October 2016 Regular Press Conference : President Katsuno's Message

(Summary of financial results)

• Our consolidated sales for the second quarter of FY2016 recorded 1,306.8 billion yen. Because of a drop in both our fuel adjustment costs and volume of electric power sold, our lighting power charges declined. This resulted in a 174.9 billion yen decline on a year-on-year basis.
• Our consolidated ordinary income marked 163.7 billion yen. With the dropping fuel prices, the different-timing margin of both fuel adjustment and fuel costs shrank. This resulted in a 46.6 billion yen profit decrease on a year-on-year basis.
• Turning to our non-consolidated financial results, sales stood at 1,213.9 billion yen. This is a 171.2 billion yen decline year on year. Our ordinary income marked 157.8 billion yen, which is a 44.8 billion yen profit decrease year on year.

(Interim dividend)

• The interim dividend for this quarter has been set to 15 yen per share.

(Earnings outlook for FY2016)

• Regarding the earnings outlook for FY2016, the forecasted earnings values we announced on July 29 have been corrected to reflect the latest performance trends.
• We are expecting consolidated sales of 2,590 billion yen; a decline of around 20 billion yen from the previous announcement. This is due to decreasing fuel adjustment costs and other sold volume of electric power.
• We are expecting a consolidated ordinary income of 125 billion yen. As our efforts to streamline management has been making progress, we are expecting around a 10 billion yen profit increase from our previously announced numbers.
• We will maintain company-wide efforts to streamline management, and work to meet the expectations and trust of customers and the society.
• This concludes my remarks for financial results.

• I first would like to talk about Chubu Electric Power’s initiatives to enhance nuclear emergency preparedness, which on October 20 the company reported to the Minister of Economy, Trade and Industry (METI) Mr. Seko.
• Reflecting on lessons learned from the Fukushima Accident, we consider it important to postulate accidents in addition to preventing them, and moreover, thinking for ourselves, making voluntary efforts, and explaining in words of our own about the kind of preparations effective in both swiftly recovering from accidents and minimizing the influence on local residents.
• We are working to further enhance our nuclear emergency preparedness in response to the Minister of METI’s request and the decision made by the Ministerial Conference on Nuclear Power this March.
• The report filed to the Minister of METI is a follow-up to the one submitted this April, and it covers the progress we made for the initiatives over these six months. I will share key details of the report.

(Accident Recovery Activity Plan)

• The Accident Recovery Activity Plan reports efforts on improving our accident response capability, which is geared towards further amplifying our accident recovery activities through repeated training on responders and in turn continuously improving the activities.
• This plan presents the following as initiatives to enhance the accident response capability of responders:
  • Off-site power restoration drills jointly held between power transmission and distribution sectors
  • Collaborative measures to strengthen our response capability with such external organizations as the Japan Nuclear Safety Institute (JANSI), Japan BWR Owners' Group (JBOG), and the Self-Defense Forces
  • Field drills for all station members including clerical job staff

(Nuclear Emergency Preparedness Plan)

• We are prepared to prevent accidents within the station and swiftly recover from them in the wake of such events. We will also arrange measures to provide for such accidents developing into an emergency that affects local residents. Concrete measures are presented in the Nuclear Emergency Preparedness Plan.
• When nuclear emergencies occur, Chubu Electric Power will communicate information to the station’s neighboring local governments, Shizuoka Prefecture, and the national government in a timely and appropriate manner. At the same time, we will dispatch our employees to the off-site center and provide information.
• When residents must evacuate, Chubu Electric Power will serve its role as an operator with regard to transportations for temporary relocations, screening, monitoring, and other undertakings required for swift evacuation processes.
• As an example of achieving stronger ties with local governments, the report presents a safety agreement Chubu Electric Power signed this July with the seven municipalities located inside the urgent protective action planning zone (UPZ).

(Dialogue with local communities)

• To enhance and reinforce nuclear emergency preparedness, we think it’s absolutely necessary to obtain understanding from local communities about Chubu Electric Power’s initiatives.
• From this October report, we accordingly decided to list observation tours, efforts of visiting and having a dialogue with residents, opinion exchange sessions, and other activities we are focusing on, as dialogue with local communities.

