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Press Releases and Other Company News FY 2010 May Summary of Remarks at Press Conference held by the Federation of Electric Power Companies of Japan and Toshio Mita, President of Chubu Electric Power Co., Inc

May 21, 2010

Chubu Electric Power Co.,Inc.

Today,  I will be discussing two items:

  • Trends in electricity demand in the Chubu Region
  • Chubu Electric's initiatives in its overseas energy projects

Trends in electricity demand in the Chubu Region

  • I will begin by considering trends in electricity demand in the Chubu Region.
  • Electricity sales to high-volume customers in the last fiscal year fell below results for the previous fiscal year, recording a year-on-year growth rate of minus 9.1%, in part because the continuing economic slowdown since fall 2008 generated a decline in production in almost all industries, in particular machinery and iron and steel. This minus 9.1% year-on-year growth rate is our most significant decline ever, surpassing the effect of the first oil shock.
  • Considered by month, electricity sales to high-volume customers fell below results for the previous fiscal year for 16 consecutive months from August 2008. However, in part because the severely reduced level of production is reviving, we recorded positive growth of sales in December 2009, and since then we have been shifting to a recovery footing.
  • We are still analyzing details, but we expect electricity sales to high-volume customers to record positive year-on-year growth of 19.3% in April 2010, and that we will exceed results for the previous year for five consecutive months.
  • However, if compared to results for fiscal 2007, prior to the global financial crisis or the "Lehman Brothers shock," electricity sales to high-volume customers for April 2010 remain at the low level of minus 8.6% growth, and we therefore feel that business conditions remain severe.
  • As you are aware, the Chubu Region is a significant manufacturing base, and one of the region's major characteristics is the fact that the machinery industry represents an approximately 40% share of the region's total industry.
  • The "machinery" category encompasses, among other industries, automotive-related industries and industries related to the production of liquid crystals and semiconductors for digital electronic products. These are all industries with broad bases, and their production activities exert an influence on other industries, such as basic material industries.
  • Additionally, approximately half of the nation's aeronautics industry is clustered in the Chubu Region. This industry is similar to the automotive industry in terms of the breadth of its base, and has the potential to be a major pillar of the regional economy. It is attracting attention as a next-generation manufacturing industry.
  • While pockets of difficulty remain in the economy in our region, we feel that factors including the effects of economic policy and increased exports, in particular to Asia, have seen it begin to gradually recover.
  • For the future, while at present we can expect a gradual recovery, there are numerous causes for concern, including a continuing high unemployment rate, the exhaustion of economic policy, and a risk of downturns in overseas economies, and we must therefore carefully watch future trends.
  • I personally believe that manufacturing, the foundation of the Chubu Region's economy, will continue its growth, and that this will promote the further development of the region.

Chubu Electric's initiatives in its overseas energy projects

  • To continue, I would like to discuss our initiatives in our overseas energy projects.
  • I have, in fact, only just returned from the inauguration ceremony for the Mesaieed A project, held on May 18 in Qatar.
  • Mesaieed A is a project involving the construction and operation of a 2 GW gas combined cycle power station in Mesaieed Industrial Area, located 40 km south of Doha, Qatar's capital. Having commenced construction in June 2007, we have now held the inauguration ceremony for the plant, and we expect to commence operation in summer this year.
    Chubu Electric acquired a stake and commenced its involvement in the project in May 2008.
  • Demand for electricity in Qatar is growing vigorously, and I have again been made keenly aware of the great significance of contributing to Qatar through our participation in this project.
  • As has already been announced, Chubu Electric's fiscal 2010 Management Plan newly specifies that we will proceed towards a target of a total investment of 100 billion yen in our overseas energy projects by fiscal 2015.
  • We positioned the period until fiscal 2010 as a time to build our overseas energy projects, and worked to secure new sources of income. We have determined that we are able to expect fixed revenues from the projects in which we have already been involved. We have, accordingly, set targets for the scale of our investments, and in future we will work actively to expand our overseas energy projects, based solidly on the experience and expertise that we have accumulated to the present.
  • We will position regions in which we have already participated in projects - Asia, North America, and the Middle East - as our focus areas for involvement in superior projects, specifically electricity generation projects, in particular high-efficiency gas thermal generation projects, and environment-related projects. In this we will, of course, give the strictest attention to business efficiency and risk management.  
  • Through our overseas energy projects, in addition to further expanding our profit base, we wish to make a contribution to the community in the countries in which we invest, and to the preservation of the global environment.

Looking back on four years

  • I think that this will be my last opportunity to speak to you as President of the company. I would like to say a few words looking back on my four years in the position.
  • In the four years since I became President in 2006, I have faced a variety of management challenges.
  • Commencing with the turbine problems in Hamaoka Nuclear Power Station Reactor No. 5, we have faced a continuing difficult management environment, confronting, among other events, rapidly increasing fossil fuel prices and a global business downturn originating in turbulence in financial markets.
  • Against this background, I have striven wholeheartedly, together with all of our employees who support Chubu Electric in its workplaces, to fulfill the mission of a public utility - to contribute to the regional economy by providing a stable supply of safe and affordable energy.
  • While I am sure that in some areas my efforts fell short and I did not achieve my goals, I believe nevertheless that I was able to fulfill my responsibilities with the generous support and cooperation of all concerned. I would like to take this opportunity to express my gratitude. I thank you sincerely.
  • Chubu Electric will face its challenges with a new team in place, including our new President, Mr. Mizuno, and I hope that everyone will look to the future with a positive attitude.

That concludes my remarks for today.