ELECTRIC POWER BU
Business overview

OutlineSince 2000 when the Tokyo Gas Group started to generate and supply the electricpower, it has engaged in a comprehensive range of business activities that extend fromfuel procurement to power generation and sales. Among the new entrants to the sector
following the start of its deregulation program, we own the largest-scale power station in theGreater Tokyo Area and sell generated power to wholesale and large-lot customers. With
the completion of deregulation of the retail electric power sector in April 2016, we startedelectricity sales to residential and commercial customers.
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.
Net sales

Number of Customers

Electricity Sales Volume¥145.7 billion

728,000

12.7 billion kWh

FY2016FY2016FY2016Net Sales and Operating Profit(¥ billion)

Net Sales (LH)180

Operating Profit (RH)(¥ billion)

30

120

2060

10002012.3

2013.3 2014.3 2015.3 2016.3 2017.3

Electricity Sales Volume
Strengths• The largest-scale, highly-efficient power sources among the new power suppliers in
the Greater Tokyo Area(billion kWh)15

• Community-based sales network (operated by Tokyo Gas Lifeval, Enesta, etc.) andover 11 million customers as a base10

• Infrastructure and operating know-how and system

Risks• Decline in price competitiveness of LNG thermal power generation, associated withchanges in prices of raw materials and fuels• Potential damage to power generation facilities and supply issues of raw materialsand fuels, stemming from a large-scale disaster

502012.3

2013.3 2014.3 2015.3 2016.3 2017.3

Toward realizing our Challenge 2020 Vision
Deregulation of the retail market, that completed thegovernment’s program for electric power and gas system
reform, is being used to provide impetus for the Tokyo Gas
Group to greatly advance toward expanding as a “totalenergy” concern. Following the electricity retail deregulation
program in 2016, the gas retail deregulation was completed in2017. While competition is likely to become intensified, we are

Full Deregulated Market of the Electricity and Gas
Number ofcompanies*

Approximate
potential customers(Million)

Approximate
market size(¥trillion)

1085

8.0

WithinTEPCO’s domain

292.820326

2.4

expecting to gain more earnings opportunities by entering themuch bigger electricity retail market.
In the Challenge 2020 Vision, we aim to evolve our total energy
business including the electricity retail business, and expand
the ratio of “electric power, LNG sales, and other business”
from 20% of consolidated net earnings when the plan wasadopted to 25% by fiscal 2020.

Business Structure(Consolidated Net Income Ratio by Business)
Electric power, LNG sales, and other business
Overseas businessGas businessElectricity

City gas25* Former general electric power operators, former general gas operators

20%25%

Fiscal 2009-2011 Average

Fiscal 2020 Targets

SINESS
Hitachi LNG
TerminalMoka Power Station(Kobelco Power Moka)(Scheduled for 2019)

Koga-Moka Line

Ibaraki Line

(Scheduled for October 2017)(Scheduled for 2020)

Saito LineTOKYO GAS ANNUAL REPORT 2017

Kiyohara Industrial Park

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

What we achieved in the first yearof the complete deregulation of theelectric power retail market
We have marketed the “Zuttomo Plan”, a package that
includes gas, electric power, and various other services, tosupport our expansion in the electric power retail market. Asof March 31, 2017, we signed plan contracts with 728,000
customers, acquiring the No. 1 position among new entrants
in the low-voltage market.
Entering the second year, we are working on retaining the No.
1 position in the number of contracts among new entrants andintroducing new service menus, in order to achieve the year’s
target of having one million customers. At the same time, weare aiming at becoming the “Best Power Supplier” in termsof customer satisfaction so that those who have switched toTokyo Gas will be content with their decision.

Objective: Selling about 10% ofelectricity demand in the Greater
Tokyo Area
Using the advent in 2016 of completion of electricity retailderegulation, the Tokyo Gas Group expanded sales to residential
and commercial customers in addition to the wholesale segment,
selling electricity volume of around 12.7 billion kWh in fiscal 2016.
We plan to sell about 30 billion kWh, equivalent to about 10% ofdemand in the Greater Tokyo Area, by 2020.

Chiba-Kashima Line

Negishi LNG Terminal

Sodegaura LNG Terminal

Tokyo Gas Yokosuka
Power Co., Ltd.

Tokyo Gas Baypower Co., Ltd.

Number of Low-Voltage Customer Contracts
Best power supplier incustomer satisfaction*

One million
cumulative

No.1 among newentrants

0.728 million
cumulative

2016.42017.3

From April 2017
(Second year since the power deregulation)* Aiming to become the best power supplier, meaning No. 1 power supplier in customer satisfaction

Electricity Sales Volume
Ohgishima Power Station Startup of No. 3 unit operations(Feb. 2016)

11.0 billion kWh

Complete deregulation ofelectricity retail(April 2016)

30.0 billion kWh12.7 billion kWh26

2016.32017.32021.3

Business overview

What we will do in and after the second year since the complete deregulationof the electricity retail sector
In light of the objectives of the electric power system
reforms and of the needs of customers, Tokyo Gas isworking at establishing a demand and supply structurethat contributes to greater stability of supply, supplies
affordable energy, and helps diversify services offeredto customers. To do this we established the PowerBusiness Division and are undertaking a variety ofmeasures to expand its electric power business.

Gas/electricity package deal, providing three-way value(good price, reliable, simple & convenience)

Value formoney

Peaceof mind

Simplicity &convenience

Value formoney

Through our gas pricing menu, including our new one “Zuttomo Gas” + “Zuttomo Electricity”, we will provide
customers with highly competitive pricing and services.

