July 2017 Regular Press Conference : President Katsuno's Message

• First, I would like to speak about FY2017 first quarter financial results.
• Chubu Electric Power’s consolidated sales for the first quarter of FY2017 recorded 655.4 billion yen.
• Although there was a drop in fuel cost adjustment costs, increases in levies and subsidies on renewable energy sources, etc., resulted in a 24.2 billion yen profit increase on a year-on-year basis.
• The consolidated ordinary income marked 28.4 billion yen.
• The different-timing margin of both fuel adjustment and fuel costs shrank. This resulted in a 64.2 billion yen profit decrease on a year-on-year basis.
• Next are the non-consolidated financial results for Chubu Electric.
• Sales stood at 604.5 billion yen. This is a 16.4 billion yen increase year-on-year.
• Ordinary income marked 2.59 billion yen. This is a 66.1 billion yen profit decrease year-on-year.
• Next is the earnings outlook for FY2017.
• As the latest earnings outlook is about the same as the previously published values of April 28, no change has been made.
• Consolidated net sales are expected to increase to 2.76 trillion yen due to an increase in electricity sales revenue following an increase in the fuel cost adjustment unit price.
• Consolidated sales are expected to decrease to 100 billion yen because of different-timing margin of both fuel adjustment and fuel costs shrank.
• As was mentioned on April 28, the actual values for profits are similar to those of the previous fiscal year when disregarding the effects of the different-timing margin; regardless, I have given instructions to make further efforts to enhance operating efficiency, and the group is currently working together to achieve this goal.
• We will continue to do our best to respond to the trust and expectations of our customers, shareholders, and society.

• I now turn to the company’s development of hydroelectric power station.
• Hydroelectric power generation is a precious pure nationally produced energy source and is a power source that provides stable energy production compared to other renewable energy sources, and therefore our company is pursuing active development in this area.
• Meanwhile, areas for the new development of hydroelectric power station are becoming smaller in scale and increasingly remote, and thus new economically-efficient development is becoming limited.
• As new development becomes difficult, our company has implemented several cost-decreasing measures, and are currently preparing to start commercial operation of two new developments in FY2022:
  • Seinaiji Hydroelectric Power Plant (5,600kW output)
  • Abekawa Hydroelectric Power Plant (7,100kW output)
• Excluding the Tokuyama Hydroelectric Power Plant, which was built as part of the multipurpose dam development plan, this will be the first new construction of hydroelectric power station undertaken by our company alone since the Hiraya Power Plant 20 years ago.

(Note) Tokuyama Unit 2 began commercial operation in FY2014 and Unit 1 began commercial operation in FY2016.

