So today I removed the cut-off. I found that there is a plastic (?) insulator between the cover and the base (see photo). The insulator was intact on the left side (battery side) but was broken on the right side (generator side) so it was arcing between the cover and the grounded base by the terminal screw. I built up the missing insulator with PC-7 epoxy and problem solved. Thanks everyone for the help. John
