Regular Press Conference for September 2011

(Thanks for energy conservation)

• First, I give great thanks for the many people in the local community who helped with the energy situation this summer by conserving energy, adjusting their business operating schedules, and so on.
• Thanks to all of you, Chubu Electric Power was able to get through the summer without incident despite the unforeseen supply and demand situation, namely the fact that we could not expect to have about 3,600 MW in supply capacity due to the suspension of operations at Hamaoka Nuclear Power Station in May.
• Meeting this challenge was only possible thanks to the efforts of industry, government and residential customers to conserve energy.
• The operating adjustments by many corporate customers including members of JAMA were a great and exceptional sacrifice for enterprise. These companies’ employees and their families were understanding and cooperative with the changes in workdays.
• Local governments, additionally, were very cooperative.
• We regret the inconvenience to our residential customers over such a long period, but such customers carefully conserved energy day to day during the hot summer months.
• It is truly thanks to the many people who did so that we were able to provide a stable supply of electric power this summer.
• Again, I sincerely thank all of our customers.

(Electric power supply and demand results for summer 2011)

• I’d like to talk about this summer’s supply and demand results. Please see Reference 1, Attachment 1.
• Please see “1. Demand results this summer” in Attachment 1.
• This summer’s peak load (the maximum power three-day average) was 25,020 MW (August 8-10), which was 1,970 MW lower than last year’s result of 26,980 MW.
• Reasons we were able to keep peak load 1,970 MW lower than last year include:

• The fact that so many customers conserved energy and adjusted their operations
• The fact that there was poor weather because of typhoons and weather front impacts in the high-demand season from late July to early September (except for mid-August). In an ordinary year, these months would be a time of high demand.

• Next, please see “2. Effects of energy conservation and operating adjustments this summer” in Attachment 1.
• We estimate that customers’ energy conservation efforts resulted in lowering peak load by about 1,000 MW, as the table shows. This figure was found by comparing this summer’s peak load results (maximum power three-day average) with summer 2010 results, after factoring out customer operating conditions and temperature impacts.
• We also estimate that customers including members of JAMA who adjusted their operating schedules reduced peak loads by about 2,600 MW, as the table shows. This was found by comparing peak load on Thursdays and Fridays (the days when such customers did not operate) with that of Monday - Wednesday.

(Electric power supply and demand outlook this winter)

• Next, I would like to talk about “this winter’s electric power supply and demand measures.” Please see Reference 1, Attachment 2-1.
• First, see Table 2-2 on the right side of Attachment 2-1.
• When the decision was made to suspend operations at all reactors of Hamaoka Nuclear Power Station, it was also decided to delay the suspension of operations of Taketoyo Thermal Power Station, Unit No. 3.
• One result of these summer supply measures is that we foresee a very challenging power supply and demand situation this winter, with a reserve margin of about 3 - 7%, which is far below the 8 - 10% criterion of supply stability.
• Additionally, periodic inspections of thermal power units were delayed until autumn and beyond, and thermal power units that have operated at high loads will undergo maintenance this winter. It has become clear that these impacts will cause this winter’s supply capacity to decrease by up to 870 MW further in February.
• Therefore, it will be necessary this winter, too, to take some measures to ensure supply capacity.
• Please see “Table 1-1: Supply capacity measures this winter” under “1. Peak load supply and demand plan” in Attachment 2-1.
• We have thoroughly examined supply-side measures such as altering the periodic inspection schedules for thermal power units, shortening those processes and purchasing electric power from other businesses, just as we did this summer.
• Specifically, we plan to take the new measures shown in the reference material of altering the periodic inspection schedules for thermal power units and shortening inspection periods, and so on, including changing the Hekinan Thermal Power Station, Unit No. 1 periodic inspection from mid-February to early March and shortening the time by 10 days.
• We have also added measures like revising hydroelectric power station maintenance processes to add supply capacity.
• Taking February as an example, these measures will make it possible to add up to 2,290 MW of supply capacity, as Table 2-3 on the right side of Attachment 2 indicates.
• On the other hand, the outlook for operation of other businesses’ nuclear power stations is uncertain and we cannot say at this time whether we will be able to procure electric power from other businesses, so under the category of electric power purchases from other businesses we forecast a loss of 720 MW of supply capacity in February.
• We believe that the net result of these measures is that this winter we will be able to secure 1,570 MW in additional supply capacity beyond that projected at the point in May when it was decided to suspend operations of all reactors at Hamaoka Nuclear Power Station.
• Please see Table 2-4.
• At the present time, we forecast that our supply capacity this winter will be 24,870 MW in February.
• We anticipate that peak load from December through February will be the same as indicated in the original plan. While our customers’ high level of conservation awareness will restrain demand, we expect an increase in demand especially from industry.
• Based on the above results of our study of the situation, we expect our monthly reserve margin this winter to be about 7%, which falls short of the reserve margin of 8 - 10% that we use as a criterion for stable supply.

