Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Medium-term Management Plan

Kansai Electric Power Group Medium-term Management Plan (2021−2025)

KX

KandenTransformation

EX

Energy Transformation

VX

Value Transformation

BX

Business Transformation■ What we aspire to become
With Energy, Transmission & Distribution, Information & Telecommunications, and Life/Business
Solution positioned as our core businesses, we will keep creating new value in areas around thesesectors as well as where they overlap.
As the operator of a platform providing various social infrastructures and services, we aim tocontinuously serve our customers and communities, while contributing to attaining a sustainablesociety.

Life/BusinessSolution

Information &Telecommunications

New sectors
Transmission &Distribution
EnergyPromote innovation anddigitalization in eachbusiness sector

Kansai Electric Power Group Integrated Report 2023

23

Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Medium-term Management Plan

■ Key initiatives■ Financial goals■ Basic premise of our business operations

Over three fiscal years from 2021 to 2023, we will complete business structural reforms while
anticipating a decline in profits. We will make investment in growth opportunities as well as
construction work to ensure nuclear safety for the future. In fiscal 2025, we will put our businesson a growth track and take another leap forward.

Firmly establishing governance andpromoting compliance
We will do our utmost to restore trust, in light of our reflection
on the receipt of cash/gifts and other issues.
■ Key initiatives

Ordinary Income

KX：Kanden Transformation

FCF

FY 2021−2023FY 2025

More than 100 billion yen
averaged over three years

More than 250 billion yen

Less than -50 billion yen
averaged over three years

More than 200 billion yen

Register a surplus across total income booked between FY 2021 and FY 2025
Equity Ratio
ROA*

12

Seeking to achieve zero-carbon
emissions
EX: Energy Transformation

Transforming into a service
providerVX: Value Transformation

With the accelerating global trend of decarbonization,
to meet expectations for contributing to theattainment of a sustainable society, we will promote
efforts toward the realization of the Kansai ElectricPower Group’s Zero Carbon Vision 2050.
Beyond our conventional large-scale asset-centeredbusiness, we will deal with needs and issues basedon the customer’s viewpoint, thereby being reborn
as a corporate group that continuously provides newvalue to its customers.

More than 20%

More than 23%

More than 1.5%
averaged over three years

More than 3.5%

*ROA [Return on total assets] = Operating income [Ordinary income + Interest expense] / Total assets [Beginning and ending balance average]

More than

250 billion yen

More than

200 billion yen
More than100 billion yen
on averageLess than-50 billion yen

3

Building a robust corporate
constitution
BX: Business Transformation

Kansai Electric Power Group Integrated Report 2023

on average

We will speed up cost structure reform, innovation,
digitalization and workstyle innovation.

Ordinary
Income

FCF

Ordinary
IncomeFCF[Reference] ROE (Return on equity = Net income / Shareholders’ equity [Beginning and ending balance average]) when the above goals areachieved: about 4% for FY 2021-2023, about 10% for FY 2025

24

Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Medium-term Management Plan

Fiscal 2023Plan

In May 2023, the Group formulated the Kansai Electric Power Group Fiscal
2023 Plan based on the progress status of the Kansai Electric Power Group
Medium-term Management Plan (2021-2025) and business environment
recognition.

■ Positioning of the Kansai Electric Power Group Fiscal 2023 Plan
Medium-term Management Plan (2021-2025)

Seeking to achievezero-carbon emissions

Key initiatives

Progress status ofthe Medium-termManagement Plan

EX: Energy Transformation■ Progress status of the Medium-term Management Plan
In fiscal 2022, we made steady efforts in line with the three key initiatives set forth in theMedium-term Management Plan: EX, VX, and BX. Meanwhile, inappropriate incidents occurredin relation to “Firmly establishing governance and promoting compliance,” the basic premise ofthe Medium-term Management Plan.
FY 2022

BasicpremiseEX• Inappropriate incidents occurred in relation
to “Firmly establishing governance andpromoting compliance,” the basic premiseof the Medium-term Management Plan.
• Commenced operation of the SpecializedSafety Facility at Mihama Unit 3 and Ohi
Units 3 and 4, and restarted these units• Invested in zero-carbon power sources inJapan and overseas.
Investment
results

Transforming into a
service provider

VX：Value Transformation

Building a robust
corporate constitution

BX：Business Transformation

VX

FY 2025

238 billion yen• Cut CO2 in half *
Investment

1,050 billion yen(Cumulative target amount for
FY 2021-2025)(Cumulative total FY 2021-2022:
456 billion yen)

• Invested in grid storage battery business,
EMS* in Japan and overseas, and data center
business.
Investment
results• Reform organizational
climate to be fundamentallypremised on compliance28 billion yen

Investment

120 billion yen(Cumulative target amount for
FY 2021-2025)(Cumulative total FY 2021-2022:
39 billion yen)

