The Okinawa Electric Power Company, Incorporated (OEPC)
Annual Report 2020

1 Overview of Okinawa Prefecture
Corporate Overview of OEPC

2 Message from the Management
4 The OEPC Group Vision

5 OEPC’s Corporate Mission

Ensuring the Stable Supply of HighQuality Energy
6 Electricity Production
7 Electricity Delivery
8 All for the Benefit of Okinawa
Disaster ReadinessToward Greater Customer Satisfaction
9 Helping in comfortable lifestyle andworkplace creation
11 Meeting Diverse Requirements

In Harmony with the Local Community
13 Working with our community

In Harmony with the Local Environment
15 Environmental measures
16 Green energy

Reinforcing Group Management

17 ‌Drawing on collective strengths of theGroup
19 Status of Corporate Governance
24 Organization Chart

25 ‌Board of Directors and Auditors
Investor Information
26 Financial Section

Overview of Okinawa Prefecture

Vladivostok
Beijing

Seoul
Tokyo

ShanghaiTaipeiHong Kong
Bangkok

Okinawa

1,000km2,000km4,000km

ManilaSingapore

Basic Data
Population

1,451,676

No. of Households

608,753Area2,281 km²

Climate

Subtropical

Location

26°12N 127°41E

Prefectural GDP¥4330.4billion

Tourism Revenue¥734.1billion◇ ‌160 islands scattered over a sea area lying about 1,000 kilometers east and west andabout 400 kilometers north and south.
◇ Okinawa has attracted attention for its advantages and potentials.
・Geographical characteristics as being located in the center of East Asia.
・The highest birth rate in Japan.
・Rich nature and mild climate.
◇ Making good use of such advantages and potentials, initiatives are underway
・Promotion of tourism.
◦Clustering of international logistics industry.

Population, No. of Households as of April 1, 2020
Area as of January1, 2020
Prefectural GDP as of Estimated results FY 2018
Tourism Revenue as of FY 2018(Source: Okinawa Prefecture, Geographical Survey Institute )Corporate Overview of OEPC
■ The Okinawa Electric Power Company (OEPC) supplies electricity to 37 inhabited islands including Okinawa main island.
■ OEPC maintains 11 isolated systems that are not connected with the transmission lines of other power companies.
■ OEPC has no nuclear and hydroelectric power plants and depends on fossil fuels for its power supply.

EstablishedMay 15, 1972

Capital¥7,586 million

Total assets¥373.941 billion (Non-consolidated)¥408.789 billion (Consolidated)

Employees

1,543 (Consolidated: 2,752)

Security code

9511

Service area

Okinawa Prefecture

Generating facilities

Steam-power generators
5 locations 1,629 thousand kW(Oil 2 locations 375 thousand kW)(Coal 2 locations 752 thousand kW)(LNG 1 location 502 thousand kW)
Gas turbine generators
5 locations 326 thousand kW
Internal-combustion power generators
13 locations 190 thousand kW
Wind power generators
5 locations 2 thousand kW
Total 2,147 thousand kW(as of March 31, 2020)

1

Okinawa Electric Power Company

Message from the Management

Mitsuru Omine
Chairman

Hiroyuki Motonaga
President

The Okinawa Electric Power Company Group (OEPC Group) advances a variety of initiatives
with the aim of creating new value as a comprehensive energy supplier through services supporting
both corporate and individual customers. We have emerged as a corporate group with a sense ofsolidarity, growing and developing hand-in-hand with the community.
Within the electric power business, which forms the core of OEPC Group’s operations, Okinawa
is getting into the era of full-scale competition as well due to the new energy suppliers entering themarket in the wake of power system reform.
It has been in this context that we formulated the OEPC Group Medium-Term Management Plan.
With this as our guide, the entire Group will come together to make a concerted effort as we boldly
embrace challenges toward realizing the corporate group that we aspire to be and achieving ourfinancial goals for FY2020 and FY2025.
Okinawa’s energy market faces intensive competition among business operators, not only
caused by subsequent entry of new energy suppliers into the market due to full liberalization of
the retail electricity market, but also increased competition with gas and ESP business that are in
progress. Further, the impact of the COVID-19 pandemic to Okinawa’s economy is unclear but it islikely to impact the demand for energy as well.
On the other hand, however, we continue to expect new energy demand mainly from large scaleurban development projects.
As for our earnings, we are vigorously promoting all-electric options and the conversion tonatural gas which reduces the carbon footprint, as well as the development of ESP business.
Simultaneously, we are making efforts to accomplish “Expansion of the topline” to encourage users
to choose our service through our fine-tuned sales activities by providing comprehensive rate plans
and better service overall. We will also work on establishing a strong and competitive managementfoundation and focus on increasing our sales revenue throughout the entire group, further to obtain
new investment opportunities and develop to actualize new business projects.

2

Okinawa Electric Power Company

As we experienced increasing damages on the infrastructural system throughout Japan due tonumbers of natural disasters in recent years, we will continue to reinforce stable supply measuresthrough the configuration of facilities highly-resilient to earthquakes, tsunami and other natural
disasters. Our business operations will be conducted with a high awareness of disaster prevention
to minimize any damage that might occur by thoroughly managing our facilities, improving ourgroup wide recovery system that mobilizes the entire group and partner companies to promptly
restore service after typhoons, liaising with local governments and disaster prevention agencies, andcommunicating information in a timely manner.
The entire electricity business has been striving to abate global warming through the achievementof CO2 emission reduction targets. The OEPC Group is endeavoring to realize a low carbon society
through, among other measures, from steady operation of the Yoshinoura Thermal Power Station
which uses liquefied natural gas, the most effective source for reducing CO2 as fuel, to mixed firing
woody biomass with coal at thermal power plants as well as further introduction and expansion ofrenewable energy usage.
In efforts to eliminate all accidents and damage from disasters, we are well aware that assuring
the safety of every person engaged in our business is our highest priority. Working together with
OEPC and partner companies, we will adhere strictly to our safety management policy and work
diligently to foster a safety culture as we fulfill our mission of ensuring a stable supply of energy.
We will also be thorough in our efforts to keep the number of working hours to an appropriate
level. This includes efforts to prevent situations where employees work for long periods at one
stretch. It is our goal to ensure both the mental and physical health of our employees and promotea harmonious work-life balance, so that we actualize “Principles for the Healthy and Productive
Management”.
We will work to further increase revenue by leveraging not only the strengths of OEPC
companies but also our comprehensive strengths that we have fostered over the course of ourbusiness operations in construction, real estate and information technology, which are at the core of
our comprehensive energy services.
Going forward, the OEPC Group will work as a cohesive unit to address various management
issues and thereby sustain growth and development.

Mitsuru Omine
Chairman

Hiroyuki Motonaga
President

3

Okinawa Electric Power Company

The OEPC Group Vision

Each member of OEPC Group is working diligently to(Established April 2019)

3. Our business fields

realize the Group’s overarching vision.

The core of the OEPC Group’s business development
will continue to be the provision of comprehensive

1. What we aim to beenergy services, which we maximize through our

The OEPC Group Vision sets out our vision for thecapability to supply both electricity and gas. Also, thefuture, pledging to “design and propose new value

Group will steadily promote business activities in IT

through services to support both corporate andservices, construction, real estate and other sectors

individual customers” through our core business as

where we are currently active as well as steadily

a comprehensive energy supplier and to “become adevelop and grow new businesses with a particular

unified business group that grows and develops hand-focus on increasing earnings from outside the OEPC

in-hand with the community.”Group. In addition, we will aggressively move ahead ina way that marshals our comprehensive strength and2. Basic Management Stancemakes fullest use of the assets of each business unit

• ‌Strive to provide a stable supply of energy

in the development of former military base sites and• ‌Meet the diverse needs of our customers and do oururban areas. Furthermore, we will consider businessutmost to enhance customer satisfaction

development outside our region and overseas that• Act as a responsible corporate citizen

relates to our core comprehensive energy services and• Value our staff and help them growleverages the OEPC Group’s strengths. We will seek to• ‌Achieve sustainable growth through proactive

create an optimal business portfolio for the Group tobusiness operations and development and continuallyachieve collaboration among business units and realizeenhancing management efficiency

sustainable development for each unit.

Comprehensive energy
services
Our aim for OPEC Group’s core business,
which is our comprehensive energy services
combining the electric power business withgas provision, energy services provider (ESP)
operations, renewable energy services andother activities, is to offer optimal energy
services that meet society’s needs in terms of
economic efficiency, environmental concernsand other commitments.

New businesses
The OPEC Group seeks to leverage ourstrengths and take advantage of business
opportunities to develop and grow new
businesses.
Our aim is to create new value-added services
by integrating AI, IoT and other IT
applications with services that our Group
companies currently provide.

Our Business Fields

Construction,
real estate, and associated businesses

Comprehensive
Energy Services(Electricity, Gas, ESP, Renewables)Newbusinesses

4

IT-related
businesses

Okinawa Electric Power Company

Construction, real estate,
and related businesses
Providing a high value-added service thatprecisely matches our customers’ needs.
Through proactive involvement in urban
development and addressing the needs of
PPP & PFI sponsored by public agencies, weseek to provide services that leverage thecomprehensive strengths that our companies
can contribute.
PPP: Public Private Partnerships are cooperative
arrangements in which government and theprivate sector offer public services.
PFI: Private Finance Initiatives are a way of utilizing
private sector financing and know-how toprovide public services on a private basis.

IT-related businesses
Expanding our earnings base through theprovision of solutions in the information
technology fieldOEPC’s Corporate Mission

The corporate mission of OEPC is spelled out in three(Established April 2019)

1. Fundamental Beliefs

documents: our Fundamental Beliefs, in which we state

Become a major driving force behind the growth of thethe ways that we seek to provide value to the community

Okinawan economy through the supply of energy (slogan:as a whole; our Basic Management Stance, in which we

Energise Okinawa)

define the fundamental goals we must aim for in order to

At OEPC, we are motivated by a strong sense ofrealize our Fundamental Beliefs; and the Action Guidelines,

mission and pride in the capabilities of the Company

in which we explain the ways to conduct the work thatto work to support the livelihoods of our individual

each employee of the Company is expected to follow.

customers and the economy of Okinawa Prefecture
as a whole. We intend to harness our passion andcreativity to help build a dynamic and forward-looking
community in Okinawa.
2. Basic Management Stance• Strive‌
to provide a stable supply of energy

Fundamental Beliefs• Meet‌the diverse needs of our customers and do ourbest to enhance customer satisfaction• Act as a responsible corporate citizen• Value our staff and help them grow

Basic Management Stance• ‌Achieve sustainable growth through proactive business
operations development and continual management
efficiency enhancements

Action Guidelines

3. Action Guidelines• Follow work procedures faithfully and swiftly• ‌Be proactively inventive, plan ideas carefully, andexecute them thoroughly• Boldly take on difficult challenges• Support one another to reach our common goals• ‌Always keep profitability in mind, and work daily toachieve cost reductions• ‌Insatiably seek and acquire knowledge and skills, andpass them on to others• Uphold high ethical standards at all times

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Okinawa Electric Power Company

Ensuring the Stable Supply of High-Quality Energy

Electricity
Production

OEPC recognizes that its core mission and the fundamental driving force behind
any electric utilities is the stable supply of the power necessary to support
people’s lives and economic activity. On the premise of maintaining the supply ofelectric power on a stable basis to meet future demand, the Company strikes abalance between energy security, economic viability, and environmental concerns.
With these in mind, we are taking steps to enhance the efficiency of our power
generation facilities.

Power consumption in
Okinawa Prefecture

Expansion of
power generation capacity

Electric power consumption in Okinawa Prefecture in
FY2019 totaled approximately 7.74 billion kWh and peakload (transmission end) was approximately 1,503,000kW,
marking a fourfold increase since FY1972 when OEPC was
founded. Long-term demand for electricity is anticipated to
grow at an average annual rate of 0.6% between FY2018
and FY2029, forecasting a mild increase reflecting an
estimated increase in the number of customers fueled by alarger population and growth of the local economy.

In Okinawa Prefecture, to which OEPC supplies electric
power, the development of hydroelectric and nuclear poweris beset with difficulties, including the constraints caused
by geography, topography and the scale of electric power
demand. Consequently, Okinawa has to rely on fossil fuels
as its electric power energy source. Previously, OEPC had
been sustaining the demand for electricity mainly by usingoil- and coalfired thermal power, but added to these bycommencing operations of the LNG-fueled No. 1 and No. 2
generators at the Yoshinoura Thermal Power Plant in 2012
and 2013, respectively. This has diversified the fuels used
to three types—oil, coal, and LNG—and brought about an
improvement in energy security. Furthermore, OEPC hasenhanced its efforts to combat global warming by using
LNG, which emits less CO2 than oil and coal.
Finally, it is worth
Power Generation by Fuel Typenoting that OEPC
Renewable energy,
uses renewable
Coal
LNG
Oil
other sourcesenergy, mixed firing
100
6woody biomass with
2
23
14
80
coal at thermal power
20
plants, as one of the60
efforts that we are
75
40
taking actions against
60
global warming.

（％）

20

0

'11
( Before Yoshinoura Thermal
Power Plant’s operation started )Notes : • Including portion from other companies

6

Okinawa Electric Power Company'19

Ensuring the Stable Supply of High-Quality Energy

Electricity
Delivery

To deliver the electricity, which we generate, to our customers, it needs to passthrough transmission lines, substations, service lines and other distribution
equipment. By taking into account demand trends throughout the region andreliability of supply, we have maintained and efficiently reinforced our distribution
system so as to ensure a stable supply of electric power in the future as well.

Our comprehensive network
At present, our company’s network of power transmission
lines connecting power plants with substations acrossthe main and remote islands, including overhead andunderground cables, measures about 1,220km (linelength). We operate some 140 substations, and thelength of our distribution line network (both overhead
and underground) connecting these substations withcustomers is about 11,078km. Moving ahead, weare continuing to build and develop transmission anddistribution networks that can cope with the region’s
growing demand and ensure reliable supply.

Construction, operation andmaintenance of distribution
facilities
Okinawa is constantly struck by typhoons. Therefore,
it is not uncommon for transmission and distribution
facilities to incur significant damage due to strong winds
and flying debris. Taking these regional characteristics
into consideration, OEPC’s transmission and distribution
operations draw on past data regarding damage andblackouts to build robust facilities that are resilient tonatural disasters. In this manner, our company strives toensure stable supply across its broad prefecture-wide
transmission and distribution network. Through regularpower line patrols and inspections, we ensure that any
irregularities in our distribution facilities are discoveredat an early stage and swiftly repaired. In this manner, we
work to prevent any recurrence of incidents. Even in cases
where incidents cause power outages, we are able torestore power quickly through an automated distribution
system operated from computers installed at each branch.

Transmission facility

Load dispatching center
At OEPC we draw up demand and supply operational
plans based on estimates of customers’ power needs,
and the amount of power generated is carefully controlledaround the clock to ensure an uninterrupted supply of highquality electricity to our customers. Because electric power
cannot be stored, we have established a remote control
system for power load adjustment at power plants andcurrent adjustments at transformers and over transmission
lines, to precisely match power demand.

Distribution line maintenance

Load dispatching center

7

Okinawa Electric Power Company

Ensuring the Stable Supply of High-Quality Energy

All for the Benefitof Okinawa

Okinawa Prefecture comprises roughly 160 islands of various sizes interspersed
across an extensive sea area extending 1,000 km east to west and 400 km northto south. The prefecture lies at the southwest tip of Japan. OEPC is responsible
for supplying all of Okinawa Prefecture. Our mission is to deliver electricity to any
island no matter how small or how far away unless it is uninhabited.

Power supply facilities forremote islands
A vast distance from mainland Japan, and composedof multiple islands, Okinawa’s geographical conditions
form a major handicap to the supply of electricity, thefoundation of modern society. We are committed tosetting up a generation and distribution network that
overcomes the difficulties presented by supplies toremote islands.
In addition to the main island of Okinawa, wehave established independent internal combustion
power-generating facilities in 10 remote islands
including Ishigaki and Miyako islands. From thesefacilities, electricity is supplied to neighboring smaller
islands round-the-clock using submarine cables.
Submarine cable overhaul projects are ongoingto stabilize power supplies to remote islands. This isbeing conducted with the fund support of government
subsidies aimed to promote laying infrastructure
groundwork for those smaller remote islands.
During emergencies such as the failure of regularsupplies to remote islands, we use transportable
generator equipment to ensure a stable supply ofelectricity.

Disaster
Readiness

Submarine power cables

Power distribution line continuing through to Yubu Island Ishigaki No. 2 Power Plant(diesel generator)

As a provider of vital services in Okinawa Prefecture, the Company had alreadytaken measures to minimize potential damage to power facilities. We had rooted
out causes of incidents and worked to make our operating environment “disasterproof,” so we could quickly restore operations when disasters occur. However, theGreat East Japan Earthquake and numbers of natural disasters intensified in recent
years heightened our awareness of the importance of ensuring a stable supply of
power come what may.
We now need to further reinforce our readiness. The Company is updating
emergency procedures for its facilities to cope with major natural disasters, andcarrying out practical and organizational re-inspections in anticipation of every
possible scenario, assuming various types of disaster.

General disaster drills prepare for major disasters

8

Okinawa Electric Power Company

Toward Greater Customer Satisfaction

acutely sensing customer feedback, occasionally providing customers with
Helping in comfortable By
advisory notices, accurately and rapidly responding to diverse customer needs, andworking to provide services that satisfy our customers, the Company helps in thelifestyle and workplace creation of abundant and comfortable lifestyles and workplaces for its customers.
creation

For corporate customers
To respond to our customers’ needs for reduced costs andestablishing business environments, we offer optimizedenergy systems and cost-effective rate plans, and further
we provide ideas and follow-up activities that help themuse energy more effectively so that our service satisfies our
corporate customers at our best.

A welfare facility kitchen that has
introduced commercial electricalequipment

Commercial electric kitchen seminar

Promoting growth in popularityof all-electric homes
Technologies such as induction heating (IH) cookers, which
generate heat magnetically rather than with open flame,
and EcoCute water heaters, which use heat extracted
from the air to boil water, help increase the number of allelectric homes every year.
As part of our efforts to convey how the power ofelectricity can enrich and make customers’ lives more
comfortable, OEPC offers a range of affordable rateplans to suit customers’ lifestyles. We are also working toincrease the popularity of all-electric homes through event
appearances and marketing campaigns as well as handson IH experiences and appliance displays at KAERU PIA
NAHA, our interactive all-electric showroom.

