ELECTRIC
POWER
BUSINESS
Outline and Strength
Since 2000 when the Tokyo Gas Group started to generate andsupply the electric power, it has engaged in a comprehensive
range of business activities that extend from fuel procurement
to power generation and sales. Among the new entrants to thesector following the start of its deregulation program, we own thelargest power station in the Greater Tokyo Area and sell generated
power to wholesale and large-lot customers. With the completionof deregulation of the retail electric sector in April 2016, we started
electricity sales to residential and commercial customers. The
complete lifting of the restrictions on region of operations or original
business sector provided an enormous growth opportunity for ourGroup, which has a competitive power source portfolio and wellestablished sales power.
By our responding to customers’ needs for more affordable,reliable, and safe energy, we aim to significantly expand our electric
power business and to raise corporate value (see details on thederegulation of the electric power and gas industries on page 15).

Objective: Selling about 10%of electricity demand in theGreater Tokyo Area
The Tokyo Gas Group has steadily increased its
electricity sales volume, mainly in the wholesalesegment. In the coming years we plan to expand sales
to residential and commercial customers and raise ourelectricity sales volume from around 10 billion kWh atpresent to about 30 billion kWh,equivalent to about 10% of demandin the Greater Tokyo Area, by 2020.

Approx.

(Billion kWh)

30 billion kWh30

Approx. 10% of theGreater Tokyo demand

An increaseof approx.
19 billion kWh

20Electricity Sales Volume
10.0

9.7

2013.32014.310.6

11.0

2015.32016.3108.302012.3

TOKYO GAS ANNUAL REPORT 201625

2021.3

Business outline

Toward realizing our Challenge 2020 Vision
Deregulation of the retail market, completing the program forelectric power and gas deregulation, can provide the impetus
for the Tokyo Gas Group to greatly advance toward
expanding as a “total energy” concern. While completion ofthe deregulation program for retail gas in 2017 is likely tointensify competition in the gas business, we are expecting togain more earnings opportunities by entering the much bigger
retail electric power market. In the Challenge 2020 Vision, weaim to evolve our total energy business including theelectricity retail business, and expand the ratio of “electricpower, LNG sales, and other business” from 20% ofconsolidated net earnings when the plan was adopted to25% by fiscal 2020.

Full Deregulated Market of the Electric Power and Gas
Number ofcompanies

Approximate
potential customers(Million)

Approximate
market size(¥trillion)

1085

8.0

WithinTEPCO’s domain

29

2.8

206

26

2.4

Electricity

City gas

Business Structure(Consolidated Net Income Ratio by Business)

Electric power, LNG sales,and other businessOverseas business
Gas business

25%20%

Tokyo Gas Group’s strengths
The largest-scale and highly-efficient power

Fiscal 2020
Targets

Fiscal 2009-2011
Averagesources among the new power suppliers in theGreater Tokyo Area
The Tokyo Gas Group now has the largest scale of powersources (1,600MW from 4 bases) among the new power
suppliers servicing the Greater Tokyo Area. By adopting
highly efficient gas turbine combined cycle (GTCC)
generation, which offers superior energy savings, highlyefficient power generation has been realized (a record high of
58% realized at the Ohgishima Power Station). In addition,
close proximity to the LNG receiving terminals enables
efficient gas transportation.

Moka Power Station(Kobe Steel)

Hitachi LNG Terminal

Community-based sales network and over 11 million
customer base
The Tokyo Gas Group has established a community-based
sales network with over 200 outlets in the Kanto region(operated by Tokyo Gas Lifeval, Enesta, and Enefit) enabling
us to tailor services to individual customers’ needs. The
10,000 employees of Lifeval, through whom there is directinteraction with those customers on behalf of the Tokyo GasGroup, are engaged every day in meticulous services thatencompass from sales calls and maintenance of gas
appliances to the opening and closing of gas fixtures in timeof moving, gas appliance safety checking, and gas meterreading. Our push-type marketing, involving contacts withover 11 million customers at their homes and places of work,
has benefitted us by enabling us to steadily gain contracts
toward becoming a No. 1 new electric power entrant in acompetitive and newly deregulated market.

Infrastructure and management know-how system
In addition to the owned city gas business assets such as
LNG terminals, pipelines, and LNG purchasing capacity, theTokyo Gas Group is capable of using distributed power
generations, including cogeneration and fuel cells, know-how
for management of electricity generation by use of LNG, andexperience in systematic business techniques from utility rate
calculation to billing and collection.

Kawasaki Natural Gas Power
Generation Co., Ltd.
Ohgishima LNG Terminal/
Ohgishima Power Co., Ltd.

Sodegaura LNG Terminal
Tokyo Gas Baypower Co., Ltd.

Negishi LNG Terminal
Tokyo Gas Yokosuka Power Co., Ltd.

Sales and Service Network(Number of Outlets Operated by Tokyo Gas
Lifeval, Enesta, and Enefit)

107
53

TokyoKanagawa

24
11883

Saitama
Chiba
Gunma
Ibaraki
Yamanashi

2Tochigi

26TOKYO GAS ANNUAL REPORT 2016

Future Initiatives Given Complete Deregulation of Retail Electric PowerIn light of the objectives of the electric power system reforms and of the needs of customers, Tokyo Gas intends toestablish a demand and supply structure that contributes to greater stability of supply, realize to supply affordable
energy, and help diversify services offered to customers by undertaking a variety of measures to expand its electric
power business.

Initiative

01

Plan to Expand Power Sources (Own Equity)

Expand power sources

Approx. 3,000 MW

Moka Power Station
Start-up of operations

Increase of approx.

