“challenge” uncharted territory. challenge. power group vision, and “3-year action plan” to...

“Challenge” uncharted territory. “Challenge” competition. “Challenge” with fresh ideas.

Challenge. - Toward the growth of the Group in a new energy era -

Kansai Electric Power Group Medium-term Management Plan (2016–2018)

The Kansai Electric Power Co., Inc.April 2016

1

The Kansai Electric Power Co., Inc.

1. Introduction

2. What We Aspire to Become in 10 Years

3. Our Efforts towards Realizing What We Aspire to Become(1) Enhancement of competitiveness in comprehensive energy business

(2) Establishment of new pillars for growth

(3) Strengthening Group Management Foundation

4. Financial goal and policy of return to stockholders

2


Thank you very much for your continuous support for the business operated by the Kansai Electric Power Group.

For the past 65 years since our founding, our Group has been operating business by “continuously serving our customers and communities,” including

providing a safe and stable supply of electricity, as our mission of primary importance.

The full liberalization of retail electricity sales starting in April 2016 ushers in a new energy era in which the business environment will dramatically

change from a “regional monopoly and fully distributed cost” model which has lasted since the day of the Group’s establishment, to a “free competition”

model.

We are going to enter an age of full-fledged competition with the participation of new rival companies from other industries, while at the same time

expansion of business domain/area resulting from the liberalization will also be an opportunity for us to achieve fresh growth.

Our Group sincerely hopes to keep serving our customers and communities by responding to the rapidly changing environment in a proactive and flexible

manner and by providing our own value not just in conventional ways but with fresh ideas.

To this end, now that we are standing at the turning point of an era, we have formulated our “Management Philosophy” and “Kansai Electric Power Group

Vision” in March 2016, which clearly show how our Group should operate our business under new management circumstances to proactively respond to

the changes and achieve long-term sustainable growth.

Introduction

Under our new philosophy and vision, what should we do to be continuously selected by our customers and bring further

growth to our Group? How should we make our way to become what we aim to be as stated in our vision?

As the first step of the way our Group must proceed, we have now developed the “Kansai Electric Power Group Medium-

term Management Plan (2016–2018)”.

Our determination underlying the Medium-term Management Plan is represented by the word “Challenge.” We

“Challenge” competition, “Challenge” uncharted territory and “Challenge” with fresh ideas; in doing so our Group will

make a concerted effort to meet your expectations.

As the newborn Kansai Electric Power Group, we will accomplish our Medium-term Management Plan with unwavering

resolve and continue to forge ahead toward the growth of our Group in a new energy era.

We ask for your continued support and patronage.

April 2016

Makoto Yagi, President and Director

3


Formulation of Medium-term Management Plan

[What we aim to be in the future]

We will provide a wide range of safe,

comfortable and convenient services from a

viewpoint of our customers and business

partners, and gain their trust to be selected as

the best partner in everyday life and business so

we keep growing at home and abroad while

fulfilling our resolve to play expected role as

Japan’s leading company in the energy sector.

By giving top priority to safety and fulfilling social responsibilities as the axis of

business management and upholding our mission of “continuing to serve our

customers and communities,” we at the Kansai Electric Power Group will realize a

bright, affluent future and keep close relationship with our customers and

communities into the future.

Based on the concept of valuing people, the Kansai Electric

Power Group will contribute to sustainable development of

communities through fair business activities.

Each one of our directors and employees will demonstrate a

“sense of mission” and “spirit of challenge” which have been

cultivated so far and give our best in our duties as a good

member of society and also fulfill the following fundamental

responsibilities.

[Fundamental Responsibilities]

•Give top priority to ensuring safety.

•Surely implement CSR.

•Keep changing to accomplish our abiding mission.

.

○While the environment surrounding the electricity business is changing dramatically as exemplified by the full liberalization of retail

electricity sales, business opportunities are expanding owing to full liberalization of retail gas sales and other factors.

○ In order to proactively respond to such environmental changes and realize “What we aim to be in the future” as stated in the “Kansai Electric

Power Group Vision” developed in March 2016, we formulated a new medium-term management plan.

Formulating a medium-term management plan

to achieve fresh growth in a new energy era

Kansai Electric Power Group

Philosophy System

Medium-term

Management Plan

Management

Philosophy

Kansai Electric

Power Group

Vision

Guidelines for

Action

Brand statement

4


3-year Steps to Realize What We Aspire to Become

Now

(2016)

After 3 years

(2019)

After 10 yearsAfter 6 years

(2022)

○ “What we aspire to become in 10 years” toward what we aim to be in the future, which is described in the Kansai

Electric Power Group Vision, and “3-year Action Plan” to realize it.

