Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Message from the Chairman of the Board
The management willtake the lead andremain committed toreforms to make us acorporate group that istruly trusted by society.
Sadayuki Sakakibara
Chairman of the Board■

Governance reform receives a good response,
but reforms still have some way to go

It has been more than three years since I became the Chairman ofthe Board at the Kansai Electric Power Company. At the time of myappointment, the Company was under severe criticism from society
due to the cash/gift receiving incident and other problems, and we
found ourselves in a very difficult situation, losing the trust of ourcustomers and society—the most important factor in our business. I
believe that the cornerstones of corporate management aretransparency, fairness, and understanding, and for the past three
years I have been working hard to reform corporate governance,including strengthening the functions of the Board of Directors.
Active discussions take place at every meeting of the Board ofDirectors, which are the linchpin of governance, with eight outside
directors out of 13 directors. In addition, as important issues are
discussed not only at the Board of Directors meetings but also inadvance, and through multiple rounds of discussion, I believe that
this has enhanced communication between outside directors andthe executive officers and led to high-quality discussions at theBoard of Directors meetings.

Kansai Electric Power Group Integrated Report 2023

An evaluation of the effectiveness of the Board of Directors by athird-party organization stated that sufficient discussions are being
undertaken based on medium- to long-term management
strategies, etc., and that the effectiveness of the Board of Directors
has been steadily improving. I believe that highly transparent
management, which values both the shareholder perspective andthe societal perspective, has taken root in the Company.
To make compliance more thorough, we have deployed various
initiatives, including the enhanced training and the strengthened
whistleblowing system, led by the newly established Compliance
Committee under the direct control of the Board of Directors.
Moreover, since assuming the chairmanship, I have visited various
workplaces dozens of times, in many cases monthly, to speak withemployees.
We had been progressing with a variety of initiatives and I
thought our employees’ attitudes toward compliance and ourorganizational culture had been steadily changing, and I felt there
was a level of response to the reforms. However, the recent seriesof improprieties that have occurred in our Group over the past
year has made me keenly aware that our reform efforts are still far
from complete, and as Chairman of the Board, I feel deeplyashamed.

■Making strong progress in reforms toensure thorough compliance

Although I have sensed an increase in compliance awarenessthrough these past efforts, in the wake of the series of problems, I
sincerely regret that I have not done enough to ensure that all Group
employees think and act on their own when they have some doubts
in the course of their work.
Regarding the issue involving customer information, since the fullderegulation of the retail industry, some employees thought it wasodd that they were able to view competitors’ information; however, fora long time, the issue was never raised. I’m afraid there was a strong
tendency for the employees who were viewing the information toaccept it without having any doubts about what had already been

decided or made into rules, perhaps thinking it was OK because
everyone else was viewing it or simply it was the company’s system.
I’m afraid this is due to the top-down culture that has persisted in
our Group for a long time. To fulfill our mission of providing a stablesupply of electric power, we have traditionally adhered to a topdown culture in which work is carried out in accordance with thedecisions of the superiors and higher organizations in the workplace.
For the safe and stable operation of power stations and otherfacilities, I think there are some aspects in which we must have astrict chain of command and behavior that follows a determined setof rules. However, for the sustainable growth of our organization
under the new business environment such as the full deregulation of
the electricity market and for thorough compliance, we need a
corporate climate in which front-line employees who are familiar
with its operations can openly give their opinions and suggestions
from the bottom up.
Since assuming the chairmanship, I have been very conscious ofthese issues, and through dialogue with employees and many otheropportunities, I have tried to change the organizational culture from
one that is based on top-down to one that is bottom-up. As a result, I
am acutely aware that my efforts have not been enough, and that
more needs to be done.
In view of this series of improprieties, we have compiled abusiness improvement plan, and the entire Group is now working
hard to carry it out. The plan has two major points.
The first is to strengthen internal controls. The Compliance
Promotion Headquarters has been newly established to improve risk
management and other systems, enhance education and training,and strengthen the internal audit function, thereby fundamentally
reinforcing internal controls for the entire Group, including front-line
workplaces.
The second point is to reform the organizational climate. The
Organizational Climate Reform Committee, chaired by the president,
has been established to change the organizational climate from a
top-down culture to one in which all group members, regardless ofposition or affiliation, can frankly discuss their own thoughts andfindings.

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Kansai Electric Power Group Overview

Value Creation Story

I intend to make sure that these new reforms by the executiveside are making solid progress and to aggressively push thesereforms ahead. The Board of Directors will conduct special
supervision (reform monitoring) over the progress of the reforms,
carefully following up on the efforts of the Compliance Promotion
Headquarters and others, and providing advice and guidance on
additional measures and improvement measures, as necessary.
In addition, since assuming the chairmanship, I have visited anumber of workplaces and engaged in dialogue with employees,
and I remain committed to communicating with them to create anopen organizational climate where employees can discuss anything.
The Group will tenaciously pursue these reforms with the aim ofgaining the trust of our customers and society as a whole.

