Regular Press Conference for July 2011: President Mizuno’s Message

• First, I would like to talk about Chubu Electric's first quarter financial results for FY2011.
• With regard to sales, the volume of power sold by our electricity business declined, but we recorded an increase in revenue as a result of factors including an increase in electricity charges due to an increase in retail unit prices.
• However, we recorded a decline in ordinary income due to the effect of factors including a decline in our volume of nuclear power generation due to the stoppage of all reactors at the Hamaoka Nuclear Power Station.
• As a result, both the consolidated and non-consolidated financial statements reported increases in revenue, but decreases in profit.

 (Consolidated)

• Regarding the Chubu Electric Group's consolidated financial statement,please see Reference 1, "FY2011 first quarter financial results."
• Here are some highlights:
  Operating revenue: 539.3 billion yen (up 2.5% YoY)
  Operating income: 22.2 billion yen (down 62.8% YoY)
  Ordinary income: 20.0 billion yen (down 60.9% YoY)
  Net quarterly income: 1.5 billion yen (down 94.0% YoY)
  Thus, the group has ended the year with increased revenue but decreased profit for the first time in three years since the FY2008 first quarter financial report.

(Non-consolidated)

• Next, for Chubu Electric's non-consolidated financial statement.
  Operating revenue: 507.4 billion yen (up 1.7% YoY)
  Operating income: 19.0 billion yen (down 67.2% YoY)
  Ordinary income: 19.2 billion yen (down 60.6% YoY)
  Net quarterly income: 1.2 billion yen (down 94.7% YoY)
  Thus, the group has ended the year with increased revenue but decreased profit for the first time in three years since the FY2008 first quarter financial report.

(Cash flow outlook for FY2011)

• Next, for our cash flow outlook for the entire year.
• With the stoppage of Hamaoka Nuclear Power Station, our outlook has been uncertain, but we have been able to make projections based on specific assumptions, taking into consideration factors including the recent status of supply and demand for power, and we have decided to make these projections public.
• I will now explain our outlook for the entire year.

(Consolidated)

• On both a consolidated and non-consolidated basis, we project a 300 billion yen deterioration in our balance sheet due to factors including an increase in fuel costs as a result of the shutdown of the Hamaoka Nuclear Power Station.
• Chubu Electric Power and the Chubu Electric Group are striving to achieve the maximum operational efficiency, but we project a significant worsening in our consolidated income and expenditure, with a 170 billion yen operating loss and a 195 billion yen ordinary loss.
• This will be the first time that we have recorded an operating loss and an ordinary loss since we commenced consolidated accounting in FY1994.

(Non-consolidated)

• Turning to our cash flow outlook on an individual accounting basis, we project an operating loss of 185 billion yen, and an ordinary loss of 210 billion yen.
• This represents our first operating loss since Chubu Electric was founded in 1951, and our first ordinary loss in 32 years, since FY1979.

(Efforts to increase operational efficiency)

• Next, I would like to discuss our efforts to increase our operational efficiency.
• The Ministry of Economy, Trade and Industry has assured us of the utmost support in relation to the effect of the shutdown of all reactors at the Hamaoka Nuclear Power Station on our balance sheet and our financing environment, and we will also work as a company and as a group to achieve maximum operational efficiency.
• Since the shutdown of all the reactors at the Hamaoka Nuclear Power Station, we have established an Operational Efficiency Committee, of which I am the chairperson, and we are proceeding with an examination of ways to further reduce costs throughout the company in order to improve our balance sheet.
• In FY2011, after having ensured the investments and expenses that are essential to achieving a stable supply of power, we intend to attempt xreduce our expenditure by 100 billion yen as an emergency measure, by thoroughly reexamining our evaluation of effects and orders of priority in relation to all of our expenditures, with no stone left unturned, from facility investments and repair costs to various expenses including advertising and marketing costs and costs for research and system development.
• We will continue with this reexamination in future, attempting to reduce expenditure still further.

(Reduction of directors’ remuneration)

• Given the fact, as I have explained, that our cash flow outlook is unprecedentedly severe, we have decided to reduce the remuneration offered to our directors.
• Specifically, we will reduce the yearly salary of our executives by 15%.This measure will take effect from July and continue until further notice.

(Summary)

• We feel that we are at present facing our most perilous situation since the foundation of the company in 1951. None of the problems that we are confronting are easily resolved, but we will work together as one, unceasingly,in order to overcome them.
• It is my belief that by facing difficult conditions directly and overcoming them, we will grow more vigorously as a company able to respond to the trust and expectations of its customers and the residents of its region, its shareholders and investors, and all members of the broader society.

• Next, I would like to discuss our decision to take over assets, etc. related to the hydroelectric power business of Mie Prefecture Public Utilities Agency. If you could please look at Reference 3.
• Chubu Electric has decided today, July 29, to take over assets, etc. related to the hydroelectric power business of Mie Prefecture Public Utilities Agency.
• Today’s decision was taken as a result of deliberations between our company and Mie Prefecture concerning basic conditions for transfer and takeover of the hydroelectric power business, following the receipt of an offer from the prefecture concerning the transfer of the business on September 21, 2007.
• We will move on to conclude an agreement with the prefecture concerning basic items and conduct the necessary procedures in accordance with the relevant laws and regulations, taking over operation of the facilities in stages.
• Expectations towards renewable energies are increasing, and we believe that in taking over the hydroelectric power business operated by the Mie Prefecture Public Utilities Agency, our operation and maintenance management technologies and integrated management in tandem with downstream power stations will enable us to ensure the efficient operation of these hydroelectric facilities.
• We will continue to use our experience in hydroelectric generation and our facility maintenance system to the maximum extent, striving to ensure stable operation of hydroelectric generation as a renewable power source, with safety as our top priority.
• This concludes my remarks for today.