Growth in Popularity of
All-Electric Homes (Cumulative)
45,00040,00038,38540,313

41,847'16'1743,43844,992'18'19

35,00030,00025,00020,00015,00010,0005,000

0

A consulting session

9

Okinawa Electric Power Company'15

Toward Greater Customer Satisfaction
Providing households witha new electricity rate type

Members only website "Okiden
more-E" is opened

Under our corporate slogan “With the community, for thecommunity,” we always strive to be a company that ourcustomers choose with confidence, and toward this end,
we began offering new electricity rate plans for individual
customers such as the Good Value Plan on June 1, 2018,
and the Meter Rate Lighting plus on September 1, 2020
that provide the customers with discounted rates on
power usage.

With our service concept of “More “E” (meaning good)to support Okinawa!”, this website is to be used as acommunity connecting us with our customers, who then inturn can enjoy “more cost-efficient” and “more convenient”
services.
The point service is connected with a number ofmore!
Okinawa’s business and professional sports teams, as
１well as organizations supporting social welfares, medical
supports and environmental activities, and eventually allow
us to contribute to boost Okinawa’s economy, to vitalize
the point service market and to solve regional issues.

Summary of the Good Value Plan

The Good Value Plan is advantageous to customers inmany cases because all rates are set equal to or lessthan meter rate lighting, a type of contract for general
residential-use electricity supply.
Further, we have added a feature as of September
1, 2020, to link the plan with our members only website,“Okiden more-E” that allow customers to earn points
by their electricity usage. (1 point added per 200 yen ofelectricity bill)● Good Value Plan Rate Structure
Same rates as those under
Meter Rate Lighting plan
¥1.13/kWh lower than
Meter Rate Lighting plan
Minimum charge¥402.40 / month¥0.48/kWh lower than
Meter Rate Lighting plan
First-tier rate
¥22.95 / kWh
10kWh

Third-tier rate
¥29.34 / kWh

Second-tier rate
¥28.01 / kWh
120kWh

more

!

more

!

１

１!
１ Earn and use “Okiden E points”

more“OkidenE points” are given to member!
customers
who purchased electricity
2
or contracted with us to sell electricity!
“Okiden E points” can be used for
shopping at local stores or providing
support for the professional sports
teams, or you can donate the points tomore! activities, etc.
social
more

2

more

!

2 ! Make Visible service
2

more

300kWhElectricity rate

This service displays graphs of electricity!
bill amountand usage, solar power sell
3 and the power generated amount,ratealso the comparison of electricity usage
with other families of similar structure,
allowing to analyze energy usage.

more

Summary of the Meter Rate
Lighting plus
Meter Rate Lighting plus is the same price as Meter Rate
Lighting, a general residential-use electricity bill, and isa great value that allows you to earn points from ourmember site “Okiden more-E” launched on September 1,
2020. (1 point added per 200 yen of electricity bill)*In order to apply for Meter Rate Lighting plus, you must
be a member of “Okiden more-E” in advance.

more

3

!

Information providing service!
Articlesuseful to customers’ daily lives
3 ! regional information are available.
and

more
more

3

more

4

!

Interactive service

Participants get points byparticipating in various campaigns,
events and surveys.
more

!

more

!

4

4 !
4

more

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Okinawa Electric Power Company

Toward Greater Customer Satisfaction
The energy market in Okinawa Prefecture is projected to experience an increase in
new energy demand due to extensive urban development of former military bases
and other lands, hotel construction to accommodate the ever-increasing numberof tourists, construction of large shopping complexes, and other factors. This will
mean more diverse and complex energy needs. Our aim is to be an energy services
provider that customers will select because we are able to meet such needs.

Meeting Diverse
Requirements

Comprehensive Energy Services

Gas Supply

In addition to providing a stable supply of electric power,
the OEPC Group has started offering comprehensive
energy services to secure demand for both electricity andnatural gas. We have been proactively proposing solutions
for heating in the industrial and commercial sectors (airconditioning, hot water supplies, kitchens and steam)since 2015.

As one facet of our comprehensive energy services,via Progressive Energy Corporation, OEPC Group has
been marketing natural gas, which offers greater cost
performance, environmental friendliness, and safetycompared to heavy oil, LPG or other fuels.
We have set up systems for supplying natural gas as
below, that are tailored to the customer’s location and levelof demand.

・OEPC Group’s Comprehensive Energy Services

Total
support forenergy utilization
Total support, from energy
diagnostics to financial
support, design andconstruction

3 supply systems
Conduitsupply system

One-stop
services
Responding to all needs
relating to energy
utilization at
one stop

PEC natural
gas supply
center system

OEPC

M

Yoshinoura
Thermal Power
Plant

Tank truck

Customer satellite
equipment

LNG

Yoshinoura
Thermal Power
Plant
Tank truck
LNG

Natural gas
supply center

Customers

Gas meterM

For customers near PEC natural gas supply center●System ﬂowchart●Energy-eﬃcientmeasures and eﬀects

・CO 2 reduction eﬀects
・Energy Saving

Act measures, etc.

●Financing

・Optimal subsidies
・Leasing plans

Optimal system and effects
Financing proposals

Gas meter

For customers in the regions where conduit not available

Proposing optimal
combinations ofelectricity andnatural gas

Customers

Customers

For customers we supply vapor/odor gas to, through conduit
from Yoshinoura Thermal Power Plant

Tank truck
supply system

Best mix
systems

Yoshinoura
Thermal Power
Plant
Vapor/Odor

・ESP proposals, etc.

OEPC examines technical aspects and financing

11(Area supply such as US base return site or industrial park)

In order to supply
more natural gas, we will
be setting up a gas conduit
from Yoshinoura Thermal
Power Plant (in Nakagusuku
Village) to Urasoe City
through the Nishi Futenma
area in Ginowan City
(Approximately 14km in
length total) targeting forcommercialization in 2023.

Okinawa Electric Power Company

Yoshinoura/Makiminato
gas conduit

Yoshinoura gas distribution facility(Yoshinoura Power Plant site)Toward Greater Customer Satisfaction
Energy Services Provider (ESP)
Energy services providers are involved with customers’
business and operations, and retain the energy facilities
as well as process to supply energy specific to thecustomer’s needs. The OEPC Group established Reliance
Energy Okinawa, an ESP company, to alleviate the burden
on our customers from high initial capital investment
for electricity, gas or other energies used, equipment
operation and maintenance, emergency response, andother responsibilities.

● Service initiation: April 2020
● Total floor area: 19,000m2● Building scale: 4 floors aboveground and 2 belowground

Adopted case (LAB 4 at the Okinawa Institute of Science andTechnology Graduate University)※ Courtesy of OIST / Tougou

LAB 4 (Illustration of completed building)※ Courtesy of OIST

［Energy Services］

The Reliance Energy Okinawa, Inc.
Heat

Electricity（air-conditioning,
hot-water supply, steam）

Gas
Electricity

Emergency
generator

Electricity,
cold water,
hot water,
hot water supply,
steam, gas
CustomerReceiving andtransforming facilities

Storage equipment
battery
Co-generation Heat

Water heater

Gas
Heat storage tanks

LNG satellite

Heavy/
light oils

Services
Energy-saving
check

Owns facilities, obviating initialinvestment for customers

Operational
control

Energyprocurement

Maintenance,
failure response

Remote monitoringfor 24 hours

ESP Illustration

12

Okinawa Electric Power Company

Water

In Harmony with the Local Community

Working with ourcommunity

OEPC has grown to its present status in parallel with the development of Okinawa
Prefecture with the invaluable support and cooperation of numerous local
community members. Under the corporate slogan “With the community, for thecommunity,” OEPC will continue its efforts to contribute to the development of thelocal community by utilizing all its management resources, with the aim of being acompany that continuously grows in tandem with the people in Okinawa.

Regional community services
development

Okinawa Youth Science Work
Exhibition

OEPC pursues a number of initiatives aimed at assisting
the local economy, building the foundation for a thriving
industry, and promoting technological development
in Okinawa. Among these initiatives include making
proposals and providing support for industrial promotion
by liaising with business organizations inside and outsideof Okinawa, conducting collaborative research withindustry, government, academia, and the private sector,
providing support to strengthen the capabilities of theseorganizations and dispatching Company staff to them.
OEPC also provides financial support to variousorganizations such as social welfare organizations,
government and non-governmental bodies, local
government authorities that promote social welfare,cultural activities, and sports.
In addition, the OKIDEN Group Volunteerism Mutual
Aid Organization, which is composed of employees of
OEPC and its affiliate companies, conducts community
cleanups, makes donations, and collects used stamps andcards for charity.

OEPC has run the Okinawa Youth Science Exhibition since
1979 with the aim of stimulating interest in science among
students, promoting science education, and contributing
to the development of human resources in Okinawa. As of
FY2019, the event has been held 42 times.
In addition to acknowledging and displaying all
winning science projects at the venue, including thosefor the Okinawa Governor’s Prize, the event offers poster
sessions by top prize recipients, corners where visitors canchallenge themselves in scientific experiments, hands-on
science experiment stage shows by teachers and scienceclasses. Such activities enable visitors to get close toscience and have fun in the process. Every year, the event
draws big crowds and garners lots of positive comments.

OEPC donated Family House, foraccommodation of parents and otherrelatives accompanying inpatients at
Prefectural Nanbu Medical Center /Nanbu Child Medical Center

Exhibition of prize-winning works

100 million yen donation to Okinawa
Medical Association working on
COVID-19 measures

13

Okinawa Electric Power Company

In Harmony with the Local Community
Arts and cultural events

SportsOEPC has been contributing to the promotion of the artsand cultural activities in Okinawa. The Company supports
a variety of arts and cultural events. In addition, theCompany organizes the “Okiden Sugarhall Audition for
Debut Concert” and the “Okiden ‘Scenery of Light’ Digital
Photo Contest.”

OEPC supports activities that promote and develop
sports in Okinawa through sponsorship and volunteer
involvement. These activities include sponsorship of such
sporting events as the Okiden Pennant Elementary School
Baseball Tournament, the Okiden Pennant Naginata
Tournament and the OEPC Autumn Open Team Table
Tennis Competition as well as sponsorship and a volunteer
presence at sporting events for people of all ages, such as
the Naha Marathon.

Sponsorship to “Kokoro no Theatre” project by Shiki Theatre
Company

Baseball workshop for children held by the Okiden baseball teamOkiden Pennant Elementary School Baseball Tournament
Grand Prize-winning artwork of the 12th Okiden"Scenery of Lights" Digital Photo Contest

Okiden Pennant Naginata Tournament

14

Okinawa Electric Power Company

In Harmony with the Local Environment

Environmental
measuresTo ensure that future generations enjoy a rich and beautiful natural environment,
our goal is to reduce the burden that our operations have on the environment asmuch as possible and promote various activities to achieve harmony between ouroperations and the environment. In addition, everyone of our employees is highly
motivated and keen to contribute to the realization of a society underpinned bysustainable development.

Promoting initiatives aimed at
protecting the global environment

Promoting preservation of theregional environment

To address the issue of global warming, OEPC participatesin the Electric Power Council for a Low Carbon Society
and strives to achieve the CO2 emission reduction target
set by the council for all members. We will work toward therealization of a low-carbon society through various global
warming prevention measures available to us, including
stable operation of Yoshinoura Thermal Power Plant, whichuses LNG that emits less CO2 than oil or coal, as well as
woody biomass mix-fired with coal at the plant.

To ensure that the islands of Okinawa retain their beautiful naturalenvironment for the enjoyment of generations yet unborn, we
make a special effort to protect the countryside and shore lands inthe vicinity of our power plants, giving consideration to biodiversity.
When constructing power plants, we will conduct
environmental assessments in accordance with laws andordinances in order to create power plants that will harmonizesmoothly with the natural surroundings cherished by thecommunity for many years to come.
We undertake a range of environment protection measures
to ensure that our activities do not impact the surrounding
environment, and we undertake environmental monitoring studies.
In addition, we are taking the following measures to improve
the local environment: rigorous management of chemical
substances, such as PCBs and dioxins; greening power plantsites; and testing out an initiative for “greening of the sea” byplanting coral and seaweed around our power generation facilities.

Wood-based
biomasspellets
Wood-based biomass distribution
facility

Yoshinoura Thermal Power Plant

Creation of a sustainable
resource-oriented society

Endorsement ofrecommendations of TCFD

We are keen to use limited natural
resources effectively and, seeking to build
a sustainable resource-oriented society,we promote the 3R concept—reduce,reuse, recycle—for industrial and generalwaste generated by our operations andplay a role in the creation of a recyclingoriented structure.

In September 2019, OEPC officially announced ourendorsement of recommendations of “the Task Force on
Climate-related Financial Disclosures(TCFD)”.
We will make efforts to disclose more information related toclimate change in order to contribute for the sustainable growthof society, while improving our own corporate value as well.
Plant producing alternative
materials from the waste

15

Okinawa Electric Power Company

In Harmony with the Local Environment

Green energy

Solar power, wind power and other renewable forms of energy are considered clean, as
they do not emit CO2—a contributory factor to global warming—during power generation.
But these forms of energy present certain challenges, including low energy density,
unstable energy output due to high susceptibility to changes in weather conditions, andhigh cost in generating power. OEPC is pursuing research aimed at expanding the useof renewable energy. These efforts include verification tests aimed at ensuring a stablesupply of solar power which feeds output to power systems in large quantity.

Utilizing Renewable Energy
Sources

Miyako Island Mega Solar Power
Demonstration Research Facility

The OEPC Group is committed to introducing renewableforms of energy such as solar and wind power. As of March
31, 2020, our company had a total generation capacity of
27,868 kW (including small hydroelectric generators) fromsolar, wind and other types of renewables throughout theprefecture including remote islands.

Taking advantage of a project initiated by the Ministryof Economy, Trade and Industry’s Agency for Natural
Resources and Energy to introduce and verify new energy
systems on remote islands to create independent powersystems, OEPC built the Miyako Island Mega Solar Power
Demonstration Research Facility, featuring a 4,000kW
solar power generation facility and 4,000kW sodium sulfur(NaS) battery storage system. Because NaS batteries havea faster response speed than thermal power generators,
the effect on frequency in the system can be mitigated bycharging and discharging in a manner that suppresses
frequency fluctuations (These fluctuations are difficult toemulate using the thermal power machines).
OEPC will utilize the results of this research to provide
stable supply of electricity on Miyako Island.

Ogimi Wind Power Generation
Demonstration Research Facility
In Ogimi Village, we constructed a demonstration researchfacility that combines a wind power generation facility
with twin turbines (2,000 kW each) and a 4,500 kWh
storage battery. We have been accumulating data on wind
power generation output to ascertain the particular output
characteristics of thistechnology.

Miyako Island Mega Solar Power
Demonstration Research Facility (NaS battery)Ogimi Wind Power Generation
Demonstration Research Facility

16

Okinawa Electric Power Company

Reinforcing Group Management

Drawing oncollective strengthsof the Group

While continuing to deploy its comprehensive energy services that supply electricity
and gas, the OEPC Group has been engaged in a wide range of business activities
by making use of its resources, including facilities, technologies and humanresources, with OEPC at the core.
The OEPC Group will continue utilizing its collective strengths for economic andcommunity development of Okinawa so as to retain the support and trust of thecommunity.

A Highly Capable Partner in
Energy Supply

OEPC Group’s International
Operations

Each company under the OEPC Group umbrella that
supports the supply of energy builds and repairs power
plants, transmission and distribution facilities, and facilities
related to the provision of gas, undertakes regular checks
and sells resources and equipment, such as transformers,
power distribution panels, cables and electric energy
meters. In addition, these companies are expanding
services for various public- and private-sector projects
where accumulated know-how and technical capabilities
can be applied to local industry and local communities.

The OEPC Group draws on technologies and know-how
accumulated through business operations and vigorously
supports technology related to the electricity business,
mainly in developing countries, as well as international
cooperation opportunities.

Gas turbine inspection at the Makiminato Thermal Power Plant:
Okinawa Plant Kogyo Co., Ltd.

Contract Awarded for Project for Introduction of Hybrid
Power Generation System in the Pacific region

Since August 2017, OEPC and Okinawa Enetech Co., Inc.
were jointly awarded by the Japan International Cooperation
Agency (JICA) a contract for the Project for Introductionof Hybrid Power Generation System in the Pacific Island
Countries.
A hybrid power generation system is a system thatcombines diesel generators with renewable energy suchas solar power and wind power generators. OEPC Grouphas been conducting trial experiments on hybrid power
generation systems in remote islands within the prefecturesuch as Miyako Island. We are utilizing experiences andtechnologies from these demonstrations in this project.
In addition to appropriately and economically operating
and maintenance control of diesel power generation system,
conducted with the deliberations for the introduction statusof renewable energy specific to this country, this project will
also support introduction and operation of renewable energy
power generation equipment in an appropriate scale, inorder to promote hybrid power generation system, built on
the premise of stabilization of power system.

Okiden Nago Building, OEPC’s new office building: Okiden Kaihatsu Co., Inc.
(Design: Okinawa Enetech Co., Inc.; Construction: Okidenko Co., Inc.)