Medium-term Management Plan is…

(Next term)

Medium-term Management Plan

(Term after next)


Now

[2016–2018] Expansion of revenue

sources

Establishment of a new

revenue structure[2019–2021]

[2022–2024]

What we aspire to

become in 10 years

Regeneration and pursuit of

fresh growth

(Current term)


What we aim to be

in the future

5


(Reference) Positioning by Step

[2016–2018]

Expansion of revenue sources


revenue structure

[2019–2021]

[2022–2024]

Regeneration and pursuit of

fresh growth

○ Restart of our nuclear power plants as early as possible to fulfill our responsibilities to our

stakeholders, such as lowering electricity rates and resuming dividend payments.

○ Enhancement of competitiveness and firm establishment of a profit-making structure at the

same time.

○ Consider a broad range of approaches toward commercialization and future growth, without

being bound by conventional frameworks.

○ Increase the scale of business and profit level by further enhancing competitiveness through

resumption of successor nuclear reactor operations and implementation of cost structure reform, as

well as by intensively devoting managerial resources to highly profitable businesses.

○ Secure stable profits from multiple revenue sources as the outcome of efforts accumulated so

far.

○ Establish a new business portfolio (revenue structure) that matches the new energy era and does

not solely depend on the electricity business within the Kansai Region, thereby realizing what

we aspire to become.

(Nex

t te

rm)

Med

ium

-ter

m M

anag

emen

t

Pla

n

(Ter

m a

fter

nex

t)

Med

ium

-ter

m M

anag

emen

t

(Cu

rren

t te

rm)

Med

ium

-ter

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Man

agem

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Pla

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6


Our Determination to Move Ahead with the “Medium-term Management Plan”

◇ “Challenge” competition.

Amid full-scale competition resulting from full liberalization of retail electricity sales, we will do our best in every process to deliver our

products and services so customers will select the Kansai Electric Power Group.

◇ “Challenge” uncharted territory.

Actively operate businesses in domains and areas we have not previously entered to achieve growth and expansion beyond the conventional

business framework.

◇ “Challenge” with fresh ideas.

In light of environmental change from a “regional monopoly and fully distributed cost” model to a “free competition” model, we will keep

challenging positively with fresh ideas without being bound by conventional thinking or frameworks.

Challenge. - Toward the growth of the Group in a new energy era -

7


1. Introduction






8


Recognition of Business Environment

○ As the managerial environment changes dramatically from a “regional monopoly and fully distributed cost” model to a “free competition” model

we are entering an era of full-fledged competition.

Since no significant increase of electricity demand can be expected in the domestic market, growth will be limited if we depend solely on the

electricity business within the Kansai Region.

○ Meanwhile, full liberalization of the energy business will allow us to expand our business domain/area including the gas business.

Additionally, overseas energy consumption is on the increase, suggesting growing business opportunities.

◆ As no significant growth of domestic electricity demand can be

expected from now on due mainly to decreasing population, cross-

area competition in the electricity market will get more serious along

with the full liberalization of retail sales.

◆ The gas market will become more competitive as well, lowering

barriers between energy markets.

◆ The world’s energy consumption will increase, keeping pace with

economic growth. In particular, energy consumption in developing

countries will increase notably.

◆ In terms of securing further neutrality of the power transmission and

distribution sector, the power transmission and distribution business

will be legally separated.

◆ Customers/communities’ needs for energy use and supply method,

such as smart communities and demand response, will be further

diversified.

◆ To attain the national goal of global warming gas reduction, the need

for CO2 emission reduction will keep on increasing, promoting

further dissemination of renewable energies.

◆ While further improvement is required for nuclear safety, the

“Strategic Energy Plan” has defined nuclear power as a low-carbon

quasi-domestic energy source and positioned it as an “important

base-load power source” with excellent supply stability and

efficiency.

Changes in the energy market Changes in the needs of customers and communities

Advent of a new energy era and opportunities for fresh growth

9


“Management Direction” and “What We Aspire to Become in 10 Years”

1. Become a highly

profitable

business group.

2. Expand business

fields.

3. Build a robust

management base.

Management Direction What We Aspire to Become in 10 Years

○ We have achieved high profitability through realization of an

increase in business efficiency and enhancement of competitiveness,

provision of new products and services, proactive use of alliances,

business activities focused on our competitors’ movements,

profitability and so on.

○ We have established a robust management base which enables agile

and effective response to environmental changes, and have also been

moving forward tirelessly as Japan’s leading company in the energy

sector.

○ Through our efforts to boldly expand our business fields (business

domain/area) without being tied to existing businesses, in pursuit of

fresh growth for our Group, the entire Group has grown into a

business group much larger than it was before the Great East Japan

Earthquake.

“Challenge”

competition.

“Challenge”

uncharted territory.

“Challenge” with

fresh ideas.

