Dark Days for Edison’s Bright Light
The thin man in the white shirt and burgundy tie looks directly into the television camera, solemnly, somewhat awkwardly, intoning: “We . . . urgently need your assistance.”
John E. Bryson, chairman and chief executive of Edison International, finds himself in the surprising position of making a commercial to ask--no, beg--his 11 million customers to stop using so much of the product his company has delivered so reliably to Southern California for more than 100 years: electricity.
It wasn’t supposed to turn out this way.
Bryson, 57, is a polished, canny leader with clout in Sacramento and an eclectic background in business, the law and government. He also was once an environmental activist--he co-founded the Natural Resources Defense Council--so his taking Edison’s helm a decade ago was seen not only as ironic but also as making him a prototype for utility chiefs responsible to both the environment and the bottom line.
And just a few years ago, he was poised to move Edison into the new century with aplomb, making his once-sleepy company the dynamic fountainhead for the state’s deregulated power industry.
Edison, based in Rosemead, would be a model utility in the new free market for electricity in California and globally, and Bryson would be its lauded architect. And it helped that he still had close friends in the environmental movement and kept tabs on their agendas.
Today, with California plunged into a power crisis, and Edison raising the specter of bankruptcy because of losses at its core Southern California Edison division, it is Bryson’s management skills--and even the future of his job--that are under severe scrutiny.
Moreover, because Bryson and other utility executives were involved in designing the deregulation of California’s power system in 1996, questions are mounting about whether Bryson should have been better prepared to steer Edison through the deregulated world to help avoid the havoc now faced by its customers, its 19,500 employees and its 85,000 common shareholders.
“As one of the most highly paid CEOs in Southern California, you’d think [Bryson] would have prepared the company for any situation,” said Douglas Christopher, a utility analyst at the investment firm Crowell, Weedon & Co. in Los Angeles. (Bryson’s compensation in 1999 included a base salary of $900,000, a bonus of $1.26 million and other benefits.)
“Now, less than a year since the [Edison] annual report discussed operational excellence, reliability, customer satisfaction and a positioning for growth, management is discussing a potential bankruptcy,” Christopher said.
Interviews with longtime industry observers and past Edison colleagues reveal a portrait of an executive whose gold-plated resume--which once seemed to promise so much--seems to have left him ill-prepared for a challenge unlike any he has faced before.
But Bryson himself has few regrets about his role in the sudden turn of events. In an interview, he mainly blamed the federal government for not controlling the skyrocketing wholesale price of power and the state for capping the prices that Edison could collect for that power from consumers.
“This is fundamentally a challenge for public decision makers, and we regrettably find ourselves in the middle,” Bryson said.
He said that back when California’s deregulation plan was taking shape in the mid-1990s, Edison complained loudly about several provisions, including the loss of most of its generating plants.
“I suppose, in retrospect, we should have pushed all those points harder, louder and more insistently and for a longer period than we did,” he said. And as for whether he could have done more this year in advance of the crisis, he said that “we’ve worked awfully hard” to be prepared but that “no one foresaw the disastrous rise” in wholesale electricity prices in California.
This week his company’s lawyers and top executives faced the state Public Utilities Commission to explain why Edison seeks rate hikes of as much as 30% for starters--and perhaps 76% in the next two years--to stave off what would be a humiliating epitaph for a once-golden career: watching his company file for bankruptcy and leaving the future of the business and its employees in the hands of an administrative judge and Edison’s creditors.
Bryson denies that the bankruptcy threat is for political leverage with the regulators.
“We have no further ability to get financing to keep the lights on,” he said. “The banks have lent and lent and now are not willing to lend further.”
Who is the solemn man at the heart of Edison’s saga?
Bryson, who lives in San Marino, is the father of four; when his children were younger he often refereed their soccer games. Usually soft-spoken and “an absolute gentleman,” as one acquaintance put it, Bryson has a strong grasp of details but isn’t one to spew them out in public to show off his prowess.
“He’s a very pleasant and charming person, not a hard-charging Jack Welch type of CEO,” one industry source said, referring to General Electric Co.’s renowned chairman.
After growing up in Portland, Ore., Bryson graduated from Stanford University and Yale Law School. In 1970, he was among a group that used a Ford Foundation grant to start the Natural Resources Defense Council, a major activist group for environmental causes.
“He’s a very broad-based guy who’s well-educated, thoughtful, loves art, music, loves his family and is still very interested in what we’re doing,” said John Adams, council president and a longtime Bryson friend.
