Businesses Merging Energy and Environmental Functions : Pollution: Reducing contaminants often goes hand in hand with saving on costs through new production techniques, firms are discovering.

SAN DIEGO —  When several competitors escaped Southern California’s tough environmental regulations by moving their plants to Mexico during the late 1980s, Larry Allen stayed behind and experimented with new production techniques that are likely to cut both pollution and his company’s energy bill.

Allen, owner of Placentia-based L&L; Shutters, was driven by South Coast Air Quality Management District regulations that severely restricted the use of solvent-based paints and coatings, which are major contributors to smog.

“We’d gotten the impression that we had to (move out of state) in order to survive,” said Allen, who now uses some water-based pre-coatings that meet air quality standards. “But it’s now looking like we’re going to be able to continue making shutters and furniture in California.”

Energy experts believe that thousands of Southern California companies could make similar advances by harnessing new technologies that are designed to trim energy use and, as a byproduct, lessen environmental pollution.

“A lot of energy and environment issues are the two sides of the same coin,” said Martin Nelson, energy coordinator for the U.S. Postal Service’s San Diego division. “If your boiler is out of compliance on (environmental) emissions, the way to correct it is to do a boiler tuneup, which is energy efficiency.”

Martin and energy managers from across the country are conducting a three-day energy and environment seminar that began Wednesday at the Holiday Inn at Montgomery Field in San Diego. The seminar is sponsored by the San Diego chapter of the Assn. of Energy Engineers.

“Five years ago, it was probably acceptable” for energy managers to ignore environmental regulations, Martin said. “But it can’t be that way any longer. Now, I’m an energy manager . . . but I’m also dealing with the environment.”

Environmentalists welcome the trend in industry toward a consolidation of energy and environmental affairs.

“We see a lot of win/win situations” because energy efficiency generates noticeable environmental gains, said Ralph Cavanagh, the San Francisco-based director of energy programs for the Natural Resources Defense Council.

“Everyone’s notion . . . has been that there’s this inevitable trade-off between a healthy economy and the environment,” Cavanagh said. “But (efficient use of energy) proves the contrary.”

Increased energy awareness in California is driven by the governor’s mandate that 75% of the state’s future energy needs be filled through improved energy efficiency rather than through the construction of new power plants.

That mandate has prompted a sea of changes for the gas and electric utility industry.

“We used to reward (utilities) for building power plants and selling megawatts,” said Michael Shames, executive director of Utility Consumers Action Network, a San Diego-based consumer group. “Now, we’re (rewarding) them, in Amory Lovins’ word, through ‘negawatts,’ by how much they reduce (electric) demand.”

While utilities, consumer groups and the state Public Utilities Commission are at odds on how to compensate utilities that successfully trim energy demand, the new ethic of energy efficiency seems to have hit home.

San Diego Gas & Electric, for example, estimates that it will need 4,557 megawatts of additional electric power during the current decade to sate growing consumer demand. SDG&E; will build new generating capacity, but the utility intends to use conservation and energy efficiency programs to account for 640 megawatts of demand.

Southern California Edison estimates that it will need 2,900 megawatts of power by the year 2000 to meet increased customer demand. However, all but 700 megawatts will be achieved through conservation and increased energy efficiency, said Edison Vice President Kenneth Gudger.

Utilities will cut demand partly by retrofitting their own inefficient power plants--which will reduce power-plant emissions.

But they also are pushing business customers to “improve their competitive situations through new technologies” that are energy-efficient and environmentally friendly, said Larry Baebler, SDG&E;’s marketing programs manager.

Most Californians “think energy efficiency means a compact fluorescent bulb in their home,” said Kenneth Gudger, Edison’s vice president of energy efficiency and market services. But commercial customers will produce 40% of the energy savings predicted by Edison through the end of this decade. Industrial customers will account for an additional 20%. Residential customers will account for just 15%.

SDG&E; already has subsidized the replacement of light bulbs and ballast for 600 industrial and commercial customers. SDG&E; will use electrical power freed by its lighting program to help meet increased consumer demand elsewhere in its system.

Companies can produce dramatic savings simply by turning to more-efficient lighting schemes.

The Postal Service used an SDG&E; lighting subsidy to cut energy use in San Diego County by 100 megawatts. “SDG&E; paid for about 50% to 70% of my costs,” Nelson said. “So that retrofit saved me money, (and) is still saving me money. . . . Paying attention to energy and the environment is good business sense.”

Utilities are also tackling more isolated environmental and energy problems.

L&L; Shutters, for example, learned about water-based coatings from a Southern California Edison marketing representative.

Edison “knocked on our door to see if they could save us energy through (more efficient) heating and lighting,” Allen said. “But when (the Edison employee) saw our spray booths, she said there was a better technology available.”

Water-based undercoatings now in use slashed solvent use to 0.61 pounds per gallon of paint, down from 3.47 pounds, Allen said. L&L; Shutters is working with Edison to find replacements for solvent-based top coatings.

And, while water-based coatings remain slightly more expensive than solvent-based paints, Allen believes that costs eventually will fall in line. “I want to do things right,” Allen said. “I’m just a small part of (Southern California’s) pollution problem, but there are a lot of little pieces out there that add up.”

Utilities have an obvious interest in helping customers solve thorny environmental problems.

“We’re trying to protect our (customer base),” said Ruby Irigoyen, manager of Edison’s Customer Technology Application Center in Irwindale. “What we’re trying to do is show our customers that there are options other than moving out of state. We’re giving them technical solutions (to environmental problems) that can let them stay here.”

Similarly, Pacific Gas & Electric is using a new, 30,000-square-foot Pacific Energy Center to teach architects, engineers and designers about “the huge potential savings that’s available by pushing conservation and energy efficiency.”