Peace ofmind

Reliable services for home life and business (Gas Fixture
Troubleshooting Support and Residential Monitoring Services)
We serve the official app of the service for Web members,“myTOKYOGAS” to customers, which provides them with

Simplicity & various information such as not only the gas and electricity
convenience usage but also the information related to the point and usefultips for everyday.

Expand power sources
Prompted by completion in 2016 of deregulation of electricity
retailing, we are aiming at delivering electricity to low-voltage
residential and commercial customers, in addition to serving thewholesale market, and we plan to expand generation capacityfrom the current level of approximately 1,600 MW (own equitybase) to around 3,000 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 andbase load supply sources, we will also promote initiatives aimed
at expanding renewable power sources in order to address theissue of preventing climate change.
Plan to Expand Power Sources (Own Equity)

Recent Initiatives

Sep. 2014

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

Jan. 2016

Submitted the “Environmental Impact Statement” forthe 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 EnergyCo., 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. 3of 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 businessand began a study of wind conditions.

Feb. 2017

Formed a business alliance with Shizen Energy Inc.,
with the objective of acquiring around 60MW of solar
power generation sources

Approx. 3,000 MW

Moka Power Station
Start-up of operations

Increase of approx.

(1,200 MW)

Ohgishima PowerStation Start-up of No.
3 unit operations(300 MW)

1,400 MW

Approx.
2,800 MW(vs. Feb. 2016)

Approx.

1,600 MW2019-20202016.2(Plan)

2020(Vision Targets)* Shizen Energy Inc. specializes in solar power generation and other renewable energy
businesses and provides total services, from development to operation and maintenance.

The Group’s Natural Gas-Fired Thermal Power Plants

Tokyo Gas Baypower Co., Ltd.
Generation capacity

100MW 100MWx 1 unit

27

Start of operations 2003

Tokyo Gas
generation capacity

100MW
Tokyo Gas interest 100%

Tokyo Gas Yokosuka power Co., Ltd.
Generation capacity

240MW 240MWx 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 420MWx 2 unit
Start of operations 2008

Ohgishima Power Co., Ltd.

Tokyo Gas
generation capacity

Generation capacity

400MW

1,221MW 407MW
x 3 unit

Tokyo Gas interest 49%

Start of operations 2010

Tokyo Gas
generation capacity

900MW
Tokyo Gas interest 75%

ELECTRIC POWER BUSINESSWe sell electricity through the Tokyo Gas Group companies,
such as Tokyo Gas Lifeval, Enesta, and Enefit, as well as throughpartnerships with companies in various industries, including
nearby city gas and LPG suppliers and businesses in a range ofother industries, including housing, construction, equipment, andtelecommunications services.
Tochigi

Gunma

EnestaEnesta8 outlets

2 outlets
Ibaraki

Saitama

Tokyo Gas
LifevalEnestaEnefit5 outlets
3 outlets

EnestaEnefit9 outlets
5 outlets
9 outlets

194outlets

Tokyo

Tokyo Gas 55 outlets
LifevalEnefit38 outlets
Kanagawa

Chiba

Tokyo Gas
LifevalEnestaEnefit5 outlets
4 outlets
2 outlets

Community-based sales network and over
11 million customer base
The Tokyo Gas Group has established a community-basedsales network with about 200 outlets in the Kanto region
enabling us to tailor services to individual customers’ needs.
The 10,000 employees of Lifeval, through whom there isdirect interaction with those customers on behalf of the Tokyo
Gas Group, have built strong relationships of trust with over
11 million customers. They are engaged every day inmeticulous services that encompass sales calls andmaintenance of gas appliances to the opening and closing ofgas fixtures when a household moves, gas appliance safety
checking, and gas meter reading.
In the retail sales of electricity, in addition to the push-type
marketing, involving contacts with these customers at theirhomes and places of work, we will use our updated website
for applications and steadily accumulate more contracts toenhance our customer base.

TOKYO GAS ANNUAL REPORT 2017

Expand electricity sales to low-voltage customers

Tokyo Gas 40 outlets
LifevalEnefit
9 outlets

Infrastructure and management
know-how and system
In addition to the owned city gas business assets such as
LNG terminals, pipelines, and LNG procurement capacity, theTokyo Gas Group is capable of using distributed-type powergenerations, including cogeneration systems and fuel cells,
know-how for management of electricity generation by use ofLNG, and experience in systematic business techniques fromutility rate calculation to billing and collection. We will makeuse of these assets and experiences.

Expand electricity sales to high-voltage and extra-high-voltage customers
By establishing Ennet in 2000, jointly with NTT Facilities andOsaka Gas, we have made another change to expand
electricity sales. In October 2015, we established Synergia
Power Co., Ltd., jointly with Tohoku Electric Power Co., Ltd.

From April 2016, Synergia began electricity sales to highvoltage and extra-high-voltage customers in the KantoRegion, mainly in its northern area.

Corporate name

ENNET Corporation

Corporate name

Synergia Power Co., Ltd.

Established

July 7, 2000

Established

October 1, 2015

Main businessElectricity trading and electricity generation

Main business

Shareholders

NTT Facilities 40%; Tokyo Gas 30%,
Osaka Gas 30%

Electricity retail supply to high-voltage and extrahigh-voltage customers in the Kanto region,
mainly in its northern area

Shareholders

Tohoku Electric Power 50%; Tokyo Gas 50%

28