Kansai Electric Power Group Fiscal 2023 Plan

Business environment
recognition

BX• Reduced repair costs by utilizing value
analysis (VA)* and raised the efficiency of
supply-demand balancing
Cost reduction achieved

78 billion yen*

Costreduction

90 billion yen*

(Single-year target amount for FY 2025)*1: CO emissions from power generation (compared to FY 2013) *2: Energy Management System*3: Capital investments, etc., were closely examined from every perspective of the value chain in collaboration with operating divisions from theplanning stage.
*4: Cost reductions from the planned value at the time of formulating the Medium-term Management Plan

Kansai Electric Power Group Integrated Report 2023

25

Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Medium-term Management Plan

■ Progress status of the Medium-term Management Plan
All of our financial targets for fiscal years 2021 through 2023 set in the Medium-term Management Plan are expected to be achieved. In particular, FCF, which has been in negative territory
in most recent years, is likely to turn positive in fiscal 2023.
We seek to strike a balance between restoring our financial soundness through interest-bearing debt reduction and making investments that will open the way to the future, hoping tomeet the expectations of our shareholders by achieving sustainable growth.

Financial goals[Medium-term Management Plan (2021−2025)]
FY 2021 (results)

FY 2022 (results) FY 2023 (forecast)

FY 2021−2023
FY 2021−2023

Ordinary
Income135.9 billion yen-6.6 billion yen

425.0 billion yen

184.8 billion yen

More than 100 billion yen
averaged over three years

Less than -50 billion yen
FCF-122.3 billion yen-289.8 billion yen

Approx.
280 billion yen

Approx.
-44.0 billion yen

Equity Ratio

19.2%

20.4%

Approx. 23%

Approx. 23%

ROA*

1.9%

0.2%

Approx. 5.1%

Approx. 2.4%

averaged over three years

FY 2025
More than 250 billion yen

More than 200 billion yen

Register a surplus across total income booked
between FY 2021 and FY 2025
More than 20%
More than 1.5%
averaged over three years

More than 23%
More than 3.5%

* ROA [Return on total assets] = Operating income [Ordinary income + Interest expense] / Total assets [Beginning and ending balance average]

Kansai Electric Power Group Integrated Report 2023

26

Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Medium-term Management Plan

■ Business environment recognition
In view of the occurrence of multiple inappropriate
compliance-related incidents, it is essential for the Group toagain work together as one to reform its organizational climate
to be fundamentally premised on compliance.
In order to reduce revenue fluctuation risks such as surges
in fuel prices, which we cannot control, we will steadily
implement the measures set forth in our Medium-termManagement Plan and annual plans, with safety as the toppriority.

At the time of formulation of the Mediumterm Management Plan (March 2021)●

Accelerating trend toward decarbonization(2050 Carbon Neutral Declaration)●

COVID-19-triggered acceleration of DX●Sluggish demand●Falling crude oil prices●

Massive introduction of renewable energy●Decline in electricity trading prices

SocietyEnergy
business

Current business environment (May 2023)●

While fuel prices increased sharply after the conflict in Ukraine, high market
prices are currently reaching a plateau, appearing to trend downward, withmarket volatility increasing.

●

There is an increasing demand among users to transfer contracts fromcompetitors to our Company in correspondence with changes in the retailbusiness environment due to high fuel prices and electricity transaction
prices staying at high levels●Trends toward decarbonization have been accelerating, accompanying
progress in government policy and institutional development• The topic of nuclear power is becoming increasingly important at the GX
Implementation Council• Introduction of a long-term decarbonized energy auction system• Intensified competition in renewable energy public offering●Accelerating digitization of services in both the public and private sectors■ Direction of FY 2023 initiatives
Basic premise of our business operations
Firmly establishing governance and promoting
compliance
In order to rebuild trust, everyone in the Group will work
together on the following to be reborn as a corporate groupthat ensures strict compliance.
With thorough compliance as the fundamental premiseon which our business management is based, we will pushthrough reform of our organizational climate so each andevery employee will take compliance seriously as their own
personal matter and put it into practice.
● We will drastically strengthen internal control to ensurethat we can cope with various environmental changes andrisks that may occur in the future.
●Kansai Electric Power Group Integrated Report 2023

Assess the environment and act in accordance withthe three key initiatives

Key initiatives

EX

Seeking to achieve zero-carbonemissions
EX: Energy Transformation

VX

Transforming into a service provider
VX: Value Transformation

BX

Building a robust corporate
constitution
BX: Business Transformation

Establish operation at the seven nuclear reactors and strive to achievea power portfolio that takes into consideration trends toward
decarbonization.

Move forward with and further deepen initiatives for innovation, etc. byleveraging our strengths to offer new value.

With ongoing uncertainty in the business environment, it is essential tocontinue to examine our business portfolio for sustainable growth and tocontinue cost structure reforms that can be made with self-help efforts.

