For CEO, Life in ‘Foxhole’ Means Little Sleep, Peace

John E. Bryson, chief executive of Edison International, never imagined his charmed life would come to this: working 16-hour days. Laying off employees. Swallowing his pride and begging for regulatory relief.

It’s early January and the heart of his company--the Southern California Edison electric utility--is going down like an old battered ship. No one will help him save it. Once-trusting consumers think Bryson is greedy. Legislators are confused. The governor seems distant. Some of his own people wonder whether Bryson is up to the task.

Bankruptcy looms like a dark hole of shame. Bryson decides, with his board of directors, to do whatever he can to avoid it. He will try to salvage Edison through political compromise, to cajole and negotiate and plead. The decision means that in the coming months he will have to make awful concessions, allow himself to be humiliated and often hold his tongue. He will do this out of the conviction that it is the only way to save hundreds of Edison jobs, the retirement income of thousands of small investors and the very economy of California.

He came to Edison almost incidentally 17 years ago, an outsider, the model of a new, environmentally sensitive energy executive. As 2001 dawns he is poised to go down in history as a bungler, the man who led a solid, century-old utility into ruin. Such a legacy is unthinkable, but as he runs from it, he embarks on a tortuous slide of disappointment.

Today, four months after the crisis hit public consciousness, there’s still a chance that Bryson will work out a political solution. But it’s a thin one, and it has come at a very high price.

January: Hope, Then Failure

Edison is several billion dollars in debt and losing millions more each day as electricity prices soar. Banks cut off credit. Blackouts are threatened across California. Bryson’s mood is one of astonishment: How can government regulators let it go this far? Why won’t someone step in? Then, in the waning days of the Clinton administration, he is called to a White House summit.

California Gov. Gray Davis, who refused to meet Bryson earlier to address the crisis, is there. So are the electricity wholesalers accused of price gouging. After weeks of blaming one another, all sides have finally come to Washington to look for solutions. Bryson is hopeful. Everyone, he says, takes the high road.

A vague plan is hatched: The state will jump in to buy wholesale electricity. Suppliers will sign cheaper long-term contracts. Edison and Pacific Gas & Electric, the troubled San Francisco utility, will pay off their debts through a state-backed bond issue, regain credit-worthiness and eventually return to normal business.

Back at Rosemead headquarters the next day, running on cold coffee, Bryson and a handful of Edison lawyers, engineers and money managers fill in the details. They go without sleep and call co-workers out of bed to ask them the rate at which transmission lines lose electrons.

By the afternoon of Jan. 12, three days after the summit, the plan is solid enough to talk about publicly.

“I’m very optimistic,” Bryson declares, relieved that the crisis has been addressed at last. “We’ll know whether or not this works in the next two to three weeks.”

It won’t.

A week later, President Bush, decidedly less fond of federal intervention, is inaugurated, and the goodwill generated in Washington evaporates. Energy prices climb even higher in California. Meanwhile, Davis plans an auction for long-term energy contracts that he swears will bring prices down. So much for a simple fix.

Insult to Injury

The following weeks bring showers of bad news. Edison defaults on loans, suspends dividends and forces some of its largest business customers to cut power. Several times, the utility comes within a hair of rolling outages.

Bryson laments the lack of progress. He can’t understand why the tone in Sacramento has turned so hostile, why Edison is painted as a villain when faulty state regulations created this mess. This is a private company, he says, over and over. The state cannot force it to operate at a loss any more than it can force a service station to pump gas below cost.

“There’s some quality to this whole thing that makes it sound like the utilities are supplicants, pleading for help,” Bryson says, bewildered. “This is our right [to cover costs] and the business doesn’t work without it. That’s the most basic premise.”

Often seething with anger, he tries to be discreet and diplomatic. The route to a deal is too delicate to risk offense. Yet his anger turns to outrage Jan. 19 when the state Public Utilities Commission issues an aggressive restraining order that compels Edison to continue delivering electricity to its customers no matter how much money it loses. There’s no need for such an order, Bryson complains, and it’s an insult to all Edison employees to suggest otherwise.

