Bryson takes control of Edison regulatory dealings.

Southern California Edison Co. underwent a management shuffle in February, with Chairman and Chief Executive John Bryson taking direct control from his second-in-command, President Michael R. Peevey, over several departments that are crucial to the company's future, including customer services and regulatory affairs.

Peevey took on oversight of public relations and the non-utility businesses owned by Edison's parent company, while keeping most of his former responsibilities, including lobbying.

Bryson apparently wanted tighter control over Edison's relations with powerful regulators at the state Public Utilities Commission and over its ability to please big customers.

State and federal regulators are chipping away at the vast market monopoly once enjoyed by the 104-year-old utility. As power supplier to most businesses and homeowners in the Southland, Edison faces stiffer competition in this decade. It must either cut costs or lose some customers. Self-generated power became a small threat in the 1980s and rival alternative-power retailers could appear in the 1990s, if approved by the PUC.

"The management changes were made, very simply, to give us a corporate organizational structure that will let us compete well into the '90s," said Edison spokesman Lew Phelps. He and other company officials say the goal is good for customers, especially large industrial and commercial concerns, which would get lower rates.

PUC officials noted, however, that Edison's image doesn't always jibe with reality. Last December it applied for a 1992 general rate increase of 5.2 percent. Just 1.3 percent was offered by the commissioners, and Edison has appealed.

Also, the management changes come on the heels of a troubling January announcement by Edison's parent company, SCEcorp: The $7.5 billion-in-revenues holding company suffered its first annual profit decline in six years. Stockholders saw SCEcorp's share price fall 13 percent in January, compared to just a 6 percent drop in the Dow 49 Utility Index.

SCEcorp management flew to New York last month for "a hand-holding session" with worried investors, according to Raymond E. Moore, a securities analyst with Oppenheimer & Co. Inc. in New York, which is "cautious" about recommending the stock.

Bryson, 48, and Peevey, 53, hold the same titles at the parent company.

At Edison, 10 senior managers were reassigned and departments were consolidated or separated last month as part of a Bryson reorganization springing out of a top-to-bottom revaluation begun by him a month after he was made CEO in October 1990. Bryson and Peevey were in Lake Arrowhead last week for strategy talks with other Edison managers and did not return telephone inquiries by the Business Journal.

To be more competitive, the Rosemead-based utility is increasingly marketing itself as a consultant, pushing energy-efficient devices for businesses and even sometimes lobbying regulators to grant lower rates for large, key customers.

Under the reorganization, about 100 middle-manager jobs in customer service would be eliminated, but there would be no broad workforce reduction. Firings were ruled out.

"They said none, but with all the rumors flying, we're not sure," said Rae Sanborn, financial secretary for the International Brotherhood of Electrical Workers union. The IBEW represents 6,000 Edison employees.

Phelps denied any suggestion that the top-level changes might signify a loss in power for Peevey, Edison's No. 2. He remains president of Edison and the holding company.

While Peevey lost control over regulatory affairs, power production and system planning, he gained responsibility over public relations and the Mission Group. The latter is SCEcorp's highly prized non-utility businesses, which earn a net profit of 50 cents on the revenue dollar, compared to 10 cents by the utility.

"In one sense, this reorganization looks to be using their strong suits: Peevey has political connections and talent in expanding the company, while Bryson is a former regulator," noted David Morse, chief of energy resources for the PUC's consumer-advocate arm.

Bryson was president of the agency that now regulates him, the PUC, from 1979 to 1982. Peevey was formerly an economist with U.S. Department of Labor and then president of the California Council for Environmental and Economic Balance.

Several Edison officers were reassigned to Mission. Mike Noel, who supervised Edison's staff as senior VP, was made senior VP and chief financial officer of Mission Energy, the energy-investment arm of the Mission Group.

He was replaced at Edison by Charles B. McCarthy, formerly senior VP over hydroelectric and fossil-fuel supplies, engineering research and environmental issues. McCarthy takes over a host of departments, from corporate contributions to transportation services, including the research duties of Robert Dietch, who moved to Mission Energy as senior VP of construction and operations. And, John Fielder stays at Edison, taking over regulatory affairs and dropping information services. Georgia Nelson, manager of procurement and material management, became special assistant to Bryson.

The management moves were sideways, said spokesman Phelps, with only one change, a promotion -- Larry Hamlin, a manager of steam generation, became Edison's VP for power production.

As for Bryson, a host of challenges faces him in the three areas over which he took direct control.

* Power production: Competition in Edison's 50,000 square miles could come from other utilities if the PUC approves a broad deregulation policy it is now contemplating. Edison is said to be focusing on cutting production costs at its gas, oil and nuclear generators.

* Regulators: The PUC now puts new power plants out to bid. Edison is largely barred from winning, by recent regulations or settlements with consumer advocates who say the giant utility can't keep itself from self-dealing. Competitors' wind and geothermal projects may be the big beneficiaries, said industry sources.

