PG&E; to Serve 800 McDonald’s Units

Outbidding 11 competing energy providers, Pacific Gas & Electric announced Monday a $180-million, multiyear contract with fast-food giant McDonald’s Corp. to supply electricity to more than 800 restaurants and regional facilities in California.

It is the latest in a flurry of deals between energy providers and commercial customers. At stake is the $20-billion California electricity market, which opens to competition as of Jan. 1.

“Signing up someone big prevents PG&E; Energy Services from getting run over. It gives them a marketing edge to work with a well-known corporation,” said Alan Lindstrom, vice president of the Redwood Securities Group in San Francisco.

PG&E; Energy Services, a subsidiary of the San Francisco-based PG&E;, will provide electricity at a guaranteed discount, said Diane Sable, an Energy Services spokeswoman. PG&E; declined to give details.

Of about 1,200 McDonald’s restaurants in the state, 400 will continue to get their power from municipal utilities. Most of the 500 McDonald’s restaurants in Southern California are now served primarily by Southern California Edison and San Diego Gas & Electric, Sable said.

Under the contract, PG&E; Energy Services will also provide other services to McDonald’s: consolidated billing, energy audits and access to real-time information about power usage.

“They [PG&E; Energy Services] were able to deliver energy savings and costs. They had the best overall package,” said Walt Riker, spokesman at McDonald’s, based in Oak Brooks, Ill. McDonald’s is also negotiating electricity contracts in Missouri, Michigan and Pennsylvania.

Energy providers nationwide are vying with one another in the huge California market. In recent months, energy providers have rolled out radio, TV and print ads in an effort to lure customers away from public utilities.

Last week, manufacturing giant TRW Inc. signed up to get electricity for its California plants from Montana Power Group of Butte, Mont. And PG&E; Energy Services signed with the California Electricity Aggregation Group, which includes manufacturer Owens-Brockway & Glass and dairy processor the Danish Creamery Assn.

Experts said that in power deregulation, differentiating the product--electricity--is difficult, so price is the main selling point.

“In the near future, price will be major factor. That’s what is important to customers,” said Michael Worms, research director at Credit Suisse First Boston in New York.