He paces the plush beige carpet outside his office. Edison is entitled to cover reasonable costs, he says.

“These guys,” he says of the PUC members, “are thumbing their noses at the law.” When a reporter asks a question about PUC Chairwoman Loretta Lynch, Bryson nearly rants.

“She’s a very negative person,” he says, then feels the crack in his veneer. With a laugh and wave of his hands, he wipes it away.

“Oh no,” he says, “I’m not going to go there.” He does it with an easygoing boyishness that still serves him well at 57, despite the hair that’s nearly gone white.

Sometimes in this crisis, Bryson appears haggard, unwell. But more often, and at the oddest times, he is buoyant, with a half smile that seems to be choking back a snort of laughter. It’s a disarming affectation, and confusing. It makes him seem almost cavalier, almost masking the fact that he has turned his life over to solving this crisis.

Bryson, the son of an Oregon sawmill operator, graduated from Stanford University and went on to Yale Law School in the late 1960s. Bright and idealistic, he co-founded the nonprofit Natural Resources Defense Council, a still-thriving environmental protection law firm.

He was barely into his 30s when Gov. Jerry Brown appointed him to chair the California Water Resources Control Board. Three years later, in 1979, Brown made Bryson a member of the PUC. He later practiced law for a while, then--through friendships cultivated at the PUC--joined Southern California Edison as a vice president. Six years later, he took over the job of the man who recruited him, Chief Executive Howard Allen.

Life at a regulated utility can be very good, and Edison grew on him. He liked the easy pace, the terrific pay ($2.2 million last year). He liked the people around him. They were smart, steady, nice. Above all, he liked the utility’s integrity, its image as a reliable corporate citizen.

Life at a deregulated utility would be very different.

Edison’s rescue plan circulates in Sacramento. To Bryson’s great annoyance, what he regards as a right to financial survival is being labeled a “bailout” by critics. The criticism fuels the idea that if Sacramento floats billions in bonds to help Edison pay its debt, the utility should give up something valuable. Perhaps its hydroelectric system. Or its transmission grid. In a world of populist political rhetoric, the trade-off is sold as “a dollar for a hot dog,” in the words of Senate Leader John Burton (D-San Francisco).

To Bryson, these assets are chunks of Edison’s soul, designed by Edison engineers, built by Edison linemen. They were marvels in their time, proof that man could harness nature on a massive scale. How could he give up Big Creek--Edison’s legendary series of dams and powerhouses deep in the Sierra Nevada? That was the first place Bryson called top Edison management together when he was named chief executive in 1990 because he wanted to start his term with the stamp of history.

Photos of the massive powerhouses hang on his office wall. Bryson walks past them, to a bookcase on the far side of his spacious office, and pulls out a photo book documenting Big Creek’s construction.

“Take it,” he tells a visitor. “Maybe it will help you understand.”

Initially, Bryson and other executives say no deal on hydro or the grid. Then they waver: maybe, but only at a fair price. But already, Bryson is making the mental adjustment, accepting the loss, doing whatever he can to stay out of bankruptcy.

He is clinging to two hopes. The first is that a state audit will prove Edison did nothing wrong, but simply followed the misguided rules that abruptly pushed California into a deregulated energy market. The second is that Edison will prevail in its lawsuit against the PUC in which it seeks to increase electricity rates to cover its ballooning costs.

In the end, neither happens. The audit alleges no criminal wrongdoing, but is extremely complex and open to interpretation. It does not explicitly ask, or answer, whether Edison did anything wrong. The lawsuit fails to produce an immediate rate increase, and a trial is years away. Edison’s stability continues to erode.

Bryson has to look hard for a few bright moments. On Jan. 23, he receives a letter from shareholder W.R. Cate, a retired telephone company manager in Henderson, N.C. He and his wife and children hold 1,500 shares; they’ve lost more than $10,000 in the last month.