17

Okinawa Electric Power Company

Reinforcing Group Management
Tiltable Wind Power Turbine
System for Kingdom of Tonga
Utilizing knowledge and experience built through construction andmaintenance of tiltable wind turbine systems, Progressive Energy
Corporation (PEC) , along with trading company Nishizawa Ltd.,
secured a contract from the Government of Japan to develop aplan for installation of a wind power generation system, an Official
Development Assistance grant, for the Kingdom of Tonga. The
delivery of five tiltable wind turbine systems was made in June
2019. In September 2019, after completion of the plant, wevisited the power generation facilities in the Kingdom of Tonga
and paid a courtesy call to stakeholders. The stakeholders in the
Government of Tonga (Deputy Prime Minister, Ministry of Energy),
Tonga Power Limited, Embassy of Japan, and JICA Tonga Officemade the following comment of appreciation: “Starting an
operation of a tiltable wind power plant will play a critical rolein the goal for the Kingdom of Tonga, which is set to acquire
the 50% renewable energy composition by 2020.”
Taking advantage of thetechnology and expertise cultivatedin Okinawa, the OEPC Group willcontribute to the developmentof the Pacific island nations that
Tiltable wind turbine power plantface the same energy-related(275 kW×5 turbines) in Tonga
problems as Okinawa (such as
high dependence on fossil fuels
due to severe damages caused bycyclones) and continue to promote
overseas business initiatives.
Group photo with local workers
in Tonga

OEPC Group Companies (As of March 31, 2018)
Company Name

Established/CapitalBusiness Areas

Construction businessOkidenko Company, Limited

June 12, 1968
¥130 million

Civil engineering, construction, electrical work, piping, electric telecommunications work,
electric power system construction work, inspection and maintenanceOkinawa Enetech Company, Incorporated

May 10, 1994
¥40 million

Sales of new energy electric power; Feasibility studies and design of electric power facilities,
and supervision of construction; environmental surveys, odor measurement, soil quality
examination and land surveys

Okisetsubi Company, Limited

September 18, 1995
¥20 million

Installation of air conditioning, sanitation, electric water-heating equipment, EcoCute andinduction heaters (IH); sales and installation of LED light fixtures

Okiden Kigyo Company, Limited

October 15, 1975
¥43 million

Construction of internal combustion power generation equipment, repair and consignment
operations
Sales and maintenance of electrical equipment; full-service advertising agency, lease ofvehicles and property; maintenance of vehicles; agency business for non-life insurancecompanies

Okinawa Plant Kogyo Company, Incorporated

June 2, 1981
¥32 million

Operation of electrical machinery and facilities, etc. on commission; installation of electricalmachinery and equipment

Okinawa Denki Kogyo Company, Incorporated

December 23, 1971
¥23 million

Repair of electrical measuring equipment and inspection agency work; sale of components
for electrical facilities

The Okiden Global Systems Company, Incorporated

April 12, 1991
¥20 million

Computer systems design, construction, operation, and sales;
sales, leasing, etc. of computers and peripheral equipment

First Riding Technology, Incorporated

July 11, 2001
¥450 million

Internet data center business
Internet solutions; call center business

April 26, 1989
¥50 million

Management, buying and selling, and leasing of real estate, aquaculture business,
construction, landscaping projects

October 14, 1996
¥49 million

Sales of electricity from renewable energy sources Planning, survey and design of renewableenergy systems, Construction and maintenance of renewable energy facilities

August 23, 2001
¥100 million

Sales of natural gas and LNG
Construction and maintenance of tiltable wind turbine facilities
Installation, operation, and maintenance of private power generation systems, and support
services for energy saving

December 1, 2017¥100 million

Energy services businessSell, lease, install, operate and maintain equipment that contributes to efficient use of energy
and the environment

March 30, 2001
¥3 million

Management consultant services, ISO certification support training

Electric power supply and peripheral businesses

Information and telecommunication business

Real estate businessOkiden Kaihatsu Company, Incorporated
Renewable development businessOkinawa New Energy Development Company, Incorporated
Gas and Decentralized power business
Progressive Energy Corporation

Energy service business
The Reliance Energy Okinawa, Incorporated
Other business
Quetech Company, Incorporated

18

Okinawa Electric Power Company

Status of Corporate Governance
Overview of Corporate Governence

specified in Article 425, Section 1 of Japan’s Companies Act.

1. Basic Approach
Conducting its business in conformity with relevant laws and in an ethicalmanner, the Company will deepen its relationships of trust with shareholders,investors and customers through prompt and appropriate disclosure to ensurethat it remains the business group of choice for its community.
To this end, we are vigorously strengthening corporate governancethroughout the Group.

Number of Directors
Under the Company’s articles of incorporation, the maximum number of directors
is 15.

2. Overview of Corporate Governance Structure and Reasons for Adoption
Overview of Corporate Governance Structure
The Board of Directors, which meets twice a month in principle, decides
important matters relating to management of the company’s affairs, receives
status reports on operations from individual directors, and oversees theperformance of their duties. In addition, all five corporate auditors attend
meetings of the Board of Directors and offer opinions.
The Board of Executive Directors discusses essential issues relating tomanagement of operations under the President’s supervision and takes steps
to ensure that operations run smoothly. In principle, the Board of Executive
Directors meets two to three times per month where it also discusses importantbusiness matters, including items to be submitted to the Board of Directors. Fulltime auditors are entitled to attend meetings of the Board of Executive Directors
and express their opinions.
The Board of Corporate Auditors, which meets once every two months
in principle, receives reports as well as discusses and renders decisions onimportant audit-related matters. Auditors are responsible for auditing individual
director’s performance of their duties, which is done by attending board andother important meetings.
The Nomination & Remuneration Committee is set up under the Boardof Directors as an advisory body on the nomination and remuneration of
directors. Independent outside directors are key members of this committee.
The committee deliberates matters relating to personal affairs and remunerationof directors and, after taking into account the advice and counsel of committee
members, submits these to the Board of Directors.
Reasons for Adoption
Appointing four independent outside directors ensures that the workings ofthe Board of Directors are fair and transparent and improves oversight of theperformance of duties by individual directors. Also, maintaining a team of fiveauditors, including three independent outside corporate auditors, in conjunction
with the supervisory function of outside directors and the internal auditing
structure ensures effective corporate governance.
3. Other Matters Related to Corporate Governance
Establishing internal control systems
Internal control systems are established in accordance with the Group’s Basic
Policy Relating to System to Ensure Appropriate Business Processes. In addition,
the policy undergoes regular review.
Risk management
The Company formulated Guidelines for Risk Management and preparedmaterials, including a response manual, based on regular identification, analysis
and evaluation of risk in each office and department, in its efforts to preempt risk
and deal quickly with it if it materializes. The Company has fully prepared itself forthe occurrence of risk events by compiling procedures for rapid implementationof the guidance contained in two handbooks, one covering crisis management
measures and the other emergency and disaster measures. It has in place aframework for responding rapidly to major disasters and accidents.
Compliance
We aim to raise and uphold compliance awareness by establishing in-house
regulations for legal and regulatory compliance and corporate ethics (Basic Codeof Corporate Conduct, and Ethical Code for Employees), and by holding regular
lectures on legal observance and corporate ethics.
We have established a Corporate Ethics Committee chaired by the
President and ensure rigorous standards of corporate conduct based on
observation of the law and corporate ethics standards. In addition to deliberating
and deciding on frameworks and internal regulations relating to legal observanceand corporate ethics, the committee works to prevent wrongful behavior and,failing that, ensure early remedial measures are taken, after discussion of specificinstances as reported to the corporate ethics consultation counter.
Overview of Limited Liability Agreement Details
Pursuant to the provision stipulated under Article 427, Section 1 of Japan’sCompanies Act and its articles of incorporation, the Company has entered into
agreements with its outside directors and external auditors that limit liability forcompensation for damages under Article 423, Section 1 of Japan’s Companies
Act. The maximum amount of liability under such agreements is the amount

19

Conditions for Approval of the Appointment of Directors
The Company’s articles of incorporation stipulate to the effect that theappointment of any director requires approval from a simple majority at a general
meeting of shareholders attended by at least one third of eligible shareholders
with voting rights.
The articles of incorporation also state to the effect that a director may not
be appointed via cumulative voting.
Resolutions of the Board of Directors That Do not Need Approval of a General
Meeting of Shareholders(1) Purchase of own shares
Pursuant to Section 2 of Article 165 of the Companies Act, the Company’s
articles of incorporation allow for purchase of own shares through market
transactions by resolution of the Board of Directors. Such purchases ensure
flexibility in Company policies to maintain the number of shares outstanding at
an appropriate level.
(2) Approval for exemption of directors from liability
The Company’s articles of incorporation stipulate that, in accordance with theprovisions of Section 1 of Article 426 of the Companies Act, the Company
may, by a resolution of the Board of Directors, exempt directors and auditors(including former directors and auditors) from the payment of compensation
for damages as stipulated under Section 1 of Article 423 of the Companies
Act, within relevant statutory and regulatory parameters.
These provisions are designed to ensure that directors’ and auditors’ liability
does not exceed reasonable bounds.
(3) Interim dividend
Based on Section 5 of Article 454 of the Companies Act, the articles ofincorporation of the Company provide for payment of an interim dividendby resolution of the Board of Directors, with September 30 each year as thebase date, as a measure to ensure greater flexibility in distribution of profits toshareholders.
Special Resolutions by the General Meeting of Shareholders
Based on Section 2, Article 309 of the Companies Act, the Company’s articles ofincorporation allow for special resolutions to be adopted by a two-thirds majority
at a general meeting of shareholders at which one-third of voting rights of eligible
shareholders are represented.
This relaxation of quorum requirements for approval of special resolutions
ensures smoother running of the general meeting of shareholders.
(Basic Policy Relating to System to Ensure Appropriate Business Processes)
1. ‌System to ensure that the execution of business by directors complies withlaws and the Company’s articles of incorporation(1) ‌In addition to thoroughly stating legal compliance and the upholding ofcorporate ethics in management policy and setting out internal rules andregulations relating to legal compliance and the upholding of corporate
ethics (Standard Regulations on Corporate Behavior, Legal Compliance andEthics Rules for Directors, etc.), directors work to improve the levels of theircompliance awareness.
(2) ‌Meeting in principle twice a month, the Board of Directors decides onimportant matters as part of day-to-day operations and oversees directors
in the performance of their duties. At the times when Board of Directors’
meetings are held, plans are devised to activate deliberation by, for example,
providing the annual meeting schedule and meeting materials in advance aswell as ensuring an appropriate length of time for deliberation.
(3) ‌The supervisory functions of meetings is enhanced by the receipt ofappropriate advice and suggestions from outside directors from standpoints
that are independent from that of the Company. As they are able to provide
appropriate advice, outside directors work to ensure that information
is exchanged, understanding shared and collaboration maintained byexchanging opinions with directors and auditors.
(4) ‌The Company has established a Corporate Ethics Committee chaired by the
President to work to thoroughly instill corporate behavior on the basis of legal
compliance and the upholding of corporate ethics. The Company has also set
up a corporate ethics consultation counter, which offers advice on corporate
ethics and receives reports on any violations of the law, and works to deter
malpractice.
(5) ‌The Company has stipulated internal rules (Basic Code of Corporate Conduct,
Guidelines for Responses to Anti-Social Forces) with regard to the rejectionof approaches by anti-social forces and, maintaining no relationships at allwith anti-social forces, thoroughly ensures compliance by taking a resolute
attitude.

Okinawa Electric Power Company

Status of Corporate Governance2. ‌System for storing and managing information relating to directors’ businessexecution
Information such as documents relating to directors’ business execution isappropriately stored and managed on the basis of internal rules (guidelines
covering document management, record management, the handling of electronic
information, and the management of important documents).
3. Rules and other systems regarding loss-related risk management(1) ‌Having established “Basic Guidelines on Risk Management” to manage risk in
an appropriate manner, the Company regularly undertakes the identification,
analysis, and assessment of the risk in each department, maintains responsemanuals, and works on risk prevention and to respond rapidly on theoccasions risk does arise.
(2) ‌Having established “Crisis Management Guidelines” and “Natural Disaster
Guidelines” to respond rapidly and appropriately to major disasters andaccidents, the Company maintains systems and response procedures in
preparation for any occurrence of risk.
4. ‌System ensuring that directors’ execution of their duties is efficiently
conducted(1) ‌Having established rules on administrative authority and office organization,
the directors clarify each department’s authority and the authority of those incharge.
(2) ‌For directors to execute their duties in an efficient manner, the Company
established the Board of Executive Directors made up of the full-time
directors, the Management Measure Committee comprised of full-time
directors and auditors, and the Executive Board comprising full-time directors,
senior management and department heads where directors regularly consult
on essential matters relating to business operations.
(3) ‌Defining quality as “quality of management,” directors work on effective
business management and continuous improvement based on quality
management systems that leverage techniques from ISO 9001, theinternational quality management standard.
(4) ‌Directors work to steadily achieve the fiscal year targets developed from fiscal
year management policies and a variety of plans by causing the fiscal year’s
management policies to become ingrained across the entire organization
and by each department and rank of human resource steadily fulfilling its
respective role.
5. ‌System to ensure that the execution of business duties by employees
complies with laws and the Company’s articles of incorporation(1) ‌The Company works to maintain and improve awareness of complianceby stipulating internal rules (Standard Regulations on Corporate Behavior,
Ethics Rules for Employees) relating to legal compliance and the upholding ofcorporate ethics as well as by regularly holding lectures on legal complianceand corporate ethics.
(2) ‌The Internal Audit Department works to collaborate with auditors andimplement audits to ensure legal compliance and the upholding of corporate
ethics.
(3) ‌The Company works to deter malpractice and planned for early rectification
by setting up a corporate ethics consultation counter, which offers advice
on corporate ethics and receives reports on any violations of the law. Cases
heard by the corporate ethics consultation counter are deliberated by the
Corporate Ethics Committee and responded to in an appropriate manner.
6. System to ensure appropriateness of business in the corporate group(1) ‌The Company stipulates Group management policy and promotes Groupmanagement on a Groupwide basis.
(2) I‌ n addition to setting the OEPC Group Standards on Corporate Behavior, theCompany promotes the formulation of codes of ethics for each Group company
and thoroughly undertakes legal compliance for the Group as a whole.
(3) ‌The Company works to ensure Groupwide legal compliance by offering advice
on corporate ethics and receiving reports on any violations of the law at Group
companies at the corporate ethics consultation counter.
(4) ‌As regards the management of affiliate companies, the Company has set up
management divisions, stipulated affiliate company management guidelines
for important matters that will have a bearing on Group management, andreceives prior consultation or reports from affiliated companies.
(5) ‌The gathering of information on business risk is undertaken by the holdingof regular meetings of the OEPC Group Chief Executive Conference thatcomprises the presidents of the Company and each Group company.
(6) ‌The Company and each Group company ensure the trustworthiness of theirfinancial reporting by maintaining and operating the essential and appropriate
internal control systems relating to financial reporting.
(7) ‌The Internal Audit Department conducts internal audits of Group companies
on an as required basis.
7. ‌In the event that auditors have requested that employees be assigned to assist
in their duties, the Company will assign full-time staff members and set up an

20

Auditors’ Office, independent from the directors, to act as an organization thatwill assist the auditors in matters relating to such employees.
8. Matters‌regarding the independence of the employees in the preceding clausefrom directors and ensuring the effectiveness of directions given to said
employees from auditors(1) The‌
Auditors’ Office staff perform their duties under the supervision of theauditors.
(2) Directors‌and auditors will exchange opinions on personnel matters pertaining
to the Auditors’ Office staff.
9. System‌
for directors and employees to report to the auditors and system forreports to other auditors(1) Directors‌and employees will submit major approval documents as well asother important documents relating to business execution for perusal by theauditors and offer explanations as required.
(2) In‌ the event that auditors have requested reports, directors respond to thoserequests at important meetings, such as of the Board of Directors or of theBoard of Executive Directors.
(3) In‌ the event that auditors have requested reports, the directors and auditorsof the Company and all Group companies respond to those requests at
OEPC Group Chief Executive Conference and OEPC Group Auditors Liaison
Committee.
(4) Directors‌
provide the auditors with information on important matters relating
to legal compliance and corporate ethics by having auditors attend Corporate
Ethics Committee meetings as observers and establishing in the Audit Officethe corporate ethics consultation counter, which can be used by all Company
and Group company personnel for matters relating to directors.
(5) Stipulating‌
in the Rules Governing the Management of the Corporate Ethics
Consultation Counter that there must be no disadvantageous treatment foranyone on the grounds of having submitted a report, directors work to protect
the identity of the said informant.
10.‌System to ensure that audits conducted by other auditors are conductedeffectively(1) Having‌regular meetings with auditors, the representative director exchanges
views and deepens mutual understanding.
(2) Maintaining‌
close cooperation with the auditors, the Internal Audit Department
works to effectively perform auditors’ audits.
(3) When‌
an auditor has requested a prepayment or reimbursement of expenses
generated by the performance of those business duties, a director will
respond to the request, excluding cases in which the tasks performed by thesaid auditor are regarded as not having been necessary.
Status of Directors
1. Status of Outside Directors
OEPC has four outside directors and three outside corporate auditors.
Outside director Akira Okada is representative director and president of the
ANA Strategic Research Institute Co., Ltd. and advisor to ANA Cargo, Inc. He
has managed companies in the same manner as OEPC through the creation of asafety culture within the company and contributed to the region through businessdevelopment based in Okinawa as well as projects that revitalize the region. In
addition, he is a person of good character and keen insight who can be relied
upon to provide a broad range of advice and opinions from a global perspective
drawn from his wealth of experience.
Outside director Hideo Yuasa is representative director and president of
Okinawa Cellular Telephone Company. As the company’s chief executive, he
has developed this community-oriented telecommunications carrier in Okinawa
and possesses extensive knowledge about the telecommunications sector. In
addition, he is a person of good character and keen insight who can be relied
upon to provide a broad range of advice and opinions from a global perspective
drawn from his wealth of experience.
Outside director Tatsuki Yogi is representative director and president of
Daido Fire and Marine Insurance Co., Ltd. Through the insurance business, hehas been intimately involved in developing the regional economy and, from theperspective of risk management, he has managed a company with a businessorientation similar to that of OEPC, which operates an infrastructure business.
In addition, he is a person of good character and keen insight who can be relied
upon to provide a broad range of advice and opinions drawn from his wealth ofexperience accumulated in the insurance industry.
Outside director Seiko Nozaki is a licensed attorney. Despite her lack ofexperience in corporate management other than serving as an outside officer,
she possesses a thorough knowledge of the Companies Act and corporate legal
affairs as well as other specialized knowledge that is beneficial to operation of
OEPC’s businesses. In addition, she is a person of good character and keen
insight who can be relied upon to provide a broad range of advice and opinions
based upon her wealth of practical experience.
Outside corporate auditor Hikaru Aharen is a licensed attorney, whose

