Tohoku Electric Power Company, Incorporated

If facilities including power plants are damaged by natural disasters such as earthquakes, tsunamis, and typhoons, or by terrorism, cyberattacks, or equipment trouble, this could have a material impact on business performance and financial position due to increased equipment restoration costs and power generation costs. The degree of impact is assessed as "extremely large," and the importance is deemed "particularly high." As countermeasures, the Group is conducting planned equipment inspections and repairs, strengthening cybersecurity measures, and enhancing labor safety and equipment security by establishing the "Tohoku Electric Power Group Safety and Security Policy."

System changes in the non-fossil value trading market, capacity market, supply-demand adjustment market, etc., progress in electricity system reform, domestic and international energy policy trends, and strengthening of environment-related regulations could have a long-term impact on business performance and financial position. The degree of impact is assessed as "large," and the importance is deemed "particularly high." As a countermeasure, the Group continuously monitors trends in energy policy and system changes.

If the suspension of nuclear power plants becomes prolonged due to policy or regulatory changes, responses to new regulatory standards, or the outcome of litigation, this could have a long-term impact on business performance and financial position due to continued increases in thermal fuel costs. Estimates indicate that if Onagawa Nuclear Power Station Unit 2 is suspended, thermal fuel costs would increase by approximately ¥60.0 billion annually, while if Higashidori Nuclear Power Station Unit 1 is restarted, thermal fuel costs would decrease by approximately ¥40.0 billion annually. As a countermeasure, the Group is promoting voluntary safety improvement measures in addition to compliance with new regulatory standards, with safety assurance as the top priority.

The back-end business related to the reprocessing, final disposal, and decommissioning of spent fuel involves extremely long-term operations and uncertainty, and cost burdens could increase due to changes in national policy, revisions to institutional measures, fluctuations in estimated future costs, and the operating status of reprocessing facilities, potentially having a long-term impact on business performance and financial position. The degree of impact is assessed as "extremely large," and the importance is deemed "particularly high." As a countermeasure, the Group continuously monitors trends in related national policies and institutional measures.

Increased equipment damage due to the intensification of natural disasters, as well as constraints on the operation and financing of fossil fuel thermal power sources accompanying the transition to a decarbonized society, could have a long-term impact on business performance and financial position. The degree of impact is assessed as "large," and the importance is deemed "particularly high." As a countermeasure, the Group is implementing the "Tohoku Electric Power Group

Intensifying competition due to full liberalization of electricity retail, population decline due to the falling birthrate and aging population, economic trends, temperature fluctuations, and progress in energy conservation could cause fluctuations in electricity sales volume, wheeling volume, and sales prices, potentially having a material impact on business performance and financial position. The degree of impact is assessed as "large," and the importance is deemed "particularly high." As a countermeasure, the Group is promoting responses to the marketization of electricity through expanding wholesale sales outside its service area and utilizing trading functions.

Fluctuations in the CIF prices of coal, LNG, heavy crude oil, etc., as well as exchange rates and wholesale electricity market prices, could cause thermal fuel costs and purchased power costs to fluctuate, potentially impacting business performance and financial position. Estimates indicate that a fluctuation of US$1 per barrel in crude oil prices would have an annual impact of ¥2.2 billion, a fluctuation of ¥1 in the exchange rate would have an annual impact of ¥2.9 billion, and a 1% fluctuation in the water flow rate would have an annual impact of ¥1.2 billion. As a countermeasure, the Group strives to diversify fuel cost fluctuation risk through a well-balanced power source mix.

The balance of interest-bearing debt at the end of the fiscal year under review was ¥3,479.1 billion, and future trends in market interest rates and changes in credit ratings could impact business performance and financial position. Estimates indicate that a 1% fluctuation in interest rates would have an annual impact of ¥2.4 billion. As a countermeasure, the Group's basic policy is to raise funds at fixed interest rates, limiting the impact of market interest rate fluctuations.

If large volumes of important information, such as personal information and facility information, are leaked, this could impact business performance and financial position through the payment of damages and a decline in social credibility. The degree of impact is assessed as "large," and the importance is deemed "high." As countermeasures, the Group is strengthening information security measures, including the development of standards, employee training, and thorough management of contractors.

In businesses other than the traditional electric power business, intensifying competition with other operators and changes in the business environment such as responses to carbon neutrality and progress in DX could result in decreased sales and profits, potentially impacting business performance and financial position. The degree of impact is assessed as "large," and the importance is deemed "high." As a countermeasure, the Group is working to strengthen competitiveness and achieve early profitability by providing a total package of energy and services and enhancing solution services.