Key Point of President's Regular Press Conference
Key Point of President's Regular Press Conference
October 2013 Regular Press Conference : President Mizuno's Message
October 29, 2013
Chubu Electric Power Co.,Inc.
- Today, I would like to speak about the following two points.
- Application to increase of electricity rates
- FY2013 Second Quarter Financial Results
Application to increase of electricity rates
- First, I would like to speak about the application to increase our electricity rates.
- Chubu Electric Power has today applied to the Minister of Economy, Trade and Industry for approval to modify the terms under which it supplies electricity, in order to increase its electricity rate.
- We deeply regret having been forced to make this decision, which will place a significant burden on our customers, and we request their understanding.
- We have worked continuously to achieve a stable supply of power and realize business efficiency in order to provide our customers with stable, low-cost and high-quality power.
- Since the shutdown of all units at the Hamaoka Nuclear Power Station in May 2011, we have applied emergency controls to expenditure and rescheduled payments throughout the entire company, in addition to thoroughly increasing management efficiency in every area, in order to improve our balance sheet in an attempt to maintain our present electricity rate for as long as possible.
- However, the cost for the increased amount of fuel we are purchasing for our thermal power stations due to the shutdown of Hamaoka Nuclear Power Station has reached around 300 billion yen a year, significantly worsening our balance sheet and placing our business in an extremely severe position.
- In addition, other factors including the weakening of the yen since the beginning of this year have further increased fuel expenditure for our thermal power station making our position more severe.
- Because of these factors, in FY2013, despite the fact that we have reflected the results of efforts to achieve maximum efficiency and we have adjusted our business outlook twice, making upwards revisions, we will be unable to avoid recording a loss for the third consecutive period.
- Additionally, since we do not expect Hamaoka Nuclear Power Station to resume operation in FY2014, we will necessarily face a loss in that year as well, in spite of our utmost efforts, which include lowering personnel costs.
- Given these circumstances, we regret to say that in order to continue our most important mission of providing a safe and stable supply of electric power, we have applied to increase electricity rates. This application to increase our rates is the first that we have made since 1980, when rates were increased against the background of the second oil crisis.
- Specifically, we have applied to increase electricity rates for customers in the regulated sector including residential use by an average of 4.95% starting April 1, 2014.
- For customers in the deregulated sector, we are seeking electricity rate increases averaging 8.44% from the same date.
- We have already increased our business efficiency, and these efforts have borne fruit. We will add to these outcomes by continuing to strive towards increased efficiency into the future, in an attempt to reduce the burden of our increased rates on our customers to the greatest extent possible.
- In concrete terms, our measures have included reducing personnel expenses, for example by revising our monthly salary scale; reducing expenditure for the procurement of materials, equipment and services, for example by expanding competition; and reducing advertising expenses, donations, and contributions to business organizations. This drive towards optimum efficiency has enabled us to reduce our electricity generation cost by 163.3 billion yen.
- In setting conditions for the makeup of our power sources when we calculated our electricity generation cost, we assumed that we would be generating power from Hamaoka Unit No. 4 from January 2016 and from Unit No. 3 from January 2017.
- We are working steadily to institute measures to increase safety at Hamaoka Nuclear Power Station, for example anti-tsunami measures, but at present we are not able to indicate when the plant might go back into operation.
- In the future, we will provide our customers with a thorough and easy-to-follow explanation of details including the background to our application for approval to increase our electricity rates and the content of the application.
- In addition to ensuring that our facilities are well-maintained, we will work to achieve even more comprehensive increases in business efficiency than we have up to the present, to enable us to continue to contribute to regional development via the stable supply of power. We ask for your support in our efforts.
FY2013 Second Quarter Financial Results
- Next, I would like to speak about our FY2013 Second Quarter Financial Results.
- 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 1.3674 trillion yen, an increase of 31.3 billion yen against the same quarter last fiscal year.
- In the area of consolidated ordinary profit (loss), factors including increased fuel costs due to the weak yen saw our result decrease by 26.8 billion yen year on year, resulting in a loss of 27.0 billion yen.
- Next, turning to our non-consolidated results,
Sales increased 16.9 billion yen year on year to 1.2826 trillion yen
Operating income decreased 30.7 billion yen year on year for a loss of 19.2 billion yen
Ordinary income decreased 28.7 billion yen year on year for a loss of 32 billion yen
Net income for the quarter decreased 16.7 billion yen year on year for a loss of 18 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 third consecutive year.
(Out look for FY2013)
- Turning to our outlook for the full fiscal year, we project that consolidated net sales will increase by 30 billion yen due to factors including an increase in the volume of power sold and the acquisition of Diamond Power, bringing us to a figure of 2.75 trillion yen.
- At the same time, looking at consolidated ordinary profit (loss), despite an increase in the volume of electricity sold, factors including increased outsourcing expenses see us continuing to project an ordinary loss of 100 billion yen.
(Interim dividend for FY2013)
- As I have explained, our business outlook continues to be extremely negative, and, as I discussed at last month’s press conference, the fact that we cannot look ahead to the recommencement of operations at Hamaoka Nuclear Power Station even in FY2014 forces us to forgo the payment of an interim dividend in FY2013.
- Also we are forced to omit year-end dividend in FY2013.
- Again, we deeply regret the fact that any increase in tariffs will place a burden on our customers and ask for your understanding in these very difficult conditions.
- That concludes my remarks for today.