Challenge.

10


Business Portfolio after 10 Years

With a balanced Group-wide business portfolio,

we aim to achieve ordinary income of at least 300 billion yen.

○We will achieve a Group-wide profit which exceeds the pre-Earthquake level.

○We will expand our business scale through proactive investment in international and Group businesses, thereby creating a balanced Group-wide

business portfolio.

300billion yen or more

Comprehensive energy/Power transmission

and distribution business International/Group

businesses

1

200billion yen

1 : 4

After 10 years (2025)

Before the

Earthquake

1.5 times or more

Investment of 1,500 billion yen in

international/Group businesses over 10 years

: 2

11


Breakdown of Business Portfolio after 10 Years

Group Support Business

20 billion yen

300billion yen or more

Comprehensive Energy Business/Power

Transmission and Distribution Business

200 billion yen or more

International Business

30 billion yen

Information and

Communications

Business

30 billion yen

Real Estate/Life Business

30 billion yen

Business portfolio after 10 years

12


1. Introduction






13


Pillars of Approach and Prioritized Measures

1. Become a highly

profitable

business group.

2. Expand business

fields.

3. Build a robust

management base.

Management Direction

“Challenge”

competition.

“Challenge”

uncharted territory.

“Challenge” with

fresh ideas.

(1)Enhancement of competitiveness in

comprehensive energy business

Pillars of Approach and Prioritized Measures

(2)Establishment of new pillars for growth

(3)Strengthening Group Management Foundation

[1] Dramatic growth of international businesses

[2] Further growth of Group businesses

[3] Promotion of innovation to accelerate growth

[1] Promotion of stable transmission and distribution

services

[2] Reform of organization and governance

[3] Strengthening foundation of human resources

[1] Enhancement of marketing and sales strategies

[2] Strengthening of competitiveness in power

supply (realization of a power structure achieving

S + 3E)

[3] Active expansion of the gas business

[4] Active promotion of alliances among operators

[5] Further promotion of reform of cost structure

Challenge

14


1. Introduction






15


(1) Enhancement of competitiveness in comprehensive energy business

○ Significant future growth in demand for electric power cannot be expected due to enhanced awareness of power saving/energy

saving, declining population, etc.

○ Full deregulation of the electricity/gas markets allows competitors from various fields to rush into the energy market, giving

customers’ free choice of a larger number of retailers and intensifying their demand for reduced energy cost.

○ Unpredictable trend of nuclear power plants and input amount of renewable energy.

○ The estimated 2030 percentages of energy mix supply sources are as follows:• Nuclear: 20–22% / coal: 26% / LNG: 27% / oil: 3% / renewables: 22–24%

○Thorough management streamlining to enhance our price competitiveness

○Providing and expanding products and services by making full use of both

the internal and external alliances

○Expansion of the integrated business combining electricity and gas with

the group service.

○Full-scale entry into markets outside the Kansai Region focused on the

metropolitan area.

○ Promotion of efforts towards strengthening of competitiveness to achieve

S+3E.

• Restart of nuclear power plants

• Secure promotion and streamlining of electric power development towards enhanced competitiveness.

• Active development of hydro- and renewable-energy power supplies.

○ Expansion into the home sector.

○ Thorough streamlining to enhance competitiveness.

Dir

ecti

on

of

effo

rts

Enhancement of

marketing &

sales strategies

Strengthening of

competitiveness in

power supply

Active expansion of

the gas business

Further promotion

of reform of cost

structure

Before the

Earthquake

2018 2025

□ Ordinary income(including the power transmission & distribution business)

160billion yen

200billion yen

170billion yen

Recognition

of the

business

environment

○Active promotion of alliances among operators to improve their enterprise

value and solve problems common to operators.

Active promotion of

alliances among

operators

16


(1)-[1] Enhancement of marketing and sales strategies

We will restart nuclear power plants and promote thorough streamlining of

management to enhance our price competitiveness and make full use of alliances

to provide and expand products and services.

Hom

e se

ctor

Bu

sin

ess

secto

r

Within the territory Outside the territory

○ Provide a price menu capable of satisfying customers’ needs.• Hapi e-Time • e-Smart 10, etc.

○ Provide value-added services by making full use of the community-based

business base.• Hapi e-Living Support • Run-to-You Service regarding Electricity • Hapi e-Points, etc.

○ Provide the living platform (Hapi e-Miruden) service and enhance the

functions.

○ Promote integrated business by making full use of bundled sales with

electricity and gas (2017.4 - ), as well as utilizing alliances with companies

within and outside of the group to combine their products and services

together. • eo electricity • au electricity, etc.

○ Promote an integrated business by combining electricity/gas supply

service with other group services including utility services.

○ Promote the proposition of optimal energy system operation.

