Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Introduction
Introduction

Editorial Policy

Editorial Policy
Index

Tohoku Electric Power Group Integrated Report 2023 Editorial Policy

Tohoku Electric Power’s media for information disclosure

The Tohoku Electric Power Group has published integrated reports since FY2018 topromote understanding of the Group’s plans for medium- and long-term value creationfrom both financial and non-financial perspectives.
Based on a careful selection of the information we want to convey to shareholders
and investors, this FY2023 Report includes an introduction to the Tohoku Electric PowerGroup’s sustainability priorities (materiality topics) and specific measures designed toachieve Working alongside next, the Tohoku Electric Power Group’s Medium- to LongTerm Vision.
The Report also reflects the International Integrated Reporting Framework of the IFRSFoundation, the Guidance for Collaborative Value Creation from the Ministry of Economy,
Trade and Industry of Japan, and other documents. Prior to its publication we submitted
this Report to the Board of Directors and confirmed its validity.
We will continue to enhance the content provided in the Report to deepen
understanding of the Tohoku Electric Power Group among our stakeholders.

The Tohoku Electric Power Group reports issues and actions of high significance in its
Integrated Report. Indepth financial information and non-financial information are available
from other information sources. The Tohoku Electric Power Group’s Sustainability Reportintroduces a broad range of information on sustainability, including the Group’s
sustainability concepts, targets, and initiatives.

Guidelines and other information used for reference

Boundary of Report
The 77 companies in the Tohoku Electric Power Group
Period subject to Report
While the Report in principle covers initiatives during FY2022 (April 1, 2022–
March 31, 2023), certain activities presented include information from pastfiscal years or FY2023

1

Tohoku Electric Power Group

Message from Top Management
Message from the CFO
Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

Toward Realizing Carbon Neutrality
Tohoku Electric Power Group Integrated Report
Foundations for Sustained Growth

Financialinformation

Flash earnings reportNon-financial
information
Financial report, Hotline(business overview),
Notice of Convocation of
the Ordinary General
Meeting of Shareholders,materials for financial
results briefings

Data

Corporate Governance
ReportTohoku Electric PowerGroup Environmental
Action Report
Sustainability Reportwww.tohoku-epco.co.jp/(previous Report: September 2022)

Planned next dateof publication
September 2024

Tohoku Electric Power Co., Inc.

1-7-1 Honcho, Aoba-ku, Sendai, Miyagi 980-8550, Japan
Phone +81-(0)22-225-2111
E-mail: s.sustainability.vr@tohoku-epco.co.jp

Steps in Value Creation

Toward the Working Alongside Next Vision

Date of publication
September 2023

For inquiries, please contact:

Corporate Strategy Division

At a Glance

A Value Creation Story

Fact Book

Ministry of Economy, Trade and Industry: Guidance for Collaborative Value Creation
IFRS Foundation: The International <IR> Framework
IFRS Foundation: SASB Standards
Global Reporting Initiative (GRI): GRI Sustainability Reporting Standards
Final report of the Task Force on Climate-related Financial Disclosures (TCFD)

The Tohoku Electric Power Group’s
Management Philosophy andGroup Slogan

Forward-looking statements
This report contains financial forecasts and other forward-looking statements. They
represent Tohoku Electric Power’s judgments based on information available at the timeof disclosure and certain assumptions. They involve known and unknown risks,
uncertainties, and other factors that may cause actual results, performance, andachievements to differ materially from expectations.

INTEGRATEDREPORT 2023

Introduction

Index

Editorial Policy
Index

Introduction

Toward the Working Alongside Next Vision

Toward Realizing Carbon Neutrality

1 Editorial Policy
2 Index
3 The Tohoku Electric Power Group’s Management Philosophy

27 Financial Strategies
28 Green/Transition Financing
29 Overview of the Tohoku Electric Power Group’s FY2023

56 Roadmap Toward Realizing Carbon Neutrality
57 Case Studies of Carbon Neutrality Initiatives
60 Disclosure Under the TCFD Recommendationsand Group Slogan

4 At a Glance
5 Steps in Value Creation
7 Message from Top Management
11 Message from the CFO
13 Preventing the recurrence of a case involving the improper
handling of information on PPS customers

A Value Creation Story

16 Value Creation Process
17 Realization of the Tohoku Electric Power Group’s Medium- to
Long-Term Vision “Working alongside next”

20 Tohoku Electric Power Group Carbon Neutral Challenge
2050

21 Sustainability Initiatives
22 Sustainability Priorities (Materiality Topics)

2

Tohoku Electric Power Group

Medium-Term Plan

Power Supply Business

30 Fuel Procurement, Thermal Power Generation, Wholesaling
34 Renewable Energy
38 Nuclear Power
41 Power Transmission and Distribution
Smart Society Building Business

44 Development Courses of Action
46 Electricity Retail Sales
47 Next-Generation Energy Services
49 Electricity Plus Services
51 Open Innovation

52 R&D/IP Strategies

Foundations for Sustained Growth

67 Establishing a Society that Recycles Effectively
68 Conserving Biodiversity
69 Human Resource Strategy
72 Digital Transformation (DX) Strategy
73 Respect for Human Rights
74 Safety Initiatives
75 Enhancing Resilience
76 Contributing to Communities
77 Risk Management
78 Corporate Governance

The Tohoku Electric Power Group’s
Management Philosophy andGroup Slogan
At a Glance
Steps in Value Creation
Message from Top Management
Message from the CFO
Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Data

93 Financial Information
94 Partnerships, External Evaluations, Etc.
96 SASB Standards Index
99 Corporate Information

INTEGRATEDREPORT 2023

Introduction

The Tohoku Electric Power Group’s Management Philosophy and Group Slogan

Editorial Policy
Index

The Tohoku Electric Power Group’s Management Philosophy
Tohoku Electric Power was founded in 1951.
Amid the postwar recovery, our first President, Ungoro Uchigasaki,
established the management philosophy which called for “Rebuilding
Japan starting in Tohoku and developing Tohoku starting with electric

The Tohoku Electric PowerGroup’s Management Philosophy
and Group Slogan
At a Glance

Prosper with Local Communities

power.” The Group rephrased this motto thereafter as follows: “TheWe seek to create value only the Tohoku Electric Power Group can deliver and toprosperity of the Tohoku region is essential to our own growth.” We’ve

realize growth and an enriched society by continuing to take on challenges

continued to do business under this philosophy for some 70 years.

and pursue innovation alongside our customers and our communities.

The strong commitment to local communities expressed in this concept is a

Steps in Value Creation
Message from Top Management
Message from the CFO
Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

fundamental management value and the ultimate expression of the Tohoku ElectricPower Group’s Management Philosophy of prospering with local communities. This

Foundations for Sustained Growthvision of extending our roots to contribute to the regions in which we operate is anDataunshakeable pillar from which all Group employees continue to approach their work, evenamid dramatically changing business environment.
However, the way to prosper with local communities must change with the times. To date,prosperity with local communities has referred to generating earnings by providing a stable, low-costsource of electricity to customers in Tohoku and Niigata. Looking forward, we will seek to expand ourbusiness area and secure management resources beyond Tohoku and Niigata, while maintaining our
willingness to contribute to Tohoku and Niigata. Through value created by progressive activities grounded

The Tohoku Electric Power Group Slogan

in energy services and creating solutions to social challenges, our goal is to contribute to Tohoku andNiigata, attracting human resources, technology, and investment to the region.
needs and issues confronting the customers who make up our local communities and theYori, Sou, Chikara

commitment of each individual employee to creating new forms of prosperity in joint efforts.

(The Strength to Work Alongside)

Essential aspects of putting this management philosophy into practice include receptiveness to the

The Tohoku Electric Power Group slogan—Yori, Sou, Chikara (The Strength to Work Alongside)—is apromise to our customers and to local communities. Based on the perspective of working together

every customer with services suited to their lifestyles and working lives.

with and alongside our customers and communities, this promise says each and every GroupMoving forward, driven by our founding motive of serving as a bedrock for theemployee will take this management philosophy to heart in his or her work and everyday activities.

region, we will continue working hand-in-hand with local communities, delivering

Under this slogan, we will seek to help co-create a comfortable, safe, reliable, and smart society andservices to the individuals within them based on a true sense of gratitude andto provide the added value only the Tohoku Electric Power Group can deliver.

3

Our motto, yori, sou, chikara, derives from the care we take in providing each andTohoku Electric Power Group

broad vision of the future.

INTEGRATEDREPORT 2023

Introduction

At a Glance

Editorial Policy

About the Tohoku and Niigata region
The area in which the Tohoku Electric Power Group’sbusinesses are based—the Tohoku and Niigata region—
accounts for about 20% of Japan’s land mass. The region is
subject to challenging natural conditions, including
earthquakes like the Great East Japan Earthquake, winterstorms, and snowfall.
The region’s traits also serve as valuable community
resources that contribute not just to renewable energy fromhydroelectric, wind, and geothermal sources, but to theregion’s seasonal scenery and diverse culture, including
foods and festivals marked by distinctive local flavors.
The region adjoins the vast market of the greater Tokyo
area, to which it is connected by high-speed transportation
network, including Shinkansen high-speed rail andexpressways. At the same time, the region is experiencing theeffects of depopulation and an aging population with low birthrates at a rate that outpaces other regions in Japan. The
region is widely expected to confront social challenges invarious areas, including transportation, education, andwelfare.

Total land mass*1

AomoriPrefecture
Akita Prefecture

Yamagata
Prefecture
Niigata
Prefecture

Iwate
Prefecture

Fukushima
Prefecture

Tokyo

Fuel procurement

Smart Society Building Business

Renewables
Achieving stable,
flexible, andefficient fuelprocurement

Pursuing an
optimal powersource structure
in light of theS+3E* approach

Trading

Electricity
wholesaling

Growing profits by
maximizing thevalue of electricity* Safety + energy security, environmental conservation, and economic efficiency

4

Tohoku Electric Power Group

21.0%

8.5%

79,531.35 km2

10,579,000

The vast region comprising
Tohoku and Niigata represents avaluable natural resource withhigh potential for renewableenergy development.

The region faces issues related
to depopulation and an aging
population with low birth rates.
At the same time, we see efforts
toward solutions to these issues
as business opportunities for
the Group.

Agricultural output*3

Renewable energy power
generation*4

19%
1,586 billion yen
Agriculture, an importantregional industry, offers highpotential for the development ofrelated services. The Group willtake on the challenges of thisand other new business fields.

The Tohoku Electric Power Group engages in business as an energy services groupbased on its commitment to maximize value for the customer. Its main area of business is
supplying power, primarily in the Tohoku and Niigata region. By demonstrating the
integrated capabilities of the Group while optimally allocating management resources
across the value chain, the Tohoku Electric Power Group is working to put “Working
alongside next,” our medium- to long-term vision into practice—and, in so doing, toincrease corporate value groupwide.
Power Supply Business

Population*2

MiyagiPrefecture

Tohoku Electric Power’s Value Chain

ThermalNuclearIndex

The Tohoku and Niigata region in nationwide statisticsPowertransmission& distribution
Maintaining a stable
power supply

Services
Electricity
retail sales

Maximizing value forthe customer by
establishing a
comfortable, safe,
reliable smart society

Leveraging the distinctive
features of the region, the Grouphas gathered expertise bypromoting renewable energy.
We will continue to strengthen
these businesses in the future.

The Tohoku Electric Power Group’s
Management Philosophy andGroup Slogan

Population composition

At a Glance
Steps in Value Creation

29%

33%

Message from Top Management
Message from the CFO

56%

59%

Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

A Value Creation Story

11%

12%

TohokuNationwide
Under 15Ages
Age 65 oryears of age
15–64
older

Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

FY2022
Wind

Solar

44%

22%

3,253,832 kWh

4,860,051 MWh

Foundations for Sustained Growth
Data

Geothermal

33%
639,871kWh

Sources*1: Ministry of Land, Infrastructure, Transport and Tourism, Statistical Reports on the Land Area by Prefectures and Municipalities inJapan (as of April 1, 2023)*2: Statistics Bureau, Ministry of Internal Affairs and Communications, Population Estimates (as of October 1, 2022)*3: Ministry of Agriculture, Forestry and Fisheries, Agricultural Production Statistics (2021)*4: Agency for Natural Resources and Energy, FY2022 Electric Power Statistics

Tohoku Electric Power by the numbers
Technological capabilities
Combined cycle power
generating efficiency

A world leader
Since launching Japan’s firstlarge-capacity combined cycle
power generation facility, theGroup has amassed a wealth oftechnology and knowledge inthe field. The state-of-the-art
Unit No. 1 at the Joetsu Thermal
Power Station has achieved
thermal efficiency of 63.62%, theworld’s highest figure as ofJanuary 24, 2023. We’reachieving both high cost
performance while reducing
environmental impact.

Network of communities
and people
Number of business sites

103 sites

The Group has built up its
customer base and human
networks over many years in the
Tohoku and Niigata region andwill maximally leverage theseassets to drive further growth.
* Total number of business sites of
Tohoku Electric Power and Tohoku
Electric Power Network (as of April
2023)

Name recognition
Tohoku Electric Power’s
name recognition

96.2%

The Group’s solid namerecognition in the Tohoku andNiigata region, where its
businesses are based, is amongits greatest strengths.
* Percentage of respondents answeringthat they were aware of Tohoku
Electric Power in a survey of 2451
residents of the Tohoku and Niigata
region (June 2023)

INTEGRATEDREPORT 2023

Introduction

Steps in Value Creation

Editorial Policy
Index

Tohoku Electric Power was founded in 1951, a time when Japan was still recovering from the turmoil of the Second World War. Since then, we’ve confronted difficult challenges in eachera, including power shortages during the postwar period of reconstruction, oil crises, numerous natural disasters, and the deregulation of the electric power market. On each occasion,
the Group has worked as a team to fulfill its mission of delivering a stable, high-quality supply of electricity. Moving forward, we will continue to work with local communities to contributeto the growth and development of the six Tohoku prefectures and Niigata Prefecture while ceaselessly working to create new corporate value.

The Tohoku Electric Power Group’s
Management Philosophy andGroup Slogan
At a Glance
Steps in Value Creation
Message from Top Management
Message from the CFO

1950s —
Mid-1950s economic boom
Developments

1958-1961 economic boom, income-doubling planin society

1970s —

1990s —

Dollar shock ollapse of the Bubble
C
EconomyFirst oil crisis

L ate 1960s economic boomPostwar reconstruction and rapid economic growth bringgrowing demand for electric powerSocial issues

Second oil crisisBubble economy

Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

Kyoto Agreement signing mandates reductions ingreenhouse gas emissions.
Start of liberalization of the retail electricity market

International Financial Crisis, growth of sustainability management in the West esponding to global environmental issues, including the need toR
reduce greenhouse gas emissions
Low-priced supply of electricity in a competitive global environmentA global oil crisis and power shortages

A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Contributing to postwar recovery and the development of Tohoku andNiigata by developing power sources catering to growing demand forelectric power

Value provided
by Tohoku
Electric Power

Amidst electricity shortages during the postwar period of recovery, Tohoku
Electric Power pushed ahead to develop energy sources within the Tadami River
water system, its largest hydroelectric power zone, working under the motto:“Rebuilding Japan starting with Tohoku and developing Tohoku through electric
power.” Later, to meet growing demand for electric power, we began building
and expanding state-of-the-art thermal power stations, starting with the
Hachinohe Thermal Power Station. We’ve supported local economic growth andthe lives of local residents ever since.

1954

Uwada Power Station comes online.

5

Tohoku Electric Power GroupPursuing diversification of power sources to break from dependency on
oil-fired thermal power and ensure a stable supply of electrical power
Motivated by the global oil crisis, Tohoku Electric Power approached various
issues, including research on diverse power sources and development site
surveys, with the aim of breaking the dependency on oil-fired power. Power
source diversification advanced considerably. Both the large-scale pumped-type
Numazawa Power Station No. 2 and Onagawa Nuclear Power Station Unit 1
came online during this period.

1958

Our first large-scale thermal power plant, Hachinohe
Thermal Power Station Unit No. 1, begins operating

Responding to the partial liberalization of retail electricity markets whilepursuing reduction of environmental impact in response to growing interestin global environmental issues
Striving to protect the environment and to make more efficient use of energy,
we launched initiatives to develop techniques for renewable energy such as
wind, solar, and geothermal power and to improve the thermal efficiency ofthermal power generation.
In addition, with the implementation of partial liberalization of retail electricity
markets for special high-voltage power users, we took on the challenge ofcorporate reforms to achieve price competitiveness. Starting with the rate
reductions in October 2000, the first after partial liberalization, we reduced rates
four times over the course of six years.

1984

Launch of operations at Onagawa Nuclear Power
Station Unit No. 1, our first nuclear power plant

1999

Higashi Niigata Thermal Power Station Unit 4-1 systemcomes online (achieving thermal efficiency of 55% orhigher, world-leading figures at the time)

INTEGRATEDREPORT 2023

2010s —Sustainable Development Goals (SDGs) adopted at UN Summit

in society

Editorial Policy

2020s —

Great East Japan Earthquake
Developments

Introduction

Today

Steps in Value Creation

Index

FutureThe Tohoku Electric Power Group’s
Management Philosophy andGroup Slogan

COVID-19 pandemic

At a Glance

Russia invades Ukraine

Steps in Value Creation

Start of full liberalization of retail electricity market

Message from Top Management

 ecovery and restoration from the Great East JapanR
Earthquake

Social issues

Responding to society’s challenges, such as climate change and an aging population with low birth rates
Securing stable supply by ensuring preparedness for natural disasters and geopolitical risks

Message from the CFO
Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

A Value Creation Story
Value provided
by Tohoku
Electric Power

Supporting recovery and restoration

Tackling the challenge of creating new value

from the Great East Japan Earthquake

to realize a sustainable society and a smart society for a new age, starting in Tohoku

The Great East Japan Earthquake caused widespread power
failures affecting nearly the entire Tohoku region. Nevertheless,drawing on the Group’s strengths, we were able to restore power
to around 80% of the area in just three days. The automatic
shutdown of all reactors in response to the earthquake at the
Onagawa Nuclear Power Station maintained safety, as designed.
The station accommodated evacuees from the community forabout three months and helped the region overcome thechallenges posed by the disaster.
We also launched the Forward Together initiative to support
restoration work within the region. The initiative entailed a wide
range of activities undertaken alongside residents, including
support for community development and information provision.

Values we have treasured since our founding
The prosperity of the Tohoku regionis essential to our own growth.
The Tohoku Electric Power Group’s
Management Philosophy

Prosper with Local Communities
The Tohoku Electric Power Group Slogan

Yori, Sou, Chikara(The Strength to Work Alongside)

The strengths we have built up over morethan 70 years
2011

Rapid recovery from power failures caused by theGreat East Japan Earthquake

Electricity professionals
 uman resources and sense of mission supportingH
the stable supply of electricity
Power generation operation technologies andworld-leading high-efficiency thermal power
generation technologies
Power grid operation and control technologies
E xperience overcoming and recovering from theGreat East Japan Earthquake
Renewable energy potential in the six Tohoku
prefectures and Niigata Prefecture

Strong community ties ustomer base, business sites, and powerC
infrastructure, centered on the six Tohoku
prefectures and Niigata Prefecture
Ties to local governments and local businessassociations in the six Tohoku prefectures andNiigata Prefecture
Social contribution activities in the six Tohoku
prefectures and Niigata Prefecture

6

Tohoku Electric Power Group

Toward the Working Alongside Next Vision

The emergence of various and diverse social challenges in recent years has led to dramaticchanges in the structure of society. Combined with other factors, including changes to demand andsupply structures accompanying the growing use of renewable energy and digitalization, thesefactors have brought the business environment in which the Group operates to a major turning point.
To increase corporate value over the medium to long term and contribute to sustainable progress
throughout society in this time of dramatic change, the Group is promoting sustainability in line with
its Sustainability Promotion Policy.
The Group will continue to fulfill its mission and seek to achieve sustained growth alongsidesociety by reexamining the values it has maintained since its founding in order to challenge the newera, while fully capitalizing on its strengths amassed to date to expedite reforms, realize solutions inline with sustainability priorities (materiality topics), realize a smart society starting in Tohoku, andachieve carbon neutrality by 2050.

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Tohoku Electric Power Group’s vision
Tohoku Electric PowerGroup medium- tolong-term vision “Working
alongside next”

Working alongside next

Targeting a smart society, starting in Tohoku

Realizing a smart
society, startingin Tohoku

P17

Tohoku Electric PowerGroup’s Carbon Neutral
Challenge 2050

Tohoku ElectricPower Group
Carbon Neutral
Challenge 2O5O

Achieving carbon
neutrality

P20

Medium-term
Plan
P29

Tohoku Electric Power Group’s Sustainability Policy /sustainability priorities (materiality topics)
P21
Increasing corporate value over the medium to longterm and contributing to sustainable progress
throughout society

INTEGRATEDREPORT 2023

Introduction

Message from Top Management

Editorial Policy
Index
The Tohoku Electric Power Group’s
Management Philosophy andGroup Slogan
At a Glance
Steps in Value Creation
Message from Top Management
Message from the CFO

Striving to further raise corporate value
while building strong risk-resilient
management foundations
based on our earnings capabilities

Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Representative Director & President
Tohoku Electric Power Co., Inc.

Taking on increasing uncertainty and change
Three years have passed since I took office as
President. Various ongoing situations make it difficult toforecast future prospects, including the transformation ofvalues due to COVID-19, the accelerating trend toward
carbon neutrality, and supply chain disruptions andincreasing fluctuations in market prices of fuel and powertransactions due to the Ukraine crisis.
In FY2022, we recorded the second consecutive yearof losses. Consolidated ordinary losses reached a record
high of 199.2 billion yen due to factors including largescale increases in power procurement costs due to rising

7

Tohoku Electric Power Group

prices in wholesale electricity markets as well as theeffects of soaring fuel prices and yen depreciation. Overthe past two years, our balance of interest-bearing debtswelled by about 1 trillion yen to 3.3756 trillion yen. At thesame time, our equity ratio fell from 18.5% (in FY2020) to
10.5%. While the ratio remains in the 10% range, it iseven lower than it was at the time of the Great East
Japan Earthquake.
Under such a critical situation, in addition to efforts ofcomprehensive efficiency improvements, we have taken
various other measures, including cutting executive pay,revising electricity rates, choosing not to pay dividends toshareholders, and cutting employee bonuses. I would liketo take this opportunity once again to express our
gratitude to all stakeholders for their understanding andcooperation.
Going forward, in addition to swiftly improving ourfinancial standing and enhancing risk resilience, we will
invest in future growth as we pursue stable earnings toprovide returns to our stakeholders.

INTEGRATEDREPORT 2023

Introduction

Message from Top Management

Editorial Policy
Index

Electricity rate revisions and the importance of
resuming nuclear power operations
The revised electricity rates introduced to all
customers since the summer of last year reflect thechanging demand and supply structures generated byfactors including the growing adoption of renewableenergy and rising fuel and market prices. The revised
rates also make it possible to shift the base fuel prices forfuel cost adjustments to levels after Russia’s invasion of
Ukraine. This has strengthened our resilience to the riskof rising fuel prices.
In light of geopolitical risks, climate change, and otherfactors, we see nuclear power as a key source ofelectricity. We expect the restart of Unit No. 2 at the
Onagawa Nuclear Power Station to improve profitability
by 40.0 billion yen per year due to savings in fuel costs
and other effects.
The Onagawa Nuclear Power Station will resume
operations after the 12-year suspension following theGreat East Japan Earthquake, and is our first boilingwater reactor (BWR) to resume operations. In addition tosimulator-based training, we are dispatching personnel tonuclear power plants operated by other companies inJapan and around the world for training on actual
reactors.
We are making steady progress toward resuming
operations around May 2024 through measures such as
construction incorporating safety measures, assigning
top priority to occupational health and safety, and testingand inspections in preparation for resumed operations.

8

Tohoku Electric Power Group

Toward sustained growth based on strengthened earning capabilities
For FY2023, we project ordinary income of 200.0
billion yen thanks to a series of revisions to electricity
rates, as well as falling fuel prices and electricity
transaction prices. However, this level of earnings is still
not sufficient to restore the equity lost over the two years
of FY2021 and FY2022. In addition, as mentioned earlier,the business environment is subject to significant
fluctuations due to factors including geopolitical andmarket risks. In addition to restoring our financial makeup
and building strong and risk-resilient managementfoundations, we must lay the groundwork for future
growth in corporate value, squarely centered on thegrowth areas of renewable energy and the Smart Society
Building Business.
In the renewable energy business, we continue tochallenge our power generation target of 2,000 MW.
Renewable energy development in the Tohoku region,
which boasts a wealth of sites ideally suited torenewables, has started to become competitive. We will
work to increase the use and profitability of renewableenergy through businesses that address the entire life
cycle, including operation and maintenance, such as bybuilding a training center for wind power maintenancetechnicians.
In the Smart Society Building Business, we aremoving forward in the three main areas of building on ourcustomer base to deliver electricity plus services,leveraging our expertise in next-generation energy, andidentifying new domains. For next-generation energy, in
December of last year, we opened the Office ofCorporate PPA to enhance our corporate powerpurchase agreement (PPA)* business. In addition to
on-site PPAs involving the installation of solar power
generation facilities at customer power consumption
sites, we will also deploy off-site PPA services in whichsolar power generation facilities are installed at sites
located remotely from the end-user facilities.

The power of our human resources constitutes thefoundations of our business activities; this, and digitaltransformation (DX), will be important drivers instrengthening corporate value. We have formulated an
HR portfolio linked to medium- to long-term businessstrategies and are moving forward with hiring and training
based on the numbers of personnel and the skills
needed to implement our business strategies.
Additionally, we have issued a health management
declaration and a message from top management
concerning diversity, with the goal of ensuring that eachand every employee can demonstrate their abilities to thefullest. Through these efforts, we are striving to maintainand improve safety, physical health, and mental health.
Under our DX promotion policy, we are reforming
business processes and creating new business value
across the Group to ensure that our accumulated data
and the digital technologies that continue to advancefrom day to day can increase our earning capacity.
Since assuming office as President, I have repeatedly
highlighted the need to transform our awareness while
maintaining the trust we have earned to date. Thistransformation is already visible: The Power Generation
Company and the Internal Services Division, which had
previously not engaged in sales activities, are now
developing and selling products and services, including
services involving monitoring for customer facility
irregularities and online teaching materials to train DX
human resources.
I believe actions to identify solutions that only the
Tohoku Electric Power Group can deliver, based on theGroup’s slogan “Yori, Sou, Chikara” (The Strength toWork Alongside), will generate earnings. Our earning
capabilities are the direct result of the strength to work
alongside. We will maintain Groupwide efforts tostrengthen them still further.
* A method for long-term procurement and supply of renewable energy from new solar
power generation equipment and other facilities at fixed prices, through direct long-term
agreements between power companies and customers

The Tohoku Electric Power Group’s
Management Philosophy andGroup Slogan
At a Glance
Steps in Value Creation
Message from Top Management
Message from the CFO
Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

INTEGRATEDREPORT 2023

Introduction

Message from Top Management

Editorial Policy
Index

Improper handling of information on subjects
including PPS customers
The recent discovery of the improper handling by
Tohoku Electric Power employees and subcontractors of
information on various matters, including power producer
and supplier (PPS) customers managed by Tohoku
Electric Power Network, has dented the trust so vital to
our operations. We take this incident, at odds with thefundamentals of the electricity business system premisedon free and fair competition, very seriously.
Under the Committee of Corporate Ethics andCompliance, of which I am the chair, we are investigating
all sales section employees and subcontractors involved
since the deregulation of retail electricity sales in April
2016 and analyzing the causes of this incident based oncounsel from internal and external attorneys and outside
experts. We are also implementing a series of ongoingmeasures to prevent any recurrence of this incident.
The trust of our customers and communities isfundamental to our businesses. Following the rules is anecessary precondition of earning this trust. In addition
to thoroughgoing efforts to encourage each and every
employee to be aware, to speak up, and to rectify
improper practices, we will implement a series of
preventive measures based on both tangibles andintangibles to make sure such an incident cannot happen
again.

9

Tohoku Electric Power Group

Toward our vision of society through sustainability management
Founded in 1936 under the national power policy, ourpredecessor Tohoku Shinko Denryoku sought tocontribute to the development of the Tohoku region
during the Great Depression and two famines caused bycold weather. In the more than 70 years since theestablishment of the Tohoku Electric Power Group, thesuccessor to Tohoku Shinko Denryoku’s vision, we havepursued the balance between creating social value andbuilding corporate value under the basic concept
articulated in the following words: The prosperity of the
Tohoku region is essential to our own growth. This has
led directly to our philosophy on sustainability
management today.
Last year, to further promote management withsustainability positioned at its core, we identified eightsustainability priorities (materiality topics) to be addressedby the Tohoku Electric Power Group. Over the past year,
we have made steady progress in areas including thestart of commercial operations at Unit No. 1 at the Joetsu
Thermal Power Station, which boasts the world’s highest
thermal efficiency; testing to contribute todecarbonization of thermal power as a step toward
carbon neutrality; formulation of a human-rights policy
and implementation of human-rights due diligence, andDX human resource training. At the same time, we have
faced various issues, including a fatal on-the-job accident
and a serious compliance violation involving the improper
handling of information on PPS customers. Management
will play an active role in efforts to prevent the recurrenceof such incidents.
As a business responsible for a vital community
infrastructure and as an energy business, the Tohoku
Electric Power Group must address various issues
related to the sustainability of society from both global
and local perspectives. In particular, we recognize theincreasing severity of natural disasters due to climatechange, the rapid depopulation, an aging population, andlow birth rates—all trends more pronounced in the six
Tohoku prefectures and Niigata Prefecture than in otherregions of Japan—to be important issues from theperspectives of both a sustainable society and ourbusiness foundations and customer base.
As for the lives of individual consumers, it occurs tome that digital technologies have made it possible tomeet a diversity of needs and preferences while
contributing to market fragmentation. The experience of
COVID-19 has impressed on many the fact thatwellbeing, including rewarding lives and good health, aremore important than the pursuit of wealth. I believe wewill need to adapt to such changes in social values as we
advance the Smart Society Building Business.

The Tohoku Electric Power Group’s
Management Philosophy andGroup Slogan
At a Glance
Steps in Value Creation
Message from Top Management
Message from the CFO
Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Unit No. 1 at the Joetsu Thermal Power Station began operating commerciallyin December 2022.

INTEGRATEDREPORT 2023

Introduction

Message from Top Management

Editorial Policy
Index
The Tohoku Electric Power Group’s
Management Philosophy andGroup Slogan
At a Glance

Based on our sustainability priorities (materiality
topics), by balancing global and local perspectives, weseek to co-create value alongside our stakeholders into
future generations. This is apparent in the focus oncarbon neutrality globally; in efforts to protect theabundant natural environment in the Tohoku and Niigata
region; and in efforts to advance universal human rights
and human capital, as well as living standards, industrial
development, and the strengths and attractions of the
Tohoku and Niigata region.
Uesugi Yozan, the ninth head of the Yonezawa clan
whose domain was centered on the current city ofYonezawa in Yamagata Prefecture, is famous for thesaying: “Where there’s a will, there’s a way; where there
is no will, there is no way.” With the Yonezawa clan
confronting a financial crisis, Uesugi Yozan took the leadas clan head in cutting costs and transforming attitudes
while promoting sericulture, carp culture, Yonezawaori
textiles, Sasano Ittobori woodcarving, and other local
industries and making them more profitable. Additionally,
he established Kojokan as the clan school for humanresource development. Through the restoration of theclan’s finances, he built the foundations for thecommunity in the Yonezawa domain for many years.
When the British travel writer Isabella Bird visited theformer Yonezawa domain 100 years after Uesugi Yozan,
she named it the Arcadia of Asia.
To realize sustainable development within the six
Tohoku prefectures and Niigata Prefecture and, byextension, society as a whole, and to increase thecorporate value of the Tohoku Electric Power Group overthe medium to long term, I pledge to demonstrateleadership that will restore the Group’s financial standing
and improve its earning capabilities as we move into the
future to break new ground. I ask for the continued
support of our stakeholders.

10

Tohoku Electric Power Group

Steps in Value Creation
Message from Top Management
Message from the CFO
Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

INTEGRATEDREPORT 2023

Introduction

Message from the CFO

Editorial Policy
Index

On taking office as CFO
My name is Satoshi Isagoda. I was appointed Chief
Financial Officer (CFO) in April 2023. As the first CFO in
Tohoku Electric Power’s history, I would like to briefly
review the factors that led to my appointment.
Tohoku Electric Power recorded losses for two
consecutive years in FY2021 and FY2022. Itsconsolidated equity ratio at the end of FY2022 had fallen
to 10.5%, its lowest point ever. Our balance of interestbearing debt had swollen to a record high of 3,375.6
billion yen. As these figures show, we faced very
challenging financial conditions.
While projected financial results for FY2023,
announced in July 2023, call for consolidated ordinary
income of 200.0 billion yen, we project the consolidated
equity ratio to be around 13% and the balance of interestbearing debt to be around 3,320 billion yen at the end of
FY2023. In short, our efforts to restore our financial
footing have just begun.
Under these conditions, more than ever before, therapid recovery of our financial footing will requirecomprehensive decision-making in our selection offundraising sources, accurate assessments of investment
priorities, and effective action in other related aspects.
That is my responsibility as CFO.
Review of FY2022
Tohoku Electric Power’s financial situation in FY2022
was remarkably challenging.
The March 2022 earthquake centered off the
Fukushima Prefecture coast damaged our power
plants—chiefly coal-fired thermal power plants—on the
Pacific side of the region. Russia’s invasion of Ukraine
generated soaring fuel and wholesale electricity market
prices. These events led to a sharp increase in the costof procuring power to offset the capacity lost due to thedamaged thermal power plants. These and other factors
led to sustained conditions of negative profit, in which thecost of supplying electricity significantly exceeded
11

Tohoku Electric Power GroupThe Tohoku Electric Power Group’s
Management Philosophy andGroup Slogan

revenues. As a result, we registered record consolidated
ordinary losses of 199.2 billion yen.
Our consolidated equity ratio fell to 10.5%, even lower
than immediately following the 2011 Great East Japan
Earthquake. Consolidated interest-bearing debt swelled
to a record high of about 3.4 trillion yen.
We deployed various cost-cutting measures in
response to these challenging business conditions,
including working to achieve swift recovery at thedamaged thermal power plants and drawing onderivatives and other means to make fuel procurement
costs more manageable in the face of rising fuel prices.
In addition, we further strengthened efforts to improve
management efficiency and moved forward withinitiatives involving new technologies intended to improve
efficiency.
Regrettably, since the damage to our financial footing
posed risks to our capacity to ensure a stable supply ofelectricity, we were compelled to revise electricity rates inderegulated market segments from November 2022 andto raise rates in June 2023, following review by thenational government, in regulated segments.

At a Glance
Steps in Value Creation
Message from Top Management
Message from the CFO
Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Consolidated settlement of accounts in FY2022
Net sales

3.72 trillion yen

Ordinary loss

199.2 billion yen

Representative Director &Executive Vice President
Tohoku Electric Power Co., Inc.

Net loss attributable to owners of parent

127.5 billion yen

Satoshi Isagoda

Consolidated cash income

136.6 billion yen

Interest-bearing debt (as of the end of
March 2023)

3.3756 trillion yen

INTEGRATEDREPORT 2023

Introduction

Message from the CFO

Editorial Policy

Trends in balance of interest-bearing debt, equity capital, and equity ratio(100 million yen)(%)
Balance of interest-bearing debt

40,000Equity capital

Equity ratio (right axis)

40

27,145 27,639

20,48824,46922.8 20,518
20.5
20,00013.9
8,925

10,00025,619

14.6

12.6

11.3

24,713 24,355 24,244 23,811 24,126 24,332

8,273
5,849

4,836

5,353

6,018

17.3

16.8

15.2

17.9

18.3

Improved efficiency
20

18.5
14.8

6,296

6,946

7,303

7,621

7,911

8,264

6,996

13.2
10.5
5,489

Approx. 15.6
Approx. 13.0
10
Approx. 6,860400

Ordinary income
excluding timelag: −762

Fuel costs decreasing
below the maximum fuelcost adjustment unit price

Fuel procurement
time lag: −1,230

572

*

2010

2011

2012

2013

2014

2015

2016

2017

2018

2020

2021

2022

2023
(Forecast): Equity ratio assuming equity capital of 50% of the issue price of hybrid bonds issued and outstanding (140 billion yen)

Outlook for FY2023
We are pursuing companywide efforts to ensureprofitability in FY2023. Among these are various
efficiency improvements, including optimized fuel andelectricity procurement, cost-cutting, and electricity rate
revisions.
Our projected financial results for FY2023 now call for
consolidated ordinary income of approximately 200.0
billion yen as we expect to return to profitability byachieving record highs due to factors including significant
upward pressure on income from the time lag effects ofthe fuel cost adjustment system as fuel prices fall.
However, we expect the balance of interest-bearing
debt at the end of FY2023, at approximately 3.32 trillion
yen, to remain even higher than in the aftermath of theGreat East Japan Earthquake. The consolidated equity
ratio is projected to be around 13.0%. These persisting
challenging financial conditions compel us to admit that
our readiness for business risks remains inadequate.
Basic thinking on financial strategy
To boost our resilience to business risks, we mustbuild up equity capital, keeping in mind a target
consolidated equity ratio of about 20%, similar to the

12

2019

Tohoku Electric Power Group

0
(FY)

1,200

FY2022 results

2,000

Amount arisingduring the fiscal
year: 680

Fuel procurement
time lag: 680

Increase as reboundfrom amount arisingduring previous
fiscal year: 1,230

Ordinary income
excluding timelag: 1,320

Other
–90

Including increase in interest
paid: −59

Effect of fuelprocurement
time lagFigures announced
July 2023

From −1,230 last year to 680 this year

At a Glance
Steps in Value Creation
Message from Top Management
Message from the CFO
Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

FY2023 forecasts

Ordinary profit, excluding effects attributable to time lag, shows a 208.2 billion yen
improvement in balance of revenues and expenditures.

level we maintained before the Great East Japan
Earthquake.
In addition, due in part to recent dramatic fluctuations
in fuel and wholesale electricity market rates, revenues
and expenditures in the electricity supply business are
fluctuating widely. Given the impossibility of predicting
when such fluctuations in revenues and expenditures
may occur, it is vital to prepare for them as soon as
possible. Not only is the scale of equity capital important,so too is the sense of urgency we need to adopt towardachieving it. For this reason, to restore our financial
footing at the earliest possible date, we will pursue efforts
to improve our earning capabilities through sustained
improvements in management efficiency, proposals for
optimal electricity and service menus suited to customer
needs, and other efforts.
Readiness for future uncertainties requires profitability
in growth businesses and the capacity to secure revenue
from new sources beyond the electricity business. We
must make steady progress in the Smart Society Building
Business, renewable energy business, and other sectors.
At the same time, we must consider returns toshareholders, employees, and other stakeholders.
Even in the face of this wide range of factors and

The Tohoku Electric Power Group’s
Management Philosophy andGroup Slogan

A Value Creation Story

Electricity rate
revisions399.2 billion yen improvement in balance ofrevenues and expenditures−1,992
0
2009

1,910

• Fuel procurement efforts• Expanded operations at Joetsu
Thermal Power Station, etc.

30

27,603(Unit: 100 million yen)Amount of change: 399.2 billion yen(from −199.2 billion yen to 200 billion yen)

33,756 Approx. 33,200
30,000Index

Major factors behind the change in consolidated ordinary income since FY2022

Foundations for Sustained Growth
Data

expectations, we will strive to balance efforts to swiftly
restore our financial foundations and efforts to ensure
future growth.
Investment in growth

Scale of investment

Effects, returns (targets)

Development of
renewable energy
sourcesMore than 100 billion
yen(FY2030)
Consolidated cash
income of approx. 20
billion yen

Investments inrenewable energy
networks

Approx. 200 billion
yen

Smart Society
Building BusinessApprox. 100 billionyenDecarbonization
Sustained and stablesupplyOptimization of thetransmission/distribution
network(FY2030)
Net sales of approx. 100
billion yen
Consolidated cash
income of approx. 20
billion yen*
* Not including electricity sales

In lieu of a conclusion
Efforts to rapidly restore our financial footing andachieve future growth are part of our medium- to longterm vision “Working alongside next.” We will strive tomaximize corporate value by responding appropriately tothe financial challenges we currently face.

INTEGRATEDREPORT 2023

Preventing the recurrence of a case involving the improper handling of information on PPS customers

Introduction
Editorial Policy
Index

We take very seriously a recent incident involving the improper handling of information and the subsequent improvement instructions. We will continue to implement thoroughgoingmeasures to prevent the recurrence of similar incidents.

Overview of the incident

Analysis of causes and measures to prevent recurrence

Since January 2023, according to investigations, Tohoku Electric Power employees
and others viewed information on customers of other retail electricity providers managed
by Tohoku Electric Power Network (i.e., information that should have been kept
confidential by Tohoku Electric Power Network). In response to this incident, the Electricity
and Gas Market Surveillance Commission and the Agency for Natural Resources andEnergy issued improvement instructions to Tohoku Electric Power and Tohoku ElectricPower Network.

Based on the findings of the investigation, we are analyzing the causes of theseincidents in detail, looking at both tangibles and intangibles, under the leadershipof the Committee of Corporate Ethics and Compliance and with the advice andguidance of internal and external attorneys and outside experts. We have formulated
and are steadily implementing measures to prevent the recurrence of such incidents,
beginning with those for which prompt implementation is most feasible.
We have established a Committee of Conduct Regulations Compliance to monitor
the progress of these preventive measures and to increase their effectiveness, inaddition to an objective monitoring and checking structure, including a new dedicatedorganization within the internal audits section and a checking system that incorporates
independent viewpoints.

Incident summary
Incident 1 Viewing information on power produc-

er and supplier (PPS) customers
 rrors in aspects such as the placement and configuE
ration of business computers resulted in Tohoku
Electric Power employees viewing private information,
concerning PPS customers, managed by the Tohoku
Electric Power Network.

system hree Tohoku Electric Power employees used IDs andTother information issued by the Ministry of Economy,
Trade and Industry to the Tohoku Electric Power
Network and accessed the Ministry’s information
system to view confidential information.

In response to these incidents, Tohoku Electric Power undertook a thoroughinvestigation with the direct involvement of the Committee of Corporate Ethics andCompliance, chaired by the President. This investigation included a Web survey of andinterviews with individuals employed by subcontractors and all employees who had
worked in the relevant sales sections since retail sales of electricity were deregulated in
April 2016.
The investigation found that while contractual status had been checked on matterssuch as customer applications for and inquiries concerning contracts and switching ofcontracts, this information was not used in Company sales activities. No external leaks of
personal information occurred. Nevertheless, we take these incidents very seriously. Suchincidents can generate mistrust of our business operations, which are based on thepremise of free and fair competition in compliance with the requirements of electric power
deregulation, and damage the trust of our communities and customers.

Tohoku Electric Power GroupAt a Glance
Steps in Value Creation
Message from Top Management
Message from the CFO
Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Incident 2 Viewing the network administration

Investigation summary and findings

13

The Tohoku Electric Power Group’s
Management Philosophy andGroup Slogan

Overview of our responses to improper handling of information on PPS customers and other data
Incident summary
Investigation findings

Overview

Information was viewed
at 23 sites.
The information viewed
included 36,980 items
concerning 214 persons.
This information wasviewed during the period
from April 2016–January2023

Details

 ne person viewed
O
26,885 items of
information on eight
corporations and 693
items concerning
individuals.
Subcontractors: The
information viewed at
two companies included
9,402 items concerning
75 persons.

Analysis of causes
Tangibles rrors in placement ofEbusiness computersconnecting the twocompanies andinsufficient rules on theiruseErrors in theconfiguration ofbusiness computersconnecting the twocompanies

Structure for executing and checking on preventive measures
Tangibles

Measure launched swiftly
Retotaling

 witching to authorization for use based onS
IDsStorage and management on separate
systems (physical segregation)

Intangibles

Improving awarenessRevising the Group Code of Conduct nhancing corporate ethics and complianceE
training and education

Intangibles

Insufficient knowledge
and awareness ofcompliance matters
Insufficient
communication oncompliance

Findings proved no information used in Company
sales activities and no external leaks of personal
information.

Monitoring and checking functions
Systemic

Objectivity

 larification of involvement throughC
allocation of responsibilities to officers
Building a structure to perform monitoring
functions
Strengthening internal audit functions
Building a structure to implement preventive
measuresBuilding a system for checking from an
independent perspective

INTEGRATEDREPORT 2023

Introduction

Preventing the recurrence of a case involving the improper handling of information on PPS customers

Editorial Policy
Index

Future efforts

14

Tohoku Electric Power GroupAt a Glance

Structural enhancements to prevent recurrence

Steps in Value Creation
Message from Top Management

Tohoku Electric Power

Message from the CFO

Instruction,

Third line ofreportingdefense
Office of Internal Audits
Conduct Regulations Compliance/
Confirmation Group
Checking the state of compliancewith conduct regulations throughinternal audits

Committee of Corporate Ethics andCompliance
Chair: President

Second lineof defense

President

Committee of Conduct Regulations Compliance
Chair: Person responsible for conduct regulations
compliance/confirmation (Vice President)(Internal auditing)Monitoring

In-houseautonomous
checking
structure

Assessing matters such as the degree of establishment andeffectiveness of preventive measures based on reports on theimplementation status from the Preventive Measures
Implementation Team. Issuing instructions to improve measures
as needed.

