Summary
On March 13, 2017, Edison International (EIX) subsidiaries, Southern California Edison (SCE) and Edison Material Supply LLC, received an arbitration decision from the International Chamber of Commerce regarding claims against Mitsubishi Heavy Industries (MHI) concerning the failure of replacement steam generators (RSG) at the San Onofre Nuclear Generating Station. The tribunal found MHI liable for breach of contract, but limited damages due to contractual clauses. The claimants were awarded $125 million in damages, plus $45 million previously paid by MHI, totaling $170 million. However, the claimants were also ordered to pay MHI $58 million for legal costs.
Key Highlights
- 1Arbitration tribunal found Mitsubishi Heavy Industries (MHI) liable for breach of contract concerning San Onofre Nuclear Generating Station steam generators.
- 2Damages awarded to claimants (SCE, SDG&E, City of Riverside) totaled $125 million, plus $45 million previously paid by MHI, for a gross recovery of $170 million.
- 3Claimants were ordered to pay MHI $58 million in legal costs, resulting in a net recovery to claimants.
- 4SCE's net recovery is estimated to be approximately $52 million after accounting for its ownership share and costs.
- 5A dissenting opinion suggested over $1 billion in damages could have been awarded if liability limitations were overcome.
- 6The arbitration award is final but subject to potential court challenges on limited grounds.
- 7SCE expects to release the redacted arbitration decision publicly, subject to agreement on confidential information.
Frequently Asked Questions
The arbitration tribunal found MHI liable for breach of contract regarding the failed replacement steam generators at San Onofre. While MHI was found liable, damages were limited by contractual clauses. The claimants were awarded $125 million in damages plus $45 million previously paid, but were also ordered to pay $58 million in legal costs to MHI. SCE's net recovery is estimated at approximately $52 million.
The total damages awarded to all claimants were $125 million, in addition to $45 million previously paid by MHI. After accounting for the $58 million in legal costs ordered to be paid to MHI, there is a net recovery for the claimants. SCE's share of the net recovery is estimated to be approximately $52 million.
Yes, the arbitration award is considered final but can be challenged in court on limited grounds. Additionally, the co-owners of San Onofre are still in discussions regarding the allocation of damages, and SCE expects to release the full tribunal decision after agreeing on redactions for confidential information.
One of the three tribunal members issued a dissenting opinion, stating that the claimants had grounds under California law to overcome the contractual limitations on liability. This dissenting opinion suggested that the claimants should have been awarded over $1 billion in damages, highlighting a potential disagreement on the extent of MHI's responsibility.