○ Full-scale entry into markets outside the Kansai Region

focusing on the metropolitan area.• Provide a price menu capable of satisfying customers’ needs.

• Business tie-up with other companies, for example an electricity-other product bundled

service.

○ Expand sales activities making full use of new power

sources, etc., around the metropolitan area.

○ Promote an integrated business combining electricity

supply service with other group services including utility

services.

Set our target to 1.0 TWh sales in 10 years

around the metropolitan area.

Co

mm

on

○ Coordinate local/area development through participation in smart communities, etc.

17


(1)-[2] Strengthening of competitiveness in power supply(realization of a power structure achieving S + 3E)

Along with the efforts towards the strengthening of competitiveness, we will provide

electricity, for which high safety, energy security, economy, and environmental

conservation are assured, to be the best choice for our customers.

2014 2025

□ Comparison of power output among various

energy sources

Nuclear

○ Make our best efforts for early restart of nuclear power plants, which are

the driver for competitiveness and make full use as the base-load power

source in the future.

• Strive to persistently improve the safety of nuclear power generation to far higher than required by the

regulations.

• Promote efforts to operate the nuclear power business as a private operator in the competitive environment.

• Promote decommissioning of nuclear power plants with both safety and efficiency ensured.

○ Secure promotion and streamlining of the development of electric power

sources to strengthen our competitiveness.

• Promote fuel-conversion work (Aioi Power Plant/Ako Power Plant)

• Develop power supply sources outside the territory by Kanden Energy Solution Co., Ltd.

• Fully streamline operations to become the leader in the industry.

○ Flexibly ensure the demand-supply operation function taking a large

amount of renewable energy input, etc., into consideration.

Hydro-

/renewable

energy

○ Make use of the FIT program and promote streamlining to strengthen the

competitiveness in existing hydro-energy generation and promote new

development.

○ Make use of the FIT program and alliances to actively develop renewable

energy power sources including in areas outside the territory.

ThermalE

ffo

rt in

th

ese t

hre

e yea

rs

Reduced

CO2

○ Promote nuclear power generation, develop renewable energy power

sources, and efficiently operate thermal power plants to reduce CO2

emissions.

0 %

12 %

17 %

46 %

24 %

: Nuclear : Coal : LNG

: Oil : Hydro-/renewal

Early restart for

increase

Active

development for

increase

Promotion of the

development of

power supply sources

to strengthen

competitiveness

taking the demand-

supply balance into

consideration.

Nuclear

Thermal

Hydro-/

renewable

energy

18


Efforts towards promotion of nuclear power generation

○ Positioning nuclear power generation in the “Strategic Energy Plan”

Recognition

of the

business

environment

Nuclear power’s energy output per amount of fuel is overwhelmingly large and it can continue producing power for several years only with domestic fuel stockpile.

Nuclear power is an important base-load power source as a low carbon and quasi-domestic energy source, contributing to stability of energy supply-demand structure, on

the major premise of ensuring of its safety, because of the perspectives; 1) superiority in stability of energy supply and efficiency, 2) low and stable operational cost and 3)

free from GHG emissions during operation.

We will make our best efforts to restart four units as early as possible, which is essential to the

recovery of the business base and make full use of them as the important base-load power source in

the future including succeeding units from the standpoint of S + 3E.

○ Make sure to promote, on a company-wide basis, the efforts defined in “Road map depicting the independent and continuous

improvement of safety” (worked out in June 2014), which has been prepared taking into consideration the reflection, lessons, etc.,

associated with Fukushima nuclear accident.

○ Regularly announce the progress of the aforementioned efforts.

Untiring efforts toward

pursuing nuclear safety

Solid action for reactor

decommissioning

Achievement

of early

restart

Eff

ort

in

th

ese t

hre

e y

ears

○ Further enhance timely provision of information and communication activities so that the people in the locations of nuclear power

plants and the social community may understand our efforts to improve the safety of nuclear power generation.

○ Do our utmost to argue and verify that nuclear power generation is safe to promote cancellation of the provisional disposition of

banned restart of the plants.

○ Strive to gain approval for the decommissioning plan and establish a safe and efficient work system.

Enhancement of public

recognition of our efforts

Responses to

lawsuits

Response to new

regulatory

requirements

Refinement of business

environment○ Promote efforts to operate the nuclear power generation business as a private operator in the competitive environment.

○ Prepare for the conformance review for the new regulatory requirements sincerely, rapidly, and accurately.

○ Prepare for the review for operation of power plants aged 40 years or more including Units 1 and 2, Takahama Nuclear Power Plant,

sincerely, rapidly, and accurately.

○ Steadily promote the nuclear fuel cycle, such as the plutonium-thermal type of reactor and immediate nuclear waste storage facility.Promotion of the nuclear fuel

cycle

○ Nuclear energy will amount to an estimated 20 to 22% of the energy mix in 2030.

