Utility Southern California Edison (SCE) said Monday it would receive the lion’s share of a $125 million arbitration decision against Mitsubishi Heavy Industries over two faulty replacement steam generators that in 2013 forced the permanent closure of the San Onofre Nuclear Generating Station (SONGS).
SCE is the plant’s majority owner with minority owners San Diego Gas & Electric and the city of Riverside. All three entities were parties to the arbitration with manufacturer Mitsubishi Heavy Industries before the International Chamber of Commerce’s International Court of Arbitration.
SONGS began operating in 1968, with its Unit 1 reactor shutting down in 1992. Units 2 and 3 started up in the mid-1980s, but had to be turned off in January 2012 following a coolant leak in one of two replacement steam generators that had been in operation less than a year. Subsequent inspections identified early wear and tear on thousands of tubes in the devices, according to the utility. The plant was formally shut down in June 2013, inflicting “billions of dollars of harm” to SONGS’ owners and California utility ratepayers, SCE said at the time.
The utility filed for arbitration in October 2012, and had sought a total of $6.7 billion, Reuters reported Tuesday. Mitsubishi Heavy Industries countered that its contractual liability topped out at $137 million.
An International Court of Arbitration panel on Monday ruled 2-1 only in support of SCE’s claim that Mitsubishi Heavy Industries was in breach of contract over the steam generators, dismissing other claims.
“The tribunal found that damages were subject to contractual limitations on liability,” according to a Southern California Edison 8-K filing with the U.S. Securities and Exchange Commission. “Accordingly, the tribunal awarded the claimants $125 million (SCE’s share $98 million) in damages, in addition to $45 million previously paid by MHI (SCE’s share $35 million).
However, Southern California Edison and its fellow SONGS co-owners must pay Mitsubishi Heavy Industries $58 million to cover the company’s legal fees, the arbitration panel ruled. Of that, SCE would pay $45 million.
The utility said its net recovery from the decision is roughly $52 million. It noted that one of three arbitration panel members stated in a concurring and dissenting opinion that the claimants had made a case for collecting more than $1 billion despite state limitations on liability.
“We had hoped the award would more accurately reflect the true magnitude of damage caused by Mitsubishi’s defective steam generators,” SCE President Ron Nichols said in a press release. “Unfortunately, the arbitration panel concluded that the contract’s prescribed liability limit should be respected and no additional award can be granted despite the harm caused.”
Parties to ICC arbitration can challenge the award in court in some instances, SCE said. The utility is still assessing the decision. “There are only limited grounds on which to appeal, but it is premature, given that we just received the award, to speculate on what SCE and other San Onofre owners will do,” SCE spokeswoman Maureen Brown said by email Thursday.
Southern California Edison in December announced that an AECOM-EnergySolutions partnership would be the general contractor for the $4.4 billion decommissioning of SONGS. Decontamination and decommissioning is due to start in 2018, with site restoration wrapping up by 2033, according to a 2016 presentation from SCE.
Google Earth
Separately, Californians who live near SONGS are expressing concern over new Google Earth images that show the close proximity of the site’s expanded independent spent fuel storage installation to the Pacific Ocean, the San Diego Union-Tribune reported this week.
Southern California Edison has received authorization from the state to move spent fuel from the plant into more than 70 new dry-cask containers installed within 100 feet of the coast. Roughly 50 storage containers are already in place there.
While the location was already known, critics say the new images throw their fears regarding earthquakes or tsunamis into sharp relief. The utility countered that the dry-storage casks in question have been licensed by the Nuclear Regulatory Commission and used for over three decades without any radiation releases.
A court hearing is due this month on a lawsuit contesting the California Coastal Commission’s permit for the expanded storage, the newspaper reported.
