Kansai Electric Power Group Overview

Business Segments

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Transmission and Distribution BusinessOverview

Takayuki Hakugin
President and Director
Kansai Transmission andDistribution, Inc.

Business environment

Kansai Transmission and Distribution, Inc. took over the general
power transmission and distribution business of the Kansai
Electric Power Co., Inc. in April 2020 to further ensure neutrality
in the transmission and distribution business. Kansai
Transmission and Distribution, Inc. is committed to providing
affordable electricity in a stable manner while placing apremium on being fair and neutral. Its operations include
managing power grids, and planning and constructing
transmission, transformation, and distribution facilities.
As energy needs in society (decarbonization, greaterresilience, etc.) become increasingly diversified, powertransmission and distribution business takes on a greater rolein meeting such needs. We will therefore develop nextgeneration grid networks to flexibly meet the diversified
needs of grid users (distributed power sources, etc.), andprovide proven, reliable grid services, thereby meeting theexpectations of customers and society.
Medium-term Management Plan Targets
Ordinary income
More than
50 billion yen on
average

More than
50 billion yen●●●The cost in striking a balance between demand and supply
increased significantly in fiscal 2022 due in part to a surge infuel prices.
Financing is available for developing next-generation grid
networks that contribute to decarbonization and greater
resilience, with the new wheeling charge system in place in fiscal
2023. Follow-up adjustment, meanwhile, reduces risks associatedwith demand fluctuations and supply-demand balance. There isthus a growing need for the power transmission and distribution
business to improve its sustainability.
As power transmission and distribution operators arereviewed and compared with one another for their charging
schemes, we must implement cost structure reforms to be anindustry front-runner while reducing wheeling charges.
Opportunities

●

●

●

●

Financing available and profits arising from greater efficiencies
secured with the new wheeling charge system in place
Diversified customer energy needs and transactions
Progress in electrification, driven by decarbonization
Expansion of energy-related business at home and abroad
Risks-45.1 billion yen●2021-2023

2025
●

●2022
●ROA

Kansai Electric Power Group Integrated Report 2023

2021 result

2022 result

0.58%-1.41%

Power transmission and distribution operators reviewed andcompared with one another, with the new wheeling charge
system in place
Rising fuel prices and tightening supply-demand balance
Declining grid demand due to the development of distributed
resources
Intensified natural disasters and possible earthquakes in theNankai Trough83

Kansai Electric Power Group Overview

Business Segments

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Transmission and Distribution Business

Kansai Transmission and Distribution Group Vision
The Kansai Transmission and Distribution Group Vision has
been established to envision the path toward 2050. We arecommitted to improving and expanding Kansai network
facilities, our group’s human resources and technologies, andplatforms serving customers and society, thereby providing
stable electricity, creating new value that goes beyond
expectations, and better serving customers and society.
As an entity that supports the entire energy industry inaddition to transmitting and distributing electricity, we
are also committed to serving as an “energy platform,”
expanding our services from providing electricity tocreating new value for customers and society.

Data platform
Utilize accumulated
data to provide various
forms of value, including
optimized energy use• Control distributed resources• Visualize equipment
information and optimize
operation• Utilize data to provide
new value

Facility platform
Provide energy consistently invarious forms to meet
expectations and make life more
comfortable and convenient• Provide EV charge anddischarge services• Realize robust electricity
distribution through distributedgrids• Provide non-contact power
feeding services• Charge wirelessly via smart poles

Kansai Electric Power Group Integrated Report 2023

Business strategies

Directions totake

We will pour resources into two businessareas with wheeling business, one of ourcore businesses, positioned as the “wheelingdomain,” and domestic and overseas
business, expanded by utilizing our groupstrength, as the “expanded domain.” At thesame time, we will create a “businessfoundation” to support these two areas.

1 Wheeling domain
Leading the industry in pursuing decarbonization andstrengthening resilience
We will create a system to provide new value, taking into
account the needs of customers and society, such as
developing next-generation networks and implementing cost
structure reforms to be an industry front-runner.

Transaction platform
Create a platform fortransactions, includingtransactions involving
unknown new value inenergy• Account management
services• Transaction matching
services• Transactions involving
value that goes beyond
electricity

Human platform
Communicate withcustomers and society
and update corporate
resources such as humanresources and technology
to meet expectations• Provide comprehensive
facility services• Collect stakeholders’needs and meet theirexpectations

5-year Efforts
Basic premise of our business operations• Doing business with integrity, beginning with compliancewith laws and regulations• Recreate a fair basis for competition• Create a robust safety culture
1 Wheeling domain• Create next-generation networks (decarbonization andgreater resilience)• Implement renovation for aging facilities• Implement cost structure reforms to be an industry
front-runner
2 Expanded domain• Create new value in power transmission and distribution
business

2 Expanded domain• Establish other sources of revenue

Establishing a primary source of revenue, following
wheeling businessWe will roll out initiatives and services at home and abroad,going beyond the boundaries of wheeling business.