(Electric power supply and demand issues this winter)

• I’d like to talk about electric power supply and demand issues this winter in a bit more detail. Please see Reference 1, Attachment 2-2.
• Please see “2. Electric power supply and demand issues this winter.”
• Because heaters and lighting are used heavily in winter, the length of time electric power is in high demand each day is longer than in the summer.
• Operations have been suspended at all reactors of the Hamaoka Nuclear Power Station and periodic inspections of thermal power stations were delayed as a supply and demand measure this summer. Therefore, this winter there will be less generating equipment available to operate and thus less supply capacity, and our thermal power stations will have to work at a very high operating rate.
• In other words, the length of time with little supply margin will be longer than in the summer.
• Therefore, there is a risk that a large failure of the power supply would impair supply stability for many hours.
• Please see “3. Demand-side initiatives.”
• As I mentioned earlier, Chubu Electric Power’s supply of electric power through the winter is expected to fall short of the reserve margin of 8 - 10% that we use as a criterion for stable supply.
• While we regret the inconvenience, we ask our customers to continue to conserve energy to the extent that it does not interfere with their personal lives and production activities.
• To help customers conserve energy, this winter Chubu Electric Power will again use our web site, etc. to provide information on specific energy conservation measures and the day-to-day supply and demand status.
• If we anticipate a large failure of the power supply that would impair supply stability, Chubu Electric Power will notify our customers as quickly as possible and will have to ask them again to take extraordinary measures to conserve energy.
• Chubu Electric Power will steadily conduct prioritized inspections and maintenance of our power stations, transmission and substation facilities and so on to prevent this from happening and will make every effort to ensure supply stability.
• While we apologize to our customers and community for any inconvenience or worry, we ask for their understanding.

• Next, I would like to discuss our revised first-half and yearly performance for FY2011. Please see “Reference 2.”
• Chubu Electric Power has revised its performance forecast filed July 29, 2011 to reflect changes in assumptions, additional savings from management efficiencies, etc., as well as this summer’s supply and demand results and this winter’s supply and demand outlook.
• I will discuss the fiscal year outlook by comparing it to the outlook filed in July.
• We assume electricity sales will be 127.6 TWh, or 0.5 TWh more than our July assumption. This is based on such factors as increased production by industry.
• We assume the exchange rate will be about 80 yen per one dollar, or five yen stronger than our July assumption, given the rapid rise of the yen since summer.
• Additionally, Chubu Electric Power has worked to:

• Reduce fuel costs by about 10 billion yen by changing and shortening periodic inspections for coal-fired thermal power plants, which are inexpensive per unit of power generated
• Create additional cost savings (from maintenance and other various costs that had been planned for this fiscal year) of approximately 20 billion yen over the July assumption with thoroughgoing management efficiencies across our operation, including a savings of about 10 billion yen by performing re-inspections.

• As a result of the above, our consolidated ordinary income is expected to be minus 155 billion yen, shrinking the loss forecast in July by 40 billion yen.
• We continue to forecast large operating and ordinary losses, meaning the challenging business environment has not changed.
• Chubu Electric Power will continue to rally its forces to practice efficient management and get through these difficult times.

• Finally, I would like to discuss the receiving of LNG tankers at Joetsu Thermal Power Station.
• As we already told everyone at the Electric Power Study Group, work was finished this September on a breakwater that the national government has been building since FY1996 as the Port of Naoetsu Energy Harbor improvement project.
• On October 8, the Ministry of Land, Infrastructure, Transport and Tourism, Niigata Prefecture, Joetsu City and others plan to hold a ceremony to mark the completion and opening of the Port of Naoetsu Energy Harbor.
• Now that the harbor is complete, Chubu Electric Power will receive the first LNG tanker at Joetsu Thermal Power Station on October 8.
• The first tanker, due from Indonesia, measures 285 meters in length and has a carrying capacity of 145,700 m3.
• The Joetsu Thermal Power Station, as soon as it is ready, will begin test operations with an aim to achieve commercial operation of Unit No. 1-1 in July of next year.
• Presently, our power supply to the Nagano area depends on long-distance transmission from thermal power stations and other power sources on the Pacific Ocean side of Japan.
• The startup of Joetsu Thermal Power Station will give us power stations on both the Pacific Ocean and Sea of Japan sides of Japan and will further enhance the stability of the power system.
• That is all for me today.