(Internal auditing)Execution of and issuing improvement
Monitoring instructions concerning preventive measures

First line ofdefenseMonitoring andchecking from an
independent
perspective

Reporting on
implementation status

Instruction, command• Attorneys• Businessethicsconsultants

Reporting on
implementation status

Preventive Measures Implementation Team

Preventive Measures
Implementation
Team
Overall coordination
Reporting on
implementation status
Reporting on
implementation status

Head office, Sales Company
The Deputy General Manager of Sales Department III and theGeneral Manager of the General Affairs Department’s Office ofLegal and Shareholders Affairs will also exercise oversight ofcompliance with conduct regulations and monitor the status.

Each branch
Each sales officeBusinessdiagnostics,
training,
education, etc.

Preventive Measures
Implementation Team
promotes preventive measuresand checks on the status of
their implementation.

Reporting on implementation status

Preventing the recurrence of a caseinvolving the improper handling of
information on PPS customers

A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Compliance
Promotion Officeestablished byFederation of ElectricPower Companies ofJapan

CustomerCenter• E xternal
experts, etc.

Tohoku Electric Power Network
Board of Directors

President

Office of Internal
Audit
Conduct
Regulations Auditor
Audit matters suchas the propriety andeffectiveness ofbusiness operations,systems, andcompliancestructures; guidance
and advice to relatedparties

Oversight of legal and regulatory complianceand compliance with conduct regulations
Second lineof defense

Third line ofdefenseInternal auditing

Preparations for launch

Roadmap

In response to theimprovement instructions
Plan for eliminating joint use of computer systems
received from theElectricity and Gas Market
Timetable of processes leading to the elimination of joint use
Surveillance Commission
FY2023
FY2024FY2025
FY2026FY2027
FY2028regarding these incidents,
July 2023 Elimination of joint use slated for January 2029 due to procedures required for migration
TohokuTohoku Electric Power has
Requirement
Electric
Planning
Design – testing
Migration
definitions
Powerreported that it plans toeliminate joint use of
TohokuRequirement
Electric
Planning
Design – testing
Migrationsystems related todefinitions
Power
Network
information on theThis timetable may be accelerated on an ongoing basis.
consignment of powertransmission starting in
System development and progress monitoring structures
January 2029 (following aWhile system development by Tohoku Electric Power and Tohoku Electric Power
Network will proceed separately, the two entities will work jointly to ensure thelead time of five years andconsistency of their development efforts. A Joint Systems Elimination Promotion
six months). We haveCouncil, including members of management, will oversee the overall progress ofreported our plans tothese efforts, identify related issues, and manage risks.
implement theseMatters such as programming methods and system segregation specifications
measures at the earliest
will be reviewed from an independent and outside perspective.
possible date, as well as
Lead timeplans to implement
The following four development issues in particular are expected to requireconsiderable lead times in the timetable of processes leading to the elimination ofcomprehensive measures
joint use of computer systems. Note that we intend to accelerate the schedule as
to strengthen internalmuch as possible.
controls systems,
Bloating and increased complexity of computer systems due to long-term use
including systems affecting
Lack of sufficient development engineers due to use of outdated programming
languages
the control environment,Effects of close coupling of related internal systems
risk assessment, control
Quality control in testing and migration due to handling of large volumes of datameasures, and monitoring.
In response to these incidents, Tohoku Electric Power Network has also analyzed thecauses that need to be addressed and is enhancing internal controls systems through anapproach based on three lines of defense, to ensure the efficacy of its compliance. It will
strive to increase the effectiveness of these measures still further by developing actionplans with input from outside experts, enhancing various measures, and other efforts.
Once again, Tohoku Electric Power Group would like to express its heartfelt regret forthese incidents. We will implement various measures, including measures intended tochange the awareness and behavior of individual employees, as well as implement new
operating rules, to assure such incidents do not recur. We are committed to regaining thetrust of all of our stakeholders through initiating comprehensive preventive measures andefforts to achieve compliance with laws, regulations, and ethical standards.

The Tohoku Electric Power Group’s
Management Philosophy andGroup Slogan

Committee of Corporate Ethics andCompliance
Chair: President

Outsideexperts,
attorneys, etc.

Committee of Conduct Regulations Compliance
Chair: Person responsible for conduct regulations
compliance (Vice President)

Enhancedaction plans
and various
measures,etc.

Formulating basic policies and action plans on conduct
regulations, controlling sections and managing implementation
status, implementing companywide training, etc.

Head office
Branches
Business sites,
etc.

Persons responsible for management of conduct regulations
Persons responsible for promoting compliance with action
regulations *2First line ofdefense*1*1 Assigned to the head office and branches; controls section andbranch conduct regulations.
*2 Assigned to the head office, business sites, etc.; implements andpromotes compliance with conduct regulations in sections, etc.

INTEGRATEDREPORT 2023

Chapter01

A Value Creation Story
Value Creation Process
Realization of the Tohoku Electric Power Group’s Medium- to Long-Term Vision “Working alongside next”
Tohoku Electric Power Group Carbon Neutral Challenge 2050
Sustainability Initiatives
Sustainability Priorities (Materiality Topics)

Tohoku Electric Power GroupValue Creation Process

Tohoku Electric Power Group’s vision

Increasing corporate value over the medium to long term and contributing
to sustainable progress throughout society

Introduction

A Value Creation Story
Value Creation Process

Input

Power Generation,
WholesalingTotal assets (consolidated): 5,211.9 billion yen
Production capital

Human capital
A wealth of professional human resourcesGroup employees: 24,528
Development costs per employee: 103,000 yen
DX literacy human resources: 2,000*1
Natural capital
The abundant natural environments within the six
Tohoku prefectures and Niigata PrefectureWind, hydroelectric, solar, geothermal, woodbiomass
Social and community capital
Building relationships of trust with stakeholders

Relationships characterized by trust withcustomers based on stable supply ofelectricity, etc.
Strong ties to local communities based on
Communities the provision of solutions to community
challenges, etc.
Shareholders, Relationships characterized by trust built up
through proactive IR activities
investors

Customers

Business
partners

Strong cooperative ties based on fair andimpartial trade activities

Employees

A positive, vital company culture based on
respect for individuals

P44

Working alongside next

Power Generation

Tohoku Electric Power GroupP20

Outcomes(Source:
Akita Offshore Wind Corporation)

Internal outcomes

Sustainability Priorities (Materiality
Topics)Toward the Working Alongside Next Vision★ External outcomes

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Financial capitalIncreasing capacity to generate cash flow (consolidated cash
income of 320 billion yen or more in FY2024)
Maintaining financial discipline, securing financial soundness

Promoting new development and improving the performanceof existing power generation facilities
Wind power Solar power
stationstationLinkage

Production capital

Large-scalestoragesystemLinkage eveloping resilient social
D
infrastructures

Linkage

Ensuring stable supplies Building next generation
New business andnetworks to expand use of growing power demandrenewables
Electricity + services

 enewable energy networkR
capacity: approx. 20 GW

 ecarbonizing power sources (e.g., renewable energyDdevelopment target of 2,000 MW)
Advanced equipment operation based on digital technologies

Intellectual capitalF urther enhancing our capacity to respond to disasters
Accumulating knowledge assets through technologicaldevelopment and R&D
New business creation through open innovation

Human capital

New domains
 usiness/service contracts:B
cumulative total of 43(FY2022)

Promoting various initiatives in three domains

Improving employee morale
Promoting diversity
Building a corporate culture that puts safety firstAssigning and developing human resources to support businessmodel transformation

Natural capital★ Controlling greenhouse gas emissions★ Controlling environmental impact in areas such as air pollution
and waste generation

Sustainability priorities (materiality topics)
Taking on the Challenge of Carbon Neutrality
Conserving biodiversity
Developing resilient social infrastructures
Respect for the human rights of diverse stakeholders

Establishing a recycling-based society
Realizing safe, comfortable, secure communities
and ways of life
Creating workplaces in which diverse humanresources can work with a sense of vitality
Sound and transparent corporate management

Our motto since the company’s founding: The prosperity of the Tohoku region is essential to our own growth.
Tohoku Electric Power Group’s Management Philosopy:
Prosper with Local Communities

Tohoku Electric Power Group Slogan: Yori, Sou, Chikara

Social and community capital
Customers
Communities★	Providing services to meet customer
needs★	Solutions to social challenges andsustained growth in the six Tohoku
prefectures and Niigata Prefecture

Shareholders,★	Stable returns to shareholders
investors
Business★	Building relationships of trust through freepartners
and fair transactions
Employees*1 By FY2025

16

Sustainability Initiatives

Market Trading ew renewable energyNdevelopment: 650 MW *2

Next-generation energy
services

Tohoku Electric Power Group
Carbon Neutral Challenge 2050

Targeting a smart society, starting in Tohoku

Main impacts on capital /value provided to stakeholders

P34

P41

Tohoku ElectricPower Group
Carbon Neutral
Challenge 2O5O

Tohoku Electric Power Group’s Medium- to Long-Term Vision

Value chain optimization

Power Transmission
and Distribution

Knowledge, know-how, and technologicalcapabilities in the power business
Power generation operation technologies
Power grid operation and control technologies
Capacity to respond to disasters

2050
Achieving carbon neutrality
by 2050

P17

Fuel Procurement

P30

Power Supply BusinessIntellectual capital

2030
Aiming to realize a smart
society, starting in Tohoku

 ower generated:
P
57,934 GWh

P38

Smart Society
Building
Business

Full range of organizations and facilities
Group companies: 77
Major power generating facilities: 253 facilities,
17.39 GW
Total length of transmission facilities: 15,506 km
Total length of distribution facilities: 149,517 km
Capital investment: 325.0 billion yen

Realization of the Tohoku ElectricPower Group’s Medium- to
Long-Term Vision “Working
alongside next”

OutputDeploying efforts targeting solutions for materiality topics and earnings in each business

Renewable Energy

Financial capitalBusiness Model (business activities)

	Building positive, stimulating working
environments*2 Assuming commercialization of all development projects

INTEGRATEDREPORT 2023

Realization of the Tohoku Electric Power Group’s Medium- to Long-Term Vision “Working alongside next”

Introduction

A Value Creation Story
Value Creation Process

Realization of the Tohoku Electric Power Group’s Medium- to Long-Term Vision “Working alongside next”
Based on our awareness that failing to innovate and proactively take on new
challenges during the current environment of dramatic transformations in society andelectricity supply and demand structures would make it difficult to fulfill the Group’s raisond’etre of seeking co-prosperity with local communities and realizing sustained growthalongside society, the Tohoku Electric Power Group released its Medium- to Long-Term
Vision, “Working alongside next” in February 2020.

Striving to achieve the Group’s ideal vision by the 2030s —“realizing a smart society,starting in Tohoku”—as identified in Working alongside next vision, we are advancing
structural reforms in the Power Supply Business and moving toward swiftly achieving
profitability in the Smart Society Building Business. Through these two businesses, wewill also tackle the challenge of carbon neutrality.

Realization of the Tohoku ElectricPower Group’s Medium- to
Long-Term Vision “Working
alongside next”
Tohoku Electric Power Group
Carbon Neutral Challenge 2050
Sustainability Initiatives
Sustainability Priorities (Materiality
Topics)Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

A group ofcompanies growing
in step with sustained societal
progress by helping

Foundations for Sustained GrowthDatato establish a smart
society for a new age,starting in Tohoku

Tohoku Electric Power Group’s Medium- to Long-Term Vision
Working alongside next

Targeting a smart society, starting in Tohoku

Period of accelerated growth(FY2020–2024)(FY2025–2030)

Corporate value

Period of business model transformation

Smart Society Building Business
Power Supply Business(core business)
Maximizing the value of electricity
through an optimal portfolio of
power sources and maximizing
business efficiency
FY202017What we want to bein the 2030s

Tohoku Electric Power Group(growth business)
Business modeltransformation

Maximizing value for the customer
through a broad range of comfortable,safe, reliable services

2050
Carbon Neutrality Statement

Taking on the Challengeof Carbon Neutrality
throughelectricity supply andefforts to realize asmart society

FY2030INTEGRATEDREPORT 2023

Realization of the Tohoku Electric Power Group’s Medium- to Long-Term Vision “Working alongside next”

Introduction

A Value Creation Story
Value Creation Process

The smart society envisioned by Tohoku Electric PowerIn the six Tohoku prefectures and in Niigata Prefecture, where the Tohoku ElectricPower Group’s businesses are based, shrinking populations and an aging society
resulting from low birth rates is proceeding at a faster pace than in other regions. As aresult, wide-ranging social issues are expected to emerge in the future, includingtransportation, education, and welfare. Among related issues, the Group considers thefollowing issues as important: effective utilization of energy in the community,
consideration for the environment, advancement of digitization, securing safety andpeace of mind, making optimal use of diverse human resources, realizing a sharing
economy, expanding flows of non-resident people, rebuilding social infrastructures, andbuilding a transportation infrastructure for the new era.
Smart society building business refers to those businesses that can identify andcreate solutions to the abovementioned social issues through next generation digitaltechnologies and innovations, to enable residents to live in comfort and safety, and withpeace of mind without conscious concern over each of the individual services used.

Realization of the Tohoku ElectricPower Group’s Medium- to
Long-Term Vision “Working
alongside next”
Tohoku Electric Power Group
Carbon Neutral Challenge 2050
Sustainability Initiatives
Sustainability Priorities (Materiality
Topics)Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

Illustration of Smart Society Building Business
A vision of the region’s future reflecting Tohoku’s natural abundance: Comfort, safety, and convenience for adults and children alike

18

Tohoku Electric Power Group

Foundations for Sustained Growth
Data

INTEGRATEDREPORT 2023

Introduction

Realization of the Tohoku Electric Power Group’s Medium- to Long-Term Vision “Working alongside next”

A Value Creation Story
Value Creation Process

Investment in growth fields, future business development
As we move forward to realize the Medium- to Long-Term Vision “Working alongside next,” we regard the renewable energy business, including power transmission gridenhancements, and the smart society building business as growth areas over the medium to long term. We will strive to expand these business areas and achieve profitability in a timely
manner by investing approximately 400 billion yen through roughly 2030.

Realization of the Tohoku ElectricPower Group’s Medium- to
Long-Term Vision “Working
alongside next”
Tohoku Electric Power Group
Carbon Neutral Challenge 2050
Sustainability Initiatives
Sustainability Priorities (Materiality
Topics)Investment in growth
Investment through 2030

Major initiatives

Effects, returns (targets)Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality
Foundations for Sustained GrowthEnhancing renewable energy business promotion structures

Developing renewableenergy power sources

More than
100 billion yen ccelerating new development of 2,000 MW through means includingA
strengthening in-house development and expanding development areas
Maintaining and expanding kWh capacity through means including thoroughrenovation of aging hydroelectric and geothermal facilities
 eploying operations and maintenance (O&M*2) businesses through Tohoku
DElectric Power Renewable Energy Service(FY2030)

Data

Consolidated cash
income of approx.
20 billion yen

Growth businesses

Grid capacity expansion (enhancements of connecting lines and trunk lines)

Investment inrenewable energy
networks*1

 ffective use of existing grid (e.g., N-1 generation control system, addressingEcongestion)

Approx.
200 billion yen

 ecuring adaptability and advancing adjustment methods (improving powerS
generation forecasts, responding to the supply-demand adjustment market)
 dopting next-generation devices and smart meters to the power distributionA
gridDecarbonization
Continuous, stablesupplyGrid optimization

 ptimal demand-supply controls through renewable energy, storage cells,
O
EMS, etc.

Tohoku EPCO Frontier: Offering plans bundling electricity with services andvarious services to enrich people’s lives

Smart Society
Building BusinessApprox.
100 billion yen(FY2030)

 ohoku EPCO Solar e Charge: Offering services combining solar power withT
storage cells

 et sales of approx.
N
100 billion yen*3

VPP business: Developing services in aggregation of renewable energy andother areas

Consolidated cash
income of approx.
20 billion yen*3

Community project, smart city planSupport for comfortable living, sustainable agriculture, etc.

*1 Investments during first regulatory period (2023–2027) of the new wheeling charge system

19

Tohoku Electric Power Group*2 Operations & Maintenance*3 Not including electricity sales

INTEGRATEDREPORT 2023

Introduction

Tohoku Electric Power Group Carbon Neutral Challenge 2050

A Value Creation Story
Value Creation Process

Carbon Neutral Challenge 2050
In March 2021, the Tohoku Electric Power Group launched the Tohoku Electric Power Group Carbon Neutral Challenge 2050, a roadmap to carbon neutrality by 2050. Based on thisroadmap, we will accelerate CO2 emissions reductions based on three main pillars: maximum use of renewable energy and nuclear power; decarbonization of thermal power sources; andelectrification and realization of a smart society.
As an interim target on the path to carbon neutrality by 2050, we are striving to halve CO2 emissions from FY2013 by FY2030 based on practical initiatives undertaken in line with thethree main pillars.
Roadmap to carbon neutrality

1

Maximum use ofrenewable energy
and nuclear power

The Tohoku Electric Power Group will take on thechallenge of achieving carbon neutrality by 2050
based on the major prerequisite of securing S+3E

Renewable energy

2D ecarbonization through use of biomass and ammonia

LNG-fired thermal power

Sustainability Initiatives
Sustainability Priorities (Materiality
Topics)Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality
Foundations for Sustained Growth

By FY2030, to make progress
toward carbon neutrality, we willseek to halve CO2 emissions
from our FY2013 figure.

S wift resumption of operation, subsequent safe
operations, increasing utilization

Coal-fired thermal power

Tohoku Electric Power Group
Carbon Neutral Challenge 2050

Data

A ccelerating new development to achieve a target of 2,000 MWM aintaining and growing generating capacity of existingsources

Nuclear power

Decarbonization ofthermal power

P56

Realization of the Tohoku ElectricPower Group’s Medium- to
Long-Term Vision “Working
alongside next”

Power network
advances• Grid development andoperational
enhancements to boost
use of renewable energy

Targeting 50%
50.45 million t-CO2

reduction from39.89 million t-CO2

Tohoku ElectricPower Group
Carbon Neutral
Challenge 2O5O

FY2013D
 ecarbonization through use of hydrogen
Phasing out inefficient power sources, replacement withhigh efficiency sources, and considering CCUS
2013

and
3 Electrification
realization of asmart societyElectrificationP roposing smart electric lifestyles, expanding domains ofelectrification (to transport, industrial, and other fields)

Next-generation energy

2022

2030

(FY)

* Previously, we reported CO2 emissions in
the retail electricity business. However,with our participation in Phase 1 of the GX
League, which focuses on CO2 emissions
on a power generation basis, we haveswitched to reporting CO2 emissions on a
power generation basis.

E xpanding distributed power source services, such as homesolar and battery equipment and corporate PPAs
P roviding distributed energy resource services using VPP
technologiesP roviding energy management solutions

20

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Introduction

Sustainability Initiatives

A Value Creation Story
Value Creation Process

Positioning sustainability as the core of management under its Sustainability Policy, the Tohoku Electric Power Group has identified the priority sustainability topics (materiality topics)
we must address to strengthen corporate value over the medium to long term and to contribute to the sustained progress of society as a whole.
By tackling the materiality topics, realizing “Working alongside next,” the Tohoku Electric Power Group’s Medium- to Long-Term Vision and taking on the challenge of achieving thegoals of the Tohoku Electric Power Group Carbon Neutral Challenge 2050, we will help achieve the targets of the Sustainable Development Goals (SDGs) and co-create both social andcorporate value together with our stakeholders, into future generations.

Realization of the Tohoku ElectricPower Group’s Medium- to
Long-Term Vision “Working
alongside next”
Tohoku Electric Power Group
Carbon Neutral Challenge 2050
Sustainability Initiatives
Sustainability Priorities (Materiality
Topics)Toward the Working Alongside Next Vision

Tohoku Electric Power Group Sustainability Policy
The Tohoku Electric Power Group proactively promotes sustainability throughmeans including realization of the Group’s “Working along next” Medium- to LongTerm Vision and taking on our Carbon Neutral Challenge 2050.
Drawing on our Management Philosophy of Prospering with Local Communities
and the Group Slogan Yori, Sou, Chikara (The Strength to Work Alongside), theTohoku Electric Power Group’s concept of sustainability calls for the Group to work
as a cohesive, united team alongside customers and communities to realize a smart
society. The Group will provide energy-related services that contribute to growing

Sustainability materiality topics

Conserving biodiversity

Creating comfortable, safe, reliable services
Maximizing customer enrichment
Tohoku Electric Power Group’s Medium- to Long-Term Vision
Working alongside next

Targeting a smart society, starting in Tohoku

Creating workplaces in which
diverse human resources can workwith a sense of vitality
Respect for the human rights ofdiverse stakeholders
 ound and transparent corporate
Smanagement

21

Tohoku Electric Power Group

Creating andbuilding
corporate valueWithshareholders
andinvestors

 ealizing safe, comfortable, secureRcommunities and ways of life
Developing resilient social
infrastructure

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Value co-created with stakeholders

Taking on the challenge of Carbon
Neutrality
 stablishing a recycling-basedEsociety

corporate value over the medium to long term and to the sustainable progress ofsociety as a whole.
Based on the goal of fulfilling its CSRs, the Tohoku Electric Power Group will
demonstrate its overall strengths through sincere and fair business activities inaccordance with the Tohoku Electric Power Group Code of Conduct while drawing
on the unique characteristics of individual group companies, thereby providing
powerful support for the value chain of business activities and meeting the
expectations of its valuable stakeholders.

Tohoku ElectricPower Group
Carbon Neutral
Challenge 2O5O

Tohoku Electric Power Group
Carbon Neutral Challenge
2050

With
business
partners
Building trust throughfair and equitabletransactions

Togetherwith ourcustomers

TohokuElectric
Power
Group

Helping to achieve
the SDGs

Solutions tocommunity issues
Sustained progress

Togetherwith ourcommunity

All incooperation
with future
generations

With
employees
Promoting DE&I*
Realizing designs for healthyand vital lives* Diversity, equity, and inclusion

INTEGRATEDREPORT 2023

Introduction

Sustainability Priorities (Materiality Topics)

A Value Creation Story

Sustainability priority (materiality topic) identification process

Value Creation Process

Seeing the various issues related to the sustainability of society not only as risks but also as opportunities for the sustained growth of both the Group and society as a whole, theTohoku Electric Power Group is taking on the challenges of realizing Working alongside next, the Tohoku Electric Power Group’s Medium- to Long-Term Vision and of the Tohoku ElectricPower Group Carbon Neutral Challenge 2050.
Recognizing the importance of clearly identifying specific priorities (materiality topics) in order to promote sustainability through realizing the vision of Working alongside next, theGroup has identified eight sustainability priorities through the following process, based on deliberations in the Sustainability Promotion Council and with reference to the recommendationsof outside experts. These priorities will be monitored from now on through deliberations in the Sustainability Promotion Council and the Board of Directors and used to steer
management’s course toward realization of the vision of Working alongside next.
Monitoring reflects various factors such as the recommendations of the Sustainability Advisory Board, an advisory body to the director responsible for sustainability, and the results of
dialogue with stakeholders
Step 1

Step 2

Step 3Choosing topics

Assessing the topics

Validation

To choose topics related to thebusinesses of the Tohoku
Electric Power Group and its
stakeholders, the current statesof both external and internal
environmental conditions wereanalyzed. Based on the findingsof such analysis, a list was
prepared of 63 topics to beconsidered.

In cooperation with related internal sections, the topics chosen in Step 1 wereassessed along the two axes of their importance to the Tohoku Electric PowerGroup and their importance to stakeholders. These assessments also werediscussed in the Sustainability Promotion Council, and the views of management
were reflected in the assessment process as well. On the subject of importanceto stakeholders, comments from five classes of stakeholders considered
important to the Group—customers, local communities, shareholders andinvestors, trading partners, and employees—were collected through means suchas surveys and dialogues for use in the assessment process.
Based on the findings of this process, particularly important topics were
narrowed down and grouped. Then, a list of proposed priorities consisting of 29
individual topics and eight materiality topics was prepared.

Step 4

Identifying sustainability
priorities (materiality topics)

The proposed priorities prepared in Step 2 were validated from the perspective of
stakeholders through means including exchange of opinions with outside experts.
[Major opinions of outside experts]
Sustainability priorities should be expressed more from the perspective of
stakeholders.
In promoting sustainability initiatives, it is important to utilize digital transformation (DX) and promote diversity, centered on promoting women in the workplace, and to participate actively in domestic and international initiatives andother activities.
There also is a need for consideration of human rights throughout the entire
supply chain, which is a subject of increasing interest in society.

Based on the results of Step 3, final
proposed materiality topics werediscussed in the Sustainability Promotion
Council and then decided on by the
Board of Directors. From now on, together
with setting targets and key performanceindicators (KPIs) regarding the identified
materiality topics and monitoring these,
the materiality topics will be reviewed asnecessary in light of factors such aschanges to the business environment andsocial issues.

Realization of the Tohoku ElectricPower Group’s Medium- to
Long-Term Vision “Working
alongside next”
Tohoku Electric Power Group
Carbon Neutral Challenge 2050
Sustainability Initiatives
Sustainability Priorities(Materiality Topics)

Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Reviewing sustainability priorities (materiality topics) as necessary in light of monitoring results and other information
Guidelines, frameworks, and other materials referenced

Overview of assessment and grouping along two axes

External environment

Internal environment

 he Tohoku Electric Power Group’s management philosophy,Tpolicies, Medium- to Long-Term Vision, medium-term plans,etc.

Category

High

E

Tohoku Electric Power Group

Relevant SDGs

Establishing a recycling-based society
Conserving biodiversity
Realizing safe, comfortable, secure communities and ways of life

S
High
Importance to the Tohoku Electric Power Group22

Sustainability priority (materiality topic)

Taking on the Challenge of Carbon Neutrality

Importance to stakeholders

International frameworks (e.g., Sustainable Development Goals(SDGs), Global Reporting Initiative (GRI) Standards,
Sustainability Accounting Standards Board (SASB) frameworks,
ISO 26000)
Items used in assessments by ESG assessment agencies
Japanese government’s Green Growth Strategy
Social and regional issues in the Tohoku and Niigata region
Industrywide topics, etc.

Relationship between identification of sustainability priorities and SDGs

Developing resilient social infrastructure
Creating workplaces in which diverse human resources can workwith a sense of vitality
Respect for the human rights of diverse stakeholders

GSound and transparent corporate management

INTEGRATEDREPORT 2023

Introduction

Risks and opportunities related to sustainability priorities (materiality topics)

A Value Creation Story
Value Creation Process

Materiality topic

Major risks associated with failure to address

Major opportunities potentially created by addressing

Increasing costs from stricter regulations, loss of society’s trust
Inability to grow market share in decentralized power sources and declining
market value of the Company’s conventional power sources
Falling share prices due to accelerating divestment from thermal power andrising fundraising costs
Damage to facilities and power failures due to increasingly severe weather
eventsDecreased hydroelectric power generation due to changing precipitation
patterns

Increased demand for electricity due to expanded use of EVs andother electrification
Falling fuel costs due to restricted operation of thermal power
Contributions to local economy (e.g., employment)
Creation of new business opportunities

Rising waste treatment costs
Reputation risk due to negative impact on ecosystems and extinction of rare
species
Rising fundraising costs, divestment due to lower ESG evaluation

Improved power generating efficiency of hydroelectric power due
to effective use of water resources
Lower costs due to effective use of waste and reduced waste
generation
Earning the trust of stakeholders

Realizing safe, comfortable,
secure communities and ways oflife

Degradation of revenue foundations due to depopulation anddeindustrialization
Loss of business opportunities due to failure to adapt to changing societal
needs
Decreased demand due to lower customer satisfaction

Strengthening earnings and customer satisfaction through thedevelopment and deployment of services
Population growth due to regional vitalization and industrial
promotion (market growth)Securing new business opportunities by identifying customer
needs

Developing resilient social
infrastructures

Loss of society’s trust due to lengthening power failures following largescale disasters
Loss of business opportunities due to failure to adapt to changing societal
needs
Accelerating depopulation as communities become less attractive andpublic service levels decline

Maintaining and strengthening societal trust through rapid
recovery from power failures
Preventing depopulation through regional vitalization andindustrial promotion (market growth) in Tohoku and Niigata
Maintaining and expanding the customer base by earning
stakeholder trust

Creating workplaces in which
diverse human resources canwork with a sense of vitality

Increasing difficulty in securing human resources
Increasing separation, decreased job motivation (productivity), lower
performance
Loss of business opportunities through decreased ability to meet customer
needs

Securing human resources, preventing separation
Enhancing ability to adapt to increasingly diverse customer needs
Increasing earnings through improving performance andenhancing competitive strengths

Respect for the human rights ofdiverse stakeholders

Accidents involving fatalities or serious injuries
Litigation risk and worsening reputation
Growing demand loss due to impaired trust among stakeholders or branddamageConsideration for employee human rights by ensuring worker
safetySecuring human resources, preventing separation
Maintaining and expanding customer base through earning trustfrom stakeholders

Sound and transparent
corporate management

Growing demand loss due to impaired trust among stakeholders or branddamageFalling stock prices, increased difficulty of raising funds, divestment
Decreased competitiveness due to failure to ascertain trends in soft law anddelays in responding thereto

Maintaining and expanding customer base through earning trustfrom stakeholders
Beneficial fundraising through improved ESG evaluation
Rising stock prices

Taking on the Challenge ofCarbon Neutrality

E
Establishing a recycling-basedsociety
Conserving biodiversity

S

G

23

Tohoku Electric Power Group

Related SDGs

Realization of the Tohoku ElectricPower Group’s Medium- to
Long-Term Vision “Working
alongside next”
Tohoku Electric Power Group
Carbon Neutral Challenge 2050
Sustainability Initiatives
Sustainability Priorities(Materiality Topics)

Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

INTEGRATEDREPORT 2023

Introduction

Materiality targets and metrics

A Value Creation Story
Value Creation Process

Materiality topic

Key topics

Taking on the
Challenge ofCarbon Neutrality

Rapid resumption of stable operation of nuclear
power stations based on a safety-first approach
Increasing adoption of renewable energy
Migration toward decarbonization of thermal power
Promoting energy conservation solutions andelectrification alongside customers
Promoting decarbonization technologicaldevelopment and innovations

Establishing a
recycling-basedsociety

Controlling waste generation and using resources
effectively

E

Conserving
biodiversity

Realizing safe,
comfortable, securecommunities andways of life

Local environmental preservation

Promoting the Smart Society Building Business toutilize digital technologies to help find solutions tocommunity challenges
Pursuing customer satisfaction
Co-creation of vital local communities in Tohoku andNiigataS
Developing resilientsocialinfrastructures

Stable energy supplies
Responding rapidly to large-scale disasters
Contributing to more advanced social infrastructure
through our technologies

Major targets and metrics

Achieving carbon neutrality

Target fiscal
year/scope*1

FY2022 results

Relatedpage(s)Tohoku Electric Power Group
Carbon Neutral Challenge 2050

2050/GCO2 emissions: 39.89 million t-CO2(−20.9% vs. FY2013)

Targeting reduction in CO2 emissions to one-halfactual level in FY2013 (50.45 million t-CO2*2)

2030/G

Recycling at least 90% of all industrial waste

Annual/TD & TN

P20 P55

Tohoku Electric Power Group

Sustainability Initiatives
Sustainability Priorities(Materiality Topics)

Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

87.6%

Wherever possible, choosing products that use fewer
plastics or substitute materials
Annual/TD & TN
Maintaining or increasing rates of recycling plastic
waste

Plastic waste generated: 1,006 t
Plastic waste recycling rate: 84.2%

Avoiding or minimizing the impact on biodiversity ofbusiness activities

Annual/TD & TNImplementing wetlands surveys and maintenancemanagement at the site of the Higashidori Nuclear
Power Station; confirming the conservation of
wetlands environments
Confirming based on the results of follow-up
surveys the preservation of flora and fauna
ecosystems as planned in the project to replace theShin-Sendai thermal power station, reporting thefindings to the Sendai City Environmental Impact
Assessment CommitteeCollecting information on rare plants and animals
when planning facilities, and determining andimplementing necessary preservation measures

Providing services with high added value tocontribute to solutions to social challenges, etc.:
number of businesses and services

2030/G

43 (cumulative total releases)

Achieving a share of 66.0% for deregulated electricity
rate service plans introduced to provide new value
2025/Gand boost customer satisfaction

 eregulated electricity rate service plans (share inDkWh): 48.4%

1,500 Yori, Sou Connect Tohoku users

2024/TOHKNet

1,087 users

Maintaining the quality of electricity: average number
and duration of power failures per household

Annual/TN

0.11 power failures, 24 min.

Maintaining stable supplies through systematic
repairs of aging facilities
Pylons: 591 pylons/5 years
Poles: 95,660 poles/5 years
Overhead power lines: 11,197 km/5 years
Underground cables: 428 km/5 years

2027/TN(Efforts began in FY2023)

Enhancing resilience to major disasters (emergency
drills conducted at least once a year)

Annual/TD & TN

Major drills conducted at all offices

P67

Foundations for Sustained Growth
Data

P68

P44

P41 P75*1 TD: Tohoku Electric Power; TN: Tohoku Electric Power Network; G: Tohoku Electric Power Group *2 Previously, we reported CO2 emissions in the retail electricity business. However, with our participation in Phase 1 of the GX League, which focuses on CO2 emissions on a power generation basis, we haveswitched to reporting CO2 emissions on a power generation basis.

24

Realization of the Tohoku ElectricPower Group’s Medium- to
Long-Term Vision “Working
alongside next”

INTEGRATEDREPORT 2023

Introduction

Materiality targets and metrics

A Value Creation Story
Value Creation Process

Materiality topic

S

Creating
workplaces inwhich diverse
human resources
can work with asense of vitality

Respect for thehuman rights ofdiversestakeholders

GSound andtransparent
corporate
management

Key topics

Enhancement of human capital to support businessmodel transformation
Implementing work-style reforms through means suchas use of digital technologies
Promoting diversity, equity, inclusion
Promoting health management

Ensuring worker safety
Preventing discrimination and harassment
Ensuring public safety and consumer safety

Securing sound foundations for revenues and finances
Thorough adherence to corporate ethics andcompliance
Risk management and response
Ensuring information security
Protecting and utilizing intellectual property
Risk management in the supply chain
Expanding two-way communication with stakeholders
Enhancing partnerships
Developing an effective governance structure

Major targets and metrics

Realization of the Tohoku ElectricPower Group’s Medium- to
Long-Term Vision “Working
alongside next”

2025/TD & TN

(Efforts began in FY2023)

Achieving a rate of at least 80% of employees taking
ordinary leave (including hourly leave)2024/TD & TN

TD: 77.1%; TN: 83.0%

At least doubling the number of women managers(vs. the start of FY2019)2024/TD & TN

TD: 1.48-fold; TN: 1.11-foldAchieving a rate of at least 5.0% of managers being
women

2035/TD & TN

2.46%

Complying with statutory percentage of employeeswith disabilities

Annual/TD, TN &
TFP

2.48%

Toward Realizing Carbon Neutrality

Achieving a percentage of no more than 20.0% of
employees who are smokers

2024/TD & TN

20.9%

Foundations for Sustained Growth

Zero fatal accidents (including subcontractors,
contracted work, etc.)

Annual/G

2

P73

Responding appropriately to consultation on
harassment: number of consultations with hotline

Annual/TD & TN

25

Sustainability
ReportZero power accidents affecting the public (due tofacility defects)

Annual/TD & TN

0

P40 P43
P53

Consolidated cash income of at least 320.0 billionyen2024/G

136.6 billion yen

Thorough business ethics and compliance: numberof serious compliance violations, number ofconsultations with whistleblowing hotline

Annual/G

Number of consultations with whistleblowing hotline:
148

Appropriate management of and response toimportant risks identified based on integrated risk
management policy: controlling value at risk to keep
it within the range of consolidated equity capital

Annual/G

Under control (value at risk / consolidated equity
capital less than 1)

Maintenance and promotion of information security
management: number of subjects for which
information security has been confirmed

Annual/G

Number of subjects confirmed (number of thosewith whom we had interviews during visits): 206 (38)Compliance with Protection of IP rights mandate
under the Group Code of Conduct: number ofpatents held

Annual/TD & TN

293 patents
12 designs

100% of major trading partners surveyed

Annual/TD & TN

(Efforts began in FY2023)

Tohoku Electric Power Group
Carbon Neutral Challenge 2050
Sustainability Initiatives

P69
Sustainability
Report

P46 P55

Sustainability Priorities(Materiality Topics)

Toward the Working Alongside Next Vision

Data

P27

Number of serious compliance violations: 2

4 utility models
102 trademarks

P13

Sustainability
ReportP73
P77

Sustainability
ReportP72
P54
Sustainability
Report

P41

Proactive communication activities with stakeholders:Annual/G
number of social contribution activities

922

P76

Enhanced dialogue with shareholders and investors(including ESG): number of dialogues

Annual/TD

24

P91

Annual/TD

Surveys assessing efficacy have been undertaken
continuously since FY2016, their results arereported to the Board, and improvements and othermeasures are implemented during the following
fiscal year.

P84*1 TD: Tohoku Electric Power; TN: Tohoku Electric Power Network; TFP: Tohoku Electric Power Friendly Partners; G: Tohoku Electric Power Group

Tohoku Electric Power GroupFY2022 results

Relatedpage(s)Training 2000 DX literacy human resources

Improving efficacy of Board of Directors (assessing
the efficacy of the Board and making continual
improvements based on the results)

25

Target fiscal
year/scope*1

INTEGRATEDREPORT 2023

Chapter

02(Source: Akita Offshore Wind Corporation)

Toward the Working
Alongside Next Vision
Financial Strategies
Green/Transition Financing
Overview of the Tohoku Electric PowerGroup’s FY2023 Medium-Term Plan
Power Supply Business

Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services

Fuel Procurement, Thermal Power
Generation, Wholesaling

Open Innovation

Renewable Energy

R&D/IP Strategies

Nuclear PowerPower Transmission and Distribution

Tohoku Electric Power GroupIntroduction

Financial Strategies
Policy on returns to shareholders

In addition to securing stable revenue through comprehensive enhancements incompetitive strengths and structural reforms of our core power supply business, theTohoku Electric Power Group will assume the challenge of business growth to help realize
a smart society by strategically investing management resources into dramaticallytransforming our business model. Success in this endeavor will require generation of thefunding (cash income) for investments in related initiatives. To increase our capacity togenerate cash flow, we established the financial target (indicator) of consolidated cash
income.
Consolidated cash income has remained low in recent years due to factors including
COVID-19, earthquakes centered off the Fukushima Prefecture coast in two consecutive
years, and Russia’s invasion of Ukraine.
In FY2023, we expect to record consolidated cash income of approximately 340.0
billion yen, as a result of a sharp recovery in business performance spurred by electricity
rate revisions in deregulated market segments from November 2022, measures to raise
rates in regulated segments beginning in June 2023, improvements in overallmanagement efficiency, and other initiatives.
In the future, in addition to developing long-term sustainable revenue foundations,
including the resumption of operations at Unit No. 2 at the Onagawa Nuclear Power
Station and other measures, we will continue to pursue efficiency improvements toachieve our FY2024 financial targets.

Our policy calls for decisions on dividends that reflect comprehensive consideration ofmatters including financial results for the fiscal year and medium- to long-term revenue
and expenditure projections, based on pursuing stable dividends.
Due to substantial losses and other factors, we will not pay interim or year-end
dividends for FY2022.
As for dividends for FY2023, based on a comprehensive evaluation of factors
including the need to make steady progress on efforts to improve equity capital,
degraded due to substantial losses in the past two years, and reducing interest-bearing
debt, in addition to business-performance forecasts for the current fiscal year, we plan to
pay interim dividends of five yen/share and year-end dividends of 10 yen/share.

Trends in consolidated cash income (100 million yen)

3,219

Damage to facilities caused byearthquake centered off Fukushima
Prefecture coast
Soaring fuel and wholesale electricity
market prices due to invasion of Ukraine

3,400

R
 esuming operation of Unit
No. 2 at the Onagawa Nuclear
Power Station
1,366

FY2019Reference

FY2024
Recording consolidated cash
income of at least 320.0 billion yen

3,023
2,573

FY2020

FY2021

FY2022

Enhancing service solutions
Thorough efficiency improvements
throughout management as a whole
FY2023(Forecast)

Consolidated cash income

To measure our capacity to generate the cash needed, we established consolidated cash income as a financial target. This
includes non-cash expenses (i.e., depreciation and impairment of nuclear fuel) not included in accounting profit indicators suchas ordinary income, as well as shares of gains or losses of entities accounted for by the equity method.
Consolidated cash income is calculated as follows:

Consolidated cash income = operating income + depreciation + amortization of nuclear fuel +share of profit of entities accounted for using equity method(Operating income does not include the effects of the time lag in the fuel cost adjustment system.)

27

A Value Creation Story

Financial targets

Tohoku Electric Power Group

Toward the Working Alongside
Next Vision
Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action(Yen)

Dividends (left axis)

Payout ratio* (right axis)

50
40

Next-Generation Energy Services

100
40

40

40

30

43.0

R&D/IP Strategies

40

31.7

Toward Realizing Carbon Neutrality

20
0

2019

Open Innovation

60

0
2018

Electricity Plus Services

80

35
68.0

20
10

Electricity Retail Sales

(%)

2020

2021

2022

0
(FY)

Foundations for Sustained Growth* No payout ratio is calculated for FY2021 and FY2022 due tothe net losses recorded.

Data

The thinking behind “Working alongside next,” the Tohoku Electric PowerGroup’s Medium- to Long-Term vision
Financial soundness

Returns to shareholders

Returns to shareholders

In addition to investing in the electricity business,
including resumption of nuclear power station
operation and renewable energy development,
we will put interest-bearing debt to effective use
through investments in growth businesses while
monitoring our capacity to repay debts (flow) and
our financial standing.

Steady returns based on consideration for stabledividends as well as matters such as resumptionof operations at Unit No. 2 at Onagawa, progress
on development of the smart society building
business, and achievement of financial targets

We plan to improve returns on invested capital bymonitoring returns on individual investments andgroupwide capital efficiency, as well as by
securing profitability in the power supply businessand shifting resources to quickly achieve
profitability in growth businesses.

FY2022 results

FY2022 results

FY2022 results

Consolidated interest-bearing
debt / cash income ratio: 22.5
Consolidated equity ratio: 10.5%

No interim or year-end
dividends

ROIC: –3.5%

FY2023 forecasts*

FY2023 forecasts*

Interim: 5 yen /year-end: 10 yen

ROIC: 4.0%

FY2023 forecasts*
Consolidated interest-bearing debt /cash income ratio: approx. 9.8
Consolidated equity ratio: approx.
13.0%* Calculated based on performance forecasts announced July 31, 2023

INTEGRATEDREPORT 2023

Introduction

Promoting Green/Transition Financing

A Value Creation Story

We are currently promoting green/transition financing as part of efforts to achieve carbon neutrality by 2050. In FY2022, in addition to our existing green financing initiatives, we raised funds throughtransition financing for investments in power transmission and distribution networks and high efficiency thermal power stations.
We will maintain the course of optimal fundraising to achieve the goals of the Tohoku Electric Power Group Carbon Neutral Challenge 2050.
The following information includes the disclosures required in annual reports following the execution of green/transition financing. The first and second issuance of Tohoku Electric Power Green
Bonds and green loans executed in FY2021 are not included below because their allocation was completed in FY2021, thus they are not subject to annual reporting requirements.

Toward the Working Alongside
Next Vision

Overview of financing

Power Supply Business

Type

Allocation of funds raised through transition finance and environmental impact (as of March 31, 2022)

Lender (loans)/name (bonds)
1 Shinsei Bank, Ltd.*1

Green loans

2 Taiju Life Insurance Company

Limited3 The Shonai Bank, Ltd.

