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Edison, SDG&E and city of Riverside take legal action against Mitsubishi

Japanese firm built San Onofre's turbine

Little more than a month after the permanent closing of the San Onofre Nuclear Generating Station, the plant's three owners have taken legal action against the manufacturer of the faulty part that led to its closure.

Southern California Edison and the two other stakeholders in the plant, San Diego Gas & Electric and the city of Riverside, have all separately taken legal action against Mitsubishi Heavy Industries Ltd., and Mitsubishi Nuclear Energy Systems, the manufacturer of the defective Replacement Steam Generators (RSG) that led to the 2012 shutdown and June 2013 closing of the nuclear power plant.

In a notice of dispute delivered to Mitsubishi on Thursday, Southern California Edison (SCE) outlined its grievances, stating that it hopes to resolve the conflict without arbitration.

“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 asserted in a news release Thursday. “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.”

This step opens up a 90-day period of dispute resolution between the companies. If an agreement isn’t reached, the notice states that SCE, which owns roughly 78 percent of the nuclear plant, reserves its right to bring any claims against Mitsubishi.

Concurrently but separately, San Diego Gas & Electric, a 20 percent stakeholder in SONGS, filed suit against Mitsubishi Heavy Industries America Inc., Mitsubishi Heavy Industries Ltd., and Mitsubishi Nuclear Energy Systems Inc. in the Superior Court of California for San Diego County on Thursday.

SDG&E cited a total of 10 causes for action, including fraud, rescission, breach of contract and negligence.

The complaint itself does not mention the amount of damages being sought, and Stephanie Donovan, senior communications manager for SDG&E, said the company didn’t have a figure in mind.

“We have chosen not to include a dollar amount in damages at this time, and will let the details of the lawsuit speak for themselves,” Donovan said. “The amount of damages will be determined or established as part of the course of the trial.”

No figure was listed in the SCE notice either, though the Wall Street Journal speculated that losses to the majority owner could top $4 billion.

The third owner of the plant with a 1.7 percent non-operating stake is the city of Riverside, which also filed suit in the Superior Court of California on Thursday citing eight complaints, including breach of contract, negligence and rescission.

“Riverside is doing everything possible to protect the interests of our customers and believes that working toward an agreement is in the best interest of everyone involved, including the residents of Riverside,” said City Manager Scott Barber in a statement Thursday. “The city and its utility is unable to provide further comment due to the pending litigation.”

For its part, Mitsubishi said the claims are incorrect and it is prepared to take any action necessary to defend itself.

“The allegations and demands made by SCE in its Notice of Dispute disregard the history of the contract negotiations and performance and are factually incorrect, legally unsound and inappropriate,” the company said in a statement Thursday night. “Through the dispute resolution process, Mitsubishi will aggressively defend itself by accurately representing the facts involved, and will take any and all actions necessary to protect its rights.”

“Mitsubishi's liability to SCE is limited by the contractual provisions to which the parties agreed, as SCE has disclosed in its filings with the U.S. Securities and Exchange Commission, and includes an overall limitation of liability [approximately US $137 million], as well as a preclusion of consequential damages, including the cost of replacement power,” the statement said.

Donovan said that while each case is different, typically these suits take a while to be resolved. She said a six-month preparation period before the parties even go to trial isn’t out of the ordinary.

“It would be some time before we see the inside of a court room,” Donovan said. “Typically on cases like this there’s a lot of back and forth time with motions, and if there’s a desire or effort on the part of either party to try and reach settlement, that takes time too.”

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