Fallout Over Nuclear Energy Debacle Underway Jul 19th 2013, 08:26
It's not a bombshell. But it is the fallout from the retirement of two nuclear units dotting Southern California's coastline. Southern California Edison has just filed a so-called Notice of Dispute on its former vendor, Mitsubishi Heavy Industries.
It is the first step toward gaining a settlement in what has become a huge blemish on the nuclear energy sector — the leakage of radiation at one of the units and the subsequent revelation that both companies had known about the underlying causes years before the incident. If the two are unable to reconcile, the case would then go to mandatory arbitration before it could get tried before a judge and jury. Judicial systems, though, are not prepared to resolve complex nuclear energy questions.
"Our action is about making sure that Mitsubishi takes responsibility for providing the defective steam generators that led to the closing of SONGS," says Ron Litzinger, president of SCE, in a formal declaration.
SONGS refers to the San Onofre Nuclear Generating Station owned by Southern California Edison. It had supplied 17 percent of the region's electricity, serving 1.4 million people. In June, officials there said the plant would permanently shut down, all emanating from a leak that occurred in January 2012. No one was ever in danger. But, letters surfaced that had been written in 2004 and 2005 in which Southern California Edison had expressed concerns to Mitsubishi Heavy over excessive tube vibrations that could lead to radiation leaks.
Edison is alleging that Mitsubishi, as designer and manufacturer of the steam generators, is responsible for the economic damages. However, Mitsubishi's liability is limited to $137 million per the contract that the two had negotiated prior to the installation. Here, Edison says that the provision does not apply, noting "contractual exceptions" and "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," Edison says.
The utility also says that Mitsubishi's computer simulations were wrong. That is, they did not accurately figure the heat and pressure inside of the steam generator tubes, which then caused them vibrate excessively and ultimately wear down and leak.
Edison says that for 16 months, Mitsubishi had failed to make things right despite the utility's persistence. It adds that the vendor only supplied "conceptual" proposals — even one that required a fix using equipment that did not 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," says the statement.
The price tag associated with all the woes: Estimated to be at least $700 million and as much as $2 billion. Just how will that be paid? Chairman Ted Craver explained on an earlier conference call that there are potentially four pools of money: ratepayers, shareholders, insurance companies and Mitsubishi Heavy.
Craver says that when examining the 2004 and 2005 letters, the utility had laid out the issues of concern to the vendor: Mitsubishi Heavy "had assured us those issues were being addressed. Our engineers review and make comments but it is the manufacturer that is ultimately responsible for the design."
Mitsubishi has reached out to this reporter, resulting in multiple discussions. And while the vendor has not yet responded to the Notice of Dispute, it has explained its position in detail. Upon learning of the utility's decision to retire its nuclear units, the vendor expressed disappointment, saying in a release that it had developed a repair plan that was both "practical and effective."
Frank Gillespi, senior vice president for Mitsubishi Nuclear Energy Systems, had explained in a personal interview that the wear and tear of the tubes was caused by an uncommon type of "vibration" that had not been seen in 40 years. That phenomenon combined with the relative high power output for the size of the generator, creating high-velocity steam that impacted the tubes that wore down.
"There are 10,000 tubes packed into big vessels," says Gillespie. "They are a quarter inch apart. Until you install and actually run the steam generators, there is no precursor what happened …
"You can't see or hear the vibration but you inspect during the refueling," he says. "The fact that these vibrations are occurring is not shoddy workmanship; it is an unusual phenomenon, which is that the direction of the vibration is different."
Gillespie says that Mitsubishi's contract with Edison does obligate it to address the issue. He said that those discussions had been proprietary but noted that there had been "multiple fixing options." He said that Mitsubishi designed the steam generators to the exact specifications that Edison had given it. To that end, the units weighed 24 tons more than the previous ones used by Edison, and they had contained thousands more tubes.
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