliances, heaters, and air conditioners. With information from these, as well as data about price and electricity sources from the utility, a homeowner, using Web- or iPhone-based applications from Tendril, could program these devices to run only when prices are below a certain level, or when there is a certain amount of renewable electricity available on the grid.