Chubu Electric Power Company,incorporated · TSE:9502

Chubu Electric Power Company,incorporated — 2Q FY2017 Earnings Presentation

53 slides from Chubu Electric Power Company,incorporated's earnings presentation, October 2017

1. Slide 1: Investors Meeting 2nd Quarter FY2017

   Investors Meeting 2nd Quarter FY2017 October, 2017

2. Slide 2: Index

   INDEX Safety Improvement Measures on 01 Outline of Financial Results for Hamaoka Nuclear Power Station <Onsite> ҩҩҩҩ15 Six-Months Ended September 30, 2017 Safety Improvement Measures on Summary of Financial Results ҩҩҩҩ01 Hamaoka Nuclear Power Station <Offsite> ҩҩҩҩ16 Electrical Energy Sold ҩҩҩҩ04 E

3. Slide 3: Outline of Financial Results for Six-Months ended September 30, 2017

   01 Outline of Financial Results for Six-Months ended September 30, 2017 Note: The company’s fiscal year (FY) is from April 1 to March 31 of the following year. FY2017 represents the fiscal year begun on April 1, 2017, and ending on March 31, 2018. 2nd Quarter(2Q) represents six months period ended S

4. Slide 4: Summary of Financial Results <1>

   01 Summary of Financial Results <1> „ Operating revenues (consolidated and non-consolidated) increased following 2014/2Q, for the first time in 3 years. „ Ordinary income (consolidated and non-consolidated) decreased for 2 consecutive years since 2016/2Q. „ We recorded increased sales and decreased

5. Slide 5: Summary of Financial Results <2>

   02 Summary of Financial Results <2> <Consolidated Operating Revenues> „ Operating revenues increased by 86.4 billion yen compared with 2016/2Q, mainly due to an increase in fuel cost adjustment charge, and an increase in surcharge and grant based on Act on Special Measures Concerning Procurement of

6. Slide 6: Summary of Financial Results <3>

   03 Summary of Financial Results <3> <Consolidated Ordinary Income> „ Consolidated ordinary income decreased by 76.4billion yen compared with 2016/2Q, mainly due to a conversion of income incurred by fuel cost adjustment system time lag into loss. [Factors contributing to change in consolidated ordin

7. Slide 7: Electrical Energy Sold

   04 Electrical Energy Sold <Electrical Energy Sold> 凑 Dropped by 0.8% to 59.9TWh, compared with 2016/2Q, mainly due to an effect of switches made to other operators with the intensified competition , in spite of an increase of production in the automobile and semiconductor industry and an increase in

8. Slide 8: Electric Power Supplied

   05 Electric Power Supplied <Electric Power Supplied> „ Hydro : The flow rate fell short of 2016/2Q ; thus hydroelectric power output decreased by 0.1TWh. „ Interchanged, purchased power : Increased by 0.7TWh, mainly due to an increase in purchase of renewable energy. „ Thermal : As a result of a dec

9. Slide 9: (Reference) Impact of Accrued Income Incurred by Fuel Cost Adjustment System (Result)

   06 (Reference) Impact of Accrued Income Incurred by Fuel Cost Adjustment System (Result) <FY2017/2Q> <FY2016/2Q> Loss Income -13.0 billion 55.0 billion Average Fuel price Fuel procurement price (basis of fuel cost adjustment charge) (basis of fuel cost) Copyright © CHUBU Electric Power Co.,Inc. All

10. Slide 10: Dividends

    07 Dividends <The Policy on Shareholder Return> „ The Company will work to maintain stable dividends after taking account of financial condition and other factors, while continuously investing in building and operating facilities that are essential for a safe and stable supply of electricity. <Divid

11. Slide 11: Summary of Forecast for FY2017 <1>

    08 Summary of Forecast for FY2017 <1> <Forecast>Revised Forecasts of Financial Results previously announced on July 28, 2017. ‫ ٹ‬Operating revenues (consolidated and non-consolidated) is not revised. ‫ ٹ‬Ordinary income (consolidated and non-consolidated) will increase mainly due to further managem

