Just a few years back, electricity was bought and sold in contracts that covered months or even years. Then came PJM Interconnection. In 1998, the Norristown (Pa.) company set up the first online marketplace for electricity. Forget about months: Prices are posted on the system every few seconds, and companies can change the power they buy on the fly.

That's changing not just the way electricity is bought, but the way it's used. Energy-intensive companies that once simply ran full-tilt, not knowing how much power cost from one minute to the next, can now cut back their production at peak times when rates soar. Eventually, the online marketplace could even let families and small businesses--their appliances linked to the Web around the clock--control energy consumption automatically, based on the price of electricity. Now that would give real power to the people.

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