Regular Press Conference for October 2012: President Mizuno's Message

• First, I would like to discuss Chubu Electric Power’s second quarter financial results for FY2012.

(Consolidated)

• Consolidated sales increased in this quarter. In our electricity business, factors including an increase in fuel cost adjustment saw electricity charges increase, and this was in part responsible for sales of 1.3361 trillion yen, an increase of 176.8 billion yen against the same quarter last fiscal year.
• With regard to consolidated ordinary income, in our electricity business, while there was a reduction in nuclear power generation, factors including the reduction of the cut-off error of the fuel cost adjustment system and a decrease in personnel costs saw us increase our income by 5.9 billion yen against the same quarter for the previous fiscal year, for a loss of 200 million yen.

(Non-consolidated)

• Next, turning to our non-consolidated results,
  Sales increased 175.1 billion yen year on year to 1.2656 trillion yen
  Operating income increased 9.7 billion yen year on year to 11.4 billion yen
  Ordinary income increased 7.7 billion yen year on year for a loss of 3.2 billion yen
  Net income for the quarter increased 20.9 billion yen year on year for a loss of 1.3 billion yen.
• Our financial results for the second quarter therefore show an ordinary loss and a net loss for the quarter in both consolidated and non-consolidated results for the second consecutive year.

(Interim dividend)

• I will now turn to the interim dividend.
• With regard to the interim dividend for this period, our future financial outlook continues to be severe, due to factors including the extension of the schedule for construction of anti-tsunami measures at Hamaoka Nuclear Power Station. However, based on comprehensive considerations taking in factors including dividend payments up to the present, our fundamental principle of paying stable dividends, and minimization of the effect on our shareholders, we have set a figure of 25 yen per share for the interim dividend.

(Outlook for FY2012)

• With regard to our outlook for the entire fiscal year, because we project a considerable fuel cost burden as a result of the shutdown of all units of the Hamaoka Nuclear Power Station, the outlook is for a 45 billion yen operating loss, an 80 billion yen ordinary loss, and a 60 billion yen net loss in our consolidated results.
• In our non-consolidated results, we project a 60 billion yen operating loss, a 90 billion yen ordinary loss, and a 65 billion yen net loss.
• This will represent the second consecutive year that we have recorded operating, ordinary, and net losses in both our consolidated and non-consolidated results.
• Our projected results for the fiscal year have not changed from the outlook published on September 4, 2012.

(Summary)

• Continuing on from the previous fiscal year, in FY2012 we once again project a difficult balance sheet and a severe financial condition as a result of the shutdown of Hamaoka Nuclear Power Station.
• We will continue to work together as a Group to implement the initiatives towards increased business efficiency that we have been putting into effect since last fiscal year, working to respond to these difficult conditions by means of comprehensive reduction of costs.

• Looking back on the first half of FY2012, Typhoons No. 4 and No. 17 struck the east of Aichi Prefecture and the Shizuoka region, causing damage to power distribution facilities and consequent power outages. Taking last year’s Typhoon No. 15 into consideration as well, in a period of approximately one year, typhoons have struck the same region three times.
• Our sympathies go out to everyone who has been affected by these disasters.
• At the same time, we wish to express our regret that considerable inconvenience has been caused to our customers in areas in which the typhoons resulted in power outages.
• As a result of these three typhoons, a total of 870,000 households experienced power outages, and Chubu Electric Power and Group companies mobilized approximately 10,000 workers in order to recover power.
• In addition, recently we have not only experienced typhoons, but also instances of formerly rare natural disasters, such as tornados and areas of low atmospheric pressure that bring heavy rains like those experienced in a typhoon.
• Power transmission facilities extend from urban to mountainous areas, and power outages can occur due to building damage or damage to lines caused, for example, by falling trees during an earthquake or typhoon. It is therefore important to have systems in place that are able to rapidly provide electricity, while also maintaining safety, during disasters of this type.
• I would now like to discuss measures we are adopting for our power transmission facilities in order to prepare for disasters.

