Key Point of President's Regular Press Conference

July 2023 Regular Press Conference : President Hayashi's Message

July 28, 2023
Chubu Electric Power Co.,Inc.

I will be discussing the following matters today:
- Financial results for the first quarter of fiscal 2023
- Improvement plan created in response to the business improvement order issued by the METI Minister and the reports made in response to the statement of direction from the Commissioner of the Agency for Natural Resources and Energy

Financial Results for the First Quarter of FY 2023

First, I will talk about the financial results for the first quarter of fiscal 2023.
As announced by Vice President Hitoshi Mizutani earlier, the consolidated net sales for the first quarter were 897.6 billion yen, an increase of 131.6 billion yen year-on-year driven by an increase in fuel cost adjustment.
Ordinary income was 242.9 billion yen, increased by 210.7 billion yen year-on-year as a result of the time-lag loss turning to time-lag gain and the raising of Special High-voltage and High-voltage standard rate plans.
To reduce the burden on the Special High-voltage and High voltage customers as much as possible, we have been providing discounts to electricity rates since June 2023, made possible by spot fuel prices trading at lower levels.
Next, the FY2023 business forecast announced on April 28 was revised based on the recent fuel price trends.
Consolidated ordinary income is expected to be around 310 billion yen, an increase by 30 billion yen from the previously announced amount due to an increase in time-lag profit from falling fuel prices. Ordinary income excluding time-lag is expected to be around 200 billion yen, unchanged from the previous announcement.
Through fuel have been trading at low prices recently, the Ukraine War is still ongoing. We will continue to monitor fuel price trends and electricity supply and demand carefully, and each business area will step up their risk management efforts and expand their ability to respond to market fluctuations.

Improvement plan in response to the business improvement order and reports in response to the statement of direction

Next, I will talk about the improvement plan we created in response to the business improvement order issued by the METI Minister and the reports which was made in response to the statement of direction from the Commissioner of the Agency for Natural Resources and Energy.
I apologize sincerely for the concern we have caused our customers, shareholder, people of the community, our business partners, and other parties concerned, with this business improvement order and statement of direction.
As explained by Shinya Otani, President of Chubu Electric Power Miraiz and the Ryuji Nakatani of the Corporate Planning & Strategy Division, today, Chubu Electric Power Miraiz submitted the improvement plan in response to the business improvement order and Chubu Electric Power and Chubu Electric Power Miraiz made a report in response to the statement of direction.
In accordance with to the Thorough Compliance Measures put together on April 7, the Chubu Electric Power Group is currently working to deepen compliance awareness through lectures by experts and trainings, and strengthen mechanisms to comply with Anti-Monopoly Act by banning employee interactions with competitors as a rule.
In addition, the following measures will be implemented in response to the business improvement order.
Chubu Electric Power Miraiz will establish the Improvement Plan Monitoring Committee half of which will be comprised of people outside of the organization. The Committee will continually monitor and assess the implementation status of the improvement plan and advise Chubu Electric Power Miraiz on necessary revisions from an outside perspective.
In addition to this monitoring by an organization half of which is comprised by people outside of the company, initiatives will continue to be steadily executed based on the following perspectives:
- Continue internal auditing
- Develop rules on interacting with other utilities and ensure compliance thorough pre- and post- controls
- Perform legal compliance monitoring in internal meetings
- Enhance trainings on competition, ensure effectiveness
- Internally disseminate the existence of the internal leniency system and internal reporting system, and ensure their effectiveness
The Group as a whole will advance initiatives to ensure compliance so as to never come under suspicions related to the Anti-Monopoly Act again.
In response to the directions for Chubu Electric Power and Chubu Electric Power Miraiz, Chubu Electric Power reported on reinforcing indiscriminate wholesale of power generated by the Group to entities within and outside the Group and building stable power trading relationships with diverse counterparties and with short-term to long-term durations, and Chubu Electric Power Miraiz on the specifics of expanding the number of options in stable and attractive price plans and services.
In regards to this, the directors of Chubu Electric Power and Chubu Electric Power Miraiz have been issued directives and officers have decided to voluntarily return their executive compensation.
The Chubu Electric Power and Chubu Electric Power Miraiz board of directors each decided to instruct the directors of both companies including myself, to “take the business improvement order from the METI Minister and the statement of direction from the Commissioner of the Agency of Natural Resources and Energy seriously, and to steadily implement recurrence prevention measures to never receive such orders and directions again.”
In addition, Chaiman Satoru Katsuno and I will voluntarily return 30%, and the five directors of Chubu Electric Power and Chubu Electric Power Miraiz will return 15% of our salaries for two months, August and September.
Finally, the Chubu Electric Group will do our utmost to ensure the sound development of the electricity business and to recover the trust from our customers, shareholders, local community, business partners and other parties concerned by continuing on with existing initiatives and implementing the initiatives laid out in the reports to the METI Minister and the Commissioner of the Agency of Natural Resources and Energy.

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