Next Step in SONGS Steam Generator Dispute: Binding Arbitration

Southern California Edison and Mitsubishi Heavy Industries will move their dispute over defective San Onofre steam generators to binding arbitration, with SCE maintaining that the Japanese company should be liable for $4 billion in damages from the plant that was ultimately shut down.

Both units were closed in June after an outage lasting more than a year while regulators and engineers from both companies scrambled to understand the causes of tube thinning in relatively new MHI steam generators. Last week, SCE announced that the initial stage of the dispute process in its contract with MHI had ended without a resolution and that the utility had requested arbitration through the International Chamber of Commerce. According to an SCE release, a panel of three arbitrators will decide the case during a proceeding in San Francisco.

“We are taking this step today to ensure that Mitsubishi takes responsibility for providing defective steam generators and to recover, on behalf of our customers, all damages from Mitsubishi for its failures,” SCE President Ron Litzinger said in the release.

That includes damages beyond a $137 million cap in the steam generator contract that SCE claims is invalid because MHI did not uphold its part of the deal. The utility also accused MHI of failing to disclose documents related to the project.

MHI promised a vigorous defense. In a statement reported by Jiji Press, the company said the liability cap was mutually agreed upon, and that SCE's allegations were "factually incorrect" and "legally unsound."

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