(Coaching and request from Minister Seko)

• Minister Seko requested and provided coaching to Chubu Electric Power to steadfastly promote nuclear emergency preparedness enhancement efforts. Such initiatives include stepping up support for the evacuation of residents and further strengthening emergency response cooperation for complex disasters that involve nuclear emergencies and natural disasters.
• Hamaoka Nuclear Power Station stands in the hypocentral region of the predicted Nankai Trough earthquake. We thus consider it important to link onsite and offsite undertakings on account of complex disasters involving both nuclear emergencies and natural disasters.
• Our company-wide emergency response drills held on September 18 and 19 assumed a complex disaster triggered by a massive Nankai Trough earthquake. The drills focused on linking onsite and offsite undertakings, and checked whether arrangements for sharing information and dispatching members were appropriate.
• By addressing issues found in the drills, Chubu Electric Power will continuously improve itself to amplify nuclear emergency preparedness. Efforts will include making its information sharing processes and collaborations more appropriate.
• We will have our members thoroughly understand that measures for nuclear safety and emergencies are never-ending processes, and make every effort to enhance safety accordingly.

• Now I look at the six months of full electric power retail deregulation in retrospect, along with efforts harnessing meter-reading slips to broaden our KatEne service.
• I will start by talking separately about the six months of the full deregulation in Chubu and Tokyo metropolitan areas.

(Looking at the Chubu area in retrospect)

• We are enjoying a positive response to the rate menus we introduced this April in the Chubu area. As of October 13, the menus succeeded in attracting around 960,000 applications.
• This favorable reaction is a result of conveying the menus to customers through several routes, including KatEne, CHUBU DENRYOKU HAJIMERU BU, flyers distributed in the process of meter-reading, and direct mail, in addition to rolling out services and rate menus that reflect customer needs.
• The KatEne membership has been steadily expanding, with 1.5 million customers currently registered. We will launch appealing services to achieve our goal of obtaining 2 million members within this fiscal year.
• We established ties with more than 50 partner companies thus far. The firms are from many different industries, including railway companies, telecommunications companies, financial institutions, and household appliance retailers.
• In spite of this fact, we are assuming that many of the customers are still cautious because of the following reasons. Competition in Chubu is thus expected to become fierce down the road:
  • It’s not easy for customers to compare multiple rate menus and services
  • Gas retail is to be fully deregulated next April

   

• We at Chubu Electric Power will continue our efforts to steadfastly identify customer needs, and offer services with high added value. In turn, we will win customer recognition in quality, price, and service combined, thereby outperforming others in the intense competition.

(Looking at the Tokyo metropolitan area in retrospect)

• We are rolling out our electric power sales operation for Tokyo metropolitan area households and small businesses by harnessing a series of routes. Examples include:
  • Direct marketing by Chubu Electric Power
  • Supply of wholesale electricity by Diamond Power Corporation
  • Through the agency/sales of partner companies
• The Tokyo metropolitan area market is sizable, and has potential for high growth. Many operators are therefore selling electric power in the region and announcing a succession of new menus. The competition there is thus extremely severe.
• In August, we renewed rate menus for the Tokyo metropolitan area into a more competitive one.
• Specifically speaking, we set both the base and power rates lower than Tokyo Electric Power’s (TEPCO) meter-rate lighting contract, and changed the menus into ones that enable customers to readily make comparisons and offer advantages to them regardless of the consumed electricity quantity.
• We received around 21,000 applications, particularly from household customers, in the greater Tokyo area as of October 25.
• Chubu Electric Power Group will bring together all of its resources to secure 100,000 customers in this area at the earliest possible timing.

• I know turn to efforts harnessing meter-reading slips to broaden our KatEne service.
• As previously announced, Chubu Electric Power offers a wide range of household-geared services through KatEne, our web member service. The issues we need to address include encouraging as much customers as possible to sign up to KatEne, and providing our services to customers who lack access to the internet.
• Customers with no access to the internet have been calling for information on energy conservation, and seeking to check the amount of electricity they used by time periods.
• In response, we decided to launch on November 1 a service for sending KatEne Report Lite. Amongst customers to which we deliver meter-reading slips notifying their monthly electricity usage, we offer this service to those who have smart meters.
• By installing smart meters, we changed how we deliver monthly meter-reading slips: Now we send them by mail, in contrast to how in the past our meter-reading staff checked meters and put slips into mailboxes.
• Taking advantage of the mail delivery of meter-reading slips, in this new service we compile a leaflet that contains particulars offered through KatEne, including daily/hourly electricity usage and information on energy conservation, and deliver the leaflets to customers as “KatEne Report Lite.”
• This is a first-ever service in which a power company uses leaflets to offer customers detailed data on electricity usage amounts and information on energy conservation.
• With KatEne Report Lite, customers without any access to the internet can enjoy some of the services provided through KatEne.
• We also invite non-KatEne member customers, who have access to the internet, to learn about KatEne services through KatEne Report Lite and register as a member.
• We send reports to customers who have smart meters; thus the number of customers receiving the reports will grow as smart meters become installed.
• We also would like to look into advertising businesses in the future, setting ad sections within KatEne Report Lite.
• As a leading total energy service corporation, Chubu Electric Power will work to provide customers with better-than-expected services ahead of competitors.