Change Is in the Wind--and the Sun : Energy: Conservation and new technologies will burgeon.

Two and a half years ago, Southern California Edison and San Diego Gas & Electric Co. announced an agreement to merge in order to better serve their combined 12 1/2 million customers. Now after extensive proceedings, the California Public Utilities Commission has said no.

We are, of course, disappointed. We believe that the proposed merger would have meant nearly $2 billion in customer savings, improved air quality throughout Southern California and enhanced diversity and reliability in energy supply.

Weighing all the issues, however, including strong San Diego opposition and the views of our wholesale customers, and operating under the provisions of new state merger law, the commission concluded that the merger should be denied.

Now it is time to move on. The energy needs and challenges facing Southern California remain large. Southern California is one interdependent economic region. Accordingly, Edison is committed to working with San Diego Gas & Electric Co., municipal utilities--big and small--and the Mexican national utility, CFE, to ensure that the region’s electrical needs are well met. To do this means:

--Emphasizing energy efficiency and conservation. Much of the region’s future electricity needs can be met through innovative conservation programs and greater energy efficiency.

--Relying on technologies that improve air quality, such as refurbishing our older gas-fired units to reduce air emissions and using renewable energy technologies, such as geothermal, solar and wind, whenever they are economically competitive.

--Increasing electrification of the transportation system to clean up the environment. Light- and heavy-rail transit, using electricity, is already successful, as the new Blue Line between Los Angeles and Long Beach shows. Even greater use of electric transportation will be here soon, particularly commercially available electric vehicles that produce no smog. Edison is pioneering this effort, and broad public support is growing.

--Widespread use of the new technologies on display at our Customer Technology Application Center in Irwindale. These are technologies that allow Edison to help small and medium-sized businesses meet air-quality regulations while improving production, thereby saving jobs and the tax base.

--Greater emphasis on research and development. Recently, Edison and Texas Instruments announced a solar-technology breakthrough. A relatively low-cost solar photovoltaic cell has the potential to provide one-third of an average home’s electricity using a 10-by-10 foot rooftop panel. More breakthroughs that use energy wisely and creatively are coming.

In addition to these important tasks, we will continue to be a responsible, forward-looking employer and corporate citizen. As a company born and bred here, we are dedicated to the long-term well-being of Southern California. With the merger behind us, we are ready for new challenges.