Panel Sticks To Warranty Cap -- $137M -- In San Onofre Case

In a decision certain to rattle the owners of nuclear power plants or revise their contract negotiations with suppliers, arbitrators at the International Chamber of Commerce said Tuesday that Mitsubishi Heavy Industries (MHI) would only need to pay the warranty cap to the owners of the San Onofre Nuclear Generating Station based on faulty steam generators that were responsible for a complete shut down of Units 2 and 3 at the coastal California plant.

San Onofre NPPSan Onofre was shuttered in 2013 after a small radiation leak in 2012 prompted an investigation that lead to the discovery that hundreds of tubes in recently installed replacement steam generators were deteriorating prematurely. The generators were installed during a 10-year, $671 million overhaul of San Onofre Units 2 and 3 that was completed in 2011.

The decision is being called a “hollow victory” for Edison International, the owners of Southern California Edison (SCE) which owns 78 percent of the San Onofre and San Diego Gas and Electric and the City of Riverside Utilities Department, which owns 20 percent and 1.8 percent, respectively. The “hollow victory” refers to the point that the plant owners secured the full amount of the warranty, which was capped by contract at $137 million – with some already paid – although the award fell enormously short of the $7.6 billion the plant owners were seeking to cover the loss of revenue and the shut down costs of the plant.

While the decision among three arbitrators was not unanimous, the single dissenter on the panel was in favor of awarding the plant owners $1 billion, according to the Associated Press. However, adding insult to injury, the owners of the plant were also ordered to pay MHI's legal fees for the lawsuit that pertained to the larger claim they were pursuing. That subtracts $58 million from the $125 million settlement.

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