Annual Report 2015 Year Ended March 31, 2015

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Annual Report 2015 Year Ended March 31, 2015 国際社会 技 術 力・ ノウ ハ ウ の 向 上 Annual Report 2015 Year ended March 31, 2015 Tokyo Electric Power Company P r o fi l e Tokyo Electric Power Company, Incorporated (TEPCO) was established in 1951 to supply electric power to the Tokyo metropoli- tan area, and for more than half a century it has continued to support society and public life with high-quality electric power. The Tohoku-Chihou-Taiheiyou-Oki Earthquake, which struck on March 11, 2011, precipitated a serious accident at Fukushima Daiichi Nuclear Power Station. TEPCO has seen considerable weakening in its fi nancial standing and income structure due to factors associated with the aforementioned event, such as the recording of substantial expenses and losses and an increase in fuel costs accompanying the suspension of nuclear power generation. In short, TEPCO has been con- fronted with an unprecedented major crisis. Addressing the situation, TEPCO, along with the Nuclear Damage Compensation and Decommissioning Facilitation Corporation (NDF), formulated the Comprehensive Special Business Plan, putting together a program of drastic streamlin- ing, management reforms, and other steps. Simultaneously, TEPCO strengthened its fi nancial position through the issuance of preferred stocks totaling ¥1 trillion, with the NDF as allottee. As a result of the above, including such initiatives as exhaustive cost reductions, in the year ended March 31, 2015, TEPCO was able to achieve profi tability for a second consecutive year. Moreover, in anticipation of the full liberalization of the electric power industry, TEPCO has decided to shift to a Holding Company System in April 2016, with the aim of simul- taneously fulfi lling its responsibilities to the communities of Fukushima and boosting its competitiveness. Once inaugurated, the holding company will assume full responsibilities regarding the payment of compensation, the decommissioning of the nuclear reactors, and the revitalization of Fukushima. Meanwhile, the TEPCO Group will optimally reallocate its manage- ment resources, with each operating subsidiary implementing business strategies best suited to its respective characteristics. In these ways, the TEPCO Group will enhance its overall corporate value. TEPCO Snapshot Service Areas of Japan’s Ten Electric TEPCO’s Position in the Japanese Electric Power Industry Power Companies Number of Customers Service Area Electricity Sales Fukuoka As of March 31, 2015 As of March 31, 2014 Fiscal 2014 Kyushu Electric Power Sapporo Hokkaido Electric Power Hiroshima Chugoku Electric Power 34.3% 10.6% 31.2% Osaka Kansai Electric Power Toyama Hokuriku Electric Power Sendai Tohoku Electric Power Total Service Area Total Service Area Total Service Area Urasoe Tokyo (1) (2) (1) Okinawa Tokyo Electric Power Electric Power Nagoya ● TEPCO’s Service Area ● Total Service Area (10 EPCOs) Chubu Electric Power Notes: 1. Source: The website of the Federation of Electric Power Companies of Japan Takamatsu 2. Source: Handbook of Electric Power Industry (2014 edition) Shikoku Electric Power CONTENTS Forward-Looking Statements To Our Shareholders and Investors......... 1 This annual report contains forward-looking state- Transition to a Holding Company System through Company Split......... 2 ments regarding the Company’s plans, outlook, strategies, and results for the future. All forward- TEPCO Group Business Operations......... 4 looking statements are based on judgments Corporate Governance......... 8 derived from the information available to the Board of Directors and Executive Offi cers ......... 10 Company at the time of publication. Certain risks and uncertainties could cause the Organization Chart......... 11 Company’s actual results to differ materially from Major Facilities......... 12 any projections presented in this report. These Financial Section......... 13 risks and uncertainties include, but are not limited to, the economic circumstances surrounding the Major Subsidiaries and Affi liated Companies......... 70 Company’s businesses; competitive pressures; Corporate Information......... 