SACRAMENTO, CALIF. -- For 15 years, the residents of Sacramento County were hooked on nuclear power. They gave it up cold turkey in 1989, voting to shut down the balky, unreliable nuclear power plant known as Rancho Seco that was crippling their publicly owned utility and driving up their electricity bills.

Now the Sacramento Municipal Utility District (SMUD) is not only nuclear-free but apparently thriving as a laboratory for experiments in energy conservation and the use of renewable fuels. With nuclear power, SMUD lost $575 million in 1989. Without nuclear power, the utility today is making money.

SMUD provides electricity for nearly 500,000 customers without burning any coal or oil. It is replacing the nuclear plant's output with highly efficient, dual-purpose natural gas units. Future capacity expansions are to come entirely from conservation -- no more power plants are to be built. Solar power and wind turbines are an increasing part of the utility's energy mix.

"There is life after nuclear power, and it's not a bad life," said SMUD general manager S. David Freeman. "The lifestyle here has not changed, except there's no more fear of the Ranch," the abandoned Rancho Seco plant.

In other parts of the country, where coal and nuclear power provide most of the electricity and utilities operate in conventional ways, Freeman is regarded as an extremist, a "tree hugger" with unrealistic ideas. But in California, which has a statewide commitment to energy conservation and renewable fuel sources, his outlook is close to the mainstream.

The voter rebellion that scrapped the nuclear plant -- a rebellion that predated Freeman's arrival -- gave him the opportunity to test his ideas in the real world.

Rancho Seco generated 890 megawatts of power, nearly half of SMUD's total demand. But breakdowns and maintenance problems often prevented the plant from operating, forcing SMUD to buy power from other utilities and pay high maintenance bills. By 1989, the consumers had had enough. Unlike the customers of most nuclear utilities, the residents here own the company and elect the directors, so when they voted to terminate Rancho Seco, they got their way.

"The decision here was an economic one. It wasn't based on a fear of nuclear power," said Freeman, who was hired six months after the vote to lead SMUD into its new era. Noting that privately owned utilities in California and Oregon have recently made similar decisions to abandon nuclear plants rather than continue paying for their upkeep, Freeman said, "It was the financial vice presidents, not Ralph Nader and Jane Fonda, who killed nuclear power."

No U.S. utility, public or private, has ordered a nuclear plant since 1978. More nuclear plants are being retired than built, presenting their owners with the same question that faced SMUD: Where is the replacement power going to come from?

In California, because of extremely tight environmental controls, it is now all but impossible to build a power plant fueled by coal, oil or nuclear reactors. That leaves natural gas, renewable fuels such as solar energy and hydroelectric power, and the one resource to which all California utilities are committed: conservation and efficiency.

If customers use less electricity, utilities do not need to generate more, even as the population increases and households acquire more electric appliances. Money that might have been spent to add generating capacity is being spent to help consumers buy more efficient refrigerators, lights and air conditioners.

This state's utilities "have all unilaterally disarmed," Freeman said. "We have accepted the revolution. We don't build power plants."

SMUD, which faced the need to act quickly because so much of its capacity was eliminated by the closing of Rancho Seco, is spending $51.7 million this year -- about 8 percent of total revenue -- on energy efficiency.

"We look at it as buying power from our customers," Freeman said. "Conservation is the most reliable source {of power}, and the price never goes up."

The concept of meeting electricity demand by paying for reduced consumption rather than increased output -- known in the business as "negawatts" -- has been slow to take hold in many states because traditional utility regulation encourages electric companies to produce and sell more, not less. California and a few other states have changed their rules to permit utilities to raise rates as they reduce demand, thus maintaining their profit levels while selling less. But SMUD, as a publicly owned utility not subject to such state regulation, did not have to wait.

According to SMUD efficiency programs manager Gail Hullibarger, the utility's efficiency budget covers a wide variety of programs, each aimed at modest improvements in efficiency and small reductions in demand. SMUD's annual report calls it "a plan to build a 700-megawatt power plant a piece at a time by reducing the energy use in Sacramento homes and businesses."

SMUD pays homeowners to turn in their old refrigerators and replace them with new, super-efficient models. It provides rebates for air conditioner replacements, and pays for homeowners to increase insulation. SMUD has planted more than 28,000 shade trees -- "air conditioners with leaves" -- to reduce the use of cooling units.

"We'll do gaskets and low-flow shower heads," Hullibarger said. "We provide water-heater blankets and solar water heat units. We provide rebates and financing for heat pumps." For low-income homeowners, SMUD pays for insulation and more efficient appliances. For business customers, Hullibarger said, SMUD provides custom-designed energy-saving programs.

For its $51.7 million in efficiency spending this year, SMUD projects a demand reduction of 42 megawatts. A small power plant generating 42 megawatts could probably be built for less, but the $51.7 million investment will return the same 42 megawatts every year with no cost for fuel or maintenance.

Still, a 42 megawatt reduction in demand is not nearly enough to cover the lost power from Rancho Seco. SMUD is buying replacement power from neighboring utilities, which have plenty of surplus power because of lowered demand associated with California's crippling recession.

Within a few years, SMUD is planning to replace most of that purchased power by completing four natural-gas-fired "cogeneration" plants, which get the maximum bang for the fuel buck by producing steam for factories as well as electricity.

According to projects manager Colin Taylor, SMUD expects the electricity from these plants to cost about 4 cents a kilowatt hour. The nationwide average is about 8 cents.

The 4-cent projection is based on a natural gas price of $3 per million British thermal units, Taylor said. The current price is less than $2, but over the lifetime of the cogeneration plants it is likely to increase. To insulate itself against price escalation, Taylor said, SMUD is purchasing natural gas reserves still in the ground, as well as contracting to buy gas from other suppliers.

Completion of the cogeneration plants will still leave SMUD about 300 megawatts of capacity short of what it needs to cover the lost capacity of Rancho Seco. Freeman said that demand will be supplied from renewable fuels -- wind turbines, hydroelectric development, geothermal or solar -- with the exact mix to be decided in 1996.