Concerning the Recent Announcement by Southern California Edison
Concerning the Recent Announcement by Southern California Edison
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On July 18, 2013, Southern California Edison (SCE) announced that it had forwarded a Notice of Dispute to Mitsubishi Heavy Industries, Ltd. and Mitsubishi Nuclear Energy Systems, Inc. (Mitsubishi) indicating its intention to pursue significant damages from Mitsubishi beyond the existing limitations of liability in the contract for supply of replacement steam generators at SONGS.
SONGS Units 2 and 3 have been off line since January 2012, when SONGS Unit 3 experienced primary to secondary leakage of small amount of reactor coolant in one steam generator, and as previously announced, SCE decided to permanently retire the units.
The direct cause of the leakage was determined to be tube-to-tube contact wear in the U-bend region of a Unit 3 steam generator. The kind of wear that occurred had never been observed in any steam generator of the U-bend type.
The SONGS steam generators were designed and manufactured with SCE's full supervision and approval and in accordance with well- established and accepted codes and standards along with our own knowledge and experience plus that of outside experts.
Since the tube wear of the steam generator at Unit 3 was first detected, Mitsubishi have worked closely with SCE observing applicable rules and regulations and utilizing knowledge and expertise of both Mitsubishi itself and the industry to analyze the root causes of the wear and technical issues necessary to safely restart SONGS Unit 2 and 3 and Mitsubishi has developed and proposed a repair plan which is both safe and practical. Mitsubishi is committed to continue its cooperation to the investigation conducted by the Nuclear Regulatory Commission (NRC) related to SONGS.
Upon SCE's notice, the parties will enter into a dispute resolution procedure specified in the contract. 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. 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 discussed in its filings with the U.S. Securities and Exchange Commission, and includes an overall limitation of liability (approximately $137 U.S. million) as well as a preclusion of consequential damages, including the cost of replacement power. Accordingly, at this moment, Mitsubishi does not expect there to be an impact by this SONGS shutdown on our results of operation based on the limitation of liability and our belief that Mitsubishi has fulfilled its obligations under the contract. If there are any new matters which require disclosures, Mitsubishi will update the information promptly.
The direct cause of the leakage was determined to be tube-to-tube contact wear in the U-bend region of a Unit 3 steam generator. The kind of wear that occurred had never been observed in any steam generator of the U-bend type.
The SONGS steam generators were designed and manufactured with SCE's full supervision and approval and in accordance with well- established and accepted codes and standards along with our own knowledge and experience plus that of outside experts.
Since the tube wear of the steam generator at Unit 3 was first detected, Mitsubishi have worked closely with SCE observing applicable rules and regulations and utilizing knowledge and expertise of both Mitsubishi itself and the industry to analyze the root causes of the wear and technical issues necessary to safely restart SONGS Unit 2 and 3 and Mitsubishi has developed and proposed a repair plan which is both safe and practical. Mitsubishi is committed to continue its cooperation to the investigation conducted by the Nuclear Regulatory Commission (NRC) related to SONGS.
Upon SCE's notice, the parties will enter into a dispute resolution procedure specified in the contract. 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. 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 discussed in its filings with the U.S. Securities and Exchange Commission, and includes an overall limitation of liability (approximately $137 U.S. million) as well as a preclusion of consequential damages, including the cost of replacement power. Accordingly, at this moment, Mitsubishi does not expect there to be an impact by this SONGS shutdown on our results of operation based on the limitation of liability and our belief that Mitsubishi has fulfilled its obligations under the contract. If there are any new matters which require disclosures, Mitsubishi will update the information promptly.