Chubu Electric Power Company,Incorporated

Market prices for LNG, coal, crude oil, wholesale electricity, and other commodities, as well as foreign exchange rate fluctuations, pose a risk of significant volatility in power source procurement costs. If geopolitical risks such as conflicts in the Middle East and Europe or conditions in Asia, weather fluctuations, and equipment troubles at suppliers overlap, supply-demand conditions and market prices could change abruptly, potentially affecting financial position and business results. As countermeasures, the Group is diversifying suppliers, extending contract terms, hedging through electricity futures trading, and reviewing extra-high-voltage/high-voltage standard rate menus effective April 2026.

Following the improper practice regarding the formulation of design basis ground motion disclosed in January 2026, both the conformity review for the new regulatory standards for Units 3 and 4 of Hamaoka Nuclear Power Station and the preparation for the review application for Unit 5 have been suspended. With all units currently offline, the Group has been forced to rely on substitute thermal power sources, and a significant increase in power source procurement costs is expected to affect financial position, business results, and cash flows. The Group has established the "Review Committee for Structural Reconstruction," chaired by the President, to work on transforming awareness, behavior, organization, and rules.

It came to light that there were long-unsettled matters with business partners regarding safety improvement construction work at Hamaoka Nuclear Power Station, as well as a case in which an executive in the nuclear power division failed to report to the Board of Directors for an extended period. In addition, an improper practice in the evaluation of ground motion during the conformity review for new regulatory standards occurred, heightening the risk of loss of social trust and impact on financial position. The Group is fully cooperating with the investigation by an investigation committee composed solely of external experts, and is promoting recurrence prevention measures including a review of procurement rules, strengthening of management systems, and enhanced monitoring.

If a large-scale natural disaster such as a Nankai Trough earthquake, massive typhoon, or abnormal weather occurs, supply disruptions and equipment damage could affect financial position, business results, and cash flows. A reassessment based on the new damage projections published by the government in March 2025 confirmed that no additional equipment measures are necessary, but the Group will continue to review its BCP based on the latest findings going forward. Resilience-enhancing measures are being implemented, including strengthening equipment recovery systems based on lessons learned from typhoon disasters, accelerating the elimination of utility poles, and strengthening cooperation with local governments.

Failure to adequately respond to changes in decarbonization-related systems, such as carbon pricing systems (fossil fuel levies, emissions trading systems, etc.), and changes in the business environment could affect financial position and business results. As a result of a reassessment of the feasibility of the offshore wind power business that Seatec Inc. had been developing in three sea areas, the Group decided to discontinue development and recorded a loss in the current consolidated fiscal year, with the possibility of additional losses arising in the future. Under the goal of reducing CO2 emissions derived from electricity sales by 50% or more by 2030 compared to FY2013 levels, the Group is promoting the expansion of renewable energy, utilization of nuclear power, and the establishment of a hydrogen and ammonia supply chain.

If a cyberattack or information leak occurs against energy supply facilities, which constitute critical infrastructure, it could affect financial position and business results through power supply disruptions, leaks of sensitive information, and loss of social trust. The Group is implementing protective measures for critical facilities in accordance with relevant laws such as the Economic Security Promotion Act and the Act on Enhancement of Cyber Response Capabilities, and continues to share and analyze information with other operators and related organizations through the Electricity ISAC. In preparation for the increasing sophistication of cyberattacks, the Group continuously implements measures such as strengthening cooperation with the government, identifying and resolving IT system vulnerabilities, and reinforcing operational rules.

Since 91.4% of interest-bearing debt outstanding consists of long-term fixed-rate funds from corporate bonds and long-term borrowings, the short-term impact is limited; however, an impact from rising interest rates is expected for newly raised funds going forward. If increases in prices and wages continue, rising procurement costs and personnel expenses could affect financial position, business results, and cash flows. The Group aims to minimize the impact through continued efficiency improvements and timely and appropriate fundraising.

Failure to adequately respond to intensifying competition in electricity retail, the transformation of the energy supply-demand structure accompanying the progress of GX and DX, and changes in industrial structure could affect financial position and business results. Chubu Electric Power Mirise Co., Ltd. is working to create new value by providing services beyond electricity and gas, while JERA Co., Inc. is working to secure competitiveness through replacement with state-of-the-art thermal power equipment and agile fuel procurement. The Group is continuously promoting optimization of its power source procurement portfolio and sophistication of market risk management.

If exports of automobiles and other goods decline due to trade policies aimed at protecting domestic industries, such as U.S. tariff policy, this could have a certain impact on electricity demand in the Chubu area, where the automobile-related industry is concentrated. If the decline in electricity demand continues, it could affect financial position, business results, and cash flows. Even in a phase of declining demand, the Group intends to work to curb the deterioration of its financial results by reducing power source procurement costs by capturing fluctuations in market and fuel prices.

The nuclear back-end business, which involves extremely long-term processes such as reprocessing of spent fuel, disposal of radioactive waste, and decommissioning of nuclear power facilities, carries the risk of cost fluctuations due to changes in estimated future costs, system revisions, and the operational status of reprocessing facilities. While uncertainty has been reduced to a certain extent by government institutional measures such as the fund-securing and management framework provided by the Nuclear Reprocessing Organization of Japan (NuRO) for spent fuel reprocessing and decommissioning promotion, cost fluctuations both within and outside the system could affect financial position, business results, and cash flows. Regarding human capital, securing personnel and acquiring advanced skills with a view to the future are recognized as important challenges, and the Group is also working on the practice of respect for human rights, including human rights due diligence.