1 Reporting Principles This is the tenth issue of the annual Sustainability Report published by Taiwan Power Company (Taipower). This year, the statistics and disclosures in the report have been compiled in accordance with the “Core” option of the G4 Guidelines of the Global Reporting Initiative (GRI). This report has been verified by the British Standards Institution (BSI) Taiwan to ensure that the report meets the requirements of the Core Option of the GRI G4 Guidelines and the GRI Electric Utilities Sector Disclosures, as well as the accountability principle standards (APS) in AA1000 (Type I Moderate Level). The contents featured in this Sustainability Report have been compiled from data submitted by relevant units of Taipower. To ensure the accuracy of report and meet stakeholders’ expectations, each year, an editorial meeting is held upon the completion of the report’s initial draft for all data-submitting units to review the contents of the report and provide feedback on the report. All contents of the report must be approved by the corresponding supervisor, the President and Chairman before publication. Following the last report of “Change for Power”, Taipower’s 2016 Sustainability Report will adopt “A Powerful New Age” as its main structure to further demonstrate Taipower’s efforts and effects of organizational transformation in 2015, showing how Taipower’s new mission and vision have guided the company in the process of organizational transformation to make Taipower’s endeavor of being sustainability visible in public. █ Period Covered by the Report From January 1 to December 31, 2015 (For the sake of complete disclosure and comparability, the report also includes some historical data.) █ Scope of the Report This report covers Taipower’s data and information regarding sustainability issues and achievements within the areas of economic management, social responsibility and environmental sustainability. █ Inquiries This report is also available in English. You can download the full version of English report from Taipower’s website. Taipower has established a brand new section on Sustainable Development in 2015. It functions as a platform to communicate with stakeholders about its performance on sustainability issues (including issues of lower materiality such as “Contribution to Society,” which are not disclosed in this report). We also added a section for stakeholders and questionnaires to communicate with our stakeholders. In addition, the Information Disclosure section on Taipower’s website is also updated regularly to provide the latest statistics on six major aspects of the company’s operation, including management, power generation, environment and so forth. We will be very glad if you have any feedback regarding Taipower’s Sustainability Report. This will enable us to better meet your requirements and publish the next Sustainability Report in the third quarter of 2017. You can contact us by the following methods: Taiwan Power Company Contact Department of Corporate Planning Address 12F, No.242, Sec.3 Roosevelt Rd., Taipei, Taiwan (R.O.C), 10016 Telephone: +886-2-2366-6463 Email: [email protected] Website: http://www.taipower.com.tw Sustainable Development Website http://csr.taipower.com.tw Sustainability Report 2007/ Sustainability Report 2008/ Published August 2007 Published August 2008 Su stainability Report 2009/ Sustainability Report 2010/ Sustainab P ility Report 2011/ Sustainability Report 2012 / Sustainability Re ublished August 2009 Published August 2010 Publishe port 2013/ Sustainability Report 2014/ Sustainability Report 20 d August 2011 Published August 2012 Published Augu 15/ st 2013 Published August 2014 Published August 2015 This report uses FSC certified paper and environmentally friendly soy ink. 2 Statement from the Chairman In 2015, the year had proven to be a critical turning point in terms of sustainable development for both the international community and Taipower. Under UNFCCC, COP21 of the United Nations Climate Change Conference was held in Paris. We have also witnessed the corresponding establishment of various low carbon alliances, such as the Carbon Pricing Leadership Coalition (CPLC) and the Breakthrough Energy Coalition. Falling international fuel prices and our people’s effort helped Taipower achieve an impressive profit of NT$ 61.8 billion before tax. The figure not only meant a substantial increase in surplus (compared to NT$ 47.8 billion of 2014) but also set a record. Facing rapid and dramatic changes in the external environment, Taipower has been striving for development through stability. In 2016, Taipower recreates new missions, visions and management philosophy for the company through reformation of Taipower’s divisional structure so that we may stay sustainable development in both the local and international market. In 2015, we obtained significant results in the areas of corporate governance and sustainability of environment and society, which we will illustrate through the following five aspects: “Improving operational efficacy”, “Strengthening social communication and Enhancing information disclosure”, “Driving organizational transformation”, “Passing on the company heritage” and “Building a green enterprise”: █ Improving Operational Efficacy Power generation and reliability are vital indicators of operational efficacy for a power company. In 2015, the thermal efficiency of our fossil-fired power plants (gross Higher Heating Value, HHV) reached 39.05%, with net generation reaching 126.3 GWh. The SAIDI diminished to 16.268 (min./cus./Yr.), and the line loss rate dropped to 3.72%. All of them set all new records for our company. In 2015, our performance again received recognition through numerous awards. Internationally, in the Getting Electricity Index in Doing Business 2016, released by the World Bank, Taiwan ranked No.2 among 189 economic entities worldwide and received full marks for the reliability of supply and transparency of tariffs index. Domestically, Taipower’s Sustainability Report 2015 was honored with the Energy Industry Gold Award and the Climate Leadership Award and Creativity in Communication. █ Strengthening Social Communication and Enhancing Information Disclosure Taipower is well aware of the importance of communication with the society. Externally, we have created a dedicated section on tariff rate disclosure and constructed the Taipower Green Network in 2015 to ensure bilateral communication with stakeholders on the topics of concern (i.e. tariff and sustainability). In addition, a reporting system was established for the handling of public opinion and emergencies to ensure response and proactive disclosure of relevant information to the media in time. Internally, we have organized demonstration and observation tours for relevant units to share their experiences and insights on communication. In 2015, Taipower has strengthened its communication with stakeholders by expanding both its depth and width. █ Driving Organizational Transformation In light of the development for power industry liberalization, Taipower has implemented the final review of accounting separation and separation of generation and grid functions and the promotion of relevant progress in 2015. Raising cost awareness and clarifying the balance of payment enable the divisional structure we have adopted for 2016 to operate smoothly. At the same time, Taipower has established four divisions of Power Generation, Nuclear Power, Transmission System and Distribution and Service to serve as concrete proof of Taipower’s efforts and results with regards to organizational transition on January 1, 2016. █ Passing on the Company Heritage Being people-oriented and passing on the company heritage have been key management philosophies for Taipower, and these have been realized in two ways: “promoting company heritage development” and “improving human resources”. With regards to the former, Taipower has continued to promote its gallery to exhibit a variety of public art pieces and strived to create a user-friendly, multi-functional art space by means of “event marketing”. As for the latter, through diverse head hunting solutions to attract talents to join the company, in addition, we have established an organizational culture that emphasizes sharing and learning to foster staffs’ competence to comply with changes, and would be able to avert risks of human resource gaps. █ Building a Green Enterprise Taipower has continued to develop and promote its Green Action Plan in 2015, including onshore wind power, solar power, small hydro and geothermal plan, conversion of hydro power plants into ecological classroom and the establishment of environmental protection strategy platforms to construct a green enterprise. Through 3 Statement from the Chairman the improvement of transmission system efficiency and the enhancement of grid technology, Taipower will increase its ratio of low-carbon energy generation so as to fulfill its mission to become an eco-friendly enterprise. On top of that, Taipower has also promoted demand bidding to assist customers in energy conservation whilst actively improving green energy purchase. In 2015, Taipower’s corporate clients purchased more than 0.15 GWh of green power, equivalent to 3600% growth compared to that of 2014. Looking forward to Taipower’s sustainable development, the company shall embrace new corporate missions and vision as the core of our operation in 2016 through two specific approaches – “consolidating our profession” and “seeking development”. In