At the Frontier of Change

More Reasons to Choose Tokyo Gas
Tokyo Gas has two fundamental corporate missions. One is to deliver customers the best possible services.
The other is to offer customers comfortable living environments by effectively utilizing gas for floor heating, cogeneration and other technologies that are both economically and environmentally sound. To raise
the level of customer satisfaction and the competitiveness of natural gas, our core product, Tokyo Gas isenhancing services from various angles and offering customers more options.

Residential Customers—Our Largest Client CategoryNumbering more than 8 million, and accounting for 90% of Tokyo Gas’ customers, are residential customers. Our 18 branches
offer total consulting solutions, including meter reading and inspections of appliances in homes once every 3 years, to ensurethat customers are using gas safely. Tokyo Gas aims to spur demand among this massive customer pool and enable residential
users to lead more comfortable lives by aggressively promoting gas floor heating. This system circulates hot water beneath thefloor to warm a room’s occupants from the feet up. Most customers have responded enthusiastically to gas floor heating.
Tokyo Gas’ goal is to make this system the de facto standard in households in Japan.

Spurring Commercial and Industrial Demand
As environmental concerns deepen, customers are seeking ways to protect the environment and also reduce their total energy
10costs. Cogeneration solves both issues. A highly efficient system, cogeneration uses natural gas to simultaneously generate electricity
and provide heat.
In the gas-fired air conditioning field, Tokyo Gas has a proven track record in GHPs (gas engine-driven heat pumps) andabsorption-type gas air conditioning. Gas sales volumes in this field are expected to rise by a yearly average of 6.1% throughthe year ending March 2006.
Tokyo Gas is conducting aggressive sales activities targeted at hotels, hospitals and other institutions, as well as industrial
users, by promoting the advantages of these natural gas systems.

Cumulative number offloor heating systems
installed

Gas sales volume forcogeneration
Unit: million m3 (46.047 MJ/m3)

Unit: thousands of homes

700

2,000600
1,500500
400

1,000300
2005001000Mar. 31000 01 02 03 04 05

PlannedTOKYO GAS Annual Report 2001

Mar. 3100 01 02 03 04 05

PlannedDemand for gas floor heating is expanding. Not only is floor heating clean andcomfortable, but it boasts superiorenergy efficiency and cost advantages.

The Saitama New City Center district heating and cooling systemcovers an area of 27.3 hectares
and services 1 cabinet office and
12 ministries. The system supplies
heat in an energy-efficient and environmentally friendly manner.

11District heating and cooling (DHC) systems, which incorporate cogeneration, have already been installed in well knownurban projects in central Tokyo, Yokohama and Chiba. These DHC projects have won plaudits for their environmental friendliness and economic soundness. In April 2000, the Saitama New City Center district heating and cooling system was completed
in Saitama Prefecture, becoming Tokyo Gas’ 15th DHC operation. We intend to take full advantage of the expertise, technological capabilities and engineering skills we have acquired from such projects to power growth in gas demand.
Power generation is another area where expectations for growth in gas demand are high. Tokyo Gas is working to promotesales in this field while actively proposing energy solutions that incorporate cogeneration systems.

In the Limelight—Micro Turbines
On-site electricity generation systems, particularly that produced by microturbines, is attracting attention as interest in small, distributed power generation systems grows. Tokyo Gas has already tested the largest number ofmicro turbines in Japan and in June 2001, the company began sales of 28kW
Capstone Turbines.
Tokyo Gas has also successfully developed and tested a dry, low NOx combustor for a 270kW cogeneration system (right) together with Toyota Turbine
and System Inc. The turbine is scheduled to go on the market in 2001.
In November 2000, Tokyo Gas invested in MyEnergy Corp., which was established by Tokyo Electric Power Co., Inc. and others. Tokyo Gas aims to champion an on-site energy business using micro turbines.

Annual Report 2001 TOKYO GAS