(Our thinking regarding disasters in relation to power transmission facilities)

• Because power transmission facilities are set up in areas in which our customers live and conduct their activities, we believe that it is important to be able to rapidly supply power with safety as the top priority.
• Based on this way of thinking, broadly speaking we see three sets of measures as being essential in responding to disasters. These are pre-disaster measures, measures that take effect during a disaster, and post-disaster measures.
• In more specific terms,

• Pre-disaster measures are facility-related measures put in place to maintain the major functions of distribution facilities and ensure the safety of the public.
• Measures that take effect during a disaster include the establishment of systems enabling rapid and appropriate initial responses to be mounted immediately following a disaster.
• Post-disaster measures include the establishment of systems to minimize damage and enable the continuation of business.

(Specific initiatives)

• First, as pre-disaster measures, we are continuing to put in place facility-related measures to enable power poles and the transformers they support to withstand the strength of the winds occurring during a typhoon and vibration and liquefaction of the soil during earthquakes in order to ensure public safety.
• For example, based on information including past damage suffered by Chubu Electric Power facilities and maps of the distribution of seismic acceleration published by the government, we have defined specific areas in which enhanced strength is necessary, and we are taking measures including increasing the depth to which power poles are buried in the ground, and broadening the anchorage of stay wires.
• In addition, based on the results of inspections and evaluations of the safety of power transmission equipment fitted to power poles following the 2009 Suruga Bay Earthquake, we have verified that the equipment is in no danger of falling and presents no issues from the perspective of public safety even in a Class 7 earthquake.

(Measures that take effect during a disaster)

• Next, I will look at measures that take effect during a disaster.
• In this category, Chubu Electric Power has long been advancing an initial response system.
• Specifically, our system analyzes typhoon projections published by the Japan Meteorological Agency in order to enable us to predict details including the path of a typhoon and wind speed for each of our workplaces.
• Based on these predictions, we are able to ensure the availability of personnel and prepare materials and equipment in advance, enabling a rapid and appropriate initial response.
• We also have a system in place enabling us to dispatch staff and make other necessary advance preparations for areas such as isolated islands where transport might be cut off following a disaster.

(Post-disaster measures)

• To conclude, I will discuss our post-disaster measures.
• Because it would be extremely difficult in practice to prevent all of the damage associated with a natural disaster such as an earthquake or typhoon, it is important to focus efforts on post-disaster measures, and to rapidly and safely restore power to customers following a disaster.  For this reason, it is necessary to prepare recovery plans in advance, and to have systems and arrangements in place.
• Chubu Electric Power has established a system enabling us to rapidly conduct inspection tours, implement designs, and conduct reconstruction work when damage has been caused by a disaster. We also make efforts to provide information on power outages and the status of reconstruction work every hour following a disaster in order to ease our customers’ minds, if only a little.
  Other measures include:

• The preparation of high-voltage generator trucks to ensure a power supply at an early stage following the disaster;
• Training to improve our ability to respond in the event of a large-scale earthquake; and
• Holding the Power Distribution Skills Olympics in order to develop our human resources.

• For example, we have allocated high-voltage generator trucks to all of our workplaces to ensure that even when we are unable to restore power lines, we can rapidly ensure the supply of power to centers for emergency response by the government, police, fire department, etc.
• In May this year, we conducted joint training with 10 other electric utilities from throughout the country to prepare for a Tokai, Tonankai and Nankai earthquake. We believe that this training, based on knowledge obtained as a result of the Great East Japan Earthquake, was highly significant in confirming the potential for cooperation between power utilities.
• In addition, we will be holding our Power Distribution Skills Olympics on November 8 at our Human Resources Development Center.
• This training is conducted to increase our skills and foster a sense of mission among our engineers, in order to enable us to rapidly restore electricity supply while ensuring safety.

(Summary)

• By means of initiatives of the type that I have described, we are working to be able to restore power to our customers even slightly earlier in the event of a power outage caused by a disaster, seeking to fulfill our mission of ensuring a stable supply of power.
• This concludes my remarks for today.