○ The provisional disposition of the banned restart of Units 3 and 4, Takahama Nuclear Power Plant was decided. (The Otsu District Court:

March 9, 2016)

19


(1)-[3] Active expansion of the gas business

We will strive to actively expand the business including entry into the home-use gas

market to double sales.

Business base

Strengthening

of marketing &

sales strategies

○ Improvement of gas consignment infrastructure (new construction of

the facility for adjusting gas calories).

○ Improvement and strengthening of gas/LNG sales by introducing

independent gas supply lines, tank lorries, etc.

○ Training of personnel working on gas sales.

○ Expansion of the integrated business combining electricity/gas supply

service with other group services.

○ Sales tie-up with gas appliance dealers, etc.

Enlargement

of sales target

(2017.4–)

○ Start of entry into the home-use market.

○ Enlargement of the sales target up to the customers in the new range of

deregulated gas 100,000 m3/year in the corporate-use market.

Eff

ort

in

th

ese t

hre

e y

ears

2015 2018 2025

Strive to at least double

current gas sales

□ Gas sales

0.72 million t

1.7 million t

1.0 million t

20


(1)-[4] Active promotion of alliances among operators

We will actively promote alliances among operators by making full use of the

individual advantages to improve the company’s value and solve the problems

common to us.

Imp

rov

emen

t of

com

pan

y’s

valu

e

Strategic alliance with Tokyo Gas

○ Promote discussion about strategic alliance with Tokyo Gas in various fields including

fuel procurement, power plant operation/maintenance, power source development, and

joint participation in overseas businesses.

Solu

tion

of

com

mo

n

pro

ble

ms

Alliance involved in nuclear power generation business among operators

○ To further improve the safety and reliability of nuclear power generation and smoothly

operate and develop the nuclear power generation business, we strive to build a

framework, which enables mutual cooperation with Chugoku Electric Power Co. Inc.,

Shikoku Electric Power Co. Inc., and Kyushu Electric Power Co. Inc. by making full use

of the individual properties and knowledge related to nuclear energy and close

geographical proximity.

○ Specifically, we will work cooperatively in the event of a nuclear power plant accident,

decommissioning of a nuclear power plant, and establishment of the facilities for specific

major accidents.

○ As part of a course of efforts:

• “Alliance in LNG procurement” to improve the capability to address changes in demand-supply and market.

• Strive to promote “Alliance in technology for LNG thermal power plant operation and maintenance” to operate them safely and

efficiently.

and achieve a low-cost and stable energy supply through the discussion about the issues in a wider range of fields.

21


(1)-[5] Further promotion of reform of cost structure <management streamlining plan>

We will promote thorough streamlining by reforming the cost structure to enhance our

competitiveness.

○ Consideration of power source streamlining based on the correct determination of demand-supply balance

Continuous

promotion of

streamlining

Procurement/

logistics reform

○ Further reduction in cost by achieving industry-leading efficient procurement and expanding procurement reform to

the entire group

○ Further improvement and streamlining of logistics by 3PL(Third-Party Logistics)

○ Offshoring BPO (Dalian, China) of personnel/labor affairs functions

○ Review and integration of responsibilities for indirect management functions among group

companies (accounting, general affairs, information equipment management, company

houses/dormitories management, etc.)

□ (Reference) Business process reforms made so far:

○ Continuation and pursuit of the sustainable efforts made after the Earthquake

• Review the equipment inspection method and construction method

• Correct determination of the timing of repair through the remaining life assessment, etc.

Business process

reform

○ Promotion of business process reform to enhance our competitiveness

• Streamlining of sales tasks including the fee collection task

• Operational reform in thermal power plants, etc.

Eff

ort

in

th

ese

thre

e yea

rs

Further thorough

streamlining

○ Promote the above-mentioned streamlining and increase the revenues for individual businesses to improve productivity (*) by 50% or more by

2025.(*) Ordinary income/employee

22


(Reference) Efforts to streamline management made so far <management streamlining plan>

○ From 2013 to 2015, we generally achieved not only the target amounts described in the management streamlining plan which

was issued when two raises in fees were applied, but also the target amounts for management streamlining including the

assessed value suggested by making best efforts as a whole of the group to fully streamline management.

○ In 2016, we will review the existing streamlining policies, employ new construction methods and business operation methods,

as well as strive to reduce the material and equipment costs to thoroughly streamline management.

