Outline of New Medium-term Management Plan

The business environment in which Tokyo Gas operates has changed dramatically in the past decade. In addition
to the deregulation of the gas and power sector, shifts in demand patterns, and the emergence of increasingly
diversified and sophisticated customer needs, there has also been a rise in public expectations regarding corporate social responsibility. These changes have been reflected in our medium-term management plans. The plan
launched in 2000 focused on our evolution as a “new utility company,” while our goal under the plan that beganTokyo Gas is establishing a broad-based profitable structure byin 2003 was to develop Tokyo Gas as a corporate group on the energy frontier. We have extended the horizon for

creating and cultivating new markets for natural gas.

our latest medium-term management plan, which was launched in April 2006. It will cover the period from fiscal
2006 to fiscal 2010 and reflects our vision for the Tokyo Gas Group in the second decade of this century. Over thenext five years we will focus our efforts on the “creation and cultivation of new markets for natural gas.”

Business Strategy Tokyo Gas is extending its strategic focus on the Kanto region,an area of continuous economic growth, to capture the huge potential demand forenvironmentally friendly and economical natural gas through expanding its service
area within a 200 km radius in the region. Another priority is to provide a one-stop
solution to the changing and increasingly diversified and sophisticated needs of ourcustomers. While procuring competitive feedstock and expanding our profit structure,
we will achieve this by establishing multi-energy supply systems that include both gas
and power, and by developing a diverse range of energy services based on the best mixof appliances and systems.

Financial Strategy In our new medium-term management plan, financial
strategy is positioned alongside business strategy in terms of its importance togrowth. In the five years between fiscal 2006 and fiscal 2010, we aim to generate
operating cash flows* of ¥1,120 billion. We will work to optimize asset
efficiency, capital and shareholder allocations, while maintaining a balance with amore aggressive business strategy focusing on 2010 and beyond. Our goal is tomaximize shareholder value while achieving financial soundness and minimizing
capital costs.
*Operating cash flow = Net income + depreciation> Assuring Financial Soundness
D/E ratio of around

Service Area Expansion

Marketing scheme covering 200 km radiusaround Tokyo in the Kanto region, and creationof wide-area infrastructure

Broad-based profit structure
built through the creation andcultivation of new markets
for natural gas

0.6> Focusing on Asset Efficiency

5.5%

ROA

Aim to have 0.6 D/E ratio toEnhance ROA and target a fiscal 2010

facilitate fundraising ability

ROA of 5.5%, while actively investingfor growth> Maximizing Shareholder Value■ Total dividend payout ratio
Current profit
structure60%

Establish a total payout ratio
target of 60% (dividends +stock repurchases divided by current
net income)
Total payout ratio of year n = [(dividends fromunappropriated profit in year n) + (amount of treasury stocks
acquired in year n + 1)] / (consolidated net income in year n)

Greater Potential Value to Customers■ Aim to achieve a continuous ROEof over10%■ Implement TEP* of around50 billion by fiscal 2010¥* TEP (Tokyo Gas Economic Profit)= net operating profit after tax prior to interest
payments – cost of capital (cost of interest-bearing debt+ cost of shareholders’ equity)

Optimal one-stop multi-energy solutions including city gas,
electricity, LNG and LPG

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