Green bonds

4 Third Green Bonds
5 Development Bank of Japan Inc.
6 Mizuho Bank, Ltd.

Transition loans

7 Nippon Life Insurance Company
8 The Dai-ichi Life Insurance

Company, Limited
9 First transition bonds

Transition bonds
10 Second transition bonds

Use of funds

Date executed

April 27, 2022
Construction costs for the Tamagawa Hydroelectric*2Power Station No. 2 (Yamagata Prefecture)
February 27, 2023
Renovation costs for the Chojahara HydroelectricPower Station*2 (Yamagata Prefecture)Three onshore wind power stations, fourgeothermal power stations
Funding for improvements at the Joetsu Thermal
Power Station
Costs of improvements of the grid connecting
Tohoku with Tokyo*3 and activities involving theprocess of acquiring power sources*3 in thenorthern Tohoku area
Funding for improvements at the Joetsu Thermal
Power Station
Costs of improvements of the grid connecting
Tohoku with Tokyo and activities involving thebidding process of acquiring power sources in thenorthern Tohoku area
Decommissioning of Harbor Units Nos. 1 and 2 at
the Higashi-Niigata Thermal Power Station

November 29, 2022
June 2, 2022

March 28, 2023

Funds raised

March 9, 2023

1

Not disclosed

100%

0%

0%

2

Not disclosed

100%

0%

0%

3

Not disclosed

100%

0%

0%

Output of projects to whichfunds were allocated14.6 MW (Tamagawa No. 2)
12.4 MW (Chojahara)

10.0 billion yen

1.0 billion yen

0.0 billion yen

Onshore wind power:
127.6 MW/3 stations
Geothermal: 207.2 MW/4 stations

Total 10.0 billion yen*3 10.0 billion yen*3

1.0 billion yen*3

0.0 billion yen*3

361.8 MW/9 stations

4

10.0 billion yen

Annual CO2 emissions
reductions*2 (FY2022)
3,164 t2,637 t—457,960 t
463,761 t*1 Projects funds of which were allocated from each mode of financing and were operating steadily as of 2023.
*2 Method for calculating annual CO2 emissions reductions: FY2022 annual power generated (MWh) × FY2022 CO2 emissions factors (t-CO2/MWh).
Emissions reductions from all projects are estimated through prorating by the amount of funds allocated.
*3 Total excludes undisclosed amounts.

28

Tohoku Electric Power Group

Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy

100%

87%

0%

Not disclosed

6

Not disclosed

100%

90%

0%

Not disclosed

7

Not disclosed

100%

83%

0%

Not disclosed

8

5.0 billion yen

5.0 billion yen

3.5 billion yen

0%22,668 t

910.0 billion yen

9.95 billion yen

8.0 billion yen

0.05 billion yen

45,335 t

Electricity Retail Sales

10 5.0 billion yen

4.95 billion yen

3.0 billion yen

0.05 billion yen

22,668 t

Next-Generation Energy Services

Total 20.0 billion yen

19.9 billion yen

14.5 billion yen

0.1 billion yen

90,671 t*2

Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action

Electricity Plus Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth

Details of transition projects
Details

Joetsu Thermal Power
StationLocation: Joetsu, Niigata Prefecture
Fuel used: LNG
Power output: 572 MW
FY2022 total output (at transmission point): 1,840 GWh
Effects: Reduced fuel consumption and CO2 emissions due to higher efficiency, etc.

Grid connecting Tohoku withTokyo

Location: Tamura, Fukushima Prefecture, and elsewhere
Construction began: 2022
Planned start of operation: 2027
Effects: Increased use of renewable energy through expanded transmission capacity toTokyo (from 5.65 GW to 10.28 GW), etc.

Bidding process to aquire
power sources in thenorthern Tohoku area

Location: Akita, Akita Prefecture
Construction began: 2022
Target start of operation: 2032
Effects: Connection of 3.9 GW of renewable energy sources to the grid

Minato Units Nos. 1 and 2 at
the Higashi-Niigata Thermal
Power Station

Location: Seiro, Niigata Prefecture
Fuel used: LNG
Power output: 700 MW (total of Harbor Units Nos. 1 and 2)
Date decommissioned: 2022

Allocation of funds raised through green finance*1 and environmental impact (as of March 31, 2022)
UnallocatedbalanceAnnual CO2 emissions reductions(FY2022)*1

Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan

Not disclosed

Use of funds

Our green/transition finance initiatives have been assessed and verified for compliance with various
applicable standards (including GBP standards) by DNV Business Assurance Japan K.K., an independentagencyAmountallocated torefinancing

UnallocatedbalanceGreen/Transition Financing

5

Assessment by external agencies

Amountallocated

Amount allocated torefinancing*1: M ethod for calculating annual CO2 emissions reductions: facility utilization rate × 365 × 24 × difference in fuel consumption rate (Higashi-Niigata Thermal
Power Station Unit No. 3 – Joetsu Thermal Power Station Unit No. 1) × calorific value of fuel × FY2022 CO2 emissions factors, assuming replacement of
power output from the Higashi-Niigata Thermal Power Station Unit No. 3 system (572 MW) with that from Joetsu Thermal Power Station Unit No. 1.
Emissions reductions from all projects are estimated through prorating by the amount of funds allocated.
*2: Total excludes undisclosed amounts.

*1 SBI Shinsei Bank, Limited at the time of loan execution *2 Power station developed and operated by Tohoku Sustainable & Renewable Energy Co. Inc.
*3 Included in the use of funds for 7 and 8

Funds raised

Amountallocated

Financial Strategies

Data* Among projects to which funds were allocated, those in use are operating steadily. Work is proceeding steadily for those currently under construction or in
the process of removal.

INTEGRATEDREPORT 2023

Introduction

Overview of the Tohoku Electric Power Group’s FY2023 Medium-Term Plan

A Value Creation Story

Since formulating the Working Alongside Next Vision, the Tohoku Electric PowerGroup has generated steady progress toward its goals for both the Power Supply
Business and the Smart Society Building Business. However, in terms of our finances andbottom line, both have been affected by the rising prices of fuel and power procurement
since Russia’s invasion of Ukraine, the effects of earthquakes off the Fukushima
Prefecture coast in 2021 and 2022, and other factors.
In light of these conditions, the FY2023 Tohoku Electric Power Group Medium-Term
Plan calls for enhancing the services proposed to help ease the burdens faced bycustomers, as well as enhancing products and services in fields other than electricity. In
addition, we will make every effort with regard to safety measures for Unit No. 2 at the
Onagawa Nuclear Power Station as we resume operation of nuclear power generation,
which will help restore profitability and our financial standing, as well as help stabilize

power supplies. Further, we will implement thoroughgoing companywide measures toimprove efficiency while adapting appropriately and flexibly to the changing businessenvironment.
Through these initiatives, we will secure positive operating income in FY2023 andrapidly accumulate earnings, thereby recovering our solid foundations of profitability,
finances and management to achieve growth and operational stability. At the same time,
we will strive to achieve structural reforms in the Power Supply Business and to generate
revenue from the Smart Society Building Business. In this way, we will establish thefoundations for growth for the medium to long term and accelerate our efforts to realize
the Working Alongside Next Vision.
We will set forth on a new growth path, as all companies and employees throughout
the Tohoku Electric Power Group join hands to implement this Medium-Term Plan.

Toward the Working Alongside
Next Vision
Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales

Business
environment

Basic
understanding

Next-Generation Energy Services

FY2023

FY2024FY2025

Electricity Plus Services
Open Innovation
R&D/IP Strategies

of profitability,and financial
standing

Growing need to achievecarbon neutrality
Importance of optimal
resource allocation andbusiness operations inindividual business fields

Swiftly building up cash income

Toward Realizing Carbon Neutrality

Enhancing service proposal Electricity retail, services
Resuming nuclear power generation

Foundations for Sustained Growth
NuclearData

Thoroughgoing efficiency improvements across managementEfficient business operations under a new wheeling charge system Power transmission and distribution

Building the foundations for medium- tolong-term growth

Growing volatility in electricity
business operations
Growing importance of stableenergy supply

Securing positive operating income

Accelerating implementation of the Working
Alongside Next VisionOptimizing the power source portfolio and supply-demand balance Power generation, wholesaling
Appropriate formation and operation of the power transmission and distribution network, grid improvements andRealizing theWorkingAlongside Next
Visionoperation for expanded use of renewables, growing new businesses and power demand Power transmission and distribution
Promoting development of new power stations and improving the performance of existing ones
Securing business opportunities throughout the value chain and life cycle

Renewable energy ptimizing supply-demand management and power procurement, enhancing added-value services andO
integrated solutions Retail electricity sales and related services
E xpanding business domains

Services

Profitability in the Smart Society
Building Business

Discovery of improper
handling of customer
information

Rapid recovery

Structural reforms of thePower Supply Business

Worsening bottom line, andfinancial standing (request to
increase electricity rates)

Taking on the challenge of carbon neutrality
Establishing robust business foundations

29

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Power Supply Business
Introduction

Fuel Procurement, Thermal Power Generation, Wholesaling

A Value Creation Story

Business environment
Opportunities
Growing demand for carbon neutrality
Capturing new markets to secure revenue opportunities

Risks
Increasing volatility attributable to rising fuel prices andelectricity market prices
Prohibition of distinctions between internal and externaltransactions in wholesale power sales

Strengths
Efforts to optimize supply and demand using trading skills
and markets
Distinction-free wholesale sales through wholesale bidding

Courses of action for responses
Major initiatives

Toward the Working Alongside
Next Vision

How to generate profit

Financial Strategies
Green/Transition Financing

We will promote the following initiatives to optimize our power source
portfolio, with the goal of achieving solid competitive strengths andcarbon neutrality while continuing to prioritize safety:

Fuel
procurement

Cutting fuel procurement costs while improving resilience and stability

Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan

In-house power Power trading
generation

Power Supply Business

Replacing and decarbonizing thermal power to reflect future roles andregulations

Optimization

More efficient maintenance via state-of-the-art digital technologies
Optimization throughout the value chain of fuel procurement, power
generation, and wholesale power sales
Profit maximization and distinction-free wholesale sales by implementing
wholesale bidding

Power
Price signals wholesalemarketFuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear Power

Making most economical choices

Power Transmission andDistribution
Smart Society Building Business
Development Courses of Action

Pursuing stable fuel procurement and economic
performance over the medium to long term
Tohoku Electric Power will seek to achieve further
improvements in economic performance, flexibility, and stability
by continuing to make progress on optimizing its procurement
portfolio as a whole through means including diversifying pricing
structures, decentralizing procurement sources in light ofstructural changes in fuel procurement markets, and use ofderivatives, thereby reducing fuel costs over the medium to longterm.
In addition, using the trading functions of Group member
Tohoku EPCO Energy Trading, we will strive to enable higher
profitability across the entire value chain, from fuel procurement
through power generation and wholesaling by means such as
hedging against potential future price hikes.
As part of efforts to achieve the goals of Tohoku ElectricPower Group Carbon Neutral Challenge 2050, we areproceeding with studies to establish procurement schemes for
new fuels (e.g., hydrogen, ammonia, and black pellets) that will
help decarbonize thermal power generation.
Tohoku Electric Power established a representative office inSingapore in April 2022 to enhance functions for researchinginternational energy trends. These efforts will help to realize
carbon neutrality through utilization of renewables and carbonneutral fuels, while also improving our flexibility and economic
performance in fuel procurement, centered on LNG.
30

Tohoku Electric Power GroupElectricity Retail Sales

Efforts to reduce fuel costs

Efforts to increase flexibility in fuel procurement

Procurement of low-grade coal (e.g., high ash content coal, subbituminous
coal, and spec coal)*

Securing quantitative flexibility to respond to supply-demand volatility (coal,
LNG)

Increasing procurement from nearby sources (coal)

Optimizing procurement volumes using provisions for change of destination(LNG)

Enhancing LNG procurement and sales negotiating functions based on the
representative office in Singapore*

Enhancing alliances with buyers in Japan (LNG)

High ash content coal: coal of higher than standard ash content but of higher overall economy in consideration of matters such as ash processing costs
Subbituminous coal: coal with lower thermal value and ash content than standard coalSpec coal: coal designated by specifications (calorific value, moisture content, ash content, etc.) suitable for use at our coal-fired thermal power plants, without consideration for coal brandNext-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Responding to risks of cutoff of fuel sources and price volatility
We will implement the following measures in response to the current high volatility in global energy prices and risks to fuel procurement
since Russia’s invasion of Ukraine:
Diversifying procurement sources, growing procurement of new coal brands(coal)

Concluding economical short-term LNG contracts (LNG)
Building optimal procurement portfolios (LNG)

Diversifying contact prices and distribution of contract negotiating timing(coal)

Strengthening cooperation with partners, including power and gas
companies (LNG)

Increasing use of derivatives (coal, LNG)

Our main sources of imported fuels for use
in power generation
RussiaCoal
LNG
Uranium

CanadaKazakhstan
US
Qatar
Malaysia
Indonesia
Mozambique

Australia

We procure US-produced natural gas, including shale gas,from the Cameron LNG project in the United States (photoshows the supply ship Diamond Gas Sakura).

INTEGRATEDREPORT 2023

Power Supply Business
Introduction

Fuel Procurement, Thermal Power Generation, Wholesaling

A Value Creation Story

Enhancing competitive strengths in thermal power generation
In addition to steady progress on developing high-efficiency thermal power
stations, we’re also suspending and decommissioning old and inefficient thermal
power stations, enhancing competitive strengths in power sources, and responding tofluctuations in power demand and supply accompanying the growing adoption ofrenewable energy.

Our thermal power stations
Joint thermal power stations

Hachinohe (LNG)
Noshiro (coal)
Akita (oil)

Sakata (coal)
Sendai (natural gas)
Higashi Niigata(LNG, etc.)

Joetsu (LNG)

R&D/IP Strategies

55

Status of thermal power stations in power source development plans

50

November 2022

Akita Unit No. 3
closed(heavy crude,
350 MW

March 2020

Akita Unit No. 2 closed(heavy crude, 350 MW)

March 2020

Development

Commercial operation ofNoshiro Unit No. 3 began(coal, 600 MW)
Ultra-supercriticalpressure(thermal efficiency 46%)

Tohoku Electric Power Group

October 2020

Increased output
on Higashi
Niigata Unit 4-1
series(from 826 to
877.9 MW)Long-term plannedsuspension of Higashi
Niigata Minato Units
No. 1 and No. 2
July 2024 (planned)(LNG, heavy oil,
Akita Unit No. 4 closed
350 MW×2)(heavy crude, 600 MW)

December 2022

Commercial operation of
Joetsu Unit
No. 1 slated to begin (LNG,
572 MW)
World-leading thermal
efficiency of 63.6% or higher

May 2023

Commencement
announced for
preparations forenvironmental impact
assessment on
replacement ofHigashi-Niigata

Toward a highly environmentallyand economically efficient powersource portfolio

September
2019

Niigata Unit
No. 3
40.4

Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation

Data

Sendai Unit No. 4
approx. 58

Higashi Niigata Unit
No. 4-1 series
55.6

Higashi Niigata Unit
No. 3 series
48.6

45

Furtherboosting thecompetitive
strength ofthermal powersources

Higashi Niigata Unit No.
4-2 series
55.8

Fuel Procurement, Thermal
Power Generation, Wholesaling

Foundations for Sustained Growth

Shin-Sendai Unit
JoetsuNo. 3 series Unit No. 1
60.9
63.6
First high-capacity
gas turbine
combined cycle
power generation toenter commercial
operation in Japan

Power Supply BusinessToward Realizing Carbon Neutrality

Trends in thermal efficiency of newly constructed facilities (design value of rated output)
Trends in thermal efficiency of existing facilities (operating results for gas, coal, and oil thermal power generation)

60

Nakoso (coal)

Suspension
and closure

31

Trends in thermal efficiency of our own thermal power stations (based on lower heating
value*)
65

Haramachi (coal)

Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan

Shinchi (coal)

Niigata (natural gas)

Financial Strategies

Using a next-generation gas turbine based on a forced air-cooled combustor systemdeveloped jointly with Mitsubishi Power, Ltd., which was recognized by a 2018 EnergyEfficient Machinery Award from the Ministry of Economy, Trade and Industry, Unit No. 1 at
the Joetsu Thermal Power Station has the goal of achieving world-leading thermal
efficiency of 63.6% while also improving facility operability compared to previous facilities.
The unit is designed to improve economic performance and reduce environmental
impact by reducing fuel consumption and CO2 emissions, while also improving thecapacity to adapt to fluctuations in power supply and demand attributable to growing
adoption of renewable energy.
This facility contributes to our competitive advantages as a new power source
providing high economic, environmental, and operational performance, as describedabove.

(%)

Shin-Sendai (LNG)

Toward the Working Alongside
Next Vision

Commencement of commercial operation of Unit No. 1 at the Joetsu
Thermal Power Station (December 2022)

46.0 (FY2021)

Shin-Sendai
Unit No. 2
42.0

40

35

1965

1975

1985

1995

2005

2015

2023

(FY)

* Lower heating value basis: volume of heat generated after subtracting condensation heat from water content of fuel and water generated
by burning fuel

INTEGRATEDREPORT 2023

Power Supply Business
Introduction

Fuel Procurement, Thermal Power Generation, Wholesaling

A Value Creation Story

Toward the Working Alongside
Next Vision

Advances in the operation of thermal power sources

Financial Strategies

Seeking to boost operational efficiency of thermal power stations still further, we’readopting advanced digital technologies like Big Data analysis and IoT.
Since 2017, we’ve moved forward in joint verification efforts with Toshiba Energy
Systems & Solutions Corporation for the following two systems, which are intended tocontribute to the early detection of equipment anomalies and increased thermal
efficiency. Since March 2020, we’ve deployed and operated these systems at all thermal
power stations (15 units at nine stations as of May 2023).
Of these, we believe in principle that the systems for early detection of signs ofequipment anomalies will contribute to safety and operational stability not just for our own

thermal power stations but also for facilities of customers in various manufacturingindustries. For this reason, we have conducted feasibility testing in this area since
FY2020. Following the completion of testing, in April 2023 we began providing these
services under the name of the ASYOMI Yori Sou Abnormality Monitoring Service.
Working with Group members Tsuken Electric Ind. Co., Ltd. and TOHKnet Co., Inc., wewill aim to grow overseas sales of this service while putting the Group’s strengths tomaximum use.

Systems for early detection of signs of equipment anomalies (utilizing Big Data analysis
technologies)

Service provision began in April 2023 under the name ASYOMI Yori Sou Abnormality
Monitoring Service

Development Courses of Action

Expertise with operations and maintenance of abroad range of equipment at thermal power stations
based on more than 60 years of experience

Electricity Plus Services

Equipment
operatingdata

Comparison ofcurrent target
values and actual
valuesResults of adoption

Signs of a problem

Alarm

Earlier detection of anomalies than conventional
monitoring methods
Capacity to detect unknown anomalies
A llows early detection and elimination ofserious equipment anomalies

Actual operating
results

Comparison ofbase values andactual operating
results inaccordance with
operatingconditions

Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building BusinessTohoku Electric Power’s high-performance,state-of-the-art digital technologies for a wide range
of general applications

Early detection of equipment anomalies and minimizing associated negative costs

Systems to increase thermal efficiency by modifying operating conditions (applying IoTtechnologies)
Base values

Green/Transition Financing

Electricity Retail Sales
Next-Generation Energy Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth

Signs of abnormality detected
Data

Results of adoption
Achieved capacity to increase thermal
efficiency through analysis at 0.1% levels

Centralequipment

Transmission
equipment

Dedicated
line

CustomerCloud
serverRealtime data linkage

TohokuElectric Power

Overseas power generation businessWe’ve applied the technologies, experience,and other resources gathered in Japan in activities
related to the power generation business in pursuingbusiness opportunities around the world. We plan topress forward to launch the commercial operationand stable utilization of projects in which we haveinvested and participated worldwide.
In development and planning for renewableenergy and smart society building business we will
make full use of the expertise, personnel networks,
and other resources accumulated to date in ouroverseas power generation operations.
32

Tohoku Electric Power Group

Projects in which we have invested and participate

Rantau Dedap Geothermal Power Plant (Indonesia)

Rantau Dedap Geothermal Power
Project

Nghi Son 2 Coal-fired Power
Project

Country

Indonesia

Vietnam

Output (thousand kW)

98

1,200

Our share of output(thousand kW)

19.6

120

Operational commencement

December 2021

July 2022

INTEGRATEDREPORT 2023

Power Supply Business
Introduction

Fuel Procurement, Thermal Power Generation, Wholesaling

A Value Creation Story

Toward the Working Alongside
Next Vision

Value-chain optimization

TradingWith the expanding adoption of market mechanisms in electricity trading, we arepromoting value-chain optimization through pricing that reflects fuel and electricity market
trends and diversifying sales methods including wholesale power sales, as well as utilizing
trading activities to secure revenue while accounting for uncertainties in quantities andprices.
In the future, we will adopt an optimization support system to improve our scenario
analysis and risk assessment further.

Seeing electricity market reforms as business opportunities, our strategic subsidiary
Tohoku EPCO Energy Trading Co., Inc. engages in integrated trading including trading in
the electricity market and fuel futures. It will continue to increase revenues by proposing
solutions that deliver added value in aspects such as price levels tailored to the market’s
perspective and flexible contractual terms and conditions while making the most of its
trading functions.
We manage a range of risks surrounding the company, including market risk, bybuilding a multilayered system involving the parent company.

Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business

Illustration of initiatives to optimize the value chain from fuel procurement to power
generation and wholesalingPower
generation

Fuel

Fuel market analysis,
forecastingLong-term, short-term, andspot fuel procurement(procurement sources,
volumes, prices, etc.)
Inventory management, tanker
planning
Fuel trading (resale, swap, etc.)

Fuel procurement andtransport

Receipt, storage,
disbursement

Wholesaletransactions,trading

Supply-demand
management

Power sourceplans (supply
plans)
 Power-generation
portfolio analysis
 Maintenanceplans,
adjustments
 Revenue
management by
power source

Demand forecasting
and analysis
 Supply-demandplanning andmonitoring
Electricity market
tradingMarket bidding
strategy
 Imbalancesettlement

Power generation

Supply-demand
management

Market analysis
and forecasting TradingWholesale andnegotiatedtransactions
 Revenue
management
Risk assessment

Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services

Tohoku EPCO Energy Trading

Electricity Plus Services

Since it started operating in April 2018, Tohoku
EPCO Energy Trading has engaged mainly in thebusiness of trading in wholesale electricity in theelectricity market to boost revenues while alsoutilizing fuel futures and other means to control theimpact of fluctuations in fuel prices.

Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Efforts for supply-demand optimization
based on market trading

Data

Customers
Electricity supply
Tohoku Electric Power

Tohoku EPCO Energy
Trading Co., Inc.

Wholesale transactions,trading

Value chain of fuel, power generation, and wholesaling
Further advances through adoption of a supply-demand optimization support system
Market transaction

Negotiatedtransaction

Fuel procurement

Fuel suppliers
Fuel
futuresmarket33

Tohoku Electric Power GroupElectricity
futuresmarketJapan ElectricPower Exchange(JEPX)

Negotiatedmarkets

INTEGRATEDREPORT 2023

Power Supply Business
Introduction

Renewable Energy

A Value Creation Story

Toward the Working Alongside
Next Vision

The Tohoku Electric Power Group

Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan

will build a solid position

Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling

as a responsible renewable energy operator.
Under the Tohoku Electric Power Group Carbon
Neutral Challenge 2050, the Tohoku Electric PowerGroup is striving to achieve carbon neutrality throughmaximal use of renewable energy and nuclear power,
decarbonization of thermal power sources, andelectrification and realization of a smart society.
Among these efforts, we recognize the need toassign a major role to renewable energy as an important
power source to achieve carbon neutrality and promotesustainability. Centered on the Renewable Energy
Company launched in April 2022, we are accelerating thedevelopment of new power sources, making the most of
existing ones, and pursuing new business opportunities.
To date, the Group has adopted approximately
2,800 MW in renewables, including hydroelectric,
solar, geothermal, and wind power. In addition, weare currently proceeding with new development andbusiness participation toward a target of developing
2,000 MW in new renewable energy sources, centeredon the six Tohoku prefectures and Niigata Prefecture.
As of July 2023, we held equity stakes for approximately
650 MW* of the output. To achieve our target, we plan
to boost output in which we hold an equity stake still
further through means including enhancing in-housedevelopment and expanding the business territory, taking
advantage of the technological capabilities, expertise,and other strengths accumulated by the Company over

70 years in the electric power business and harnessing
numerous business facilities in the six Tohoku prefectures
and Niigata Prefecture.
As for existing power sources, we will generate
maximum value from our hydroelectric, geothermal,
and other power sources already in operation by
moving forward with comprehensive repairs and othermaintenance activities and by boosting generated power,
based on the premise of creative cost cutting.
To pursue new business opportunities, Tohoku
Electric Power Renewable Energy Service is growing
its business scope through means including training
maintenance engineers for wind power facilities anddispatching certified chief electrical engineers, with afocus on operation and maintenance of renewable energy
sources and related facilities.
Tohoku Electric Power also is testing the reuse andrecycling of spent solar panels in Miyagi Prefecture, as we
actively take on the challenge of large volumes of wastes
generated from solar panels after use.
By comprehensively advancing these initiatives, theGroup will realize solutions to the issues faced in ourcommunities, increase the profit-generating potential of
our renewable energy businesses, and aim for both thesustained progress of society as a whole and medium- tolong-term increases in corporate value.

Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
DataManaging Executive Officer
Tohoku Electric Power Co., Inc.
President of Renewable Energy Company

Yuji Sasaki* Assuming commercial operation of all projects currently under development

34

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Power Supply Business
Introduction

Renewable Energy

A Value Creation Story

Business environment
Opportunities
Growing need to realize carbon neutrality
Rising importance of carbon neutrality from an energy security (energy self-sufficiency) perspective
Need to strengthen awareness of opportunities and threats in business operations and play an active rolein securing opportunities and mitigating threats
Risks
Impact of regulatory changes on the electricity business
Reduced profitability due to heightened competition
Rising business costs attributable to expanding inflation
Difficulty in procuring materials attributable to supply chain disruptions

Courses of action for responses
Main initiatives

We will move forward with the following initiatives to strengthen
the profit-generating potential of our renewable energy
businesses with the aim of the sustained progress of society as awhole and to increases our corporate value over the medium tolong term:

Strengths
Technological strengths and expertise amassed over 70 years in the electricity businessNumerous business sites within the six Tohoku prefectures and Niigata Prefecture

Accelerating the development of 2,000 MW power sources throughmeans including enhancement of our in-house development andexpansion of our business territory
As of July 2023, the Group was participating in 31 new development and business
operation projects, with an equity stake in output capacity of approximately 650 MW.*In the area of wind power, in addition to ongoing independent development feasibility
studies on the Takko Wind Power Project (tentative name), in June 2022 we acquired allrights to the Shiraishi-Kosugo wind power project from AR Wind Energy K.K, and sincethen we have proceeded with independent development and other efforts as we aim tostrengthen in-house development. While operations started at the JRE Oritsumedake
South No. 1 wind farm followed by Akita Port and Noshiro Port wind farms, we continue
feasibility studies with BW Ideol, a global leader in floating offshore wind power, toward
joint development of a commercial-scale floating offshore wind power project off thecoast of Iwate Prefecture. Outside our franchise area of the six Tohoku prefectures andNiigata Prefecture, Tsunase Solar Power Plant (Tsu, Mie Prefecture) began operating in
February 2023, after which we started participating in the Fukui Kunimidake wind power
project (Fukui, Fukui Prefecture). We are also at work on building hydroelectric,
geothermal, and biomass power projects.

 romoting new development toward coexistence with the community,Ptargeting 2,000 MW
Improving performance through appropriate maintenance and operationof existing power generation facilities
 ptimizing Group companies’ renewable energy power generationO
structures (reorganizing wind, solar, and geothermal power businesses
between Tohoku Sustainable & Renewable Energy Co. Inc. and Tohoku
Electric Power)

Toward the Working Alongside
Next Vision

Key points for profit generation

Financial Strategies
Green/Transition Financing

 ecuring development opportunities
S
by enhancing in-house development
activities, expanding the businessterritory, and other effortsImproving performance throughappropriate maintenance andrenovation
 ursuing new business opportunitiesP
through the wind power
maintenance business and otherbusinesses

Maintaining and expanding kWh capacity via the comprehensive
renovation of aging hydroelectric and geothermal power facilities
To achieve sustained earnings, we are moving forward with various initiatives tomaintain and expand power generation at existing facilities.
Following replacement work to improve generating efficacy at the aging Asanai Power
Station (a hydroelectric power station that first began operating in 1945) and Iwaizumi
Power Station (a hydroelectric power station that first began operating in 1941), theseplants resumed commercial operation in July 2022 and January 2023, respectively.
In addition, Group member company Tohoku Sustainable & Renewable Energy Co.,
Inc. is carrying out full-fledged renovations on the Chojahara Power Station, (ahydroelectric power station with maximum output of 12,400 kW), which first began
operation in 1938. This project is expected to boost capacity to 12,900 kW.
In the area of geothermal power facilities, Tohoku Sustainable & Renewable Energy ismaking progress on replacement work at the Matsukawa geothermal power station,
which began operating in 1966 as Japan’s first commercial geothermal power station.

Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data* Assuming commercial operation of all projects currently under development

Growing business opportunities across the renewable energy value chain
Group member Tohoku Electric Power Renewable Energy Service is growing its
maintenance business for onshore wind power facilities in the Tohoku and Niigata regions
while also training maintenance engineers for wind power facilities and engaging in thebusiness of certified chief electrical engineer dispatching.
In December 2022, we opened and began accepting trainees at the Akita Juku Wind
Power Training Center on the site of the Tohoku Electric Power Akita Thermal Power

Station, as the fourth certified Global Wind Organization (GWO) Basic Safety Training(BST)* training facility in Japan.
We are also engaging in businesses related to the reuse and recycling of spent solar
panels through the activities of the Community Collection Model Study Committee, anagency of PV Cycle Japan.

* A nonprofit formed in 2012 whose membership includes major wind turbine makers such as GE, Vestas, and Siemens, and wind power facility owners, and which certifies training agencies based on international standards on training for wind power facility operators.

35

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Power Supply Business
Introduction

Renewable Energy

Renewable energy development

Power stations currently under development or in which we participate

To date, we have been involved in the development of 31 projects. As of the end of
July 2023, we held equity stakes in a total output of about 650 MW*. We plan to continue
working toward our various goals, including enhancing in-house development activities
and expanding our business territories to expand our renewable energy options.
* Assuming commercial operation of all projects currently under development

Major renewable energy development/
participation projects

14(including development feasibility studies)

Onshore wind

25
1

Wind

4

Hydroelectric2

Geothermal

24

Solar

TBD

3

Iwata Prefecture offshore floating

TBD

TBD

4

Fukaura wind73.6 MWFebruary 2024

5

Noshiro-Yamamoto wide area wind

96.6 MW

March 2025

6

Inaniwa-Takko wind

Approx. 100 MW

FY2025 or later

7

Inaniwa wind

Approx. 100 MW

FY2025 or later

8

Shiroishi-Kosugo wind

Approx. 38 MW

FY2026 or later

9

Abukuma S. wind

Approx. 90 MW

FY2025 or later

Power Transmission andDistribution

10

Tabito Central Wind Farm

Approx. 54.6 MW

FY2027 or later

Smart Society Building Business

11

Inego Pass Wind Farm

58.8 MWMay 2028

Development Courses of Action

Takko wind (tentative name)75.6 MWFY2027 or later

13

14

96 MW

2027 or later

27.5 MW

2026

16

Shimokita wind
JRE Sakata wind replacement
project
Onakadaibokujo wind

4 MW

November 2024

17

Fukamochi wind

94.6 MWFY2030 or later

18

Fukui Kunimidake wind farm

37.8 MWMay 2027

19

Kijiyama (tentative name)14.9 MW

2029

20

Narusegawa

2.3 MW

FY2034

6

28

15

3

Hydroelectric19

Biomass

12
20

11

TBD

13

15

29

Akita Prefecture offshore

April 2024

Geothermal

23

2

42 MW

24

27

TBD

JRE Miyagi Kami Wind Farm

7

22

Aomori Prefecture offshore

12

One project

Biomass1

Output

21 26
16 17

5

21

Shin-Kamimatsuzawa

9.4 MW

FY203122

Chokai-minami Biomass

52.9 MW

October 2024

23

Niigata-Higashi Minato Biomass

50 MW

October 2024

Offshore wind10

Onshore wind

Hydroelectric36

31 Tsunase Solar Power

Plant(Tsu, Mie Prefecture)

Tohoku Electric Power Group

Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerElectricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
DataPower stations in current operation

8

Output(As of July 31, 2023)

Solar

Operational start dateNoshiro December 2022

24

Akita port/Noshiro port offshore

138.6 MW

25

Wind Farm Tsugaru

121.6 MW

April 2020

26

JRE Shichinohe-Towada wind30.5 MW

December 2021

27

JRE Tsuruoka-Hachimoriyama wind13.6 MW

November 2021

28

JRE Oritsumedake S. 1 wind44.18 MWJanuary 2023

29

Tamagawa No. 2 hydroelectric

14.6 MW

November 2022

30

Miyagi Osato Solar Park

37.5 MW

October 2021

31

Tsunase Solar Power Plant

35 MW

February 2023

9

wind farm(Fukui, Fukui
Prefecture)

Financial Strategies

30

Project name18 Fukui Kunimidake

Toward the Working Alongside
Next Vision

Scheduled operational start
date
TBD

Project nameOffshore wind

A Value Creation Story

Akita January 2023

INTEGRATEDREPORT 2023

Power Supply Business
Introduction

Renewable Energy

A Value Creation Story

Toward the Working Alongside
Next Vision

The Tohoku Electric Power Group’s comprehensive renewable energy solutions
Measurements and surveys for renewable energy sources
Measurements and surveys of project sites are an essential part of renewable energy
development.
Higashi Nihon Techno Survey Corporation contributes to renewables development by
providing advanced measurement technologies using 3D laser scanning, drones, andremote-control boats. It will expand the range of orders received from their current focus
on hydroelectric power projects to include surveying in the offshore wind power fieldusing underwater drones and other maintenance surveying.

Topographical image made using 3D
laser scanning

Aerial photographic surveying via UAV(drone)Surveying of rivers via remote controlled
boat

Renewable power generation
Tohoku Sustainable & Renewable Energy operates 18 power stations in the Tohoku
and Niigata region with a total capacity of approximately 124 MW, in addition to twogeothermal steam plants (as of the end of August 2023). It is proceeding withreplacement work at the Matsukawa geothermal power station, Japan’s first commercial
geothermal power station, while proactively researching and developing new projects.

Illustration of Matsukawa geothermal power
station after completion of replacement work

37

Tohoku Electric Power GroupNew Tamagawa No.2 hydroelectric power station(completed in November 2022)

Construction on renewable energy facilities
Yurtec has a track record of more than 20 years in construction work related torenewable energy facilities, chiefly in the Tohoku and Niigata regions. In particular, since2012, following the Great East Japan Earthquake, it has worked on about 300 solar
power facilities (generating capacity: approx. 1,200 MW) and about 50 wind power
facilities (generating capacity: approx. 1,000 MW). It also works on biomass power
generation facilities.
Through this work, it has accumulated considerable experience and expertise not justin power stations but also in power transmission and substation facilities for connection to
the existing power grid, as well as telecommunications facilities.
In recent years, solar power facilities are being used increasingly in comparatively
small-scale local production and local consumption of power at sites such as factory andresidential rooftops, while wind power facilities are trending toward large-scale offshore
farms and, increasingly, larger than ever onshore facilities as well.
As a member of the Tohoku Electric Power Group, Yurtec will strive to expand orders
received for construction related to renewable energy facilities by establishing related
construction structures and leveraging its sales strengths as a local firm to contribute to asustainable society.

Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Yurtec’s track record (since FY2012)
Solar power

Wind power

Projects

Generating capacity

Projects

Generating capacity

Approx. 300

Approx. 1,200 MW

Approx. 50

Approx. 1,000 MW

Watari Solar Power Station• Comprehensive construction
contract• 79,458 kW• 22 kV on-site power lines• 66 kV/22 kV transformer
facility

Rokkasyomura Futamata Wind Farm
• Comprehensive construction• 154 kV power line (1.2 km)
contract• 154 kV/22 kV transformer• 1,500 kW turbines × 34
facility• 22 kV power line (20 km)

INTEGRATEDREPORT 2023

Power Supply Business
Introduction

Nuclear PowerA Value Creation Story

Business environment

Courses of action for responses
In addition to accelerating efforts to achieve rapid resumption of nuclear power station operations, based on the paramount
precondition of safety, we will proceed with the following initiatives to enhance our competitive strengths and public trust.

Opportunities
Growing importance of nuclear power in response to tight supply-demandconditions and soaring fossil fuel energy prices
An important carbon-free energy source for a carbon-neutral society

Initiatives to enhance safety and reliability
Onagawa Unit No. 2: Rapid resumption of operation and subsequent
stable operation

Risks
Facility damage and nuclear accidents attributable to natural disasters, terrorist
attacks, and other events
Unplanned suspension of operation attributable to human error, mechanical failures,etc.

Higashidori Unit No. 1: Continued appropriate handling of compliancetesting under new standards
 nagawa Unit No. 3: Studying application for compliance testing underO
new standards

Strengths

Onagawa Unit No. 1: Planned decommissioning

An important energy source in terms of decarbonization, supply stability, and energy
security

Financial Strategies
Green/Transition Financing

Initiatives to enhance competitive strengths

Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan aintenance and improvement of facility utilization rates andM
reducing operating costs after restart and maintenance andmanagement costs for long-term outages

Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling

Initiatives to enhance trust

Renewable Energy wo-way dialogue with local community on operational resumption
Tof Onagawa Unit No. 2 through reimagining it as the first reactor

Nuclear PowerPower Transmission andDistribution
Smart Society Building Business

Nuclear power stations

Development Courses of Action

At our nuclear power plants, we are completing construction work on safety measures with safety prioritized and making steady progress on initiatives in preparation for subsequent
resumption of operations. We will move forward steadily with initiatives intended to improve safety even more, above and beyond merely conforming to new regulation standards.

Next-Generation Energy Services

Electricity Retail Sales

Installation of equipment to relieve pressure on
the reactor vessel (e.g., filter vents), raisingbulwarks, additional work based on reviews forconstruction plan permits, etc.

Understanding of local residents (easy to understand and detailed
communication on the need for nuclear power stations and safety measures)

Approval

Safety regulation change permit

Approval

Construction work on safety measures

Foundations for Sustained Growth
Data

Progress on the permit to change nuclear reactor equipment
Now
Earthquake/tsunami review

Plant review

Finalization of standard seismic ground motion/
finalization of standard tsunami

Our December 2013 application for a permit to change nuclear reactor equipment inconnection with new regulation standards was approved in February 2020, while ourconstruction plans were approved in December 2021 and our safety regulation change
permit was approved in February 2023.
We are aiming for swift resumption of operation as we make every effort to complete
the construction work now underway on safety measures, while giving top priority tosafety.

Currently, our June 2014 application in connection with new regulation standards isundergoing review concerning assessment of standard seismic ground motion andstandard tsunami. After standard seismic ground motion/standard tsunami finalization,
the process will proceed to the stage of plant review based on the results of review ofearthquake/tsunami safety and other matters.
We will continue working to complete the review process as soon as is feasible.

Unit No. 3 at the Onagawa Nuclear Power Station (output: 825 MW)
Currently, we are carrying out studies in proportion for conformity assessment
regarding matters such as the planned layout of safety equipment, based on theknowledge, assessment, and other feedback from a review of the permit to change
nuclear reactor equipment and construction plan permit for Unit No. 2 at the Onagawa
Nuclear Power Station.

Decommissioning plans for Unit No. 1 at Onagawa Nuclear Power Station, whichceased operation in December 2018, were approved by the Nuclear Regulatory
Commission in March 2020. In May 2020, Miyagi Prefecture, the town of Onagawa, andthe city of Ishinomaki granted preliminary approval for plans in accordance with our safety
agreements. In addition to putting safety first in the decommissioning process, we will
share information on the progress with local residents and other parties through our
website and other avenues.

Tohoku Electric Power Group

Open Innovation

Toward Realizing Carbon Neutrality
Resumption ofoperation

Construction plan permit

Approval

Construction work on
safety measures complete

Approved
Feb. 15, 2023

Conformity
assessment

Safety regulation change permit

Approved
Dec. 23, 2021

Permit to change nuclear reactor
equipment

Electricity Plus Services
R&D/IP Strategies

Unit No. 1 at Higashidori Nuclear Power Station (output: 1,100 MW)
Start of commercial
operation

Construction plan permit

Approved
Feb. 26, 2020

Resumption of operation

Permit to change nuclear
reactor equipment

Construction work on
safety measures complete

Construction
work onsafetymeasures

Conformity
assessment

Unit No. 2 at the Onagawa Nuclear Power Station (output: 825 MW)

38

Toward the Working Alongside
Next Vision

Decommissioning of Unit No. 1 at Onagawa Nuclear Power Station

Nuclear-power decommissioning information | https://www.tohoku-epco.co.jp/electr/genshi/safety/haishi/index.html

INTEGRATEDREPORT 2023

Power Supply Business
Introduction

Nuclear PowerA Value Creation Story

Safety initiatives
At our nuclear power plants, we are completing construction work on safety measures with safety prioritized andmaking steady progress on initiatives in preparation for subsequent resumption of operations. We will move forward
steadily with initiatives intended to improve safety even more, above and beyond merely conforming to new regulation
standards.

Nuclear power information | https://www.tohoku-epco.co.jp/
electr/genshi/safety/

Toward the Working Alongside
Next Vision
Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply BusinessTangibles

Intangibles

In addition to making our nuclear power plants more resistant to earthquakes and tsunami, we are implementing measures to ensure double and triple
redundancy in our response to potential accidents.

Protecting
the facility

Earthquake/tsunami
countermeasures aising bulwarks
RSeismic retrofitting, etc.
Raising bulwarks

Seismic retrofitting

Preventing damage
to fuelSecuring power supplies

Containing
radiation*

Preparing appropriate measures for each stage of potential accidents

Preparing double and triple redundancy measures for the responses at each stage

耐震工事

Power supply vehicles

Bulldozers
High-pressure
alternative water
防潮堤かさ上げ工事
injection equipment

耐震工事
Large-capacity pumping trucks

Tohoku Electric Power Group

Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Electricity Plus Services
Open Innovation

Automatic fire
extinguishingequipment

R&D/IP Strategies

Watertightness at
an opening

Toward Realizing Carbon Neutrality
Emergency task force drill on appropriate first response and swift
external reporting and communication to contain an accident(Onagawa Nuclear Power Station)

Foundations for Sustained Growth
Data

Accident drills using reactor simulators
Measures against
intentional
airplane crashand other events(Safety facilities toremotely prevent
severe damages
in case of nuclear
accidents)

Operation drill for an accident in which all AC power is cut off,
using a reactor simulator (Onagawa Nuclear Power Station)

Drills for connections to power supply vehicles

Emergency task force location
Container ventilation equipment
equipped with filters

Hydrogen recombinationequipment* Measures to prevent damage to nuclear reactor vessels and buildings that contain radioactive materials

39

Renewable Energy

Next-Generation Energy Services

 istribution of bulldozers
D
Emergency task force
locations, etc.
防潮堤かさ上げ工事
Gas-turbine generators

Securing containment
functionsInstallation of container
ventilation equipment
equipped with filters
Installation of hydrogen
recombination equipment, etc.

Hands-on emergency task force drills at the
emergency response center

Infrastructure development
for responding to accidents

Distribution of gas-turbine
generators
Distribution of power supply
vehicles, etc.

Securing cooling
functionsInstallation of high-pressure
alternative water injection
equipment
Distribution of large-capacity
pumping trucks, etc.

Fire/flood
countermeasures
Installation of automatic
fire extinguishingequipment
Watertightness at
openings, etc.

We will continue with various measures to improvereadiness for accidents in terms of intangibles in
addition to tangibles, through means such as drills
for various eventualities to enable plant staff torespond better to emergencies.

Fuel Procurement, Thermal
Power Generation, Wholesaling* Photos depicting equipment at Onagawa Nuclear Power Station

Drill on connecting cables to a power supply vehicle to supply power
to the plant in an emergency (Higashidori Nuclear Power Station)

INTEGRATEDREPORT 2023

Power Supply Business
Introduction

Nuclear PowerA Value Creation Story

Efforts to enhance competitive strengths

Efforts to strengthen trust

Maintaining and improving facility utilization rates and reducing operating costs
after restart and maintenance and management costs for long-term outages
Together with making every effort to ensure the safety of operation after resumption,
we will carry out various measures to reduce costs, including further improvements inutilization rates through more efficient periodic inspection and other activities, joint
procurement with other businesses and enhancement of joint management with affiliatecompanies, optimization of facility inspection cycles and items, and expansion ofcompetitive bidding.

Two-way dialogue with the community on operational resumption of Onagawa Unit
No. 2 through reimagining it as the first reactor
We consider the resumption of operation of Unit No. 2 at the Onagawa Nuclear Power
Station as a new starting point, expressing our resolve for the rebirth of the facility, rather
than a simple restart of operation. Accordingly, we will devote every effort to the restart
while prioritizing safety by learning from our predecessors, who started up Unit No. 1
from scratch, to strengthen ties with members of the community.
We are deploying a wide range of activities reflecting our view that listening tocommunity residents based on two-way dialogue is vital to a nuclear power business.