Efforts for

streamlining

2013 2014 2015Descriptions

Target Result Target Result Target Result

Cost involved in demand-

supply343 445 633 941 914 624

• Combined cycle in the Himeji No.2 Power Plant

• Purchasing of inexpensive electric power from Japan

Electric Power Exchange

Cost of capital investment 86 98 98 103 117 128• Reduced procurement cost

• Review of construction timing and contents

Repair cost 296 470 371 607 370 628• Reduced procurement cost

• Reduced smart meter price

Personnel cost 451 373 453 376 465 490

• Further reduced board members’ and advisors’

compensation

• Reduced basic salary and non-payment of bonus

Overhead 491 446 506 526 489 612• Reduced procurement prices

• Promoted streamlining policies for each cost

Total 1,667 1,833 2,060 2,553 2,355 2,481• All the target amounts for streamlining have been

achieved.

(unit: one hundred million yen)

(Target amount = management streamlining plan + assessed value)

(The total figures are not always correct due to rounding.)

□ Results of 2013 to 2015 management streamlining

23


(Reference) Main streamlining cases <management streamlining plan>

Str

eam

lin

ing c

ase

s

<Fuel conversion>

Fuel conversion in thermal

power plants

Main cases

<Review of specifications>

Newly adopted aluminum

wires

<Review business operation

method>

Outsourcing of printing

work

Efforts

○ The thermal fuel cost has been reduced in Units 1 (start of operation in Sep., 1982)

and 3 (start of operation in Jan., 1983), Aioi Power Plant using natural gas, which

is inexpensive and environmentally-friendly, in addition to heavy oil and crude oil

since 2016.

○ To supply power safely and stably, as well as reduce the material cost, newly-

developed “low-wind-pressure aluminum wires” are used instead of copper

wires.

○ At present, the new wires have been introduced in some areas and will be

expanded in all the areas within the territory starting from 2016.

○ It is expected that the introduction of new wires may reduce wire cost by about

20% (depending on the wire sizes) as streamlined material cost and avoid the

risk of stress-corrosion breakage of wires.

○ Conventionally, we managed and used our own printers internally. At present,

MPS (Management Print Service*2) is used to reduce the total cost associated

with the printing work.

(*2) Without owning printers internally, building and operation of the printing environment is

outsourced.

○ Specifically, the total cost was reduced by optimizing the number of printers and

layout taking the number of printed sheets into consideration, using one supplier

for all the in-house printers, and outsourcing of routine work such as

consumable goods management and procedure for lease/purchase of individual

equipment.

(*1) Since supply stability may be further increased, the specification allowing for the use of heavy and crude

oil is employed even after natural gas becomes available.

Before renewal of facilities After renewal of facilities (2016–)

Rated output 375 thousand kW each 375 thousand kW each

Fuel Heavy oil, crude oil Natural gas, heavy/crude oil*1

24


1. Introduction






25


(2)-[1] Dramatic growth of international businesses

We will expand the investment fields and regions to become a leading international

IPP business player in Japan.

○ It is expected that the demand for electric power will continue to largely grow in the developing countries including the countries

in Southeast Asia, Middle East, Latin America, and India.

○ The technological capability for hydro- and thermal-power generation, as well as power transmission and distribution, is our

competitive advantage in expanding our business abroad.

○ It is necessary to strengthen the network with the local governments and companies and train and recruit the human resources who

are skilled in information collection.

Recognition

of business

environment

New

businesses

Business base

○ Strengthening of the capacity of creating and processing businesses to

ensure new businesses

• Tie-up and building alliances with trading houses, etc

• Strengthening of the local network through deployment of overseas offices

○ Expansion of investment fields and regions

(renewable energy, North America/Europe, etc.)

○ Training and recruitment of global human resources who have special

expertise and wealth of experience

Existing

businesses

○ Steady promotion of developing businesses and securement of revenues

from the existing projects

Eff

ort

in

th

ese t

hre

e y

ears2015 2018 2025

3 billion yen

30 billion yen

5 billion yen

□ Profit Target of International Business

About 10,000 ～ 12,000 MW is assumed as a target

for the equity portion as of 2025.

2016-2025

(Ten years)

2016-2018

(Three years)

□ Cumulative Amount of Planned Investment

140billion yen

500billion yen

26


(2)-[2] Further growth of Group businesses <information and communications business>

We will strive to strengthen our customer base and create value-added services to

become an information and communications service provider, who is selected also by

customers outside the Kansai Region.

○ For the FTTH business and corporate line business, the trend toward reduced prices has advanced due to market saturation.

○ The MVNO and Cloud markets have been expanding rapidly.

○ Tie-in sales, for example communications-electricity, are expected to penetrate through the complete deregulation of the electric

power/gas retail markets.

