FAQ
In this section, we respond to frequently asked questions from our stakeholders.

Q1

A

1

QA

‌
TheCompany has entered the third year since thelaunch of the “Challenge 2020 Vision.” Does it haveany plans to revise targets?
‌Circumstances surrounding energy after the Great East
Japan Earthquake and other basic conditions are generally
in line with our forecasts, and we therefore see no need torevise targets at this point in time. In the “hop, step, jump”
progression of the “Challenge 2020 Vision,” fiscal 2014 ispositioned as the last year of the “hop” stage during which
we will form the structures that the Tokyo Gas Group will
require going forward. After these structures have beensolidified, we will reconsider the necessity of target revisions.

‌Would
it be best for Tokyo Gas to focus on the gas
business? Specifically, why is the Company investingin the Barnett basin project and other upstream
businesses?
‌
2 Investment in upstream businesses not only enables us tosecure returns; it also brings other benefits. For example,Q3A

3structure, and thereby we aim to expand gas sales volume
to 22.0 billion m3 by fiscal 2020. To date, growth in gas
sales volumes has been consistent with the forecasts of the“Challenge 2020 Vision.”			 In addition, while developing infrastructure, we haveseen cases in which the installation of pipelines has
resulted in the appearance of new demand that we had
not initially anticipated.

2should resource procurement costs associated with theCove Point LNG Project increase due to a rise in the Henry
Hub index, the revenues generated by upstream interestsin the Barnett basin will also increase. This is because we
could sell gas procured from the Barnett basin within theUnited States at the higher price dictated by this index. In
this manner, investment in upstream businesses helps
stabilize the earnings of the entire Tokyo Gas Group.

‌ would appear that Tokyo Gas is investing aggresIt
sively in northern Kanto. To what extent do you thinkgas demand can be cultivated in this area?
‌There is significant latent demand in northern Kanto (seeP.17). We will cultivate this demand by developing infra-Q

4

A4Q5A5‌Whatare the Board of Directors’ policies toward
corporate governance?
‌	Aiming to protect shareholder interests in management, theCompany began appointing outside directors in 2002 toimprove corporate governance systems, and managementtransparency has improved as a result. Going forward, wewill continue to practice accountability toward stakeholders
while actively conducting information disclosure.
‌The“Challenge 2020 Vision” calls for the Tokyo Gas
Group to conduct aggressive investment. What is thelikelihood that this will result in excessive investmentin projects with insufficient profitability?
‌Our basic approach toward investment is to make decisions based on economic rationality, and we will only invest
in projects from which we can expect appropriate returns.
The Investment Evaluation Committee is responsible forevaluating projects and making judgments regarding
economic rationality.

Investment Evaluation Committee
Overview To evaluate the economic rationality of investments, theCompany has established the Investment Evaluation Committee.
This committee conducts objective, multifaceted evaluations ofestimates formulated by planning departments.
Before investment proposals are presented to the Corporate
Executive Committee for deliberation and approval, the Investment
Evaluation Committee evaluates their economic rationality from aquantitative perspective. It then reports these findings to theCorporate Executive Committee.
Scope of Evaluations The Investment Evaluation Committee
evaluates investments targeting increased profitability or businessdevelopment in a wide range of areas.
Evaluation Methods The conditions required to generate future

cash flows are evaluated, and net present value (NPV) and theinternal rate of return (IRR) are calculated based on projected cashflows. The committee also formulates withdrawal standards thatconsider whether or not investments are producing the anticipatedresults. Prior to investment, the committee considers possible

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Tokyo Gas Annual Report 2014

measures that could be implemented should the projects comeinto conflict with these standards while also evaluating investment
risk factors.
Post-Investment Monitoring In addition to evaluating projects
before investment, the Investment Evaluation Committee continues to evaluate investments periodically after they are concluded
to ensure that they are properly managed. Should a project comeinto conflict with withdrawal standards, the likelihood of achieving
the initial goals of the investment is reevaluated. When deemednecessary the committee will propose withdrawal to the Corporate
Executive Committee.
Committee Membership The Investment Evaluation Committee
is chaired by the executive officer in charge of finances and its
members include the general managers of the Corporate Planning
Department and the Finance Department. Based on the nature of
the projects being discussed, Tokyo Gas Group members that areknowledgeable on the subject may be asked to participate.