12. Slide 12: Summary of Forecast for FY2017 <2>

    09 Summary of Forecast for FY2017 <2> [Principal figures] (TWh,%) Current July 28 Change (Electrical energy sold) (A) (B) (A-B) (A-B)/B Low voltage 37.7 37.7 - - High voltage / Extra-high voltage 81.6 81.6 - - Total 119.3 119.3 - - (Other principal figures) Current July 28 CIF price: crude oil ($/b)

13. Slide 13: (Reference) Impact of Accrued Income Incurred by Fuel Cost Adjustment System in FY2017 (Forecast)

    (Reference) 10 Impact of Accrued Income Incurred by Fuel Cost Adjustment System in FY2017 (Forecast) ٛFY2016ٜ ٛFY2017ٜ Income Loss 6.0 billion -15.0 billion Fuel procurement price Average Fuel price (basis of fuel cost) (basis of fuel cost adjustment charge) Copyright © CHUBU Electric Power Co.,Inc.

14. Slide 14: Management Situation

    02 Management Situation Copyright © CHUBU Electric Power Co.,Inc. All Right Reserved.

15. Slide 15: Mid-term Target toward the Achievement of "What We Aim For"

    Mid-term Target toward the Achievement of ‟What We Aim For” 11 (Initiatives for Management Issues) Chubu electric 凑 As a leading company that provides services that exceed expectations to Power Group customers ahead of our competitors, we will aim to become a ‟total “What We Aim For ” energy service

16. Slide 16: Development of High Efficiency Thermal Power Plants

    㻝㻡 12 Development of High Efficiency Thermal Power Plants [Outline of development of Nishi-Nagoya (Reference) Development schedule Thermal Power Plant Unit No.7] Output (at the generation end) 2,376 MW 2013 2014 2015 2016 2017 2018 ҩҩҩҩҩ 2021 (FY) Thermal efficiency (LHV basis) Approx. 62% ‫ٽ‬Mar.-1

17. Slide 17: Business Expansion of JERA

    13 Business Expansion of JERA „ TEPCO Fuel & Power, Incorporated and Chubu Electric established “JERA Co., Inc.”, as a new company that implements “a comprehensive alliance covering the entire energy supply chain, from upstream fuel and procurement through power generation.” After establishing JERA,

18. Slide 18: Expansion of Total Energy Services

    14 Expansion of Total Energy Services „ Taking full liberalization of entry to gas business from April 2017 as an opportunity, gas has begun to be sold to household customers in addition to conventional customers for industrial use and business use. „ With competitive procurement capacity of JERA as

19. Slide 19: Safety Improvement Measures on Hamaoka Nuclear Power Station <Onsite>

    15 Safety Improvement Measures on Hamaoka Nuclear Power Station <Onsite> „ Major construction works at Unit 4 have been completed excluding some construction works including re-examination of construction work details based on the situation in the field. We are presently undergoing inspections by th

20. Slide 20: Safety Improvement Measures on Hamaoka Nuclear Power Station <Offsite>

    16 Safety Improvement Measures on Hamaoka Nuclear Power Station <Offsite> Offsite‫ق‬outside of the power plant site‫ك‬ Mutual cooperative systems On March 7, 2017, Chubu Electric Power concluded an agreement As preparation for nuclear disasters, coordination with the on mutual technical cooperation

21. Slide 21: Efforts for Development of Business Structure that can Adapt to Change of Environment

    Efforts for Development of Business Structure that can Adapt to Change 17 of Environment [Reinforcement of business foundation utilizing ICT and expansion of business areas] „ ICT such as IoT, big data and AI will be utilized for reinforcement of business foundation, and examinations will be made fo

22. Slide 22: Reference Data(1): Financial Results

    03 Reference Data(1): Financial Results Copyright © CHUBU Electric Power Co.,Inc. All Right Reserved.

23. Slide 23: Consolidated Statements of Income

    18 Consolidated Statements of Income (Rounded down to nearest 100 million yen.) (Billion yen,%) 2017/2Q 2016/2Q Change (A) (B) (A-B) (A-B)/B Operating revenues 1,393.3 1,306.8 86.4 6.6 Non-operating revenues 8.1 7.7 0.3 4.7 Ordinary revenues 1,401.4 1,314.6 86.7 6.6 Operating expenses 1,296.3 1,134.