Recognition

of Business

environment

2015 2018 2025

170 billion yen270 billion yen

220 billion yen

□ Direct sales

2016-2025

(Ten years)

2016-2018

(Three years)160billion yen

500billion yen

FTTH

Business

sector

○Development of new businesses by making full use of our

customer base

○Reform of the business structure focusing on solutions and

strengthening of marketing outside the territory

MVNO

Energy

○ To be classified in the top-share group, intensive input of

operational resources and strengthening of promotion activities

○ Expansion of tie-in sales of electricity and gas for FTTH users

Common○ Expansion of new businesses through alliances and the creation

of value-added services

Exis

tin

g b

usi

nes

ses

New

bu

sin

esse

s

Eff

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e y

ears

2015 2018 2025

□ Ordinary income

15 billion yen

30 billion yen

16 billion yen


27


(2)-[2] Further growth of Group businesses <real estate business>

We will actively expand our businesses as a comprehensive real estate business group

meeting the needs for real-estate in metropolitan areas, as well as in the Kansai

Region.

○ For the housing market, it is estimated that the number of newly-built houses has reached its peak as the number of households

approaches its peak, while the trading of used houses has gained momentum.

○ The rental office market has hit a plateau in the Kansai Region due to reduction in the working-age population and continued

heavy concentration in Tokyo.

Recognition

of business

environment

2015 2018 2025

90 billion yen

150 billion yen

100 billion yen

□ Direct sales

2016-2025

(Ten years)

2016-2018

(Three years)150billion yen

500billion yen

2015 2018 2025

□ Ordinary income

11 billion yen

30 billion yen

15 billion yen

Housing

business

(house and lot)

Lease

business

○ Active expansion of the business in metropolitan areas based on the

Kansai Region by strengthening the brand strength, etc.

○ Steady expansion of the business throughout Japan, as well as in the

Kansai and Metropolitan areas by ensuring sites suitable for business

and excellent properties.

Investment/

development

business

Others

○ Well-balanced expansion of the business by combining rental/sales/fee

businesses.

○ Development of complex construction projects including

offices/houses/hotels/shopping centers, etc.

○ Enter into the stock-related markets (reform of used houses, renovation,

etc.)

○ Steady scale expansion of office buildings and apartment custodial

services

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* The figures listed above include those of the business related to living.


28


(2)-[3] Promotion of innovation to accelerate growth

We will make novel efforts not seen in the existing ones to realize What we aspire to

become in 10 years to actively and resolutely challenge new businesses and the

development of new products/services.

○ Electricity business

focusing on the

improvement of

existing products and

services

○ Group businesses

make effective use of

our know-how and

properties

ConventionallyEstablishment of the group-original

innovation promotion scheme

Pursuit of all the possibilities towards

innovation promotion

What we aspire

to become in 10

years

Expansion of

revenue sources


revenue structure

Regeneration and pursuit of the possibility

of fresh growth

Making use of the most-

advanced technology and

develop a new business model

Creating the framework for

innovation promotion

Making active use of external

ideas and resources

Taking an inventory of

cultivated strengths

○ Discovery and collection of seeds of new businesses, etc., in the group

○ Building of a network with other companies for making full use of external ideas and

resources to improve the required time and quality for development

○ Building of a business model to achieve a new type of growth different from the

existing one

○ Establishment of an innovation promotion organization, expansion of an in-group

innovation network, and sharing of group resources

○ Efforts to train and ensure the human resources responsible for innovation

• Utilize energy technology including distributed

power sources, batteries, and hydrogen-power

• Expansion of the use of biomass energy

• Making full use of IoT, AI, and sensor technology

• Better relationship with our customers and the communities to listen to various

opinions

• Technology related to electrification (heat pumps, etc.)

• Design of energy-supply facilities and know-how of maintenance/operation of

them

• Knowledge and know-how cultivated by the group businesses

Exam

ple

s of

stre

ngth

s

Exam

ple

s of

tech

nolo

gy

Exam

ple

s of

mod

els

• With the widespread use of electric cars,

entry into their peripheral businesses, such

as power-supply stands

• Monetization of demand response

and energy-saving trade

29


1. Introduction






30


(3)-[1] Promotion of stable transmission and distribution services

As a leader of the social foundation, we try to provide new services by utilizing our

technology and know-how, as well as supplying electric power at a low price safely

and stably to contribute to communities.

