Key Point of President's Regular Press Conference
Key Point of President's Regular Press Conference
March 2017 Regular Press Conference : President Katsuno's Message
March 28, 2017
Chubu Electric Power Co.,Inc.
- Today I will be discussing the following three matters:
- Future schedule and background to basic agreement on the integration of existing thermal power generation businesses
Future schedule and background to basic agreement on the integration of existing thermal power generation businesses
- After founding JERA Co., Inc. in April 2015, TEPCO Fuel & Power, Inc. and Chubu Electric Power Co., Inc. have been integrating business areas in a phased manner, beginning from fields that have fewer obstacles and would highly benefit from merging. The two utilities combined fuel transportation and trading businesses into JERA in October 2015, which was followed by the integration of existing fuel businesses and overseas power generation/energy infrastructure businesses in July 2016.
- JERA has acquired the coal-trading business of EDF Trading, a subsidiary of French electricity utility EDF Energy, and also has gotten involved in developing and managing a renewable energy project implemented by ReNew Power Ventures, India’s leading renewable energy utility. Fully using the know-how of TEPCO Fuel & Power and Chubu Electric Power, the joint venture has started replacing domestic thermal power sources as well. With operations harnessing the economy of scale achieved by business integrations, JERA’s business areas have been enjoying steady benefits.
- In addition to wider use of renewable energy and a slowdown in domestic energy demands, the environment of the Japanese energy market is expected to significantly change in the coming years. Examples include establishment of a new power market as well as intensified competition resulting from progress in deregulation of electricity retail.
- Combining existing thermal power has been decided necessary in flexibly dealing with changes in business environments, maximizing benefits of comprehensive alliance, and providing a stable supply of electricity, gas, and other energy along with improving both parent company groups’ corporate value. To raise the value of JERA in the future, it would become increasingly necessary to assure the joint venture’s financial health and autonomy in management.
- Thus, for the basic agreement, TEPCO Fuel & Power and Chubu Electric Power have been holding consultations not only on basic principles and the significance of integration but also on steps toward assuring JERA’s financial health and autonomy of management. These matters, i.e. assuring JERA’s financial soundness and autonomy of management, were verified with the New Comprehensive Special Business Plan that was recently announced by TEPCO. In addition to that, the two utilities came to terms about introducing steps to keep JERA’s corporate value improvement activities unrestricted, including dividend rule settings. This in turn led to TEPCO Fuel & Power and Chubu Electric Power’s decision to sign a basic agreement and to move into detailed deliberations.
- Regarding future schedules, the two companies will consult in detail over concrete conditions and business ranges subject to integration. The goal is to enter into a joint venture agreement during the first half of FY2017, then assess assets/value, and combine businesses in the first half of FY2019.