Gas, Electric Firms to Help Irvine Save Energy : Utilities: Improvements will be made at no cost to ratepayers. Move is seen as an answer to deregulation.

In a deal that could become typical as California’s utilities are increasingly immersed in the competitive world of deregulation, Southern California Gas Co. and Southern California Edison Co. have signed an agreement with the city of Irvine to finance energy efficiency improvements for city facilities at no cost--or risk--to Irvine residents.

The pact goes far beyond existing utility programs that offer rebates to customers that invest in more efficient lighting or other energy-saving improvements.

In the Irvine deal, the utilities will oversee and finance a broad range of measures, such as modifying cooling, lighting, ventilation and energy control systems.

Details of the arrangement were explained here Sunday at a conference at the Aspen Institute arranged by John B. Phillips, executive director of the California Energy Coalition, a Laguna Beach-based group that includes city governments and energy-related businesses.

The idea, said Phillips, who orchestrated the Irvine deal, was “How do you harvest large amounts of energy efficiency, not just light bulb by light bulb?”

Under the plan, the utilities will front $300,000 to install energy-saving equipment at Irvine’s City Hall, which will result in lower energy costs. However, the city will continue to pay what its typical utility bill has been, with the remaining money going back to the utilities to pay for the equipment. In five years, the financing will be paid off and the city’s utility bills will be permanently reduced.

“The utilities are guaranteeing that it works,” Irvine Mayor Michael Ward said. “If it doesn’t work, it doesn’t cost the city of Irvine anything. If it works, we save money.”

The Gas Co. and Edison also agreed Sunday to negotiate a similar deal with the city of Santa Monica. Santa Monica Mayor Judy Abdo said she hopes that a deal can be worked out quickly to help finance energy efficiency improvements as part of the city’s rebuilding efforts after the Northridge quake.

What’s new here is that utilities would act as general contractors and financiers, instead of leaving customers to devise their own energy efficiency plans.

“The customers don’t have to understand energy studies in engineering to do this,” said Warren I. Mitchell, president of Southern California Gas Co. “And the customer can be a city, or various industrial customers wrapped together.”

California’s utilities have been looking to expand the services they sell in an increasingly deregulated market.

That effort will be heightened for California’s electric utilities if the state Public Utilities Commission adopts a proposal to let all California consumers choose their electric company by 2002. That proposal, announced Wednesday, could be adopted this fall.

Indeed, one big goal of the utilities in financing deals like the one with Irvine is to retain customers who might otherwise go shopping in the deregulative market for their energy needs.

But this could also bring in new business for the utilities.

Robert H. Bridenbecker, Edison vice president of customer solutions, estimates that a $2-billion to $4-billion market in energy conservation services exists in Southern California alone.

Edison hopes to market these and other services outside its traditional service territory, Bridenbecker says.

Bridenbecker says Edison is making a similar offer to Taco Bell as part of the attempt to keep the company from moving its Orange County corporate headquarters--and 1,000 jobs--out of California.

The California executives were in Aspen to sign an accord with two Swedish mayors and their utility companies to exchange information about the results of the Irvine deal, as well as other energy conservation measures they will launch.