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Thursday, July 18, 2013

SCE serves Mitsubishi with Formal Notice of Dispute over SONGS Steam Generators

Press release received 9:15 AM  7/18 from Southern California Edison.

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FOR IMMEDIATE RELEASE
Media Contact: Maureen Brown, (626) 302-2255
Investor Relations: Scott Cunningham, (626) 302-2540

Southern California Edison Serves Formal Notice of Dispute to Mitsubishi over Defective Steam Generators at SONGS
 
ROSEMEAD, Calif., July 18, 2013 — Southern California Edison (SCE) has served a formal Notice of Dispute on Mitsubishi Heavy Industries, Ltd., and Mitsubishi Nuclear Energy Systems (together, “Mitsubishi”) which seeks to hold Mitsubishi accountable for designing and manufacturing defective Replacement Steam Generators (RSGs) at the San Onofre Nuclear Generating Station (SONGS).

“Our action is about making sure that Mitsubishi takes responsibility for providing the defective steam generators that led to the closing of SONGS,” said Ron Litzinger, president of SCE.

Although Mitsubishi warranted the generators would operate reliably for 20 years, SCE was required to take SONGS offline in January 2012 when one of the Mitsubishi RSGs experienced a radioactive coolant leak after less than a year of operation. Although its contract with SCE required Mitsubishi to repair the RSGs “with due diligence and dispatch,” SCE’s Notice of Dispute alleges that Mitsubishi failed to do so.

Facing continued uncertainty about restoring SONGS to service at any level of power, SCE permanently retired the plant as of June 2013. SCE alleges that Mitsubishi, as designer and manufacturer of the faulty RSGs, is responsible for the enormous harm its failures have caused to California ratepayers, SCE, and the other SONGS owners.

When SCE contracted with Mitsubishi to replace the SONGS steam generators, it did so to extend the life of SONGS so that the plant could continue to provide safe, reliable and affordable power to over 1.4 million homes in Southern California.

However, SCE’s Notice of Dispute claims that Mitsubishi seriously breached the Contract, totally and fundamentally failing to deliver what it promised. SCE alleges that Mitsubishi grossly failed to appropriately model the thermal hydraulic conditions in the RSGs, including the relative wetness of the steam/water mix in the RSGs (“void fraction”) and the speed of the steam/water flow within the RSGs (“fluid velocity”).

In addition, Mitsubishi is alleged to have failed to design tube support structures capable of withstanding the extreme thermal hydraulic conditions within the RSGs. As a result, the RSGs experienced damaging flow-induced vibration that caused several types of excessive tube wear. The tube-to-tube wear was so advanced in one of the four identically-designed RSGs that it caused a radioactive coolant leak, which SCE was able to address by promptly and safely shutting the plant down.

The Notice of Dispute claims that for over 16 months, SCE has asked Mitsubishi to make things right, but Mitsubishi failed to live up to its contractual obligations. SCE invoiced Mitsubishi for the money SCE was forced to spend investigating and attempting to repair the RSGs, but SCE claims that Mitsubishi has refused to even acknowledge responsibility for any of these costs, even after receiving thousands of pages of documents in support. SCE further claims that Mitsubishi additionally refused to submit to a contractually mandated audit of the documents regarding its work on the RSGs, hindering a transparent look into what went wrong with Mitsubishi’s steam generators, and why.

The Notice of Dispute also alleges that SCE asked Mitsubishi to provide a repair or replacement plan that eliminated the risk that these serious problems would reoccur, but after more than 16 months and despite the contract’s requirement that it provide repairs “with due diligence and dispatch.”

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 as18 inches, with specialty tools that did not yet exist.

Ultimately, with no reliable timeline for generating power at SONGS, SCE determined that the prudent course of action was to end the uncertainty for its ratepayers and the company and permanently retire SONGS as of June 2013. Such an early retirement is exactly what the Steam Generator Replacement Project was designed to avoid.

SCE’s notice, issued today, formally initiates a 90-day dispute resolution process under the Contract. If that process is unsuccessful, then SCE intends to initiate binding arbitration against Mitsubishi, as the designer and manufacturer of the faulty RSGs, to recover damages Mitsubishi has caused.

In the Notice of Dispute, SCE argues that limitations on Mitsubishi’s liability set forth in the Contract do not apply because of contractual exceptions and because of provisions of California law.

  Mitsubishi, like the manufacturer of a “lemon” automobile, was unable to fix the defects in its product because they were so fundamental and pervasive. In this circumstance, SCE claims that the limitations are not enforceable, and Mitsubishi is therefore responsible for the full measure of damages incurred by SCE, the other SONGS owners and their customers.

A copy of the Notice of Dispute is available here: http://www.edison.com/files/NoticeOfDispute.pdf. SCE was required to redact certain portions of the Notice of Dispute that are based on information that Mitsubishi has deemed proprietary and confidential. If Mitsubishi agrees to disclose this information, SCE will release an unredacted copy of the Notice of Dispute.

About Southern California Edison
An Edison International (NYSE:EIX) company, Southern California Edison is one of the nation’s largest electric utilities, serving a population of nearly 14 million via 4.9 million customer accounts in a 50,000-square-mile service area within Central, Coastal and Southern California.
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9:20 AM Eastern  7/18/2013
ATOMIC POWER REVIEW

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UPDATE -- Saturday, July, 20, 2013.

Further actions have, as could have been expected, occurred relative to this story. 

San Diego Electric & Gas, also a part owner of the San Onofre Nuclear Generating Station, has announced its own lawsuit against Mitsubishi Heavy Industries.  Read about this action here.

Mitsubishi Heavy Industries has responded to the SCE action already; read about this here.

BACKGROUND LINKS  -- added Saturday, July 20, 2013

The announcement that San Onofre Nuclear Generating Station would be retired was made by Southern California Edison on June 7, 2013.  Click here for the release.

In March, some redacted documents were released by the NRC, and I produced my analysis of the findings in a very detailed post; click here to see that post.  This post also contains eight essential links to background information on the whole SONGS steam generator issue, including the popular steam generator articles on Atomic Power Review.  If this topical situation is new to you, you won't want to miss all of these links.



2 comments:

  1. Feels to me like outrage and admonitions after the horse has left the barn. For me, Edison could've taken a lot of heat off itself by pushing Mitsubishi's role out in center stage the whole time and maybe more folks would've cut Edison some slack in responsibility and given them more leniency in getting their act together and SONGS operational.

    James Greenidge
    Queens NY

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  2. Jim, you can bet that until there had been sufficient time and effort, SCE's lawyers would have prevented this all from coming out while there was a chance Mitsubishi could or would fix the problem. Now that the decision to retire the plant has been made, the gloves are off, so to speak.. at least, that's my educated observer opinion.

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