■

Steady progress toward Medium-termManagement Plan goals

Accelerating corporate growth from an externally objective
perspective is also a cornerstone of governance, and an importantrole for me to play. In March 2021, the Company formulated theMedium-term Management Plan to identify the path to achieving
the sustainable growth of the Group. This plan was created after
thorough discussions from the formulation stage with theparticipation of outside directors, including myself.
Despite the continuing severe business environment, the Grouphas worked together to vigorously promote the three key initiativesof the plan, and we are seeing steady results, large and small, in all of
the Group’s business areas.
With regard to the first key initiative, seeking to achieve zero carbon
emissions (EX), by 2050, I believe it is crucial to make effective use ofrenewables and nuclear power, which are non-fossil sources of energy.
In renewables, we are proud to be Japan’s largest producer ofhydroelectric power, and we have also achieved a large number ofsolar and wind power development projects both in Japan andoverseas. In the nuclear energy, we had worked hard Group-wide toestablish a system to operate our seven reactors at our nuclear
power stations since the Great East Japan Earthquake, and with theKansai Electric Power Group Integrated Report 2023

Medium-term Management Plan

Business Overview

recent restart of the Takahama Units 1 and 2, we have been able tobring the system in operation. We will continue to make sustained
use of this important base load power source, placing the highest
priority on safety.
Furthermore, making thermal power generation zero-carbon isanother major issue, and the use of hydrogen energy will be a keyelement. We expect that the hydrogen business has great growthpotential in the future, and we are currently working on not only
utilizing hydrogen as a fuel for power generation, but alsoestablishing a hydrogen supply chain to manufacture, transport, andsupply it. We have already begun studying the development ofreceiving and storage facilities in the Himeji area, one of Japan’s
leading industrial centers, and we are determined to fulfill our role asa major player in the coming hydrogen age.
For the second key initiative of transforming into a service
provider (VX), we find that there is a great opportunity to create newvalue and services in our core businesses of energy, real estate, andinformation and telecommunications, as well as in areas aroundthese sectors. Working hand in hand with our business partners, weare actively developing new businesses, including data centers andVPPs, to meet the various needs of our customers and society atlarge.
As for the third key initiative, building a robust corporate
constitution (BX), we intend to create a strong managementfoundation through thorough cost reductions and the use of digitaltechnology, among other means. Since the beginning of my term, I
have been saying that there is tremendous room for cost reductionin the Company, and while we have already achieved a certain
degree of progress, I will continue to promote creative and inventive
measures going forward.
Innovation is the key to promoting any of these initiatives. I
believe that innovation is not limited to the creation of new
businesses and services, but also includes innovative changes in all
aspects of business, such as technology, organization, and work
processes. In order to achieve sustainable growth amidst thecontinuing challenging business environment, we need to fully
mobilize the power of innovation from all members of the Group.

Foundation to Support Value Creation

Financial and Corporate Information

As part of this effort, in July 2023, we integrated the R&D functionthat is involved in technological development and the innovation
function that creates new businesses, and we built a system toaggressively promote innovation in an integrated and dynamicmanner.
We at the Group will further accelerate our efforts in the three key
initiatives of EX, VX, and BX, and consistently achieve the goals set
forth in the Medium-term Management Plan, by implementing
Group-wide innovation.
Additionally, it is essential for us to look further into the future than
the five-year period covered by the Medium-term Management Plan,and also to stay ahead of the curve toward the achievement of ourvision for each of our businesses as we take into account changes insocietal conditions and technological trends. We will continue to takeup the challenge of achieving even greater growth for our Group.

■In the spirit of our second founding,the Kansai Electric Power Company will
once again shine brightly

The 1960s and 1970s were a valuable time for us as the very futureof the Company was staked to build the Kurobegawa No. 4 Power
Station (known as Kuroyon) and we became pioneers in thedevelopment of nuclear power in Japan. I believe it was during thisperiod that we developed the indispensable spirit of boldly taking up
challenges of achieving lofty goals and working together in unity torealize them.
It is no exaggeration to say that our second founding period is athand now that we are facing these headwinds. We will once again
revive the spirit that has been passed down to us from our predecessors,
and regain the trust of society to become a truly reliable company. As
we face new challenges and difficulties, we have resolved to make thenext leap forward with the strength of all members of the Group.
Although my position and role differ from those of the executive
officers and employees, I will continue to do my utmost to restore theKansai Electric Power Company to its former glory.

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