Okinawa Electric Power Company

Status of Corporate Governancespecialized knowledge and practical experience afford him the capability toappropriately execute the duties of an outside corporate auditor. In addition, he isa person of good character and keen insight who can be relied upon to conduct
audits from a neutral and objective perspective and contribute to ensuring the
integrity of management.
Outside corporate auditor Morihiko Kinjo is a university professor
specializing in economics, regional and cultural promotion, tourism, and otherareas. Despite his lack of involvement in corporate management, he possesses
a thorough knowledge of the field of economics and may be relied upon toappropriately execute the duties of an outside corporate auditor. In addition, he isa person of good character and keen insight who can be relied upon to conduct
audits from a neutral and objective perspective and contribute to ensuring the
integrity of management.
Outside corporate auditor Miwa Furusho is a certified public accountant andpublic tax accountant. Despite her lack of involvement in corporate management,
she possesses expertise in financial affairs, accounting and related areas andmay be relied upon to appropriately execute the duties of an outside corporate
auditor. In addition, she is a person of good character and keen insight who canbe relied upon to conduct audits from a neutral and objective perspective andcontribute to ensuring the integrity of management.
Outside director Hideo Yuasa is representative director and president of
Okinawa Cellular Telephone Company, a company with which OEPC has abusiness relationship relating to communications rates and has business alliances
related to the sales of electricity. OEPC has a shareholding of less than 2%. Mr.
Yuasa was an outside director of Okinawa Telecommunication Network Co., Inc.,an OEPC affiliate. Furthermore, he was a director of that company during theprevious five years.
Outside director Tatsuki Yogi is representative director and president of
Daido Fire and Marine Insurance Co., Ltd., a company with which OEPC has
a business relationship relating to insurance premiums and other matters. In
addition, OEPC holds less than 4% of the shares of Daido Fire and Marine
Insurance Co., Ltd.
No special relationships exist between OEPC and outside directors Akira
Okada and Seiko Nozaki.
No special relationships exist between OEPC and outside corporate
auditors Hikaru Aharen, Morihiko Kinjo or Miwa Furusho.
The Company has a standard in place with respect to the independenceof outside directors and outside corporate auditors. For there to be no likelihoodof any conflicts of interest arising, all outside directors and outside corporate
auditors are designated and reported as independent directors, thereby fulfillingthe criteria.
(Criteria in Respect of Independence of Outside Directors)
Determining that the Company’s outside directors and external auditors are
independent requires that they do not fall into any of the following categories:
1. A business operator whom the Company is a major client
2. A major client of the Company
3. ‌A consultant, accounting expert or legal expert who is receiving large amountsof money or other assets other than director remuneration from the Company(if the recipient of those assets is an organization, such as a corporation or
association, also means a person belonging to that organization)
4. Someone to whom any of 1. through 3. above was applicable in the past year
5. ‌Spouse and relatives within two degrees of kinship of anyone (excluding thosewith little importance) listed in items (1) through (3) below(1) Any person listed in items 1. through 4. above(2) ‌Anyone who executes business at a subsidiary of the Company (including
directors who do not execute business if they are outside corporate
auditors designated as independent officers)(3) ‌Anyone who, in the past year, has fallen under (2) above or executedCompany business (including directors who do not execute business if they
are outside corporate auditors designated as independent officers)
※ 1. ‌“A business operator whom the Company is a major client of” refers
to a business operator to whom OEPC or an OEPC subsidiary paid
2% or more of the business operator’s gross annual consolidated
sales during the most recent fiscal year.
※ 2. ‌“A major client of the Company” refers to a client who paid OPEC 2%
or more of the OEPC’s gross annual consolidated sales during themost recent fiscal year.
※ 3. ‌“Receiving large amounts of monetary or other assets” refers to asituation where the consultant, accounting expert or legal expert (oran organization, such as a corporation or association, also meaninga person belonging to that organization) has annually received \10
million or more in monetary or other assets based on an average overthe previous three fiscal years.

21

2. M
‌ utual Coordination between Oversight and Audits by Outside Directors or
Auditors and the Internal Audits, Company Auditor Audits and Accounting
Audits, as well as the Relationship with Internal Control Division
Through their position on the Board of Directors, outside directors exercise
oversight over the duties of directors from an external perspective. Outside
corporate auditors coordinate information with financial auditors and the Internal
Audit Office to listen to and exchange opinions about audit plans, results andother information.
Status of Audits
1. Status of Auditor’s Audits• ‌Organization, personnel, and procedures of audits made by the auditors
The Board of Corporate Auditors consists of five auditors, including three external
auditors. To provide an organization that assists auditors in their professional
duties, OEPC established the Auditors’ Office with seven full-time staff members
responsible for assisting auditors in their tasks and the secretariat’s duties formeetings of the Board of Corporate Auditors.
Auditors conduct audits in the decision making process by directors andtheir execution of duties in accordance with the auditing policies and plansestablished by the Board of Auditors. In addition to the necessary reports
received from the directors, etc., to improve the effectiveness of audits fromthe viewpoint of mutual complementation and efficiency of the audits, they also
cooperate with the Internal Audit Office and the accounting auditors.
Furthermore, Standing Auditor Hideki Onkawa has years of experience inaccounting at OEPC. And External Auditor Miwa Furusho is a certified public
accountant and public tax accountant, with expertise in financial affairs andaccounting.
• ‌Activities of auditors & Board of Corporate Auditors in this fiscal year
In this fiscal year, OEPC held a Board of Corporate Auditors eight times. The
attendance of individual auditors is as follows.
Name
Hideki Onkawa*
Kenji Kobashigawa
Hikaru Aharen
Morihiko Kinjo*
Miwa Furusho*

Number of meetings
5
8
8
5
5

Number of attendances
5
8
8
5
5

*Please note that the attendance records for Hideki Onkawa, Morihiko Kinjo, andMiwa Furusho are based on the Board of Corporate Auditors held after June 27,
2019.
As a general principle, the Board of Corporate Auditors is held once every
two months. In addition to receiving reports on the status and results of the audit
from individual auditors, they monitor and verify whether the accounting auditors
are maintaining their independent position and conducting audits appropriately.
Items related to the assignment, dismissal, and refusal of accounting auditors, aswell as consent to remuneration, etc. are investigated according to the agendasof the Board of Corporate Auditors.
Furthermore, regularly scheduled meetings are held with representative
directors and outside directors to exchange opinions on the critical auditing
issues.
Full-time auditors investigate on the status of business and property
through attendance at important meetings including the Board of Directors andverifying important business approval documents, etc., to confirm the process ofmaking important decisions and the status of execution of duties conducted bydirectors, and to provide opinions on these matters.
Part-time (external) auditors attend the Board of Directors and receive
reports from other auditors, directors, and employees, etc. They request
explanations where necessary, and express their opinions from a neutral andindependent standpoint based on specialized expertise.
2. Status of Internal Audits
For internal auditing, OEPC established up the 16-member Internal Audit Office,which reports directly to the President, to assess whether internal control systems
prescribed in accordance with the Companies Act and Financial Instruments
and Exchange Act function effectively. The Internal Audit Office checks on
the maintenance and operation of internal controls in every organization,verifies the implementation of appropriate and effective business operations toachieve management targets, and strives to conduct audits that add value tomanagement. In addition to reporting to the Board of Directors, the Internal Audit
Office submits reports to and exchanges opinions with auditors regarding audit
plans and results, while also coordinating information with accounting auditors.

Okinawa Electric Power Company

Status of Corporate Governance
3. Status of Accounting Audits• ‌Name of audit firm
Deloitte Touche Tohmatsu LLC• ‌Certified public accountants executing the audit
Akihiro Kido, designated limited liability partner
Seiji Hamamura, designated limited liability partner• ‌Numbers of consecutive years conducting audits
47 years• ‌Composition of audit service assistants
The team assisting with auditing operations includes four certified public
accountants and six other personnel.
• ‌Policy and Reasons for Selection of Audit Firm
The Board of Corporate Auditors reviews a range of matters that includes
whether any conflicts exist pursuant to the Companies Act, Certified Public
Accountants Act or other laws or regulations, the financial auditor’s auditing
quality and quality assurance, its independence and professional ethics as wellas its overall capabilities, after which the board selects the financial auditor.
• ‌Evaluation of Financial Auditor by Board of Corporate Auditors and the
Corporate Auditors
Every year, in addition to considerations pertaining to selection of the financial
auditor, the Board of Corporate Auditors evaluates, through its coordination
with the financial auditor, the effectiveness and efficiency with which the audit isconducted, report of the auditing results, audit fees and other matters relating
to the financial auditor.
4. Compensation for Audits(Compensation for Audits and Other Services Provided by Accounting Auditor)• ‌Details of compensation paid to certified public accountants and assistants
engaged in audits of the Company
(Millions of yen)Classification

Previous Consolidated Fiscal Year
Consolidated Fiscal Year in Review
Compensation for audit Compensation for Compensation for audit Compensation forcertification duties
non-audit duties
certification duties
non-audit duties
OEPC
50
0
51
2
Consolidated
subsidiaries
Total
50
0
51
2
Details of non-audit services performed for OEPC
(Previous consolidated fiscal year)
Preparation of comfort letter as part of bond issue.
(Current consolidated fiscal year)
Preparation of comfort letter as part of bond issue.
Advisory services on CDP Climate Change questionnaire.
• ‌Compensations for organizations belonging to the same network with auditing
certified public accountants (Detroit Tohmatsu Group)
Previous Consolidated Fiscal Year
Consolidated Fiscal Year in Review
Compensation forCompensation forClassification audit certification Compensation for audit certification Compensation for
non-audit duties
non-audit duties
dutiesduties(Millions of yen)
(Millions of yen)
(Millions of yen)
(Millions of yen)Companysubmitting
2
13
audit
Consolidated
Subsidiaries
Total
2
13
Our non-audit operations details are as follows.
(Previous Consolidated Fiscal Year)Tax return documentation review operations
Advisory services related to the construction of the security cloud for our group• ‌Description of other remuneration based on audit and attestation services
No applicable items.
• ‌Policy for determining audit feesNo applicable items.
• ‌Reason for Board of Corporate Auditors consenting to remuneration and otherfees for the accounting auditors
The Board of Corporate Auditors agreed to the amount of remuneration andother fees for accounting auditors based upon the Board’s verification andconsideration of the audit plan, accounting auditors’ performance of their duties
during accounting audits, basis for calculation of estimated remuneration,and other factors that the Board found through the acquisition of necessary
materials and listening to reports from relevant internal departments andaccounting auditors.

22

Corporate Officers’ Compensation
1. P‌ olicy for calculation of executive remuneration and method of determination
Comprehensively considering such factors as the OEPC’s performance andoperating information as well as the business environment, OEPC determines theamounts of director remuneration to be paid within the scope of the remuneration
limits approved by resolution of a general meeting of shareholders and in line witheach director’s responsibilities. Director’s bonuses are determined on a case-bycase basis in line with individual responsibilities, pending approval by a general
meeting of shareholders, after taking into account factors such as the Company’s
performance.
The date on which the General Meeting of Shareholders passed its
resolution on the remuneration and other compensation for directors is June29, 2006, amending the resolution to read that the amount of remuneration for
directors shall “not exceed ¥310 million” and setting a quorum at 14.
The date on which the General Meeting of Shareholders passed its
resolution on the remuneration and other compensation for corporate auditors isJune 29, 2016, amending the resolution to read that the amount of remuneration
for corporate auditors shall “not exceed ¥80 million” and setting a quorum at five.
In addition, from the standpoints of transparency and fairness, theamount of remuneration and other compensation is determined by the Board of
Directors which takes into account the advice and counsel of the Nomination &Remuneration Committee, mainly comprised of independent outside directors.
*Monthly compensation is decided during the Human Resources andCompensation Committee held on April 23, 2019, as well as the Board of
Directors held on June 27, 2019
*The bonus plans will be decided during the Human Resources andCompensation Committee held on April 14, 2020, as well as the Board of
Directors held on April 30, 2020
2. Total‌compensation paid to directors and auditors by position, totalcompensation by type, and number of persons
Position

Directors (excluding Outside Directors)
Auditors (excluding External Auditors)
Outside Directors and External Auditors

Total(¥ million)

Total Compensation
Number
by Type (¥ million)of
Basic
Bonuses Persons
Compensation
295
237
58
13
58
58
—
3
34
34
—
10

3. ‌Significant portion of salary paid to directors who concurrently serve as employees
Total (¥ million)
34

Number of Persons
Details
5
Salary (including bonuses) as employees

Shareholdings
1. Standard and Approach to Classification of Investment Equities
For investment equities where the purpose of such holdings is other than purely
financial, OEPC focuses on “businesses that make OEPC Group’s operations run
smoothly” and “businesses instrumental in promoting the regional economy andsustainably developing the regional society” and equities are held as a matter ofpolicy in cases where such retention is determined to contribute to enhancing
OEPC’s corporate value.
OEPC does not hold investment equities for purely financial purposes
and, if the company does so in the future, the standard and approach to suchinvestments will also be considered.
2. I‌nvestment equities for which the purpose of such holdings is other than purely financial• ‌Holding policy, method of verifying rationale for holding, and verification by the
Board of Directors and other bodies of the propriety of holding particular issues
Each year, the OEPC Board of Directors verifies the propriety of its holdings
by scrutinizing, from a mid- to long-term perspective, specific shares held
as a matter of policy to determine whether the purpose of such holdings isappropriate as well as whether the benefits and risks consequent upon suchholdings are consistent with the capital cost.
The verification conducted for the current accounting year determined that all
stock issues contributed to increasing OEPC’s corporate value and confirmedthat they are valid.
(The 1174th Board of Directors held on November 26, 2019 “Verification
Results of the Eligibility of Cross-Shareholdings”)

Okinawa Electric Power Company

Status of Corporate Governance• ‌Issues and balance sheet amounts
Unlisted shares
Equity securities otherthan those not listed

Number of security issues Total balance sheet amount (¥ million)
32
2,045
6
4,969

(Issues for which the number of shares increased during the current period)
Number of
Total acquisition value of
security issues increase in shares (¥ million)
Unlisted- shares

Reason for increase in shares‌(Issues for which the number of shares decreased during the current period)
Unlisted shares

Number of security issues Total sale value of decrease in shares (¥ million)-• ‌Information about the number of shares for each issue of specified investment
shares, deemed holding shares, balance sheet amounts, etc.
Specified investment sharesCompany Name

Current
Previous Purpose for holding, quantitative effect ofAreperiodperiod holding, and reason for increase in number OEPC
sharesNumber of Number of of shares
held?
sharessharesBalance
Balancesheet
sheet
amountamount(¥ million) (¥ million)
The Bank of
592,800 592,800 Contribution to the promotion of the local Yes
Okinawa, Ltd.
1,870
2,042 economy and OEPC’s business operations.
The dividend yield is greater than or equal
to OEPC's Cost of Capital (WACC).
Okinawa Cellular 472,000 472,000 While contributing to the promotion ofNo
Telephone
1,696
1,661 local economies, OEPC has a businessCompany
alliances handling package sale of electricity
and communications, contributing to theoperation of our business.
The dividend yield is greater than or equal
to OEPC's Cost of Capital (WACC).
Bank of the689,660 689,660 Contribution to the promotion of the local No
Ryukyus, Ltd.
731
777 economy and OEPC’s business operations.
The dividend yield is greater than or equal
to OEPC's Cost of Capital (WACC).
SAN-A Co., Ltd.
86,40086,400 Contribution to the promotion of the local Yes
389
382 economy.
The dividend yield is greater than or equal
to OEPC's Cost of Capital (WACC).
Mizuho Financial 1,768,490 1,768,490 Contribution to the promotion of the local No*
Group, Inc.
218
302 economy.
The dividend yield is greater than or equal
to OEPC's Cost of Capital (WACC).
KDDI
19,80019,800 Contribution to the promotion of OEPC's
No
Corporation
63
47 business operations.
The dividend yield is greater than or equal
to OEPC's Cost of Capital (WACC).
Note: *The holding company does not hold OEPC shares, but the shares are
owned by their subsidiaries.
3. Investment shares whose purpose for such holding is net investment Not applicable.
No applicable items.

23

Okinawa Electric Power Company

Organization Chart

Top Management Group
Committee

Planning Dept.
Corporate Strategy
OfficeInternal Auditing
OfficePlanning Division
Business Development Dept.
IT Business Development GroupIT Promotion
Division

Information Systems Dept.
Research & Development Dept.
Environmental Affairs Dept.
General Administration Dept.

••••

Board of Directors
ChairmanPresident
Executive Vice
Presidents
Directors

Accounting & Finance Dept.
Procurement Dept.
Site Acquisition andManagement Department
Marketing Dept.
Sales andMarketing Division

Business Solutions Dept.
Home Solutions Dept.

Disaster Management
OfficeTransmission and Distribution
Administration Dept.

Audit andSupervisory
Board

Office of
Audit andSupervisory
Board Members

Power System Management Dept.

Transmission andDistribution Division

Distribution Dept.

Power Generation
Division

Power Generation Dept.

Remote Islands
Company

Naha Branch
Yonabaru
Customer Service Office
Urasoe Branch
Uruma Branch
Nago Branch
Remote Islands Energy
Services Dept.

Tokyo Branch
Miyako Branch
Yaeyama Branch(As of July 1, 2020)24

Okinawa Electric Power Company

Board of Directors and Auditors

Mitsuru Omine

Hiroyuki Motonaga

ChairmanManaging Directors:

Directors:

President

Hitoshi Nakasone
Hayato Narisoko
Tetsu Yokoda
Hiroyasu Kugai
Jun Uema
Naomasa Nakamura
Hiraku Nakahodo

Outside Directors*:

Standing Auditors:
External Auditors:

Kiyohito Shimabukuro
Executive Vice President

Akira Okada
Hideo Yuasa
Tatsuki Yogi
Seiko Nozaki
Hideki Onkawa
Kenji Kobashigawa
Hikaru Aharen
Morihiko Kinjo
Miwa Furusho

Outside directors are as define outside directors are as(As of June 26, 2020)

Investor Information
Stock Price Range on the Tokyo Stock Exchange

Transfer Agent and Registrar
Mitsubishi UFJ Trust & Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-8212, Japan

6,000
5,000
4,000

Securities Traded
Tokyo Stock Exchange
Fukuoka Stock Exchange

3,000
2,000
1,000

Common Stock Issued
54,217,110 shares

1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9

2018

Number of Shareholders
9,256


2019

2020

Conducted a 1.25-for-1 stock split of ordinary shares on June 1, 2018.
Conducted a 1.05-for-1 stock split of ordinary shares on June 1, 2020.