* Systems planning: Long-range strategies are shifting, as Edison becomes less of a generator and more of a transporter of power, a service in which bad customer service can kill off accounts.

The utility sometimes tries to cut special deals for its most restless customers. For instance, the Tamco steel mill in Rancho Cucamonga is pushing Edison to cut rates or see the maker of construction rebar "put out of business" by rival steel makers in Nevada and Utah that pay lower rates, said Jim Boothe, economic adviser to PUC Commissioner Daniel Fessler.

Fessler and Commissioner Norman Shumway toured Tamco's mill last month. They found Tamco's monthly bills for its electric furnace are $1 million-plus, said Boothe. At stake are 350 workers and a payroll of $13 million.

But if Edison applies for a lowered rate, the PUC would not necessarily agree, despite the hardship.

"There's a concern (among commissioners) that before you know it, everyone wants a subsidized rate," said Boothe. He said the fairness issue could doom such an appeal if commissioners believe Edison's residential customers would have to make up revenue losses.

John Bryson ushers in era of conciliation 

Edison's new chairman is laying old hostilities to rest

Remarkable changes have apparently taken place at Southern California Edison Co. since John Bryson and Michael R. Peevey took the chief executive and president posts in October 1990, according to several utility observers.

Edison seems more conciliatory toward consumer watchdogs and regulators at the state Public Utilities Commission under the regime of Bryson, a former environmental attorney and PUC president, and Peevey, a one-time labor economist, they said.

Sources also point to a string of recent decisions, including a 1991 settlement with regulators to shut down one of Edison's nuclear generators at San Onofre. Edison initially had wanted to upgrade the old reactor and charge customers for the work.

The big power company today appears less combative, only a few years after it led other L.A. industrial interests in derailing the Air Quality Management District's plan to meet federal clean-air standards by the year 2007.

"No question that there's been a reduction of arrogance, bull-headedness, single-mindedness and militaristic personality of Howard Allen (Bryson's predecessor)," said Michael Shames, executive director of Utility Consumers Action Network, or UCAN, a San Diego-based consumer advocate. "The personality of John Bryson is slowly creeping its way through the Edison hierarchy," which he said is better for customers.

Allen, a 37-year Edison veteran, kept the utility profitable while fighting famously with the PUC and L.A.-area smog regulators.

"Howard Allen was not accessible. Period. Bryson is a helluva lot more conciliatory," said Rae Sanborn, the International Brotherhood of Electrical Workers union's business manager.

Not everyone sees a new era at Edison.

"They're projecting a more 'green' image, but we don't see any substantive changes . . . that benefit consumers," said Audrie Krause, executive director of TURN (Toward Utility Rate Normalization), a consumer advocacy group. "We still consider them the sleaziest, greediest utility in the state."

And some PUC staff members consider the new attitude more "damage control" and image-building that true compromise, according to one staff member who knows Bryson and Peevey. "Edison was slick before and they're slick now," said the staff member, who asked not to be named.

Nevertheless, in last month's management changes at Edison, a vice president liked by the union, Larry Hamlin, was promoted to vice president of power production, where he can dictate job-duty changes for some 2,500 union members.

"Larry Hamlin is very definitely trying to turn the labor situation around, and that's refreshing," said Sanborn. "Bargaining over any issue used to be very . . . dictatorial. They (management) used to make up their minds in the back room and then just announce changes. It was: 'If you don't like it, grieve it or sue us in court.'"

Hamlin, in his former job as manager for steam power, typically brought job-change concepts to union leadership to see which were most agreeable, said Sanborn. He also credited Peevey for promoting Hamlin and seeming rather open-minded.

President Peevey spent several hours conferring with union leadership on his first day in the job as No. 2 in command, the same day in 1990 that Bryson became CEO. That impressed Sanborn. "Under the old Edison, this wouldn't have happened in a lifetime."

Bryson and Peevey have yielded on several monumental quarrels with regulators at the PUC and at its consumer-watchdog arm, the Division of Ratepayer Advocates:

* In May, after the PUC shot down 5-0 Howard Allen's $2.9 billion merger plan with rival San Diego Gas & Electric Co., Edison decided not to appeal and had no harsh words for regulators or critics.

* Later that month Edison pushed forward a plan to trim Edison's carbon dioxide emissions 10 percent by the year 2000 and 20 percent by 2020. That was a step more than air-quality regulators could have forced the company to take.

* More recently, the duo settled scores with the feisty PUC consumer division, which had alleged sweetheart deals between Edison and a sister company, Mission Energy, that sold power to Edison under long-term power-purchase contracts. Non-standard contracts were used, rather than the PUC-approved contracts, which allegedly resulted in Edison charging its customers higher rates to pay inflated prices to Mission. Edison agreed to repay its customers $250 million over several decades.

"That was just shrewd management," criticized Krause. "By settling with the division, they avoided public hearings and embarrassment over their under-handed, anti-consumer activities to take from one hand and give to the other."