The deregulation of energy utilities is happening everywhere. If it hasn’t come to where you live yet, chances are it will soon. That’s why we all sat up and took notice this summer when residents of San Diego, California, one of the first areas of the country to become fully deregulated, saw their electricity bills more than double.

There is no single approach to the process of deregulation. Each state has options to structure things differently, and hopefully we’ll all learn from the disastrous experience in San Diego. The challenge and the process are complex and many layered. Yet in all the complexity, one thing is certain. New technologies such as residential gateways are going to be a key part of the solution.

Fundamentally, we’re facing the classic case of supply and demand. Deregulation exposes energy consumers to true energy costs and the vagaries of the open market. Recent news reports have also highlighted an aging and overburdened infrastructure for the supply and distribution of electricity. Current consumption, boosted by the high-technology industry, has outpaced power generation development. And analysts predict our demand for electricity will continue to rise at a fairly rapid rate. The result is that natural events such as a surge in temperature can easily trigger massive shortages and price variations.

Residential Gateway Solution

To meet future energy demand, more power plants are planned, renewable resources are being researched, and progress is being made on better methods for storing and transmitting electrical power. But all this takes time and considerable financial investment. Additionally, the ecological impact of generating new power supplies is an issue that must be addressed. Thus, most experts agree that even as we improve our ability to create and distribute energy, we also need to become more efficient in our use of it. If we don’t, the costs will be high, in both environmental and economic terms.

The residential gateway is poised to have a huge positive impact, both in the implementation of deregulation and in meeting the larger energy supply challenge. Along with the smart meter, the residential gateway plays an essential role in allowing both energy utility companies and their customers to better manage energy use. Its precise and timely consumption data enable a smoother supply and demand response. It also enables the shaping of a more informed, predictable and controlled demand, which will mitigate the need for new power plants, thus lowering the cost of generation. This bolstering of the efficient management of energy resources will in turn have a significant impact on our environment.

Informed Energy Use

Do you know which of your appliances is the biggest energy hog? How much electricity does it take to leave the fountain on in the garden 24/7? To leave the hot tub warmed up? To leave the computer on all day? At what point do space heaters become more efficient than heating the entire house?

Systems generally work most efficiently when some kind of feedback loop helps them stay on target. The current feedback you get from your monthly electric utility bill probably doesn’t supply the level of detail that would facilitate or encourage you to change your daily habits.

Electricity providers will use residential gateways to enable value-added e-services, such as the ability to remotely monitor and control lighting or temperatures. But because they’ll already receive input from every electrical device or system in your home, residential gateways can also provide the information link you need to personally and effectively manage your energy use.

Lower Costs with Tiered Pricing

Most consumers aren’t motivated to alter energy use when the difference is only a few pennies or a small fraction of the bill. But multiply that fraction times several thousand homes during a peak period, and you’ve got enough increased consumption to trigger a price increase of 50 percent or more. Experts analyzing the San Diego energy crunch have estimated that if overall usage had been just 10 percent lower during the period of record temperatures and increased demand, the rate hike crisis could have been averted. Even worse than a simple rate increase, in some cases, are the costs and consequences associated with an unplanned outage in a typical electricity-dependent home or business.

To avoid costly blackouts and brownouts, as well as the unwelcome price spikes that result from having to buy when electricity is at a premium on the market, pundits predict that utilities under deregulation will increase their offering of management incentives such as tiered pricing. Tiered pricing plans set thresholds of energy consumption above which prices can increase dramatically. And like long-distance telephone rates, electricity prices are highest when demand is greatest, so the plans usually include a time element too.

A tiered pricing plan can actually save you money, as long as you have access to reliable information tools that allow you to take advantage of it. What you need is detailed consumption data, available on a frequent or real-time basis, and a warning system to let you know when your use approaches cost threshold levels.

Smart Home Energy Manager

At its most sophisticated, the residential gateway plays an even larger role in the efficient management of your energy consumption and budget. It can be programmed to make sure your usage levels stay under cost thresholds without compromising comfort or essential functions. Before a peak level is reached, the gateway can raise the air conditioning thermostat by three degrees, shut off the pool pump, and ask you politely if you would consider waiting until after 6 p.m. to use the clothes dryer.

Because it has access to all devices and appliances in your home, a smart gateway can apply pre-programmed guidelines to prioritize, cycle, and alter set-points to bring energy output down to pre-established levels. It can also send you warnings or alerts, giving you the option to override the system and make your own choices about what to do.

The residential gateway in your future isn’t just for fun and convenient new e-services. It will be a hard-working, practical energy manager too, an indispensable part of your household.