Every day, Tokyo Gas rewards the trust placed in it by existing customers byexceeding their expectations through the exceptional value of its “total energysolutions.” At the same time, we are reaching out to prospective customers
through the appealing benefits of our value proposition. Through these efforts
we are opening up a new and more rewarding “energy frontier.”

Face-to-Face with Customer Value

Tokyo Gas Annual Report 200501

During the 120 years since its foundation, Tokyo Gas has supplied customers in the Tokyo metropolitan area andthe greater Kanto region with city gas, an energy source that has become an essential part of people’s lives andbusiness activities.
Tokyo Gas has built a solid business base in this service area, the thriving economic center of Japan that generates
more than 40% of the nation’s gross domestic product within an area 100 kilometers in diameter. Our business structure is solidly grounded in natural gas. This low environmental-load energy source is finding increased use owing to
low emissions of NOx and CO2 and zero emissions of SOx, gases that cause atmospheric pollution and global warming.
Tokyo Gas offers experience and technologies in the use of natural gas that it has honed over many years. At a timeof progressive deregulation that is stimulating competition with suppliers of electricity and oil, as well as with newentrants in the natural gas business, Tokyo Gas has taken stock of the strengths it has cultivated over the years andbegun to implement an aggressive growth strategy.
Even as it solidifies its position as a leader and trendsetter of Japan’s gas industry, Tokyo Gas is undergoing a major
structural transformation to remake itself into a corporate group that can serve as a “one-stop” supplier of heat,electric power, air conditioning and other forms of energy customers require.

Dynamic
Growth strategy for a new era: leveraging built-in
strengths to enhance our potential

02 Tokyo Gas Annual Report 2005

Increasing Added Value and Promoting the Use of Natural Gas
Tokyo Gas is implementing policies aimed
at further expansion of its gas business.
These include enlargement of the supply
area in the Kanto region, where latentdemand is great, the supply of comprehensive energy services centered onnatural gas and wholesale distribution togas companies outside its service area.
Over the years, Tokyo Gas has laid anextensive network of gas pipelines,
exceeding 50,000 kilometers in total
length, primarily in the greater Tokyoarea. However, the advance of manufacturing plants and major commercial
facility construction has reached theperiphery of the Tokyo metropolitan area,
and we are carefully gauging energy
demand and providing energy solutions
tailored to the needs of customers inoutlying areas. With full consideration
given to investment returns, Tokyo Gas istaking effective measures to extend
pipelines, construct satellite stations andlink facilities expansion to increased
sales of city gas.
Tokyo Gas is also actively proposing
comprehensive energy services involving

gas cogeneration systems, which offer
excellent energy efficiency and low environmental load. Tokyo Gas is increasing
added value and promoting wider use ofnatural gas by serving as a comprehensive
source for the supply of heat, electric
power and air conditioning that customers
require, as well as the technical services
to ensure their stable supply.
At the same time, Tokyo Gas
leverages its engineering capabilities in
the wholesale distribution of gas to othergas suppliers, implementing a strategy
that promotes mutual growth by actively
participating in the sales activities ofwholesale gas customers.

Tokyo Gas Annual Report 200503

By nature of their position as proprietors of infrastructure essential to customers’ lives and business activities, city
gas companies are entrusted with the public mission of providing a stable and secure supply of gas.
With regard to securing the gas resources essential for stable supply, Tokyo Gas was the first company in Japan toimport LNG and has perfected a means for the stable, low-cost procurement of this resource. We engage in theimport of LNG from nine projects in six countries and has moved into upstream development and LNG transport
using company-owned vessels, in further pursuit of this objective.
Tokyo Gas has implemented initiatives to put safety first in the process of producing city gas from LNG and delivering it to customers. We design production and supply facilities to withstand earthquakes of magnitude 7.2, the equivalent of the Great Hanshin Earthquake. Moreover, Tokyo Gas operates SUPREME, the world’s most extensive superdense real-time seismic motion monitoring and disaster mitigation system, which remotely monitors some 3,800 locations and shuts off gas supply in times of natural disaster. We work to ensure safety in residential use through suchmeans as promoting the introduction of microchip-controlled gas meters with automatic shut-off functions and theenhancement of Gaslight 24, a system for round-the-clock emergency mobilization to respond to gas leaks andother problems.

Reliable
Tireless pursuit of the safety, security and comfort
that underpin customer trust

Proposing More Comfortable, Satisfying Lifestyles through
New Ways of Using Gas
Tokyo Gas enjoys a bond of trust basedon safety and security with 9.6 million
households who have long appreciatedthe flavor of food cooked over an open
flame and the convenience of water
heated with gas. We are working todevelop new appliances and propose newlifestyles to enable people to more fully
experience the comfortable, satisfying
living made possible by city gas.
Tokyo Gas has brought the comfort ofcity gas to every room in the home with
the TES system for using hot water toenhance overall home comfort. TES
system customers enjoy the benefits ofexpanded applications for gas such as thefloor heating systems now included as
standard equipment in about 80%* of condominiums newly constructed in theTokyo metropolitan area, bathroom
heaters, clothes dryers and a new hotwater mist sauna. Launched in fiscal 2004,
the TES Remote PLUS service has madepossible a higher level of conveniencethrough the use of mobile phones andpersonal computers for the remote
operation of gas appliances.
The TES system is already in use in
more than a million residences. To
express its appreciation to customers, in2005 Tokyo Gas will conduct a largescale campaign in celebration of its
selling of one million systems. Anotheraim of the campaign is to ascertain
customer needs and wants and to apply
the information obtained to futurebusiness activities that will meet expectations and reward customer trust.

*About 80% of all newly-built private condominiums in The Tokyo Gas’ service area have floor-heating systems.

04 Tokyo Gas Annual Report 2005

Tokyo Gas Annual Report 200505