Nuclear risk management system

President of Tohoku Electric Power

See

Nuclear Safety Promotion
CouncilCheck and
Improvement

Direction andcommands(improvement)

Civil &
ArchitecturalEngineering
Dept.
ReportDepartment
audit

Head Office(evaluation)

Report(General Managers of
departments in chargeof facilities)

Nuclear Power
Dept.
Nuclear Power
Division

Audit

Office of Nuclear
Power Internal
Audit(check and evaluation)

ReportReportInternal audit
depts.

Instruction
Establishing and strengthening organized
and systematic risk management
In July 2014, in light of the importance of
nuclear risk management, we established anuclear risk management system led by the
President to strengthen the commitment tonuclear risk management among senior
executives. Among other duties, this commission
is tasked with analyzing and evaluating nuclear
risks and deliberating on measures to mitigate
risks, approaches to establishing dialogue withlocal communities, and the overall direction andmanagement of nuclear risk management.

Visiting all local households to reflectcommunity feedback in power station
operations

Holding facility tours and other activities todemonstrate facts about the power station

Twice each year, as part of the continuing Konnichiwa

We believe it is important for people to view the

Visit (Onagawa) and All-household Visit (Higashidori)

nuclear power station up close so that they canprograms, plant personnel from the Onagawa andunderstand matters such as the status of its safety

Higashidori nuclear power stations visit all households inmeasures. For this reason, we take various opportunities

the local communities, one at a time*.

to provide station tours to a wide range of people.

Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality* We visited some 3,700 households around the Onagawa Nuclear Power
Station (in the town of Onagawa and the Oshika Peninsula area of the city ofIshinomaki) and 2,300 households around the Higashidori Nuclear Power
Station (in the village of Higashidori).

Foundations for Sustained Growth
Data

Risk Management

P77
A Konnichiwa Visit at the Onagawa Nuclear Power Station

A facility tour

Providing information on nuclear power via social media and the Web
We use social media such as X (formerly Twitter) and YouTube to communicate
to the broadest possible audience information on our nuclear power stations andefforts to improve plant safety.
Our website provides virtual power station tours, which use video, photos,
computer graphics, and other media to convey information on the state of safetymeasures to a broad audience.

Virtual tour of Onagawa Nuclear Power Station on our website

Tohoku Electric Power Group

Financial Strategies

Power Stations

Enhancing risk communication
We’re working to strengthen nuclear risk communication. This means engaging local
communities in dialogue concerning the basis of the risks posed by nuclear power
generation, an approach that seeks to share risk information while carefully attending tocommunity concerns and opinions on nuclear energy to help forge mutual understanding
and build trust. On these occasions, we continue to provide detailed presentations onand measures to reduce nuclear risk as part of efforts to maintain two-way dialogue withlocal communities. Furthermore, we also proactively communicate information via social
media to help people to understand our initiatives to reduce the risks of nuclear power.
We will also reflect the opinions of outside experts and other stakeholders in our
nuclear risk management. We plan to reorganize risk information into various categories
to improve clarity and to develop the personnel who will be responsible for risk
communication. In these and other ways, we plan to continue enhancing risk
communication.
40

Toward the Working Alongside
Next Vision

Communicating information via X (formerly Twitter)

INTEGRATEDREPORT 2023

Power Supply Business

Power Transmission and Distribution
Securing a stable supply of electricity alongside our communities—We tackle the challenges of building a next-generation network to expand use ofrenewables

Representative Director & President
Tohoku Electric Power Network Co., Inc.

Company name Tohoku Electric Power Network
Established
Representative
Capital
Employees

41

Co., Inc.
April 1, 2019
Mitsuhiro Sakamoto,
Representative Director & President
24 billion yen

6,786 (as of March 31, 2023)

Tohoku Electric Power Group

While fulfilling our mission to ensure a stable supply ofelectricity as the general power transmission franchise for the six
Tohoku prefectures and Niigata Prefecture, Tohoku Electric Power
Network supports the enriched lifestyles of local residents throughceaseless cost-saving activities and contributing to achievingcarbon neutrality by 2050.
We deeply regret the recent case of inappropriate handling ofcustomer information (including making customer information
concerning PPS services, which should have been kept
confidential, accessible by Tohoku Electric Power employees),
which not just involved leakage of customer information but also
could shake the foundations of fair trading among retail electricity
businesses.
We will continue to aim to regain the trust of customers andretail electricity businesses through steady preventive measures.
The environment in which the Power Transmission andDistribution operates is undergoing dramatic change, including
increasingly severe natural disasters, aging facilities, growing
adoption of renewables to achieve carbon neutrality by 2050, anddecreasing demand for electricity attributable to the shrinking
population.
Under such conditions, the new revenue cap system has beenlaunched in the wheeling charge system. Intended to keep down
costs as much as possible while securing the investment needed
for stable supply, this system will promote both autonomous
improvements in efficiency by general power transmission anddistribution operators and competition among businesses. The
national government, as well as customers and local communities,
will compare and assess general transmission and distribution
operators based on the results. In this dramatically changing
business environment, we at Tohoku Electric Power Network willcontinue to fulfill our mission of stable delivery of low-cost, highquality electricity to all those in our service area through continually
executing our business plan identifying our aims for five years into
the future while also further improving on efficiency.
As we strive to ensure supply stability, all members of theorganization will work as one to address both the tangibles and theintangibles of our business in areas including construction,
inspections, maintenance, and renovations of power transmission

and distribution facilities, as well as emergency drills to strengthen
our disaster response. We also recognize the need for full-fledged
renovation of the numerous power stations built during Japan’s
postwar years of rapid economic growth, and we will move forward
steadily on measures to address aging infrastructure using asset
management systems, digital technologies, and other solutions.
We expect an accelerating shift to renewable energy as amajor power source amid efforts to contribute to realization ofcarbon neutrality by 2050. Since our franchise area of the six
Tohoku prefectures and Niigata Prefecture offers marked
renewable energy potential, we must advance our large-scale
power transmission grid equipment and our grid stability andsupply-demand adjustment technologies. From this point forward,
we will play an active role in building the next-generation power
network with an even greater sense of urgency than before.
In addition to making progress on such efforts toward stablesupply and expansion of renewables, we are enhancing ourbusiness foundations through comprehensive cost reduction andefficiency improvement efforts and measures to grow earnings. To
cut costs and improve efficiency, the Efficiency Promotion
Committee and the Kaizen Promotion Committee, under theleadership of the Chief Kaizen Officer (CKO), are leading the way
toward our goal of further improving efficiency and productivity. To
grow earnings, we are striving to create new businesses that draw
on our network assets, including facilities and know-how. Our goal
is to generate as many successful case studies as possible byfurther accelerating these initiatives.
Despite dramatic changes in the business environment,
including the shrinking population and the launch of the revenue
cap system, our goals remain unchanged: growth and progress
together with our communities while supporting their safety, peaceof mind, and comfort through the power network. We strive toprovide high-quality services that meet the needs of ourcustomers, enrich their lives, and support our communities, while
fulfilling our mission to ensure a stable supply of electricity, basedon the perspective of working alongside our customers and ourcommunities, as well as our foundations in the six Tohoku
prefectures and Niigata Prefecture.

Introduction
A Value Creation Story

Toward the Working Alongside
Next Vision
Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

INTEGRATEDREPORT 2023

Power Supply Business
Introduction

Power Transmission and Distribution

A Value Creation Story

Business environment

Securing systematic capital investment opportunities
following the launch of the new wheeling charge system

Risks
Impact of increasingly severe natural disasters on facilities,
capacity to ensure stable power supplies, etc.
 esponding to an operating environment characterized byRchanges in earnings structures and competition among
power transmission and distribution companies following
the launch of the new wheeling charge system
Consequences of declining populations and changes in
the power supply-demand structure

Strengths
Expected renewable energy potential for the six Tohoku
prefectures and Niigata Prefecture
Disaster resilience based on lessons from earthquakes,
etc.

How to generate profit

Passing on disaster response knowhow andtechnological capabilities gained from pastdisasters
Systematic renovations of aging facilities
Improving disaster response capabilities
through drills, etc.

Building next-generation powertransmission and distribution networks
Steady implementation of grid improvement
plans
Making effective use of the existing grid
Advancements in supply-demand and gridmanagement

Reducing costs
Harnessing AI, IoT, and other new
technologies
Reducing costs in response to the changing
business environment by making operations
more efficient

Overview of the new wheeling charge system and quantitative targets of thepower transmission and distribution businessStablesupplyAnnual power failures affecting lower
voltage (lighting) customers: 155 MWhor less

Growth inrenewables

Major quantitative targets ofbusiness plans based on therevenue cap system umber of project owners applyingN
for connection study who do notrespond by deadlines: 0
Number of project owners applying
for contracts who do not respond bydeadlines: 0

Service-level
improvements

The purpose of the new wheeling charge system(revenue cap system) is to encourage the general powertransmission businesses to secure both investments andcost efficiency improvements, which makes it possible tostrengthen resilience and ensure that renewables canserve as a major power source. It has been adopted toreplace the previous comprehensive-cost method.
Under this system, general power transmission
businesses will formulate business plans identifying goals
to be achieved during a fixed regulatory period (the first
period is the five years from FY2023 through FY2027)
based on national guidelines.*1 With the approval of thenational government, they will set wheeling service rates
based on revenue projections accounting for the costs
needed to realize these plans and other specificparameters.

 umber of service applicantsNrequesting advance connection study
who do not respond by deadlines: 0
Number of misreported final usage
volumes: 0
Number of errors in rate calculation: 0
Number of delays in notification of
final usage volumes and billing forrates: 0*1 G
 uidelines on Appropriate Calculation of Projected Wheeling Revenues of General Power Transmission Businesses (Ministry of Economy, Tradeand Industry Directive No. 61 of 2022 [issued July 22, 2022])

42

Tohoku Electric Power Group

Financial Strategies

Ensuring stable supply
Under the new wheeling charge system, while
taking the steps needed to ensure the necessary
investments and stable supply, we will achieve theefficiency target specified in our business plans
and seek out further efficiency improvements,
draw on management resources to growearnings, and strive to maintain and grow profits.

Green/Transition Financing

Projected earnings under
the new wheeling charge
systemOverview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan

Profit

Key points for profit generation
Ceaseless efficiency improvements (new technologies,
business processes, construction, procurement, etc.)
Harnessing management resources (our assets andknowhow) to grow profits
Creating power demand based on our local customer
base

Maintaining andgrowing profits

Power Supply Business

Sustained
efficiency
improvements

Renewable Energy

Business
processes

Revenue growthachieved byapplying
management
resources

Equipment
operation

Fuel Procurement, Thermal
Power Generation, Wholesaling
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation

Ensuring stable supply through appropriate formation and operation of
power transmission facilities
Tohoku Electric Power Network serves a vast region in which it maintains andmanages numerous facilities under challenging natural conditions, including some ofJapan’s heaviest snow belts. With the growing frequency and severity of natural disasters
in recent years, we will strive to enhance the resilience of these facilities while applying
various new technologies, including asset management systems and digital technologies,
to renovate aging facilities systematically and efficiently. In this way, we will maintain thesoundness of our power transmission facilities and ensure stable power supplies.
Patrolling and inspecting
power transmission facilities

Data
accumulation

Facility A

Facility B

Facility C

DronesSmart meters

Facility
management
database(Facilities A, B, C)

Risk assessments (quantitative
assessment method)
Now

FutureValue atrisk (600)

Facility failure rate
Tablets

Monitoring systems

General power transmission operators
patrol and inspect facilities and develop
databases on the results.

Facility value at risk = impact of facility
failure × facility failure rate

OCCTO maintains
standard quantitative
assessment methods.

General power transmission
operators develop facility
renovation plans.

R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Facility renovation planning: Facility renovation volume: Facility renovation volumereflecting timing of investment,
construction workloads, etc.
Renovation volume

 otential for advances in technological innovation andPgrowth in business opportunities in decarbonization
efforts, including efforts to achieve carbon neutrality by
2050

Major initiatives

Wheeling costs, etc.

Growing opportunities for efficiency improvements using
digital innovations

Toward the Working Alongside
Next Vision

Impact of facility failure

Opportunities

Courses of action for responses

FY

Facility
renovation plan(nationwide)

Systemic renovations
achieved throughout the
network

Source: Guidelines on Renovating Aging Facilities (Organization for Cross-regional Coordination of Transmission Operators, published
December 17, 2021)

INTEGRATEDREPORT 2023

Power Supply Business
Introduction

Power Transmission and Distribution

Building a next-generation network as adoption of renewable energy
expands
The Tohoku and Niigata regions offer great potential for wind power and otherrenewable energy sources, which will be key to Tohoku Electric Power Network achievingcarbon neutrality by 2050. To this end, we are striving to expand the renewable power
network through means including improving and expanding the grid connecting Tohoku
to Tokyo and other parts of the transmission network, and promoting power source
bidding in the northern Tohoku area. (The total volume of renewable energy connected in
FY2022 was approximately 20,000 MW.)We will also strive to enhance resilience, expand the use of distributed power sources
including renewables, and develop next-generation networks to realize a smart society.
Specifically, we expect to make progress in building efficient facility equipment
configurations in response to increased adoption of distributed power sources and grid
operation suited to changes in supply and demand; building supply-demand optimization
controls on remote islands; and systems development to realize more advanced use ofsmart-meter data and communications networks.

 teady promotion of the bidding process for new
Spower sources in the northern Tohoku area andwide-area grid improvements such as the grid romoting effective use of existing grid, such as
P
Japanese-style connection and management
including non-firm connection

connecting Tohoku with Tokyo
Appropriate responses to master plans conforming
to medium- to long-term energy policies

Solar power Large-scale Nuclear power Thermal power
stationstorage system
stationstationWind power station
Distributed gridHome solar
power, etc.

Putting renewable energy to best use

To achieve progress with efficiency improvements in
response to the changing business environment, we haveestablished the Efficiency Promotion Committee, chairedby the President, and the Kaizen Promotion Committee,
chaired by the Chief Kaizen Officer (CKO), to advance
integrated efficiency improvements companywide. The
approaches taken include equipment and operation
review, new technologies and digital transformation (DX),organizational review, and kaizen activities.
We will also continue to carry out thorough cost
cutting and efficiency improvements while actively
incorporating new knowledge, technologies, and othersolutions under the efficiency plan formulated in responseto the launch of the revenue-cap system—all based on
the premises of ensuring safety and stable power
supplies.

Equipment and operation
reviewHarnessing new technologies
and DX promotion
Organizational review
Seizing initiatives fromcompetitors
KaizenToward the Working Alongside
Next Vision
Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action

Promoting thoroughefficiency improvements
based on coordinated efforts
among the head office,branches, and frontline sites

Tohoku Electric Power Network is making progress on creating new businesses andservices based on our existing network assets. Examples include Denki SOS, a service
that handles power failures caused by customer equipment, an advertising businesses
using the exterior walls and other spaces at our business sites, and Yori, Sou Power Pole
Search, a geolocation search service based on power poles and towers. In March 2023,
we launched a new automated metering service for water and gas utilities, using oursmart meter communications network.
We will continue to increase earnings through means including creating new
businesses based on our assets and know-how as well as public dissemination of thebenefits of electrification to contribute to carbon neutrality.

Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Overview of automated metering service
Renewableenergy output
forecasts

Transmission

More efficient metering operations
Early detection of water and gas leaks

Delivery

The power company handles automatic metering, remote control, etc.
Cuts costs and improves business efficiency.

Also enables visualizationand other solutions based onmeter data, etc.

Gas
Wirelessterminal

 alancing stable of electricity and its quality, through means such asBadvances in grid and supply-demand technologies and further

Gas meter

improvements in the precision of renewable energy output forecasts

Smart water meter

Water
Wirelessterminal

Water and gas utilities

Tohoku Electric Power Group

Keys to efficiency
improvements

New businesses and growth in power demand from a medium- to longterm perspective

Connection

43

A Value Creation Story

Thorough cost cutting

Electricity

Water Gas Electricity

Smart electricity
meter

Smart electricity
meter network

Electricity
Smart electricity
meter system

Tohoku Electric Power Network

Gas utility

Water utility

Water and gas utilities

INTEGRATEDREPORT 2023

Smart Society Building Business
Introduction

Development Courses of Action

A Value Creation Story

Contributing to the progress of our region while growing
the Tohoku Electric Power Group
Working alongside next, the Tohoku Electric PowerGroup’s Medium- to Long-Term Vision, calls for the Groupto grow while promoting the sustainable development ofcommunities by helping to achieve a smart society for a
new age, starting in Tohoku. Currently, we are in theprocess of evolving into a Group capable of providing awide range of services centered on energy as we pursue
initiatives in three domains.
Most of our efforts are currently focused on the domain
represented by next-generation energy. As an integrated
regional energy firm and team of electricity professionals,
we will develop and provide services to enable businesses
and consumers in the Tohoku and Niigata regions to makethe most of diverse energy resources. In the virtual power
plant (VPP) business, we have launched a renewable energy
aggregation service in addition to existing efforts to secure
gains through market trading. In the power purchaseagreement (PPA) business, we opened the Corporate PPA
Business Office in FY2022 to enhance corporate solutions;
we also made progress on developing the Tohoku Electric
Solar e-Charge business for individual customers. Bybuilding a business model encompassing all aspects, fromthe development of renewable energy through sales andsupply-demand management services, and by delivering
optimal energy management solutions, we will help
establish a carbon neutral society.
Another core domain is services bundled with electricity.
Here, Tohoku Electric Power and Tohoku EPCO Frontier willdevelop high added value services based on the retailelectricity business and bundle them with electricity
services, leveraging our customer base and ties to thecommunity established over more than 70 years in theelectricity business.
To develop attractive products and services, we willleverage Tohoku EPCO Frontier’s strengths in digital
44

Tohoku Electric Power Grouptechnologies to enable dynamic service development andmarketing while seeking to maximize Group synergies.
By anticipating the needs of individual customers,
Tohoku Electric Power will deliver safety and peace of mind
through Sumai Anshin Support and other services, while
Tohoku EPCO Frontier will propose a diverse range of
products and services to enrich the lives of our customers.
We are also sowing seeds in new business domains
with the aim of enhancing our lines of business. Specifically,
we are implementing open-innovation programs on themes
related to social challenges in our region, seeking a wide
range of business ideas from outside the organization. We
are aiming to generate new businesses and services
through collaboration and cocreation with our partners. We
are also striving to develop new businesses beyond theboundaries of the energy domain, through feasibility testingon use of new technologies such as non-fungible tokens(NFTs).
Grounded in customer needs and expectations for theGroup, we are moving forward with business development
and expansion initiatives that draw on our strengths,
including energy knowhow, customer base, and otherdiverse assets. To accelerate these initiatives even further,
we are increasing the speed of the cycle from service
development through sales and proposing diverse services
with high added value, to improve our competitive strengths
as a company chosen by customers.
In these ways, we will realize a smart society starting in
Tohoku by developing and providing a wide range of
products and services centered on energy and delivering
comfort, safety, and peace of mind to the lives of theresidents of our communities. In so doing, we will contributeto the sustained growth of the Tohoku and Niigata regions
and achieve growth for the Tohoku Electric Power Group.

Toward the Working Alongside
Next Vision
Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
DataManaging Executive Officer
Tohoku Electric Power Co., Inc.

Mitsuo Oyama

INTEGRATEDREPORT 2023

Smart Society Building Business
Introduction

Development Courses of Action

A Value Creation Story

Business environment
Opportunities
Post-COVID changes in society

Emergence of social issues accompanying depopulation

Changes in power supply and demand structures due to the progress of decarbonization, decentralization, anddigitalization

Risks
Rising fuel and power procurement costs and changes in supply and demand structures
Emergence of new service providers, severe competition

Courses of action for responses
We will advance the following initiatives to transform our business model and swiftly achieve
profitability in this business:

Toward the Working Alongside
Next Vision
Financial Strategies
Green/Transition Financing

Enhancing the earnings potential of the retail electricity business by deploying new sales approaches thatreflect the changing business environment

Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan

Expanding business into the next-generation energy domain, based on VPP technologies

Power Supply Business

Development of high value added services based on electricity retail sales

Fuel Procurement, Thermal
Power Generation, Wholesaling

Expanding into new business fields such as agriculture and healthcare
Developing and stimulating the foundations for business creation, including incubation and M&A activities

Strengths

Renewable Energy
Nuclear PowerPower Transmission andDistribution

Energy know-how built up in the power business

Smart Society Building Business

Customer base and human networks in the Tohoku and Niigata regions

Development Courses of Action
Electricity Retail Sales

In the Smart Society Building Business, as electricity professionals, we focus above allon business development that draws on our energy expertise in next-generation energy.
In ways that include VPP technologies, distributed renewable energy sources and storage
cell installation services, and energy management solutions, we will expand our businessdomains and help establish a carbon neutral society.
In addition to efforts to enhance the earnings potential of its base in the retailelectricity business through sales approaches that account for rising fuel and electricity
procurement costs and changing supply and demand structures, the Smart Society
Building Business is also focusing on the domain of services beyond electricity bybundling high value added services with retail electricity sales. In this domain, we will
expand the scope of products and services that deliver comfortable, safe, and reliablevalue by proposing diverse rate plans and various convenient services.
To broaden the Smart Society Building Business still further, we will leverage ourstrengths and assets to take on the challenges of new domains through a businessincubation process that involves internal and external business contests and enhanced
open innovation functions in cooperation with startups.
By deploying packages that combine various products and services with local
initiatives (community projects) such as smart-city programs in ways that meet
community needs, we will realize a smart society, starting in Tohoku while deliveringsolutions to various issues in the community.

Next-Generation Energy Services

Business portfolio

Electricity Plus Services
Open Innovation

Core domains

R&D/IP Strategies

New domains

Toward Realizing Carbon Neutrality

Leveraging energy expertise

Courses of action in developing the Smart Society Building Business

Examples: Smartagriculture, mobility,
real estate, etc.

PPA

Foundations for Sustained Growth
Data

Next-generationenergy domain
VPP

Domain ofelectricity plus
services

Electricity
retail sales

Utilizing customer baseBusiness incubation foundations
Investments, M&A, alliances, business contests, etc.

45

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Smart Society Building Business
Introduction

Electricity Retail Sales

A Value Creation Story

We revised retail electricity rates to enhance the earnings potential of the retail electricity business in light of rising fuel and power procurement costs and changing supply and demand
structures.
We will continue to promote efforts to achieve reliable, comfortable, eco-friendly lifestyles while helping customers reduce the burden of electricity rates.

Revised electricity rates
Despite efforts to date to enhance cost competitive strengths by implementing
efficiency improvements amid intensifying competition for retail sales following the
deregulation of retail electricity sales, we faced circumstances in which the cost of
supplying electricity exceeded revenues from electricity rates. This is due to complex
factors, including soaring fuel prices and wholesale electricity market prices, as well aslarge-scale facility damage caused by earthquakes.
Given the difficulty of maintaining a stable supply of electricity under such conditions,regrettably, we had no choice but to increase electricity rates for customers in regulated
segments. In November 2022, we requested an average increase of 32.94%. In May
2023, we received approval for an average increase of 25.47%, which we implemented inJune 2023.
In deregulated segments, in November 2022, we revised rates for high voltage power
and above and eliminated maximums under the fuel-cost adjustment system for
deregulated low voltage rates. We also revised deregulated low voltage rates at the sametime of revision of regulated electricity rates in June 2023.
In the standard service menu for high voltage power and above, we implemented rate
revisions in April 2023 to include market-price adjustments.
We take very seriously the views and feedback received from customers during theprocess of gaining approval for the rate revisions, and we will continue thorough efforts toimprove efficiency and ensure a stable supply of electricity to our customers. We will
provide advice on efficient ways to use electricity and help realize reliable, comfortable,
eco-friendly lifestyles, to minimize the burden of electricity rates.

46

Tohoku Electric Power Group

Activities to propose energy conservation and rate reduction solutions tocustomers
We launched a summer energy conservation action program in June 2023 to provide
benefits to customers who cooperate in energy conservation.
In addition to this action program, we are providing consulting services for energy
conservation and proposing on-site solar-power generation and consumption services forcorporate customers. For household customers, we have launched a promotional
campaign to support part of the costs of heat pump replacement.
We will implement a program similar to thesummer energy conservation action program in
winter 2023 as well, as we strive to improve power
supply-demand balance and reduce rate burdens on
customers.

Toward the Working Alongside
Next Vision
Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth

Promoting Smart Life Electrification
To achieve carbon neutrality, we recommend that
customers switch to full electrification in ways that
include use of EcoCute solutions based on energyefficient heat pump technology.
In the future, we will strive to realize reliable,
comfortable, eco-friendly lifestyles that conserve
energy and safeguard the planet by proposing
comprehensive Smart Life Electrification solutions
that combine various Tohoku Electric Power services
with devices such as solar panels, storage cells, andvehicle-to-home (V2H) solutions.

Data

Smart Life Electrification

INTEGRATEDREPORT 2023

Smart Society Building Business
Introduction

Next-Generation Energy Services

A Value Creation Story

How to generate profit

Service positioning, value provided

We will grow our businesses in next-generation energy services and contribute to acarbon neutral society by providing services to put various energy resources to maximum
use drawing on virtual power plant (VPP) technologies and supplying distributed
renewable energy sources and storage cell installation services.
We will also enhance the provision of optimal energy management solutions to
individual customers and actively participate in smart city and other community initiatives
projects, to realize a smart society starting in Tohoku, as well as solutions that address
individual community issues.

Supplyingelectricity fromrenewables

Key points for profit generation
Onsite/offsite
PPA

Power generation
forecasting
Supply-demand
adjustment

Growing thebusiness basePower generation
forecasting/planning services

Improving precision of power generation
forecasting related to supply-demand
VPP
management
Power source
Repair andSwiftly securing VPP (aggregation) resources
development/
maintenance
Ascertaining corporate PPA needs andmaintenanceservices
supporting adoption
Swiftly developing and securing service human Improving profitability and growing business domains
by linking various businesses around a core of power
resources
generation forecasting and supply-demand adjustment

Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution

Development Courses of Action
Electricity Retail Sales
Electricity Plus Services

Market trading

Added-value services

Category I’ power sources andcapacity markets, supplydemand adjustment market, etc.

Renewable-energy related
services, energy optimization

RewardResource provision
Optimization controls
and reward

customers conclude long-term contracts with renewable power producers, as a means ofprocuring renewable power. We will increase orders received by applying our renewableenergy aggregation technologies to meet PPA needs.

Service provision
Resource provision

Decentralized energy resources

Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth

RewardRenewableenergyoperators

Serviceprovision

Servicecharges

Operations on behalfof customers
Renewable energy
demand-supply
operation support
services• Precise power generation
forecasts• Submission of daily plans• Electricity trading, etc.

Related parties

Data

Organization for Cross-regional
Coordination of Transmission
Operators, general electricity
transmission and distribution
utilities, electricity trading markets,
etc.

Private power-generation facilities, storage cells, EVs, etc.

Growing the renewable energy aggregation service business
Renewable energy, which is seeing growing use, is a power source for which it isdifficult to balance supply and demand. We have launched renewable energy aggregation
services that draw on our knowledge of the power business to efficiently deliver
renewable energy on behalf of renewable power producers.
Demand is also growing for power purchase agreements (PPAs), whereby corporate

Tohoku Electric Power Group

Green/Transition Financing

Next-Generation Energy Services

Virtual power plants (VPPs)

47

Financial Strategies

Smart Society Building BusinessSee here for more information on the renewable energy business
Power Supply Business: Renewable Energy P34

Major initiatives in FY2022, future courses of action
A virtual power plant (VPP) service
combines customer distributed energy
resources and provides returns to customers as
a portion of revenues earned through market
trading and other means.
In the future, we will test household demand
response services to control household storage
cells remotely in accordance with electricity
market price fluctuations and tight supplydemand conditions. These will contribute todecarbonization by supporting the adoption ofstorage cells and, in the future, managing
storage cells on the scale of tens of thousandsof units.

Toward the Working Alongside
Next Vision

Carport type solar panels at Sendai International Airport
This on-site PPA project by Toyota Tsusho,
Tokyu Land, and Tohoku Electric Power involved
installing carport type solar panels on parking lot
no. 1 of Sendai Airport, which operates Sendai
International Airport, and began operation in May
2023.
It is projected to generate 1,816 MWh of power
per year, reducing CO2 emissions by 875 t.

INTEGRATEDREPORT 2023

Smart Society Building Business
Introduction

Next-Generation Energy Services

48

A Value Creation Story

Tohoku EPCO Solar e Charge business development

Smart city and town management

Since its establishment in April 2021, Tohoku EPCO Solar e Charge has promoted
adoption of solar power and storage cell services to households (under the name Aozora
Charge Service) through this business. Highly regarded for how it facilitates contributions
to carbon neutrality with zero initial costs, Tohoku EPCO Solar e Charge has partneredwith about 200 home builders. Its service is used by customers over a broad territory
from the Tohoku Electric Power service area to the Kanto region.
It has also secured bulk contracts for housing subdivisions in Miyagi and Niigata
prefectures and elsewhere. In particular, the Asahi District of Izumi New Town in Sendai
recommends its use on its 721 residential lots. Testing of demand response services
using solar power and storage cell services is also underway in the district.
In addition, Tohoku EPCO Solar e Charge has proposed using its services tocontribute to local government decarbonization plans. Specifically, it is participating in ajoint proposal to select an advanced decarbonization district in the city of Miyako, Iwate
Prefecture. It will continue proposing solutions to contribute to the development ofdecarbonized districts by local governments.
In the future, in addition
to targeting continuing
growth in its partnerships
and its service area, it will
strive to realize a society inwhich households andcommunities can use
electricity with peace ofmind at any time based on
the development of
products related to electricvehicles and energy
management.

Drawing on our knowledge as a general energy company with a focus on electricity,
we supply value to help identify solutions to social issues and to achieve sustained
growth in local communities through local smart city plans and other efforts.
At Izumi Park Town (Izumi Ward, Sendai),alongside other activities, we’re developing
state-of-the-art services with a focus on
the energy field. We’re participating inSuper City plans* in the cities of Sendai and
Aizuwakamatsu. Our goal is to establish a smart
society, starting in Tohoku, by deploying theknowledge and understanding gained throughsuch activities at other locations.

Tohoku Electric Power Group* Super City plan: An effort targeting the development of a true city of the future to
take the lead in realizing future ways of living based on state-of-the-art
technologies ranging from AI to Big Data, under the Cabinet Office’s National
Strategic Special Zones program.

Source: Super City Open Lab

Toward the Working Alongside
Next Vision
Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

exEMS service to support optimal energy experiences
We offer the experience Energy Management System (exEMS) to businesses that
contract with us for high-voltage electricity or above as a service furthering energy
conservation and cost savings in light of ever-growing awareness of the need to cut
energy costs and protect the environment. Drawing on technologies such as Internetof things (IoT) and artificial intelligence (AI), this service helps customers manage
daily energy use and draft energy-conservation measures by visualizing the details ofelectricity use, including changes in demand and electricity consumption.
The greatest strength exEMS offers is its ease of adoption. By realizing battery
operation using next-generation telecommunications and other technologies, exEMS
makes it possible to visualize electricity use without requiring large-scale installation
construction. Since introducing this service in 2018, we’ve provided it to numerous
customers, primarily in the Tohoku and Niigata region.
The product lineup includes exEMS with A, which supports air conditioning demand
controls, and exEMS Advance,
which enables visualization ofelectricity use per device alongwith environmental measurements.
We plan to continue developing
this product line by expanding therange of services provided to meetcustomer needs.

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

INTEGRATEDREPORT 2023

Smart Society Building Business
Introduction

Electricity Plus Services

A Value Creation Story

Service positioning, value provided

Tohoku Electric Power and Tohoku EPCO Frontier are working together to provide
bundled services based on electricity retail sales. We will expand the scope of products
and services by formulating diverse rate plans and various convenient services.
Through these diverse rate plans and services, we will put into practice the Groupslogan “Yori, Sou, Chikara (The Strength to Work Alongside),” delivering comfort, safety,
and peace of mind to customers.

Toward the Working Alongside
Next Vision

How to generate profit
Improving profitability through bundling electricity
with services

Key points for profit generation
Securing optimal power procurement
sources
Service development leveraging Group
strengths and based on customer needs
Enhancing sales abilities to propose optimal
electricity and service plans suited tocustomer needs

Customers
Optimal proposals forindividual customers

Rapid PDCA
cycle

Identifying
customer needs

Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply BusinessElectricity

Optimization

Power procurement
sources

Services

Service development anddeployment based on theconcepts of comfort, safety,
and peace of mind

Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action

Main initiatives in FY2022 and future courses of action

Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services

Business development by Tohoku EPCO Frontier
Tohoku EPCO Frontier was established in April 2021 as a core company driving the
Smart Society Building Business.
In FY2022, it did business under highly challenging conditions as power procurement
prices rose due to factors such as higher fuel costs spurred by the Ukraine crisis andrapid yen depreciation.
Under these conditions, it undertook the Smart Energy Conservation Challenge, aprogram that bundled smart energy-conserving power plans, in which rates werediscounted in accordance with energy savings, and energy conservation supporting
services to help customers save energy through means such as improving the energy
savings of home appliances. These efforts seek to reduce economic burdens on
customer households.
In FY2023, it will seek to improve profitability by
deploying various services that meet customer
needs and contribute to solutions to society’s
challenges, while also striving to procure power at
low prices and realize further efficiency
improvements throughout its businesses.

49

Tohoku Electric Power Group

Open Innovation

A wide range of services to enrich the lives of our customers
In addition to expanding services likely to grow in the future, including household
budget consultation services and camping support services, Tohoku EPCO Frontier isstriving to rapidly develop new services. As part of such efforts, it participates in testing ofa program to use IoT technologies to help keep children safe on their way home fromschool.
In preparation for future growth, it is engaging in activities such as identifying the
products it should provide based on a vision of living 10 years in the future and actively
developing new services by backcasting from this vision.
By collecting and analyzing customer information, including behavioral data, andrunning through rapid hypothesis-testing cycles through A/B testing and other means, itwill move forward to develop new solutions quickly as part of efforts to promote advancesin digital marketing.

R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

INTEGRATEDREPORT 2023

Smart Society Building Business
Introduction

Electricity Plus Services

A Value Creation Story

Enhancing partnerships in plans bundling electricity with gas or electricity
with cable TV/Internet (Selling bundles in cooperation with eleven partners in total, including
existing partners)
Recent partners

Sales began

Sennan Gas (Natori, Miyagi Prefecture)

April 2022

Sendai Propane (Tagajo, Miyagi Prefecture)

April 2022

Yamagata Gas(Yamagata, Yamagata Prefecture)

April 2022

Mizusawa Gas (Oshu, Iwate Prefecture)

May 2022

New Media(Yonezawa, Yamagata Prefecture)

June 2022

Sendai CATV (Sendai, Miyagi Prefecture)

June 2023

Noshiro Energy Service(Noshiro, Akita Prefecture)

Summary

Bundling electricity with gas

Tohoku Electric Power lifestyle services work alongside customers to
improve safety and peace of mind
We offer Tohoku Electric Power lifestyle services to help community residents findsolutions for their needs.
In FY2022, we enhanced the range of services available and, in June 2023, beganoffering lawn mowing, pruning,
pest control, and other services todeliver solutions to household
concerns.
We will continue to provide
safe, reliable services to help
people in the community live
happier lives.

Tohoku Electric Power Group

Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Nuclear PowerPower Transmission andDistribution

Bundling electricity with cable TV/Internet

July 2023

Toward the Working Alongside
Next Vision

Renewable Energy

Bundling electricity with gas

We will contribute to community development by supporting enhanced lifestyles andenhancing partnerships with local infrastructure services to offer affordable bundles.

50

Vacant home management service launchedThis service includes monthly checking of the interior andexterior conditions of customers’ cherished homes andreporting to customers with photographs.
We launched this service in the Sendai area of Miyagi
Prefecture in November 2022 and expanded it to parts of
Yamagata and Fukushima prefectures in June 2023.

Support services launched for lock, window, andfurniture problems
This fixed-rate service prepares customers for unforeseen
issues such as lost keys, broken windows, and door
problems.
When a customer calls to report a problem, we provide afull range of services, including acceptance of repair
requests, dispatch of repair staff, and identifying and fixing
the problem.
We began offering this service in the six Tohoku prefectures and Niigata Prefecturein November 2022.

Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Low-priced plan added to Sumai Anshin Support service lineupThis fixed-rate service handles issues related to electricity and plumbing.
When a customer calls to report a problem, we provide a full range of services,
including acceptance of repair requests, dispatch of repair staff, and identifying and fixing
the problem.
In March 2023, we added a lower priced plan to handle a limited range of problems
compared to the existing plan that covers electrical facilities.
This service is available in the six Tohoku prefectures and Niigata Prefecture.

INTEGRATEDREPORT 2023

Smart Society Building Business
Introduction

Open Innovation

A Value Creation Story

Tohoku EPCO Open Innovation Program 2023 for cocreation with partner
firms

Results of Tohoku EPCO Open Innovation Program 2022

Aimed at realizing a smart society, the Tohoku EPCO Open Innovation Program 2023
is underway from late April 2023 through late February 2024. This program will cocreate
solutions to social issues such as depopulation, low birth rates, and population aging tohelp realize a smart society in the six Tohoku prefectures and Niigata Prefecture, as wellas putting to use the region’s wealth of forestry resources and vacant properties.
Companies that submit highly feasible business ideas that can utilize the resources
and strengths of both partners will be provided with assistance in further improving on
their plans together with Tohoku Electric Power or Tohoku EPCO Frontier. Then, theresults of consideration of the plans will be announced in a meeting and efforts toward
testing or commercialization will begin.

With the goal of realizing a smart society, the Tohoku EPCO Open Innovation Program
2022 took place from May 2023 through February 2023.
The program received a total of 132 ideas on three themes. Following consideration of
the potential for synergies to Tohoku Electric Power Group assets and feasibility of theideas, cocreation has begun on the business ideas from Engate, Inc., ADDIX, Inc., andPanta Rhei Co., Ltd.
Future plans call for aiming to commercialize these ideas through cocreation between
the partner companies and Tohoku Electric Power or Tohoku EPCO Frontier.

Toward the Working Alongside
Next Vision
Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Themes sought

1. Providing services to enrich human-resource development through reskillingand job matching
2. Realizing services putting the region’s forestry resources to maximum use
3. Realizing community vitality using vacant properties

Partner companies

Engate, Inc.
The project seeks to develop a platform to use a gifting system
to highlight the appeal of the Tohoku region, including traditional
culture, cuisine, and arts, as well as its natural blessings.

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

ADDIX, Inc.
The project seeks to develop a service platform to make it easier
to collect Tohoku Electric Power points and enable customers toexperience true advantages using the partner firm’s knowledgeof Web service operations.

Panta Rhei Co., Ltd.
The project will supply safe, reliable wind power even inlocations where solar panels cannot be installed.
As a power source for local production and local consumption,in which the power generated is used on site, it will generate
revenue through sales of wind power equipment to powercompanies, real estate businesses, and other buyers.

51

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Introduction

R&D/IP Strategies
Current state of R&D in priority fields and future courses of action

We have identified this five-year period (FY2020–2024) as a time in which we willtransform our business model to achieve what we want to be in the 2030s identified in
Working alongside next, the Tohoku Electric Power Group’s Medium- to Long-Term
Vision. To this end, we are moving forward with business activities based on the three
focal points. The entire Tohoku Electric Power Group is working together as one toward
Group growth by promoting R&D to contribute to innovations in society and thoroughenhancement of our competitive strengths.
In these initiatives, together with careful selection of the details of R&D projects basedon profitability and future potential we also have identified three priority domains, and wewill focus in particular on R&D to contribute to promoting the Tohoku Electric PowerGroup’s Carbon Neutral Challenge 2050 as well as realizing a smart society and creating
new revenue sources.

Contributing to progress toward the Tohoku Electric Power Group Carbon
Neutral Challenge 2050

Point

1

Point

2

Point

3

ChangeChallenge

CreateEnhancing competitive
strengths throughcomprehensive reforms in thePower Supply Business

Taking on the challenge ofswiftly achieving profitability
in Smart Society Building
Business

Evolving the managementfoundations to support
corporate value creation

Priority R&D domains

Contributing toprogress toward
Tohoku Electric PowerGroup Carbon Neutral
Challenge 2050

Realizing a smart
society and creating
new revenue sources

Steady efforts toward
smart electric power
maintenance andresilience

Trend in R&D expenses

Planned R&D expenses related to carbon neutrality(Billion yen)
10

(Billion yen)
2.0

7.5
6.3

6.0

5.0

5.6

5.3

0
2018

2019

2020

2021

2022

(FY)

2021

2022

2023

* Actual figures shown for 2021, 2022

Tohoku Electric Power Group

Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Black pellets

Nuclear PowerPower Transmission andDistribution
Smart Society Building BusinessResearch on LNG thermal hydrogen/ammonia
mixed burning
Research on burning black pellets in coal thermal
power
Research on CO2 reduction and effective use
Research on floating offshore wind power

Research on dynamic-rating power transmission
capacity
Research on more advanced methods of forecasting
solar and wind power output
Research on improving precision of short-/mediumrange demand forecasting

Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Realizing a smart society and creating new revenue sources

Toward Realizing Carbon Neutrality

In addition to actively carrying out R&D toward swiftly achieving profitability in new
businesses related to realizing a smart society and creating new revenue sources, we will
also further advance initiatives toward increasing electrification rates and expanding adoptionof electric devices and efforts to help improve business efficiency and cut costs by usingmeans such as digital innovation technologies.

Foundations for Sustained Growth

Research on service to provide PV for
in-house consumption
Research on automatic control of home
appliances
Research on more advanced solution
services for consumer households
Research on new next-generationenergy businesses

CloudserverControl-side
terminal

Internet

Posting points awarded
Requests for power
conservation/increases

Managing point information/control requests

Wired
LAN
EcoCuteHome storage
cell

Wired
LAN

Router
Wired LANECHONETLite
gateway

Data

User-side
terminal
Entry of requested points
Wi-fi

LAN
adapter

Air conditioner

Efforts toward smart maintenance and resilience

0.4

0
2017

Power Supply Business

Examples of other major R&D efforts

0.6
0.5

Green/Transition Financing

Concept of automatic control of home appliances

1.2

1.0

2.5

Financial Strategies
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan

Examples of R&D in FY2023

1.4
1.2

5.3

Toward the Working Alongside
Next Vision

Automatic device controls based on identifying point levels

1.5
6.3

To achieve carbon neutrality in 2050, we’re pursuing R&D
across a wide range of fields, including decarbonization,
renewable energy, and power grids. We plan to continue pursuingthese initiatives.
We’re planning 83 R&D projects to help realize carbon
neutrality over the coming three years, and 57 projects currently
are underway.

Examples of R&D in FY2023

R&D contributing to a stable supply of electricity to support core businesses

52

A Value Creation Story

R&D vision

2024

2025

(FY)

Research on automatic facility patrols
Research on using autonomous drones to perform
inspections and patrols

Research on more advanced wiring work and useof robotics
Research on use of high-precision positioning
technologies

INTEGRATEDREPORT 2023

Introduction

R&D/IP Strategies

Research overview
This project involves the production of hydrogen through water electrolysis in solar
power generation by setting up solar power and hydrogen production systems. The greenhydrogen produced from solar power in this way is used as fuel to generate electricity
using fuel cells. This power is supplied to the R&D Center. While it involves energy losses
in hydrogen production and power generation, this project has generated a wide range ofknowledge on various topics, including the feasibility of smoothing out power supply byabsorbing sudden fluctuations in solar power generation through the production of greenhydrogen.
Based on future research on topics such as verification of the durability of mainequipment and power supply to EV rapid charger using green hydrogen, we will makeprogress on deepening knowledge on effective use of hydrogen energy, including
measures to control renewable energy fluctuations using water electrolysis, and othertopics to help develop hydrogen-related businesses.
Overview of hydrogen generating system
Solar power equipment

Water electrolysis hydrogen production
equipment

Solar power generated fromequipment on the roof of the
Research and Development
CenterElectricity

Oxygen isreleased into
the atmosphere.Electricity

Electricity
outputElectricity generated fromsolar power

OxygenTime

Electricity

Oxygen53

Tohoku Electric Power GroupElectricity

Hydrogen

Water
Heat

OxygenHydrogenElectricity

Electricity generated throughhydrogen and oxygen reactions

HydrogenHydrogenHydrogenShort-period component stored
in storage cells

Fuel cell

Hydrogen-absorbing
alloy hydrogenstorage tank

Produces hydrogen and oxygen throughelectrolysis of water.

Electricity

Electricity

Electricity

EV rapid charger

Research andDevelopment
CenterA Value Creation Story

In November 2021, we opened the Co-Creation Research Center together with
Tohoku University to serve as a base for R&D joint efforts. During the period of
November 2021 through March 2025, through close joint efforts with the University,
we plan to make the most of research results and human resources in cooperative
efforts on topics such as carbon neutrality and digital transformation (DX), thereby
enhancing competitive strength of the power business.

