February 2013 Regular Press Conference: President Mizuno's Message

(Thanks for energy conservation)

• First, I want to thank our customers for their cooperation with energy conservation efforts, which have continued again this winter.
• This winter there were some days that looked very severe in terms of the reserve margin, but we have been able to provide a stable supply of electricity. This is thanks to the energy conservation efforts of our residential and corporate customers, who have been conscientiously turning down the temperature on their air conditioning and turning off unneeded lights.
• The period requested for energy conservation by the national government lasts until March 29. With apologies for the trouble to our customers, we ask that energy conservation efforts be continued within reasonable bounds.

(Electric power supply and demand results for this winter)

• Now I would like to talk about supply and demand results for this winter to date.
• Please look at [Table 2] of “1. Peak Load” in Attachment 1.
• We estimated the peak load for Chubu Electric Power this winter to be 22.81 GW for the maximum power three-day average and 23.67 GW for the one-time peak load (announced November 6, 2012).
• This winter's actual peak load results from December 2012 to February 22, 2013 were 22.24 GW for the maximum power three-day average and 22.58 GW for the one-time peak load.
• As a result, the maximum power three-day average was 570 MW lower than the initial forecast and the one-time peak load was 1.09 GW lower.
• The peak load for this winter as seen in the Table 2 “maximum power three-day average” and “one-time peak” is based on actual results for February.
• Temperatures in February have been higher so far than in the previous year, and the weather was not as harsh as in FY2011. In addition, large numbers of our customers, from residential to corporate, cooperated with the energy conservation program, and at present we think these are the primary reasons that actual figures were lower than the forecast.
• Please look also at the handout information in [Reference 2]. This shows that although there were some days on which the reserve margin fell short of 5% in the actual results, stable operation was maintained on every day within the range of the reserve margin secured for the day. In our view, there has been no problem with supply so far.

(Comparison of demand for FY2010 and the present fiscal year)

• Next please look at “2. Comparison of demand in FY2010 (December 2010-February 2011) and this winter” in Attachment 1.
• For the energy conservation impact this winter, a comparison will be made with the FY2010 winter demand from December 2010 to March 2011, before the earthquake.
• The comparison results cannot be given at this time for the following reasons:

• The period requested for energy conservation by the national government lasts until March; and
• Analysis and evaluation of economic influences have not yet been completed.

We will therefore inform you of these results once the data to March has been analyzed and evaluated.

• Today I will give you a simple comparison using the actual results for electric power demand from December 3 last year to February 22.
• We isolated the actual results from the demand results for this winter to date and the demand results for the winter of FY2010 that were for the same weather conditions. Comparison shows that the average for this winter has decreased about 1.10 GW.
• Given the breakdown for this 1.10 GW, we suppose that it includes the effects of energy conservation and also of the economy.
• I cannot provide specific figures to illustrate the effects of energy conservation. Considering the scale of the reduction in demand, however, it appears likely that this level is the same as the level we predicted initially.
• Again, I would like to express my deep gratitude to our customers for their great cooperation.

(Supply capacity and interchange with other power companies)

• Finally, I would like to discuss our supply capacity this winter and our interchange with other power companies. Please look at “3. Supply capacity and interchange with other power companies” in Attachment 1.
• First, regarding supply capacity, we began commercial operation of Joetsu Thermal Power Station Unit 1-2 (output 595 MW) in January 2013. I am pleased to say that the plant has experienced no major problems so far and we have it in full operation.
• The other thermal power stations are not experiencing any major problems that interfere specifically with their supply of power, and we are able to anticipate that supply capacity will be as planned.
• Chubu Electric Power has also received requests from other power companies that are anticipating supply shortages, and we have implemented interchange with them.
• Specifically, we implemented interchange with Kyushu Electric Power Company to provide a maximum supplement of 450 MW during the daylight hours on weekdays and a maximum supplement of 160 MW during holidays and at night.
• We are committed to doing everything we can in the continuing effort to provide our customers with a stable supply of electric power.

• Moving on, I would like to talk about our participation in a solar power generation project in Thailand.
• If you could please look at Attachment 2.
• Chubu Electric Power has decided to participate in a solar power generation project in Thailand. We have therefore acquired 49% of the shares of the Thai operating company that is engaged in development and operation of a mega solar power generation plant in central and northern Thailand from Gunkul Engineering Pcl.
• This is the first time for Chubu Electric Power to participate in a solar power generation project in another country.
• The operating company that we are investing in is conducting mega solar development and operation at six locations in Thailand with a total output of approximately 30 MW.
• Two of the six mega solar locations have already begun commercial operation.
• Construction is presently underway at the remaining four locations, and they are slated to begin operation this year.
• This project is intended to sell wholesale electric power to government power distribution companies under a program for the complete purchase of energy in Thailand.
• By participating in this project, Chubu Electric Power will be able to further strengthen the power generation business in Thailand while also making a contribution to global environment protection overseas.

(Policy for engaging in overseas business)

• Finally, I would like to introduce the Chubu Electric Power power generation business in Thailand.
• If you could please look at Attachment 3.
• Chubu Electric Power aims to make maximum use of management resources, develop business in other countries, and expand revenues in order to assure our sustained growth into the future.
• By such means as increasing our technical capabilities through overseas projects, we intend to establish a stronger business foundation and work to further improve our energy services in Japan.
• We have positioned Asia, North America, and the Middle East as high-priority regions for Chubu Electric Power. Southeast Asia, in particular, promises to undergo an increase in electric power demand as the economy develops, and it is a region where we can expect to find numerous business opportunities for this and related reasons. We have therefore directed our own efforts to this region, as well.

(Chubu Electric Power business in Thailand)

• The first overseas power generation business that Chubu Electric Power participated in was the Gas Thermal Power Generation Project in Thailand in 2001. Since then, we have also taken part in a Rice Husk Biomass Power Generation Project, a Wind Power Generation Project, and an Industrial Areas Cogeneration Project.
• The present Solar Power Generation Project is the fifth business in which Chubu Electric Power is participating in Thailand.
• We have established the local subsidiary Chubu Electric Power (Thailand) to perform management, operation, and maintenance of these projects. We have also established a joint venture for operation and maintenance with a local partner. Chubu Electric Power has temporally transferred employees to these companies.

• To date, our employees have engaged in:

• Management support for local projects; and
• Technical guidance in operation and maintenance.

Through these and other such activities, we have worked to provide a stable supply of electric power in Thailand as well as to promote the widespread adoption of renewable energies.

• Thailand is experiencing steady growth in power demand as its economy expands. Demand is anticipated to grow by an annual average of about 4% for the decade ahead. For this and other reasons, we continue to anticipate opportunities for business in Thailand.
• Chubu Electric Power has built strong relationships of trust with local corporations and business partners in Thailand through the businesses we have participated in to date.
• It is our intention to make advantageous use of this network to seek further expansion of our business in Thailand.

(Summary)

• With the shutdown of operation at the Hamaoka Nuclear Power Station, we presently face harsh financial circumstances.
• However, our overseas energy business will be necessary for the sustained growth of the Chubu Electric Power Group into the future, and we consider it necessary from a medium- to long-term perspective to pursue this business.
• Consequently, we intend to engage in carefully selected projects where investment in the near future will be essential for the realization of our future growth strategy.
• Once the stable supply of electric power in Japan has been assured, we hope to take steps for steady expansion of this business in the future, while giving full consideration to the efficiency and risks of such projects.
• That is all from me today.