Key Point of President's Regular Press Conference

November 2017 Regular Press Conference : President Katsuno's Message

November 28, 2017
Chubu Electric Power Co.,Inc.

Today I will be discussing the following three matters:
- Reorganization
- Use of information and communications technology (ICT)
- Company-wide emergency preparedness drill

Reorganization

I would like to begin by talking about our reorganization.
Last April, Chubu Electric Power introduced an internal company system into its power generation, power transmission and distribution, and retail businesses. Efforts to reinforce business operations have been underway by harnessing each internal company’s autonomy. Examples include the implementation of new measures and flexible management decisions based on changes in the business environment.
A year and a half has passed since we introduced the system. Each internal company had set business plans and objectives, which resulted in translating their efforts into results in regard to strategy planning/implementation and cash flow control. I feel that an autonomous business operation system, headed by the internal company presidents, is beginning to steadily take root.
In the meantime, the business environment surrounding Chubu Electric Power will change at an increasingly rapid pace. Examples include the full retail deregulation of electric power and gas as well as progress in the electric power system reform.
In order for each internal company to more flexibly and swiftly address such changes, Chubu Electric Power has decided to entirely reorganize itself next April. This initiative involves further transferring Regional Offices and frontline business site functions to the internal companies and restructuring Headquarter functions.
First I would like to explain about the reorganization of internal companies.
An Audit Group tasked with reinforcing governance functions and a General Affairs Department, the objective of which is to strengthen management functions such as general affairs and personnel, will be newly established as organizations common across the internal companies.
R egarding significant changes made to each internal company, the Power Generation Company’s Thermal Power Administration Center, which administrates thermal power stations, will be discontinued. We will establish a double-layered system consisting of the Thermal Power Generation Business Department and thermal stations, in turn enhancing each station’s autonomy and achieving streamlined station operations.
As for the Power Network Company, we will transfer Customer Service Offices and Field Maintenance Construction Offices responsible for practical power transmission and distribution operations: They will be moved from current Regional Offices to become a part of the Power Network Company. At the same time, new Offices will be established to administrate said bodies.
Finally, for the Customer Service & Sales Company, customer service functions of Regional Offices - tasked with local sales activities - will be relabeled as a Community Customer Service Division to swiftly and flexibly address changes in the competitive environment concerning sales businesses. The functions will be transferred from current Regional Offices to the Customer Service & Sales Company.
Thus, the three internal companies will have control ranging from the headquarters to their frontline business sites. That would allow for establishing organizations that are headed by internal company presidents, in turn enabling internal companies to further promote their autonomous executive operations.
I’d like to move on to the reorganization of the headquarters.
Based on two major viewpoints, i.e. reinforcing strategic functions and streamlining/upgrading the quality of common service functions, Chubu Electric Power will reorganize the headquarters into the Corporate Division, Office, and Center, depending on functions.
The Corporate Division will be responsible for strategic functions, such as drawing up growth strategies and optimally allocating management resources to maximize Chubu Electric Power Group’s corporate value.
The Office will be responsible for optimizing business operations, e.g. controlling and adjusting Chubu Electric Power’s management department.
Related management functions will be brought together to the Center to both streamline and improve the quality of Chubu Electric Power’s common service functions that go beyond the boundaries of internal companies.
Regional Offices will still be tasked with arranging community response activities, which are key initiatives that have been undertaken in local communities. They also will continue to manage emergency preparedness businesses that straddle the internal companies.
Thermal power generation businesses are to be integrated into JERA in the first half of FY2019, and the legal unbundling of the power transmission and distribution department is to take place by April 2020. In view of these developments, Chubu Electric Power is deliberating on spinning off its thermal power generation, power transmission and distribution, and retail business units in its future business system.
Chubu Electric Power will stay ahead of the competition by quickly developing a new business model that copes with changes in the business environment, and accordingly creating new value that can live up to the trust and expectations of customers, society, and shareholders alike.

Use of ICT

I now turn to the use of ICT.
Technological innovations prompted by the so-called Fourth Industrial Revolution, such as the IoT - which connects various items in a person’s surrounding through a network - as well as big data analysis and the usage of artificial intelligence (AI), are starting to affect workstyles and lifestyles in addition to such economic activities as production, sales, and consumption.
Chubu Electric Power is putting effort into creating new businesses and services that take advantage of ICT. As announced this June, we are promoting an Open Innovation initiative that incorporates new ideas and innovative technologies from external sources, aiming to develop services speedily and efficiently as well as to roll out businesses.
Regarding the Chuden Open Innovation Environment “COE (Voice)” and Chuden Open Innovation Laboratory “COLab (Collaboration)” that we introduced in June, my presentation today will focus on “COE (Voice)”.
Aiming to develop new services and to roll out businesses, COE, a website dedicated to the Open Innovation initiative, took applications for many different services and ideas relating to three topics.
One such topic is COE Business Factory 2017, for which we received 29 applications. This program’s objective is to work with start-ups, universities, and research institutions to create a new service that harnesses the Power Network Company’s information and power transmission and distribution equipment.
We have seen many proposals that offer innovative ideas. For instance, one application involved an autopilot drone logistics service that takes advantage of electric cable routes.
Another topic for which we are taking applications is the Smart Pole Project. This is a program to develop new local services by attaching electronic paper, sensors, and cameras onto Chubu Electric Power’s utility poles.
We have taken applications from 21 firms so far. Their proposals are ingenious; one example is a service that uses cameras attached to utility poles to identify the gender and age of a passer-by, in turn displaying information optimal for that individual.
The third topic is the Public Call for COE Technology and Solution Proposals 2017. In this program, we receive a wide range of technological and solution-related proposals on our business issues to further advance and streamline our businesses.
The call for this program is open until December 22. There have been 17 applications so far, and the proposals hold the promise of being harnessed in practical businesses, e.g. a system using radios to prevent losing transient equipment.
I now turn to “COLab (Collaboration)”. This institution started to fully operate in November as a verification and development laboratory for promoting ICT-based Open Innovation initiatives.
COLab was established as a platform for start-ups, universities, research institutions, as well as Chubu Electric Power to share ideas on the development of new services and to verify the effectiveness of those concepts. The latest ICT and open-source software are available for use at COLab.
COLab for instance provides a café-like meeting space where people can relax and share ideas. It also has a software development room that houses permanently-installed AI speakers.
Ideas that were put into tangible form at COLab with ICT will be available for customers to use in the laboratory. New services will be developed based on customers’ comments and requests.

Company-wide emergency preparedness drill

Before ending my presentation, I would like to talk about Chubu Electric Power’s company-wide emergency preparedness drill.
Chubu Electric Power has been undertaking these drills annually in preparation for major earthquakes. This fiscal year is no exception: On December 7 and 8, we will be conducting a drill in which all business sites are to participate.
The drill anticipates a large-scale blackout and nuclear emergency resulting from a massive earthquake in the Nankai Trough, taking place at 9 AM on a weekday.
Moreover, the drill will be performed without its scenario being announced beforehand. It will focus on initial responses relating to establishing the Emergency Task Force Headquarters, which addresses large-scale blackouts after earthquakes, and the Emergency Response Organization that copes with nuclear emergencies. The drill will also involve the identification of damages and subsequent responses for early recovery, and will be conducted without disclosing the scenario beforehand.
This ends my presentation.

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