Toward the Working Alongside
Next Vision

Human resources,
funds,
information,
needs
Results,
information

Tohoku University
Co-Creation
Research Center

Graduate School ofEngineering
Graduate School of
Science
Graduate School of
Agricultural Science

Industry-Academia
Cooperation Center…

Background and objectives
Accompanying the expanding adoption of renewable energy is the need for
adjustments in response to fluctuations in output resulting from weather conditions. We
have to date addressed output fluctuations based on storage cell technologies. By
focusing on hydrogen production technologies, however, this project is intended to verify
whether such technologies can be used to absorb large-scale fluctuations in power
output from renewable energy sources to the same degree as fuel cells.

Accelerated promotion of R&D together Intellectual property with Tohoku University

Tohoku ElectricPower

Research on responding to fluctuations in the output of renewable energy
using hydrogen production technologies

Graduate School of
Economics andManagement

Access to state-of-the-art
technologies and research
information from across Japanand around the world through joint
efforts with Tohoku University
Academic research institutes inJapan and around the world
Startups based at Tohoku University
Domestic startups
Overseas startups
Other

Financial Strategies
Green/Transition Financing
Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan
Power Supply Business
Fuel Procurement, Thermal
Power Generation, Wholesaling
Renewable Energy
Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales
Next-Generation Energy Services
Electricity Plus Services

Studying information and joint efforts

Open Innovation
R&D/IP Strategies

Collaboration and joint efforts topics
Under the supervision of Tohoku University Data Science College (operated by
Tohoku University Knowledge Cast Co., Ltd.), we launched a joint online program
intended to train human resources for digital transformation (DX) with zero to one,inc. based on the zero to one learning platform, titled “Data Literacy Couse for
Solutions to Social and Business Challenges.”
This course draws on lectures andcase studies that meet Ministry of
Economy, Trade and Industry DX literacy
Production, overall
The Strength to Workstandards to help students learn theAlongsidesupervision
TohokuElectric Power•Manages
allprocesses
relatedtoessential statistical fundamentals andJoint production
the preparation of teachingmaterials and promotes the• Provision of data for case studies
methods used with data. Among its
program (curriculum design, slide• Demo lecturesand manuscript preparation,• Provision of case studies on use indistinguishing features is a focus on
narrated video production, online
business situations
applications in business settings, which
preparations, etc.)• Checking narrated video
Development
should help promote both DX
implementation and DX reskilling within
Data Literacy Couse for Solutions to Social andBusiness Challenges
the enterprise.
This course will contribute to a
Supervision
sustainable society by helping
businesspeople learn data literacy andprovide solutions to social and businessTohoku University
Supervision
challenges.
• Advising on course specifics from an academic perspective

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

INTEGRATEDREPORT 2023

Introduction

R&D/IP Strategies

A Value Creation Story

Intellectual property

Toward the Working Alongside
Next Vision

We see intellectual property s a key management resource in enhancing ourcompetitive advantages. Our R&D activities also comply with the obligation to respect
intellectual property rights specified in the Tohoku Electric Power Group Code of
Conduct.

Financial Strategies

Code of Conduct: 3 (1)Protecting intellectual
property rights

Policy on intellectual property
We advance strategic intellectual property initiatives throughout the Tohoku ElectricPower Group to allow effective use of intellectual property in business activities throughits creation, protection, and application.

Targets and metrics
We have identified the following targets and metrics for our IP strategy initiatives.
Based on these, we are pursuing sustained efforts to enhance in-house training that will
strengthen knowledge and awareness of IP from a compliance perspective, including
avoiding infringement, and the competitive perspective of securing rights to our research
results.

Protecting IP rights in line

TargetPatent applications
Patents

patents held

Trademarks

Utility models

Designs

Patents

Trademarks

Utility models

Designs

500
3
2

400
14
7

23

40

Power Supply Business

Renewable Energy

Initiatives under the intellectual property strategy
Our branding initiatives, new business promotion efforts to realize a smart society, andother activities have led to a significant increase in the number of trademark applications
over recent years.

Nuclear PowerPower Transmission andDistribution
Smart Society Building Business
Development Courses of Action
Electricity Retail Sales

Setting up a hotline
for patents and otherIP rights

To promote efficient R&D and to secure and make proactive use of intellectual
property, we provide general employees with introductory and applied training on IP
operations. We also provide seminars on searching for patent and trademark
information and more specialized training for our IP staff. We have also set up three
IP courses in our distance learning program for employees to offer a broad range ofopportunities for acquiring knowledge in this area.

Setting up a hotline
for patents and otherIP rights

We have set up a hotline for the handling of industrial property (IP) rights by a team in
the Research and Development Center to help oversee activities involving filing ofpatent applications and maintaining and managing IP rights.

Supporting the IP
activities of Group
companies

In addition to introducing the current state of Company IP activities through the
Research and Development Center’s publicity bulletins, we accept trainees fromGroup companies for IP training programs and seminars. The goal is to strengthen
IP knowledge groupwide.

Next-Generation Energy Services
Electricity Plus Services
Open Innovation
R&D/IP Strategies

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth
Data

Patent registrations

60
50

rights while respecting those belonging to others.

Overview of the Tohoku ElectricPower Group’s FY2023 MediumTerm Plan

Fuel Procurement, Thermal
Power Generation, Wholesaling

Number of

Metricwith the Group code of conduct

Green/Transition Financing

We protect and utilize the Group’s intellectual property

66

300

17
7
74

299

13
5

13
4

12
4

84

95

102

285

286

293

Example of protected
IP rights
Power supply vehicle
Patent no. 6545110(registered June 28, 2019)(jointly developed by Aichi
Corporation and Tohoku ElectricPower)

30
21

200

16

3

20

4
31
21

15

16

17

0

0
2018

54

284

100

10

2019

2020

2021

Tohoku Electric Power Group

2022

(FY)

2018

2019

2020

2021

2022

(FY)

INTEGRATEDREPORT 2023

Chapter

03
Toward Realizing Carbon
Neutrality
Roadmap Toward Realizing Carbon Neutrality
Case Studies of Carbon Neutrality Initiatives
Disclosure Under the TCFD Recommendations

Tohoku Electric Power GroupIntroduction

Roadmap Toward Realizing Carbon Neutrality

A Value Creation Story

To achieve carbon neutrality by 2050, the Tohoku Electric Power Group is striving to
reduce CO2 emissions based on three pillars: making the most of renewable energy andnuclear power, decarbonization of thermal power sources, and electrification andrealization of a smart society.
For renewable energy, we are striving to develop 2,000 MW of new power as early as
possible by 2030 and thereafter while maintaining and improving the power generation
capacity of existing sources. For nuclear power, we are making steady progress toward
resumption of operations around May 2024.
To decarbonize thermal power sources, we are studying and testing the use of
biomass and ammonia at coal-fired thermal power plants and the use of hydrogen andother materials at LNG-fired thermal power plants. We’re also studying CO2 capture atthermal power plants to enable use of CCUS.*
To promote electrification and realize a smart society, in addition to promoting Smart
Life Electrification to enable comfortable, smart use of electricity by combining fullelectrification with solar, storage cell, and other services, we are also working to grow thebusiness domains of our next-generation energy services to set up distributed powersources based on VPP technologies, corporate PPAs, and other solutions.
To achieve the goal of carbon neutrality by 2050, the Group is seeking to halve CO2
emissions by FY2030 vs. actual FY2013 levels.
The Group Promotion Council of Carbon Neutrality and Environmental Management,
chaired by the President, manages efforts to achieve this goal and the goal of carbon
neutrality by 2050.

FY2030

1

RenewableenergyMaximum use ofPower grid

power

Nuclear
power

Carbon neutrality

Developing 2,000 MW capacity (as early as possible by 2030 and thereafter)

Toward Realizing Carbon Neutrality
Roadmap Toward Realizing
Carbon Neutrality
Case Studies of Carbon Neutrality
Initiatives
Disclosure Under the TCFD
Recommendations

Foundations for Sustained Growth
Data

2050

Further expansion

Maintaining and improving the capacity of existing sources

renewable energy
and nuclear

2050

2030

CO2 emissions: one-half of FY2013 levels

Toward the Working Alongside Next Vision

Developing and operating the grid to make maximum use of renewable energy
Swift resumption of operations and subsequent operational stability and improved operational efficiency(including grid expansion, digitization, and storage and P2G use of surplus renewable energy)

2

Decarbonizationof thermal power

Coal thermalpower

Feasibility study

LNG thermalpower

Feasibility study

Decarbonization using biomass and ammonia
Toward full-scale deployment (e.g., increasing mixedfuel burning ratio, studies of unmixed burning)

Verification

Implementation studies

Decarbonization using hydrogen, etc.
Verification

Toward full-scale deployment (e.g., increasing mixedfuel burning ratio, studies of unmixed burning)

Implementation studies

Phasing out inefficient power sources, replacement with high-efficiency sources, studying CCUS*

3

Proposing Smart Life Electrification

Electrification

Electrification
and realization ofa smart society

Next
generationenergyExpanding range of electrification (to transport, industrial, and other fields)

Integrated

Expanding services to establish distributed power sources through home solar, storage cells, corporate PPAs, and other efforts

initiatives

Providing services for use of distributed energy resources using VPP technology
Providing energy management solutions

Management

Governance

56

Board ofSupervision

Sustainability Promotion

Directors

ReportingCouncil

Tohoku Electric Power Group

Cooperation

Promotion Council of Carbon Neutrality andEnvironmental Management
Chair: President
Members: Vice Presidents, Managing Executive Officers* CCUS: carbon capture, utilization, and storage technologies

INTEGRATEDREPORT 2023

Introduction

Case Studies of Carbon Neutrality Initiatives
Making the most of renewable energy and nuclear power

Decarbonization of thermal power

We are making steady progress on efforts to develop new renewable energy sources
and to make the most of nuclear power. Both are carbon-free energy sources.
In the area of renewable energy, we are accelerating work to develop 2,000 MW of
new capacity while improving the performance of existing sources.
In addition, to expand the use of renewables, we are improving and enhancing ourpower transmission and distribution networks and making rapid progress on developing
next-generation networks.
In the area of nuclear power, we are accelerating efforts to resume operations while
putting safety first.

Key to achieving carbon neutrality by 2050 while maintaining stable supplies ofelectric power will be maintaining an adequate level of large-scale grid power sources.
For this reason, we are proceeding with efforts to reduce and eliminate carbon emissions
from thermal power sources.
For coal-fired thermal power, we are testing mixed burning with biomass andexpanding our study of ammonia use. For LNG thermal power, we are striving toaccumulate the knowledge needed for mixed burning with hydrogen and explore thefeasibility of future operation by testing related technologies. We are also studying a wide
range of options to contribute to decarbonization, including participating in a study
project under contract to the Japan Organization for Metals and Energy Security as anadvanced carbon capture and storage (CCS) project (FY2023).
While suspending operation of aging power sources, we will carry out further efforts
toward decarbonization of thermal power. As part of efforts to study replacement of Units
Nos. 1 and 2 at the Higashi-Niigata Thermal Power Station with high-efficiency equipmentthat generates less CO2 emissions, for example, we have started preparations forenvironmental impact assessments. We will continue to upgrade power sources in light ofconsiderations such as the states of various regulatory systems intended to achievecarbon neutrality and customer electricity demand as we strive toward both
environmental performance and competitive advantage.

Accelerating work to develop 2,000 MW of new capacity /maintaining and enhancing kWh performance of existing sources

P35

Nuclear power station initiatives

P38

Development of next-generation networks to expand use of renewables
Case study: Building optimal supply-demand controls on Sado Island
The Tohoku Electric Power Group is participating in the Niigata Prefecture Natural Energy Island Vision, aproject that seeks to establish a sustainable recycling-based society and carbon neutrality, invigorate the local
economy, improve disaster resilience, and maintain a thriving natural environment based on the adoption ofrenewable energy.
To encourage further adoption of renewable energy on Sado Island, Tohoku Electric Power Network is
combining solar power and storage cell systems and energy management systems (EMSs) to realize optimal
control of supply and demand.
To prepare for thecommencement of operationsin December 2023, we aremoving forward withconstruction to install a storage
cell system (output: 5,000 kW)
at the Ryotsu Thermal Power
Station in Sado, Niigata
Prefecture, and the Hikari no
Chikara Kurinoe solar power
station (output: 1,500 kW) in
Kurinoe, Sado.

57

Tohoku Electric Power GroupA Value Creation Story
Toward the Working Alongside Next Vision

Toward Realizing Carbon Neutrality
Roadmap Toward Realizing Carbon
Neutrality
Case Studies of Carbon Neutrality
Initiatives
Disclosure Under the TCFD
Recommendations

Foundations for Sustained Growth
Data

Thermal power decarbonization initiatives
Case study: Joint study toward adoption of hydrogen and ammonia with JERA, Kyushu

Electric Power, Chugoku Electric Power, Shikoku Electric Power, Hokuriku ElectricPower, and Hokkaido Electric PowerIn November 2022, we concluded a memorandum of understanding on studying joint efforts toward adoptionof hydrogen and ammonia as fuels for power generation, with JERA Co., Inc., Kyushu Electric Power Co., Inc.,
Chugoku Electric Power Co., Inc., Shikoku Electric Power Co., Inc., Hokuriku Electric Power Co., Inc., andHokkaido Electric Power Co., Inc. To secure large volumes of hydrogen and ammonia as fuels for power generation
it is essential to develop and expand new supply chains through joint efforts among companies motivated toward
decarbonization.
This memorandum signed by seven companies operating large-scale thermal power plants in Japan calls for astudy of the feasibility of joint efforts in the following areas to develop and expand hydrogen and ammonia supply
chains. Based on these studies, we will seek to help rapidly build stable, economic supply chains for nextgeneration fuels and realize a carbon free society.

Joint procurement to reduce procurement costs of hydrogen and ammonia foruse in domestic power plants
Establishing means of transport and storage of hydrogen and ammonia
Encouraging policy support and development of rules for hydrogen and ammonia
Exchanging opinions and study of cooperative projects regarding adoption ofhydrogen and ammonia in JapanINTEGRATEDREPORT 2023

Introduction

Case Studies of Carbon Neutrality Initiatives

A Value Creation Story

Decarbonization of thermal power

Toward the Working Alongside Next Vision

Verification study of mixed burning with hydrogen and ammonia to decarbonize LNG-

Case study: Verification study of mixed burning with black pellets to decarbonize coal

fired thermal power

thermal power/production of biomass raw materials on unused land on the power
station site

Expectations are high for hydrogen and ammonia as energy sources to move closer to achieving carbon
neutrality. Neither substance releases CO2 emissions when burned.
We are currently targeting hydrogen because testing can begin more quickly for LNG thermal power than forammonia. We are preparing equipment for verification testing of mixed hydrogen burning at our Niigata Thermal
Power Station No. 5 series (a 109 MW natural gas plant) to check the stability of burning.

In 2021, the Noshiro Thermal Power Station (a coal-fired station with total output of 1,800 MW) beganverification testing of mixed burning with black pellets biomass fuel made from partially carbonized wood.
Following assessment of the storability and transportability of black pellets, in May 2023, we tested small-scale
mixed burning. We will proceed with various studies and preparations for testing using larger ratios of mixed
burning. In addition, at the Akita Thermal Power Station (a station fired by heavy oil and crude oil with total output
of 600 MW), test cultivation of plants that can serve as raw materials in biomass fuel began in 2021 using an

Illustration of mixed burning of hydrogen andammonia
Hydrogen andammonia

Fuel (natural gas, LNG)

unused plot of land.

Toward Realizing Carbon Neutrality
Roadmap Toward Realizing Carbon
Neutrality
Case Studies of Carbon Neutrality
Initiatives
Disclosure Under the TCFD
Recommendations

Foundations for Sustained Growth
Data

Efforts to date have demonstrated that certain varieties of plants are
well-suited to the cold Tohoku climate. After harvesting some of the plants, weundertook trial pelletizing and torrefaction to verify their characteristics asbiomass fuel.
In FY2023, we also started the production of biomass materials at theNoshiro Thermal Power Station to gather knowledge concerning expectedcrop yields and regional conditions and characteristics.
We will continue to pursue efforts such as trial cultivation of biomass
materials to accumulate more knowledge of biomass.

Test production of biomass materials
at Akita Thermal Power Station

Projected timetable
SteamturbinePower
generator

Gas turbine

Heat recovery
boilerSmokestackFeasibility
assessment

P roduction of the biomass
raw materials on unused
land at our power stations

Projected timetable erification testing ofV
mixed hydrogen burningat Niigata Thermal Power
StationM ixed burning of blackpellets at Noshiro Thermal
Power Station

Feasibility
assessment

Study of equipment
deployed for mixed/
unmixed burning ofhydrogen/ammonia

Detailed study,
equipment
improvements

Verification

Feasibility assessment anddetailed study

Deployment ofknowledge
obtained throughverification

Detailed study,
equipment
improvements

Study toward full-scale
deployment

Trial
cultivation
2021

2022

Study of fuelproduction
2023

2024

Case study: Joint study of advanced CCS project in the eastern Niigata area
Alongside Japan Petroleum Exploration Co., Ltd., Mitsubishi Gas Chemical Co., Inc., Hokuetsu Corporation,
and Nomura Research Institute, Ltd., we are participating in a five-company FY2023 study of an advanced CCS

Study ofimplementation

project under contract to the Japan Organization for Metals and Energy Security (August 2023–March 2024).
This study involves research on an advanced CCS project in the eastern Niigata area (aiming to begin CO2collection and storage by FY2030).
Mitsubishi Gas Chemical Company
Mitsubishi Gas Chemical Company
Study of separation and recovery
Specifically, in the eastern Niigata
Study of CO transport (pipeline)
CO pressurization facility (storage)
Study of pressurization and storage
area, which is subject to the Niigata
CO pipeline
carbon-neutral facility development basic
Tohoku Electric Powerpreparation strategy announced byStudy of separation and
2

2

2022

2023

2024

2025

from 2026

Niigata Prefecture in March 2023, we will
study separation and capture, pipelinetransport, and pressurization andstorage of CO2 emitted from chemical,
paper, and thermal power plants.

recoveryNomura ResearchInstitute
Study support andadvisory
operations

CO2 pipeline

Hokuetsu Corporation
Study of separation andrecoveryCO2 pipeline

Tohoku Electric Power Group

from 2026

2

2021

58

2025

INTEGRATEDREPORT 2023

Introduction

Case Studies of Carbon Neutrality Initiatives
Decarbonization of thermal powerResearch on conversion of CO2 generated by thermal power to methane gas usinghydrogen from renewable energy
We’re currently undertaking joint research with Shizuoka University on converting the CO2 generated by thermal
power sources to methane gas—a carbon capture, utilization and storage (CCUS*) technology.
This project seeks to synthesize methane gas from CO2 generated by a thermal power station and hydrogenproduced using renewable energy for reuse in mixed burning in LNG thermal power generation. This technology
will enable reductions in and more effective use of CO2 generated by thermal power sources.
This project is currently studying expanding the size of the equipment used to convert CO2 to methane gas,
extending the useful life of catalyzers used in methane conversion, and other approaches.
* CCUS: carbon capture, utilization, and storage technologies

Projected timetable
Laboratory testing• E xpanding CO2 processing
capacity• E xtending the life of catalyzers
used in methane conversion

Testing with small
scale experimental
equipment

Deployment ofknowledge

2021

2022

2023

2024

Testing with large
scale verificationequipment

Promoting electrification and realization of a smart society will help reduce CO2
emissions from customers and the community and to realize decarbonization.
We propose comprehensive solutions by promoting Smart Life Electrification to
enable comfortable, smart use of electricity by combining full electrification with solar,
storage cell, and other services.
We will expand next-generation energy services, including VPP technologies,
distributed renewable energy sources, storage cell installation services, and energy
management solutions.

Promoting Smart Life Electrification

P46

Expanding the business domains of next-generation energy
services

P47

Toward the Working Alongside Next Vision

Toward Realizing Carbon Neutrality
Roadmap Toward Realizing Carbon
Neutrality
Case Studies of Carbon Neutrality
Initiatives
Disclosure Under the TCFD
Recommendations

Foundations for Sustained Growth
Data

Growing corporate PPA projects

Deployment ofknowledge

2025 to 2028

from 2029

Illustration of methane gas conversion

Catalyzers usedin methane
conversion

Case study: Purchasing renewable energy from 77 Solar Park Tomiya
The 77 Bank, Ltd. and our wholly owned subsidiary Tohoku Energy Service Co., Inc. have concluded a contract
on an offsite corporate PPA (self-consigned transmission) service.
Under this contract, 77 Solar Park Tomiya, a solar farm with a capacity of approximately 2,000 kW will be built
on unused land on a general athletic ground owned by 77 Bank in the city of Tomiya, Miyagi Prefecture. Electricity
generated from renewable energy source will be supplied to the 77 Bank head office building and several branch
offices. With construction and launch of power supply by 2024, this project is expected to lead to annual
reductions of approximately 1,237 t in CO2 emissions once it begins providing renewable energy.
We believe adopting renewable energy through setting up
new solar power stations can contribute to realizing carbon
neutrality and to sustained community development as an effort
that contributes directly to increasing renewable energy sources
through additionality.*
77 Bank and Tohoku Electric Power concluded an agreement

Experimental CO2-to-methane
conversion equipment (in laboratory)

on joint efforts in promoting carbon neutrality on April 27, 2023,
and this is the first project under the framework of this agreement.

CO2
Scope of research
CO2

A Value Creation Story

Electrification and realization of a smart society* The contribution to alternatives to CO2-emitting power sources during generation
by newly installed renewable power generation facilities.

H2

Illustration of 77 Solar Park Tomiya at completion

Reducing CO2 emissions by adopting onsite PPA projects (Tohoku Electric Power GroupLNG thermal
power

CO2
recycling

Wind power
Methane conversion
CH4

Solar power

Hydrogenfrom renewable energy

as a whole)As part of our next-generation energy services, we are enhancing proposals for onsite PPA projects in whichsolar power and other facilities are installed on the same sites as customer business facilities, which then use thepower generated. We estimate CO2 emissions reductions by corporate customers provided with onsite PPA
services in FY2022 to total 4,979 t-CO2.
The Group also proposes other solutions, including solar andstorage cell installation services for household customers. We
will actively promote CO2 emissions reductions on the customer

59

Tohoku Electric Power Groupside through these efforts.

FY2022

4,979 (t-CO 2)

INTEGRATEDREPORT 2023

Introduction

Disclosure Under the TCFD Recommendations

A Value Creation Story

Having long recognized climate change risks and opportunities as importantmanagement issues, we’ve moved forward with measures to reduce emissions of CO2
and other greenhouse gases in terms of both supply and demand. In addition, sinceannouncing our support for the TCFD* recommendations in April 2019 we have redoubled
efforts to promote environmental management in aspects such as strengthening our
responses to climate change and continually enhancing information disclosure inaccordance with the framework of the recommendations.
We believe it is important not merely to disclose information but to reflect in ourmanagement strategies the risks and opportunities posed by climate change. In doing so,
we also rely on engagement with various stakeholders including institutional investors.

Toward the Working Alongside Next Vision* Task Force on Climate-related Financial Disclosures, established by the Financial Stability Board (FSB) to reflect the aims announced by G20
finance ministers and central bank governors

Case Studies of Carbon Neutrality
Initiatives

Foundations for Sustained Growth

Board of Directors
Reporting60

Sustainability Promotion Structure

Tohoku Electric Power Group

Oversight

Sustainability Promotion Council
Director in charge of sustainability

Integrated Risk
Management Council

Advising

Advisory board

Cooperation

Environmental Management Committee

Roles

Tohoku Electric Power integrates and lists in its environmental management
framework the groupwide climate risks and opportunities identified by each businessexecution section and assessed with regard to financial impact. It then ascertains thepriority of responding to each risk based on the projected financial impact. Under the
integrated risk management framework, a structure has been developed for reporting on
climate-related risks with major impacts on management to the Board of Directors twice
annually, together with non-climate-related risks.

Financial Report 2022

Data

Promotion Council of Carbon Neutrality and Environmental Management

Risk management

See

Roadmap Toward Realizing Carbon
Neutrality

Disclosure Under the TCFD
Recommendations

Governance
The Board of Directors enhances our responses to climate change and makes
decisions on their incorporation into management strategy based on a recognition of therisks and opportunities posed by climate change, studies of various response measures,and monitoring and oversight of the state of progress toward our goals.
The President chairs the Promotion Council of Carbon Neutrality and Environmental
Management and coordinates environmental activities, including responses to climatechange.
Following the integration of progress status into the environmental management
framework and reporting to the Promotion Council of Carbon Neutrality andEnvironmental Management, responses to climate change are reported annually to theBoard of Directors as sustainability priorities (materiality topics) following deliberations by
the Sustainability Promotion Council.
We have also established an advisory board composed of outside experts, to advise
the director in charge of sustainability on matters such as sustainability trends andstakeholder perspectives, and we incorporate these into the deliberations of the
Sustainability Promotion Council.

Toward Realizing Carbon Neutrality

Sustainability Report 2023

P4

See

Risk Management

Responding to environmental issues, promoting environmental management
Deployment and handling of measures to address global environmental issues
such as climate change
Studies and proposal of measures toward carbon neutrality
Structure
Chair: President / Members: Vice Presidents, Managing Executive Officers

P77

P24 Business and Other Risks | https://www.tohoku-epco.co.jp/ir/report/security/pdf/2022_ho.pdf

INTEGRATEDREPORT 2023

Introduction

Disclosure Under the TCFD Recommendations

A Value Creation Story

Strategy

Toward the Working Alongside Next Vision

Scenario analysis
We perform ongoing scenario analyses to ascertain the financial impact of futureclimate change risks and opportunities. In our scenario analyses, we selected the risks
and opportunities identified under the environmental management framework deemed
likely to have an outsize impact on the Company’s businesses and ascertained inparticular which risks and opportunities are likely to grow within the scenarios envisioned.
We chose two scenarios: a 4° C scenario under which the shift to a low carbon
society fails to advance and countermeasures against climate change are not enhanced
beyond current levels, and a 1.5° C scenario under which major changes are made to

Toward Realizing Carbon Neutrality

policy and the behavioral forms throughout society as a whole to achieve greenhouse gas
emissions neutrality and limit the global temperature increase to no more than 1.5° C (thescenario of progress toward carbon neutrality in 2050). Our scenario analysis reflects
medium- to long-term timelines including the period starting in 2050.
To ensure sustained operations under any scenario, we will continue to analyze
climate change risks and opportunities, seeking to minimize management risks andswiftly reflecting opportunities in management strategies, aiming for sustained growth.

1.5° C scenario

Enhanced restrictions on CO2emissions
2 Systems related to adoption ofrenewable energy
3 Energy prices, market prices
1(%)

Reference scenarios

Analysis oftransition risks
associated with more
pronounced impacts

Global electrification rate under the 1.5°C scenario
52

20

Data

IPCC Fifth Assessment Report (RCP8.5 Scenario), etc.

6

Increasingly severe climate
disasters(%)

7

Changes in precipitation
patterns

Analysis ofphysical risks
associated with more
pronounced impacts

Future rate of increase in heavy precipitation*1 (4° C scenario)
2°C*2

30

4°C

20

40
30

Foundations for Sustained Growth

Anticipated risks to the Company

Changing evaluations bystakeholders
5 Progress of decarbonization
technologies (including
electrification and distributed
power sources)
450

Disclosure Under the TCFD
Recommendations

Temperature at century’s end is up 3.2–5.4° C from the Industrial Revolution
due to failure to take additional countermeasures.

IEA WEO2022 (NZE Scenario), etc.

60

Case Studies of Carbon Neutrality
Initiatives

4° C scenario

Temperature rises by less than 1.5° C
since the Industrial Revolution thanks to aggressive action.
Reference scenarios

Roadmap Toward Realizing Carbon
Neutrality

10

28

0

20

-10

10

Nationwide

0
2021

2030

Source: Prepared based on IEA World Energy Outlook 2022

2050

North
Japan,
Japan
Sea side

North
Japan,
Pacific
Ocean side

East
Japan,
Japan Sea
side

East Japan,
Pacific
Ocean sideWest
West Japan,
Japan,
Pacific
Japan Sea Ocean side
side

Okinawa,
Amami

*1 T
 his graph shows rates of increase in heavy precipitation in the future (2080–2100 annual average) under the 4° C scenario, basedon current levels (1984–2004 annual average). Heavy precipitation refers to the top 5% average values of daily precipitation on daysof precipitation during the year.
*2 The 2° C scenario refers to RCP2.6.
Source: Based on Ministry of the Environment and Japan Meteorological Agency projections of Japan’s climate at the end of the 21st century

We’re improving our scenario analysis in stages, based on multiple climate change scenarios identified by the International Energy Agency (IEA), Intergovernmental Panel on Climate Change (IPCC), and other bodies. This scenario analysis is intended to consider impacts that may arise undercertain assumptions and feasible responses, based on a long-term perspective. No guarantees are made regarding results.

See
61

Tohoku Electric Power Group

Roadmap Toward Realizing Carbon Neutrality

P56

INTEGRATEDREPORT 2023

Introduction

Disclosure Under the TCFD Recommendations

A Value Creation Story
Toward the Working Alongside Next Vision

Strategy
Results of analysis of transition risks
Under the 1.5° C scenario, which anticipates growing transition risks, we anticipate
political and policy risks (e.g., introduction of carbon pricing) or economic and market
risks (e.g., falling market prices of conventional power sources) in each of the short,medium, and long term. This scenario involves risks of thermal power using coal andother fossil fuels becoming less competitive due to rising costs of carbon emissions.

Scenario

Category

Climate change risk

1 Enhanced

restrictions on CO2emissions
Politics(policies)
renewable energy
adoption

1.5° C
scenario

Society(reputation)

3 Energy prices,market prices

4 Changing

evaluations bystakeholders

5 Progress ofTechnology

ImpactIncreased costs due toSignificant
adoption of carbon pricing, etc.

decarbonization
technologies(including
electrification anddistributed powersources)

Decreased recoverability ofinvestment in renewables due
to changes to the FIT program,intensifying competition in the
renewables business, etc.

Significant

Decreased market prices ofexisting power sources due toexpansion of distributed powersourcesSignificant

Accelerating divestment fromthermal power sources forwhich decarbonization has notbeen implemented, rising
fundraising costs, falling stock
pricesRoadmap Toward Realizing Carbon
Neutrality
Case Studies of Carbon Neutrality
Initiatives
Disclosure Under the TCFD
Recommendations

Foundations for Sustained Growth
Data

Timing of Anticipated business opportunities
occurrence *2
for the Company

Our response
Proactively assuming the challenge of carbon neutrality byaccelerating CO2 emissions reductions in the Tohoku
Electric Power Group under the Tohoku Electric PowerGroup Carbon Neutral Challenge 2050

Short/
medium/long term

Increase in new capital
investment involving
decarbonization technologies
Decreased demand forelectricity due to progress onenergy-saving technologies

Tohoku Electric Power Group

Developing projects targeting new development of 2,000 MW in
renewable energy
Rapid resumption of nuclear plant operations

Long term

Short/
medium/long term

Growth in market share of low
carbon and carbon-free
products (including powersource from renewable energy)
and services

Decarbonization of thermal power sources
Verification testing of mixed burning with hydrogen and ammonia
at the Niigata Thermal Power Station
Verification testing of mixed burning with black pellets at theNoshiro Thermal Power Station
Test cultivation of biomass materials on unused land at power
plant sites

Electrification and realization of a smart society
Significant

Progress on electrifying Company vehicles to promote EV use
Business expansion through proposal of electrification including
conversion of heat sources and decentralized power sources
Promoting renewable energy through corporate PPA initiatives
Promoting the renewables aggregation business*

Short/
medium/long term

Growing demand for electricity
due to rising electrification
rates, including EVs
Significant*1 Business risks that would have pronounced impact on the Company have been identified under certain assumptions.
*2 Short term: through 2025; medium term: through c. 2030; long-term: through c. 2050

62

Toward Realizing Carbon Neutrality

Maximum use of renewable energy and nuclear power
2 Systems related to

Economy(markets)

Anticipated businessrisks to the Company *1

Over the medium to long term, we expect advances in decarbonization technologies
that enable improved thermal efficiency and lower costs for the storage cells used inelectric vehicles. This involves risks including rising amounts of new capital investment
and decreased electricity demand due to progress in energy-conservation technologies.
The 1.5° C scenario also anticipates business opportunities for the Group due to
growing market shares of carbon-free products and services, rising electrification rates,and other factors.

Medium/long term

Lower cost of renewableenergy facilities
Development and penetrationof technologies related tostorage cells, CCUS

* Services to ensure the aggregation and effective use of community renewable resources

Promoting technological development
Technological development toward utilization of hydrogen andammoniaTechnological development in grid and storage systems toward
increased use of renewables
Technological development related to offshore wind powerTechnological development in carbon recycling
See

Roadmap Toward Realizing Carbon Neutrality

P56

INTEGRATEDREPORT 2023

Introduction

Disclosure Under the TCFD Recommendations

A Value Creation Story
Toward the Working Alongside Next Vision

Strategy
Results of analysis of physical risks
Under the 4° C scenario, which envisions high levels of physical risks, we anticipate
significant climate change impacts, increasingly severe climate disasters, and changing
precipitation patterns.
Acute risks include increased damage to Group facilities and impediments to supply.

It will become increasingly important to enhance resilience throughout the power
infrastructure. We also anticipate the chronic risk of changes in precipitation patterns toaffect hydroelectric power generation and other activities.
We will strive to increase power system resilience through being ready for frequentand severer climate disasters and enhancing the resilience and recoverability of facilities.

Toward Realizing Carbon Neutrality
Roadmap Toward Realizing Carbon
Neutrality
Case Studies of Carbon Neutrality
Initiatives
Disclosure Under the TCFD
Recommendations

Foundations for Sustained Growth

Scenario

Category

Acute

Climate change risk

6 Increasingly severe

climate disasters

4° C
scenario
Chronic

7 Changes inprecipitation
patterns

Anticipated businessrisks to the Company *1

ImpactTiming ofoccurrence *2

Damage to Company facilities
and supply impediments
resulting from frequent
occurrence of increasingly
severe strong winds,
torrential downpours, etc.

Significant

Short/
medium/long term

Reduced hydroelectric power
production capacity

MediumExamples of financial impact ofphysical risks

Data

F Y2019
Extraordinary losses causedby typhoons in East Japan
6.1 billion yen
Increase in costs due to aLong term

Our response

1% decrease in the

Increasing power system resilienceEnhancing resilience of power sources and supply equipment(installation of bulkheads, elevating important equipment, dredging)
Increasing recovery abilities (implementing disaster drills)

precipitation rate
2.4 billion yen*1 Business risks that would have pronounced impact on the Company have been identified under certain assumptions.
*2 Short term: through 2025; medium term: through c. 2030; long-term: through c. 2050

Response case study: Adoption of compact, low-voltage emergency
power supply vehicles transportable by air

Methods for securing power supplies
1 Connection to low-voltage power lines
2 Connection to power meters
3 Attached temporary power outlets(eight outlets with a total capacity of up to 80 A)

63

Tohoku Electric Power GroupTo ensure power supply to isolated regions and remote islands in the event of amajor disaster, Tohoku Electric Power Network has adopted low-voltage emergency
power supply vehicles that can fit inside large helicopters used by the Japan GroundSelf-Defense Force.
These can be transported by helicopter to enable safe, flexible emergency powertransmission in isolated regions and shorten the time required until recovery from thedisaster.

INTEGRATEDREPORT 2023

Introduction

Disclosure Under the TCFD Recommendations

A Value Creation Story
Toward the Working Alongside Next Vision

Metrics and targets
CO2 reduction targets
We will proactively assume the challenge of carbon neutrality by 2050, based on the
major prerequisite of securing S+3E.
To achieve the goals of the Tohoku Electric Power Group Carbon Neutral Challenge
2050, the Group will aim to halve CO2 emissions in FY2030 vs. their actual FY2013 levels.
Based on the Tohoku Electric Power Group Carbon Neutral Challenge 2050
announced in March 2021, we will accelerate CO2 emissions reductions across the
Tohoku Electric Power Group through decarbonization of thermal power, maximum use ofrenewable energy and nuclear power, and electrification and realization of a smart
society.
See

Carbon Neutral Challenge 2050

Investing in growth
We will aim to invest more than 100 billion yen in renewable energy power
development by roughly 2030, to generate consolidated cash income* of roughly 20
billion yen in FY2023.
In the Smart Society Building Business, we will aim to invest approximately 100 billion
yen by roughly 2030, to generate consolidated cash income of roughly 20 billion yen (notincluding electricity sales) in FY2030.

Toward Realizing Carbon Neutrality
Roadmap Toward Realizing Carbon
Neutrality
Case Studies of Carbon Neutrality
Initiatives
Disclosure Under the TCFD
Recommendations

Foundations for Sustained Growth* Operating income + depreciation + amortization of nuclear fuel + share of profit of entities accounted for using equity method

Data

P20

1. Maximum use of renewable energy and nuclear power

Example of financial impacts of transition risks

 eeking to develop 2,000 MW of renewable energy soon after 2030
S
Swift operation resumption and increased operation rate of nuclear power
based on the essential prerequisite of safety

Cost of purchasing 100 GWh worth
of non-fossil-fuel certificates:

130 million yen*

2. Decarbonization of thermal powerDecarbonization based on the use of hydrogen and ammonia in LNG thermal
power generation
Decarbonization based on the use of biomass and ammonia in coal thermal
power generation

results and financial status

Proposing optimal electrification and energy efficiency centered on heat pumps
Expanding promotion of distributed energy services
Promoting the renewable-energy aggregation business

64

Roadmap Toward Realizing Carbon Neutrality

Tohoku Electric Power Group

P56

Estimated impact of a change of 1%
in interest rates on Group business

3. Electrification and realization of a smart society

See* The reference price of non-fossil fuel certificates is based on the results of the fourth phase of market trading
to achieve obligations under the Act on Sophisticated Methods of Energy Supply Structures (contract price1.3 yen/kWh).

Financial Report 2022

5.3 billion yen/year** The impact of market interest rate fluctuations is limited because most of interest-bearing debt consists ofbonds and long-term borrowing at fixed interest rates.

P24 Business and Other Risks | https://www.tohoku-epco.co.jp/ir/report/security/pdf/2022_ho.pdf

INTEGRATEDREPORT 2023

Introduction

Disclosure Under the TCFD Recommendations

A Value Creation Story

Metrics and targets

Toward the Working Alongside Next Vision

Scope 1, 2, and 3 greenhouse gas emissions
Scope 1 and 2 greenhouse gas (GHG) emissions from Tohoku Electric Power andTohoku Electric Power Network power stations and other business facilities are calculated
pursuant to the following Japanese laws: Act on Rationalizing Energy Use, Act on
Promotion of Global Warming Countermeasures.
Scope 3 GHG emissions are calculated based on the Basic Guidelines on Accounting
for Greenhouse Gas Emissions Throughout the Supply Chain (Ver. 2.5).
Scope 1 emissions are direct emissions from GHG sources in Tohoku Electric Powerand Tohoku Electric Power Network. Scope 2 emissions are indirect emissions from thegeneration of electricity and heat supplied to us by other companies. Scope 3 emissions
are indirect emissions from the business activities of Tohoku Electric Power and Tohoku
Electric Power Network, not included in Scope 1 and 2 emissions.
Scope 1, Scope 2, and Scope 3 (Category 3) emissions have been assured by an
external party.

Toward Realizing Carbon Neutrality
Roadmap Toward Realizing Carbon
Neutrality
Case Studies of Carbon Neutrality
Initiatives
Disclosure Under the TCFD
Recommendations

Foundations for Sustained Growth
Data(Unit: 10 thousand tons CO2)

Item

Scope 1 (Direct GHG emissions by the business)
Scope 2 (Indirect GHG emissions from use of electricity, heat, and steam
supplied by other companies)

FY2021 results

FY2022 results

3281.53106.9★

0.1

0.1★

1359.21381.5

Category 1

Purchased goods and services

27.4

33.0

Category 2

Capital goods

15.9

50.4

Category 3

Fuel- and energy-related activities

1313.01295.3★

Category 4

Upstream transportation and distribution

0.3

0.2

Category 5

Waste generated in operations

1.6

1.6

Category 6

Business travel

0.2

0.2

Category 7

Employee commuting

0.8

0.8

Scope 3 (Indirect GHG emissions other than Scope 1 and 2)★: The data has been assured by KPMG AZSA Sustainability Co., an external party.
Calculation methods
Emissions in the following categories are calculated based on Japan’s Act on Rationalizing Energy Use, Act on Promotionof Global Warming Countermeasures, and Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout theSupply Chain (Ver. 2.5).
Emissions intensities are derived from the Emissions Intensity Database for Calculation of Organizational Greenhouse Gas
and Other Emissions through the Supply Chain (Ver. 3.3) and IDEA Ver. 2.3.
• Category 1: (price data on products and services purchased) × (emissions intensity)• Category 2: (increase in book value of fixed assets) × (emissions intensity)• Category 3: (volume of power supplied by other companies) × (alternative CO2 emission factor) + (volume used by type of fuel)× (emissions intensity)• Category 4: (heat consumption by type of vehicle, vessel, etc.) × (emissions intensity)• Category 5: (final industrial waste disposal) × (emissions intensity) − (industrial waste recycled) × (emissions intensity)• Category 6: (number of employees) × (emissions intensity)• Category 7: (number of employees by working pattern and urban category) × (number of business days) × (emissions intensity)

65

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Chapter

04

Foundationsfor Sustained GrowthEstablishing a Society that Recycles Effectively

Safety Initiatives

Conserving Biodiversity

Enhancing Resilience

Human Resource Strategy

Contributing to Communities

Digital Transformation (DX) Strategy

Risk Management

Respect for Human Rights

Corporate GovernanceTohoku Electric Power GroupIntroduction

Establishing a Society that Recycles Effectively

A Value Creation Story

Appropriate waste management and treatment

Plastic waste output

Toward the Working Alongside Next Vision

Our waste management system allows centralized and companywide control ofemitted waste. In addition to appropriate waste treatment, we’re moving ahead withstudies of individual waste items based on a wide range of perspectives, including cutting
emissions and final treatment volumes, recycling, and reuse.
For coal ash in particular, which accounts for some 80% of total waste emissions,
we’re enhancing recycling initiatives to allow use in land reclamation as landfill materials,
in addition to use as a component of cement and roadbed materials.
In FY2022, we made effective use of 87.6% of the waste we generated, exceeding therate of 86.7% for FY2021 but short of our target of 90%. Contributing factors included
lower shipments of coal ash to cement companies due to lower demand for cement,
although coal ash generated, which accounts for the majority of wastes, did decrease.

Our volume of plastic waste output is trending around the level of 1,000 tons/year. The
bulk of this waste consists of wiring materials generated by the Tohoku Electric Power
Network. At least 80% of this waste is recycled. We maintain an overall recycling rate of atleast 70% for all plastic waste.

Toward Realizing Carbon Neutrality

The coal ash generated by coal-fired thermal
power stations is put to effective use as fly ash thatmeets JIS standards* for use in concrete forarchitectural construction, civil engineering, andother applications. The gypsum generated as a
byproduct of the exhaust desulfurization process isused in gypsum boards and other products.

1,099
76.3%

1,158
73.6%

50

(949)

79.3%

1,029
76.9%

(79)

1,006
(89)

1,000

84.2%
(1,059)Respect for Human Rights

(950)

(917)

500

Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Data

0

2017

2018

2020

2019

2021

2022

(FY)

*TD: Tohoku Electric Power, TN: Tohoku Electric Power Network.

RecyclingJIS-standard fly ash

Work on the foundation of
Unit No. 3 at the Noshiro
Thermal Power Station
built using fly ash

Efforts to promote reuse and recycling of spent solar panels

Making effective use of waste plastic
With the goal in mind of establishing a society that recycles effectively, in addition to
reducing, recycling, and reusing plastic waste, we strive to purchase products made fromwaste plastic.
Examples of recycled products include the plastic deadman units needed to help
prevent the collapse, subsidence, and inclination of power poles. We’ve replaced
concrete deadman units with plastic units made from waste plastic removed during wiringconstruction.

We are proceeding with the testing of appropriate reuse andrecycling of spent solar panels from homes and other uses, throughour participation in the Miyagi Feasibility Testing Program of theCommunity Collection Model Study Committee, an agency of PV
Cycle Japan.

Targets for reducing and recycling industrial wastes from products using plastics
Choosing products that use fewer plastics or substitute materials as much as possible
Striving to promote recycling of plastic wastes, and maintaining and increasing therecycling rate

Tohoku Electric Power Group

(91)

0

* JIS standards: The Japanese Industrial Standards, national standards specifying matters such as standards and measurement methods forindustrial products in Japan.