24. Slide 24: Non-consolidated Statements of Income <1>: Operating Revenues

    19 Non-consolidated Statements of Income <1>: Operating Revenues (Rounded down to nearest 100 million yen.) (Billion yen,%) 2017/2Q 2016/2Q Change 岧Major factors for change岨 (A) (B) (A-B) (A-B)/B Electricity sales revenues 1,052.9 1,025.5 27.4 2.7 凑 An increase in fuel cost adjustment charge Sold po

25. Slide 25: Non-consolidated Statements of Income <2>: Operating Expenses

    20 Non-consolidated Statements of Income <2>: Operating Expenses (Rounded down to nearest 100 million yen.) (Billion yen,%) 2017/2Q 2016/2Q Change 岧Major factors for change岨 (A) (B) (A-B) (A-B)/B Salaries and employee benefits 91.4 89.1 2.3 2.6 凑 An increase in fuel price Fuel 339.3 264.6 74.7 28.2

26. Slide 26: Non-consolidated Statements of Income <3>: Net Income

    21 Non-consolidated Statements of Income <3>: Net Income (Rounded down to nearest 100 million yen.) (Billion yen,%) 岧Major factors for change岨 2017/2Q 2016/2Q Change (A) (B) (A-B) (A-B)/B Operating income 88.5 164.0 (75.5) (46.0) 凑 Electricity business : -69.8 凑 Incidental business : -5.6 Non-operat

27. Slide 27: Consolidated and Non-consolidated Financial Standing

    22 Consolidated and Non-consolidated Financial Standing (Rounded down to nearest 100 million yen.) (Billion yen) 2017.9 2017.3 Change (A) (B) (A-B) 5,451.0 5,412.3 38.7 Assets <4,969.5> <4,956.5> <13.0> 3,657.0 3,687.5 (30.5) Liabilities <3,501.1> <3,535.9> <(34.8)> 1,794.0 1,724.7 69.3 Net assets <

28. Slide 28: Consolidated Statements of Cash Flows

    23 Consolidated Statements of Cash Flows (Billion yen) FY2017/2Q FY2016/2Q Change (A) (B) (A-B) Cash flows from operating activities (a) 142.8 174.0 (31.1) Cash flows from investing activities (b) (173.0) (181.9) 8.8 Cash flows from financing activities(c) (37.0) (12.3) (24.7) Net decrease in cash a

29. Slide 29: Electricity Business Operating Expenses (Non-consolidated)

    24 Electricity Business Operating Expenses (Non-consolidated) ‫ق‬Billion yen‫ك‬ Salaries and employee benefits Fuel Purchased power Maintenance Depreciation Other 3,000.0 2,709.7 2,638.2 (6%) 2,457.1 (7%) 2,500.0 2,297.3 (7%) 2,317.3 2,231.7 2,136.8 (9%) (8%) 2,037.3 1,982.9 (8%) 2,000.0 (9%) (7%) 1

30. Slide 30: Cash Flow (Consolidated)

    25 Cash Flow (Consolidated) ‫ق‬%LOOLRQ\HQ‫ك‬ Cash Flows from Operating Activities Cash Flows from Investing Activities FCF 800.0 600.0 562.4 539.1 471.9 449.7 476.8 400.0 358.8 335.0 254.4 227.6 194.0 200.0 113.6 176.8 203.7 296.7 199.2 143.7 0.0 (25.1) (70.2) (102.9) (62.8) (200.0) (215.1) (272.7)

31. Slide 31: Fund Raising

    26 Fund Raising „ We raised total approximately 1,500 billion yen in long-term funding for 3 years since the shutdown of Hamaoka Nuclear Power Station. „ We raised 390 billion yen in long-term funding in FY2016. „ We plan to raise approximately 400 billion yen in long-term funding in FY2017. 900.0 (