(1,200 MW)

Aiming at delivering electricity to low-voltage residential andcommercial customers, in addition to the wholesale market,
we plan to expand generation capacity from the current levelof approximately 1,600 MW (company equity base) to around3,000 MW by 2020. In addition to the Tokyo Gas Group’s
power stations, it has been agreed that electric power
generated at Moka Power Station, which is underconstruction by Kobe Steel, one of the largest Independent
Power Producers (IPP), will be supplied to Tokyo Gas. Adding
to our competitive gas-fired thermal power sources and baseload supply sources, we will also promote initiatives aimed at
expanding renewable power sources in order to address tothe issue of preventing climate change.

1,400 MW(vs. Feb. 2016)

Ohgishima Power Station
Start-up of No. 3 unit
operations

Approx.
2,800 MW(300 MW)

Approx.

1,600 MW2016.22020

2019-2020(Plan)(Vision Targets)

Recent Initiatives
Sep. 2014

Concluded an agreement with Kobe Steel, Ltd. for the supply of electricity from the Moka Power Station (1,200 MW; operations scheduled to commence fromfiscal 2019)

Jan. 2016

Submitted the “Environmental Impact Statement” for the construction plan of the coal-fired thermal power plant (power generation scale up to a maximum of
2,000 MW by mid-2020s) of Chiba-Sodegaura Energy Co., Ltd. (investment by Idemitsu Kosan, 33%; Kyushu Electric Power, 33%; Tokyo Gas, 33%)

Feb. 2016

Ohgishima Power (investment by Showa Shell Sekiyu, 25%; Tokyo Gas, 75%) started operation of the No. 3 of Ohgishima Power Station, expanding the Tokyo
Gas Group’s Power source to approximately 1,600 MW

Mar. 2016

Received the subsidy of Fukushima Prefecture’s wind power generation optimal location selection business and began a study of wind conditions.

Mar. 2016

Kawasaki Natural Gas Power Generation (investment by JX Nippon Oil & Energy, 51%; Tokyo Gas, 49%) submitted the Environmental Impact Statement for theKawasaki Natural Gas Power Plant Units No. 3 and No.4 Enlargement Plan (power output of approximately 550 MW X 2 units, scheduled to start operationsfrom 2021)

The Group’s Natural Gas-Fired Thermal Power Plants

Tokyo Gas Baypower Co., Ltd.
Tokyo Gas
generation capacity

Generation capacity

100MW

100MW
x 1 unit

Start of operations 2003

100MW
Tokyo Gas interest 100%

TOKYO GAS ANNUAL REPORT 201627

Tokyo Gas Yokosuka Power Co., Ltd.
Generation capacity

240MW

240MW
x 1 unit

Start of operations 2006

Tokyo Gas
generation capacity

180MW
Tokyo Gas interest 75%

Kawasaki Natural Gas Power Generation Co., Ltd.
Generation capacity

840MW

420MW
x 2 unit

Start of operations 2008

Ohgishima Power Co., Ltd.

Tokyo Gas
generation capacity

Generation capacity

Tokyo Gas
generation capacity

400MW

1,221MW 407MW
x 3 unit

900MW

Tokyo Gas interest 49%

Start of operations 2010

Tokyo Gas interest 75%

Business outline

ELECTRIC
POWER
BUSINESS

Initiative

02

Expand electricity sales tohigh-voltage and extra-highvoltage customers

In October 2015, we established Synergia Power Co., Ltd.,
jointly with Tohoku Electric Power Co., Ltd. Synergia began
electricity sales to high-voltage and extra-high-voltage
customers in the Kanto Region, mainly in its northern area.

Tokyo Gas Group’s Electricity Sales Companies

Corporate name
Address

1-9-12 Kita Ueno, Taito-ku, Tokyo
October 1, 2015

Main businessElectricity retail supply to high-voltage andextra-high-voltage customers in the Kantoregion, mainly in its northern area
¥495 million

Shareholders

Tohoku Electric Power 50%; Tokyo Gas 50%

Corporate name

ENNET CorporationAddress

July 7, 2000

Main businessElectricity trading and electricity generation

Shareholders

Following the full deregulation of the electricity retail sector inApril 2016, we began low-voltage electricity sales toresidential and commercial customers mainly in our supply
area, the Kanto Region. We sell electricity through the Tokyo
Gas Group companies, such as Tokyo Gas Lifeval, Enesta,and Enefit, as well as through partnerships with companies invarious industries, including nearby city gas and LPG
suppliers and businesses in a range of other industries,including housing, construction, equipment, andtelecommunications services.

Offer one-stop electricity, gas and othervalue-added services
The Tokyo Gas Group has established relationships of trustwith over 11 million customers through its community-based
sales network, which tailor services to individual customers’
needs at their homes and workplaces. The services include
gas appliance safety checking and gas meter reading, gasappliance repair and installation, and the opening and closingof gas fixtures in time of moving. In the electricity retailbusiness, we will leverage our existing sales structure andrelationships of trust with customers, provide more value
to them, and take up challenges that may arise, whereby toraise the Tokyo Gas Group’s corporate value.

The Front Tower Shiba Koen, 2-6-3 Shiba Koen,
Minato-ku, Tokyo

Established

Capital03

Expand electricity sales tolow-voltage customers

Synergia Power Co., Ltd.

Established

Capital

Initiative¥6.3 billion
NTT Facilities 40%; Tokyo Gas 30%,Osaka Gas 30%

28

TOKYO GAS ANNUAL REPORT 2016