Utsunomiya

Gunma
Tochigi

Network Expansion andNew Energy Services areIncreasing Demand
To transform its business advantages into growth in
the core gas business, Tokyo Gas recognizes it is necessary to extend its pipeline network to expand its
supply services. With deregulation leading to escalating competition as more companies move into theenergy sector from other industries, the Company
believes that infrastructure development in regions ofexpanding demand will create business opportunities.
Effective pipeline expansion, guided by careful monitoring of demand trends and profitability, is a criticalelement of business strategy.
Under this strategy, Tokyo Gas has extended its
pipeline network to the northern Kanto region,
which offers particularly strong potential for

Moka

HitachiTochigi Line (2006)
SanoKumagaya-Sano Line (2004)

IbarakiKumagayademand growth. The Kumagaya-Sano Line will becompleted in October 2004, and the Tochigi Line inMarch 2006. To attract new users in areas aroundthese new pipelines, it is also actively marketingcogeneration systems, which are increasingly seen
as solutions to environmental and cost concerns.
There is growing interest in the concept of energy service providers. By establishing and retaining
ownership of the cogeneration systems and otherenergy facilities they employ, energy service
providers can give customers a one-stop solution totheir energy needs. Customers can easily adopt
these services because they are not required tomake large capital investments. Other customer

advantages include reduced energy costs andenvironmental friendliness. In 2002, Tokyo Gas
established a new subsidiary, ENERGY ADVANCE Co.,
Ltd. The engineering capabilities of the Tokyo Gas
Group and its ability to procure LNG reliably and economically allow the new company to maximize theadded-value potential of gas cogeneration. ENERGY ADVANCE is employing a highly efficient marketing strategy, targeting customers with substantial
heat needs and strong environmental awareness. Its
primary focus is the Kanto region, where there is alarge latent demand.

SaitamaTokyo

Central Trunk Line (2009)

HeadOffice

Kanagawa

Chiba

TokyoBay

Ohgishima
LNG Terminal

Sodegaura
LNG Terminal

Negishi LNG Terminal
Minamiashigara(High-pressure transmission pipelines
High-pressure transmission pipelines(Under construction)
Medium-pressure transmission pipelines) Proposed year of completion
Tokyo Gas’ service area
Tokyo Gas’ direct and indirect wholesale area

Kanto Region

New Ways to Grow, Actively and Proactively
Configuration of Residential Fuel Cell
Cogeneration System

Strengthening Ties withCustomers through Product andService Innovation
Although anticipating strong competition from electric
power companies in the household market, Tokyo Gas isdetermined to attract new customers and maintain its
relationships with existing customers. A key strategic
asset in this market is the Tokyo Gas brand, which thepublic associates with safety, reliability and trust. Tokyo
Gas is using this asset to its advantage against the competition by offering a wide range of products andNew Cooktop
Since its launch in 2001, sales havesteadily expanded. The number ofunits sold in fiscal 2003 reached44,500, a 64% year-on-year increase.

[2]

TOKYO GAS ANNUAL REPORT 2004

Utility gridElectricity

services that meet customer needs and provide
appealing lifestyle options.
In 2001, Tokyo Gas launched a new type of gas
cooktop. The ease of cleaning and attractive designof this appliance have made it a major success,and it is expected to account for over 40% of gas
cooktops sold by Tokyo Gas in 2004. The Company ismarketing the new cooktop on the basis of its excellent features to counter competition from induction
heating (IH) cooking appliances.
Another popular product of Tokyo Gas is high-efficiency water heaters. As a result of aggressive advertising campaigns, consumers have recognized the energy efficiency, environmental qualities and other appealing
features of this range of water heaters, and sales havefar exceeded initial projections. Since the second halfof the 1990s, the Company has also actively marketed
floor heating, establishing it as the de facto standard.
Today floor heating is installed as standard in about
80%* of new condominiums.
Many other products and services are helping toenhance the added value provided by Tokyo Gas from theperspective of consumers. Examples include a range ofbilling options for gas floor heating and a remote operation service for gas equipment to control bath or floor
heating from outside the home using mobile telephones
or computers. A home security service is provided incollaboration with Sohgo Security Services Co., Ltd., aleading security firm. Tokyo Gas also offers insurance
for household effects, which was jointly developed withSpace heatingCity gas
Hot water

Sompo Japan Insurance Inc.
There is growing interest in residential fuel cells as
economical and environment-friendly energy systems. Tokyo Gas sees the emergence of this market as amajor business opportunity and has been developing
technology to improve durability and reduce costs with aview to a market launch in the fourth quarter of fiscal
2004. In April 2004, it established a project group within
its sales organization to specifically focus on these systems and develop a marketing structure.
* About 80% of all condominiums developed by the private sector in
the Tokyo Gas service area have floor-heating systems.

TOKYO GAS ANNUAL REPORT 2004[3]