Mitsubishi faces $7.6 billion claim over SONGS shutdown

29 July 2015

A claim for $7.6 billion has been made against Japan's Mitsubishi for damages resulting from the early closure of the San Onofre Nuclear Generating Station (SONGS) in California.

SONGS aerial - 460 (SCE)
The San Onofre plant (Image: SCE)

Replacement steam generators supplied by Mitsubishi - intended to enable San Onofre units 2 and 3 to continue operating until 2022 - were found to be suffering from excessive wear after less than one year in service. Both pressurized water reactors were taken offline in early 2012 only to be closed permanently in June 2013 when majority owner Southern California Edison (SCE) decided not to continue a protracted regulatory process to show that lower power operation would be safe.

SCE and Edison Material Supply LLC filed a demand in October 2013 for arbitration against Mitsubishi Heavy Industries and its US subsidiary Mitsubishi Nuclear Energy Systems related to the supply of the replacement steam generators. In the arbitration, SCE and co-owners in the San Onofre plant San Diego Gas & Electric (SDG&E) and the city of Riverside claimed an amount of not less than $4 billion in compensation for damages against Mitsubishi alleging a breach of the warranty obligation of the supply contract.

On 27 July, the claimants submitted documents to the International Chamber of Commerce, which is arbitrating the matter, that increase their claim to $7.57 billion.

Mitsubishi said in a statement yesterday, "The allegations and demands made by those parties disregard the history of the contract negotiations and performance and are factually incorrect, legally unsound, and inappropriate."

According to Mitsubishi, its liability to SCE is limited "by the contractual provisions to which the parties agreed", which includes an overall limitation of liability of some $137 million as well as "a preclusion of consequential damages, including the cost of replacement power". The company maintains it has fulfilled its obligations under the contract.

San Onofre is owned 78.2% by SCE, 20% by SDG&E and 1.8% by the city of Riverside.

Researched and written
by World Nuclear News