Credit Rating (As of August 31, 2020)(As of March 31, 2020)

S&P
Moody’s
R&I

Rating agency

Long-TermA+
A1AA

Credit ratings are subject to withdrawal or revision at any time

25

Okinawa Electric Power Company

Short-Term
A-1
a-1+

[¥]

FINANCIAL SECTION
Consolidated Five-Year Summary
The Okinawa Electric Power Company, Incorporated and its consolidated subsidiaries

Years Ended March 31

Financial Statistics
For the year:
Operating revenues .................................................................
Electric ................................................................................
Other ..................................................................................
Operating expenses ................................................................
Electric ................................................................................
Other ..................................................................................
Interest expense ......................................................................
Income before income taxes and noncontrolling interests ........
Income taxes ...........................................................................
Net income attributable to owners of the parent ......................
Per share of common stock (Yen):
Basic net income* ...............................................................
Cash dividends applicable to the year**...............................
At year-end:
Total assets .............................................................................
Net property, plant and equipment ..........................................
Long-term debt, less current maturities ...................................
Total equity ..............................................................................

2020

2019

Millions of yen
2018

2017

2016

¥204,296
191,492
12,803
193,969
182,079
11,890
1,347
9,311
2,519
6,705

¥205,481
193,431
12,049200,038
188,567
11,470
1,549
5,220
1,367
3,751

¥196,134
186,080
10,053
186,801
177,393
9,407
1,810
8,381
1,978
6,273

¥179,997
170,675
9,322
170,870
162,078
8,792
2,061
7,521
1,896
5,517

¥182,265
173,046
9,218
175,025
166,232
8,793
2,406
5,229
1,521
3,647

¥ 123.22
60.00

¥

68.94
60.00

¥ 112.00
60.00

¥

¥

¥408,789
329,840
158,101
155,710¥399,104
325,259
163,680
152,404¥402,088
330,559
149,975
152,759¥400,237
337,292
151,380
153,361¥409,860
345,579
157,364
148,111

2020

2019

2018

2017

2016

7,316

7,453

7,761

7,813

7,649

2,147
1,220
11,0782,147
1,204
11,0182,148
1,200
10,9402,153
1,197
10,8732,155
1,159
10,828

97.25
60.00

64.29
60.00

Years Ended March 31

Operating Statistics
For the year:
Electric energy sales (Millions of kWh) ......................................
At year-end:
Generating capacity (Thousands of kW) ...................................
Transmission lines (km) ............................................................
Distribution lines (km) ...............................................................

Notes: * A 1.5-for-1 stock split was effected on June 1, 2015. A 1.5-for-1 stock split was effected on June 1, 2016. A 1.1-for-1 stock split was effected on June 1, 2017.
A 1.25-for-1 stock split was effected on June 1, 2018. A 1.05-for-1 stock split was effected on June 1, 2020. It is calculated on the assumption that these stock splits
were conducted at the beginning of FY 2016 (April 1, 2015).
** A 1.5-for-1 stock split was effected on June 1, 2015. A 1.5-for-1 stock split was effected on June 1, 2016. A 1.1-for-1 stock split was effected on June 1, 2017.
A 1.25-for-1 stock split was effected on June 1, 2018.A 1.05-for-1 stock split was effected on June 1, 2020. However, the cash dividends per share information has
not been restated to reflect these stock splits at each fiscal year.

CONTENTS
27
29
31
32
32
33

Financial Review (Consolidated Basis)
Business and Other Risks
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
Consolidated Statement of Changes in Equity

26

34
35
43
46
47

Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
Independent Auditor’s Report
Nonconsolidated Balance Sheet
Nonconsolidated Statement of Income

Okinawa Electric Power Company

Financial Review(Consolidated Basis)

Business Performance

1. Electric Power BusinessIn the first half of fiscal 2019, the fiscal year ended March 31,
2020, the Okinawan economy experienced substantial growth inpersonal consumption, tourism, and public investment inconstruction. However, towards the end of the fiscal year the
spread of COVID-19 and other factors weakened personal
consumption and tourism, slowing the pace of growth.
Under these circumstances, the Okinawa Electric Power
Company, Incorporated ( “OEPC”) recorded operating revenues(sales) of ¥204,296 million on a consolidated basis, down ¥1,184
million (0.6%) compared with the previous fiscal year.
Operating expenses fell by ¥6,068 million (3.0%) year on year,to ¥193,969 million compared with the previous fiscal year.
As a result, operating income rose by ¥4,883 million (89.7%)
compared with the previous fiscal year, to ¥10,326 million.
Income before income taxes and non-controlling interests,
which includes other income and expenses, was up ¥4,090
million (78.4%) to ¥9,311 million. Net income attributable toowners of parent for the period under review rose by ¥2,954
million (78.7%), to ¥6,705 million.
Details of business performance by segment are as follows:

Despite increases in sales of electric power to other companies
and profits from power wheeling, revenues from the ElectricPower Business fell by ¥1,489 million (0.8%) year on year, to¥194,471 million due to the decrease the volume of electric
power sold and the impact of the fuel cost adjustment system.
Meanwhile, operating expenses fell by ¥6,218 million (3.2%)
year on year, to ¥186,234 million due to lower fuel costs,
depreciation and amortization.
This resulted in an increase in operating income of ¥4,728
million (134.8%), to ¥8,236 million.

27

Okinawa Electric Power Company

2. Other Operations

Cash Flows

In other operations, revenues rose by ¥1,681 million (3.6%) year
on year, to ¥48,792 million due to increases in work orders forenergy service providers and the gas supply business. Meanwhile, expenses rose by ¥1,249 million (2.8%) year on year, to¥46,416 million.
This resulted in an increase in operating income of ¥431
million (22.2%) to ¥2,375 million.

Cash flows from operating activities
Net cash from operating activities rose by ¥19,484 million(117.3%) year on year, to ¥36,092 million compared with theprevious fiscal year.

Cash flows from investing activities
Net cash used in investing activities increased by ¥8,580 million(49.3%), to ¥25,988 million compared with the previous fiscal
year.

Cash flows from financing activities
Net cash used in financing activities rose by ¥4,240 million(544.7%) to ¥5,018 million compared with the previous fiscal
year.
As a result, cash and cash equivalents as of the end of theyear totaled ¥21,593 million, up by ¥5,085 million (30.8%)
compared with the end of the previous fiscal year.

Note: * A 1.5-for-1 stock split was effected on June 1,
2015. A 1.5-for-1 stock split was effected on June
1, 2016. A 1.1-for-1 stock split was effected onJune 1, 2017. A 1.25-for-1 stock split was effected
on June 1, 2018. A 1.05-for-1 stock split was
effected on June 1, 2020. It is calculated on theassumption that these stock splits were conductedat the beginning of FY 2016 (April 1, 2015).

28

Okinawa Electric Power Company

Business and Other Risks
The following is a description of the various risks that could havean impact on the business performance and financial position of
the OEPC Group (the “Group”).
Statements of a forward-looking nature contained in thisreport are based on the Group’s evaluations as of the end of the
fiscal year under review (consolidated basis).

1. Changes to system for electric power businessElectric power system reform in Japan is progressing in threesteps, the first being the establishment of the Organization for
Cross-regional Coordination of Transmission Operators, followedby the full liberalization of the electricity retail market, and then,legal separation designed to neutralize the power/ distributionsector, effective from April 2020. However, the Group continues
to maintain its integrated power transmission system by being
positioned as an approved general power transmission anddistribution business operator able to engage in the retail electricity business and power generation business.
Nevertheless, the Group’s business performance could be
affected by national energy policy, system changes related toelectricity business in line with such policy, tougher environmental
regulations, and other trends.

2. Businesses other than the electricity business
To improve its enterprise value, the Group is leveraging its
management resources to expand its scope of operations anddevelop new businesses. The Group currently engages in theconstruction business, IT-related business, and real estatebusiness as well as in gas supply and renewable energy
businesses.
Unfavorable competitive developments, or a change in theoperating environment surrounding these businesses, could havean adverse effect on the business performance of the Group.

3. Power sale fluctuations
In its core Electric Power Business, the volumes of electricity soldby the Group can be affected by climatic factors (temperatures,
typhoons, etc.), economic trends, developments in energy
conservation initiatives, competition dynamics, among others. The
potential, therefore, exists for the Group’s business performance
to be affected by these and related factors.

4. Fuel price fluctuations
In Group operations, we primarily use coal, oil, and LNG asthermal fuel sources. Fuel costs fluctuate in tandem with the
supply-demand picture and foreign exchange rates. However, we
are working to minimize the risk of fuel cost fluctuations by aiming
for a balanced electric power generation mix among other things.
We can minimize these impacts on our earnings through afuel cost adjustment system to ensure that changes in fuel prices
and foreign exchange rates are reflected in electricity charges.
Nevertheless, particularly large changes in fuel prices could
adversely affect our business and financial performance.
29

5. Financial market trends
The balance of the Group’s interest-bearing liabilities totaled¥180.8 billion on March 31, 2020. Future changes in interest
rates on fund procurement brought about by such factors as
movements in market interest rates or changes in credit ratings
have the potential to impact the Group’s earnings performance.
However, as the interest rates are fixed for the majority of ourinterest-bearing debt, the impact of interest rates on the Group’s
earnings performance is expected to be limited.
The Group’s retirement benefit costs and obligations arecalculated on the basis of actuarial prerequisites, such as
discount rates, and the long-term rates of return on pension
assets. Fluctuations in discount rates and investment yields havethe potential to affect the Group’s performance.

6. Special legal measures
To ensure a stable and adequate supply of electric power to
Okinawa, OEPC benefits from special measures and provisions inaccordance with the Law for Special Measures to Promote
Okinawa, which enable us to secure funds and facilitate otheraspects of our operations. This means we receive financing at low
interest rates from the Okinawa Development Finance Corporation (ODFC).
OEPC also benefits from various tax advantages (such as
reduced fixed property taxes and exemption from coal tariffs inconnection with coal and LNG). However, the savings achieved
through these special benefits are passed on to electricity
customers.
Any abolition of these measures and provisions could have asignificant impact on the Group’s business performance.

7. Natural disasters and accidents
The Group performance may be adversely affected by major
earthquakes, tsunamis, typhoons, and other natural disasters, aswell as equipment failures, malfunctions, and other incidents. To
reduce the risks posed by these kinds of natural disasters andincidents, and to ensure a stable supply of electricity, the Group
strives to maintain and enhance equipment reliability by regularly
conducting equipment inspections, improvements, and repairs.
Also, under the assumption that electric power facilities andother infrastructure could suffer damage from major earthquakes,
tsunamis, typhoons, and other natural disasters, we work toensure swift recovery from disasters by participating in company-wide coordinated disaster preparedness training as well as
disaster preparedness training conducted by government
agencies.

Okinawa Electric Power Company

8. Personal information leakage

10. Impact of COVID-19

Our Group collects and manages personal information (including
specified personal information) from customers in order to
conduct business, and if this information is leaked externally, ourperformance may be adversely affected by problems such asdeterioration of brand image or payment of reparations for
subsequent damages.
We are working to implement the following measures against
these risks:
We have established a basic policy concerning the protectionof personal information (privacy policy) which is posted on our
website and at each place of business, in order to ensure that ouremployees are well informed.
We have enacted internal regulations relating to the protectionof personal information and established a corporate structure forcarrying out appropriate information management.
We are working to increase awareness and comprehension of
personal information protection through activities such as
conducting training via e-learning and publishing case studies in
the company newsletter which highlight problems related topersonal information protection.
Moreover, because the nature of these risks make it difficult toreasonably forecast the timing and likelihood of their actualization,
we do not touch on this here.

The global spread of COVID-19 has caused effects like stagnationin economic activity and a decline in consumer spending due tolock downs, and has resulted in a situation in which the future
outlook is opaque. In response to the government's declaration ofa state of emergency, trends to refrain from travel have gathered
momentum nationwide. Okinawa is also facing a worsening
economy due to fewer tourists visiting the prefecture, and theclosure of hotels and other commercial facilities.
While we are seeing signs of resumption of economic
activities following the government's lifting of the state of emergency, there are still concerns about a possible second or third
wave of infections. Prolonged impacts from COVID-19 may
negatively impact demand for electricity due to a worsening
prefectural economy, or cause a contraction in the movement ofpeople and goods due to the disruption of supply chains. This, inturn, could impact procurement of materials and equipment aswell as activities such as equipment maintenance and inspection.
Under the circumstances, our group will do everything in our
power to fulfill our responsibility as an essential utility provider bycontinuing to maintain a stable supply of energy.

9. Conduct that violates corporate ethics
If our Group's social credibility or brand image were tarnished byactions that violate corporate ethics, such as breaking the law, orif we had to pay reparations for damages resulting from suchactions, the Group’s performance could be adversely affected.
We are working to handle such risks in the following ways:
We have established a Corporate Ethics Committee, chairedby the President, which engages in activities such as enacting theinternal regulations and planning activities related to corporate
ethics.
This committee strives to thoroughly enforce the corporate
ethics through activities including delivering a President's
Message, holding lectures related to compliance and corporate
ethics, publishing case studies in the company newsletter, andraising awareness among business partners.
We have also established "corporate ethics hotlines" both
inside and outside the company to handle reports and consultations on matters related to corporate ethics. In addition tocontinuing to raise awareness among employees, we strive toprovide comprehensive protection for whistle blowers.
Moreover, because the nature of these risks make it difficult toreasonably forecast the timing and likelihood of their actualization,these factors will not be described here.

30

Okinawa Electric Power Company

Consolidated Balance SheetThe Okinawa Electric Power Company, Incorporated and its consolidated subsidiaries

Millions of yen
2020
2019

March 31, 2020

AssetsProperty, plant and equipment (Note 3):
Utility plants .......................................................................................................... ¥973,374
45,063
Other plant and equipment (Note 5) ......................................................................
17,175Construction in progress .......................................................................................
Total ................................................................................................................. 1,035,612
Less:
Contributions in aid of construction (Note 2(b)) .................................................
(34,016)
Accumulated depreciation ................................................................................ (671,755)
Total ............................................................................................................ (705,772)
329,840
Net property, plant and equipment...............................................................
Investments and other assets:
Investment securities (Notes 4 and 11) ..................................................................
7,428
2,030
Investments in and advances to unconsolidated subsidiaries and affiliated companies......
11,201
Deferred tax assets (Note 8) ..................................................................................
1,694
Other assets .........................................................................................................
(58)
Allowance for doubtful accounts ...........................................................................
22,296
Total investments and other assets ..............................................................
Current assets:
Cash and cash equivalents (Note 11) ....................................................................
21,593
Notes and accounts receivable (Note 11) ............................................................
16,776
10,969Inventories, principally fuel ....................................................................................
7,411
Other current assets .............................................................................................
(98)
Allowance for doubtful accounts ...........................................................................
56,652
Total current assets .....................................................................................
Total ................................................................................................................. ¥408,789
Liabilities and equity
Long-term liabilities:
Long-term debt, less current maturities (Notes 5 and 11) ......................................
Lease obligations (Note 5) .....................................................................................
Liability for retirement benefits (Note 7) ..................................................................
Other long-term liabilities .......................................................................................
Total long-term liabilities ...............................................................................
Current liabilities:
Current maturities of long-term debt (Notes 5 and 11) ...........................................
Short-term bank loans (Notes 6 and 11)................................................................
Commercial paper (Notes 6 and 11)......................................................................
Notes and accounts payable (Note 11) .................................................................
Income taxes payable (Note 11) ............................................................................
Accrued expenses ................................................................................................
Other current liabilities ...........................................................................................
Total current liabilities ...................................................................................
Equity (Note 9):* **Common stock,
Authorized — 92,800,000 shares
Issued — 54,217,110 shares in 2020 and 2019 .................................................
Capital surplus ......................................................................................................
Retained earnings .................................................................................................
Treasury stock, at cost — 2,390,471 shares in 2020 and 2,389,436 shares in 2019 ....
Accumulated other comprehensive income
Unrealized gain on available-for-sale securities .................................................
Deferred loss on derivatives under hedge accounting .......................................
Defined retirement benefit plans .......................................................................
Total ............................................................................................................
Noncontrolling interests.........................................................................................
Total equity ..................................................................................................
Total .................................................................................................................

Thousands of
U.S. dollars (Note 1)
2020¥965,901
38,962
10,664
1,015,527$8,943,991
414,069
157,817
9,515,877(33,607)(656,660)(690,268)
325,259(312,569)(6,172,520)(6,485,090)
3,030,787

7,856
1,853
11,5791,905(60)
23,134

68,25818,653102,930
15,566(536)
204,872

16,50815,374
13,826
5,128(127)
50,711¥399,104

198,419
154,152
100,790
68,104(908)
520,557$3,756,217¥158,101
23,807
12,508
1,195
195,613¥163,680
22,632
11,504
1,656
199,473$1,452,741
218,757
114,937
10,983
1,797,419

23,918671

219,779
6,167

13,351
1,139
10,721
7,664
57,46514,8071,052
3,000
12,195440
10,3395,390
47,226

7,586
7,217
143,690(5,239)

7,586
7,218
140,084(5,238)69,70966,3191,320,318(48,148)

1,767
(21)
(774)
154,226
1,484
155,710¥408,789

1,928
(12)
(561)
151,004
1,399
152,404¥399,104

16,240(195)(7,116)
1,417,127
13,6391,430,766$3,756,217

122,681
10,466
98,51470,422
528,031

See notes to consolidated financial statements.
Notes: * A 1.25-for-1 stock split was effected on June 1, 2018.
It is calculated on the assumption that this stock split was conducted at the beginning of FY 2019(April 1, 2018).
** A 1.05-for-1 stock split was effected on June 1, 2020. However, the number of shares presented above has not been restated to reflect this stock split.
The number of the shares after the stock split is as follows:
Authorized shares - 92,800,000 shares
Issued - 56,927,965 shares in 2020 and 2019
Treasury stock - 2,509,994 shares in 2020 and 2,508,907 shares in 201931

Okinawa Electric Power Company

Consolidated Statement of Income
The Okinawa Electric Power Company, Incorporated and its consolidated subsidiaries

Millions of yen
2020
2019

Year Ended March 31, 2020

Thousands of
U.S. dollars (Note 1)
2020

Operating revenues:
Electric ..................................................................................................................
Other ....................................................................................................................
Total operating revenues ..................................................................................