3 Business foundation

3 Business foundation
Creating an organization where exploration and ambition
in providing new value is taken as matter-of-fact
We will develop an organizational culture to aim for more
ambitious goals and implement innovative operational
reforms, emphasizing Kaizen (the Toyota production system)
and DX.

• Promote Kaizen and DX, innovate the organizational culture• Strengthen human resources and support various workstyles• Contribute to local communities (to win understanding andconfidence)• Strengthen the financial bases

84Kansai Electric Power Group Overview

Business Segments

Value Creation Story

Medium-term Management Plan

Foundation to Support Value Creation

Financial and Corporate Information

Transmission and Distribution Business
1 Wheeling domain

Initiatives in fiscal 2022

Learning lessons from a serious violation of the Electricity
Business Act (power producer and supplier data breach, etc.),
we have strengthened our system to comply with laws andregulations. Specifically, the president, appointed as the chiefcompliance officer (CCO), controls compliance and behavior
issues, with directors in charge of compliance in place. In
addition, the Compliance Promotion Division was set up torun day-to-day operations under the direct control of thepresident, where compliance and behavior issues are centrallycontrolled. Moreover, we will create a framework for checking
compliance and systems by incorporating external
perspectives to make control more effective.

Annual duration of power outage per household(minutes/household)
400

External
Internal Auditing experts,etc.
Department

Headquarters

System Audit GroupCompliance Promotion
Division

Conduct Regulations
Audit GroupStrengthen the system
check function

DCO and ACO in place*Conduct Regulations
Subcommittee

Investigation, Verification, andReform Committee

Each branch office

External
intellectuals,etc.

Appoint directors in chargeof compliance

Externalexperts,etc.

* Compliance manager of each department and area. Department: Department Compliance Officer

Over capacity

Distribution line
start end

Allocate powersource cars

Distribution line
terminal end

Power outage areain times of disaster

Distribution system
Distribution substation
DER
Grid information

Grid information

Grid control

DER information
Transmission system DER information
DER system
operators (TSOs),Resource management,procurement, operation,electricity transmission
etc. of DER
and distribution utilities DER control order
DER control order
Place bids

DER information

Grid control

Aggregators(AC/RA)

Mechanisms for DER utilization

Tender bids

Provide new services

Supply-demand Capacity market Wholesale electricity
adjustment(Broad areatransaction market …
market (TSO)
institution)(JEPX)• Avoid controlling output of energy-saving
operators• Avoid imbalances, etc.

Upgrading grid distribution networks
200Due to Typhoon No. 120PresidentvoltageLower limit for
appropriate
voltageStrengthen resilience
Municipalities, companies withEV fleets, etc.

Due to Typhoon No. 21

Board of Directors

Board Meeting

limit for
Voltage control Upper
appropriate

300

100

External
intellectuals,
Neutrality and Fairness etc.
Advisory Board
External
intellectuals,etc.
Compliance Committee

Peak cut

Our commitment is to ensure the operation of power grids
between power plants and customers, optimize facilities, andprevent and respond quickly to power outages. As a result of
our efforts, with the exception of major natural disasters, weare maintaining one of the world’s highest power quality
levels in the transmission and distribution business.

Framework for legal complianceManagement Audit
Committee

Maintain grid voltage

Peak shift

To provide high-quality electric power

Doing business with fairness and integrity

Appointed COO

Avoid grid congestion
Current
Hour

Basic premise of our business operations

Audit &Supervisory
Board Member

Business Overview

706 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22(FY)

DER flexibility platform
Developing a stable electricity system by utilizing the value ofdistributed energy resources (DERs) is critical to achievingcarbon neutrality by 2050. We, therefore, will continue todevelop technology for incorporating DERs into grid
operation to ensure greater flexibility.

We will introduce next-generation equipment to closely
monitor and control the operation status of the grid
distribution networks, thereby dealing with problems arisingfrom the input of massive amounts of renewable electricity,
upgrading the capacity of grid distribution networks toaccommodate more renewable electricity. All of this willcontribute to decarbonization. In addition, we will prevent
power outages by incorporating grid information (gridvoltage/current waveforms, etc.) and develop an early
detection system for power outage causes. These measures
will also contribute to increasing resilience.

(DCO), Area: Area Compliance Officer (ACO)

Kansai Electric Power Group Integrated Report 2023

85

Kansai Electric Power Group Overview

Business Segments

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Transmission and Distribution Business

Advanced asset management
The number of aging facilities is increasing. These facilities
should be systematically refurbished to ensure safe and stableelectricity supply. Rational and efficient implementation ofrefurbishment, however, requires a comprehensive plan thattakes into account facility risks, refurbishment costs,
construction capabilities, etc.
We will develop and verify a system to map out a plan
based on investment value evaluation, with efforts underway
to upgrade our asset management.