Bryson still “loves the outdoors, and he has taken numerous trips, river-rafting trips, and keeps very closely in touch with his roots in Oregon,” Adams said.
After a few years at the council, Bryson left briefly to work for a private law firm in Portland. He returned to California in 1976 to become chairman of the state Water Resources Control Board during the administration of Gov. Jerry Brown. And from 1979 to 1982, Bryson served as president of the PUC, the agency now smack in the middle of the state’s electricity crisis.
Bryson joined Southern California Edison in 1984 as a senior vice president and became chief executive of Edison International (then called SCEcorp) in 1990. That appointment drew lots of publicity, given that he was a former environmental activist tapped to run what was then one of the state’s major polluters, and he was dubbed a “green” utility executive. (He also served for nearly a decade as a director of Times Mirror Co., the former parent of the Los Angeles Times that was bought by Tribune Co. earlier this year.)
Bryson and his wife, television executive Louise Henry Bryson, are prominent in Southern California social circles and various causes.
He has used Edison’s once-deep pockets to support numerous charities. For instance, Edison made a $350,000 grant to the Aquarium of the Pacific in Long Beach for the 88-foot-long sculpture of a blue whale that hangs from the facility’s ceiling.
Bryson has been celebrated for his early support of the Black Business Assn., and Edison created a $4-million Arts for the Community program in 1997 that included $1 million for the Walt Disney Concert Hall in Los Angeles.
At the same time, he has embarked on high-profile marketing ploys aimed at lifting Edison’s public image. It was under Bryson that Edison won the naming rights for Anaheim’s Big A baseball stadium for a reported $1.4 million a year. It is now called Edison International Field.
Despite his environmental resume, Bryson himself left no doubt that his main loyalty was to Edison and its shareholders when he became CEO in 1990, because he cautioned in an interview that “the company is not in the business of providing [for] social needs.”
Yet now, as Bryson’s TV commercials illustrate, he has been forced to worry about just that: providing for one of California’s greatest social needs. And whatever his personal charms or foibles, what may matter more now to his customers, employees and shareholders is whether he is up to the task of managing the current crisis.
Of course, Bryson alone isn’t responsible for the state’s electricity mess. “There’s enough blame to go around for everyone,” especially since there were power shortages in Southern California and other signs this summer that an even bigger problem could be brewing, said a former Edison executive who asked not to be identified.
Bryson also had to grapple with a deregulation plan in California that in fact retained plenty of regulations that tied his hands, said Paul Fremont, an analyst at Jefferies & Co. in New York.
Edison and other utilities were forced to sell their fossil-fuel power plants, and a public market for electricity was created. But customer price rates were capped for up to five years, blocking Edison and the other utilities from raising prices to cover the costs of buying power on the wholesale market, Fremont said.
Though the PUC is talking about lifting those price caps to give Edison and others relief, Edison’s distribution of electricity is currently “a purely regulated industry,” he said.
Yet some observers are hard-pressed to see how Bryson could have let the situation deteriorate so badly that Edison’s stock price and bond ratings--which determine how much interest the utility must pay for its growing sum of borrowed cash--have dropped so far and that the firm’s solvency is now in doubt.
The stock has lost nearly half its value since February, wiping out $4.7 billion of its shareholders’ wealth. And Edison last week scrapped its common-stock dividend to conserve dwindling cash.
“What kind of manager is he? This crisis and how they resolve it will answer that question,” another industry source said of Bryson.
Bryson and colleagues had been talking to Gov. Gray Davis and other state officials about how to handle the problem, “but they may not have screamed bloody murder, and so it fell on deaf ears, for whatever reason,” the source said.
The fruits of Bryson’s reign as Edison’s chief executive have been subject to debate for some time.
Ironically, given his youthful environmental activism, he has been the target of environmental critics through the years. He has rejected the criticism, contending that Edison during his tenure has done everything from helping protect endangered species to pushing for tougher smog controls.
Yet before deregulation, Edison was sharply criticized on environmental grounds for its San Onofre nuclear power plants and for the majority interest it held until this year in the huge coal-fired Mohave Generating Station near the Colorado River in Laughlin, Nev. Critics also said he was not doing enough to promote alternative fuels.
His Wall Street record was mixed even before this year’s power crisis. From 1995 to the end of 1999, Edison’s total return--stock price gains plus dividend payouts--rose 49%, badly trailing the Standard & Poor’s 500 index. But Edison did outpace the total return of S&P;’s index of electric-utility stocks for that span.
Still, “this is the first time that Bryson has had to deal with a crisis like this,” a former senior Edison executive said. “There’s been nothing like this in his career.”
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