¥191,492
12,803204,296¥193,431
12,049205,481$1,759,554
117,650
1,877,204

Operating expenses (Notes 7 and 10):
Electric ..................................................................................................................
Other ....................................................................................................................
Total operating expenses .................................................................................

182,079
11,890193,969

188,567
11,470200,038

1,673,062
109,253
1,782,316

Operating income ....................................................................................................

10,326

5,443

94,888Other expenses:
Interest expense ...................................................................................................
Other — net ..........................................................................................................
Net other expenses ..........................................................................................
Income before income taxes ..................................................................................

1,347
(332)
1,015
9,311

1,549
(1,326)222
5,220

12,383(3,051)
9,332
85,556

Income taxes (Note 8):
Current .................................................................................................................
Deferred ................................................................................................................
Total .................................................................................................................

2,037
482
2,519

1,598
(230)
1,367

18,721
4,429
23,151

Net income...............................................................................................................
Net income attributable to noncontrolling interests ..............................................
Net income attributable to owners of the parent ...................................................

6,791
85
6,705

3,852
100
3,751

62,404788
61,615

¥

¥

$

Yen

Per share of common stock (Note 2(k)):
Basic net income* .................................................................................................
Cash dividends applicable to the year**.................................................................

U.S. dollars¥68.9460.00¥ 123.22
60.00

$

1.13
0.55

See notes to consolidated financial statements.
Notes: * A 1.25-for-1 stock split was effected on June 1, 2018. A 1.05-for-1 stock split was effected on June 1, 2020.
It is calculated on the assumption that these stock splits were conducted at the beginning of FY 2019 (April 1, 2018).
** A 1.25-for-1 stock split was effected on June 1, 2018. A 1.05-for-1 stock split was effected on June 1, 2020.
However, the cash dividends per share information has not been restated to reflect these stock splits at each fiscal year.

Consolidated Statement of Comprehensive Income
The Okinawa Electric Power Company, Incorporated and its consolidated subsidiaries

Millions of yen
2020
2019

Year Ended March 31, 2020

Net income...............................................................................................................
Other comprehensive loss (Note 13)
Unrealized loss on available-for-sale securities ......................................................
Deferred loss on derivatives under hedge accounting............................................
Defined retirement benefit plans ............................................................................
Share of other comprehensive loss inan affiliate accounted for under the equity method ..........................................
Total other comprehensive loss .............................................................................
Comprehensive income ..........................................................................................
Total comprehensive income attributable to:
Owners of the parent ............................................................................................
Noncontrolling interests.........................................................................................
See notes to consolidated financial statements.

32

Okinawa Electric Power Company

¥

¥

¥

6,791

¥

3,852

Thousands of
U.S. dollars (Note 1)
2020$

62,404

(156)
(8)
(212)

(1,038)(24)(425)(1,442)(80)(1,954)

(0)
(378)
6,412

(1)
(1,488)¥ 2,363$(3)(3,480)58,924

6,323
89

¥

$

2,268
95

58,103820

Consolidated Statement of Changes in Equity
The Okinawa Electric Power Company, Incorporated and its consolidated subsidiaries

Shares / Millions of yen
Common stockYear Ended March 31, 2020

Shares * **Balance, April 1, 2018������������������������������������������������������������������������������������������ ¥43,373,688
Stock split��������������������������������������������������������������������������������������������������������

Treasury stock

AmountCapitalsurplusRetainedearnings

Shares * **Amount¥7,586¥7,212¥139,131¥1,906,955¥(5,224)

10,843,422

476,832

Net income attributable to owners of the parent�����������������������������������������������Cash dividends ������������������������������������������������������������������������������������������������

3,751(2,798)Purchase of treasury stock�������������������������������������������������������������������������������
Disposal of treasury stock���������������������������������������������������������������������������������

0Change in the parent's ownership interest due to transactions with noncontrolling interests���

5

6,137

(14)

(488)

1

¥2,389,436¥(5,238)

1,121

(2)

(86)

0

¥2,390,471¥(5,239)

Noncontrollinginterests

Total
equityNet change in the year��������������������������������������������������������������������������������������
Balance, March 31, 2019�������������������������������������������������������������������������������������� ¥54,217,110¥7,586¥7,218Net income attributable to owners of the parent�����������������������������������������������Cash dividends ������������������������������������������������������������������������������������������������

¥140,084
6,705(3,109)Purchase of treasury stock�������������������������������������������������������������������������������
Disposal of treasury stock���������������������������������������������������������������������������������

(0)Change in the parent's ownership interest due to transactions with noncontrolling interests���
Other ���������������������������������������������������������������������������������������������������������������
Net change in the year��������������������������������������������������������������������������������������
Balance, March 31, 2020�������������������������������������������������������������������������������������� ¥54,217,110(0)
10¥7,586¥7,217¥143,690

Shares / Millions of yen
Accumulated other comprehensive income
Unrealized gain (loss) Deferred gain (loss)
on available-for-sale on derivatives under
securities
hedge accounting

Year Ended March 31, 2020

Balance, April 1, 2018������������������������������������������������������������������������������������������
Stock split��������������������������������������������������������������������������������������������������������
Net income attributable to owners of the parent�����������������������������������������������Cash dividends ������������������������������������������������������������������������������������������������
Purchase of treasury stock�������������������������������������������������������������������������������
Disposal of treasury stock���������������������������������������������������������������������������������

¥2,962

Definedretirement
benefit plans¥11¥(136)

Total¥151,543¥1,216

3,751(2,798)(14)
1

Change in the parent's ownership interest due to transactions with noncontrolling interests���
Net change in the year��������������������������������������������������������������������������������������
Balance, March 31, 2019��������������������������������������������������������������������������������������
Net income attributable to owners of the parent�����������������������������������������������Cash dividends ������������������������������������������������������������������������������������������������
Purchase of treasury stock�������������������������������������������������������������������������������
Disposal of treasury stock���������������������������������������������������������������������������������

(1,033)¥1,928Change in the parent's ownership interest due to transactions with noncontrolling interests���
Other ���������������������������������������������������������������������������������������������������������������
Net change in the year��������������������������������������������������������������������������������������
Balance, March 31, 2020��������������������������������������������������������������������������������������

(160)¥1,767

(24)
¥(12)

(8)
¥(21)

(425)
¥(561)(212)¥(774)¥152,759
3,751(2,798)(14)
1

5(1,483)¥151,004
6,705(3,109)(2)
0183¥1,399

(0)
10
(382)
¥154,226

5(1,299)¥152,404
6,705(3,109)(2)
0

84¥1,484

(0)
10
(297)
¥155,710

Noncontrollinginterests

Total
equityThousands of U.S. dollars (Note 1)
Accumulated other comprehensive income

Balance, March 31, 2019��������
Net income attributable toowners of the parent��������Cash dividends�������������������

Commonstock

Capitalsurplus$69,709$66,326 $1,287,182

Treasurystock$(48,130)$17,718$(115)

61,615(28,573)

Purchase of treasury stock��
Disposal of treasury stock���Change in the parent's ownershipinterest due to transactions
with noncontrolling interests���
Other����������������������������������
Net change in the year��������
Balance, March 31, 2020��������

Retainedearnings

Unrealized gain (loss) Deferred gain (loss)
on available-for-sale on derivatives under
securities
hedge accounting

(19)
1

(0)
(7)
93
$69,709$66,319 $1,320,318$(48,148)(1,477)$16,240(80)$(195)

Definedretirement
benefit plans

Total$(5,162) $1,387,528$12,860 $1,400,389

61,61561,615(28,573)(28,573)

(19)
1

(19)
1

(7)

(7)

93
(1,954)(3,512)$(7,116) $1,417,127

93
778(2,733)$13,639 $1,430,766

See notes to consolidated financial statements.
Note: * A 1.25-for-1 stock split was effected on June 1, 2018.
** A 1.05-for-1 stock split was effected on June 1, 2020. However, the number of shares presented above has not been restated to reflect this stock split.

33

Okinawa Electric Power Company

Consolidated Statement of Cash Flows
The Okinawa Electric Power Company, Incorporated and its consolidated subsidiaries

Millions of yen
2020
2019

Year Ended March 31, 2020

Operating activities:
Income before income taxes���������������������������������������������������������������������������������
Adjustments for:
Income taxes paid�������������������������������������������������������������������������������������������
Depreciation and amortization�������������������������������������������������������������������������
Loss on disposal of property, plant and equipment �����������������������������������������
Changes in assets and liabilities:
Increase in notes and accounts receivable���������������������������������������������������
Decrease (increase) in inventories����������������������������������������������������������������
Increase (decrease) in notes and accounts payable�������������������������������������
Decrease in interest payable������������������������������������������������������������������������
Increase in liability for retirement benefits�����������������������������������������������������
Other - net�������������������������������������������������������������������������������������������������������
Total adjustments�����������������������������������������������������������������������������������
Net cash provided by operating activities������������������������������������������������
Investing activities:
Purchase of property, plant and equipment������������������������������������������������������
Proceeds from sale of property, plant and equipment��������������������������������������
Payments for investments and advances���������������������������������������������������������
Proceeds from sales of investment securities and collections of advances�������
Other - net�������������������������������������������������������������������������������������������������������
Net cash used in investing activities��������������������������������������������������������
Financing activities:
Proceeds from issuance of bonds�������������������������������������������������������������������
Repayments of bonds�������������������������������������������������������������������������������������
Proceeds from long-term debt�������������������������������������������������������������������������
Repayments of long-term debt������������������������������������������������������������������������
Net decrease in short-term bank loans������������������������������������������������������������
Net decrease in commercial paper������������������������������������������������������������������Cash dividends paid����������������������������������������������������������������������������������������
Other - net�������������������������������������������������������������������������������������������������������
Net cash used in financing activities��������������������������������������������������������
Net increase (decrease) in cash and cash equivalents����������������������������������������Cash and cash equivalents, beginning of year�����������������������������������������������������Cash and cash equivalents, end of year���������������������������������������������������������������
See notes to consolidated financial statements.

34

Okinawa Electric Power Company

Thousands of
U.S. dollars (Note 1)2020¥ 9,311¥ 5,220$ 85,556(1,289)22,384767(2,603)23,239358(11,846)
205,686
7,051(1,451)
2,932
846
(12)
426
2,178
26,78136,092(3,226)(3,225)(1,925)(45)
258(1,440)11,38816,608(13,335)
26,943
7,775
(119)
3,914
20,017246,088
331,644(25,403)
219
(21)
303
(1,087)(25,988)(20,557)
448
(47)
1,026
1,721
(17,408)(233,422)
2,014
(193)
2,790
(9,992)(238,803)

9,966

9,966
(10,000)
16,879(12,111)(187)(1,000)(2,797)(1,528)(778)(1,578)18,086¥16,508

91,577

6,501(13,194)(381)(3,000)(3,104)(1,804)(5,018)
5,085
16,508¥21,593

59,736(121,241)(3,506)(27,565)(28,529)(16,582)(46,112)46,728
151,690$198,419

Notes to Consolidated Financial Statements
The Okinawa Electric Power Company, Incorporated and its consolidated subsidiaries
Year Ended March 31, 2020

1. Basis of presenting consolidated financial statements
The accompanying consolidated financial statements have been preparedfrom the consolidated financial statements that are issued for domestic
reporting purposes in accordance with the provisions set forth in theJapanese Financial Instruments and Exchange Act, the Electricity
Business Act, and their related accounting regulations. The Okinawa
Electric Power Company, Incorporated (the "Company") and its
consolidated subsidiaries (collectively, the "Companies") maintain theiraccounts and records in accordance with the provisions set forth in the
Companies Act of Japan (the “Companies Act”) and in conformity withaccounting principles generally accepted in Japan, which are different incertain respects as to application and disclosure requirements ofInternational Financial Reporting Standards.
In preparing the accompanying consolidated financial statements,
certain reclassifications and rearrangements have been made to theconsolidated financial statements issued domestically in order to present
them in a form that is more familiar to readers outside Japan. In addition,certain reclassifications have been made to the financial statements for theyear ended March 31, 2019, to conform to the classifications used in the
consolidated financial statements for the year ended March 31, 2020.
The consolidated financial statements are stated in Japanese yen, thecurrency of the country in which the Company is incorporated andoperates. The translations of Japanese yen amounts into U.S. dollar
amounts included herein are provided solely for the convenience ofreaders outside Japan and are stated at the rate of ¥108.83 to $1, theapproximate rate of exchange on March 31, 2020. Such translations
should not be construed as representations that the Japanese yenamounts could be converted into U.S. dollars at that or any other rate.
Amounts of less than one million yen have been rounded down, except
for per share data. Consequently, the totals shown in the accompanying
consolidated financial statements ( both in yen and in U.S. dollars ) do notnecessarily agree with the sums of the individual amounts.

2. Summary of significant accounting policies(a) Consolidation
The consolidated financial statements as of March 31, 2020, include theaccounts of the Company and its 12 significant subsidiaries (12 in 2019).
Investment in one affiliated company (one in 2019) is accounted for by theequity method. Under the control and influence concepts, thosecompanies in which the Company, directly or indirectly, is able to exercise
control over operations are fully consolidated and those companies overwhich the Companies have the ability to exercise significant influence areaccounted for by the equity method.
All significant intercompany balances and transactions have been
eliminated in consolidation. All unrealized profits included in assets
resulting from transactions within the Companies are eliminated.
Consolidation of the remaining subsidiaries and the application of theequity method to the remaining affiliates would not have a material effecton the accompanying consolidated financial statements.
Investments in such unconsolidated subsidiaries and affiliatedcompanies are stated at cost.
(b) Property, plant and equipment
Property, plant and equipment are stated at cost. Contributions in aid ofconstruction are deducted from the cost of the related assets. Suchaccounting treatment is required by the regulations described in Note 1.
Depreciation is principally computed using the declining-balancemethod based on the estimated useful lives of the assets. Depreciation ofeasements is computed using the straight-line method based on theestimated useful lives of the transmission lines.
35(c) Long-lived assets
The Companies review their long-lived assets for impairment whenever
events or changes in circumstance indicate the carrying amount of anasset or asset group may not be recoverable. An impairment loss would
be recognized if the carrying amount of an asset or asset group exceeds
the sum of the undiscounted future cash flows expected to result from thecontinued use and eventual disposition of the asset or asset group. The
impairment loss would be measured as the amount by which the carrying
amount of the asset exceeds its recoverable amount, which is the higherof the discounted cash flows from the continued use and eventual
disposition of the asset or the net selling price at disposition.
(d) Investment securities
Investment securities are classified and accounted for, depending upon
management's intent, as follows:i) marketable available-for-sale securities are reported at fair value, withunrealized gains and losses, net of applicable taxes, reported in a separate
component of shareholders' equity and ii) nonmarketable available-for-salesecurities are stated at cost determined by the moving-average method.
For other-than-temporary declines in fair value, investment securities
are reduced to net realizable value by a charge to income.
(e) Cash and cash equivalents
Cash equivalents are short-term investments that are readily convertible
into cash and exposed to insignificant risk of changes in value.
Cash equivalents include time deposits that mature or become due
within three months of the date of acquisition.
(f) Inventories
Inventories are stated at cost, based principally on the monthly averagemethod, or net selling value.
(g) Derivatives and hedging activities
The Company uses derivative financial instruments to manage its
exposures to fluctuations in foreign exchange. Foreign currency forward
contracts are utilized to reduce foreign currency exchange risk. The
Company does not enter into derivatives for trading or speculative
purposes.
For derivatives used for hedging purposes, if such derivatives qualify
for hedge accounting because of high correlation and effectivenessbetween the hedging instruments and the hedged items, gains or losses
on derivatives are deferred until maturity of the hedged transactions.
The foreign currency forward contracts are utilized to hedge foreign
currency exposures. Account payables denominated in foreign currencies
are translated at the contracted rates if the forward contracts qualify forhedge accounting.
(h) Retirement and pension plans
The Company has a defined contribution pension plan, a funded defined
benefit pension plan, and an unfunded retirement benefit plan for
employees. Certain consolidated subsidiaries have funded defined benefit
pension plans. Other consolidated subsidiaries have unfunded retirement
benefit plans for employees.
The liability for retirement benefits is accounted for based on the
projected benefit obligations and plan assets at the balance sheet date.
The projected benefit obligations are attributed to periods on a benefit
formula basis. Actuarial gains and losses are amortized on a decliningbalance basis over five years within the average remaining service period.
(i) Income taxes
The provision for income taxes is computed based on the pretax income
included in the consolidated statement of income. The asset and liability
approach is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the
carrying amounts and the tax bases of assets and liabilities. Deferredtaxes are measured by applying currently enacted tax laws to thetemporary differences.

Okinawa Electric Power Company

(j) Stock and bond issuance costs
Stock and bond issuance costs are charged to income when paid or
incurred.
(k) Per share information
Basic net income per share is computed by dividing net income available
to common shareholders by the weighted-average number of commonshares outstanding for the period. Diluted net income per share is notdisclosed because no latent shares were outstanding.
Cash dividends per share presented in the accompanying consolidated
statement of income are dividends applicable to the respective years,
including dividends to be paid after the end of the year.
The Company effected a 1.05-for-1 stock split on June 1, 2020 (seeNote15)(l)New Accounting Pronouncements
On March 31, 2020, the ASBJ issued ASBJ Statement No. 29,"Accounting Standard for Revenue Recognition," and ASBJ Guidance No.
30, "Implementation Guidance on Accounting Standard for Revenue
Recognition." The accounting standard and guidance establish theprinciples that an entity applies when reporting information about revenue
arising from a contract with a customer.
The Company expects to apply the accounting standard and guidance
for annual periods beginning on or after April 1, 2021, and is in theprocess of measuring the effects of applying the accounting standard andguidance in future applicable periods.
On July 4, 2019, the ASBJ issued ASBJ Statement No. 30,"Accounting Standard for Fair Value Measurement, " ASBJ Statement No.
10, "Accounting Standard for Financial Instruments, " and ASBJ Guidance
No. 31, "Implementation Guidance on Accounting Standard for Fair Value
Measurement. " These accounting standards and the guidance establish
the measuring of the fair value of financial instruments in ASBJ Statement
No. 10 "Accounting Standard for Financial Instruments. "The Company expects to apply these accounting standards and theguidance for annual periods beginning on or after April 1, 2021, and is in
the process of measuring the effects of applying these accounting
standards and the guidance in future applicable periods.

