Corners were cut at the San Onofre Nuclear Generating Station (SONGS) according to a report by Mitsubishi Heavy Industries (MHI) on the retrofitting it did for Southern California Edison (SCE), the plant's owner and operator. 

The cut corners could transform SCE’s intended cost savings into an enormous financial burden. Yet SCE may not, according to its most recent 10-K financial filing, have learned its lesson.

The Root Cause Analysis Report for tube wear identified in the Unit 2 and Unit 3 Steam Generators of San Onofre Generating Station from Mitsubishi Heavy Industries (MHI) indicates, according to a letter from Senator Barbara Boxer (D-California) and Congressman Edward Markey (D-Massachusetts) to the Nuclear Regulatory Commission (NRC), “that SCE and MHI were aware of serious problems with the design of San Onofre nuclear power plant’s replacement steam generators before they were installed, rejected enhanced safety modifications and avoided triggering a more rigorous license amendment and safety review process.” 

“The MHI report appears to squarely place the cause of and responsibility for the outages at San Onofre at Edison’s feet,” according to S. David Freeman, former head of the Los Angeles Department of Water and Power.

MHI replaced the two steam generators of the 1,172-megawatt SONGS Unit Two in January 2010 and the two steam generators of the 1,178-megawatt Unit Three in January 2011. Unit Two began a scheduled outage for refueling on January 10, 2012, and was out of service when control room operators shut Unit Three down on January 31, 2012. Both units have been offline ever since.

The SONGS Unit One went on-line in January 1968, was built to last until 2004, but was decommissioned in 1992 due to wear. Unit Two went on-line in August 1983, and Unit Three in April 1984.

In the steam generators, the heat from the light water reactors turns water into the steam that drives electricity-generating turbines. Such turbines can also generate electricity with steam created by water boiled with coal, natural gas, geothermal stations or concentratingsolarpower stations.

To prevent faulty tubes from leaking radioactive steam, plant operators do regular inspections. If a tube is found to be severely worn, it is plugged.

Vermont nuclear watchdog group Fairewinds Associates concluded that the San Onofre reactors “plugged 3.7 times as many steam generator tubes than the combined total of the entire number of plugged replacement steam generator tubes at all the other nuclear power plants in the U.S.

The release of the MHI report came shortly after the February 26 release by Edison International (NYSE:EI) of its most recent 10-K.

SCE has mitigated the potential financial burden of the outage by passing its increased costs on to ratepayers because, it asserted in the 10-K, “the actions taken and costs incurred in connection with the San Onofre replacement steam generators and outages have been prudent.”

“MHI is contractually obligated to repair or replace defective items and to pay specified damages,” the 10-K said. But MHI has to date paid only $45 million, rejected other SCE claims, and, according to the 10-K, arbitration or litigation for further restitution may be necessary.

SONGS is insured against property damage and outage losses by Nuclear Electric Insurance Limited (NEIL). SCE filed claims in October 2012 but has received no response from NEIL. “To the extent any costs are recovered under the outage policy,” the 10-K said, “SCE expects to refund those amounts to ratepayers.”

If the MHI report validates ratepayer advocates’ claims that SCE is the responsible party, the company could face crippling rate refunds. A return to operation would limit those refunds.

“Three independent firms with expertise in steam generator design and manufacturing,” EI’s 10-K reported, “agreed that it would be safe to restart Unit 2 and operate at a reduced power level (70 percent) for approximately five months, followed by a mid-cycle scheduled outage and inspection.”

The ability to restart Unit 3, the 10-K said, is not yet clear and may “be affected by the operating experience of Unit 2.”

Neither will be restarted until, Edison promised, “any necessary repairs and appropriate mitigation plans for that Unit are completed.”

But SCE’s plan for an imminent restart at 70 percent power may be another shortcut aimed at avoiding financial burden at the expense of safety, this time without MHI’s complicity. SCE “has been advised by MHI," it acknowledged in the 10-K, “that a possible course of action would be replacement of significant portions of the steam generators, a process that could take more than five years.”