67

73.3%

(76)

Digital Transformation (DX) Strategy

1,500

Safety Initiatives

1,150

1,025

(t)

Waste output

Recycling rate

Putting coal ash and gypsum to effective use

100

Human Resource Strategy■ Plastic waste output (before corporate split) ■ Plastic waste output (TN)■ Plastic waste output (TD) — Recycling rate (TD+TN)

150

Establishing a Society that
Recycles Effectively
Conserving Biodiversity

Plastic waste output and recycling rates(%)

Foundations for Sustained
GrowthRecycling

Waste plastic after removal(e.g., meter boxes, insulation covers)

Plastic deadman(buried in the ground to prevent power polecollapse)

Supporting the Plastics Smart Campaign cleanup activities https://www.tohoku-epco.co.jp/enviro/disclosure/

INTEGRATEDREPORT 2023

Introduction

Conserving Biodiversity
Our position on biodiversity
One of our four environmental action principles calls for us to “safeguard and coexist
with the rich natural environment.” Emphasizing the spirit of coexistence with nature thatcharacterizes the Tohoku and Niigata region, we advance various business activities thatreflect due consideration for the environment, including a sense of gratitude for thevarious blessings and benefits generated by biodiversity and implement measures toprevent our business activities from damaging biodiversity.
We will continue to seek to avoid and minimize the impact of power station operations
on biodiversity.

Biodiversity considerations at power stations
Coexistence with peregrine falcons, a rare wild animal species in Japan at thermal
power stations
Peregrine falcons, one of Japan’s rare wild animal species, arefound in the areas of the Sendai Thermal Power Station and theShin-Sendai Thermal Power Station. To further the level of
biodiversity, we’re working to preserve their living habitats.
Peregrine falcon nursing chicks
In particular, at the Shin-Sendai Thermal Power Station, weon a nesting platform;
placed nesting platforms for peregrine falcons on smokestacks and photographed in May 2022
(Shin-Sendai Thermal Powerconfirmed that peregrine falcons were making their nests on theStation)nesting platforms and that young birds had already fledged and left
the nests.
Creating a waterside environment on the premises of a thermal power station
The Sendai Thermal Power Station reconstructed a biotope
around the reservoir on its premises, as part of our actions toconserve biodiversity. Cercion sexlineatum, Oryzias fish, and othervaluable species can be found in the Maejima Pond for Wild Birds,
positioned at the center of the biotope.
Cercion sexlineatum
Preventing intrusion of sandfish in thermal power stations
In addition to installing nets on its water intakes to keep fish out, the Noshiro Thermal
Power Station in Akita Prefecture deploys channels to return to the sea any fish that makeit through the nets. These are part of efforts to prevent the intrusion of sandfish—theprefectural fish—which congregate in large numbers near the coast
to spawn during winter.
While sandfish eggs adhere to the nets, we remove the nets
after incubation is confirmed, reflecting our concern to preserve
local fishery resources.
Sandfish eggs

68

Tohoku Electric Power Group

Preserving wetlands on the premises of a nuclear power station
Numerous rare animal and plant species are found in the wetlands on the premises ofthe Higashidori Nuclear Power Station. Protecting
them requires controlling the growth of reeds andother plants. We carry out regular weeding toensure that habitats for rare animals and plants
remain unchanged.
Hemerocallis esculenta inbloom in the wetlands

Maculinea teleius, a rarebutterfly species

Surveying and preserving endangered flora and fauna in transmission andsubstation facility installation and expansion work
Before setting up a substation or switching station on site, we survey endangered floraand fauna and take measures such as relocation of rare flora and fauna and checking on
their propagation to minimize the impact on ecosystems.
In addition, when installing ultra-highvoltage power lines through mountainous
Eggs
relocatedareas, we implement autonomouspreservation measures based on priorsurveying of endangered flora and fauna
Tohoku salamander eggs
Artificial off-site incubationand expert opinions, to minimize theenvironment
environmental impact of construction.

A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Data

Biodiversity initiatives https://www.tohoku-epco.co.jp/enviro/seibutsu/index.html

Removing the designated invasive alien species cutleaf coneflower
Tohoku Sustainable & Renewable Energy Shizukuishi site in
Iwate Prefecture, an operator certified by the Ministry of theEnvironment, removes the designated invasive alien
species cutleaf coneflower from the Kakkonda andMatsukawa areas every year.
Link

Confirmation and certification of removal (under procedures prior to legal amendment) |Japan’s efforts to combat invasive species | Act on the Prevention of Adverse Ecological
Impacts Caused by Designated Invasive Alien Species (env.go.jp)

Participation in the Ministry of the Environment’s
30 by 30 AllianceTohoku Ryokka Kankyohozen participates in the 30 by 30
Alliance for Biodiversity, aimed at helping to achieve thetarget of preserving or protecting 30% of Japan’s land andsea regions by 2030.

INTEGRATEDREPORT 2023

Introduction

Human Resource Strategy

A Value Creation Story

For the Tohoku Electric Power Group to grow in step with the sustained progress ofsociety by contributing to the realization of a smart society for a new age, starting in
Tohoku, we believe it will be vital to strengthen human resources capable of creating newvalue and to improve coordination between business and HR strategies. On this basis, in
FY2021 we formulated a human resource portfolio based on our medium- to long-termbusiness portfolio and visualized the number and skills of human resources needed tocarry out business strategies. We are also systematically enhancing efforts such as

developing and hiring the human resources of skill types that require enhancement for the
future.
At the same time, we will promote measures in areas such as health management,
workstyle reforms, and diversity, equity, and inclusion (DE&I) to increase the engagement
and labor productivity of each and every employee and build a corporate culture in whichhuman resources with diverse sensibilities and values can thrive.

Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy

Overview of HR strategies

Respect for Human Rights

Business strategies

Safety Initiatives
Enhancing Resilience

HR strategies

Contributing to Communities
Risk Management
Corporate Governance

Building an HR portfolio

Staffing and hiring plans isualizing the numbers of staff andVskills needed in the future in eachbusiness area ormulating staffing plans toFrealize the HR portfolio
Proactively hiring career humanresources with specialized skills

 tilizing the talent managementUsystem to ascertain quantitatively
any gaps between current
conditions and future goals, as data
Ascertaining gaps
in individual business areas

Area A

Area A

Area B
Area B

Now

FutureDevelopment plansImplementing systematic HR
development by visualizing future
numbers of staff and skills needed eveloping human resources forD
DX promotion and new businesses

HR management cycle
Proactive,
systematic hiring of
human resources
with diverse skills

Systematicdevelopment of
human resources
with needed skills

HiringDevelopment

Assessment,
treatment

Placement

Implementing
assessment andtreatment to enable
individuals todemonstrate theirabilities to the maximum

Data

Implementing
optimal assignmentof human resources
groupwide

Promoting health management, workstyle reforms, and diversity, equity, and inclusion (DE&I)
Increasing the engagement and labor productivity of each and every employee and building a corporate culture
in which human resources with diverse sensitivities and values can thrive

69

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Introduction

Human Resource Strategy

The human resource portfolio to support realization of Working alongside
next

Efforts to promote understanding and permeation of the Working alongsidenext Medium- to Long-Term Vision

We will draw on our human resource portfolio based on our medium- to long-termbusiness portfolio to deploy HR measures and maximize our human capital.
Our human resource portfolio divides the Group’s business domains into 14 fields anddivides the human resources who can play active roles in these fields into 181 skill types.
Among these, we are enhancing HR development, hiring, and other efforts for humanresources in 36 skill types essential to activities such as data analysis, digital marketing,and other digital initiatives, launching and promoting new businesses, promoting nextgeneration energy services such as VPP, and developing and promoting renewableenergy businesses. We will review in the future the domains and skill types to be
expanded in light of business strategies.
In addition, by adopting a talent management system we will both promote digitaltransformation (DX) in HR management and quantitatively ascertain and analyze various
matters, including the skills of individual employees, reflecting these in staffing plans,
hiring plans, HR development, and placement.
By advancing HR management to promote these measures, we will develop thehuman resources needed to realize our vision: Working alongside next.

For all Group employees to work together to realize the Working alongside next
Medium- to Long-Term Vision, it is important to ensure permeation in the organization of
information on topics such as the background of its formulation and course of action for
its realization in light of subsequent changes in business conditions.
For this reason, in addition to establishing related themes in various tiered training
programs, we are taking steps such as providing opportunities for sharing ideas among
employees on how to realize the vision and direct communication by members ofmanagement, in visits to sites across our service areas, of information on the Group’sbusiness environment and ideas for realizing Working alongside next. By combining
various approaches such as these, we are working to ensure thorough understanding
and promotion of the vision among employees.

To put the Medium- to Long-Term Vision into practice, each and every employee must
live-out the message embodied in the slogan Strength to Work Alongside through his or
her everyday work by working alongside our customers and communities.
Toward this end, we are working to ensure the vision is firmly understood by all
employees through means including the Working Alongside Next Manual, an e-learning
tool for learning about the concepts behind the vision, section-specific action casestudies collected to provide a concrete image of how the vision can be put into practiceby sharing information on successful case studies, and a brand video intended to inspireautonomous action.

Sharing successful
case studies

Tiered training (examples)
Training for new employees

The background behind formulation of Working alongside next
and our vision for its realization

Training for newly appointed managers

Management’s role in realization of Working alongside next

Tohoku Electric Power Group

Toward Realizing Carbon Neutrality

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities
Risk Management

Data

Efforts to realize Working alongside next at sites on the frontlines

Internal public study meetings
To deepen understanding of Working alongside next, we hold study meetings to share
information on subjects such as ideas for and challenges in its realization, acrosssectional boundaries.
Site visits by management
Members of management of both
Tohoku Electric Power and Tohoku ElectricPower Network visit frontline business sites
to engage in periodic exchange of opinions
and discussions on topics like the Group’sbusiness environment, management’s
courses of action for realizing Working
alongside next, and their personal views.

Brand video

Sites visited in FY2022: 141

70

Toward the Working Alongside Next VisionCorporate Governance

Site manager training

Putting our slogan Strength to Work Alongside into practice

A Value Creation Story

President Higuchi exchanges opinions with employees at afrontline site

INTEGRATEDREPORT 2023

Introduction

Human Resource Strategy

A Value Creation Story
Toward the Working Alongside Next Vision

Diversity, Equity, and Inclusion

Toward Realizing Carbon Neutrality

Message on diversity
from top management

Yori, Sou, Chikara(The Strength to Work Alongside)
each other as diverse individuals

Targets and plans to promote diversity, equity, and inclusion (DE&I)
As described below, Tohoku Electric Power and Tohoku Electric Power Network haveformulated general employer action plans pursuant to the Act on Promotion of Women’sParticipation and Advancement in the Workplace, including targets for the number and,as a medium- to long-term goal, the percentage of women managers.

Drawing on our Management Philosophy of Prospering with Local Communities, we
strive to contribute to a sustainable society in which each customer and community
member can live in comfort, safety, and peace of mind. We do this through our smart
society building business, seeking growth and development with local communities as
their chosen partner.
Important issues in these initiatives include respect for human rights and the need topromote diversity, equity, and inclusion (DE&I). To accommodate the diverse lifestyles andneeds of our customers, our employees must be able to work in good health and withvitality, capitalizing on their diverse backgrounds, unique perspectives, and individual
experiences. This is why we believe DE&I will drive innovation.
We will maintain our proactive stance on developing and enhancing systems thatallow diverse human resource to thrive. At the same time, we will promote awareness ofand seek to develop our organizational culture, striving to be an enterprise in which all
workers can thrive with vitality, without regard for gender, age, disability status, form of
employment, nationality, ethnicity, religion, creed, culture, sexual orientation, or sexual
identity.
Through these initiatives, we will work alongside our customers and communities as astrong partner who enables them to live in better comfort, safety, and peace of mind.

71

Tohoku Electric Power Group

Establishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy

Number of womenmanagers*1
Percentage of womenmanagers*2

Representative Director& President

Foundations for Sustained
GrowthTo increase the number of women managers by at least 2.0 times vs. the start of FY2019 byMarch 31, 2025

Respect for Human Rights
Safety Initiatives
Enhancing Resilience

Aiming for a percentage of 5.0% of all managers being women by the end of FY2035*1 Number of women in positions of department manager or above under the Act on Promotion of Women’s Participation and Advancement in
the Workplace*2 Percentage of women in executive positions, including department manager or above, under the Act on Promotion of Women’s Participation
and Advancement in the Workplace

Contributing to Communities
Risk Management
Corporate GovernanceData

We will continue to enhance initiatives that support a work-life balance, family, andcareer formation and success, as well as considering and implementing measuresreflecting feedback from women employees (e.g., networking among women employees,
awareness reforms among management, and awareness reforms in the workplaceconcerning promoting women in the workplace and working during child-rearing years).
Through these measures, targeting the goals above, we will help build workplaces
where diverse human resources can thrive and help accelerate changes in employee
awareness of DE&I promotion.
In addition, in April 2021 Tohoku Electric Power declared it support for the Keidanren’s
proposal that businesses take on the challenge of increasing the percentage of women
directors to 30% or more by 2030.
Employee interview
In the Group Strategy Section, I work mainly to identify domestic andinternational energy trends and periodically communicate information to related
Sachiko Chisaka
internal sections. I’m also raising two boys.
Strategic Planning
Since the birth of my first child, in addition to taking childcare leave, I’ve taken
Corporate Strategy Division
full advantage of programs like shortened working hours for childcare, flextime, andwork from home, so that I can balance home life and childcare with my career. Aftermy second child was born, when I returned to work, my husband took childcare leave. That allowed me toreturn to work a little earlier.
Sometimes overtime is unavoidable when work gets busy. My husband and I always talk about how to
divide our responsibilities, like taking children to and from school, as well as home and childcare duties, while
continuing to talk about what work is like currently.
I plan to continue making the most of various programs to fulfill my duties at work and home with thesupport of my family members.

INTEGRATEDREPORT 2023

Introduction

Digital Transformation (DX) Strategy

A Value Creation Story

Basic concept

HR development and agile cocreation

Toward the Working Alongside Next Vision

Digital transformation (DX) in the Tohoku Electric Power Group refers to the use ofdigital technologies and data to transform business processes and create new businessvalue.
We have formulated the Tohoku Electric Power Group DX Promotion Policy based on
this concept. In addition to efforts to promote DX as a Group strategy, we will enhance
structures and initiatives to achieve our goals based on the policy.

To foster a mindset among all Group employees of actively promoting DX andcontinually taking on challenges, we will identify the human resource ideal currently indemand and provide training tailored to individual roles. We will also promote agile
cocreation by providing opportunities for value creation and problem-solving by teammembers, including external partners. In addition to enhancing practical capabilities, wewill promote programs to improve the career potential of human resources who take apositive approach.

Toward Realizing Carbon Neutrality

Tohoku Electric Power Group DX Promotion Policy
Tohoku Electric Power Group DX Promotion Policy
1. Using digital technologies and data to increase value in the energy business2. Creating new businesses and enhancing DX business based on customer perspectives
3. Taking on the challenges of Group growth and innovation by taking a personal interest in DX

Establishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights

Case study: Automating facility patrols using drones and terrestrial robots (thermal
power section)
This project developed a precursor system capable of AI-driven image analysis andvibration analysis by combining drones and terrestrial robots to automate thermal power
station facility patrols, which require considerable time and labor. We expect further
improvements to enable greater energy stability, safety, and economic performance.
Vibration data

Digital technologies and platforms

Foundations for Sustained
GrowthSafety Initiatives
Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Data

AI analysis system

DX HR development/innovative mindsets
Antenna

Achieving business model transformation by updating
legacy systems
Accelerating decision-making and judgment using AI
and other technologies in data analysis and applications
Developing DX platforms and accelerating DX promotion

Improving DX literacy among all employees to enableagile cocreation and career formation

Fostering a corporate culture that continues to generateinnovations Groupwide

DX promotion targets
We will realize earnings growth by developing DX human resources across the Tohoku
Electric Power Group and by deploying DX to increase value in our energy businesses.

72

Increasing business
value

By FY2025, we will implement and make steady progress on 30 joint measures across sections
and the Group. By FY2030, we will realize concrete energy business advances and increases invalue in all business sections and Group companies.

Growing earnings

We will use DX to accelerate development of new businesses in facility management using AI
and smart devices and data-driven businesses with the goal of achieving cash income of 20
billion yen in the Smart Society Building Business by FY2030.

HR development

By FY2025, we will train 20 Groupwide DX promotion personnel, 50 advanced data analysts,
350 section DX promotion personnel, and 2,000 DX-literate employees.

Tohoku Electric Power Group

Sensor

Securing advanced DX technologies through joint efforts
with communities, universities, and research institutions

Vibration sensors were installed on
rotating machinery to collect datausing contactless RFID technology.

Various data
automaticallytransmitted
to the cloudViewing
results ofinspection
on the Web

Vibration analysis Automatic

determination ofabnormalities
based oncomparisons topast data

Drone
Image data
Learning image

Monitoring for alarms in thethermal power station’scentral control room

Inspection image Difference detected as abnormality

Terrestrial robot
Installed on instruments, drive components, andother components subject to external visualinspection

Image analysis
An image that differs from the learning image (image neverdetected before) is identified as an abnormality.

Employee interview
For transmission and distribution businesses, we saw a need to promote DX totake advantage of AI, drones, and other technologies that would promote automatic
diagnosis of equipment and improve job performance and efficiency.
I plan to continue working to advance the business reforms by focusing myknowledge and skills with DX technologies.

Tamotsu Hayasaka

Power System Engineering
Dept. (Substation)
Tohoku Electric Power Network

INTEGRATEDREPORT 2023

Introduction

Respect for Human Rights
Supplier human rights risk assessment

Under our Prosper with Local Communities management philosophy and our Yori, Sou, Chikara (The
Strength to Work Alongside) Group slogan, the Tohoku Electric Power Group seeks to contribute to sustainedsocial progress while striving to increase corporate value over the medium to long term, through solutions tothe challenges facing our communities and society by working to realize a smart society. To achieve thesegoals, we believe it is essential to respect the dignity and rights of all stakeholders in our business activities.
Toward this end, in March 2023, we formulated the Tohoku Electric Power Group Human Rights Policy,
which is based on the United Nations Guiding Principles on Business and Human Rights. The policy seeks toclearly identify our commitment to human rights and declare it to both internal and external stakeholders,which help promote the efforts above to achieve sustainability.
This policy is the result of gathering and assessing a broad range of perspectives from internal sectionsand Group companies and soliciting the views of outside experts. The policy was approved by the
Sustainability Promotion Council under the oversight of the President of Tohoku Electric Power andsubsequently reported to the Board of Directors.
Under this policy, we will fulfill our responsibilities with regard to the human rights of all stakeholders
throughout our business activities.

In our sustainability surveys targeting suppliers, in addition to
improvements in the area of human rights in Request to Material
Suppliers, we check on human rights initiatives on various topics,
including respect for human rights, prohibition of child labor andforced labor, and prohibition of discrimination.
Specifically, we check on internal policies on human rights,
consultation systems related to human rights, and periodic surveys
on human rights.
We also analyze the survey results, review their specifics, andexchange opinions with suppliers for whom we believe room for
improvement remains based on dialogue and discussions. We also
request improvements in their efforts.
In FY2022, we surveyed 234 suppliers and identified none thatwarranted improvement.

See

Tohoku Electric Power Group Human Rights Policy

Sustainability Report 2023

Process of identifying and assessing the impact of human rights risks
Value-chain analysis

STEP 2

Surveying

STEP 3On-site audits

STEP 4

Impact assessment analysis /study of corrective measures

Tohoku Electric Power Group

Toward Realizing Carbon Neutrality

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Data

See

Supplier Cooperation

Sustainability Report 2023

P42

Remediation mechanism

Identifying and assessing the impact of human rights risks
In FY2022, as part of our human rights due diligence efforts, we began identifying human rights risks andassessing their impact at Tohoku Electric Power and Tohoku Electric Power Network while soliciting the viewof outside experts.
In addition to making further progress on identifying human rights risks, we will consider corrective
measures in stages, based on the priorities of individual initiatives, and strive to mitigate and prevent risks
through an appropriate plan-do-check-act (PDCA) cycle.
Identifying and assessing the impact of human rights risks will expand to include Group companies in
FY2023.

STEP 1

Toward the Working Alongside Next Vision

P43

Human rights due diligence73

A Value Creation Story

Formulating a Human Rights Policy

 ased on reviews of internal materials and interviews with related sections at the head office andB
corporate headquarters, surveying stakeholders concerning the organizational structure and lines ofbusiness to identify potential human rights risks from the perspectives of seriousness and likelihoodof occurrence and performing initial assessments of their impact
Conducting surveys of related sections at the head office and corporate headquarters regarding thestatus of efforts to address human rights risks
Reviewing survey questions and surveying multiple business sites
 ased on survey results, conducting on-site audits (facility tours, interviewing site employees,
Breviewing related materials and data) of sites that require more detailed review
 ased on the results of the survey above and on-site audits, carefully reviewing our identification andBassessments of the impact of human rights risks from the perspectives of seriousness and likelihoodof occurrenceStudying corrective measures

Appropriate hotline operation
We have established the internal and external Yori, Sou Hotline*1
to respond to harassment and issues related to corporate ethics orcompliance.
This hotline accepts consultations from those working within theGroup (executives, employees, subcontractors, temporary staff, andstaff from placement agencies) as well as Group suppliers.
In addition to training hotline staff to ensure they have thenecessary skills, we deploy various procedures, including strict
control of personal information on those who contact the hotline andmeasures to prevent disadvantageous treatment traceable to theirconsultations. This is intended to maintain a structure whereby users
can consult with the hotline with peace of mind.
Hotline consultations*2
FY2020

FY2021

FY2022

Harassment hotline*1

17

24

25

Corporate ethics hotline*1

14

14

14

*1 On July 1, 2023, the previous hotline programs, including the harassment hotline and the corporate ethics
hotline, were consolidated into the Yori, Sou Hotline.
*2 Numbers of consultations shown are totals for Tohoku Electric Power and Tohoku Electric Power Network.

INTEGRATEDREPORT 2023

Introduction

Safety Initiatives

A Value Creation Story

See

Actions for safety that lead to medium- and long-term improvement incorporate value
Occupational safety and equipment security are the foundations of the Tohoku
Electric Power Group’s business activities. We consider securing the safety of ourcustomers and our communities to be the first steps in earning trust in order to fulfill ourunchanging mission to deliver stable supplies of low-cost, high-quality electricity tocustomers.
Through efforts by all our employees and construction workers to put into practice ourslogan of “Yori, Sou, Chikara (The Strength to Work Alongside),” we strive to be a groupthat is trusted and selected.
In accordance with our safety-related policies, we will continue our efforts to build a
corporate culture that puts safety first and to increase corporate value.

Thorough Safety

Sustainability Report 2023

P53
Toward the Working Alongside Next Vision

Building a corporate culture that puts safety first

Toward Realizing Carbon Neutrality

Initiatives to ensure thorough safety and improving business quality
Aiming to firmly establish a corporate culture that ensures thorough safety and boosts
business quality, we’re striving to improve safety and security groupwide and the quality
management system for nuclear power.
Based on our recognition that securing safety is the top priority in all businessactivities, a key goal is to build a corporate culture that puts safety first through evengreater coordination groupwide. In April 2020 we established the Tohoku Electric PowerGroup Safety and Security Policy, under which we strive to enhance initiatives related tooccupational safety and equipment security.

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Relationship between actions for safety and corporate valueenhancement
Making Tohoku Electric Power Group into a company that is trusted and selected(The Strength to Work Alongside)

Retaining high employee morale

Stable and continuous supply ofhigh-quality electricity at low rates

Putting safety first
Safety of employees

Labor safety

Safety of customers

Safety of local communities

Facility security

Actions on safety management towards the achievement of zero accidents
For the purpose of reducing industrial accidents, we have introduced the safety andhealth management system to independently and continuously improve safety
management. It is an international standard method of safety and health management.
Each office will independently perform management and remove and reduce latent risks
and harmful factors in advance to prevent industrial accidents.
If any industrial accident occurs, we will probe into the fundamental cause andbackground to develop effective measures for the prevention of recurrence and share
information within the Company to prevent any similar accident from happening.

Initiatives to ensure facility security
To avoid the recurrence of improprieties that have occurred before, the status ofautonomous security activities in each section is reported to the Promotion Council of
Safety and Maintenance, the Nuclear Safety Promotion Council, and the Committee ofCorporate Ethics and Compliance, thereby confirming that they are being implemented
according to plan; that systems are in place for identifying and correcting any issues
ourselves; and that active communication occurs through dialogue and other measures.
In these and other ways, we seek to ensure that autonomous security activities are evenmore firmly established within the organization.
In addition, through autonomous security activities, we strive to ensure the safety ofcustomers and our communities by ensuring the security of facilities.
See Actions for entrenching voluntary security activities
P75

74

Tohoku Electric Power Group

Data

Sustainability Report 2023

INTEGRATEDREPORT 2023

Introduction

Enhancing Resilience

A Value Creation Story

Governance structure for disasters
To deliver a stable supply of electricity to customers, Tohoku Electric Power andTohoku Electric Power Network have developed a governance structure intended toenhance their abilities to respond to major disasters such as earthquakes and typhoons.
While Tohoku Electric Power Network has succeeded to the power transmission anddistribution business since its statutory separation into a separate entity in April 2020, toaccount for the state of damage and social impact of an emergency, both companies
respond together to disasters.

teams via expressways, undertaken with East Nippon Expressway Co., Ltd.
By continuing to establish and maintain personal contact with related parties throughdrills and other activities, we will enhance readiness for natural disasters of growing
severity.

Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives

Enhancing resilience based on the lessons learned and experience gainedin responding to disasters
Tohoku Electric Power and Tohoku Electric Power Network have accumulated
significant expertise and technological capabilities through their experience withnumerous natural disasters, including the Great East Japan Earthquake. Based on thelessons learned, we have enhanced various structures to ensure preparedness for the
potential for more frequent andsevere natural disasters.
In addition to ensuring a stablesupply of electricity, we will continue
to develop facilities efficiently while
maintaining and managing themappropriately by incorporating thelessons learned from past natural
disasters in both tangible andintangible measures.

Enhancing the capacity to respond to disasters in cooperation with outsideorganizations
Tohoku Electric Power and Tohoku Electric Power Network have concluded
agreements on cooperation with outside organizations, including local governments, theJapan Self-Defense Forces, and the designated public utility East Nippon Expressway
Co., Ltd. to facilitate mutual cooperation in the event of a disaster.
Under these agreements, practical drills are carried out to enhance cooperation. The
drills carried out to date include drills on the air transport of Company vehicles using
Japan Self-Defense Forces helicopters, drills on sea transport using convoy vessels, drills
on recovery work in the event of blocked roadways, and drills on transporting emergency

75

Tohoku Electric Power Group

Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance
Recovery work drills assuming blocked roadways[Ground Self-Defense Force]

Drills on transporting emergency teams via expressways[East Nippon Expressway Co., Ltd.]

Data

Distribution of duties in the event of a complex disaster
Learning from the accident at the Fukushima Daiichi Nuclear Power Station following
the Great East Japan Earthquake, Tohoku Electric Power and Tohoku Electric Power
Network distribute emergency center duties to ensure an effective response at their head
offices in the event of a complex disaster—for example, a nuclear disaster combined witha major power outage. Accordingly, the President of Tohoku Electric Power will prioritize
actions to respond to the nuclear disaster, while officers assigned by the President willoversee measures to tackle other disasters. This system is intended to ensure thepreparedness needed to respond effectively to multiple concurrent disasters.
Before the 2011
Great East Japan Earthquake

After the 2011
Great East Japan Earthquake

Emergency Headquarters

Integrated Emergency Center(headed by the president of Tohoku Electric Power)(headed by the president of Tohoku Electric Power)

Damage tonuclearfacilities

Major power
outageDistributionof duties

Damage tonuclear facilities(response directedby the president of
Tohoku Electric Power)

Major power
outage(response directed by
an officer designatedby the president of
Tohoku Electric Power)

INTEGRATEDREPORT 2023

Introduction

Contributing to Communities

A Value Creation Story

Basic concept

Supporting solutions to community challenges and community revitalization

Toward the Working Alongside Next Vision

Based on our management philosophy of prospering with local communities and Yori,
Sou, Chikara (The Strength to Work Alongside), our Group slogan, the entire Tohoku
Electric Power Group strives to establish a smart society by providing services based onenergy and to advance initiatives that deliver solutions to challenges facing ourcommunities and society. In this way, we hope to contribute to the sustained growth andprogress of society.
Based on this outlook, we implement various social contribution activities, including
Machizukuri Genki Juku® training courses designed to help identify solutions tocommunity challenges and the Tohoku Niigata Revitalization Support Program to support
community vitality. Through these and other measures, we strive to play a role as amember of the community in its sustained progress and to build relations of trust withlocal communities based on ongoing dialogues in which individual employees take part.

Machizukuri Genki Juku®
Machizukuri Genki Juku® training courses dispatch
appropriate expert Machizukuri Partners to organizations working
to solve issues faced by individual communities, thereby
contributing to community revitalization and autonomy in the six
Tohoku prefectures and Niigata Prefecture. This programsupports highly individual community development in the region.

Toward Realizing Carbon Neutrality

Social contributions targets, metrics, and results

Active communication activities with stakeholders /number of social contribution activities

Social contribution activities

Regional revitalization support

FY2022 social contribution activities

Machizukuri Genki Juku® support organizations*

Actions implemented:

922

Participants from the community
around39,132

Between FY2006 and FY2022:

42 organizations

Tohoku and Niigata Revitalization
Support Program aid organizations
Between FY2017 and FY2022:

Establishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights

Machizukuri Genki Juku® https://www.tohoku-epco.co.jp/genki/

Safety Initiatives
Enhancing Resilience

Tohoku and Niigata Revitalization Support Program
The subsidies granted under this program support
organizations engaged in voluntary activities to resolve issues inlocal communities across the six Tohoku prefectures and Niigata
Prefecture, including local industrial promotion, local community
restoration and revitalization, and expanding the numbers ofvisiting non-residents.

The Group pursues social contribution activities in line with its social contribution
targets and metrics.

Targets/metrics

Foundations for Sustained
GrowthContributing to Communities
Risk Management
Corporate Governance

Data

Tohoku and Niigata Revitalization Support Program https://www.tohoku-epco.co.jp/sprogram/

Promoting International Cooperation and Exchange Activities
We promote various international joint efforts and exchange activities. These activities
include online seminars for technical trainees from various ASEAN countries, helping to operate
the Tohoku Canada-Japan Society, and working with various other organizations to promoteinternational exchange in the Tohoku region.
Social contribution activities
Under the Houkago Hiroba next-generation support project,
Tohoku Electric Power holds an essay contest for middle school
students and school concerts and supports various athletic
tournaments. We believe these activities support the healthy growth
Participation in the Yamagata
Hanagasa Festivalof children, who are key to the region’s future.
In addition, as a member of the local community, we seek to strengthen communication withthe community in various ways, including participation in community activities in each prefecture,cleanup and tree-planting activities, and welfare activities.

43 organizations* The results shown are totals for Tohoku Electric Power and Tohoku Electric Power Network.

Essay contest for
middle school students

76

Tohoku Electric Power Group

School concert

Interaction with a nursery school

INTEGRATEDREPORT 2023

Introduction

Risk Management

A Value Creation Story

Risk management initiatives

Toward the Working Alongside Next Vision

In addition to establishing an Integrated Risk Management Policy, the Company
periodically reviews business and financial risks to identify, analyze, and evaluate risks
and to study and implement responses.
Particularly for factors that pose major risks to Company businesses, the integrated
risk management departments cooperate with various committees and otherorganizations in accordance with risk characteristics, based on monitoring and risk
management by the Integrated Risk Management Council. Business execution
departments such as in-house companies and divisions also identify and evaluate risks
periodically and incorporate responses and other measures into their annual businessplans to deploy risk management activities specific to their own organizations.
As an example of cooperation with individual committees, the Committee of Market
Risk Management appropriately manages market risks in the Company’s businessactivities, including those related to fluctuating fuel prices and wholesale electricity trading
prices, in light of the growing importance of revenue management as the Company’sbusiness environment changes. It then studies and implements responses as necessary,
including hedge transactions.

Toward Realizing Carbon Neutrality*Only the main deliberative bodies are shown

Integrated Risk Management
CouncilMonitoring of the state of management of importantbusiness risks

Reporting on the state of management ofimportant business risks and proposals forcompanywide response policies

Integrated risk management
departments

Cooperation

Committee of Crisis
Management
Nuclear Safety Promotion
CouncilCommittee of Market Risk
Management
Promotion Council of Safety
and Maintenance
Promotion Council of Carbon
Neutrality and Environmental
Management

Promoting the integrated risk management cycle

Notification of the Integrated Risk
Management Policy, instruction regarding
risk evaluation and response proposals

 e advance risk management activities in which the Integrated Risk Management
W
Council serves as the leading organization based on the Integrated Risk
Management Policy.
 hile the sections closest to where risks occur conduct autonomous riskWmanagement as our basic policy, we carry out management to keep measured value
at risk within a range that the Company finds tolerable. Based on a recognition that
securing stable revenues requires appropriate risk-taking, we also strive to keep
value at risk within the amount of consolidated equity capital, thereby achieving
management that strikes a healthy balance between soundness and profitability.
 or risks and other matters for which it is difficult to measure value at risk, weF
qualitatively analyze their nature and maintaining systems capable of withstanding
them to minimize the impact of the actual emergence of risks.

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Data

Integrated Risk Management Council

Risk management structure

Decision on the Integrated Risk
Management Policy; guidance andadvising related to risk management

Basic concept underlying integrated risk management

Reporting on the results of risk evaluation,
status of drafting and implementing
response measures, etc.

The Integrated Risk Management Council is a joint council with Tohoku Electric Power
Network chaired by the President of Tohoku Electric Power. Its membership consists of all
directors of both companies. Its purpose is to promote the Company’s integrated risk
management activities and to deliberate on and explore our response to key businessrisks in the Group from a management perspective while taking care to handle
information in compliance with applicable laws and regulations.
Specifically, it meets twice annually to evaluate the state of management of importantbusiness risks and to provide guidance and advice on deployment of risk management
activities while striving to enhance risk management activities through feedback toindividual business execution sections and related deliberative bodies. It also reports
periodically to the Board of Directors and other parties on the state of risk management.
See “Business and Other Risks” in the Financial Report for specific examples ofimportant business risks.
https://www.tohoku-epco.co.jp/ir/report/security/

In-house companies, divisions,Group member companies
Ascertaining and evaluating risks and drafting andimplementing response measures

77

Tohoku Electric Power Group

Studying responses and other measuresin accordance with the distinguishingfeatures of various risks

INTEGRATEDREPORT 2023

Introduction

Corporate Governance

A Value Creation Story

Message from the Chairman of the Board

Toward the Working Alongside Next Vision

Business environment
Two years have passed since I was appointed
Chairman of the Board. Over this period, the Group’sbusiness environment has undergone dramatic change.
COVID-19 and Russia’s invasion of Ukraine have affectedsociety in significant ways.
I regret the concern we caused stakeholders due tothe losses recorded for two years in a row (in FY2021
and FY2022), as well as the incident involving theimproper handling of information on PPS customers andother data. Currently, we are making thoroughgoing
efforts Groupwide to restore our financial standing andrebuild our compliance structure.

Representative Director& Chairman of the Board

78

Tohoku Electric Power GroupOur governance structure
On our Board, seven outside directors of diverse
backgrounds engage in free and open discussions withinternal directors to incorporate diverse viewpoints andjudgments from outside the organization into
management decisions. In the Board’s activities, we
strive to prevent informational asymmetries among
directors and to ensure discussions take place on a levelplaying field by thoroughly explaining matters to outside
directors in advance and helping them better understandthe thoughts and goals of executives through thisprocess. Through tours of frontline business sites,
dialogue with employees, and other activities, we seek tocreate opportunities to deepen their understanding of ourbusinesses based on two-way exchange.
Over the past year, the Board has devoted
considerable discussion time to pressing issues, such as
securing profits quickly, restoring our financial
foundations, and rebuilding the compliance structure. I
believe the Outside Directors have played a key role inpromoting Company reforms by offering opinions that, attimes, may have appeared harsh.
Structurally, we’re taking steps to accelerate thedecision-making process by delegating authority fromthe Board to individual directors. This has improved
autonomy and speed in making decisions. At the sametime, as its autonomy increases, it grows even more
important to monitor the Board from the perspective of
overall optimization. From my perspective as Chairman of
the Board, I will continue thoroughgoing oversight toensure the organization’s vectors are in alignment.

Message to stakeholders
Given the uncertain business environment, I believe it
is vital to have both the flexibility to adapt to suddenchange and the strength that serves as a source ofcorporate value and competitive advantage. In addition to
generating profits and restoring our financial footing, we
will enhance our risk resilience in the face of businessenvironmental changes and build on our strengths aselectric power professionals—qualities attested by thefact that Unit No. 1 of the Joetsu Thermal Power Station
has achieved the highest thermal efficiency in the world.
We will aim for medium- to long-term growth by tacklingthe challenges of realizing a smart society, starting in
Tohoku, as called for in the Group’s Medium- to LongTerm Vision, Working Alongside Next, and achieving theGroup’s Carbon Neutral Challenge 2050 based on theGroup’s sustainability priorities (materiality topics), which
act as guideposts.
To do so, it is essential to increase the Group’s overallcapabilities by enabling diverse human resources todemonstrate their individual strengths. We aredetermined to develop human resources, including thoseskilled in digital transformation (DX) technologies, to build
workplaces in which diverse human resources can workwith vitality, and to strengthen our human capital.
The Tohoku Electric Power Group seeks to cocreatesocial value and corporate value alongside our
stakeholders into the generations to come. To do so, theBoard of Directors must monitor each initiative closely
and demonstrate highly effective oversight functions.
While continuing to deepen communication withstakeholders, we will enhance corporate governancefrom the perspectives of transparency, management
dynamism, and soundness. We are grateful for thecontinuing guidance and support of all our stakeholders.

Toward Realizing Carbon Neutrality

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Data

INTEGRATEDREPORT 2023

Introduction

Corporate Governance

A Value Creation Story

Corporate Governance https://www.tohoku-epco.co.jp/ir/policy/governance/index.html

Basic concepts of corporate governance
The Tohoku Electric Power Board of Directors establishes basic corporate governancepolicies to clarify our basic corporate governance concepts and related practical
initiatives. Under our management philosophy of prosperity in partnership with thecommunity, as identified in Working alongside next, the Tohoku Electric Power Group’s
Medium- to Long-Term Vision and the Group slogan Yori, Sou, Chikara (The Strength toWork Alongside), we seek to grow in step with sustained progress within society byhelping to establish a smart society in various ways: providing services centered onenergy, working alongside customers, and engaging in sustained dialogue withstakeholders.
To ensure appropriate management consistent with this heading, the Company
implements initiatives that enhance corporate governance, including those that ensure
exhaustive compliance with corporate ethical standards and laws and regulations,promoting fair, honest, and transparent business administration, and improving internal
control and risk management.
The Company sees strengthening and improving corporate governance as one of its
priority management issues. Based on this perspective, the Company will advanceinitiatives to ensure sustained growth and enhanced corporate value on a medium- andlong-term basis to meet the expectations of its stakeholders. Company initiatives will
include activities that make management more flexible, sound, and transparent.

Toward the Working Alongside Next Vision

conferences and, as necessary, briefings, held by the representative director.
(2) We disclose financial, non-financial, and other information through fair, detailed,and simple methods, in accordance with the Companies Act, the Financial
Instruments and Exchange Act, and other laws and regulations, as well as our own
Disclosure Policy and other policies.
(3) T o the extent feasible, we also strive to disclose this information in English.
4

Guarantee of shareholder rights and equitable standing
The Company handles all matters based on laws and regulations, thereby
guaranteeing shareholder rights and equality in real terms. At the same time, theCompany advances efforts to prepare conditions that permit shareholders to exercise
their rights, with due regard for minority and foreign shareholders.
Appropriate joint efforts with stakeholders beyond shareholders
Based on safety, consideration for the environment, and compliance with corporate
ethical standards, laws, and regulations, we stress activities based on two-way dialogue
with a diverse array of stakeholders. The Company targets sustained growth andmedium- to long-term growth in corporate value.
3

79

Appropriate information disclosure and transparency(1) In addition to the appropriate disclosure of information pursuant to laws andregulations, we engage in the timely disclosure of accurate and highly useful
information through our website and various other media, in addition to press

Tohoku Electric Power Group

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy

1

2

Toward Realizing Carbon Neutrality

Responsibilities of the Board of Directors(1) T he roles and responsibilities of the Board of Directors include measures to achieve
the sustained growth of the Company and increasing corporate value over the
medium to long term while soliciting diverse neutral and objective opinions fromindependent outside Directors, in light of the duties entrusted to them byshareholders and associated accountability and responsibilities. The Board of
Directors also strives to foster a culture that encourages free and constructive
debate and exchange of opinions and welcomes issues raised by outside
Directors.
(2) In addition to its important role as a Company supervisory body, the Audit andSupervisory Committee serves as a statutory independent body charged withauditing the discharge of management responsibilities on behalf of shareholders by
the Representative Director and other Executive Directors. By fulfilling these
responsibilities, it contributes to a sound corporate governance structurecommensurate with society’s trust in the Company and promotes sound, sustained
growth and medium- to long-term value creation.
See

Internal controls, corporate governance chart

Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Data

P80

Shareholder dialogue
To further sustained growth and medium- to long-term growth in corporate value, theCompany establishes opportunities for dialogue with shareholders beyond the General
Meetings of Shareholders, while Directors and other members of top management strive
to explain clearly in management policies and elsewhere matters such as the Company
business environment and initiatives. The ultimate goal is to ensure understanding, and topromote constructive dialogue with shareholders.
5

SeeCommunication with shareholders and investors

P91

INTEGRATEDREPORT 2023

Introduction

Corporate Governance

A Value Creation Story

Internal Control and Corporate Governance Diagram (Tohoku Electric Power)

Toward the Working Alongside Next Vision

Board of Directors

The Board of Directors consists of 15 Directors, including seven independent outside Directors unimpeded by potential conflicts of interest
that may arise with general shareholders.
In principle, the Board meets once a month to decide on important matters related to management and matters and essential for Company
operations. The Directors also report on the status of business execution to the meetings of the Board of Directors and monitor these reports
and business implementation carried out by other Directors. The Board of Directors delegates certain important decisions on businessexecution to the Directors through a system whereby the Representative Director & President, Representative Directors & Executive Vice
Presidents, and Managing Executive Officers (collectively referred to as “Executive Officers with titles”) take charge of business execution.

3

Management Committee

Consisting of Executive Officers with titles, the Management Committee meets weekly to discuss overall business administration policies andplans and the execution of important business based on basic management policies set by the Board of Directors. The Management
Committee also promotes the development of effective, efficient business processes through an in-house company system, in which thePower Generation Company, Sales Company, Renewable Energy Company, the Nuclear Power Division, and the Internal Services Divisionindependently explore autonomous business expansion.
4

Audit and Supervisory Committee

To ensure objectivity and neutrality in management supervision functions, three of the four members of the Audit and Supervisory Committee
are outside members. One full-time member of the Committee is appointed to carry out, on a daily basis, activities such as attending
important meetings of the Executive Committee and other bodies, inquiring with business execution sections concerning the state ofbusiness execution, inspecting sites, and joint efforts with internal audit sections, thereby making auditing and supervisory functions more
effective. In addition to meeting monthly, the Audit and Supervisory Committee meets at other times when necessary to deliberate and reporton matters relevant to its functions as an auditing and supervisory body.
In addition to attending meetings of the Board of Directors, the Executive Committee, and other important meetings, the full-time member
also inquires with business execution sections concerning the state of business execution, reviews important documents, inspects the stateof business and finances at business sites, and otherwise strives to ensure that auditing of matters such as the performance of Directors’
duties and the maintenance and operation of internal control systems is fully addressed. He or she also strives to improve audit results byattending discussions with the Representative Director and engaging in the periodic exchange of viewpoints with the internal audit sections
and the accounting auditors, as well as enhancing cooperation with the statutory auditors of affiliate companies. In particular, in the area ofenhancing cooperation with internal audit sections and accounting auditors, tripartite auditing meetings are held among the full-time member,the Director with responsibility for internal auditing, and the accounting auditors. By providing information obtained through auditing activities
and other activities, the full-time member helps ensure full and effective cooperation with outside members.
The outside members of the Audit and Supervisory Committee attend discussions of the Board of Directors and Representative Directors,
asking questions and presenting views based on a wide range of perspectives and drawing on their wealth of personal experience, as well as
touring facilities to inspect the state of operations. Member Miyahara attends the voluntary Nomination and Compensation Advisory
Committee as a member.
In addition to the assignment of specially appointed auditing officers responsible for assisting in the duties of the Audit and Supervisory
Committee, the Audit and Supervisory Committee Office functions as an organization charged with supporting the Committee in its duties.
5

Internal audit departments

At the Company, the Office of Internal Audits conducts internal audits on businesses from various perspectives, including the effectivenessand appropriateness of organizations and management systems, the economy and efficiency of business administration, and theeffectiveness and efficiency of facility preservation activities. The Office of Nuclear Power Internal Audit performs internal audits associatedwith safety guarantees and reliability enhancements for nuclear power generation within the Company. These internal audit departments
perform internal audits through interviews with the individuals concerned at the Company, its subsidiaries, and principal affiliates,
documentary research, and on-site confirmation. The internal audit departments report their internal audit findings to the Representative
Director & President, the Management Committee, the Board of Directors, and the Audit and Supervisory Committee. In addition, thedepartments urge the divisions concerned to resolve problems and issues that require improvement or correction. The departments alsoseek to raise the effectiveness of internal audits in cooperation with the Audit and Supervisory Committee and accounting auditors, throughmeans such as semiannual joint audit meetings among the three parties of the Director in charge of internal auditing, full-time Audit andSupervisory Committee members, and accounting auditors, in addition to quarterly reporting to the Audit and Supervisory Committee on the
results of internal auditing. The internal audit departments are independent from the respective executive bodies. The Office of Internal Audits
and the Office of Nuclear Power Internal Audit fall under the direct control of the Representative Director & President.