The major classes of property, plant and equipment as of March 31, 2020
and 2019, consisted of the following:

Original
cost

Thermal power-generating
facilities������������������������������ ¥  467,506
Transmission facilities����������
166,235
Transformation facilities��������
110,623
Distribution facilities��������������
182,531
General facilities�������������������
33,496
Other electricity-related
facilities������������������������������
12,980Utility plants��������������������������
973,374
Other plant and equipment���
45,063
Construction in progress�������
17,175
Total��������������������������������� ¥1,035,612

As of March 31, 2019

Original
cost

Thermal power-generating
facilities������������������������������ ¥  466,534
Transmission facilities����������
164,094
Transformation facilities��������
108,849
Distribution facilities��������������
178,688
General facilities�������������������
34,753
Other electricity-related
facilities������������������������������
12,980Utility plants��������������������������
965,901
Other plant and equipment���38,962
Construction in progress�������
10,664
Total��������������������������������� ¥1,015,527

As of March 31, 2020

Original
cost

Thermal power-generating
facilities������������������������������ $4,295,747
Transmission facilities���������� 1,527,483
Transformation facilities�������� 1,016,480
Distribution facilities�������������� 1,677,213
General facilities�������������������
307,789
Other electricity-related
facilities������������������������������
119,277
Utility plants�������������������������� 8,943,991
Other plant and equipment���
414,069
Construction in progress�������
157,817
Total��������������������������������� $9,515,877

Accumulated
depreciation

Carrying
value¥(16,604)(4,139)(1,505)(3,209)(6,195)¥(331,391)(109,313)(73,721)(96,236)(14,998)¥118,538
50,64033,62379,242
13,559(538)(32,193)(1,198)(215)¥(33,607)(11,262)(636,923)(19,737)

1,179
296,784
18,026
10,448¥325,259¥(656,660)

Thousands of U.S. dollars
Contributions
in aid ofAccumulated
construction
depreciation

Carrying
value$(152,254) $(3,105,858) $1,037,634(38,808) (1,030,005)
458,669(13,877)(689,266)
313,335(30,043)(912,511)
734,658(49,390)(136,212)
122,186(4,951)(104,203)
10,121(289,326) (5,978,059) 2,676,605(21,263)(194,461)
198,343(1,978)155,838$(312,569) $(6,172,520) $3,030,787

4. Investment securities
The costs and aggregate fair values of investment securities at March 31,
2020 and 2019, were as follows:

3. Property, plant and equipment

As of March 31, 2020

Millions of yen
Contributions
in aid ofconstruction

Millions of yen
Contributions
in aid ofAccumulated
construction
depreciation

Carrying
value¥(16,569)(4,223)(1,510)(3,269)(5,375)¥(338,010)(112,095)(75,012)(99,308)(14,824)¥112,925
49,916
34,10079,952
13,297(538)(31,487)(2,314)(215)¥(34,016)(11,340)(650,592)(21,163)1,101
291,294
21,585
16,959¥329,840¥(671,755)

36

Millions of yen
Unrealized
Unrealized
gains
lossesFair
value

As of March 31, 2020

Cost

Securities classified as:
Available-for-sale:
Equity securities����������
Other���������������������������
Total������������������������

¥ 2,739148¥ 2,887¥ 2,907

¥ 427
26
¥ 454

¥ 5,218121¥ 5,340

As of March 31, 2019

Cost

Millions of yen
Unrealized
Unrealized
gains
lossesFair
value

Securities classified as:
Available-for-sale:
Equity securities����������
Other���������������������������
Total������������������������

¥ 2,739398¥ 3,137

Okinawa Electric Power Company¥ 2,907¥ 3,103¥ 3,103

¥ 355
116
¥ 471

¥ 5,486281¥ 5,768

Thousands of U.S. dollars
As of March 31, 2020

Securities classified as:
Available-for-sale:
Equity securities����������
Other���������������������������
Total������������������������

Cost$25,170
1,362$26,532

Unrealized
gains

Unrealized
lossesFair
value$26,714$3,931
241$4,172$47,953
1,120$49,074$26,714

Investment securities whose fair values cannot be reliably determined are
excluded from the preceding tables. The carrying amounts of suchinvestment securities were ¥2,087 million ($ 19,184 thousand) in 2020 and¥2,087 million in 2019.

5. Long-term debt
Long-term debt as of March 31, 2020 and 2019, consisted of the following:
Millions of yen
2020
2019

Domestic bonds, 0.110% to 1.452% in 2020
and 0.110% to 1.452% in 2019, due seriallythrough 2030������������������������������������������������� ¥ 75,000 ¥ 65,000
Loans from Okinawa Development FinanceCorporation, 0.100% to 2.050% in 2020 and
0.100% to 2.100% in 2019, due seriallythrough 2039�������������������������������������������������
96,736
102,413Loans from banks, insurance companies andother sources, 0.159% to 1.950% in 2020
and 0.150% to 1.950% in 2019, due seriallythrough 2039�������������������������������������������������
8,430
9,447
Obligations under finance leases��������������������
25,66024,259Total������������������������������������������������������������ 205,827
201,120
Less current maturities������������������������������������ (23,918)(14,807)
Long-term debt, less current maturities *��������� ¥181,909 ¥186,312

Thousands of
U.S. dollars
2020$  689,148

888,878

77,468
235,781
1,891,277(219,779)$1,671,498

All of the Company's assets are subject to certain statutory preferential
rights as collateral for bonds and loans from the Okinawa Development
Finance Corporation.
Certain assets of the consolidated subsidiaries, amounting to ¥3,238
million ($29,761 thousand), are pledged as collateral for a portion of thelong-term debt as of March 31, 2020.
The aggregate annual maturities of long-term debt outstanding as ofMarch 31, 2020, were as follows:2021����������������������������������������������������������������
2022����������������������������������������������������������������
2023����������������������������������������������������������������
2024����������������������������������������������������������������
2025����������������������������������������������������������������
2026 and thereafter�����������������������������������������
Total������������������������������������������������������������

The weighted-average interest rates applicable to short-term bank loans
were 0.493% and 0.448% as of March 31, 2020 and 2019, respectively.
The weighted-average interest rate applicable to commercial paper was(0.008)% as of March 31, 2019.

7. Retirement and pension plans(a) The Company’s retirement benefit plans are as follows:i)	‌A cash balance pension plan based on the Defined-Benefit
Corporate Pension Lawii) A lump-sum retirement benefit planiii) A defined contribution pension plan
In certain cases, the Company pays additional retirement benefits for
employees.
Consolidated subsidiaries have the plans of either i) or ii) above andcalculate liabilities for retirement benefits by the simplified method.
(1)	‌The changes in defined benefit obligation, excluding plans applying thesimplified method shown below, for the years ended March 31, 2020
and 2019, were as follows:
Millions of yen
2020
2019

Note * ‌Long-term debt, less current maturities, including lease obligations for theyears ended March 31, 2020 and 2019, were ¥23,807 million ($218,757
thousand) and ¥22,632 million, respectively.

Years Ended March 31

6. Short-term borrowings

Millions of yen

Thousands of
U.S. dollars¥ 23,918
23,47722,725
17,64018,49599,569¥205,827$  219,779
215,728
208,818
162,093
169,948914,909$1,891,277

Balance at beginning of year��������������������������� ¥19,550
Current service cost������������������������������������
1,169
Interest cost������������������������������������������������
38
Actuarial (gains) losses�������������������������������
(6)
Benefits paid�����������������������������������������������
(513)
Balance at end of year������������������������������������� ¥20,239¥18,297
1,102
61
456
(367)
¥19,550

Thousands of
U.S. dollars
2020$179,644
10,749358(60)(4,716)$185,975(2)	‌The changes in the net carrying amount of liabilities and assets for theretirement benefits of plans applying the simplified method for the years
ended March 31, 2020 and 2019, were as follows:
Millions of yen
2020
2019

Balance at beginning of year���������������������������
Periodic benefit costs����������������������������������
Benefits paid�����������������������������������������������
Contributions from the employer�����������������
Balance at end of year�������������������������������������

¥3,409
547
(139)
(205)
¥3,611¥3,448
472
(262)
(248)
¥3,409Thousands of
U.S. dollars
2020$31,328
5,031(1,284)(1,888)$33,187(3)	‌The changes in plan assets for the years ended March 31, 2020 and
2019, were as follows:
Millions of yen
2020
2019

Balance at beginning of year��������������������������� ¥14,808
Expected return on plan assets������������������
286
Actuarial losses�������������������������������������������
(585)
Contributions from the employer�����������������
495
Benefits paid�����������������������������������������������
(310)
Others���������������������������������������������������������
52
Balance at end of year������������������������������������� ¥14,747¥14,401
278
(198)
486
(266)
105
¥14,808

Thousands of
U.S. dollars
2020$136,067
2,631(5,375)4,555(2,851)
481$135,508*Others above comprises changes in plans applying the simplified method.

37

Okinawa Electric Power Company

(4)	‌Reconciliation between the liability recorded in the consolidatedbalance sheet and the balances of defined benefit obligation and plan
assets, including plans applying the simplified method, as of March 31,
2020 and 2019, was as follows:
Millions of yen
2020

Funded defined benefit obligation������������������� ¥18,986
Plan assets������������������������������������������������������ (14,747)
4,238
Unfunded defined benefit obligation����������������
8,270
Net liability for defined benefit obligation��������� ¥12,508

2019

2020

¥18,201(14,808)
3,393
8,110
¥11,504$174,456(135,508)
38,94775,990$114,937

Millions of yen
2020
2019

Liability for retirement benefits������������������������� ¥12,508
Net liability for defined benefit obligation��������� ¥12,508

Thousands of
U.S. dollars

Thousands of
U.S. dollars
2020¥11,504¥11,504$114,937$114,937(5)	‌The components of net periodic benefit costs for the years ended
March 31, 2020 and 2019, were as follows:
Millions of yen
2020
2019

Current service cost�����������������������������������������
Interest cost�����������������������������������������������������
Expected return on plan assets�����������������������
Recognized actuarial losses����������������������������
Others��������������������������������������������������������������
Net periodic benefit costs��������������������������������

¥1,169
38
(286)
285
547
¥1,755

Thousands of
U.S. dollars
2020¥1,102
61
(278)
69
472
¥1,427$10,749358(2,631)
2,623
5,031$16,131*Others above comprises costs in plans applying the simplified method.

(6)	‌Amounts recognized in other comprehensive income (before income
tax effect) in respect of defined retirement benefit plans for the years
ended March 31, 2020 and 2019
Millions of yen
2020
2019

Actuarial losses�����������������������������������������������
Total�����������������������������������������������������������������

¥(292)¥(292)

Thousands of
U.S. dollars
2020¥(585)¥(585)$(2,691)$(2,691)(7)	‌Amounts recognized in accumulated other comprehensive income(before income tax effect) in respect of defined retirement benefit plans
as of March 31, 2020 and 2019
Millions of yen
2020
2019

Unrecognized actuarial losses�������������������������
Total�����������������������������������������������������������������

¥(1,066)¥(1,066)

Thousands of
U.S. dollars
2020¥(773)¥(773)$(9,802)$(9,802)(8)	‌Plan assets as of March 31, 2020 and 2019a. Components of plan assets
Plan assets consisted of the following:2020

Debt investments���������������������������������������������
Equity investments������������������������������������������
General account����������������������������������������������
Others��������������������������������������������������������������
Total�����������������������������������������������������������������

2019

16%
20
53
11
100%

20%
18
52
10
100%

b. Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering
the long-term rates of return which are expected currently and in the
future from the various components of the plan assets.

(9)	‌Assumptions used for the years ended March 31, 2020 and 2019, areset forth as follows:
Discount rate���������������������������������������������������
Expected rate of return on plan assets������������

2020

2019

Mainly 0.3%
2.5%

Mainly 0.2%2.5%(b)	‌The required contribution to defined contribution plans by theCompany for the years ended March 31, 2020 and 2019, was ¥198
million ($1,819 thousand) and ¥197 million , respectively.

8. Income taxes
The Companies are subject to several taxes based on income and revenue.
For the years ended March 31, 2020 and 2019, the aggregate normal
effective statutory tax rates approximated 27.4% .
The significant components of deferred tax assets and liabilities as ofMarch 31, 2020 and 2019, were as follows:
Millions of yen
2020
2019

Deferred tax assets:
Unrealized profit������������������������������������������ ¥3,733
Liability for retirement benefits��������������������
3,634
Depreciation and amortization��������������������
3,035
Accrued bonus��������������������������������������������
738
Other�����������������������������������������������������������
1,662
Subtotal�������������������������������������������������� 12,804
Less: valuation allowance���������������������������
(522)
Total deferred tax assets������������������������ ¥12,282
Deferred tax liabilities:
Unrealized gain on available-for-salesecurities��������������������������������������������������
(682)
Unrealized gain on land revaluation�����������
(282)
Other�����������������������������������������������������������
(116)
Total deferred tax liabilities�������������������� ¥(1,080)
Net deferred tax assets�������������������������� ¥11,201

Thousands of
U.S. dollars
2020¥3,729
3,347
2,753
721
2,576
13,127(422)¥12,705$34,304
33,391
27,892
6,786
15,276
117,652(4,796)$112,856

(730)
(282)
(113)
¥(1,125)¥11,579(6,267)(2,591)(1,067)$(9,926)$102,930

As the difference between the normal effective statutory tax rate and theactual effective tax rate reflected in the accompanying consolidated
statement of income for the year ended March 31, 2020 and 2019 is not
more than 5% of the normal effective statutory tax rate, a reconciliation
has not been disclosed.
38

Okinawa Electric Power Company

9. Equity
Japanese companies are subject to the Companies Act. The Companies
Act requires that an amount equal to 10% of dividends must be
appropriated as a legal reserve (a component of retained earnings) or as
additional paid-in capital (a component of capital surplus) depending on
the equity account charged upon the payment of such dividends until the
total of aggregate amount of legal reserve and additional paid-in capitalequals 25% of the common stock. Under the Companies Act, the total
amount of additional paid-in capital and legal reserve may be reversed
without limitation. The Companies Act also provides that common stock,legal reserve, additional paid-in capital, other capital surplus, and retained
earnings can be transferred among the accounts within equity undercertain conditions upon resolution of the shareholders.

10. Research and development costs
Research and development costs charged to income were ¥613 million($5,638 thousand) and ¥584 million for the years ended March 31, 2020
and 2019, respectively.

11. Financial instruments and related disclosures(a) The Companies’ policy for financial instruments
The Companies use financial instruments, mainly long-term debt, includingloans and bonds, to raise funds required for capital investments andrepayments of liabilities. Short-term bank loans and commercial paper areused to fund their ongoing operations.
(b) Nature and extent of risks arising from financial instruments
Investment securities, mainly equity securities issued by companies related
through business, are exposed to the risk of market price fluctuations.
Receivables, such as trade notes and trade accounts, are exposed tocustomer credit risk.
Loans at variable interest rates are exposed to market risks fromchanges in variable interest rates. However, related interest rate
fluctuations have a minimal impact because most funds are raised at fixedinterest rates.
Payment terms of payables, such as trade notes and trade accounts,
generally are less than one year.
The Companies use foreign currency forward contracts to manage
exposure to fluctuations in foreign exchange.
(c) Risk management for financial instruments(1) Credit risk management
In accordance with electric power supply agreements and the like, theCompanies continuously manage the credit risk from receivables bymonitoring the payment terms and balances of each customer andidentifying the default risk of customers at an early stage.
(2)	‌Market risk management (stock price, interest rate, and foreignexchange risks)
The market risk of investment securities is managed by monitoringmarket values and the financial position of issuers on a regular basis.
Derivative transactions have been made in accordance with internal
policies that regulate their authorization. Risk management policies areset forth at the beginning of the fiscal year. Each derivative transaction
is reported to a financial and accounting officer monthly and reported
to the Board of Directors semiannually.
39(3) Liquidity risk management for fund-raising
The Companies prepare and update their financial plans on a timely
basis and manage liquidity risk through the use of an overdraft line andby acquiring a commitment line.
(d) Fair values of financial instruments
Fair values of financial instruments are based on quoted prices in active
markets. If a quoted price is not available, other rational valuation
techniques are used instead. Please see Note 12 for details related to fairvalues for derivatives.
(1) Fair values of financial instruments
The carrying amounts and aggregate fair values of financial instruments
as of March 31, 2020 and 2019, were as follows:

March 31, 2020

Carrying
amountMillions of yen
Fair
Unrecognized
value
loss

Investment securities:
Available-for-sale������������������������������������Cash and cash equivalents�������������������������
Notes and accounts receivable�������������������
Total��������������������������������������������������������

¥  5,340
21,593
16,776¥ 43,711¥  5,340
21,593
16,766¥ 43,711

Long-term debt:
Bonds������������������������������������������������������
Loans������������������������������������������������������
Short-term bank loans���������������������������������
Notes and accounts payable�����������������������
Income taxes payable����������������������������������
Total��������������������������������������������������������
Derivatives����������������������������������������������

¥ 75,000
105,167
671
13,351
1,139¥195,329¥(29)¥ 75,096
108,250
671
13,351
1,139¥198,508¥(29)

March 31, 2019

Carrying
amountMillions of yen
Fair
Unrecognized
value
loss

Investment securities:
Available-for-sale����������������������������������Cash and cash equivalents�������������������������
Notes and accounts receivable�������������������
Total��������������������������������������������������������

¥  5,768
16,50815,374¥ 37,651¥  5,768
16,50815,374¥ 37,651

Long-term debt:
Bonds����������������������������������������������������
Loans����������������������������������������������������
Short-term bank loans���������������������������������
Commercial paper���������������������������������������
Notes and accounts payable�����������������������
Income taxes payable����������������������������������
Total��������������������������������������������������������
Derivatives����������������������������������������������

¥ 65,000
111,861
1,052
3,000
12,195440¥193,550¥(17)¥ 65,838
115,580
1,052
3,000
12,195440¥198,108¥(17)

Okinawa Electric Power Company¥   96
3,082¥3,179¥  8383,719¥4,558

Thousands of U.S. dollars
March 31, 2020

Carrying
amountInvestment securities:
Available-for-sale������������������������������������
$49,074
Cash and cash equivalents�������������������������
198,419
Notes and accounts receivable�������������������
154,152
Total�������������������������������������������������������� $  401,645

Fair
value

Unrecognizedloss(2)	‌Carrying amount of financial instruments whose fair values cannot be
reliably determined
Millions of yen$49,074
198,419
154,152$  401,645

Long-term debt:
Bonds������������������������������������������������������ $  689,148 $  690,034
Loans������������������������������������������������������
966,347994,672
Short-term bank loans���������������������������������
6,167
6,167
Notes and accounts payable�����������������������
122,681
122,681
Income taxes payable����������������������������������
10,466
10,466
Total�������������������������������������������������������� $1,794,811 $1,824,023
Derivatives���������������������������������������������� $(269) $
(269)$   886
28,324$29,211

Investment securities whose fair values cannot be reliably determined are
excluded from the preceding tables.
Derivatives are stated at the net amount.
Investment securities
The fair values of investment securities are measured at the quoted market
price of the stock exchange for the equity securities. Fair value information
for investment securities by classification is included in Note 4.
Cash and cash equivalents and notes and accounts receivable
The carrying values of cash and cash equivalents and notes and accounts
receivable approximate fair value because of their short maturities.
Bonds
The fair values of bonds are mainly measured at the quoted market price.
Long-term loans
Because long-term loans at variable interest rates reflect short-term
movements in market interest rates, the carrying amounts approximate fairvalue.
The fair values of loans at fixed interest rates are determined bydiscounting the cash flows related to the loans at the Company’s assumed
corporate borrowing rate.

