Hokuriku Electric Power Company

Shika Nuclear Power Station Unit 2 is undergoing a compliance review against the new regulatory standards, with reviews of faults around the site, seismic ground motion, and tsunamis, among others, continuing. New findings from the 2024 Noto Peninsula Earthquake may also affect the review, and a prolonged review process or reduced capacity utilization could impact the Group's business performance. The company continues construction work for safety improvement measures while striving to provide timely explanations to local residents.

Reprocessing of spent fuel, disposal of radioactive waste, decommissioning, and other processes require substantial funds and long project periods, and costs are recorded and contributed based on contribution unit prices notified by each organization. Although risk has been reduced to some extent by national institutional measures, if system revisions or changes in estimated future costs occur, business performance may be affected.

Under the 7th Strategic Energy Plan adopted by the Cabinet in February 2025 and the amended GX Promotion Act enacted in May 2025, participation in the emissions trading scheme will become mandatory from FY2026 (ending March 2026), and starting FY2033 (ending March 2033) emission allowances will be phased into full paid allocation. A policy to reduce power generation from inefficient coal-fired thermal plants has also been indicated, and stricter decarbonization regulations may affect the Group's business performance and cost structure. The Group is working on decarbonizing its power sources based on its 2050 Carbon Neutrality Roadmap.

Electricity sales volume fluctuates due to economic activity, temperature, competitive conditions in the electricity market, industrial hollowing-out, epidemics, and other factors, and may affect business performance through increases or decreases in operating revenue. In addition, there is a risk that variation in annual rainfall and snowfall may cause hydroelectric power generation volume to fluctuate, in turn affecting thermal fuel costs and other expenses. Attention must also be paid to how changes in the competitive environment following full retail liberalization affect the acquisition of demand.

Prices of thermal fuels such as coal, crude oil, and LNG may fluctuate sharply due to supply-demand conditions and foreign exchange rate movements, and smooth procurement may become difficult due to changes in the political situation or troubles in procurement regions. While the fuel cost adjustment system provides a certain degree of adjustment, the special retail supply terms set an upper limit on the adjustment unit price, creating a risk that price increases cannot be fully passed through. The Group seeks to control the risk of fluctuations in income and expenditure through the use of fuel and electricity derivative transactions and optimization of its sales portfolio.

The Group sells surplus supply capacity and procures shortfalls through the wholesale electricity exchange, and market price fluctuations driven by supply-demand conditions and fuel price trends may affect business performance through changes in sales revenue and procurement costs. The Group has introduced a market price adjustment unit price for high-voltage and extra-high-voltage contracts to curb the range of fluctuation, but complete hedging is difficult.

The balance of interest-bearing debt at the end of the consolidated fiscal year was ¥1,097.8 billion, and a rise in procurement interest rates due to increases in market interest rates or a downgrade in credit rating may affect business performance. Since the majority of interest-bearing debt consists of corporate bonds and long-term loans with medium- to long-term fixed interest rates, the immediate impact of interest rate increases is considered limited; however, rising prices and labor costs in the procurement of materials and equipment may also affect business performance. The Group seeks to reduce procurement prices through expanded competitive bidding and bulk ordering, among other measures.

In the event of a large-scale natural disaster such as an earthquake or typhoon, or an equipment failure, business performance may be affected by increased repair costs and costs of procuring alternative power sources. In light of the 2024 Noto Peninsula Earthquake, the Group is advancing the early full restoration of damaged facilities and further strengthening its disaster response capabilities. It is also working on measures to prevent, detect early, and quickly restore from troubles using AI and IoT technologies.

The Group is developing carbon-neutral-related businesses, overseas businesses, and other ventures, and its new medium-term management plan announced in April 2023 sets out expansion into business areas beyond the electricity business. Due to changes in the market environment, such as increased competition from other operators, and fluctuations in the international situation, the profitability of these new businesses may fall below initial expectations. While the Group states it will pursue these ventures with due consideration of future potential and profitability, uncertainties specific to new business areas remain.

If acts contrary to corporate ethics occur or damage results from a cyberattack, business performance may be affected by a decline in social credibility and increased response costs. The Group is thoroughly ensuring compliance with corporate ethics by establishing and adhering to a code of conduct and personal information protection regulations and enhancing compliance training, while also strengthening information security measures, including building a system for early detection and early recovery from cyberattacks.