80

Tohoku Electric Power Group

Appointment
and dismissal

Appointment
and dismissal

Board ofDirectors
Directors

1

Audit and supervision
Report(Directors who are not members of the
Audit and Supervisory Committee)

Supervision

ReportAppointment
and dismissal

 udit and SupervisoryA
Committe
Directors
4

Judging the
propriety ofaccounting audits(Directors who serve as members of
the Audit and Supervisory Committee)

ReportInquiryFoundations for Sustained
GrowthAudits2 Nomination andCompensation Advisory
Committee

Cooperation

Office of Audit
andSupervisory
Committee

Establishing a Society that
Recycles Effectively

Accounting auditors

Nomination and Compensation Advisory Committee

General Meetings of Shareholders

Cooperation

Command and report

Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities

Cooperation

Office of Nuclear
Power Internal Audit

Risk management
systems

Head OfficeIntegrated Risk Management
Council(Company presidents and generalmanagers)

Power Generation Company
Sales Company
Renewable Energy Company
Nuclear Power Division
Indirect departments
Internal Services Division

Branch offices, power
stations, customer service
offices, etc.

Digital Transformation (DX) Strategy

DataInternal audit
departments
Office ofInternal Audits

Sustainability Promotion
SystemSustainability Promotion
CouncilCommandand report

Offices (office managers)

5

AuditsManagement
Committee

Commandand report

Human Resource Strategy

Corporate Governance

Representative Director& President
3Conserving Biodiversity

Risk Management

Business execution/control structure

Cooperation

2

The Company has established a Nomination and Compensation Advisory Committee comprised of two internal Directors (Representative
Director & Chairman of the Board Jiro Masuko and Representative Director & President Kojiro Higuchi) and four independent outside
Directors (Directors Tsutomu Kamijo, Osamu Kawanobe, and Mikito Nagai who do not sit on the Audit and Supervisory Committee, andDirector Ikuko Miyahara, a Committee member). To ensure the objectivity, timeliness, and transparency of nomination and compensation, theorganization of this body is based on a majority of its membership consisting of independent outside Directors and an independent outside
Director serving as its chairperson. It deliberates and advises on consultation received from the Board of Directors regarding nomination andcompensation of Directors and other executives. The Nomination and Compensation Advisory Committee fulfills the functions of both avoluntary committee equivalent in function to a nomination committee and a voluntary committee equivalent in function to a compensationcommittee.

Toward Realizing Carbon Neutrality

AuditsAuditsCommittees deliberatingon specific issues
Committee of
Crisis Management
Nuclear Safety Promotion
CouncilCommittee of Market
Risk Management
Promotion Council of Safety
and MaintenanceChecksReportGroup companies

Promotion Council of Carbon Neutrality
and Environmental Management

Instructions and reporting1* Indicates major deliberative bodies
only.

Corporate ethics and compliance systems
Committee of Corporate Ethics
and Compliance

Instructions
and reporting

Corporate ethics consultation
counters (internal and external facilities)

Committee of Conduct
Regulations Compliance

INTEGRATEDREPORT 2023

Introduction

Corporate Governance

A Value Creation Story

Changes in corporate governance systems

Toward the Working Alongside Next Vision

Commencement of initiatives to strengthen governanceand achieve flexible business administration

Promoting governance reforms based on

Strengthening governance to accountcorporate governance codes

for rapidly changing management environment

Reducing the numbers of Directors and terms of office
Introducing the Executive Officer system
Introducing the system of stock options for stock-based compensation

Appointing two or more outside Directors
Initiating assessments of the Board of Directors’ effectivenessEstablishing the voluntary Nomination and Compensation Advisory
Committee

Toward Realizing Carbon Neutrality

Establishing Executive Officers with titles
Changes in status to a company with an audit and supervisory committee
Appointment of female Directors
Adopting a stock-based compensation program linked to businessperformance

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy

April 2005 to March 2015
Governance system

Company with an audit andsupervisory board

Committee

Digital Transformation (DX) Strategy

April 2018 to the present

Respect for Human Rights

Company with an audit andsupervisory board

June 2018
Changes in status to company with an audit and supervisory committee

Safety Initiatives

January 2017
Establishing the voluntary Nomination
and Compensation Advisory
Committee (consisting of two
members from the Company and two
additional members from outside theCompany)

June 2018
Increase in the number of Nomination and Compensation Advisory Committee members from outside the Company (tochange the numbers of members from the Company and those from outside the Company to two and four,
respectively)
January 2020
Outside Director chosen as Chair of the Nomination and Compensation Advisory Committee

Contributing to Communities

Representative Director & Chairman of
the BoardRepresentative Director & Chairman of the Board

Enhancing Resilience

Chairman of the Board of Directors

Representative Director & Chairmanof the Board

Separation of supervisionand execution

June 2005
Introducing the Executive Officer
systemDecrease in the number of Directors
specified in the Articles ofIncorporation from 25 or fewer to 18
or fewer

Nomination of Directors

June 2007
Reducing the term of office for
Directors from two years to one year

November 2015
Establishing criteria for judging theindependence of outside Directors
Establishing policies for nominating
Directors

November 2020
Clearly defining the abilities and qualities demanded of Directors

Compensation for Directors

June 2007
Abolishing Retirement Benefits for
Directors
June 2010
Introducing the system of stock
options for stock-based
compensation

November 2015
Establishing policies for determining
compensation for Directors

June 2020
Adopting stock-based compensation program linked to business performanceStock option compensation program abolished

Assessment of the Board of
Directors’ effectiveness
Basic policies regarding
corporate governanceOutside Directors(Figures inare the ratios of outside Directors
to total number of Directors.)

Outside Statutory Auditors

81

April 2015 to March 2018

Tohoku Electric Power Group

Risk Management
Corporate Governance

Data

April 2018
Establishing Executive Officers with titles
June 2018
Delegation of a portion of the Board of Directors’ authorities to Directors
April 2020
Expanding the authority delegated by the Board of Directors to Directors

February 2016
Start of the assessment of the Boardof Directors’ effectiveness (using aquestionnaire survey)
November 2015
Establishment

From June 2013
1 outside Director 6%

From June 2016
2 outside Directors 13%

March 2020
Basic Policy on Corporate Governance established
From June 2018
6 outside Directors 35%

From June 2019
6 outside Directors 35%

Since June 2020
6 outside Directors 40%

Since June 2021
7 outside Directors 44%

Since April 2023
7 outside Directors 47%

Including three outside Directors
serving as members of the Audit
and Supervisory Committee

Including three outside Directors (one female
Outside Director) serving as members of the
Audit and Supervisory Committee

Including three outside Directors (one female
outside Director) serving as members of the
Audit and Supervisory Committee

Including three outside Directors (two female
outside Directors) serving as members of the
Audit and Supervisory Committee

Including three outside Directors (two female
outside Directors) serving as members of the
Audit and Supervisory Committee

3 outside Statutory Auditors

INTEGRATEDREPORT 2023

Introduction

Corporate Governance

Policies and procedures for appointing and dismissing executive teammembers and nominating candidates for Directors by the Board of Directors
The Company seeks to administer businesses to reshape their value alongside local
communities by adapting to anticipated changes in the management environment andengaging in sustained dialogue with stakeholders, thereby maintaining the role of Tohoku
Electric Power Group a group of companies that grow alongside and provide essentialfunctions within communities. The Company has adopted the following policies andprocedures for nominating and dismissing Directors to administer its businesses
appropriately.
Policies
The Board of Directors shall have members whose numbers are necessary and appropriate for building effective
management systems in a company active in the electricity business and for monitoring substantive discussions andbusiness execution. The Board of Directors shall consist of an appropriate number of members, totaling 18 or fewer, as
specified in the Articles of Incorporation.
In selecting and dismissing Directors, the Nomination and Compensation Advisory Committee, including two or more
independent outside Directors, shall convene discussions to secure the objectivity, timeliness, and transparency of theirselection and dismissal.
Candidates for internal Directors (excluding candidates for Directors serving as members of the Audit and Supervisory
Committee) are chosen from individuals with a wealth of experience in each field, based on a consideration of a soundbalance of specialties, technical expertise and business experience in particular in the electric power industry, which
involves high specialization and a broad range of business domains, knowledge concerning the electricity business ingeneral, and new business fields, among others, thereby helping to achieve Working alongside next, the Tohoku ElectricPower Group’s Medium- to Long-Term Vision. The desired traits are:

• The imagination needed to envision a forward-looking vision and creative business models and to lead theorganization• The decisiveness needed to take personal responsibility for decision-making based on knowledge, experience,and principles• The tenacity needed to achieve goals without giving up, tackling challenges boldly, while bringing together
wisdom and resources from inside and outside the organization• The sensitivity needed to identify business opportunities without overlooking signs indicating risk
• The character needed to combine a strong sense of mission with lofty ethics as leaders of a business serving
the public interest
Candidates for outside Directors (excluding candidates serving as members of the Audit and Supervisory Committee) shallbe selected by evaluating whether candidates can work to realize proper decisionmaking and management supervision by
the Board of Directors, based on practical experience grounded in corporate management and other factors and insights
into social, economic, and other trends.
Candidates for Directors serving as members of the Audit and Supervisory Committee shall be selected by evaluating
whether the candidates can apply their respective experience and insights to the proper execution of their duties as Audit
and Supervisory Committee members and to the audit and supervision of job execution by Directors. Candidates foroutside Directors serving as members of the Audit and Supervisory Committee shall be selected by evaluating whether the
candidates can perform audits and supervision from an objective and neutral perspective.
	Whether candidates for outside Directors are independent or not shall be judged on the basis of the Independence Criteria
for Outside Directors set by the Company.

Procedures	Based on the above policies, to enable more objective, timely, and transparent decision-making, the Nomination andCompensation Advisory Committee, whose members include multiple independent outside Directors, including the chair,deliberates on the appointment. A decision is made by the Board of Directors. For candidates for Directors serving as
members of the Audit and Supervisory Committee, the consent of that Committee is obtained before submission to theBoard of Directors. The Audit and Supervisory Committee may also present opinions on candidate Directors (not including
candidates for Directors serving as members of the Audit and Supervisory Committee) and submit them to the General
Meeting of Shareholders.

82

Tohoku Electric Power Group

Policies and procedures for determining compensation for Directors
Policies and procedures for determining compensation for Directors (excluding
Directors serving as members of the Audit and Supervisory Committee) are as follows:
Policies
To help realize Working alongside next, the Tohoku Electric Power Group’s Medium- to Long-Term Vision, decisions are madeon the remuneration of Directors (not including Directors serving as members of the Audit and Supervisory Committee) in
accordance with the following policy, intended to strengthen motivation among Directors to improve business performance andcontribute to improvements in business performance over the medium to long term, by clarifying the relationship between
remuneration and business performance and stock prices.
The remuneration structure consists of fixed remuneration, remuneration linked to short-term performance, andremuneration linked to medium-/long-term performance. Remuneration amounts are determined for each position based ona consideration of Company business results, the business environment, and other factors, while also referring toremuneration at other publicly traded firms.
To incentivize improved business results, the percentages of total compensation accounted for by fixed remuneration,
remuneration linked to short-term performance, and remuneration linked to medium-/long-term performance are set toroughly 70%, 10%, and 20%, respectively, at the time the goals are achieved.
Fixed remuneration is paid monthly as monetary remuneration in annual amounts determined so as not to exceed the total
approved by the General Meeting of Shareholders.
Remuneration linked to short-term performance is paid as annual remuneration that varies with the degree to whichbusiness performance objectives are achieved, so as not to exceed the total approved by the General Meeting of
Shareholders.
Remuneration linked to medium-/long-term performance is paid by awarding one share of Company common stock per
point based on the total points earned annually during the time of service, at the time of retirement or resignation through aninvestment-trust- based remuneration system. This, too, is not to exceed the total approved by the General Meeting of
Shareholders. Points are awarded as fixed points and variable performance-linked points awarded in accordance with theextent to which business performance objectives are achieved. If a recipient becomes ineligible to receive this remuneration,for example by having committed any of the acts prohibited under the Rules on Issue of Shares, and such fact has been
discovered prior to the date of finalization of beneficiary rights, then the shares of common stock will not be issued. If theviolation has been discovered after the date of finalization of beneficiary rights, then the Company may demand return of theamount corresponding to the remuneration paid.
The indicator used in the portion corresponding to variable performance-linked points in remuneration linked to short-term
and medium-/long-term performance is the financial target of consolidated cash income (excluding factors such as time lag
effects of the fuel-cost adjustment system, an external variable factor) identified in Working alongside next, the Tohoku
Electric Power Group’s Medium- to Long-Term Vision. The target is set to 320 billion yen for each fiscal year. Amounts paid
and other matters vary with the extent of achievement of this target and other factors.
Remuneration of outside Directors, whose perspectives are independent of business execution, consists of fixed
remuneration only.
	Allotments for the respective Directors shall be decided in accordance with the sizes of the roles assigned to the respective
title holders, the details of deskwork and duties assigned to the respective Directors and their respective scopes of
responsibility.

A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Data

Procedures	Overseeing the business as a whole, the President makes decisions each year regarding the amounts paid to eachindividual and other matters, through a Board of Directors resolution delegating full authority to him or her. To ensure its
objectivity and transparency, the resolution on delegation of authority to the President is deliberated on by the Nomination
and Compensation Advisory Committee, whose members include multiple independent outside Directors, including thechair. The amounts paid to each individual and other matters, decisions related to which are delegated to the President as
described above, cannot exceed the total payment amounts and other amounts for Directors (excluding Directors serving as
members of the Audit and Supervisory Committee) as specified in advance through deliberation by the Nomination andCompensation Advisory Committee. The actual amounts paid are reported to the Nomination and Compensation Advisory
Committee.
The Audit and Supervisory Committee may state its decided opinion on compensation for Directors (excluding Directors
serving as members of the Audit and Supervisory Committee) at a General Meeting of Shareholders.

Policies and procedures for determining compensation for Directors serving as
members of the Audit and Supervisory Committee are as follows:
Remuneration for Directors serving as members of the Audit and Supervisory Committee, whose positions are independentof business execution, consists of fixed remuneration only, paid monthly so as not to exceed the total approved by theGeneral Meeting of Shareholders. The amount paid to each Director is determined through negotiation among the Directors
serving as members of the Audit and Supervisory Committee.

INTEGRATEDREPORT 2023

Introduction

Corporate Governance

A Value Creation Story

Compensation for Directors, etc.
(FY2022)

Monetary remuneration
Fixed remuneration

Directors(excluding Directors serving
as members of the Audit
and Supervisory Committee
and Outside Directors)

Members of the Audit
and Supervisory
Committee

Number ofcompensation
recipients

Amount paid
(millions of yen)

13

319

5

70

—

—
—

Remuneration linked to medium-/long-term performance
Number ofAmount paidcompensation(millions of yen)
recipients

8
—

39
—

(Notes) 1. As of March 31, 2023, there were 12 Directors (including four outside Directors), excluding those serving as members of the Audit
and Supervisory Committee. The Company has four additional Directors serving as members of the Audit and Supervisory
Committee, including three outside Directors. Compensation for the Directors specified above includes compensation for one
Director not serving as members of the Audit and Supervisory Committee who stepped down at the end of the 98th Ordinary
General Meeting of Shareholders held June 28, 2022 and for one Director serving as a member of the Audit and Supervisory
Committee who resigned.
2. The total compensation paid to the eight outside Directors above was 84 million yen, all paid as fixed remuneration.
3. In light of the consolidated ordinary loss recorded this fiscal year, we have not paid the entire amount of remuneration linked toshort-term performance and the portion corresponding to performance-linked points of remuneration linked to medium-/long-term
performance.
4. The Company has issued a total of 137,282 shares of stock as payment for execution of duties to two Directors (excluding Directors
serving as members of the Audit and Supervisory Committee) who resigned on March 31, 2022. Each of these was paid under thestock-based compensation program linked to business performance.
5. Remuneration limits approved by the General Meeting of Shareholders are outlined below.

Fixed remuneration, remuneration linked to short-term performance
Up to 516 million yen/
Directors
year
Directors serving as(excluding Directors serving as
Up to 12 million yen/(including up to 60
members of the Audit andmembers of the Audit andmonthmillion yen/year for
Supervisory Committee
Supervisory Committee)
outside Directors)(Based on resolution passed at the 96th Ordinary General(Based on resolution passed at the 94th Ordinary General
Meeting of Shareholders held June 25, 2020. The resolution
Meeting of Shareholders held June 27, 2018. The
affects 11 Directors.)
resolution affects four Directors.)
Remuneration linked to medium-/long-term performance
Under the investment-trust- based remuneration system, Company stock andDirectors excluding outsidemonetary amounts equivalent to the convertible value of Company stock are issued/
Directors
granted at the time of resignation. The trust contribution amount per three fiscal(excluding Directors serving on theyears is not to exceed 540 million yen in total; the total number of points awarded to
Audit and Supervisory Committee)
Directors per fiscal year is not to exceed 400 thousand points (equivalent to 400
thousand shares of stock).
(Based on resolution passed at the 96th Ordinary General Meeting of Shareholders held June 25, 2020. The resolution
affects eight Directors.)

CEO (President) succession plan
The Board of Directors overseas the development of successors to the position ofChief Executive Officer (President) to ensure this occurs systematically and with anadequate investment of time and resources. The Nomination and Compensation Advisory
Committee, whose members include multiple independent outside Directors, including
the chair, deliberates on the development of successors in a systematic and continuous
manner, to ensure its objectivity and transparency, while taking into consideration matterssuch as the Company’s changing business conditions.
83

Tohoku Electric Power Group

Toward Realizing Carbon Neutrality

Nonmonetary remuneration

Remuneration linked to short-term
performance
Number ofAmount paidcompensation(millions of yen)
recipients—

Toward the Working Alongside Next Vision

Message from the chair of the Nomination
and Compensation Advisory Committee
Initiatives to date
Our Nomination and Compensation Advisory
Committee was established in 2016. The committee
met seven times in FY2022. To ensure objectivity,
timeliness, and transparency in nomination andremuneration, the committee is composed of amajority of independent outside Directors, including
myself, its chair.
Committee meetings feature active discussions
among member internal and outside Directors. To
date, we have deliberated on ways to develop andevaluate the next generation of management basedon the five abilities and qualities required for candidate
Directors: imagination, decisiveness, tenacity,
sensitivity, and integrity. We also used the skills matrix
to select appointments that strike a balance in termsof the skills, specializations, and other qualities
needed of the Board of Directors as a whole. We also
adopted a stock-based compensation program linked
to business performance as an incentive to achieve
medium- to long-term performance on the path torealizing Working Alongside Next, the Tohoku ElectricPower Group’s Medium- to Long-Term Vision. We
believe the steady establishment of these and otherinitiatives related to nomination and remuneration will
make the Group’s governance initiatives still more
effective.
We share various information with Directors who
are not members of the committee, includingsummaries of our discussions and agenda items,
through reports submitted to the Board of Directors.
We strive both to deepen understanding of matterssuch as nomination and remuneration systems and to
make the committee even more transparent.
Into the future
To realize Working Alongside Next, the Tohoku
Electric Power Group’s Medium- to Long-Term Vision,
Directors must continue to contribute to improving
business performance and maximizing corporate
value over the medium to long term under theappropriate governance. To adapt in appropriate andtimely ways to the changing business environment
and move to promote digital transformation (DX) andfind and implement solutions to the Group’s

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives
Enhancing Resilience

Director(Independent Outside Director)
Chairperson, Nomination andCompensation Advisory Committee

Tsutomu Kamijo

Contributing to Communities
Risk Management
Corporate GovernanceDatasustainability priorities (materiality topics) amid
growing demand from society, we must promote
development of the next generation of management,
armed with the specialization and diversity needed tomake bold, responsible decisions. We must also
pursue progress on succession plans whileconsidering matters such remuneration systems toincrease incentives for Directors.
We will maintain our efforts to deepen
understanding of the actual conditions under which
individual businesses operate and the issues they faceamid accelerating environmental changes and toascertain the abilities, qualities, and othercharacteristics of candidates for the next generationof management through means such as study
meetings and site tours for Directors, while monitoring
the committee for objectivity, timeliness, andtransparency. We will also seek to assess the next
generation of management candidates in respect ofcompetency and personality.
All members, each with their own practicalmanagement experience and extensive knowledge ofsocial and economic developments, will strive tocontribute to sustained growth by identifying optimal
solutions for the Group through repeated multifaceted
discussions of key matters based on their uniquestandpoint as outsiders.

INTEGRATEDREPORT 2023

Introduction

Corporate Governance

A Value Creation Story

Assessment of the Board of Directors’ effectiveness
The Company undertakes a questionnaire survey of Directors to assess the Board of Directors’ effectiveness and reports the findings of the survey to the Board of Directors annually.
Based on the survey findings, the Board of Directors shares its understanding of the existing conditions and opinions for bettering the conditions and the like, assesses the effectivenessof the Board of Directors as a whole, and confirms initiatives for improving the Board’s effectiveness, among other things.
Survey topics
The survey questions are grouped into the following main categories. Directors are
asked to choose one of five answers for each question. A space is provided in eachcategory for freeform comments.

Overview of results of evaluation
The results of the survey carried out in February 2023 showed improvements from thetwo previous surveys in terms of overall average scores, as well as strong results in all
evaluation categories. Based on this survey we have judged the efforts conducted in
FY2022 to increase the efficacy of the Board to have generated positive results.
Referring to the results of exchange of opinions among all outside Directors in March
2023, after totaling the results of this survey, deliberations in a May 2023 Board of Directors
meeting confirmed that the Board had demonstrated satisfactory efficacy in FY2022.
At the same time, to increase efficacy even more they recognized the need for initiatives
on the following matters:

I.

Number of members and composition of
V. Support structures for Directors andthe Board of Directors
members of the Audit and Supervisory
II. Scope of matters submitted to the Board ofCommittee, provision of information to
Directors
them, etc.
III. Decision-making and oversight at the
VI. Operation of the Nomination and
Board of Directors
Compensation Advisory Committee
IV. Operation of the Board of Directors, etc.
VII. Priority initiatives for FY2022

FY2022 initiatives
In FY2022, we sought to increase the efficacy of the Board of Directors via thefollowing initiatives:
1

Implementing validation of the plan-do-check-act (PDCA) cycle concerningbusiness administration to enhance monitoring of the medium-term plan2

 ystemically holding colloquia and other activities outside of the Board of Directors,
S
to enhance free discussions and exchange of opinions among inside and outside
Directors1

 o enhance internal controls Groupwide, achieving a shared understanding of andTdeepening discussions on the state of Group internal controls and related essential
issues2

To increase the efficiency of business risk management, achieving a sharedunderstanding and promoting effective discussion of matters such as overviews of
medium- to long-term management topics and the state of progress on related
initiatives

Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Data

The Company Board of Directors will continue to strive to maintain and improve theefficacy of the Board of Directors on these and other points, thereby ensuring appropriate
management oversight by the Board and to realize sustained growth in corporate value.

In addition to the above initiatives, efforts are underway to deepen the understandingof outside Directors of the Company’s current conditions and related management topics.
These efforts include the regular and routine provision of internal and industry-related
information, as well as information on how customers, shareholders, investors, and ourcommunities evaluate us, in addition to facility tours and study meetings to present anddiscuss management topics and related matters.
Process of assessing the efficacy of the Board
Assessment of the efficacy

the Board by each Director
1 of(Questionnaires)

84

Tohoku Electric Power Group2

Analysis of resultsof assessment andidentification of issues

3

Preparing plans
for solutions to issues

4

Deliberation in the Boardon the content of plans

Steady implementation

5 of initiatives

INTEGRATEDREPORT 2023

Introduction

Corporate GovernanceDirectors (as of July 2023)* Actual attendance is shown for FY2022. Sadao Kanazawa took office on June 28, 2023.
* Attendance for Satoshi Isagoda and Sadahiko Ohno is for meetings of the Board held since June 28, 2022.

A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy

85

Representative Director & Chairman of the Board

Representative Director & President

Representative Director & Executive Vice President

Jiro Masuko

Kojiro Higuchi

Kazuhiro Ishiyama

Status of attendance at Board of
Directors meetings

Status of attendance at Board of
Directors meetings

Status of attendance at Board of
Directors meetings

11/11 (100%)

11/11 (100%)

Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities

11/11 (100%)

Risk Management
Corporate GovernanceReasons for appointment

Reasons for appointment

Reasons for appointment

Since joining the Company, Masuko has worked in businesses
centered on those assigned to the nuclear power divisions. He is
familiar with the Company’s businesses in general, as demonstrated
by past service as an Executive Officer and the General Manager ofthe Aomori Branch Office, and as Executive Officer and General
Manager of the Nuclear Power Department. He has served as
Managing Director since June 2015, as a Representative Directorand Executive Vice President since April 2018, and as a
Representative Director and Chairman of the Board since April 2021.
The Company reappointed him as Director in light of his extensive
business experience within the Company and general knowledge ofelectricity business management.

Since joining the Company, Higuchi has worked in businesses
centered on those assigned to the thermal power divisions. He is
familiar with the Company’s businesses in general, as demonstrated
by past service as the General Manager of the Haramachi Thermal
Power Station and as an Executive Officer and General Manager of
the Thermal Power Department. He has served as Managing
Director from June 2016, as a Director and Managing Executive
Officer from April 2018, as a Representative Director and Executive
Vice President from June 2019, and as a Representative Director
and President since April 2020, in light of his extensive businessexperience within the Company and general knowledge of electricity
business management.

Since joining the Company, Ishiyama has worked in businesses
centered on those assigned to the planning divisions. He is familiar
with the Company’s businesses in general, as demonstrated by past
service as Executive Officer and General Manager of the Corporate
Planning Department and Managing Executive Officer. He served as
Director and Managing Executive Officer from June 2021 and as a
Representative Director and Executive Vice President from April
2022. The Company reappointed him as Director based on his
extensive business experience within the Company and generalknowledge of electricity business management.

Representative Director & Executive Vice President

Representative Director & Executive Vice President

Director & Managing Executive Officer

Data

Director & Managing Executive Officer

Hiromitsu Takano

Satoshi Isagoda

Sadahiro Ohno

Sadao Kanazawa

Status of attendance at Board of
Directors meetings

Status of attendance at Board of
Directors meetings

Status of attendance at Board of
Directors meetings

Status of attendance at Board of
Directors meetings

11/11 (100%)

9/9 (100%)

9/9 (100%)—/— (—%)

Reasons for appointment

Reasons for appointment

Reasons for appointment

Reasons for appointment

Since joining the Company, Takano has worked in businesses
centered on those assigned to the general-affairs divisions. He is
familiar with the Company’s businesses in general, as demonstrated
by past service as General Manager of the General Affairs
Department, Senior Executive Officer and General Manager of the
Niigata Branch Office, and Managing Executive Officer. He served as
Director and Managing Executive Officer from June 2021 and as a
Representative Director and Executive Vice President from April
2022. The Company reappointed him as Director based on his
extensive business experience within the Company and generalknowledge of electricity business management.

Since joining the Company, Isagoda has worked in businesses witha focus on those assigned to the business administration divisions.
He is familiar with the Company’s businesses in general, as
demonstrated by past service as an Executive Officer and General
Manager of the Human Resources Department, an Executive Officer
and General Manager of the Iwate Branch, and a Managing
Executive Officer. He was appointed Director & Managing Executive
Officer in June 2022 and Representative Director & Executive Vice
President in April 2023. The Company appointed him as Director
based on his extensive business experience within the Company
and general knowledge of electricity business management.

Since joining the Company, Ohno has worked in businesses with afocus on those assigned to the thermal power divisions. He is
familiar with the Company’s businesses in general, as demonstrated
by past service as an Executive Officer and General Manager of the
Thermal Power Department and a Managing Executive Officer. He
was appointed Director & Managing Executive Officer in June 2022.
The Company appointed him as Director based on his extensive
business experience within the Company and general knowledge ofelectricity business management.

Since joining the Company, Kanazawa has worked in businesses
centered on those assigned to the nuclear power divisions. He is
familiar with the Company’s general businesses, as demonstrated bypast service as an Executive Officer and General Manager of the
Nuclear Power Department and as a Managing Executive Officer.
The Company has appointed him as Director in light of his extensive
business experience within the Company and general knowledge ofelectricity business management.

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

* Actual attendance is shown for FY2022.
* Attendance for Keiko Uehara and Katsuaki Fujikura is for meetings of the Board held since June 28, 2022.
* Attendance for Katsuaki Fujikura is for meetings of the Audit and Supervisory Committee held since June 28,2022.
* T he independence of independent Directors is judged based on the standards for independence established by
the financial instruments exchange on which Company shares are listed.

Corporate GovernanceDirectors (as of July 2023)

Introduction
A Value Creation Story
Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy

Director (Outside Director) (Independent Director)

Director (Outside Director) (Independent Director)

Director (Outside Director) (Independent Director)

Director (Outside Director) (Independent Director)

Tsutomu Kamijo

Osamu Kawanobe

Mikito Nagai

Keiko Uehara

Status of attendance at Board of
Directors meetings

Status of attendance at Board of
Directors meetings

Status of attendance at Board of
Directors meetings

Status of attendance at Board of
Directors meetings

11/11 (100%)

11/11 (100%)

Respect for Human Rights
Safety Initiatives

9/9 (100%)

Enhancing Resilience
Contributing to Communities

Reasons for appointment and summary of anticipated roles

Reasons for appointment and summary of anticipated roles

Reasons for appointment and summary of anticipated roles

Reasons for appointment and summary of anticipated roles

Risk Management

Kamijo has served in positions including Chairman and Director of
Sapporo Holdings Ltd. and brings experience in managing acompany that manufactures and sells beverages, foods and otherproducts. The Company appointed Kamijo as an Outside Director
based on expectations that he will apply his extensive experienceand rare insights to the management of the Company based on his
past career and performance record.
Kamijo brings a wealth of experience as a corporate manager,
playing a leading role in areas including large-scale domestic andinternational M&A and business alliance activities and global
business development. He is expected both to oversee Company
management and to offer advice on management policies andbusinesses from an independent perspective.

Kawanobe is Representative Director and President of JR EASTMECHATRONICS CO., LTD. Previously held positions include thoseof Representative Director and Vice President of the East Japan
Railway Company. He brings a wealth of experience in managing
public-interest businesses and in other areas. The Company
appointed Kawanobe as an Outside Director based on expectations
that he will apply his extensive experience and rare insights to the
management of the Company based on his past career andperformance record.
Kawanobe brings a wealth of experience as a corporate manager,
playing a leading role in business diversification efforts based on therail transportation business. He is expected both to oversee
Company management and to offer advice on management policies
and businesses from an independent perspective.

Nagai’s previous positions include Representative Director andPresident of NIPPON STEEL KOWA REAL ESTATE CO.,LTD. He has
also served as a Director and Vice President of Mizuho Corporate
Bank, Ltd. (now Mizuho Bank, Ltd.), and he brings a wealth ofexperience in managing the real estate and banking businesses andin other areas. The Company appointed Nagai as an Outside
Director based on expectations that he will apply his extensive
experience and rare insights to the management of the Company
based on his past career and performance record.
Nagai brings a wealth of experience and financial insights as acorporate manager. He is expected both to oversee Company
management and to offer advice on management policies andbusinesses from an independent perspective.

Uehara’s previous positions include Executive Director of Daiwa
Securities Business Center Co. Ltd., where she managed
back-office business operations, and Executive Officer of Daiwa
Securities Group Inc. The Company appointed Uehara as an Outside
Director based on expectations that she will apply her extensive
experience and rare insights to the management of the Company
based on her past career and performance record.
Uehara brings a wealth of experience and financial insights as acorporate manager. She is expected both to oversee Company
management and to offer advice on management policies andbusinesses from an independent perspective.

Corporate GovernanceDirector & Audit and Supervisory Committee Member

Director & Audit and Supervisory Committee Member(Outside Director) (Independent Director)

Director & Audit and Supervisory Committee Member(Outside Director) (Independent Director)

Director & Audit and Supervisory Committee Member(Outside Director) (Independent Director)

Katsuaki Fujikura
Status of attendance at Board of
Directors meetings
Status of attendance in Audit andSupervisory Committee meetings86

10/11 (91%)

Digital Transformation (DX) Strategy

Ikuko Miyahara
9/9 (100%)
10/10 (100%)

Status of attendance at Board of
Directors meetings
Status of attendance in Audit andSupervisory Committee meetings

Kazuo Kobayashi
1 1 / 1 1 (100%)
13/13 (100%)

Status of attendance at Board of
Directors meetings
Status of attendance in Audit andSupervisory Committee meetings

Akiko Ide
1 1 / 1 1 (100%)
1 3 / 1 3 (100%)

Status of attendance at Board of
Directors meetings
Status of attendance in Audit andSupervisory Committee meetings

1 1 / 1 1 (100%)
1 3 / 1 3 (100%)

Reasons for appointment

Reasons for appointment and summary of anticipated roles

Reasons for appointment and summary of anticipated roles

Reasons for appointment and summary of anticipated roles

Since joining the Company, Fujikura has worked in businesses with afocus on those assigned to the fuel divisions. He is familiar with theCompany’s businesses in general, as demonstrated by past service
as an Executive Officer and General Manager of the Fuel
Department, an Executive Officer and Special Remuneration Audit
Executive, and a Senior Executive Officer and General Manager of
the Niigata Branch. The Company appointed him as Director & Audit
and Supervisory Committee Member based on his extensive
business experience within the Company and general knowledge ofelectricity business management.

As university professor, Miyahara has experience in the real-world
use of regional resources, research on support for reconstruction
following major earthquakes, and joint industry, government, andacademic projects. The Company appointed Miyahara as Outside
Director and Audit and Supervisory Committee Member based on
expectations she will apply her extensive experience and rare
insights gained in her academic career toward the objective ofproviding impartial audits and supervision, drawing on her past
career and performance record.
Miyahara brings a wealth of insights as an experienced academic
and experience based on involvement in disaster recovery in the
Tohoku region. She is expected both to audit and oversee Company
management from an independent perspective.

Kobayashi is a Standing Statutory Auditor of the Nippon Life
Insurance Company. He offers considerable knowledge of financial
affairs and accounting. He has also served in posts including a
Representative Director and Executive Vice President of the Nippon
Life Insurance Company, and he has experience in management of
the life insurance business. The Company reappointed him as an
Outside Director and an Audit and Supervisory Committee Member
based on expectations that he will apply his extensive experienceand rare insights toward the objective of providing impartial audits
and supervision of the Company based on his past career andperformance record.
Kobayashi brings knowledge of financial affairs and accounting andfinancial insights. He is expected both to audit and oversee
Company management from an independent perspective.

Ide’s previous positions include Standing Statutory Auditor of
Nippon Telegraph and Telephone Corporation, Statutory Auditor ofNTT, Inc., and Executive Officer of NTT Docomo, Inc. The Company
appointed her as an Outside Director and an Audit and Supervisory
Committee Member based on expectations that she will apply her
extensive experience and rare insights toward the objective ofproviding impartial audits and supervision of the Company based on
her past career and performance record.
Ide brings a wealth of experience in management of public utilities
and auditing experience and insights. She is expected both to audit
and oversee Company management from an independent
perspective.

Tohoku Electric Power GroupData

INTEGRATEDREPORT 2023

Introduction

Corporate Governance

A Value Creation Story

Areas of specific expectations for skills individual Directors have (skills matrix)
Our outlook on areas of expectations
for individual Directors

The seven items below have been identified as skills essential to Company Directors in general and skills essential for future strategic implementation to realize “Working alongside next,”
the Tohoku Electric Power Group’s Medium- to Long-Term Vision:
Chair

Name

Toward the Working Alongside Next Vision

Title

Jiro Masuko

Representative Director &Chairman of the Board

Kojiro Higuchi

Representative Director &President

MemberNomination andCompensation
Advisory Committee
member?

Male

FemaleAreas of particular expectations
Planning andmanagement

Technology*2

Finance andaccounting

Legal and risk
management

Kazuhiro Ishiyama
Hiromitsu Takano

Businessdevelopment andmarketingFoundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively*1

Gender

Toward Realizing Carbon Neutrality

Conserving Biodiversity

Socialcommunication*3

Personnel andhuman resource
development

Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Representative Director &Executive Vice President

Data

Satoshi Isagoda
Sadahiro Ohno
Sadao Kanazawa

Director & Managing
Executive Officer

Tsutomu Kamijo
Osamu Kawanobe
Director (Outside Director)

Mikito Nagai
Keiko Uehara
Katsuaki Fujikura
Ikuko Miyahara
Kazuo Kobayashi
Akiko Ide

Director & Audit andSupervisory Committee
MemberDirector & Audit andSupervisory Committee
Member(Outside Director)*1 T he above list describes the top three areas of particular expectations based on the skills possessed by individual Directors. It does not indicate all areas of specialization and experience of each Director.
*2 T echnology refers to capabilities related to electricity, machinery, and other technologies in general, including environmental knowledge, to contribute to carbon neutrality.
*3 S ocial communication refers to capabilities related to communication with local communities and other stakeholders.

87

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Introduction

Corporate Governance

A Value Creation Story

Messages from outside Directors

Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively

Osamu Kawanobe

Mikito Nagai

Keiko Uehara

Director (Outside Director)(Independent Director)

Director (Outside Director)(Independent Director)

Director (Outside Director)(Independent Director)

Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives

The past year was marked by dramatic change. Just as
we entered the final stages of operational resumption at the
Onagawa Nuclear Power Station, we confronted power
failures caused by an earthquake, the need to respond tosoaring fuel prices and other costs, and a case of improper
handling of customer and other information. While theCompany responded appropriately and effectively in thesecases based on deliberations by the Board, the improper
handling of customer and other information demonstrated
one major issue: certain risks related to matters such as
employee training and the operation of computer systems
had not been fully assessed. We will enhance oversight toprevent the recurrence of similar incidents.
Board meetings and study meetings include lively
discussions reflecting the diversity of our membership. We
may repeatedly discuss the same themes if required. We havealso been able to identify certain trends thanks to the frequent
provision of Company information to outside Directors. I strive
to express external views and those of consumers based on
this information.
Times of uncertainty require the flexibility to adapt tochange, rather than sticking with the way things have been
done in the past. Keeping in mind the risk of maintaining thestatus quo, we must take steps in new directions based on athorough discussions of risks. I intend to contribute to theGroup’s evolution into an organization capable ofdemonstrating sustainability from The Strength to Work
Alongside perspective and building a smart society based on
the knowledge and expertise accumulated over years in theelectric power business.

88

Tohoku Electric Power GroupOver the past year, The Company’s business environment
was highly challenging. These challenges include rising fuelprices, dramatic yen depreciation, and damage caused by theearthquake centered off the Fukushima Prefecture coast in
March 2022. We recorded significant losses for the second
year in a row. To the certain disappointment of ourshareholders, we paid no dividends.
While the external environment remains fluid, I believe it isimportant to secure solid earnings and resume dividend
payments based on continuing efforts to cut costs, optimize
supply and demand, and procure the necessary fuel. At thesame time, we must rapidly restore the financial footing
needed for medium- to long-term investment. Other importantmanagement topics include thoroughgoing measures to put
safety first in resuming operations at Unit No. 2 of the
Onagawa Nuclear Power Station and regaining the trust lost
through the improper handling of customer and otherinformation while implementing and closely monitoring
thorough preventive measures.
We must also accelerate efforts to give concrete form to
the Medium- to Long-Term Vision, Working Alongside Next.
We face the pressing need to shift toward investments inhuman resources and the human resource portfolio needed
to support these efforts. I intend to provide advice andsupport as we move to become a more flexible, diverse
organization while strengthening employee engagement.

One year has passed since my appointment as an outside
Director. During this year, the Company’s earnings situation
proved especially challenging. In the face of significant
difficulties, including record high ordinary losses and the needto raise regulated rates, the Board undertook lively
discussions among those on the executive side and theoutside Directors, followed by timely and appropriate
reporting on subsequent conditions. Outside Directors arealso applying their experience outside the power industry tooffer constructive, impartial advice on measures to rebuild thecompliance structure in response to the improper handling of
information on customers and other information. We willclosely monitor these efforts. It should be noted that theGroup has made progress even under these challenging
business conditions, including achieving the world’s highest
level of efficiency at the Joetsu Thermal Power Station anddiversifying fundraising by issuing hybrid bonds.
The Company’s business environment remains harsh, but
this should not be seen as discouraging. We face numerous
challenges in various areas, including decarbonizing anddiversifying our revenue sources. While we may see a faintglimmer of light at the end of the tunnel in certain respects,
we will continue to move forward, step by step, as wetransform Tohoku Electric Power. I will continue to support theCompany as it tackles these challenges by doing my best to
share this awareness while deepening my understanding of
the Company through interactions with those in the field.

Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Data

INTEGRATEDREPORT 2023

Introduction

Corporate Governance

A Value Creation Story

Messages from outside Director/Audit and Supervisory Committee Members

Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively

Ikuko Miyahara

Kazuo Kobayashi

Akiko Ide

Director/Audit and Supervisory
Committee Member (Outside Director)

Director/Audit and Supervisory
Committee Member (Outside Director)

Director/Audit and Supervisory
Committee Member (Outside Director)

Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives

In FY2022, chaotic conditions continued in the global
economy, as Russia’s invasion of Ukraine entered its second
year. The Company focused on responding to volatility in fuelprices and stabilizing procurement. At the same time, the firstmajor compliance issue since the corporate split reminded usof the importance of sound business management andadministration. Examples of good news during the period
include rapid recovery at thermal power stations affected by
the earthquake off the Fukushima Prefecture coast in Marchof last year and the start of operation of a state-of-the-art
power source at the Joetsu Thermal Power Station in
December. The latter facility achieved the world’s highest
generating efficiency. In the Tohoku region, power failures anddamage to power stations and other infrastructure due tonatural disasters are growing from year to year. The time andcosts required for recovery have affected company revenues
and expenditures. We must be prepared to mitigate theeconomic burdens of the damage sustained by business
infrastructure in the future.
In the area of efforts to promote women in the workplace,
I believe awareness within the company is rising, thanks tointernal dialogue including Group companies and to training
sessions, among other efforts. The Company has many
young employees, both men and women, who take pride in
and are inspired by their work As an outside Director, I would
like to support the Company in exploring the best way to hire
and promote the next generation.

89

Tohoku Electric Power GroupIn FY2022, the Group’s revenues, expenditures, andfinances fell below even the levels observed right after the2011 Great East Japan Earthquake.
In addition to matters affecting the overall industry,including rising fuel and other prices, some of our thermal
power stations were severely damaged by an earthquake
centered off the Fukushima Prefecture coast. These and otherfactors led to what could truly be called the most challenging
business environment since the Company’s founding. Under
these conditions, the theme to be addressed by managementin FY2023 became perfectly clear: making steady progresson the Group’s Medium- to Long-Term Vision, Working
Alongside Next, based on the steady restoration of ourearnings and financial foundations. Structural management
reforms, including the operational resumption of nuclear
power stations with an emphasis on safety, continued growthin use of renewable energy, and efforts to improve
management efficiency to reduce burdens on customers, will
require enhancements of the underlying governance. The
incident involving the improper handling of information on PPA
customers and other data last year reminds us of the need toenhance governance Groupwide.
Such governance is based on the proper recognition ofrisks, appropriate decision-making processes, and a timely
plan-do-check-act (PDCA) cycle. Checking on these is an
important responsibility of the Board of Corporate Auditors.
FY2023 is a crucial time for the Group, and I intend to do mybest as an outside Director and member of the Board of
Corporate Auditors.