27

Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Medium-term Management Plan

■ Main efforts in FY 2023
Reforms of organizational climate●Establishment of the Organizational Climate Reform
Committee chaired by the President to build anorganizational culture where all executives andemployees can candidly talk about their feelings andawareness across positions and sections, while alsooverseeing and promoting a series of reforms.

Strengthening internal controls●

Delivery of messages from senior management, centralized
gathering and analysis of employees’ opinions throughdialogue, and solving cross-functional issues

The Internal Control Board was established to oversee
risk management plans in cooperation between
specialized corporate divisions and business executiondivisions.
Promoting initiatives to strictly observe relevant laws
and regulations and to prevent inappropriate incidents
through monitoring, assessment, and improvement ofbusiness performance●Kansai Electric Power Group Integrated Report 2023

Making efforts to promote Groupwide compliance andrisk management by establishing the Compliance
Promotion Headquarters to promote unified measures
toward drastic reinforcement of internal controls and byappointing the Chief Compliance Officer, or CCO, as
the highest-ranking officer for promoting compliance.

Verification system utilizing external human resources

Special supervision by the Board of Directors (reformmonitoring) requires reports on the progress status ofseries of reforms in conjunction with Board of Directors
meetings, follow-up on the status of individual
initiatives, and advising and guidance on additional
measures, etc.
● Special audits by the Audit Committee require not
only reporting on the status of compliance with laws
and regulations, but also periodically and as necessaryon the status of efforts made in series of reforms, as well
as auditing the effectiveness, degree of penetration, andestablishment of these efforts.
●Additionally, enhancing and reinforcing the structureof the Office of Internal Auditing and drawing on
external expertise (e.g., conducting periodic external
assessments based on international standards) will
improve audit quality.

28

Kansai Electric Power Group Overview

Value Creation Story

Medium-term Management Plan

Business Overview

Foundation to Support Value Creation

Financial and Corporate Information

Medium-term Management Plan

■ Main efforts in FY 2023
EXVXSeeking to achieve zero-carbon emissions

Accelerate efforts in line with the Zero Carbon Roadmap.
● Give top priority to safety, establish operation at the sevennuclear reactors, and mount efforts to achieve a power
portfolio that takes into consideration trends toward
decarbonization.
●Examples of primary efforts
Establish operation at the seven nuclear reactors
through the restart of Takahama Nuclear Power Station
Units 1 and 2, with continued safe and stable operation.
● Determine a site for the planned interim storage facilities
outside of Fukui Prefecture by the end of 2023.
● Accelerate efforts to strengthen competitiveness with afocus on the public bidding for offshore wind power
generation, and promote development of solar power
generation through the Corporate Power Purchase
Agreement.
● Aim to build a large-scale hydrogen supply chain fromoverseas to the Himeji area around 2030, expedite
efforts from upstream (supply side) to downstream(demand side) in cross-industrial collaboration withneighboring business operators.
●Investment

FY 2022
resultsEXbillion yen

238

FY 2023
plan

Medium-term Management
Plan (2021-2025)

215

billion yen

1,050 billion yen(Cumulative target amount for
FY 2021-2025)

BX

Transforming into a service provider

Speed up transformation into a service provider.
● For further advancement of VX, promote service
development based on social and environmental analysis.
●Examples of primary efforts● Realize and expand the data center business, a vital
platform for a digital society.
● Promote the Zero Carbon Package mainly throughutilization of distributed renewable energy resources,
electrification, and optimal control of these withSenaSon*1.
● Promote and expand the VPP business and grid storage
battery business based on a distributed services
platform*2 (E-Flow LLC).

Building a robust corporate constitution

Continue with efforts in improving efficiency to achievegoals in the cost structure reform set forth in the Mediumterm Management Plan.
● Deepen digital technology-based transformation,
reinforcement of human capital base, etc.
●Examples of primary efforts● Delve into efficiency improvement by promoting
group-wide value analysis, not by Kansai Electric Power
Company alone.
● Accelerate business exploration and development,
vigorously pushing VX innovation forward.
● In the electric power transmission and distribution
business, upgrade networks to the next generation andthoroughly improve efficiency to adequately respond tosystem updates.

*1 An energy management system that optimally controls distributed energy
resources owned by customers.

*2 A platform that brings together distributed energy resources owned by customers,
power generation companies, etc., and carries out optimal market transactions.

Investment

FY 2022
resultsVXbillion yen

28

FY 2023
plan55billion yen

Medium-term Management
Plan (2021-2025)
120 billion yen(Cumulative target amount for
FY 2021-2025)

Costreduction*FY 2022
resultsBX

billion yen

78

FY 2023
plan75billion yen

Medium-term Management
Plan (2021-2025)
90 billion yen(Single-year target amount for
FY 2025)* Cost reductions from the planned value at the time of formulating the Medium-termManagement Plan

Kansai Electric Power Group Integrated Report 2023

29