○ Introduction of license system associated with electricity system reform, full liberalization of electricity retail and legal structural

separation(Security of neutrality and fairness, security of coordination for safe and stable power supply, duty of ultimate secure supply)

○ Development of facilities’ high aging

○ Major expansion of demand for power supplied by our transmission and distribution facilities(*) cannot be expected due to energy-

saving, population decrease, and popularization and expansion of regenerated energy and private power generation

Recognition

of business

environment

(*) Demand for electric power in the entire Kansai Region supplied by our

transmission and distribution facilities

Base field

Growing

field

○ Safe and stable supply of electric power and meeting

customers’ needs• Supply of appropriate transmission and distribution services on the premise of secured

neutrality

• Steady implementation of countermeasures for high aged facilities by utilizing

sensors and diagnosis technologies

• Restructure of transmission and distribution network for improvement in utilization

rate of facilities

• Promotion of access to streamlining services

• Promotion of smart use of power system corresponding to popularization of

regenerated energy

• Expansion of smart meter introduction

○ Effort to meet demand for electric power supplied by

transmission and distribution facilities and challenge to

provide new services• Sending accessible system information to society

• Increase in overseas transmission and distribution business consulting

• Advancement of transmission and distribution network utilizing storage batteries

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Corporate culture of safety and

reform

Safe and stable supply

Meeting customers needs

Our business foundation

Electric utility field

Provision of new services

New business fields

Sound financial strength

High quality electric power is kept to be

supplied safely and stably for

customers’ use with a feeling of trust.

All needs including pursuing lower prices

are satisfied for customer satisfaction.

Sense of mission is developed with

prioritizing safety, and keeping the challenge

to reform actively in the workplace with feel

of growth.

Appropriate interests are secured and financial

strength is improved to continue stable business

toward a clear financial goal.

Making effort to provide new services for

further growth.

Duty of a sensible member of society is

fulfilled to contribute to local

communities.

Contributing to local

communities

□ Vision of transmission and distribution services

31


(3)-[2] Reform of organization and governance

Actively promoting medium-term management plan for construction of organization

and governance system allowing maximized group value.

○ To realize “What we aspire to be in 10 years” and to build a system for maximizing group value, we will revise our management system from the

current system centered on the electricity business to a new system aiming at the comprehensive growth of the entire group in June, 2016.

○ Specifically, the top management and staff organization are defined as the “Group Head Office” to strengthen group management as well as to

define companies operating the business of the pillar of growth [Transmission and distribution (after legally separated), Kanden Energy Solution

Co., Inc., K-Opticom Corporation, Kanden Realty & Development Co., Ltd.] as the “Core company” to build a system materializing the high

profitability of the entire group.

* The chart below shows the image in case the transmission and distribution business is owned by the operating-holding company after the legal unbundling.

□ Image of future organization and governance system

Group Head Office

Comprehensive

energyInternational

Transmission

and distribution•••

～～

Comprehensive

energy

(Kanden Energy

Solution)

Information and

communications(K-Opticom)

Real estate(Kanden Realty &

Development )

Group

companies

Kansai Electric Power Co., Inc.

Core companies

32


(3)-[3] Strengthening foundation of human resources

Promoting reform, strengthening the foundation of human resources suitable for the

new energy era and establishing a new corporate culture

○ Fostering an organization and human resources able to compete in the new era with the two wheels of “Speciality” and “Diversity”

○ Switching to a “Strong and flexible corporate culture” to promote challenge for materialization of further growth

○To improve competitiveness and productivity, the entire group promotes the fostering and deployment of human

resources to increase the skills and abilities of human resources.(Securing highly specialized human resources, promoting activities in new fields such as international business and group business)

○ Further improvement in personnel and wage system for employees

“Human resources”

reform

“Way of working”

reform

Diversity promotion

○ Realizing highly productive working in a manner with well-modulated on/off by “Arranging comfortable work

environments” and “Reforming sense of efficient use of time”

○ Developing a competitive corporate group allowing creation of new value by respecting “Differences” in each person,

and strengthening the organization by varied sense of values and ideas

○ Realizing way of work enabling people to use their abilities to the maximum regardless of their sex and age

Corporate culture

reform

○ Clarifying the important sense of values and behavior patterns and promoting reform to aim for a “Strong and

flexible corporate culture”

[Targets for further active participation of females]

◆ By the end of FY 2020, the ratio of females in managerial positions shall be double that of FY 2013.

◆ Ratio of females recruited for office work shall be at least 40%.

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1. Introduction






34


Financial goal and policy of return to stockholders

□ Financial goals [Consolidated base]

□ Policy of return to stockholders

Our policy of return to stockholders is to secure sound financial strength and maintain stable dividends in order to distribute

surplus to all stockholders appropriately as the Kansai Electric Power group.

Item 2018 fiscal year (3 years later) 2025 fiscal year (10 years later)

Ordinary profit 200 billion Yen 300 billion Yen

Capital-to-asset ratio Approx. 20% Approx. 30%

ROA Approx. 3.5% Approx. 4%

Currently, we are making efforts to restart our nuclear power plants and streamline management for the early resumption of

dividends.

(*)

(*) Business profit [Ordinary profit + Interest expense] ÷ Total assets [Average of beginning and end of term]

“challenge” uncharted territory. challenge. power group vision, and “3-year action plan” to...

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