Looking ahead

Condition Based Maintenance (CBM)
Current:
Conducted based on facility conditions
observed during monitoring, inspection, etc.

ValueRisk

Time Based Maintenance (TBM)
Current:
Conducted according to scheduled plans

Condition
Breakdown Maintenance(BM)
Past:
Conducted retroactively to deal
with facility failures andabnormalities

Investment value evaluation
Facility risk assessment
Looking ahead:
Quantitatively assess facility
risksInterval
FailureCurrent

Technologicalinnovations

Kansai Electric Power Group Integrated Report 2023

Future:Evaluate investment returns

Experience,hunch

Oil analysis,
temperature sensor,
vibration sensor, etc.

Tablets, image
analysis,Smart meters, partial drones, etc.
discharge analysis,
mapping, etc.

AI or 5G,
next-generation
distribution,automation, etc.

Emergency response system for disasters, etc.
We designate initial responders and have initial response
supervisors put on night watches to prepare for quickly
setting up the response system in case of emergency. Inaddition, special training drills are conducted several times ayear for both initial response supervisors and initialresponders.
Moreover, the Kansai Electric Power Group comprehensive
emergency response drills are conducted every year. We arecommitted to improving our disaster response skills andraising disaster awareness, not only to prepare for theoccurrence of the Nankai Trough Earthquake but also withconsideration for severe incidents such as the simultaneous
occurrence of a nuclear power disaster or during occasions
when the balance of power supply and demand is tight.
Furthermore, in line with the disaster cooperation plan, we
will cooperate with general power transmission anddistribution utilities and relevant authorities in times ofdisasters to quickly recover and restore electricity facilities andsystems for stable supply of power.
Number of participants in group-wide
comprehensive emergency response drills(fiscal 2022)

1,00286Kansai Electric Power Group Overview

Business Segments

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Transmission and Distribution Business

Implementing cost structure reforms to be an industry
front-runner
A cost reduction of 55.1 billion yen/year expected formeasures discussed before fiscal 2022 is incorporated in thebusiness plan submitted to the government in accordancewith the new wheeling charge system. We will make thesemeasures a standard practice to start with. At the same time,
we will implement cost structure reforms in all areas,
incorporating external knowledge, to be a front-runner inpower transmission and distribution operation.

each other in providing financial institutions with services toprevent fraudulent account creation, with the former’s
proprietary information on power facilities combined with thelatter’s fraudulent access detection system.
In addition, we are incorporating electric facility
information to provide new services for continuous customer
management designed to streamline management of existingaccounts for financial institutions. These services will help
prevent crimes, including money laundering.
Overview of services leveraging information on electrical power
facilities to prevent fraudulent account creation
New account creation

2 Wheeling/expanded domains
Upgrading and reforming power transmission anddistribution business
The structures of electricity systems are changing, with
distributed resources increasing and users beginning toparticipate in the market, and we will develop a businessstrategy designed to upgrade and reform our powertransmission and distribution business to become moresustainable and continue growing. Accordingly, we haveestablished a Frontier Lab, which is tasked with research andanalysis of future trends and exploration and implementationof new initiatives, all under the direct control of the president.
3 Expanded domains
Services to prevent fraudulent account creation,leveraging information on electrical power facilities
Fraudulent accounts using “stolen identities” are often abusedfor criminal purposes such as money laundering, which is
becoming a public concern. Kansai Transmission andDistribution, Inc. and Caulis Inc., therefore, collaborate with

Kansai Electric Power Group Integrated Report 2023

“sustainability promotion.” In fiscal 2022, for example, we wereawarded three consulting projects in three countries,
including Nigeria and Lebanon.
Kansai Transmission and Distribution, Inc., meanwhile, islooking at investing independently in overseas projects tofurther boost its earnings.

❶Banks, credit card companies, etc.
Spoofingor not?

❷Meeting with the president of AEDC (a local power distribution company)

Aha!

Authentication of
the person creating
an account❸Authentication results(API automated response)

4 Business foundation
Promoting Kaizen and DX

Developing and providing
fraudulent access detection services

Database

Data extraction
Spoofing detection services leveraging information onelectrical power facilities

Expanding overseas operations
We are extending our reach worldwide, focusing on“expansion of earnings,” “technological contribution,” andWe implemented 197 Kaizen projects in fiscal 2022 to create a
new organizational culture that aims to improve productivity.
Specifically, we eliminated waste and conducted afundamental review of work procedures, which resulted in
drastic improvements in productivity and added value.
As part of the DX initiative, moreover, we incorporated
AI-based image analysis to streamline facility patrols anddevelop a management system, which upgraded on-site andmanagement operations.
We will implement operational reforms through Kaizen
and DX, specifically by further pursuing Kaizen, introducing
innovative technology and utilizing digital technology.

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