Southern California Edison and three other companies asked an arbitrator this week to award them $7.57 billion from Tokyo-based Mitsubishi Heavy Industries as compensation for destroying the San Onofre Nuclear Generating Station.

Mitsubishi manufactured the vibrating steam generators and hundreds of tubes that leaked a small amount of radioactive steam shortly after installation. The plant closed in January 2012. Edison blamed manufacturer Mitsubishi, which blamed computer problems and bad math for the misdesigned equipment that shook like crazy until things broke. There is evidence that both knew the design was problematic.

After lengthy negotiations, it was decided in November to stick the one innocent party in the fiasco—customers—with the lion’s share of the tab. Ratepayers picked up $3.3 billion of the $4.7 billion bill for replacement energy and loss of the plant.

The Los Angeles Times quotes a spokesperson for The Utilities Reform Network (TURN) as saying the ratepayers are assured of half of any collection from Mitsubishi, but the Times also says in a “For the Record” addendum to its online story, “It is unclear what impact reopening the settlement talks would have on any award Edison might win in the dispute with Mitsubishi.”

The settlement (pdf) says, “SCE and SDG&E shall each equally share net litigation proceeds from Mitsubishi Heavy Industries between their respective ratepayers and shareholders. . . . 50% / 50% in all recovery from the pending multi-billion arbitration claim.”

Then again, it’s 153 pages long and crafted by well-paid lawyers, so who knows for sure what “net litigation proceeds” really are.

For its part, Mitsubishi Heavy Industries claims the most it could owe is $137 million and said in a statement, “The allegations and demands made by those parties disregard the history of the contract negotiations and performance and are factually incorrect, legally unsound, and inappropriate.”

Mitsubishi’s statement seemed aimed at its stockholders and assured them the company “does not expect there to be an impact by this dispute.” It may not have worked. The stock dropped 4.5% on Monday and has dropped 19.5% since June 4.  

Meanwhile, the deal is being challenged by a former party to the settlement, The Utilities Reform Network (TURN). The advocacy group changed its mind after the revelation in February that then-Public Utilities Commission (PUC) commission President Michael Peevey met privately with an Edison executive in a Warsaw, Poland, hotel room in March 2013 to discuss a framework for settlement. Peevey is a former Edison president.

The disclosure was included among thousands of e-mails released last year that revealed an overly close, if not illegal, relationship between the regulator and the utilities it regulated. There are ongoing state and federal investigations.

The PUC has not decided what to do about the request to reopen the deal.

–Ken Broder

To Learn More:

Mitsubishi Heavy Says Edison Claims $7.57 Billion in Damages (by Jason Rogers, Bloomberg)

Edison Seeks Almost $7.6 Billion in Damages for Nuclear Plant (by Ivan Penn, Los Angeles Times)

San Onofre Bailout Under Growing Fire (by Chris Reed, CalWatchdog)

Reform Group Wants San Onofre Deal It Signed Off on Reopened (by Ken Broder, AllGov California)