Thursday, July 18, 2013

San Onofre Nuke Plant: Southern California Edison Serves Mitsubishi Heavy Industries with a Notice Seeking Compensation over Faulty Steam Generators

From Wall Street Journal (7/18/2013; emphasis is mine):

Owners of San Onofre Nuclear Plant Press Mitsubishi Heavy
Losses at Shuttered Plant Could Total More Than $4 Billion

The operator of the San Onofre nuclear-power plant took the first legal step Thursday to try to collect billions of dollars from Mitsubishi Heavy Industries Ltd. over what it says was gross negligence in the design and manufacture of equipment that prompted the shutdown of the California plant.

Southern California Edison, a unit of Edison International of Rosemead, Calif., served Mitsubishi with a notice that it will seek compensation for the plant owners' losses through arbitration.Those losses include the value of the closed plant and other expenses and could total more than $4 billion.

SoCal Edison is majority owner and operator of the plant, which once produced enough power to light 1.4 million homes in Southern California and is located near the Pacific Ocean between San Diego and Los Angeles. The other owners are San Diego Gas & Electric Co. and the city of Riverside, Calif.

A Mitsubishi unit, Mitsubishi Nuclear Energy Systems Inc., designed and supplied the plant in 2010 and 2011 with the largest steam generators ever used at a U.S. nuclear facility, replacing older generators. But after the new equipment sprang a leak in 2012, SoCal found problems that it concluded were too pervasive to fix. Last month, it told U.S. nuclear regulators the owners had decided to retire the plant.

Frank Gillespie, a senior vice president of Mitsubishi's nuclear unit, said he believes the company's liability is limited to the $137 million value of equipment it supplied to San Onofre.

In an interview Thursday after reviewing the dispute notice, he said that Mitsubishi is sorry the owners decided to close the 2,200 megawatt plant. "Technically, it could have been fixed," he said. "But it could have been expensive."

SoCal Edison spokesman Janet Clayton said that although the contract between Mitsubishi and the owners limits liability, the owners don't think it applies because they think Mitsubishi is guilty of gross negligence, an accusation Mr. Gillespie disputed. SoCal Edison said Mitsubishi should have done more modeling and analysis of its steam-generator design to have anticipated problems and made corrections.

An arbitration panel will decide what level of compensation, if any, is due the plant owners.

The California Public Utilities Commission has opened an inquiry to determine what went wrong with the plant overhaul. Ultimately, the agency will decide whether to saddle customers of SoCal Edison and San Diego Gas and Electric with the cost of a plant from which they get no electricity or whether to assign some share of San Onofre's costs to the owners and to vendors like Mitsubishi.

Problems at the plant surfaced in January 2012. One reactor at the plant was shut down for refueling when the other reactor sprang a leak in a heat transfer tube—part of the steam generator system furnished by Mitsubishi—and was taken out of service.

Coming as it did after the accident at the Fukushima Daiichi plant in Japan, news that the leak involved the release of small amounts of mildly radioactive steam alarmed nearby residents. Many public officials called for the plant to be retired, not just because of the equipment problem but also because it sits near seismic faults that still are being mapped. The faults were unknown when the plant was built three decades ago.

Extensive tests ordered by the U.S. Nuclear Regulatory Commission in 2012 revealed a serious problem with unusual wear in several thousand of the plant's roughly 10,000 steam tubes, which carry heat from the reactor to the equipment that makes electricity, as a result of vibrations within and between the tubes. Both Mitsubishi and plant owners agree the plant developed a problem with fluid-induced vibration. Mitsubishi has said the type of vibration hadn't been seen before and therefore the company shouldn't be blamed.

(Full article at the plant)

Mitsubishi's defense is almost funny. Of course that type of vibration hadn't been seen before, because there had been no steam generator that big. The steam generators built for San Onofre were one of the kind with 10,000 tubes, instead of normal 3,000 to 4,000 tubes.

It's somewhat akin to TEPCO and the Japanese government's claim that the earthquake like that had never happened before (at least not in their lifetime or the last 100 years), therefore they shouldn't be blamed for the nuclear accident caused by the disaster.

If the US NRC's opinion back in June 2012 is still valid, then Mitsubishi screwed up the computer modeling in designing the steam generator, grossly underestimating the speed of the flow inside the tubes.

But then, SCE was the one who gave Mitsubishi the spec, and SCE was the one who approved and accepted the final products. Gross negligence may be equally applicable to SCE.

For the whole saga of San Onofre and its steam generators, see my posts.


Anonymous said...

"Ultimately, the agency will decide whether to saddle customers of SoCal Edison [SCE] and San Diego Gas and Electric with the cost ..."

Why on earth should customers have to pay for the operator's or his vendor's errors? Does this kind of concept exist anywhere else in commerce (of course, apart from rolling over the cost on the back end into future product prices)?
If I recall correctly, it was seriously important to SCE to accomplish the steam generator modifications and replacement without a license amendment, i.e., the public had absolutely no input whatsoever. But we may now have to foot the bill for the whole thing going wrong? How could that possibly be justifiable?

arevamirpal::laprimavera said...

mscharisma, remember Cyprus? Bad investment decisions by the banks, and the banks were made whole by practically confiscating the bank deposits of residents, retirees and businesses, while Russian oligarchs had ample time to move their millions. TPTB always go after the weakest constituents.

JAnonymous said...

Toyota redux ?

Enter the N[A]SA already.

Anonymous said...

4 billion dollars, is that a lot?

Did Edison try to mitigate the damages instead of shutting down the plant site entirely?

Edison has some explaining to do, wonder if the PUC will listen.

GE and Westinghouse must have seen the writing on the wall and broke up and unloaded their interests in producing full size nuke power plants (nuke plant life spans were/are being exceeded). I think nuke cleanup divisions are their money makers now.

JAnonymous said...

@Anon above

exactly !

Seen Areva in the news yesterday, trying to say how they want to help Tepco on the Fukushima cleanup, and how they only have to ask.

Decommissioning a NPP costs several billion for each reactor. Anyone building an NPP now, has a short-term view, scorns his own children, or doesn't have any. On the other hand, they get their pockets lined alright.

Anonymous said...

Then does that mean Japan can sue GE for faulty design, shoddy construction, and gross negligence which led to the Fukushima disaster? Everyone in the nuclear industry is just trying to pass the buck.

Anonymous said...

The first place to pass the buck is to the Japanese who design an unsafe product thinking only of profit.

Mike said...

The first two problems with SCE's case that spring to mind are (1) it doesn't appear to have mitigated its damages by attempting repair or replacement of the generators; and (2) SCE may be subject to an "unclean hands" defense because of its intentional misrepresentation to the NRC that these generators were a like-kind replacement for the old ones, and so did not require extensive regulatory review.


Anonymous said...

@5:06 Isn't 4 billion too much? Building a new plant costs about five and San Onofre is already 30 years old...

Anonymous said...

"...The company reportedly has a $2.7 billion trust fund, after taxes, to handle costs associated with the closure. According to Craver, the fund, containing money collected from ratepayers each time they pay their energy bill, could cover 90 percent of Edison’s $3 billion in expected retiring expenses.

But according to Edison officials, total expenditures are anticipated at $4.1 billion, leaving more than $1 billion in funding unaccounted for..."

Link to links...

Anonymous said...

@10:38 great post, brilliant! especially considering that in the US utilities are allowed to defer the decommissioning of their plants by 30 years (or was it 40?).
Free financing for half a century, considering that ratepayers start putting down their cash the moment the plant starts producing energy.


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