71 related laws and regulations; product development programs; and changes in exchange rates. To Our Shareholders and Investors Annual Report 2015 1 To Our Shareholders and Investors Achieving Both “Accountability” and “Competitiveness” While persisting with the payment of compensation, decommis- sioning and securing the stability of the electricity supply, we are striving to secure the funds necessary to the revitalization of Fukushima. In addition, we recognize that it is crucial for us to be prepared for market competition following the full liberalization of the electricity retail market scheduled for April 2016. With this in mind, in concert with said liberalization TEPCO will shift to a Holding Company System earlier than other utilities propose to do so, as it aims to adopt the corporate form that best enables it to Fumio Sudo, Chairman Naomi Hirose, President implement management strategies optimized to the characteris- tics of each business operation. To further enhance our competitiveness, we formed a com- prehensive alliance with Chubu Electric Power Co., Inc., promot- It is our sincere regret that more than four years later the accident ing business collaboration encompassing the entire supply chain, at the Fukushima Daiichi Nuclear Power Station continues to trou- from upstream investment and fuel procurement through power ble so many people, including our shareholders and investors as generation. Going forward, we intend to utilize alliances with well as the residents of areas in the vicinity of the power station. diverse businesses other than utilities, thereby creating synergies Going forward, we will make the utmost efforts to stabilize the to strengthen our operations in the retail market. These are a few situation while maintaining compassion in our heart for the plight examples of our ongoing efforts to build an operating platform of the people of Fukushima. capable of helping us fulfill our responsibilities over the long term. Our Responsibilities regarding the Revitalization of Fukushima Enhancing Our Corporate Vale In line with the Comprehensive Special Business Plan approved by TEPCO believes that if it wants the aforementioned initiatives to the Japanese government, TEPCO has been pushing forward with yield greater profits, it is important to enhance the fairness and the paying out of compensation and decommissioning of nuclear transparency of management. Specifically, we recognize that reactors. In doing so, the Company has worked in close coopera- complying with Japan’s Corporate Governance Code, which came tion with the government while rallying all management resourc- into effect in June 2015, constitutes a vital component of our es groupwide to fulfill its responsibilities regarding the business foundation. In line with this recognition, we will imple- revitalization of Fukushima. In particular, to deal with the problem ment various corporate reforms to enhance productivity while of contaminated water, we introduced a multi-layered pursuing forward-looking initiatives aimed at constantly creating approach—including the use of ALPS multi-nuclide removal new value, with all Group companies working as one to gain the equipment—for the purification of the heavily contaminated confidence of our shareholders and investors. water derived from the decommissioning process that is the par- Although it is with sincere regret that TEPCO had to continue ticular focus of public anxiety. Thanks to these efforts, we were the non-payment of dividends for fiscal 2015 we sincerely ask for able to complete the purification treatment of all of the heavily shareholders’ understanding of and cooperation with our future contaminated water by May 2015, except for a small residual efforts. amount at the bottom of the storage tanks. Moreover, we finished the removal of all fuel from the spent fuel pool of Unit 4 of the Fukushima Daiichi Nuclear Power Station in December 2014 and have been conducting surveys inside the reactor containment vessels with an eye to removing fuel debris, thereby making steady progress toward decommis- sioning. Fumio Sudo, Chairman Naomi Hirose, President 2 Tokyo Electric Power Company Transition to a Holding Company System through Company Split Transition to a Holding Company System through Company Split In April 2016, TEPCO will shift to a Holding Company System comprising a holding company and three operating subsidiaries, as announced in the New Comprehensive Special Business Plan approved by the government in January 2014. 【 Background and Objectives of the Transition to a Holding Company System 】 As demand for electric power decreases due to energy conservation efforts and the development of low-energy products, there are plans for the full liberalization of the electricity retail market in April 2016 and for the statutory separation of electricity trans- mission and distribution divisions in 2020. Japan’s electric power market is witnessing a period of great change. In this environment, for TEPCO to continue fulfilling its responsibilities associated with the Fukushima nuclear power accident and to maintain an inexpensive and stable supply of electric power, it is essential for each business division to apply the best busi- ness strategies that suit its characteristics and work to improve the corporate value of the overall TEPCO Group. Given these circumstances, TEPCO has decided to transition to a Holding Company System with the aim of achieving both “responsibility and competitiveness.”
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