Chubu, Hokuriku to talk turbine costs with Hitachi

TOKYO, Dec 26 (Reuters) - Japanese utilities Chubu Electric Power Co. and Hokuriku Electric Power Co. said on Tuesday they have asked Hitachi Ltd. to discuss damages related to problems in Hitachi-designed turbines.

The Nihon Keizai business daily reported earlier that Chubu, Japan's third-biggest utility, has decided to seek damages of up to 100 billion yen ($842 million) from Hitachi to recover repair costs and missed profits.

One of Chubu Electric's nuclear power units automatically shut down in June because of turbine vibrations, causing the utility to halve its profit forecast for the business year ending next March.

An inspection of a unit at Hokuriku Electric in August revealed cracks in all three of its Hitachi-made turbines.

Both Chubu and Hokuriku said they would talk with Hitachi about repairs and additional costs such as oil and coal purchases for thermal power generation to compensate for the nuclear shutdown.

They added they have not decided on the amounts of damages they would seek.

Chubu had estimated that if the unit remains closed until March, it would have to boost oil purchases by 100 billion yen to generate enough thermal power to make up for the shutdown. The unit is still closed.

Fifth-ranked Hokuriku estimated earlier this year it would have to boost its oil and coal purchases by an extra 13 billion yen if the nuclear unit shutdown lasts until the end of March. The firm is expected to restart the troubled No. 2 Shiga nuclear unit in early May at the earliest.

The paper said talks with Hitachi will take place early in 2007.

Hitachi in September said it expected a group net loss of 55 billion yen for the year to March instead of a profit, factoring in an expected cost of 38 billion yen to fix the turbines it supplied to Chubu and Hokuriku.

But the country's biggest electronics conglomerate said in October it did not expect to pay compensation, although it said it could have tested its turbines more thoroughly.

The utilities had said that an increase in turbine size had triggered unforeseen currents and steam flows inside low-pressure turbines, causing cracks in the turbine wings and halting two of their nuclear power units.

In the talks, Hokuriku would seek a satisfactory settlement with Hitachi, not jeopardising their cooperative relationship, Junichiro Murosaki, head of Hokuriku's Tokyo branch office, told reporters.

Before the announcements, shares in Hitachi closed down 0.8 percent at 719 yen, underperforming a 0.45 percent rise in the benchmark Nikkei average . Chubu also slipped 0.8 percent to close at 3,580 yen, while Hokuriku fell 0.2 percent to 2,720 yen.

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