• In addition to the developments in new areas, our company is also working on the development of hydroelectric power station that use unused energy, such as the final effluent from existing dams, etc., and so far we have a total of six developments with a total output of 1,430kW.
• Recent developments include:
  • The Shinkushihara Hydroelectric Power Plant (230kW output) and Atagi Hydroelectric Power Plant (190kW output) which began commercial operation in FY2015
  • The Nyukawa Hydroelectric Power Plant (350kW output) which began commercial operation in FY2016
  • The Shinokuizumi Hydroelectric Power Plant (290kW output) which is scheduled to begin commercial operation in FY2017
• Next, I shall talk about the “efforts to increase the energy production of existing hydroelectric power station.”
• Hydroelectric power station have the advantage of being able to be used for a longer period of time with appropriate maintenance compared to other power sources.
• The “dam renewal vision” announced by the government last month also set forth policies aiming to expand the usage of existing hydroelectric power station by “using existing dams ‘longer’ and ‘more wisely.’”
• Our company has also been actively working on increasing the energy production of existing hydroelectric power station.
• I will now talk about the following two pillars for increasing the energy production of existing hydroelectric power station:
  • Design optimization and application of new technologies
  • Increase in energy production through operational change
• I will first talk about “design optimization and application of new technologies.”
• In hydroelectric power generation, power is generated by using energy from water in rivers and other water sources to rotate water mills, and conventionally was designed so that generating efficiency was maximized at the time of maximum flow as permitted by the government.
• When updating our facilities, our company reviewed the design to allow maximum generating efficiency at the time of flow when the frequency of water intake throughout the year was high, enabling us to increase the amount of energy produced.
• In addition, we visualized the movement of water flowing through the water mills using analysis technology and incorporated this in our designs, allowing us to change the shape of the water mill blades to transfer water energy in the most efficient manner.
• We applied this measure to our equipment starting in FY2007, and so far, this measure has been implemented at nine hydroelectric power station, resulting in an increase in energy production of 3～28%.
• The total increase in energy production at the nine power stations is approximately 17.6 million kWh per year, enough to power approximately 5,600 households.
• Next are our efforts to “increase energy production through operational change.” This is a measure to enhance power generation capacity by reviewing the operating methods of the power station, and does not involve much cost.
• Our company is working on increasing energy production by implementing measures such as the following:
  • Change in maximum output
  • Reduction in the power generation shutdown period when rivers are flooded
  • Switch to dam operation at high water levels
• First, I will talk about the ”change in maximum output.” At hydroelectric power station, the output that is calculated based on the maximum flow permitted by the River Law is reported to the government, and power generation cannot exceed the reported output.
• We focused on the fact that the maximum output can be reached without using the permitted maximum flow if the capacity of the actual generation facilities goes beyond the planned values.
• We re-examined the performance of the generation facilities in detail, and by changing the reported maximum output in accordance with the performance, we were able to increase energy production.
• Next, I will describe the “reduction in the power generation shutdown period when rivers are flooded.”
• Hydroelectric power station may stop operation when water flow is high from rainfall, etc., because the sediments churned up from the river bed due to the surge of water may damage equipment such as conduits and water mills.
• Our company has increased the amount of energy production by stopping operation as late as possible and resuming operation as early as possible, using information such as the following to review conditions that allow generating operation when the rivers are flooded and to precisely determine the amount of rainfall and the time lag to increased flow and turbidity.
  • Estimates of the amount of sediment contained in the turbid waters flowing into conduits when the rivers flood, cultivated through dam management
  • More detailed assessment of the effects of sediment on equipment such as conduits and water mills
• Lastly, I will talk about the “increase in hydroelectric head by operating the dam at a higher water level.”
• Until now, our company has managed the dam water level with plenty of allowance, in preparation for a rapid increase in the water flowing into the dam due to sudden rainfall.
• By using sophisticated precipitation forecast and detailed water level operation that predicts the inflow of water into the dam, etc., we were able to operate at a high water level.
• This resulted in a larger head, increasing the amount of energy production.
• I have introduced three improvement measures brought about by operational change. One measure uses new technology, while the other two measures were accomplished by many years’ of experience in the field to “minimize wastage of our precious water and use it as effectively as possible.”
• Through these improvement measures, our company has increased energy production by approximately 174 million kWh a year by FY2016, which is enough to power approximately 55,800 households.
• Hydroelectric power and other renewable energy sources are pure nationally produced energy sources, and are environmentally-friendly while also contributing to increased energy security.
• Our company and the Chubu Electric Power Group will continue active development in hydroelectric power as well as other renewable energy sources such as wind power and solar power generation.

• Lastly, I will talk about the visit to the Hamaoka Nuclear Power Station by Deputy Chairman Fuketa of the Nuclear Regulation Authority on the 18th of this month.
• This was Deputy Chairman Fuketa’s first visit to Hamaoka since the field investigation in June 2015, and we are very grateful that on this visit he was able to witness the various safety enhancement measures of the Hamaoka Nuclear Power Station, such as breakwaters and emergency gas turbine generators.
• Although the time was limited, we feel that Vice President Kurata and General Manager of Hamaoka Nuclear Power Executive Headquarters Masuda were able to provide a careful explanation of the company’s efforts towards enhancing safety.
• After his visit, Deputy Chairman Fuketa recognized our company’s efforts by saying that he “felt an active commitment towards safety enhancement,” while also mentioning that “there was still room for improvement with regards to safety measures.”
• We will accept his feedback with sincerity and continue to firmly support the Nuclear Regulation Authority reviews, and rather than remaining within the framework of the new regulatory standards, we shall continue to implement measures to further enhance the safety of the Hamaoka Nuclear Power Station.
• Our company will work on further enhancing nuclear disaster measures by advancing intangible measures such as developing a disaster prevention system and improving training, in addition to tangible measures to enhance safety.
• We will provide careful explanations of our efforts to the local community as well as all others concerned, and with their understanding, we shall strive to do our best so that the Hamaoka Nuclear Power Station can continue to serve as an important power source.
• This ends my presentation.