The Company revised electricity rates on high-voltage andspecial high-voltage power in November of last year andrevised its regulated retail rates and unregulated low-voltage
power rates in June of this year. It faces the pressing need torestore earnings and financial standing while enhancing
management foundations to achieve operational stability. I
believe it will be vital for the Company to control and remain
highly resilient to risks in the face of changing businessconditions, as it faces risks that may affect its business
operations, including the volatility of fuel and electricity market
prices, the growing frequency of natural disasters, and trends
in energy policies.
In response to the incident of improper handling by theCompany of information on PPA customers and other data,
we studied and formulated preventive measures based on athorough investigation and analysis of the factors leading to
the incident. Keeping in mind the fact that doing business incompliance with the conduct regulations under the Electricity
Business Act is an important precondition, as a member ofthe Board of Corporate Auditors, I wish to focus, reflecting theconditions encountered in the field, on steady progress withcountermeasures, both tangible and intangible. In this way wecan avoid loss of customer trust while maintaining a faircompetitive environment.
I intend to do all I can to help realize the Medium- to
Long-Term Vision, Working Alongside Next, through thePower Supply and Smart Society Building Businesses, as weovercome the challenges posed by the current businessenvironment.

Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Data

INTEGRATEDREPORT 2023

Introduction

Corporate Governance

A Value Creation Story

Enhancement of Group governance

Toward the Working Alongside Next Vision

The Board of Directors has established a basic policy on a structure to secure appropriate business operations and a structure to secure appropriate business operations at
subsidiaries and other Group companies, under which we’re striving to enhance governance at subsidiaries and other members of the Group.

Business administration structure
We’ve established Affiliate Business Rules and Affiliate BusinessStandards, and we demand prior consultations and reports fromsubsidiaries and affiliates concerning important matters, as well as
providing appropriate guidance and advice.
Alongside ensuring a thorough understanding of the Group’s
Medium- to Long-Term Vision “Working alongside next” throughmeans such as periodic corporate group management meetings,
we’re studying and implementing measures to improve efficiency andproductivity on a continual basis.

Corporate ethics and compliancestructure

Structure for management of risks oflossesWe have established the Tohoku Electric Power Group Liaison
Council on Corporate Ethics and Compliance Promotion to promote
corporate ethics and compliance smoothly and steadily and tostrengthen related activities throughout the Group, through means
such as sharing information, improving knowledge, and improving
skills through enhanced joint efforts among the Company and Group
companies.
Group companies formulate and implement codes of conduct
based on the Tohoku Electric Power Group Sustainability Policy and
the Tohoku Electric Power Group Code of Conduct.

In accordance with the Affiliate Business Rules and Affiliate
Business Standards, we demand prior consultations and reports fromsubsidiaries and affiliates concerning significant risks, as well as
provide appropriate guidance and advice.
We have also established the Risk Management Response Manualand the Tohoku Electric Power Group Emergency Communication
Rules, through which we have set up a structure for risk management
and emergency response.
Any legal violations or other such incidents identified at a Group
company in consultations with the Yori, Sou Hotline are duly reported
to the Board of Directors and the Committee of Corporate Ethics andCompliance, then appropriately addressed.

Tohoku Electric Power
TohokuElectricPower

Guidance andadvicePrior consultations
and reports

Subsidiaries,
etc.

Management meetings, etc.

Toward Realizing Carbon Neutrality

Information sharing, activity support,
guidance, advice, etc. for eachcompany based on promotion of theliaison council and other means

Subsidiaries, etc.
Formulating individual
codes of conduct

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities
Risk Management
Corporate Governance

Data

Concept of emergency response structure

Tohoku Electric Power

Implementing integrated groupwide activities

Risk Management Response Manual
Emergency Communication Rules

Fostering solidarity throughout the Group
Ensuring thorough understanding ofcorporate ethics and complianceGroup companies

Tohoku Electric Power Group

Enhancement of complianceTohoku Electric Power and Tohoku Electric Power Network have always pursued
business efforts with an understanding that compliance with business ethics, laws, andregulations is the fundamental basis of all business activities. As such, we established a
Committee of Corporate Ethics and Compliance chaired by the President and diligently
run through the PDCA cycle to ensure that our initiatives are adequate in light of social
needs and to make any improvements identified as necessary.
The Group formulated the Tohoku Electric Power Group Corporate Ethics andCompliance Activity Policy to establish basic courses of action for corporate ethics andcompliance activities. The Group is currently pursuing activities in which all Group
member companies comply with three priorities: eliminating all violations; acting in ways
acceptable to society; and autonomous activities at individual workplaces.
Under this policy, we are pursuing various initiatives, including training targeting
specific tiers of staff. Related efforts include Tohoku Electric Power Group Corporate
Ethics Month and groupwide employee surveys on corporate ethics and compliance.

An incident involving the improper handling of information on PPA customers andother data occurred at Tohoku Electric Power and Tohoku Electric Power Network. This
incident raised doubts about business operations premised on fair and equal competition
under the system of deregulated electricity sales and eroded the trust we have withcustomers and the community. We take this incident very seriously. We plan to enhance
corporate ethics and compliance activities based on the approach of paying attention,
discussing concerns, and making corrections to prevent similar future incidents.
In the future as well, we will continue efforts to ensure that each and every employee
implements thorough compliance in accordance with the Tohoku Electric Power Group
Code of Conduct, keeping firmly in mind at all times the need to do business in fair andappropriate ways, paying close attention to how our customers see us, to continue to be
worthy of the trust of customers in our community.
See Preventing the recurrence of a case involving the improper handling of information
on PPS customers P13
See90

Tohoku Electric Power Group

Compliance

Sustainability Report 2023

P73

INTEGRATEDREPORT 2023

Introduction

Corporate Governance

A Value Creation Story

Communication with shareholders and investors
To promote constructive dialogue with shareholders and investors, we provide
opportunities beyond the general meeting of shareholders whereby we strive to enhancedialogue through organic joint efforts with various sections, centered on the director in
charge of IR, to deepen understanding of our initiatives.
Dialogue and discussions with shareholders and investors represent a valuable
opportunity for the Company to gain various insights. In addition to feeding back such
insights to Company Directors and management, we also use the information gleaned toenhance tools for communications with shareholders and investors (i.e., various
explanatory materials and media).
We are firmly committed to strengthening corporate value through constructive
dialogue with shareholders and investors, and kindly ask for the continuing understanding
and support of our stakeholders with regard to these matters.

Audience

91

1

Appointment of a director in charge of IR, to coordinate dialogue with shareholders andinvestors overall

2

Organic coordination with individual sections through dynamically scheduled meetings inwhich Corporate Strategy Division as the section in charge of IR and related sections
participate, in addition to the director in charge of IR and other relevant directors

3

Holding events such as shareholder colloquia and briefings on financial results, toenhance dialogue other than individual meetings

4

Sharing information with executives and related internal parties on summaries of dialogue
with shareholders and investors and striving to put comments and requests received touse in Company management

5

Establishing Standards on Control of Insider Trading and asking executives, executive
officers, employees, and other parties to manage material facts thoroughly as well as
carrying out timely, fair, and appropriate disclosure in line with the Disclosure Policy of
information that could have a material impact on decisions by shareholders and investors

Tohoku Electric Power Group

Initiative

 olding briefings on financial results forH
analysts and institutional investors twice
annually (at the end of the second quarterand the fiscal year)
Analysts,
institutional
investors

Individual
shareholders,
individual
investors

Details of FY2022 activities

 riefings on financial results held forB
analysts and institutional investors
Small meetings

Holding individual meetings on ESG andstewardship and individual meetings withbond investors to grow ESG financeIndividual meetings held on ESG andstewardship

Timely feedback to the Management
Committee, IR Promotion Committee, andother bodies of views and requests frominvestors and the latest trends related to ESG
investment and disclosure

Individual meetings with bond investors(debt IR)

Efforts to enhance disclosure to improve ourevaluations in capital markets

Policy on constructive dialogue with shareholders
To contribute to sustained growth and medium- to long-term increases in corporate
value, we respond to various topics that interest and concern shareholders throughopportunities for dialogue, in addition to opportunities provided by the general meetingsof shareholders. Core members of management and directors strive to explain
management policies as clearly as possible, to ensure that shareholders understand ourefforts in light of our business environment.
We are also advancing the following initiatives as we continue to promote constructive
dialogue with shareholders.

Toward the Working Alongside Next Vision

Major IR activities

ESG briefings on the Integrated Report acility tours for analysts and institutionalF
investorsIndividual remote meetings with overseas
institutional investors

Toward Realizing Carbon Neutrality

Foundations for Sustained
GrowthEstablishing a Society that
Recycles Effectively
Conserving Biodiversity
Human Resource Strategy
Digital Transformation (DX) Strategy
Respect for Human Rights
Safety Initiatives
Enhancing Resilience
Contributing to Communities
Risk Management
Corporate GovernanceData olding online briefings to maintain andHsecure new individual shareholders

Company briefings for individual investors

Enhancing tools for communicating with shareholders and investors
In the first quarter of FY2023, to facilitate communications with shareholders and investors, we updated thematerials that present business results to reflect the opinions and other feedback received from shareholders andinvestors.
We are striving to enhance data and information deemed to be of interest to shareholders and investors in various
ways, including adding results from past fiscal years and forecasts for the current fiscal year that concern indicatorsof returns on capital.
We will continue to enhance these and other tools to facilitate communication with shareholders and investors.

INTEGRATEDREPORT 2023

Chapter

05
Data

Financial Information
Partnerships, External Evaluations, Etc.
SASB Standards Index
Corporate Information

Tohoku Electric Power GroupIntroduction

Financial Information

A Value Creation Story
Toward the Working Alongside Next Vision

Financial data for most recent 11 years (consolidated)

Toward Realizing Carbon Neutrality(billion yen)

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

1,792.6

2,038.8

2,182.0

2,095.5

1,949.5

2,071.3

2,244.3

2,246.3

2,286.8

2,104.4

3,007.2

Electric utility operating revenue

1,575.7

1,815.4

1,932.2

1,853.2

1,727.2

1,854.3

2,012.7

2,022.2

2,067.0

1,840.3

2,716.9

Other business operating revenue

216.9

223.4

249.7

242.3

222.3

216.9

231.6

224.1

219.7

264.1

290.2

1,848.5

1,953.2

2,012.3

1,905.8

1,819.1

1,963.7

2,160.6

2,130.0

2,198.8

2,133.1

3,187.2

Electric utility operating expenses

1,626.4

1,732.4

1,782.0

1,686.3

1,618.7

1,763.7

1,943.0

1,916.4

1,995.6

1,888.5

2,906.9

Other business operating expenses

222.1

220.7

230.2

219.4

200.4

199.9

217.6

213.5

203.2

244.6

280.3

(55.9)

85.6

169.7

189.7

130.4

107.6

83.6

116.3

87.9

(28.7)(180.0)Operating revenue*

Operating expenses
Businessresults

Operating income

Cash flow

Ordinary income(93.2)

39.0

116.6

152.6

104.7

88.4

65.7

99.9

67.5

(49.2)(199.2)

Net income attributable to owners of parent(103.6)

34.3

76.4

97.3

69.9

47.2

46.4

63.0

29.3

(108.3)(127.5)

Cash flows from operating activities

46.6

236.4

374.2

371.8

278.1

324.0

262.8

371.5

217.6

97.1

(93.7)Cash flows from investing activities(236.7)(247.5)(247.7)(250.5)(256.3)(273.9)(250.5)(310.6)(254.9)(322.1)(275.7)

Cash flows from financing activities

262.6

45.4

(211.2)(104.1)(55.9)(36.2)(69.3)

6.7

(5.7)

293.2

598.4

4,284.3

4,243.0

4,131.2

4,152.4

4,145.9

4,222.1

4,258.6

4,323.0

4,471.0

4,725.6

5,211.9

3,645.1

3,536.5

3,497.2

3,502.7

3,475.4

3,557.4

3,620.9

3,679.0

3,731.3

3,809.1

4,005.1

639.2

706.4

633.9

649.7

670.5

664.6

637.6

644.0

739.7

916.5

1,206.7

522.7

574.5

651.2

684.3

755.6

798.7

833.7

864.1

901.5

778.9

631.0

2,714.5

2,763.9

2,561.9

2,471.3

2,435.5

2,424.4

2,381.1

2,412.6

2,433.2

2,760.3

3,375.6

187.9

360.4

376.2

368.2

357.5

345.3

317.4

321.9

302.3

257.3

136.6

Total assets
Property, plant, and equipment

Financialstanding

Current assets

Net assets
Interest-bearing debt
Consolidated cash income

Main
indicators(FY)

Equity ratio (%)

11.3

12.6

14.6

15.2

16.8

17.3

17.9

18.3

18.5

14.8

10.5

Free cash flow

(152.8)

31.8

179.2

151.8

44.5

71.1

30.6

77.1

(22.6)(211.5)(352.5)Return on assets (ROA) (%)

(1.3)

2.0

4.1

4.6

3.1

2.6

2.0

2.7

2.0

(0.6)

(3.6)

Return on equity (ROE) (%)(19.4)

6.7

13.6

15.8

10.6

6.6

6.2

8.1

3.6

(14.2)(20.4)

1.2

1.8

3.7

4.4

3.0

2.5

1.9

2.6

2.0

(0.6)

(3.5)

-

7.3

9.8

12.8

25.0

42.3

43.0

31.7

68.0

-

-

Return on invested capital (ROIC) (%)
Payout ratio (%)
Per-share Dividend yield (%)
information Net earnings per share (EPS) (yen)

0.00

0.47

1.10

1.72

2.32

2.81

2.83

3.84

3.83

4.92

0.00

(207.97)68.78

153.35195.01140.10

94.61

93.12

126.32

58.81(216.84)(255.14)

Book value per share (BPS) (yen)969.97

1,073.45

1,206.38

1,261.40

1,392.24

1,463.42

1,526.66

1,584.30

1,654.46

1,399.90

1,097.95

Foundations for Sustained Growth

Data
Financial Information
Partnerships, External Evaluations,
Etc.
SASB Standards Index
Corporate Information* The Accounting Standard for Revenue Recognition has been applied since FY2021.

93

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Introduction

Partnerships, External Evaluations, Etc.

A Value Creation Story
Toward the Working Alongside Next Vision

Participation in initiatives
UN Global Compact signatory

Participation in Challenge Zero

Seeking to build a sound global society

Challenge Zero is an initiative

through joint efforts between the United

to communicate across the

Nations and the private sector (companies

world and support innovativeand other organizations), the UN Global

actions by companies andCompact is the world’s largest sustainability

other organizations to take on the challenge of realizing a

initiative. Signatory organizations are
required to conform to and put into practice 10 principles in
the four areas of human rights, labor, the environment, andSupport for the Challenge Initiatives for 30% of
Executives to be Women by 2030
The Challenge Initiatives for 30% of
Executives to be Women by 2030
program was launched by

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth

Data
Financial Information

Keidanren to accelerate efforts to promote diverse humanPartnerships, External
Evaluations, Etc.

carbon-neutral society, a long-term goal under the Paris

resources for inclusion and co-creation based on diverse

SASB Standards Index

Agreement, through joint efforts between Keidanren and theJapanese government.

values, the key to sustainable capitalism. The goal is toensure that 30% of executives will be women by 2030.

Support for the Keidanren Initiative for Biodiversity
Conservation

Participation in the GX League

Corporate Information

anti-corruption.

Participation in Plastics Smart
Plastics Smart is a campaign
launched by the Ministry of theWe participate in the GX League as we
continue to enhance promotion of efforts

Environment to promote joint

The Keidanren Initiative for Biodiversity
Conservation is an initiative launched byefforts and partnership among a

Keidanren and the Keidanren

accumulating knowledge and expertise

wide range of parties including individuals, NGOs,

Committee on Nature Conservation. By

on reducing CO2 emissions.

corporations, research institutes, and government agencies,

promoting the Keidanren Biodiversity

to resolve the issue of ocean plastic wastes.

Conservation Statement and Guidelines,

to achieve carbon neutrality by

it strives to promote further mainstream adoption of efforts topreserve biodiversity.

Partnerships with local governments
Joining the Akita SDGs Partnership(Tohoku Electric Power Akita Branch)Participation in the Fukushima SDGs Promotion Platform(Tohoku Electric Power Fukushima Branch)

The Akita SDGs Partnership program is an

The Fukushima SDGs Promotion Platform was established by

Akita Prefecture program whereby

Fukushima Prefecture to promote prefectural development bycompanies, other organizations, and local

creating opportunities for joint efforts and partnerships

governments who are making active efforts

among organizations in the prefecture within the framework ofto achieve the Sustainable Development

the SDGs. It had 332 members as of July 26, 2023, including

Goals (SDGs) through their business activities

municipalities, companies, associations, and nonprofits. It

and other efforts are recognized and publicly acknowledged.

carries out various activities from the perspectives ofTo help realize sustainable communities powered by public-

broadening efforts, connecting to each other, and learning.

private partnerships on SDG efforts, the program makes
visible the efforts of registered companies and othermembers.
94

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Introduction

Partnerships, External Evaluations, Etc.

A Value Creation Story
Toward the Working Alongside Next Vision

External evaluations on sustainability
CDP* evaluation

Kurumin certification

We proactively disclose

Under this certification program based on

environmental information by

the Act on Advancement of Measures to

responding continually to CDP

Support Raising Next-Generation

climate change and water security

Children, the Minister of Health, Labour

questionnaires. Our scores in 2022 were A- for climate

and Welfare certifies companies thatchange and B for water security.

actively support employees raising* An international NGO (formerly known as Carbon Disclosure Project) that promotes andassesses disclosure by companies and local governments on climate change and otherfieldschildren.

2023 Certified Health & Productivity Management
Outstanding Organizations Recognition Program

Eruboshi certification

We’ve been chosen to thethe Act on the Promotion of Female2023 Certified Health &Participation and Career Advancement in

Productivity Management
Outstanding Organizations

the Workplace, the Minister of Health,(Large Enterprise Category) Recognition Program by thethat carry out outstanding initiatives to

Ministry of Economy, Trade and Industry and the Nippon

promote women in the workplace.

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth

Data
Financial Information
Partnerships, External
Evaluations, Etc.
SASB Standards Index
Corporate Information

Under this certification program based on

Labour and Welfare certifies companies

Kenko Kaigi.

Inclusion in ESG indices95

FTSE Blossom Japan Sector Relative Index

Sompo Sustainability Index

This index developed by theThis index developed by Sompo Assetglobal index provider FTSE

Management Co., Ltd. includes about

Russell includes Japanese firms

300 issues chosen for their outstanding

with outstanding ESG

ESG initiatives, through a combination of(environmental, social, andannual ESG assessments and stock pricegovernance) initiatives in each industry.

assessments.

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Introduction

SASB Standards Index

A Value Creation Story

Summarized below are Tohoku Electric Power Group results related to the Electric
Utilities and Power Generators industry standard provided by the Sustainability
Accounting Standards Board (SASB) of the United States.

Disclosure topic

Accounting metrics

Category

Unit

Since the SASB standards were prepared primarily for use by US firms and in US
markets, they include accounting metrics that do not apply to the Group’s businessactivities. Nevertheless, we strive to disclose information to the fullest extent possible inline with the spirit of these standards.
Code

Performance

Environment

Greenhouse Gas
Emissions andEnergyResource
Planning

Air Quality

Water
Management

96

Toward Realizing Carbon Neutrality
Foundations for Sustained Growth

Data
Financial Information(1) Gross global Scope 1 emissions(2) Gross global Scope 1 emissions, percentage covered underemissions limiting regulations(3) Gross global Scope 1 emissions, percentage covered underemissions reporting regulations

Quantitative

Greenhouse gas (GHG) emissions associated with power delivery

Quantitative

Long-term and short-term strategy or plans to manage Scope 1
emissions, emissions reduction targets, and analysis of performanceagainst these targets(1) Number of customers served in markets subject to renewable
portfolio standards (RPS)(2) Percentage fulfillment of RPS target by market
Atmospheric emissions of the following pollutants:(1) NOx (excluding N2O)(2) SOx(3) Particulate matter (PM10)(4) Lead (Pb)
(5) Mercury (Hg)
Percentage of each in or near densely populated areas(1) Total water withdrawn (2) Total water consumed
Percentage of each in regions with High or Extremely High Baseline
Water Stress
Number of incidents of noncompliance associated with water quantity
and/or quality permits, standards, and regulations
Water management risks and strategies and measures to mitigate suchrisks

Coal AshManagement

Toward the Working Alongside Next Vision

t-CO 2andAnalysis

Quantitative

Quantitative

IF-EU110a.2(1) 31,069,000 t-CO2(2) 0% (because Japan lacks regulated markets)(3) 100%

IF-EU110a.3

Number,
Percentage(%)

IF-EU110a.4

The RPS system was abolished in Japan in 2012 when the nation migrated to a FIT program.
We purchase electricity generated from renewables under the FIT program.

IF-EU120a.1

SASB Standards Index
Corporate Information

30,330,000 t-CO2 (31,470,000 t-CO2)—t·%Partnerships, External Evaluations,
Etc.

* Figure in parentheses represents base CO2 emissions not reflecting adjustments, etc. under the feed-in tariff (FIT) program for renewables.

In March 2021, in the Tohoku Electric Power Group Carbon Neutral Challenge 2050, we summarized our long-term course ofaction to achieve carbon neutrality by 2050.
We have also set a CO2 emissions target of halving CO2 emissions by FY2030 vs. actual FY2013 levels.
Under the Tohoku Electric Power Group Carbon Neutral Challenge 2050, the Group will accelerate CO2 emissions reductions
primarily by maximizing use of renewable energy and nuclear power and development of smart society building business, inaddition to decarbonizing thermal power sources.
Specifically, we will seek to swiftly achieve and expand 2,000 MW in renewable power generating capacity, based primarily onwind power, to make effective use of the wealth of renewable energy sources in the six Tohoku prefectures and Niigata Prefecture.
We will also enhance the power network and make progress in aspects such as the use of storage cells and hydrogen in
preparation for growing use of renewables.
We will strive to advance energy management and put distributed energy to effective use in the region, by developing smart
society building business, including providing VPP services.
Our Scope 1 emissions were 30.6 million t-CO2 in FY2019, 31.1 million t-CO2 in FY2020, and 32.8 million t-CO2 in FY2021. We
plan to maintain this course through the above measures to achieve these goals.

Discussion(1) 13,994 t, 100%(2) 7,285 t, 100%(3) Not disclosed(4) Not disclosed(5) Not disclosed* A lthough particulate matter, lead, and mercury are treated as part of the normal flow of powerplant operations, figures for these pollutants
are undisclosed because their atmospheric emissions are not analyzed.

Quantitative

1000m3·%

IF-EU140a.1(1) 10,580,000 m³, 0%(2) 330,000 m³, 0%

Quantitative

Number

IF-EU140a.2

0—IF-EU140a.3

In use of river water and other water sources, we strive to manage water resources in various ways, including compliance withwater intake volumes permitted under laws and regulations.
Measures to confirm water stress in the Tohoku and Niigata region using the WRI Aqueduct Water Risk Atlas tool to identify
water risks resulted in a “low-medium” assessment at maximum. As such, the expected frequency of water-related risks,
including drought, is low.

t·%

IF-EU150a.1

894,000 t, 84.8%

Number

IF-EU150a.2

Five sites

Discussion
andAnalysisAmount of coal combustion residuals (CCR) generated, percentage
Quantitative
recycled
Total number of coal combustion residual (CCR) impoundments broken
down by (EPA) hazard potential classification and structural integrity Quantitative
assessment

Tohoku Electric Power Groupt-CO 2·%

IF-EU110a.1

INTEGRATEDREPORT 2023

Introduction

SASB Standards Index

A Value Creation Story

Disclosure topic

Accounting metrics

Category

Unit

Code

Performance

Social capital

Toward Realizing Carbon Neutrality
Average retail electric rate (per kWh) for:(1) residential(2) commercial(3) industrial customers
Typical monthly electric bill for residential customers for(1) 500 kWh(2) 1,000 kWh of electricity delivered per month

EnergyAffordability

Toward the Working Alongside Next Vision

Number of residential customer electric disconnections for
nonpayment
Percentage reconnected within 30 days

Quantitative

Quantitative

Quantitative

Yen

IF-EU240a.1(1) Residential: 25.81 yen(2) Commercial: 27.33 yen(3) Industrial: 25.42 yen

Yen

IF-EU240a.2(1) 500 kWh: 12,865 yen(2) 1,000 kWh: 26,720 yen

IF-EU240a.3(1) Number of residential customer electric disconnections for nonpayment
a. Disconnections under specific retail supply agreements:
FY2022: 156,580
b. Cancellations of demand and supply contracts based on low voltage electricity standard agreements:
FY2022: 11,162

Number,
Percentage(%)

Foundations for Sustained Growth

Data
Financial Information
Partnerships, External Evaluations,
Etc.
SASB Standards Index
Corporate Information(2) Percentage reconnected within 30 days
N/A

and
Analysis—

IF-EU240a.4

Japan’s Electricity Business Act stipulates the following: “A General Electricity Utility shall not refuse to provide powertransmission in its service area without due cause.” In general, if an application is submitted for the supply of electricity in the
Tohoku Electric Power Network service area, electricity is supplied to the subject location. We believe consumers should haveequal opportunity to access affordable energy services. It is our understanding our service area lacks any areas not served byelectricity. Factors affecting electricity rates include levies assessed by government policy to encourage use of renewables andamounts of fuel-cost adjustments on thermal power.

Quantitative%

IF-EU320a.1(1) 0.06% (employees of Tohoku Electric Power and Tohoku Electric Power Network)(2) 0 (employees of Tohoku Electric Power and Tohoku Electric Power Network)(3) Not disclosed (not disclosed because we have no calculation made on a groupwide basis)

Percentage of electric utility revenues from rate structures that (1) aredecoupled and (2) contain a lost revenue adjustment mechanism(LRAM)

Quantitative%

IF-EU420a.1

Percentage of electric load served by smart grid technology

Quantitative%

IF-EU420a.2

Penetration of smart meters at end of FY2022: 90.6%

IF-EU420a.3

We propose solutions to the various challenges facing our customers, centered on energy. Specific examples include joint
development with the manufacturer of Heat Edge air chillers, which offer improved capacity during times of harsh cold andimproved energy conservation performance; provision of exEMS services with demand control functions that visualize
electricity usage; and home solar power services supplied through one-stop services from adoption through maintenance,with no need for initial investment. Other activities include the development of equipment and services intended to help
conserve energy and reduce CO2 emissions.
We have also launched an Energy Conservation Challenge Campaign intended to lower customer utility costs and improve
electricity supply and demand. Numerous customers are current participants.
We disclose the following quantitative data in place of customer electricity savings:
 Number of energy solutions proposed (FY2022): 749
 Number of views of the Shou-ene Life service providing information on energy conservation (FY2022): 335,849 viewers• https://www.tohoku-epco.co.jp/dprivate/sl-denka/saving/• https://www.tohoku-epco.co.jp/energy_saving_cp/2022winter/power_saving/ Number of entries to the Energy Conservation Challenge Campaign (FY2022): 615,000 for low-voltage, 35,000 for highvoltage/special high-voltage

Discussion of the impact of external factors on affordability ofelectricity, including economic conditions within the territory served

Discussion

Human capital
EmployeeOccupational
Safety and
Health(1) Total recordable incident rate (TRIR: incidents/200,000 hours
worked)(2) Fatality rate (incidents)(3) Near-miss frequency rate (NMFR: incidents/200,000 hours worked)

Business-model innovation

End-Use
Efficiency and
DemandCustomer electricity savings from efficiency measures in each market

97

Tohoku Electric Power Group

Quantitative

MWh

Not applicable (since there are no subject customers in Japan)* To make up for lost revenue from progress in energy conservation, we aim to increase revenues through means such as provision of various
services to meet customer needs.

INTEGRATEDREPORT 2023

Introduction

SASB Standards Index

A Value Creation Story

Disclosure topic

Accounting metrics

Category

Unit

Code

Quantitative

Number

IF-EU540a.1

Performance

Leadership, governanceTotal number of nuclear power units, broken down by US Nuclear
Regulatory Commission (NRC) Action Matrix Column

Toward the Working Alongside Next Vision
Toward Realizing Carbon Neutrality

4 units (breakdown: 3 units at the Onagawa Nuclear Power Station*, 1 unit at the Higashidori Nuclear Power Station)* Unit No. 1 at the Onagawa Nuclear Power Station is in the process of decommissioning and is currently not operational.

Foundations for Sustained Growth

Quality policies for nuclear safety (excerpt)

Nuclear Safety
and Emergency
Management

Description of efforts to manage nuclear safety and emergency
preparedness

We have a duty to enhance nuclear safety and reduce risks based on the keen safety awareness inherited from ourpredecessors and the many lessons gained from the Great East Japan Earthquake and other disasters.
For this objective, each employee has resolved to gain the understanding and trust of society by demonstrating a strong senseof responsibility, contributing to the safety culture, and continually conducting PDCA activities, based on the formulated
policies set forth below.

Discussion
andAnalysis—

IF-EU540a.2

Data
Financial Information
Partnerships, External Evaluations,
Etc.
SASB Standards Index
Corporate Information

1. Put safety first at all times.
2. Comply with laws, regulations, and rules.
3. Establish a habit of constant review.
4. Enhance information sharing.
5. Take a proactive approach to improvements.
See the following link for more on our quality policies for nuclear safety:
https://www.tohoku-epco.co.jp/electr/genshi/safety/quality/index.html

Grid Resiliency

Number of incidents of noncompliance with physical and/or
cybersecurity standards or regulations

Quantitative

Number

IF-EU550a.1

Physical risk incidents: 0
Cybersecurity incidents: not disclosed (in light of risks posed by such disclosure)(1) System Average Interruption Duration Index (SAIDI) including major
event days
(2) System Average Interruption Frequency Index (SAIFI) including
major event days
(3) Customer Average Interruption Duration Index (CAIDI) including
major event days

Quantitative

Minutes,Number

IF-EU550a.2(1) 127 minutes (including interruptions for work purposes)(2) 0.13 times (including interruptions for work purposes)(3) 206 minutes (including interruptions for work purposes)

Category

Unit

Code

Activity Metrics
Number of: (1) residential, (2) commercial, and (3) industrial customers served

Quantitative

Number

IF-EU000.A

Total electricity delivered to: (1) residential customers, (2) commercial customers, (3)industrial customers, (4) all other retail customers, and (5) wholesale customers

Quantitative

MWh

IF-EU000.B

Length of transmission and distribution lines

Quantitativekm

IF-EU000.C

Performance
Left undisclosed (for reasons involving competition under deregulation of the electricity business)
Retail:Lighting: 19,959,000 MWh
Power: 45,982,000 MWh
Wholesale: 15,885,000 MWh

Transmission lines (circuit length)

98

Distribution lines (route length)

Aerial: 24,426 km
Underground: 820 km
Aerial: 145,665 km
Underground: 3,852 km

Total electricity generated, percentage by major energy source, percentage in regulated
markets

Quantitative

MWh, %

IF-EU000.D

Total electricity generated: 57,933,659 MWh (volume at transmission destination)
Incudes: 13.8% from hydroelectric power
85.2% from thermal power
None from nuclear power
1.0% from renewables
Percentage in regulated markets: Not applicable (because Japan lacks regulated markets)

Total wholesale electricity purchased

Quantitative

MWh

IF-EU000.E

Left undisclosed for reasons involving competition

Tohoku Electric Power GroupINTEGRATEDREPORT 2023

Introduction

Corporate Information

A Value Creation Story
Toward the Working Alongside Next Vision

Business Overview

Total Number of Shares (as of the end of March 2023)

Company Name

Ordinary income (for FY2022)

Total Number of Issuable Shares

1,000,000,000 shares

Tohoku Electric Power Co., Inc.

-220.8 billion yen (consolidated: -199.2 billion yen)

Total Number of Issued Shares

502,882,585 shares

Toward Realizing Carbon Neutrality

Head Office
1-7-1 Honcho, Aoba-ku, Sendai, Miyagi
980-8550, Japan

Date establishedMay 1, 1951

Representatives (as of the end of March 2023)
Jiro Masuko, R epresentative Director & Chairman of
the Board

Financial Information

Major Shareholders (as of the end of March 2023)

Partnerships, External Evaluations,
Etc.
SASB Standards Index

Name

Number ofshares owned(thousand)Ratio of shares owned
to the total number ofissued shares (%)
14.01

Number of Shareholders (as of the end of March 2023)

The Master Trust Bank of Japan, Ltd. (trust account)

70,157

185,988

Custody Bank of Japan, Ltd. (trust account)

28,109

5.61

Tohoku Electric Power Employee Shareholding Association

17,824

3.56

CapitalService Areas

Nippon Life Insurance Company

13,727

2.74

10,2382.04

251.4 billion yen

Aomori Prefecture, Iwate Prefecture, Akita Prefecture,
Miyagi Prefecture, Yamagata Prefecture, Fukushima

Mizuho Bank, Ltd.
The 77 Bank, Ltd.

6,468

1.29

JP MORGAN CHASE BANK 385781

6,233

1.24

STATE STREET BANK WEST CLIENT - TREATY 505234

5,356

1.07

City of Sendai

5,196

1.04

Total Assets (as of the end of March 2022)
4,381 billion yen (consolidated: 5,211.9 billion yen)

Number of Employees (as of the end of March 2023)
4,901 (consolidated: 24,528)

Operating revenue (for FY2022)
2,301.5 billion yen (consolidated: 3,007.2 billion yen)

* Due to rounding, the sum of individual figures may not equal the
total.

99

Data

Kojiro Higuchi, Representative Director & President

Prefecture, Niigata Prefecture and other areas

Tohoku Electric Power Group

Foundations for Sustained Growth

SSBTC CLIENT OMNIBUS ACCOUNT

5,066

1.01

Total

168,374

33.61

Corporate Information

Electricity Sales (for FY2022)
Lighting: 19,959 GWh
Power: 45,982 GWh
Retail total: 65,940 GWh

Distribution of Shares by Type of Shareholders (as of the end of March 2023)

Wholesale: 15,885 GWh
Total: 81,825 GWh

National and local governments

20,356,894 shares
4.0%
Private and other investors

Financial institutions

216,810,867 shares
43.1%

152,573,987 shares
30.3%

Foreigners

Other corporations

84,386,570 shares
16.8%

28,754,267 shares
5.7%

INTEGRATEDREPORT 2023

Introduction

Corporate Information

A Value Creation Story

Tohoku Electric Power Group facilities*(as of March 31, 2023)

Shimokita

Tohoku Electric Power Co.,Inc.

Higashidori
Nuclear* Facilities operated by Tohoku Electric Power and Tohoku Electric Power Network

Thermal, geothermal or nuclear power station
Kamikita

Major thermal or nuclear power station operated by other companies
Kita-Tsugaru

203

2,450 MW

226

2,570 MWThermal911,170 MW

14

11,940 MW

Geothermal

4

139 MW

5162 MW

Data

Solar

4

4.8 MW

13

17 MW

Financial Information

Wind

—

—

1

14 MW

Nuclear2

2,750 MW22,750 MW

Total

222

16,510 MW——

Power Stations

Aomori

Major substation operated by other companies

Hachinohe Thermal

AC/DC conversion station operated by other companies

GonoheMajor switching station
Transmission line (500 kV)

Tohoku Electric Power Network

NoshiroTransmission line (275 kV)
Major transmission line among the 154 kV lines

Akita

Sumikawa
Geothermal

Kakkonda
Geothermal

Transmission
Facilities

Iwate

Shizukuishi

Akita

Transmission line (275 kV or more) operated by other companies ThermalFoundations for Sustained GrowthPartnerships, External Evaluations,
Etc.
SASB Standards Index
Corporate Information

NoshiroThermalMajor switching station operated by other companies

Toward Realizing Carbon Neutrality

Tohoku Electric Power Group(major facilities)

Hydraulic
Major hydraulic power station (60 MW or more)

Major substation

Toward the Working Alongside Next Vision

Facility Overview

MiyakoPrefectural border

Substation
Facilities

Route distance

15,506 km

Circuit length

25,246 km

Supports

58,604

Number of
facilities

636

Tohoku Electric Power Network
Route distance

149,517 km

Power
Extended wire
Distribution
distance
Facilities

592,950 km
3,168,564

Supports

Higashi Hanamaki

Annual power generation capacity*

Uenotai
Geothermal

Hydroelectric

Ugo

Tobishima
ThermalMizusawa

Ofunato

Coal

Gas

Oil

NuclearHydroelectric

New energy, etc.

FIT

(10 MW)

RyotsuThermalAikawaThermalNiigata
Thermal

Sado

Shin-Sendai Thermal
Higashi-Sendai

Chuetsu

Honna

Uwada

Honna
Joetsu Thermal
MinamiUonuma
Ishizone

Tohoku Electric Power Group

1,500

Miyashita

Fukushima
YanaizuNishiyama
Geothermal

297

297

139

69

685

HigashiFukushima

Haramachi Thermal

2,599

2,540

527

520

481

297
60

297

297

60

60

75

7
2

12
7
1

Renewables

Other

685

721

732

709

647

694

624

625

37

8

7

4

7

8

8

7
1

7
2

34
32

50

30

8

17
9
6
2

26

25
500

587

37

39

34
34
27

Minami-Soma
366

372

366

0

2018
Izumizaki

787

9

ShinchiSukagawa

Numazawa
No. 2Oil, etc.

1,000

Yonezawa
Yanaizu

2,666

2,000

NatoriEchigo Toyomi

2,694
620

Sendai Thermal

Okitama

Niigata
KariwaOnagawa Nuclear

SendaiKita-Niigata

Nakaniigata

100

Ishinomaki

Nishi-Sendai

Nishi-Yamagata

Higashi-Niigata
Thermal2,500

Miyagi-Chuo

Hondoji

1

2,857

YakuwaGas

100

ShinjoMiyagi

Coal

Wholesale power exchanges

(%)

3,000

Awashima
ThermalAnnual shares of power sources*

Iwaki

2019

2020

365

2021

368

2022

0
(FY)

* Totals for individual figures and total figures may not agree due torounding. New energy, etc. refers to facility capacity on existing
networks, including wind power, solar power biomass power,
waste power, and geothermal power. The power transmission
business is excluded from FY2020 due to a spin-off.

6

6

6

6

5

2018

2019

2020

2021

2022

(FY)
* Includes transmission to and from other areas and powerreceived from other companies. Totals may not add up to 100 due
to rounding.

INTEGRATEDREPORT 2023

101
Morioka Eki Nishiguchi District
Heating & Cooling Center

Tohoku Electric Power Group
Planning & Administration
Division

Branch Offices

Sales Company
Customer
Services
Offices

Aizu
Wakamatsu
Regional
OfficeGeothermal Power Station

Service Center

Power Station (Diesel)** Sado only

Tokyo OfficeLand Affairs Center

Branch Office

Regional Load Dispatching
CenterNetwork Service Department

Service Application –Installation Liaison CenterTransmission Line
Construction Office

Board of Directors

Management
Committee
Audit and Supervisory
Board Member

Audit and Supervisory
Committee

Office of Audit andSupervisory Board Member

General Education andTraining CenterTransmission Line andSubstation Construction Center

Distribution Engineering
Department
Distribution Access Center

President

Wheeling Service Center

Power System Engineering
Department

Land Affairs Department
Central Load
Dispatching Center
Power System AccessCenterContract Center of Transferring
Distribution Line

Information Systems andCommunications Department

Office of Audit and Supervisory
Committee

Power Plant Siting OfficeTelecommunications
Engineering Center

Civil and ArchitecturalEngineering Department

General Affairs Department

Corporate Planning
Department

Office of Safety and Quality
Management

Office of Internal Audit

Research and Development
CenterBoard of Directors

Supervisory Control Center

Gas Business Department
Sales Strategy Department

Tohoku Electric Power Co., Inc.

Power Network Center

Communications
Construction Center
Central Information andCommunication Station

Customer Center

Business Customer Solutions
and Marketing Department
Living Solutions and Marketing
Department

Renewable Energy
Company

Business Customer
CenterOffice of Corporate PPAManagement
Committee

Power Engineering Center

Hydropower Department

Hydropower Operations
CenterGeothermal Engineering
CenterWind and Geothermal Power
Department

Renewable Energy Planningand Development Department

Thermal Power Department

Power Generation
Company

Power Plant Construction
Office (Thermal Power)

Thermal Power Station

Nuclear Power
Division

Fuels Department

Business Strategy Department

Nuclear Power Department

Office of Nuclear Power
Quality Assurance

Executive Officers

Noshiro Energium Park

Energy Supply and Demand
Operation Center
Representative Office Registered in
Singapore
Thermal Power TechnicalTraining CenterTokyo BranchInformation Systems andCommunications Department

Accounting and Finance
Department
Materials and Procurement
Department

General Affairs Department

Human Capital Department

Office of Internal Services
Planning

Plant Sitting Department

Civil and ArchitecturalEngineering Department

Public Relations Division

Business Creation DivisionCorporate Strategy Division

Office of Nuclear PowerInternal Audit
Office of Safety and Security
Management

Internal Services Division

Nuclear Power Stations

Electronic Communication
Engineering Center

Office of Legal andShareholders Affairs
General Affairs Support
Center
Accounting and FinanceCenterOffice of Secretaries
Office of Internal Audits

Corporate Information
Introduction

A Value Creation Story

Organization chart
Toward the Working Alongside Next Vision(as of April 1, 2023)
Toward Realizing Carbon Neutrality

Tohoku Electric Power Network Co., Inc.
Foundations for Sustained Growth

Data
Financial Information

Partnerships, External Evaluations,
Etc.

SASB Standards Index

Corporate Information

Sales Company

INTEGRATEDREPORT 2023

Introduction

Corporate Information

A Value Creation Story

Members of the Tohoku Electric Power Group

Toward the Working Alongside Next Vision(As of July 1, 2023)

Seeking to realize the ideal form for the 2030s, the 77 companies that make up the Tohoku Electric Power Groupwill work as a united team to demonstrate their collective strengths.

Toward Realizing Carbon Neutrality

A group of companies growing in step with sustained societal progressby helping to establish a smart society for a new age, starting in Tohoku

Foundations for Sustained Growth

Data
Financial Information
Partnerships, External Evaluations,
Etc.
SASB Standards Index
Corporate Information

Tohoku Electric Power Co., Inc.
Power generation
Joban Joint Power Co., Ltd.
Tohoku Sustainable & Renewable
Energy Co., Inc.
Arakawa Hydro-Electric Power Co.,Ltd.
Sakata Kyodo Power Company
Ltd.
Soma Kyodo Power Company, Ltd.

Aqua Power Tohoku Co., Ltd.
Yur Solar (Tomiya/Hobara/Zao)
Co., Ltd.
Fukushima Electric Power
Corporation
Chokai Minami Biomass Power
Co., Ltd.
15 other companies

Tohoku Electric Power Network Co., Inc.
Construction and maintenance of facilities related to the electric power businessYurtec Corporation
Tohoku Electric Power Engineering &Construction Co., Inc.
Tohoku development consultant CO.,LTD
Higashi Nihon Techno Survey
Corporation
YUTOS Corporation
YURTEC SERVICE Corporation

TECS FUKUSHIMA Corporation
YURTEC MIYAGI SERVICE
Corporation
YURTEC HAIDEN TECHNO
Corporation
YURTEC KANTO SERVICE
Corporation
Air Conditioning Enterprise Co., Ltd
Tohatsu Hydro Engineering Co., Inc.

Tohoku Port Service Co., Inc.
Tohoku Air Service, Inc.
Tohoku Electric Power Renewable
Energy Services Co., Inc.
Tohoku Power Transmission andDistribution Service Co., Inc.
1 other company

Overseas businesses
Tohoku Power Investment Company B.V.
Kyushu Tohoku Enrichment Investing SAS
Yurtec Vietnam Co., Ltd.
Merit Power Holdings
Sigma Engineering JSC

Manufacture of equipment related to the electric power business
Kitanihon Electric Cable Co., Ltd.
Tsuken Electric Ind Co., Ltd.

TDRI G.K.

Information and telecommunications
Toinx Co., Ltd.
TOHKnet Co., Inc.

102

Tohoku Ryokka Kankyohozen Co., Ltd.

GREENRECYCLE Corporation

Noshiro Yoshino Gypsum Co., Ltd.

Retail electricity
Tokyu Power Supply Co., Ltd.

Tohoku EPCO Frontier Co., Ltd.

Gas and energy solutions

Life and business support

Nihonkai LNG Co., Ltd.
Tohoku Natural Gas Co., Inc.
Tohoku Energy Service Co., Inc.
Tohoku EPCO Solar e Charge Co., Inc.

HNK Co., Inc.
TDG Business Support Corporation
Aquaclara Tohoku Corporation
Tohoku-Electric Power Friendly
Eltas Tohoku Inc.
Partners Co., Inc.
Tohoku Electric Power Transcosmos Management Partner Co., Inc.

Tohoku Electric Power GroupKitanihon Densen Service Co., Ltd.

Environmental preservation and recycling

Investment and trading
Tohoku EPCO Energy Trading Co., Inc.

Tohoku Electric Manufacturing Co., Ltd.
Tohoku Electric Meter Industry Co., Inc.

E life Partners Co., Ltd.
Tohcs Corporation
New Lease Corporation

INTEGRATEDREPORT 2023

Corporate Strategy Division
Tohoku Electric Power Co., Inc.
1-7-1 Honcho, Aoba-ku, Sendai, Miyagi 980-8550, Japan

https://www.tohoku-epco.co.jp/