32. Slide 32: Financial Ratio, Credit Ratings

    27 Financial Ratio, Credit Ratings [Shareholders’ equity ratio] [Debt-Equity ratio] Times 35.0 3.0 Non-Consolidated Consolidated Non-Consolidated Consolidated 30.0 31.1% 2.5 (Consolidated) 25.0 2.0 1.9 Times 20.0 (Non-Consolidated) 28.7% 1.5 15.0 (Non-Consolidated) 1.0 10.0 1.6 Times 0.5 (Consolidat

33. Slide 33: Reference Data (2): Management Information

    04 Reference Data (2) : Management Information Copyright © CHUBU Electric Power Co.,Inc. All Right Reserved.

34. Slide 34: Schedule of the Electricity and Gas System Reform

    28 Schedule of the Electricity and Gas System Reform [Schedule of the electricity system reform] Schedule for Schedule for implementing the measures Enacted the bill 3rd phase: Enacted on Further securing the neutrality of the power transmission/distribution In April 2020 June 17, 2015 sector throug

35. Slide 35: Initiatives of JERA <1>

    29 Initiatives of JERA <1> „ JERA will expand business based on investment profits from each business and profits generated from the optimization of the value chain. ¾ We will divide the value chain from the securing of interests of energy resources to procurement, transportation, gas supply and pow

36. Slide 36: Initiatives of JERA <2>: Type of Business

    30 Initiatives of JERA <2> : Type of Business [Fuel business (Upstream, procurement, transportation, trading)] Optimum portfolio is create using the world’s largest procurement scale and trading, and fuel procurement that can flexibly respond to change of business environment in the future is realiz

37. Slide 37: (Reference) Overseas IPP and Fuel Projects of JERA Group

    31 (Reference) Overseas IPP and Fuel Projects of JERA Group (As of October, 2017) Canada • Goreway Gas Thermal IPP Netherlands • Rietlanden Coal Terminal Oman US U.A.E. • Sur Gas Thermal IPP • Tenaska Gas Thermal IPP • Umm Al Nar Gas Thermal IWPP Taiwan • Carroll County Gas Thermal IPP India • Chang

38. Slide 38: Sales Strategy <1>: Optimum Proposal of Gas & Electric Power

    32 Sales Strategy <1> : Optimum Proposal of Gas & Electric Power „ We arranged seven gas tariff menus, i.e. the KatEne Gas Plan for households and the BizEne Gas Plan geared toward businesses. They have been set at prices lower than the gas tariff menu offered by Toho Gas*. * There are some cases th

39. Slide 39: Sales Strategy <2>: Gas Sales Framework

    33 Sales Strategy <2> : Gas Sales Framework „ In 2001, Chubu Electric Power launched a natural gas sales operation geared towards large factories, harnessing its own pipelines. The company has since then been taking incremental steps to strengthen and expand its gas business. „ We started to sale ga

40. Slide 40: Sales Strategy <3>: Electricity Sales Framework in the Tokyo Metropolitan Area

    34 Sales Strategy <3> : Electricity Sales Framework in the Tokyo Metropolitan Area [Electricity tariff menu in the Tokyo metropolitan area (KatEne Plan) ] ⋇ Top-class low price ¾ Discount rate is 5-10% (KatEne point included) compared with TEPCO Energy Partner’s existing menu. Features ⋈ Benefit ari

41. Slide 41: Sales Strategy <4>: Enhancement of Points of Contact with Customers

    35 Sales Strategy <4> : Enhancement of Points of Contact with Customers ٛLow voltage ٜ „ Various services with high added values that contribute to convenient and comfortable life as “daily-life coordinator” are developed and provided. ٛHigh voltage嵣Extra-high voltage ٜ „ Total energy solution is pr

42. Slide 42: Hamaoka Nuclear Power Station <1>: The State of Power Station

    36 Hamaoka Nuclear Power Station <1> : The State of Power Station „ For Unit 4, application for review for checking conformity to New Regulatory Standards was submitted on February 14, 2014. For Unit 3, application for review for checking conformity to New Regulatory Requirements was submitted on Ju