Investment securities:
Available-for-sale:
Unlisted equity securities�����������������������
Other������������������������������������������������������
Total������������������������������������������������������������

2020

2019

2020

¥2,087¥2,087$19,184¥2,087¥2,087$19,184(e) Maturity analysis for financial assets with contractual maturities

March 31, 2020

Cash and cash equivalents�����������������������������
Notes and accounts receivable�����������������������
Total������������������������������������������������������������

Thousands ofMillions of yen
U.S. dollars
Due in one year or less Due in one year or less

¥21,593
16,776¥38,370$198,419
154,152$352,571

12. Derivatives
The Company uses derivative financial instruments to manage its
exposures to fluctuations in foreign exchange. Foreign currency forward
contracts are utilized to reduce foreign currency exchange risk. The
Company does not hold or issue derivatives for trading or speculative
purposes.
Derivatives are subject to market risk, which is the exposure created bypotential fluctuations in market conditions, including foreign exchange.
Because the counterparties to those derivatives are limited to majorinternational financial institutions, the Company does not anticipate any
losses arising from credit risk.
Derivative transactions entered into by the Company have been madein accordance with internal policies.

Short-term bank loans, commercial paper, notes and accounts payable,
and income taxes payable
The carrying values of short-term bank loans, commercial paper, notes
and accounts payable, and income taxes payable approximate fair value
because of their short maturities.
Derivatives
Fair value information for derivatives is included in Note 12.

40

Thousands of
U.S. dollars

Okinawa Electric Power Company

Derivative transactions to which hedge accounting is applied
Millions of yen

As of March 31, 2020

Foreign currency forward contracts:
Buying EURO��������������������������������������������������

Hedged item

Foreigncurrencytransaction(forecasted
transactions)Contract amount¥969

Contract
amount due
after one year¥465

Thousands of U.S. dollars

Fair value

Hedged item

Contract amountContract
amount due
after one year¥(29)

Foreigncurrencytransaction(forecasted
transactions)$8,912$4,277

Fair value$(269)

Millions of yen

As of March 31, 2019

Foreign currency forward contracts:
Buying EURO��������������������������������������������������

Hedged item

Contract amountContract
amount due
after one year

Foreigncurrencytransaction(forecasted
transactions)¥1,000¥502

Fair value¥(17)

The fair value of derivative transactions is measured at the quoted price obtained from the financial institution.
The contract or notional amounts of derivatives which are shown in the tables above do not represent the amounts exchanged by the parties and do
not measure the Company’s exposure to credit or market risk.

13. Other comprehensive income
The components of other comprehensive income for the years ended March 31, 2020 and 2019, were as follows:
Millions of yen
2020
2019

Other comprehensive loss
Unrealized loss on available-for-sale securities
Losses arising during the year�����������������������������������������������������������������������������������������������������������������������������������������������������������������������
Reclassification adjustments to profit or loss�������������������������������������������������������������������������������������������������������������������������������������������������
Amount before income tax effect�������������������������������������������������������������������������������������������������������������������������������������������������������������������
Income tax effect�������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������
Total������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������
Deferred loss on derivatives under hedge accounting
Losses arising during the year�����������������������������������������������������������������������������������������������������������������������������������������������������������������������
Amount before income tax effect�������������������������������������������������������������������������������������������������������������������������������������������������������������������
Income tax effect�������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������
Total������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������
Defined retirement benefit plans
Losses arising during the year�����������������������������������������������������������������������������������������������������������������������������������������������������������������������
Reclassification adjustments to profit or loss�������������������������������������������������������������������������������������������������������������������������������������������������
Amount before income tax effect�������������������������������������������������������������������������������������������������������������������������������������������������������������������
Income tax effect�������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������
Total������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������
Share of other comprehensive loss in an affiliate accounted for under the equity method
Losses arising during the year����������������������������������������������������������������������������������������������������������������������������������������������������������������������
Total other comprehensive loss��������������������������������������������������������������������������������������������������������������������������������������������������������������������������

41

Okinawa Electric Power Company

Thousands of
U.S. dollars
2020¥ (274)96(178)
21¥ (156)¥ (1,422)¥ (12)(12)3¥   (8)

¥

(33)
(33)
9
(24)

$   (110)(110)30$     (80)

¥ (578)
285
(292)
80
¥ (212)¥   (655)
69
(585)
160
¥   (425)$ (5,315)
2,623(2,691)737$ (1,954)¥   (0)¥ (378)¥(1)¥ (1,488)$      (3)$ (3,480)(1,422)384¥ (1,038)¥$ (2,524)
887(1,636)194$ (1,442)

14. Segment information(a) Description of reportable segments
The Companies’ reportable segments are those for which financial information is available and regular evaluation by the Company’s management isperformed in order to decide how resources are allocated among the Companies. The Company and its consolidated subsidiaries compose their own
business segments, respectively, and the “Electric” segment, which includes most of the Company’s business, is treated as a reported segment. The“Electric” segment supplies electricity throughout Okinawa Prefecture.
(b) Methods of measurement for the amounts of sales, profit, assets, and other items for each reportable segment
The accounting policies of each reportable segment are consistent with those disclosed in Note 2, “Summary of Significant Accounting Policies.” Segment
profit is based on operating income. The same or similar general business conditions are applied to “Sales to external customers” and “Intersegment sales
or transfers.”(c) Information about sales, profit, assets, and other items is as follows:
Millions of yen

2020

Reportablesegment
Electric

Sales
Sales to external customers����������������� ¥191,609
Intersegment sales or transfers������������
2,861
Total������������������������������������������������� ¥194,471
Segment profit������������������������������������������ ¥  8,236
Segment assets���������������������������������������� 373,941
Other:
Depreciation�����������������������������������������
21,840
Increase in property, plant andequipment and intangible assets��������
23,064

Thousands of U.S. dollars

Reconciliations Consolidated

Reportablesegment
Electric

Other$116,571 $1,877,204$1,877,204
331,761
358,052 $(358,052)$448,332 $2,235,257 $(358,052) $1,877,204$ 21,826 $   97,506 $   (2,617) $   94,888
524,520 3,960,537 (204,320) 3,756,217

Other

Total

¥12,686
36,105¥48,792¥ 2,375
57,083¥204,296
38,966¥243,263¥ 10,611
431,025¥(38,966)¥(38,966)¥   (284)(22,236)¥204,296¥ 10,326
408,789$1,760,633
26,291$1,786,924$    75,679
3,436,017

1,414

23,255(870)

22,384200,688

12,995

213,684(7,998)205,686

6,056

29,120(569)

28,551

211,93155,647

267,578(5,232)

262,346¥204,296

Total

Reconciliations Consolidated

Millions of yen

2019

Reportablesegment
Electric

Sales
Sales to external customers����������������� ¥193,565
Intersegment sales or transfers������������
2,394
Total������������������������������������������������� ¥195,960
Segment profit������������������������������������������ ¥  3,507
Segment assets���������������������������������������� 368,746
Other:
Depreciation�����������������������������������������
22,899
Increase in property, plant andequipment and intangible assets��������
17,376

Other

Total

Reconciliations Consolidated¥11,915
35,195¥47,111¥ 1,944
49,045¥205,481
37,590¥243,071¥  5,451
417,792¥(37,590)¥(37,590)¥     (8)(18,687)¥205,481¥  5,443
399,104

1,222

24,121(882)

23,2392,892

20,268(840)

19,428¥205,481

Notes: 1. ‌“Other” consists of construction, operation of electrical machinery and facilities on commission and others. Information of sales by regions is omitted, since theCompanies' sales to external customers in Japan accounted for more than 90% of the sales in the Consolidated Statements for the fiscal years ended March 31,
2020 and 2019.
2. Reconciliations of the segment profit and the segment assets are intersegment transaction eliminations.
3. Segment profit is adjusted to reflect operating income in the consolidated statements of income.

15. Subsequent event
The following appropriation of retained earnings at March 31, 2020, was approved at the Company's shareholders' meeting held on June 26, 2020:
Millions of yen

Year-end cash dividends, ¥30 (27¢) per share���������������������������

¥1,554

Thousands of U.S. dollars$14,286

On June 1, 2020, the Company effected a 1.05-for-1 stock split for each outstanding share and 2,710,855 shares were consequently issued toshareholders of record on May 31, 2020.
42

Okinawa Electric Power Company

43

Okinawa Electric Power Company

44

Okinawa Electric Power Company

45

Okinawa Electric Power Company

Non-consolidated Balance SheetThe Okinawa Electric Power Company, Incorporated

Millions of yen
2020
2019

March 31,2020 (Unaudited)
AssetsProperty, plant and equipment:
Utility plant and equipment��������������������������������������������������������������������������������������� ¥1,011,793
Construction in progress�������������������������������������������������������������������������������������������
14,097
Total����������������������������������������������������������������������������������������������������������������
1,025,890
Less:
Contributions in aid of construction ���������������������������������������������������������������������
(32,559)
Accumulated depreciation �����������������������������������������������������������������������������������
(675,819)
Total����������������������������������������������������������������������������������������������������������������
(708,378)
Net property, plant and equipment�������������������������������������������������������������������
317,511
Investments and other assets:
Investment securities������������������������������������������������������������������������������������������������
7,014
Investments in and advances to subsidiaries and affiliated companies����������������������
5,766
Deferred tax assets���������������������������������������������������������������������������������������������������
5,576
Other assets ������������������������������������������������������������������������������������������������������������
1,464
Allowance for doubtful accounts ������������������������������������������������������������������������������
(29)
Total investments and other assets
19,792Current assets:
Cash and cash equivalents ��������������������������������������������������������������������������������������
12,760Accounts receivable�������������������������������������������������������������������������������������������������
13,198
Fuel and supplies������������������������������������������������������������������������������������������������������
10,071Other current assets ������������������������������������������������������������������������������������������������
691
Allowance for doubtful accounts ������������������������������������������������������������������������������
(83)
Total current assets�����������������������������������������������������������������������������������������
36,637
Total���������������������������������������������������������������������������������������������������������������������
¥373,941
Liabilities and equity
Long-term liabilities:
Long-term debt, less current maturities �������������������������������������������������������������������
Lease obligations������������������������������������������������������������������������������������������������������
Liability for retirement benefits�����������������������������������������������������������������������������������
Other long-term liabilities������������������������������������������������������������������������������������������
Total long-term liabilities�����������������������������������������������������������������������������������
Current liabilities:
Current maturities of long-term debt�������������������������������������������������������������������������
Short-term borrowings���������������������������������������������������������������������������������������������
Commercial paper����������������������������������������������������������������������������������������������������
Accounts payable�����������������������������������������������������������������������������������������������������
Income taxes payable�����������������������������������������������������������������������������������������������
Accrued expenses����������������������������������������������������������������������������������������������������
Other current liabilities ���������������������������������������������������������������������������������������������
Total current liabilities���������������������������������������������������������������������������������������
Equity:** ***Common stock,
Authorized - 92,800,000 shares
Issued - 54,217,110 shares in 2020 and 2019�����������������������������������������������������
Capital surplus :Additional paid-in capital ��������������������������������������������������������������������������������������
Retained earnings :Legal reserve �������������������������������������������������������������������������������������������������������
Unappropriated����������������������������������������������������������������������������������������������������
Unrealized gain on available-for-sale securities����������������������������������������������������������
Deferred loss on derivatives under hedge accounting�����������������������������������������������
Treasury stock, at cost 2,390,471 shares in 2020 and 2,389,436 shares in 2019�����
Total equity������������������������������������������������������������������������������������������������������
Total���������������������������������������������������������������������������������������������������������������������

Thousands of
U.S. dollars *2020¥1,002,237
8,808
1,011,046$9,297,008
129,533
9,426,542(32,446)(660,977)(693,423)
317,622(299,174)(6,209,863)(6,509,038)
2,917,503

7,259
3,087
6,081
1,718
(34)
18,11364,454
52,98851,241
13,456(273)
181,866

7,379
12,373
12,731644(117)
33,010¥368,746

117,250
121,272
92,5436,351(769)
336,647$3,436,017¥152,549
21,5017,830
1,070
182,952¥158,836
22,651
7,320
1,708
190,517$1,401,724
197,571
71,9489,838
1,681,081

22,987

14,068211,2280
10,945583
12,0396,874
53,430

3,000
9,122
50
12,2644,494
43,0000100,576
5,357
110,630
63,164490,956

7,586

7,586

69,709

7,141

7,142

65,625964
125,391
1,734(21)(5,239)137,558¥373,941

964
122,849
1,935(12)(5,238)135,228¥368,746

8,866
1,152,180
15,939(195)(48,148)
1,263,978$3,436,017

Notes: * The translations of Japanese yen amounts into U.S. dollar amounts have been made at the rate of ¥108.83 to $1, the approximate rate of exchange as of March 31, 2020.
** A 1.25-for-1 stock split was effected on June 1, 2018.
		 It is calculated on the assumption that this stock split was conducted at the beginning of FY2019(April 1, 2018).
*** A 1.05-for-1 stock split was effected on June 1, 2020. However, the number of shares presented above has not been restated to reflect this stock split.
		 The number of the shares after the stock split is as follows:		 Authorized shares - 92,800,000 shares
		 Issued - 56,927,965 shares in 2020 and 2019
		 Treasury stock - 2,509,994 shares in 2020 and 2,508,907 shares in 201946

Okinawa Electric Power Company

Non-consolidated Statement of Income
The Okinawa Electric Power Company, Incorporated

Millions of yen
2020
2019

Year Ended March 31, 2020 (Unaudited)Thousands of
U.S. dollars *2020

Operating revenues�������������������������������������������������������������������������������������������������

¥194,471¥195,960$1,786,924

Operating expenses:
Personnel��������������������������������������������������������������������������������������������������������������
Fuel�����������������������������������������������������������������������������������������������������������������������
Purchased power��������������������������������������������������������������������������������������������������
Depreciation����������������������������������������������������������������������������������������������������������
Repairs and maintenance��������������������������������������������������������������������������������������
Taxes other than income taxes������������������������������������������������������������������������������
Other��������������������������������������������������������������������������������������������������������������������
Total operating expenses����������������������������������������������������������������������������������

17,981
48,83632,01021,693
18,841
7,329
39,541
186,234

17,69254,07032,732
22,717
18,992
7,238
39,008
192,453

165,225
448,745
294,128
199,335
173,124
67,351
363,335
1,711,245

Operating income����������������������������������������������������������������������������������������������������

8,236

3,507

75,679Other income (expenses):
Interest and dividend income��������������������������������������������������������������������������������
Interest expense����������������������������������������������������������������������������������������������������
Other - net������������������������������������������������������������������������������������������������������������Net other expenses (income)����������������������������������������������������������������������������

440(1,298)
(56)
(914)

587
(1,518)
1,117
(186)

4,046
(11,930)(521)(8,405)

Income before income taxes����������������������������������������������������������������������������������

7,321

3,694

67,273

Income taxes:
Current�����������������������������������������������������������������������������������������������������������������
Deferred����������������������������������������������������������������������������������������������������������������
Total�����������������������������������������������������������������������������������������������������������������
Net income���������������������������������������������������������������������������������������������������������������

1,117
552
1,669
¥5,651

903
(243)
659
¥3,034

10,264
5,078
15,342$51,930Yen

Per share of common stock
Basic net income **�����������������������������������������������������������������������������������������������Cash dividends applicable to the year ***��������������������������������������������������������������

¥103.86
60.00

U.S. Dollars¥55.76
60.00

$0.95
0.55

Notes: *0 ‌The translations of Japanese yen amounts into U.S. dollar amounts have been made at the rate of ¥108.83 to $1, the approximate rate of exchange at March 31,
2020.
**0 ‌A 1.25-for-1 stock split was effected on June 1, 2018. A 1.05-for-1 stock split was effected on June 1, 2020. It is calculated on the assumption that these stock
splits were conducted at the beginning of FY 2019 (April 1, 2018).
***0‌A 1.05-for-1 stock split was effected on June 1, 2020. However, the cash dividends per share information has not been restated to reflect this stock split at eachfiscal year.

47

Okinawa Electric Power Company