The Kansai Electric Power Company, Incorporated

The Group has a higher proportion of nuclear power generation compared to other electric power companies, and if plant outages become prolonged due to securing compliance with new regulatory standards or lawsuits seeking injunctions against nuclear operations, business performance could be significantly affected. Based on FY2025 results, a 1% deterioration in the nuclear capacity utilization rate would increase costs by approximately ¥4.6 billion. Since all seven units are concentrated in Fukui Prefecture, there is also a risk of simultaneous multi-unit outages due to localized disasters, as well as risks of increased costs for spent fuel storage management and back-end operations. In response, the Group is promoting efforts to secure compliance with new regulatory standards, assert and substantiate safety in litigation, and advance initiatives based on the spent fuel countermeasure roadmap.

The Group recognizes transition risks such as increased power generation costs due to the introduction and strengthening of CO2 emission regulations, decreased electricity sales volume due to accelerated technological innovation in distributed power sources, and reduced competitiveness and higher funding costs due to delays in decarbonization initiatives. In addition, physical damage to facilities from intensifying abnormal weather events such as typhoons and heavy rains (acute risk) and declines in hydroelectric power generation utilization rates due to reduced precipitation (chronic risk) may also affect business performance. In response, the Group is promoting maximum introduction of renewable energy, maximum utilization of nuclear power, and zero-carbonization of thermal power based on the "Zero Carbon Vision 2050" and the "Zero Carbon Roadmap."

Changes in competition policy accompanying electricity system reform, reviews of various market systems such as the capacity market and long-term decarbonization power source auctions, and the strengthening of carbon pricing introduction such as GX-ETS and paid auctions may result in fluctuations in earnings or additional cost burdens. Business performance may also be affected if the 7th Strategic Energy Plan undergoes a major transformation. In response, the Group continues to gather information on national policy and regulatory trends, asserts the Group's views through deliberative councils and other channels, and works to improve the predictability of investment recovery.

Amid the ongoing shift toward distributed energy systems driven by growing needs for renewable energy-derived electricity and battery storage utilization, if the Group's initiatives lag behind other operators, this could lead to a decline in customers and electricity sales volume. In addition, retail electricity sales volume and prices may fluctuate due to weather, economic conditions, progress in energy conservation, and competitive conditions, and there is a risk that fuel price increases cannot be reflected in rates when the fuel cost adjustment system's upper limit is exceeded. In response, the Group is working to strengthen competitiveness through proposals for utilizing distributed energy, development and provision of AI-based energy management systems, and building a diverse procurement portfolio.

As of the end of March 2026, the balance of interest-bearing debt (consolidated) stood at ¥4,266,618 million (equivalent to 43.3% of total assets), and since a portion of long-term funding is procured at variable interest rates, trends in market interest rates may affect business performance. There is also uncertainty in earnings fluctuations arising from foreign exchange rate movements and changes in various commodity prices. In response, the Group aims to avoid losses beyond a certain level and stabilize earnings through devising sales strategies and utilizing derivative transactions.

There is a risk that the utilization rate of existing power sources could decline due to the strengthening of CO2 emission regulations or the materialization of nuclear outage events, leading to significant impairment of asset value. Risks also exist regarding delays in the business development of hyperscale data centers and soaring construction costs, impairment of asset value if business development after M&A does not proceed as planned, and failure to secure profitability in investments in domestic renewable energy, overseas businesses, and new ventures. In response, the Group strives for appropriate management of investment risk through gathering information on policy trends and asserting its views at deliberative councils, as well as establishing and operating a management process that includes investment feasibility assessment and post-investment monitoring.

If facility damage, disruption to stable power supply, or leakage of customer information occurs due to external cyberattacks including ransomware, this could lead to a decline in social trust and affect business performance. Delays in promoting DX, inappropriate use of AI or errors in judgment, and malfunctions or outages of information systems could also affect business performance. In response, the Group has established a system to strengthen cyber resilience and supply chain countermeasures based on the "Kansai Electric Power Group Security Strategy," and is promoting DX through a tripartite structure comprising the DX Strategy Committee, K4 Digital Inc., and each business division.

In addition to past inappropriate incidents such as the cash and gift receipt issue, improper handling of new power retailer customer information, and violations of the Antimonopoly Act, inappropriate incidents have also occurred at Group companies (such as Kinka Co., Ltd. and Kanden Engineering Co., Ltd.), and if social trust declines due to a recurrence of serious compliance violations, business performance could be affected. In response, the Group is promoting both fundamental strengthening of internal controls and organizational culture reform, through the establishment of the Internal Control Subcommittee and Organizational Culture Reform Council, the transition to a company with a Nominating Committee, etc., and the establishment of a Compliance Committee.

Amid progressing labor shortages due to population decline and increasing vulnerability of supply chains, if it becomes difficult to stably and continuously secure diverse human resources, and if strengthening of the human capital base does not progress due to reasons such as declining employee motivation, sustainable growth could be hindered. Business performance could also be affected if social trust declines due to the occurrence of industrial accidents. In response, the Group has introduced a new evaluation and compensation system from FY2025, including extending the retirement age to 65, is strengthening new graduate and career recruitment, is developing human resources through the Kansai Electric Power Group Academy, and is implementing wage revisions and increases in starting salaries.

Natural disasters such as typhoons, heavy rains, earthquakes, and tsunamis, as well as armed attacks and infectious diseases, may cause facility damage and operational disruptions, making it difficult for the Group to provide its services. Changes in the international situation, such as instability in the Middle East, also carry risks of impacts on fuel procurement activities and expanded fluctuations in fuel prices and wholesale electricity market prices. In response, the Group takes agile action through regular meetings of the disaster prevention subcommittee, strengthening facility resilience, building a stable procurement portfolio through diversification of procurement regions, contract periods, contract counterparties, and price indices, and building an information-sharing network with diverse business partners.