Chubu Electric Power Co.,Inc. | July 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) July 2018 Regular Press Conference : President Katsuno's Message

July 31, 2018

Chubu Electric Power Co.,Inc.

  • First, I would like to express my heartfelt sympathies for the people affected by the tropical storm Jongdari that swept over Japan.
  • Over 200,000 homes experienced blackouts especially around the Aichi, Mie and Shizuoka Prefectures in the Chubu region due to power lines severed by fallen trees and flying objects caused by strong winds.
  • I apologize sincerely to all customers affected by the blackouts for all the inconvenience and anxiety.
  • Next, I would like to talk about the electricity demand for this summer.
  • Electricity demand has increased as a result of the heat wave that struck Japan in mid-July. On July 23rd, demand reached a record 26,070,000 kW, the highest for the Chubu Electric Power’s area since the 2011 Tohoku earthquake.
  • Chubu Electric Power has set the projected maximum electricity demand at a certain point for this summer’s heat at 26.27 million kW in the Electricity Supply-Demand Verification Subcommittee held by the government. However, our supply capability for August is approximately 28.5 million kW with a reserve capacity of 8.4%— we expect to be able to provide a stable supply of electricity this summer.
  • By further ensuring the operation and maintenance of thermal power and hydropower plants, power transmission facilities and transformers, we will endeavor to provide electricity in a stable manner.
  • It is my hope that our customers do not overexert themselves and use air conditioning and other measures to protect themselves from the heat.
  • I will be discussing the following matters today:
    • FY2018 first quarter financial results
    • Sales efforts
    • Efforts in educating the next generation

FY2018 first quarter financial results

  • I would first like to speak about the FY2018 first quarter financial results.
  • Chubu Electric Power’s consolidated sales for the first quarter of FY2018 was 684 billion yen.
  • While electric power sales fell, increases in fuel cost adjustments and surcharges and subsidies pertaining to renewable energy resulted in a 29 billion yen increase in revenue on a year-on-year basis.
  • Consolidated ordinary income was 39.5 billion yen.
  • The factors for its increase are as follows.
  • While electric power sales fell, there were a few factors that improved revenue such as increases in efficiency and in electricity sold to other utilities. There were also temporary factors that increased revenue such as a reduction in thermal power generation fuel costs as hydropower output increases, as well as increases in JERA profits. All together profits increase by 11 billion yen.
  • Chubu Electric Power’s profit excluding cut-off errors was around 53 billion yen but the actual figures are presumed to be around 44 billion yen, excluding the 9 billion yen from temporary revenue improving factors.
  • As for the earnings outlook for FY2018, the forecasted earning values announced on April 27 have been corrected to reflect the latest performance trends.
  • Consolidated sales are expected to be around 2980 billion yen: a revenue increase due to the increases in fuel cost adjustments.
  • Consolidated ordinary income is expected to be around 100 billion: a decline in profits due to an increase in losses from cut-off errors as a result of rising fuel prices.
  • Profits excluding cut-off errors are expected to reach the managerial goal of 150 billion yen, unchanged from the previously announced figure.
  • Chubu Electric Power will maintain company-wide efforts to streamline its management, work to increase revenue and meet the expectations and trust of customers, shareholders and society.

Sales efforts

  • I now turn to discuss two of our sales initiatives.
  • I would first like to talk about the establishment of “CS Energy Service Co., Ltd.” which we announced today.
  • Today, Chubu Electric Power and Chubu Gas concluded a joint venture agreement to establish a new company, ”CS Energy Service Co., Ltd. ” that will be selling gas and electricity to corporate customers in the Higashi Mikawa region in Aichi Prefecture and the Seien region in Shizuoka Prefecture.
  • There are many factories in this region that use heat sources such as heavy oil and LP gas. The new company will be promoting a switchover to the more environmentally friendly natural gas, as well as providing bundled electricity and gas plans with discounts.
  • Both companies will continue to meet the expectations and trust of people of the region and explore opportunities to further ties in providing our customers with more valuable services.
  • Next, I will speak about “Korekara Denki” announced on the July 23.
  • With the sequential conclusion of the Feed-in-tariff Program for Renewable Energy after November 2019, customers with residential solar power generation facilities may end up transmitting electricity to the system without compensation.
  • Therefore, we recommend customers enter into a new electricity sales contract with an electricity retailer before the end of the guaranteed purchase period.
  • Chubu Electric Power will continue to actively purchase electricity after the conclusion of the guaranteed purchase period. At the same time, Chubu Electric Power will be starting a new service, “Kokokara Denki” that will enable customers to use the electricity generated across “time” and “location” using the latest technology such as AI, IoT and block chain.
  • Specifically, the service will provide a “place” for customers to trade the electricity they generated in many forms. Examples include using electricity they generated during the day at night or sharing the electricity with family members living far away or with companies they want to support.
  • Electricity transactions used to be conducted strictly between “the customer and the utility”. Such transactions are expected to take many forms in the future—between individuals or between an individual and a company.
  • “Korekara Denki” will be a significant step for services that cater to these kinds of future transactions. Chubu Electric Power is looking forward to announcing the details as they are determined.

Educating the next generation

  • To conclude the presentation, I would like to speak about Chubu Electric Power’s “initiatives to educate the next generation” and our events scheduled at the PR Exhibition Pavilion for summer break.
  • Having the children who will be responsible for the future take an interest and feel close to energy and environmental problems is important for Japan’s future as an island nation with scarce energy resources. Chubu Power Electric has been actively promoting “education for the next generation” as a priority in our social contributions.
  • Our initiatives to educate the next generation are divided into five large categories, including operating the PR Exhibition Pavilion, holding lectures at elementary schools and handing out large informational posters.
  • In 2017, the PR Exhibition Pavilion welcomed 630,000 visitors, and approximately 850 lectures and facility tours were held with 26,000 people participating.
  • The “Electricity Museum” in Fushimi is especially popular, receiving about 300,000 visitors each year. The exhibits were overhauled in March of this year to introduce a new exhibition space that allows visitors to experience a convenient world that utilizes the latest AI and IoT technology.
  • Many events for children will be held at all Exhibition Halls during the summer break. I hope that this will provide, for as people as possible, an engaging opportunity to learn about energy and environmental problems.