Edison Blames Manufacturer for San Onofre Shutdown

Written by Adam Townsend

Southern California Edison took the first step Thursday to recover some of the $2 billion it has lost because of faulty steam generators at the shuttered San Onofre Nuclear Generating Station.

The company filed a "notice of dispute" against Mitsubishi Heavy Industries. Edison claims Mitsubishi hasn't lived up to its contractual promise to develop a repair plan for the faulty steam generators it designed.

“Our action is about making sure that Mitsubishi takes responsibility for providing the defective steam generators that led to the closing of SONGS,” Edison President Ron Litzinger said in a news release.

Design flaws in the generators built by Mitsubishi were identified as the cause of a radioactive coolant leak in January 2012. A frenzy of action by activists, politicians and regulators over the following 16 months led Edison to decide to permanently close the plant because of uncertainty about restarting it.

According to the original contract with Edison, Mitsubishi is liable for $137 million, a fraction of the roughly $2 billion Edison has spent or lost in connection with plant shutdown. Edison argues that Mitsubishi, under California law, should be responsible for the total cost of the shutdown because the problems with its generators "were so fundamental and pervasive."

Mitsubishi "totally and fundamentally failed to deliver what it promised," Edison asserted, rendering the limitations in the contract "not enforceable."

Mitsubishi has said it complied fully with the contract.

"Mitsubishi does not expect there to be an impact by this SONGS shutdown on our results of operation considering the said limitation of liability and our belief that Mitsubishi has fulfilled its obligations under the contract," said a company statement issued in June, after Edison announced the plant would close for good.

"Mitsubishi's liability to SCE is limited by the contractual provisions to which the two parties agreed... [It] includes an overall limitation of liability (approximately $137 U.S. million) as well as a preclusion of consequential damages, including the cost of replacement power," the statement says.

Edison, in its notice of dispute, argues Mitsubishi didn't correctly calculate the heat and pressure inside the steam generator tubes, which caused the tubes to vibrate, wear down and leak.

Also, Edison argues that after engineers identified the cause of the leak, Mitsubishi failed to provide an adequate repair plan as required by the contract.

"Mitsubishi provided only 'conceptual' proposals -- for example, one proposal would have required workers to perform first-of-a-kind repairs in radioactive, confined areas as narrow as 18 inches, with specialty tools that did not yet exist," Edison stated in the release.

Mitsubishi said its repair plan was "practical and effective."

The notice of dispute gives the companies 90 days to resolve their claims, at which point the dispute will enter arbitration proceedings overseen by a neutral third party.

Edison said in its statement, "The total amount of damages will depend on various factors, including the ongoing regulatory inquiries into the outages."