Started a post on adjusting cut out, but it gets pretty tricky. Will just say, that spring tension on cutout and air gap from core to lever are what control it and is is normally adjustable. Reverse bucking current is what opens the cutout and spring tension and air gap both have effect on that and closing them. Actualy, I have seen new cutouts that were wired incorrectly and they constantly arced (sparked) while closed and charging. Needless to say they would not open when shut down. Had two one day guy brought in he had bought from parts store, slipped on one of ours, worked fine. At any rate, your cutout is not working as intended, wrong polarity or set or wired wrong internally.
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