“We are behind you,” Cate writes. “Bargain hard until you see some blood.”

Bryson writes back the same day: “Many thanks for your perceptive and insightful letter. . . . It was a ray of light and fun. We do intend to bargain hard until we see some blood.”

His job becomes a blur of conference calls, predawn pages and last-minute shuttle flights. His world is this Rosemead office, where he often settles into a beige armchair and eats his lunch off a cafeteria tray; airports, where he boards the Southwest shuttle to or from Sacramento, and legislative hallways, where he trolls for allies.

The closest thing to a routine is the daily meeting with the inner circle. At least once a day, Bryson strides across the plush-carpeted hall to a conference room for an update on Edison’s latest strategy. To each new idea from Sacramento, they respond earnestly, as if it were already law. The next day, when a new idea emerges, they do it again. There is something poignant, almost comical, watching the cluster of desperate veteran executives trying to outguess a new crop of state legislators.

Bryson thinks about the hours he has spent with these men and a few women, the wartime atmosphere, and feels grateful.

“You’re in a foxhole,” he says in February. “The question is: Is the person beside you right there with you all the way? What I’ve seen is an amazing crew of people. They’re creative, really dedicated, determined to work it through, and showing good judgment even when stressed. That’s the little offset to all this.”

Feb. 7: The Longest Day

Bryson wakes up in Sacramento, exhausted with a cold. Negotiations with the state are going nowhere. Legislative hearings start in two days. Edison wants its side heard, so Bryson has come to the Capitol to talk to reporters and seek help from the governor.

He stands at a podium next to Bob Foster, Edison’s governmental affairs chief, a career employee. Their messages are clear: Bankruptcy is bad. We didn’t cause this crisis. We have a legal and moral right to cover the costs of wholesale electricity. We will only sell our transmission lines if it’s a fair deal.

He is scanning the state’s newspapers later when he freezes at an editorial in The Times contending that Edison International “milked” its utility of essential cash. Not now, he moans. The editorial gives credence to an allegation that the parent corporation stole money from its starving utility to pay off shareholders.

In fact, Bryson insists, the transfer of funds, detailed in the state audit, was legal and proper and approved by the PUC. He must clear this up before the legislative hearings. He gets on the phone to The Times--where he was once a member of the newspaper’s corporate board--and begs for an audience with the editorial board. He flies south and walks into the building that day, carrying a binder full of memos, charts and old audits going back five years. He is cordial but insistent. “Milked” is inappropriate, he says. It’s a word that implies unethical.

He is pale from his cold and a little too desperate. He stays more than an hour, too long for the editorial writers, who are facing deadlines. Please, Bryson insists. Let me read from this 1999 audit that found SCE “more than compliant.” Just this one page.

But his pleas produce no Times editorials reflecting his comments.

Two days later, a clear-headed Bryson addresses the Legislature with an evocative speech about trust. He laments the rift between utilities and regulators, the mutual distrust that has developed.

“We find ourselves today treated as an adversary and as an enemy,” he says. But his defense is forgotten, wiped out by a question from a San Diego legislator: Did Southern California Edison overpay millions of dollars in taxes to the parent company, Edison International? The implication is that Edison International found another way to drain the utility--and, thus, ratepayers--of cash.

Bryson insists it’s not that devious. The PUC required the utility and its parent company to figure their taxes separately. SCE paid those taxes to the parent. But losses from other subsidiaries lowered Edison International’s taxes and allowed it to keep some of the SCE money.

Did SCE overpay Edison International in taxes? the legislator asks again.

It’s complicated, Bryson says. But, yes, we did.

In mid-February, a federal judge rejects Edison’s request to force the PUC to immediately increase rates to cover costs. Edison’s last ace blows away.

