The state has selected a San Diego-based company for at least a $38 million contract to take over and expand energy-efficiency programs currently overseen by Hawaiian Electric Co., the state's largest electric utility.

Science Applications International Corp. was chosen to run the Hawai'i Energy Efficiency Program, which is funded by electricity users and promotes energy-saving measures.

Science Applications is to assume programs developed by HECO as well as introduce new initiatives aimed at increasing energy efficiency while reducing electricity consumption and demand. HECO's program has involved a variety of informational and financial measures, including rebates for buying Energy Star appliances and installing solar hot-water heaters.

The PUC announced two years ago that it wanted to transfer the efficiency and conservation programs away from HECO, noting it wanted to remove a perceived conflict between the utilities' need to generate revenue and promotion of energy-saving measures, such as switching to compact fluorescent light bulbs.

"We think it's a very, very good idea," said Henry Curtis, executive director of Life of the Land, a nonprofit group following the state's energy issues. Curtis said he believed HECO wasn't aggressive as it could be in pursuing efficiency and conservation programs.

The program has been funded by HECO's rate payers, who will continue to pay a PUC-approved monthly charge on HECO bills. The so-called Public Benefits Fund Surcharge amounts to 0.1986 per kilowatt hour for residential customers and a slightly lower rate for business customers.

HECO's typical residential customer who uses 600 kilowatt hours a month pays about $1.19 to fund the program each month. The rate payers aren't alone in the U.S. in the funding, with about half the states in the country maintaining similar programs, according to the Pew Center on Global Climate Change.

Science Applications International said it will oversee design and implementation of the Hawaii Energy Efficiency program, customer incentives and rebates, new initiatives, and working with another state project, the Hawaii Clean Energy Initiative.

It said the program will concentrate on cost-effective efficiency measures where customer bill savings exceed program costs in the long run.

The program is in keeping with the Lingle administration's drive to lower reliance on imported oil and foster use of renewable energy sources.

"Improving and aggressively implementing energy-efficiency programs are a top priority of the commission, the state and of the entire country," Carl Caliboso, PUC chairman, said in a press statement.

"The selection of SAIC is a historic milestone in our energy-efficiency efforts. "

HECO spokesman Darren Pai said the company wants to work with Science Applications past the July 1 handoff.

"We want to work closely with SAIC to see continued implementation of programs," Pai said.

Science Applications was awarded a multiyear contract that runs through 2013. It has a value for the first two years of $38 million.

"This new framework for energy efficiency will bring about higher overall energy savings and improve the cost-effectiveness of administering energy-efficiency programs," said J.T. Grumski, company senior vice president.

"It will also spur the introduction of innovative efficiency programs and increase customer choice and participation in energy-efficiency programs, helping residents of Hawai'i save on their electricity bills."

Science Applications is a Fortune 500 company that already operates several offices in Hawai'i. The company employs about 45,000 workers and its clients included the U.S Department of Defense, the intelligence community, the U.S. Department of Homeland Security and other government agencies.