March 2020 Regular Press Conference : President Katsuno's Message

Today, I would like to take a look back on my five years as president of the Chubu Electric Power Group.

• Before addressing the main topic of today’s press conference, I would like to mention that we are currently working to restore power to approximately 250 of the households affected by snowfall the day before yesterday that interrupted power in Nagano Prefecture. I would like to extend my sincerest apologies for the inconvenience and anxiety that more than 16,000 households are experiencing. We are doing everything we can to reestablish service today and bring relief to those affected by this outage.
• Five years ago, when I first started serving as president, was the time when Japan had just begun reforming its electricity system, the aim of which was to establish resilient and sustainable electricity supply systems. Chubu Electric Power faced loads of issues. We needed to establish a marketing strategy for the upcoming full-scale liberalization of retail electricity and gas sales, integrate our fuel and thermal power generation business with Tokyo Electric Power Company, implement measures to enhance the safety of Hamaoka Nuclear Power Station, prepare for the legally-mandated separation of the electricity distribution and transmission business, and address many other matters. It was a time when historic change had begun to take place.
• Over these past five years, I worked diligently to attend to each and every one of these issues. Now, we will finally embrace a new business structure tomorrow.
• This accomplishment has been made possible by each and every one of you, our employees, who understood our objectives well and worked diligently to achieve greater efficiency and improve our operations. I would once again like to take this opportunity to express my appreciation to you all.
• Our business environment has undergone changes as the result of policies, and this has facilitated the adoption of a significant volume of decentralized power sources, of which solar photovoltaic power has been the most common, as well as the introduction of smart meters in the lead up to full-scale liberalization. In combination with the rapid advances made in digital technology, these are being applied to upgrade our power transmission and distribution network as well as improve the convenience of home life. They also make economic development possible as well as provide solutions to social issues, allowing us to contribute to the realization of “Society 5.0.”
• In addition, we are now able to streamline our power transmission and distribution system and efficiently utilize energy. This will also contribute to the realization of a low-carbon society, a pressing global issue that must be addressed.
• The “Chubu Electric Power Group Management Vision,” released in 2018, states:

• In our energy business, coinciding with the spin-off of power transmission and distribution, we will transition to a business model that separates power production from sales, and deliver even safer, more affordable, and more resilient good-quality energy.
• In new growth areas, we will evolve our present energy infrastructure into a community support infrastructure so that we may contribute to the resolution of a variety of social issues.

Focusing on these two points, we made strategic arrangements to improve our business structure with the adoption of an in-house company system, integration of our businesses into JERA, creation of the Business Development Division, establishment of sales companies, as well as other major organizational changes and transfers of authority.

• We have made strategic investments in key areas and taken steps toward realizing our Management Vision.
• Through these initiatives, JERA has established a comprehensive alliance throughout the entire value chain from upstream investments and fuel procurement to power generation. Even as it plays a core role coordinating fluctuations in demand and supply in the difficult business environment moving toward a low-carbon society, the company has advanced steadily apace strengthening cost competitiveness and creating new revenue streams.
• In our sales business as well, a new market for electricity transactions has developed, which makes for a very competitive environment. Even so, our respective sales companies have promoted marketing activities tailored to each area and product while they personally accommodate customers.
• In areas where we have made strategic investments, we have been aggressive, launching new services and furnishing new communities, which include Minamori-Pole, information banking service MINLY, and smart meter automated metering, and we have expanded overseas participating in a submarine power transmission business in Germany, acquiring the Dutch company Eneco, and making other dynamic moves. These investments will also produce a synergistic effect with our domestic businesses.
• The Hamaoka Nuclear Power Station is one of our key management challenges. We have been wholeheartedly addressing the review conducted by the Nuclear Regulation Authority and have steadily, albeit one step at a time, making progress toward the configuration of reference ground motion and reference tsunami.
• In recent years, natural disasters have caused a succession of major power outages. These instances have renewed our appreciation that “electric power is the infrastructure supporting all infrastructures” as well as the great social need for a stable supply, and we have worked to enhance our resilience to natural disasters.
• It has been the Chubu Electric Power Group’s unwavering mission to realize “S+3E,” our aim of simultaneously providing a stable supply of energy and achieving economic efficiency, environmental compatibility on the grand premise of ensuring safety. Upon that foundation, we will consistently focus on the two challenges that we face of creating new value in view of changes in the times and evolving into a community support infrastructure. I believe that we have been able to keep “one step ahead” in a way that has exceeded our customers’ and society’s expectations.
• Beginning in April, Chubu Electric Power will be at the stage where we will have to steadily implement the arrangements, which we have put in place, under a new business structure in which not only are production and sales separate, but power transmission and distribution have been spun off into another company.
• The year 2020 will be the year of this new business structure and, most certainly, our “second foundation.”
• We foresee that this will continue to be a time of great change. I hope that, with our new president Hayashi at the helm, the entire group will unite and further accelerate this “one step ahead” business strategy that we have pursued.
• In my new position as chairman, I will also do my utmost to make sure the entire Chubu Electric Power Group achieves even greater growth.
• Lastly, I would like to express my heartfelt gratitude to our customers, business partners, the media, our employees and all our stakeholders for the enormous support, understanding and cooperation that you have provided.
• This ends my presentation.

