* SCE accuses Mitsubishi Heavy of contract violations
* Mitsubishi Heavy says SCE's allegations 'groundless'
* Mitsubishi shares fall 9 pct but quickly pare losses
By Rory Carroll
July 19 Southern California Edison
accused Mitsubishi Heavy Industries of contract
violations in failing to properly design or quickly repair
defective steam generators it built for the utility's now-closed
San Onofre nuclear plant.
Mitsubishi on Friday rejected the charge.
The two Mitsubish-manufactured replacement steam generators
came with a 20-year warranty, but after one year of operation,
one of the units experienced a small radioactive coolant leak
that forced SCE to take the plant offline in early 2012.
In early June, SCE officials announced they would
permanently retire the 2,150-megawatt plant, which is located
halfway between Los Angeles and San Diego.
On Thursday, SCE, which is owned by Edison International
, filed a notice of dispute saying Mitsubishi failed to
appropriately test the equipment or design adequate support
structures that would have prevented the premature wear found on
thousands of tubes inside the four large steam generators.
Mitsubishi has 90 days to respond to the allegations before
the parties enter into dispute resolution with arbitrators.
"What we're asking for with this notice is for Mitsubishi to
take responsibility for the defective steam generators and the
enormous harm those failures caused to California ratepayers, to
Southern California Edison, and to the other owners of San
Onofre," said Maureen Brown, a spokeswoman for SCE.
"This is about gross negligence. They did not deliver what
they promised," she said.
Mitsubishi Heavy on Friday said SCE's allegations and
demands were "factually incorrect, legally unsound, and
Shares in the Japanese heavy equipment manufacturer fell as
much as 9 percent on Friday to 593 yen but quickly pared losses.
In the afternoon they were down 2.9 percent at 632 yen, compared
with a 1.6 percent drop in Tokyo's benchmark Nikkei average
Mitsubishi Heavy said it did not expect the dispute to have
an impact on its earnings.
SCE last month said it would record a second-quarter charge
of $450 million to $650 million before taxes, or $300 million to
$425 million after tax.
The loss of San Onofre, which supplied power to more than
1.4 million homes in Southern California, has put extra pressure
on California's electric grid this summer, although the grid's
operator has said the state will likely get through the summer
without any service disruptions.
SCE has started the long process of decommissioning the
plant, in which it owns a 78 percent stake. Sempra Energy's
San Diego Gas and Electric (SDG&E) owns 20
percent and the city of Riverside, California, also has a small