43. Slide 43: Hamaoka Nuclear Power Station <2>: Progress of the Nuclear Regulation Authority's Review

    Hamaoka Nuclear Power Station <2> : Progress of the Nuclear Regulation 37 Authority’s Review to Verify Compliance with the New Regulatory Standards „ As to Unit No.4, the application form for Change in reactor establishment permission that we submitted has been reviewed by the Nuclear Regulation Aut

44. Slide 44: Hamaoka Nuclear Power Station <3>: Seawater Inflow via Damaged Tubes

    Hamaoka Nuclear Power Station <3> : Seawater Inflow via Damaged Tubes 38 in the Main Condenser for Hamaoka Reactor No.5 [Fact] - On May 14, 2011, when preparing for cold shutdown after reactor No. 5 was suspended, a portion of the tubes in the main condenser, through which seawater flowed to cool st

45. Slide 45: Hamaoka Nuclear Power Station <4>: Activities to Take Part in Dialogue with Local Residents

    Hamaoka Nuclear Power Station <4> : 39 Activities to Take Part in Dialogue with Local Residents „ On the Hamaoka Nuclear Power Station, we have been steadily promoting further safety measures including facilities measures and disaster prevention measures together with gaining public understanding as

46. Slide 46: Composition of Power Sources and Electric Power Output (FY2016)

    40 Composition of Power Sources and Electric Power Output (FY2016) „ Based on energy mix of Japan, aim for optimum composition of power sources by combining various types of power source, such as nuclear power, thermal power and renewable energy, in a well-balanced manner from the standpoint of “S+3

47. Slide 47: Responses to Global Warming ~ Reduction of CO2 Emissions ~

    41 Responses to Global Warming ~ Reduction of CO2 Emissions ~ „ Japanese government set up the target of reducing greenhouse gas emissions (26% reduced by FY2030) as Japan’s goal of the Paris Agreements, and decide the proportion of nuclear power generation and renewable energy(Non-fossil energy sou

48. Slide 48: Renewable Energy <1>: Our Efforts toward Promotion

    42 Renewable Energy <1>: Our Efforts toward Promotion (As of the end of September, 2017) (Reference) Development locations of hydroelectric power station Chubu Electric Chubu Electric Group Conventional hydro operating 196 Site : 5,453MW Akigami : 0.29MW(FY2016) Generation with minimum water level P

49. Slide 49: Renewable Energy <2>: Actions for Expansion of Introduction of Renewable Energy

    Renewable Energy <2>: 43 Actions for Expansion of Introduction of Renewable Energy „ To realize energy mix of Japan, take actions for expansion of introduction of renewable energy such as efforts for adjusting supply and demand in a wide range for change of output of renewable energy and efforts for

50. Slide 50: Reinforcement of the Frequency Converter (FC)

    44 Reinforcement of the Frequency Converter (FC) „ In order to stably supply electricity when power outage occurs in a wide range due to stoppage of large-scale power source, efforts will be made to increase FC by 900 MW to a total of 2,100 MW in FY2020 so that lending of electricity between regions

51. Slide 51: Reinforcement of Business Foundation Utilizing ICT and Expansion of Business Areas

    Reinforcement of Business Foundation Utilizing ICT and 45 Expansion of Business Areas „ ICT such as IoT, big data and AI will be utilized for reinforcement of business foundation, and examinations will be made for provision of new services. [Main efforts utilizing IoT] Power network Communications n

52. Slide 52: Disclaimer

    DISCLAIMER This presentation contains assumptions and forward-looking statements with respect to the financial conditions, and forecasts of the company, which are based on information currently available. These assumptions involve certain risks and uncertainties, and may cause actual results materia

53. Slide 53: Copyright © CHUBU Electric Power Co.,Inc. All Right Reserved.

    Copyright © CHUBU Electric Power Co.,Inc. All Right Reserved.

Chubu Electric Power Company — 2Q FY2017 Earnings Presentation on 6ix