Last year, executives at asphalt manufacturer Lunday-Thagard Co. learned that faulty steam traps were costing the company $80,000 per year in unnecessary energy costs.

Since then, the South Gate company has not only replaced the traps which capture condensing water that can be used to heat industrial machinery but it has spent millions of dollars to install a more efficient boiler and extra insulation.

That might sound like overkill, but with today’s sharply higher fuel costs, companies are willing to spend far more than ever to conserve. Lunday-Thagard’s multiple steps are saving $1 million per year.

“We’re pretty excited about that,” said John Wasner, vice president of refining for the company.

Lunday-Thagard is far from the only company finding that energy savings that go beyond simply turning down the thermostat can result in big improvements to the bottom line.

Amid skyrocketing energy prices and an intensifying state effort to reduce greenhouse gas emissions, many manufacturers and other companies are making multi-million dollar investments to reduce energy consumption.

Companies looking to become more energy efficient are as diverse as Irvine-based fast-food restaurant chain owner El Pollo Loco Holdings Inc. and El Monte-based composites manufacturer M.C. Gill Corp.

Part of the impetus for companies to reduce their power usage is the high cost of energy. Since last August, the price of natural gas has nearly doubled to around $1 per therm. Many large industrial users, such as steel mills or oil refineries, use more than 10 million therms per year. Even smaller companies often spend several million dollars per year on energy.

Transitioning to energy-efficient technology can be costly and, as a financial investment, often takes years to pay off. But in the long-run, most converts say it is worth it from a financial standpoint.

And now amid efforts to reduce carbon emissions related to global warming, utilities across the state are under pressure to offer rebates and other incentives to companies that convert to energy-efficient technologies.

The financial incentives, combined with the increasing cost of doing nothing, is leading companies in a variety of sectors to reduce their energy consumption, said Adam Gottlieb, a spokesman for the California Energy Commission.

“There are a lot of industries in California that are implementing energy efficiencies,” he said.

Bad traps

Southern California Gas Co., the Los Angeles-based utility owned by Sempra Energy, along with the Los Angeles Department of Water and Power and Southern California Edison Co., offers business customers rebates on a variety of energy-saving measures, including refrigeration upgrades and energy-efficient roof replacements.

Executives at Lunday-Thagard have benefited from about $200,000 in rebates from the gas company. After attending an energy efficiency conference put on by Sempra, the company asked the gas company to examine its facilities and recommend energy-saving changes the company could make.

One key area where the asphalt maker was losing energy was through its bad steam traps. The company uses steam to heat the oil used in asphalt production. By replacing many of the 130 traps the company uses, it saved nearly $100,000 a year.

And installing the new traps cost Lunday-Thagard almost nothing since the gas company gave a $200 rebate for each trap, which only cost about $240.

“It’s a win-win situation somebody comes and tells me what’s wrong for free and the gas company” gives a rebate, Wasner said. “We’re a large enough customer that we get enough attention from the gas companies.”

Despite the rebates, Lunday-Thagard still had to spend “at least a couple million” dollars on new equipment, Wasner said.

Southern California Gas expects to distribute as much as $18 million this year in rebates and other incentives for commercial and industrial users. It is the nation’s largest natural gas utility, serving more than 20 million consumers in the state.

“We meet, we lend the technical expertise to them on their projects,” said Rachel Laing, a spokeswoman for San Diego-based Sempra. “We help them figure out what measures they can take to improve efficiency.”

M.C. Gill, for example, has used well over $100,000 in utility incentives to replace its oxidizers, which control toxic gases emitted during manufacturing. The company, which makes baggage compartment liners for passenger and freighter aircraft, is now saving more than $200,000 annually.

El Pollo Loco, likewise, has been making numerous improvements to its restaurants in an effort to reduce energy consumption and take advantage of rebates from the utilities.

The upgrades include new fryers, hot water heaters and other kitchen equipment, for a total investment of about $300,000 in the past year, said Dan Milojevich, director of facilities for the company.

The fryers, for example, use infrared technology rather than a traditional open flame, which cuts down on natural gas consumption. The devices are used to heat oil for frying tortilla chips and taco shells.

Energy efficiency is always on the company’s radar, Milojevich said, but it has taken on greater importance. “With energy costs going up as dramatically and steadily as it has there is a stronger and stronger push to look at new equipment. There’s always some type of equipment improvements,” he said.

Greenhouse gases

The upgrades may give the company a leg up as the state implements measures to reduce greenhouse gas emissions, which result from the use of coal, natural gas and other sources to make electricity.

In late 2006, state lawmakers approved a proposal to reduce California’s greenhouse gas emissions 25 percent by 2020. The specifics of the plan are still being ironed out, but companies that take early action to reduce energy use could earn credits under the program when it is implemented in the coming years.

Gottlieb, of the Energy Commission, said the desire to reduce greenhouse gases is a significant factor in the increase in companies seeking to improve their energy efficiency.

Laing said another major factor in the decision to cut energy consumption is the so-called “green movement” that has taken hold in recent years. “People now regard the environmental effects of what they do more seriously,” she said. “It’s no longer the domain of the hippies and the green types; it’s something that everybody is thinking about.”