Nuclear power plant repairs could reach $65mn

Southern California Edison (SCE), an Edison International (NYSE: EIX) company, said costs associated with inspections and repairs to the 2,200 MW San Onofre Nuclear Generating Station (SONGS) could land between $55 million and $65 million. A spokesperson for the operator of the plant said the estimate is subject to Nuclear Regulatory Commission (NRC) review under the confirmatory action letter and subject to any new developments that may result from further analysis, testing and inspection.

Both units at SONGS are currently shut down for inspections, analysis and tests. Unit 2 was taken out of service Jan. 9 for a planned outage. Unit 3 was taken offline Jan. 31 after station operators detected a leak in one of the unit’s steam generator tubes. In April, Southern California Edison told the NRC that the company completed additional inspections of the SONGS Unit 2 steam generators, based on Unit 3 findings. SCE had identified wear in two of the 19,454 tubes in the Unit 2 generators that was similar to the type of wear that was previously seen in Unit 3.

The steam generators were supplied by Mitsubishi Heavy Industries (MHI) and are under warranty for an initial 20 years from acceptance.  The purchase agreement, while subject to certain exceptions, obligates MHI to repair or replace defective items, sets forth specified damages for certain repairs, and provides that MHI's liability under the purchase agreement is generally limited to $137 million in the aggregate and excludes consequential damages, defined to include the cost of replacement power, the spokesperson said.

SCE said replacement power costs for outages associated with the steam generator inspection and repair, commencing on Feb. 1, 2012 for Unit 3 and March 5, 2012 for Unit 2, through March 31, 2012 were about $30 million.

“Total replacement power costs will not be known until the Units are returned to service,” the spokesperson said in an email. “But costs for power are likely to be higher during the summer months should replacement power still be required at that time.”

Incremental inspection and repair costs totaled $30 million through mid-April, the spokesperson said.

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