The connectivity to accomplish those feats will be provided by CellNet's multilevel wireless network.

The startup's business model exploits a deregulation trend that started in the United Kingdom and has spread to 18 states in the United States. In effect, Utility.com will be a broker of kilowatt-hours (kWh), buying energy from generating stations and selling it to consumers. Customers will access a Web site to monitor their usage and select options for reducing consumption.

At the heart of Utility.com's strategy is the mechanism for the buying and selling of power — an automated, hour-by-hour energy market much like a computerized stock market.

Power-generating capacity in California is largely divested from the electric-utility companies. Increasingly, the right to sell power to individual homes and to businesses is also separated from the old utilities, leaving them primarily in the business of owning and maintaining the power-distribution network.

In the new system, as before, energy flows from the generators to the consumers through the power grid. But in parallel with the actual delivery of the electricity, the ownership of the kWh is merchandised through an Automated Power Exchange (APX). Every hour, utility companies such as Utility.com bid electronically to the APX for the power they will be using in the next hour. (There are also provisions for purchasing power a day in advance, or via long-term contract, to meet predictable needs.)

At the same time, generating stations offer blocks of power for the next hour. The APX resolves the bids and quotes and determines what price the utility will be charged for the power its customers consume. At the end of the month, records from power-generating stations and electric-meter readings from customers are brought together. Accounts are settled, making sure that all the kWh are accounted for and that each utility is charged appropriately, based on how much was consumed in each hour of the previous month.

There is a substantial difference in cost between energy generated during peak hours and energy generated off-peak. Beyond supply-and-demand dynamics, that's partly because more expensive, peaking generation facilities must be brought on line during periods of high usage.

By the same token, energy purchased under a longer-term contract — or even ordered a day in advance — can be significantly less expensive than power bought via bid as it is needed.

Hence, a utility's ability to anticipate its peak needs can save it a great deal of money. Further, if a utility could actually shut down some of its customers' loads during peak hours — with their prior approval, of course — the savings could be even more substantial.

Chris King, president and chief executive of Utility.com, estimated that the savings passed along to a consumer could amount to 15 percent on a monthly electric bill.

That is where CellNet comes into the picture. CellNet has been rapidly building a hybrid network that connects every electric meter in a geographic region to a central Oracle database. By having its customers equip themselves with CellNet electric meters, Utility.com can collect hourly data on every house it serves, vastly improving its ability to estimate demand and, just as important, its ability to demonstrate actual demand figures during the monthly settlement process.

"There are other meter-reading service providers, and we are looking at them for some regions," said Utility.com chief operating officer Junona Jonas. "But our preference is to work with CellNet."

CellNet's network comprises several distinct layers. At the individual consumer's home, CellNet provides what it calls Communications Modules — intelligent, two-way 915- to 928-MHz radios — integrated into household electric meters. The modules use direct-sequence spread-spectrum techniques to upload data automatically at a programmable interval — as often as every five minutes, but in the case of Utility.com about once an hour.

The modules communicate with microcellular base stations, called MicroCell Controllers, that act as hubs for all Communications Modules within about a quarter-mile radius. The MicroCell Controllers are in turn networked into a wide-area net (WAN) by CellMaster base stations, each of which can handle up to a couple of hundred MicroCell Controllers.

Thus, CellNet can spread a microcellular data network over a very large geographic area with a relatively small amount of fixed equipment.

The CellMaster base stations communicate via land line or microwave link to an array of Sun workstations. The workstation array controls the network, receives and organizes the incoming data and stores relevant data in an Oracle database. Views of the database are provided via a gateway to such CellNet clients as Utility.com.

Denise Rushing, vice president of sales and marketing at CellNet, said the remote meter-reading wireless networks already are in use in 2 million homes, with 4 million expected by 2000.

While collecting hourly data will by itself give Utility.com a market advantage, the company doesn't intend to stop there. "Measuring accurately is great, but it's even better if you can control some of your customers' demand during peak periods by turning off things they don't need," said Jonas. To do that, Utility.com will exploit the bidirectional capability of CellNet's wireless network.

Smart thermostat

Customers who request it will be given a smart thermostat — developed for Utility.com by Scientific Atlanta — to retrofit to their heating and cooling system, Jonas explained. The thermostat not only offers the usual time-based programming features for a microcomputer-controlled unit, but it also serves as a two-way Communications Module for CellNet's local network.

Thus, as demand builds during the day, Utility.com will be able to query customer-profile information and, if the customer has approved, send a message to the thermostat to reduce its demand — by shutting down the air conditioning, for instance, or turning down the set point for the heat. Such relatively minor changes, coming at peak periods, when the unit cost of energy is the highest, have great leverage over Utility.com's average energy cost, allowing it to both pay for its use of the CellNet network and pass savings on to customers.

In the future, Utility.com could extend the concept to other major loads in homes and small businesses, Utility.com's King said. The relatively low cost of CellNet-compatible transceivers would make control of individual appliances practical in some cases.

The company also sees a big opportunity for expansion as electric-utility deregulation spreads. Today, California, Massachusetts, Rhode Island and Pennsylvania are the immediate targets, but King and Jonas said they expect deregulation to spread through the United States. And the European Union and the government of Australia both have mandated power deregulation, opening the door to international business down the road.

CellNet will help Utility.com work with independent software vendors to allow the development of third-party tools for advanced billing services and special device-control applications. But Rushing stressed that CellNet does not hold a majority investment in the new business.