• I am Senior Managing Executive Officer Kingo Hayashi.
• I would like to discuss the efforts that we will be making to address our management challenges in FY 2020. However, before that, I would like to express my thoughts on my installation as president tomorrow.
• Ahead of the company split to be executed tomorrow, I again feel the intensity and determination inherent in the weighty responsibility that the president must bear.
• With the environment in which our company operates about to reach a historical turning point, all Chubu Electric Power Group employees and partners need to share in our Management Vision, and each and every one of us must take it upon himself or herself to implement concrete policies in order for us to achieve that vision.
• So that we may promptly and faithfully meet the expectations of our stakeholders, we will aim to be a “robust and flexible corporate group,” of which I will take the lead as we all unite together with our group partners and move forward.
• With your continued assistance, I will do my utmost with passion and conviction to meet your expectations. I hope that you will join me and support me in this endeavor.
• Now, I would like to discuss our initiatives for meeting the management challenges we face in FY2020.
• Today, Chubu Electric Power released the publication “2020 Initiatives for Meeting Chubu Electric Power Group’s Management Challenges,” which summarizes that concrete actions that we will take to realize the Management Vision formulated in 2018 and achieve our FY2021 management targets.
• The environment in which the Chubu Electric Power Group operates has dramatically changed with society’s strong demands for a low-carbon society, the rapid progress made in digitalization, as well as decentralization and local consumption of local production using renewable energy sources.
• To address the changes in our business environment, we will transition to a business model in which power production and sales are separate that will also see the spinoff of our sales divisions in addition to the legally-mandated separation of the power transmission and distribution divisions.
• Personally accommodating customers in each of these different markets and pursuing independent initiatives will better assure the safe and affordable energy that we supply.
• In addition, our new business structure will comprise three pillars: reliable supply and resilience, realization of a low-carbon society, and the creation and provision of new value. We will further accelerate our previous efforts so that we will achieve our profit targets, promote ESG management, and contribute to the SDGs.
• In seeking to realize these, we will advance four priority initiatives.
• To begin, I would like to explain the first priority initiative which is to further improve the safety of Hamaoka Nuclear Power Station.
• Currently, the Nuclear Regulation Authority is conducting a review of the Hamaoka Nuclear Power Station to determine if the power station complies with the new regulatory requirements. Once the definitions of reference ground motion and reference tsunami are largely finalized, the review will proceed onto aspects related to the plant and we will be able to explain our safety improvement measures based on these standards.
• We will continue to earnestly cooperate with the review and make the maximum effort possible so that the Nuclear Regulation Authority will be able to verify the Hamaoka Nuclear Power Station’s compliance with the new regulatory requirements at an early date.
• We will also work to further develop our disaster prevention system and enhance our training as well as strive to provide meticulous explanations to the community and society about both the tangible and intangible safety aspects of the Hamaoka Nuclear Power Station. These efforts will help the power station build even greater trust with society and the community.
• Next, I would like to explain the second priority which is the stable supply in a new age.
• With the ever-increasing adoption of renewable energies, we will coordinate output of our thermal power generation facilities and employ other means to maintain a stable supply in the Chubu area. We will also work to further enhance the functionality of our grid by utilizing ICT as well as installing next generation power distribution equipment as we strive to ensure electric power quality and streamline equipment formations.
• In aiming to enhance our resilience, we will work to promptly restore service when disasters occur, further accelerate the removal of utility poles and installation of electric cables underground, utilize hydroelectric dams for flood control, strengthen our cybersecurity, in addition to other efforts.
• Next, I would like to explain the third priority which is the strengthening of our business foundation and realizing sustainable growth.
• Across the various business sectors of the energy value chain comprising power production, transmission and distribution, and sales, the entire group will implement initiatives aimed at realizing a low-carbon society. These efforts will include expanding renewables and promoting installation of electrical appliances in homes and buildings.
• In addition, we will actively expand our business in other countries and strive to increase revenue through synergy with our domestic operations. JERA will also endeavor to stably deliver internationally competitive energy and enhance the value of the entire Chubu Electric Power Group.
• Lastly, I would like to explain the fourth priority which is the acceleration of business development in new growth areas.
• Chubu Electric Power Group will work to create and provide services that utilize cutting-edge technologies framed with the keywords low-carbon society, customer focus, and digitalization.
• Combining various types of data acquired through our electric power and information communication networks, we will deliver, along with our energy services, “expanding value through connectedness” tailored to address issues that people face in their lives as well as challenges confronting industry and communities.
• I would like to continue on and discuss our management targets.
• Chubu Electric Power Group will continue to work to achieve the management targets that we have set as well as achieve consolidated ordinary income of ¥170 billion or more in FY2021 and consolidated ordinary income of ¥250 billion or more in the second half of the 2020s, which were laid out in the Management Vision.
• We also need to realize sustainable growth in our future as we seek to achieve our Management Vision.
• Chubu Electric Power Group will make aggregate strategic investments for business growth and development of more than ¥400 billion over the five years from FY2019 until FY2023.
• We will continue to appropriately manage risk and ensure sustainable growth.
• We will steadily pursue these four priority initiatives so that we may deliver good-quality energy safely, affordably, and stably. Through the creation of community support infrastructure, we will contribute to solutions for social issues, of which the realization of a low-carbon society is a top priority.
• Also, no matter what changes take place in the business environment and systems, we must always bear in mind that compliance is the universal foundation upon which we operate. Even after our company split, the entire group must work together as we pursue activities in our aim to be a corporate group that is trusted by our stakeholders.
• This ends my presentation.