Feb. 23: The End of the Beginning

Stage 3 alerts--the last step before rolling blackouts--have become routine. Businesses are screaming about reliability. The state is bleeding money trying to continue purchasing power. Davis, his political future at stake, is engaged. A framework is announced: Edison agrees to sell its transmission grid for less than half of what it wanted. In exchange, a portion of rates revenue will be set aside to cover past debt.

Bryson has to explain his decision to disheartened employees, many of whom helped build the grid and take so much pride in it. He’s not even sure the agreement will work. “Was it Churchill,” he wonders to a reporter, “who said something like, ‘This is not the end. This is even not the beginning of the end. But it may be the end of the beginning’? That may be where we are now.”

He worries about losing employees, about being able to attract good ones in the future. He worries about Edison becoming a takeover target. His escapes are few.

A day after the framework is signed, he sits in an Oxnard high school gymnasium, watching his 17-year-old daughter compete in the last game of her high school basketball career. Bryson is lost in the energy of the gymnasium, grateful for the anonymity of the bleachers.

He and his wife, Louise Henry Bryson, a former documentary filmmaker and now television executive, live in San Marino. He dotes on his four daughters. The youngest, a still-innocent 12, knows something’s wrong at Daddy’s work but has no idea how bad it is.

Small breaks are the way to get through this, he tells himself. He works out--aerobics, Pilates, yoga--in a Pasadena gym where no one knows him. His chief financial officer, Ted Craver, runs the L.A. Marathon. Counsel Bryant Danner takes comfort in drives to Mammoth. Foster and John R. Fielder, a vice president for regulatory affairs, take their wives to Hawaii for a week. Their timing is horrible.

April 6: A Tightening of the Noose

While Foster and Fielder are gone, PG&E; decides to solve its financial crisis by filing for bankruptcy protection. Creditors will now be less timid about pulling Edison into court. Bryson figures he has a few days, at most, to close a deal with the state, or Edison will go down too.

That night, he and Davis meet for more than four hours, refining the framework. The Edison team spends all weekend, yet again, filling in the details. Monday morning, after five hours of discussion, Edison’s directors approve a 33-page agreement covering the bond issue, dedicated rate component and sale of Edison’s transmission lines to the state.

It’s far from over. The state Legislature must sign off on certain parts. Consumers must approve bonds to cover the debt, which will be paid off through a small share of rates over some 15 years.

And then there are the intangibles: Will people still buy Edison stock? Will institutions still lend it money? It will be years before it is clear whether Edison’s decision to fight bankruptcy is the right one. Bryson’s humiliation rose last week when Forbes magazine dinged him as No. 7 on its list of the nation’s “worst-valued” CEOs. But he feels at peace, that he has done everything he could do--except, perhaps, talk a little louder, a little earlier in the crisis.

“It’s probably fair to say that, going all the way back to last summer, we could have rung the bell louder,” he says, a sadness momentarily replacing the boyish chuckle. “We kept thinking we would be be persuasive, and it kept not happening. We tried hard, but we didn’t succeed.”

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About This Series

Times staff writer Nancy Cleeland spent three months inside Southern California Edison, watching the toll on the company’s engineers, linemen and executives as they grappled with the state’s electrical power crisis.

Today: The CEO of Edison’s parent company had lived a charmed life in business and government--until now.

Sunday: Engineers, raised in a culture of logic, find their traditional formulas can’t solve the politically charged power crisis.

Monday: Linemen, the field hands proud of their ability to restore customers’ power, are stunned when a budget crisis forces them to leave some people in the dark.

* The complete series is available online at latimes.com/power

John E. Bryson

Chief executive officer,

Edison International

* Age: 57

* Compensation in 2000:

$2.2 million

2001: $950,000

* Retirement portfolio:

100% Edison stock

* Education: Stanford University, Yale Law School

* Career highlights: Co-founded Natural Resources Defense Council, 1970; appointed head, State Water Resources Control Board, 1976; head of Public Utilities Commission, 1979-82; private law practice, 1982-84; vice president, Southern California Edison, 1984-90; chief executive, Edison International, 1990-present

* Family: Married with four daughters