Key Point of President's Regular Press Conference

Key Point of President's Regular Press Conference

December 2023 Regular Press Conference : President Hayashi's Message

December 26, 2023
Chubu Electric Power Co.,Inc.

  • I would like to preface this conference by expressing that we take it very seriously that on December 20, Chubu Electric Power and Chubu Electric Power Miraiz received opinion-hearing notices from the Japan Fair Trade Commission (JFTC) concerning a draft cease-and-desist order and a draft surcharge payment order for the supply of city gas for commercial and industrial customers in the Chubu area.
  • We apologize for the concern we are causing among related parties. Careful considerations will be made for our future actions by thoroughly examining the content of the notices and based on explanations about the content of and other factors related to the draft order.

  • I will be discussing the following matters today:
    • Transition to a Company with an Audit and Supervisory Committee
    • looking back on 2023 and our plans for the coming year

Transition to a Company with an Audit and Supervisory Committee

  • First, I will talk about our transition to a company with an audit and supervisory committee.
  • Chubu Electric Company voted in its Board of Directors meeting held today to transition from its current “company with a board of company auditors” system to a “company with an audit and supervisory committee.”
  • We are committed to delivering safe, affordable, and stable energy with consideration for the global environment, and contribute to the sustainable development of local communities and society by creating new value that enriches the lives of customers.
  • Aiming to become a corporate group that continues to grow with customers, Chubu Electric Power has also worked to enhance its corporate governance.
  • Balancing agile decision-making and an even higher level of governance will take on greater importance from here on, considering the demand for further efforts to achieve carbon neutrality and for businesses to create new value, as well as the necessity to respond to the demands of the capital market (e.g., improving PBR). To this end, we will need to further separate our business execution and supervision fronts.
  • More specifically, we will need to further deepen the separation between business execution and supervision which involves entrusting execution to the business execution front and having it thoroughly supervised by the Board of Directors.
  • Transitioning to a company with an audit and supervisory committee will allow for a significant and flexible delegation of business execution authority from the Board of Directors to the directors, and this is expected to enhance the agility and speed of decision-making related to business execution.
  • At the same time, the transition will allow for further strengthening the Board of Directors’ focused reviews on management policies and strategy establishments, as well as the function of supervising business execution.
  • Audit and supervisory committee members having a voting right in the Board of Directors will also further strengthen auditing and supervisory functions.
  • In determining the remuneration and proposals of personnel (e.g., directors), we have already established the Nomination and Remuneration Committee, a voluntary meeting consisting of myself—the President—and external directors. We will continue to ensure fairness and transparency by receiving advice from the external directors in the Committee.
  • We plan to make the transition by obtaining an approval on a required amendment of articles of association in the 100th General Meeting of Shareholders, scheduled to be hosted in June 2024.
  • The details of the amendment to the articles of association and personnel of executive officers, related to the transition, will be announced as soon as they are decided.

looking back on 2023 and our plans for the coming year

  • Next, I would like to reflect on this year and share aspirations for the coming year.
  • The global energy landscape (e.g., Russia’s invasion of Ukraine in 2022) has become increasingly turbulent and changed drastically in 2023, in turn reminding us of the profound impact the Chubu Electric Power Group can face particularly on the fronts of stable energy supply and energy costs.
  • I would like to discuss our “response to a drastically changing business environment,” “efforts to restart Hamaoka Nuclear Power Station,” and “reinforcement of compliance” to review the past year.

  • First is our response to a drastically changing business environment.
  • We revised our standard pricing menus for extra high-voltage and high-voltage customers starting this April. This was to stably deliver electricity to our customers, despite a significant increase in power supply procurement costs with the global rise in fuel costs and other uncertainties in the energy landscape.
  • In view of the decline in fuel prices and management efforts alike, we started to offer a discount to special high-voltage and high-voltage customers in June. At the same time, discounts and point reductions are made available to household customers as well.
  • We expect the profits for this fiscal year to significantly increase, given such factors as the shift of the different-timing margin to a marginal profit, the reduction of Chubu Electric Power Miraiz’s power supply procurement costs, and the revision of Chubu Electric Power Grid’s wheeling charges. Our business environment from here on, however, remains unclear because of the escalating tensions in the Middle East, among other factors.
  • To sustainably grow with society and customers even in a drastically changing business environment, we will continue to make group-wide efforts to strengthen our market responsiveness and streamline management.

  • The second point is about efforts to restart Hamaoka Nuclear Power Station.
  • Responding to climate change issues (e.g., achieving carbon neutrality by 2050), is a common issue for humankind. Japan has been increasingly working to realize a carbon-free society, as exemplified by the enactment of the GX Promotion Act and the GX Decarbonization Electricity Act in May 2023.
  • Amid this situation, we consider that nuclear power generation, which contributes to stable power supply and decarbonization alike, is taking on greater importance. Restarting Hamaoka Nuclear Power Station is thus an important management issue for us.
  • The design basis ground motion that we presented was rated as “generally appropriate” in September 2023 in the compliance review for new regulatory requirements. Based on this and other factors, we consider that we are making great strides toward formulating a design basis ground motion.
  • Going forward, we will offer thorough explanations to our customers and the local community, and at the same time focus on tsunami reviews and work all-out on reviews to have plant reviews conducted as early as possible.

  • The third point is the reinforcement of compliance.
  • From January 2023 and onward, an incident has been revealed in which customer information obtained by Chubu Electric Power Grid in its consignment services was leaked and inappropriately accessed by Chubu Electric Power Miraiz.
  • We take this fact very seriously, as this inappropriate handling of information may impede fair competition among retailers.
  • The three companies in the Chubu Electric Power Group, including us, will embrace a strong determination to never let a similar incident occur again, and endeavor to reinforce recurrence prevention by mustering all efforts of the Group, centered on the Recurrence Prevention Joint Review Committee that I chair.
  • Further, in March this year, the JFTC issued a surcharge payment order against us and both a cease-and-desist order and a surcharge payment order against Chubu Electric Power Miraiz.
  • Given the differences in fact-finding and legal interpretation with the JFTC, a revocation action was filed in September 2023. We will steadfastly make and establish our claims in the revocation action to gain the court’s understanding.
  • As mentioned at the beginning of this conference, we take JFTC’s suspicion as to our alleged violation of Japan’s Antimonopoly Act very seriously, including the matter concerning the supply of city gas to commercial and industrial customers. We and Chubu Electric Power Miraiz will accordingly continue to steadily take various measures so that we are never suspected of violating said Act again.
  • Compliance is an important foundation of management for our group. I am committed to leading and making continued efforts to ensure compliance.

  • Finally, I wish to share aspirations for the coming year.
  • The major change in the business environment surrounding us is expected to continue into the coming year. This is precisely a situation in which we intend to bolster our energy business, which is at the core of our group’s operations.
  • To achieve this, we will harness unconventional and novel approaches to stably supply power in a manner that matches the changing times, and thereby fulfill our unchanging mission.
  • Further, to meet society’s growing expectations for carbon neutrality, we will further promote decarbonization endeavors including the aforementioned efforts to restart Hamaoka Nuclear Power Station and to increasingly expand renewable energy.
  • Expanding new growth areas is essential in meeting the diversifying needs of society and customers, as well as in securing revenues. We will ensure growth by continuing to identify focus-worthy business areas and properly committing resources.
  • The business environment surrounding our group is undergoing a significant change that could be interpreted as a turning point. We are committed to steadily moving forward next year to fulfill our unchanging mission and create new value at the same time to realize Management Vision 2.0.
  • We consider the next year to be a stepping stone for achieving the vision.

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