Tohoku Electric Power Company, Incorporated

Business Details

The mainstay segment of the Tohoku Electric Power Group, responsible for stable power supply through thermal, nuclear, and renewable energy generation, while also providing electricity retail and solution services. Corporate and indirect functions are also included in this segment. The segment's main base is the Tohoku and Niigata areas, and it serves household (lighting), industrial (power), and wholesale customer segments. It operates under a two-reportable-segment structure of "Power Generation & Sales Business" and "Transmission & Distribution Business."

Recent Overview

Directly hit by mark-to-market valuation losses on electricity forward transactions stemming from the deterioration of the Middle East situation, ordinary income fell sharply by 48.4% year on year.

In FY2025 (fiscal year ended March 2026), ordinary income for the Power Generation & Sales Business segment fell sharply to ¥126,604 million, down ¥118,574 million (48.4%) year on year. Although there was an improvement in earnings from the restart of Onagawa Nuclear Power Station Unit 2, this was mainly due to a deterioration in earnings from changes in the market and sales environment, as well as mark-to-market valuation losses on electricity forward transactions caused by a sharp rise in fuel prices and electricity market prices amid the worsening Middle East situation. Note that this mark-to-market valuation impact is expected to be recorded as a reversal gain in FY2026, and there is said to be no impact on earnings when combined over the two fiscal years. Retail electricity sales volume shrank 4.4% year on year to 58.2 billion kWh due to intensifying competition, while wholesale volume expanded 20.5% to 20.6 billion kWh.

Key Products

Growth Drivers

• Continued stable operation of Onagawa Nuclear Power Station Unit 2, leading to lower power generation costs and secured stable supply capacity (nuclear power generation volume in FY2025 increased 229.4% year on year to 5,199 million kWh)
• Expansion of wholesale electricity sales volume (increased 20.5% year on year to 20.6 billion kWh in FY2025)
• Increase in hydroelectric power generation volume (up 13.6% year on year) due to improvement in the water inflow ratio (100.6% in FY2025 versus 86.0% in the prior year)
• Expansion of Corporate PPA service sales and strengthening of renewable energy aggregation services
• Recording of reversal gains in FY2026 from mark-to-market valuation losses on electricity forward transactions, etc. (earnings-neutral when combined over the two fiscal years)

Risks

• Continued contract switching due to intensifying competition in electricity retail (retail electricity sales volume in FY2025 decreased 4.4% year on year)
• Risk of sharp spikes in fuel prices and electricity market prices due to geopolitical risks such as the situation in the Middle East (fluctuations in mark-to-market valuation of electricity forward transactions, etc.)
• Earnings volatility risk due to time lags in the fuel cost adjustment system (gains/losses linked to market conditions)
• Operational risk at nuclear power plants (prolonged regulatory response and safety review process; the review for Higashidori Nuclear Power Station Unit 1 remains ongoing)
• Fuel price volatility risk (dependent on international market conditions for coal, LNG, and heavy oil)
• Water inflow ratio and weather variability risk in renewable energy development, along with grid connection constraints
• Continued outlook uncertainty as the earnings forecast for FY2027 (ending March 2027) remains undetermined due to uncertainty over fuel prices and other factors