Chubu Electric Power Co.,Inc. | February 2018 Regular Press Conference : President Katsuno's Message - Key Point of President's Regular Press Conference (2018)

Key Point of President's Regular Press Conference (2018) February 2018 Regular Press Conference : President Katsuno's Message

February 27, 2018

Chubu Electric Power Co.,Inc.

  • Today I will be discussing the following matter:
    • Establishment of energy sales company in Tokyo metropolitan area

Development behind establishment of joint sales venture

  • In addition to jointly constructing the Mie-Shiga Pipeline and participating in the Freeport LNG Project together, Osaka Gas and Chubu Electric Power Company have cooperatively developed businesses in various energy-related areas and have discussed possibilities of further collaboration.
  • Competition in the energy field is intensifying after full deregulation in Japan’s electric power and gas retail in 2016 and 2017, respectively. Customer needs are becoming more diverse and advanced than ever. What’s necessary for encouraging customers to choose our energy amid this stiff competition is to precisely tailor to customer needs and to provide new value exceeding customer expectations.
  • Sharing awareness of the current business climate, the two companies have been discussing ways in which they can collaborate in sales and accordingly decided to establish a joint venture company that engages in sales businesses in the Tokyo metropolitan area. This will be achieved by sharing a basic principle of bringing together the two companies’ managerial resources to build a new business model differing from previous electric power or gas utilities, in hopes of creating new value that serves to customers’ daily life and thereby living up to customer expectations.
  • Establishing the joint sales venture is considered to be a significant contribution to enhancing the two companies’ corporate value.
    For Chubu Electric Power, the establishment will translate into accelerated sales operations and full gas sales rollout in the greater Tokyo area; for Osaka Gas, the new venture will lead to taking on new challenges of expanding business in Tokyo and in nearby prefectures.

Business model goal

  • The goal of the joint venture is to achieve the following three business models.
  • The first is a low-priced, stable electric power and gas supply model. As for power and gas procurement, the joint venture looks to provide valuable electric power and gas to customers, combining JERA’s power/gas resources and market procurement methods to establish a competitive portfolio.
  • The second model involves electricity and gas professionals suggesting products extensively ranged both in quality and in lineup.
  • Each business has its own characteristics. The electricity business has been supplying power in a wide-ranging and stable manner using expansive transmission and distribution networks; meanwhile, the gas business has been ensuring safety and offering equipment and services alike to customers through shops and other close customer interaction points. Combining and mutually complementing their managerial resources and sales networks, Osaka Gas and Chubu Electric Power hope to see energy professionals offer best-fit gas and power suggestions to customers. For households, the two companies will make optimal electricity or gas-related suggestions matching daily customer lives. For corporate clients, the two companies will establish a lineup of extensive and high-quality suggestions that go further than energy supply: examples include production line improvement and facility management suggestions mixing development-integrated solutions with industrial burner technologies, the former being Chubu Electric Power’s strong point and the latter a forte of Osaka Gas.
  • The two companies will also couple products that the other lacks, thereby building a partnership that allows for providing customers with more valuable services.
  • The third model involves creating new value conducive to customers’ daily lives and businesses using technologies based on the Internet of Things (IoT).
  • Chubu Electric Power recently announced the establishment of a new company that provides households with IoT equipment-based lifestyle support (smart home) services. Harnessing a service platform built with this new initiative and Osaka Gas’ big data analysis technology, efforts will be made to develop a new service that can bring convenience and comfort to customers’ daily lives. Combining know-how in social infrastructure administration, which the two companies fostered through their energy businesses, Chubu Electric Power and Osaka Gas look to not only suggest the best lifestyle for each household but also to develop next-generation social infrastructure connecting energy and social infrastructures with equipment belonging to customers, thereby offering improved convenience to local customers.

Sales target

  • Partnering with various firms that have customer bases in the greater Tokyo area and developing/rolling out new business models to cater to wide-ranging customer needs, Chubu Electric Power aims to provide services to some 3 million customers in the future, selling 20 billion kWh of electricity and roughly 1 million ton of gas in the Tokyo metropolitan area in around 2030.
  • As a leading company providing customers with better-than-expected services ahead of competitors, Chubu Electric Power seeks to become a total energy service corporation that goes ahead of others. The establishment of the new company allows for new gas sales operations and the provision of added value services in the greater Tokyo area. Chubu Electric Power will accordingly roll out innovative and new businesses at an increasingly faster pace.

Overview of new company

  • Before ending my presentation, I would like to give an overview of the new company.
  • The new company will launch on April 2. It will start providing customers with services after obtaining authorization, arranging systems, and finishing other preparations for sales operations. The new company, named CD Energy Direct Co., Ltd., will separately announce the specific timing in which services are to start.
  • The “C” and “D” come from the first letters of “Challenge” and “Dynamic,” reflecting hopes for the new company to take on challenges in creating new value, expand business in a dynamic fashion, and directly cater to customer requests. C and D also stand for “Chuden” and “Daigas,” short for Chubu Electric Power and Osaka Gas.
  • CD Energy Direct will start with a capital of 1.75 billion yen and be headquartered in Chuo-ku, Tokyo. As for the firm’s management, Shinji Ozu from Chubu Electric Power will be appointed as president and director.
  • Displaying strengths of Osaka Gas and Chubu Electric Power, CD Energy Direct seeks to serve as a top-choice energy marketer for a greater number of customers and prove to be successful .