The Okinawa Electric Power Company, Incorporated

Progress in institutional design and market development, as well as strengthened environmental regulations, associated with the "7th Strategic Energy Plan" and "GX2040 Vision" formulated in February 2025, may affect the Group's business performance. Depending on the direction of energy policy, there is a risk that the Group may be forced to review the profit structure of the Electric Power Business and capital investment plans. At present, no specific countermeasures have been disclosed, and the Group is at the stage of closely monitoring policy trends.

Fluctuations in the prices of major thermal fuels—coal, heavy oil, and LNG—and in foreign exchange rates directly affect business performance. While the fuel cost adjustment system mitigates the impact to a certain extent, it may not fully absorb significant price fluctuations, and the risk of rising procurement costs due to escalating tensions in the Middle East also continues. Coal is procured from Indonesia and Australia, and LNG mainly from Australia; while the Company states there is currently no major impact, future developments could significantly affect procurement and prices.

As of the end of March 2026, interest-bearing debt outstanding stood at ¥320.2 billion, and fluctuations in market interest rates or changes in credit ratings affecting fundraising rates may impact business performance. However, since the majority of interest-bearing debt is procured at fixed interest rates, the impact of interest rate fluctuations is considered limited. In addition, retirement benefit expenses and obligations are also affected by changes in the discount rate and the investment yield on pension assets.

Electricity sales volume in the Electric Power Business fluctuates due to weather conditions such as temperature and typhoons, economic conditions, progress in energy conservation, and competitive conditions with other operators, and may affect business performance. Okinawa has regional characteristics that make it particularly susceptible to typhoons, and the impact of weather-related risk is especially significant. The risk of demand loss due to intensifying competition with rival companies also remains an ongoing challenge.

The Group operates the Construction Business, Real Estate Business, information and communications business, and lifestyle/business support businesses in addition to its core comprehensive energy business, and business performance may be affected by changes in the business environment, including progress in competition with other operators in each business. There is a risk that the profit base of the diversified businesses could be undermined by intensifying competition. No specific countermeasures have been disclosed, and responding to changes in the business environment remains a challenge.

Based on the Okinawa Development Special Measures Act, the Company receives special measures such as low-interest financing from the Okinawa Development Finance Corporation, reduced fixed asset tax, and exemption from petroleum and coal tax on coal and LNG. If these special measures were abolished, the Company's cost structure would change significantly, potentially affecting the Group's business performance. The benefits from these tax-related special measures are currently passed on to customers, and if abolished, a review of the rate structure may also become necessary.

In the event of large-scale natural disasters such as earthquakes, tsunamis, and typhoons, or equipment accidents, business performance may be affected by supply disruptions due to equipment damage and the incurrence of restoration costs. As countermeasures, the Company maintains reliability through planned inspection, repair, and improvement of equipment, conducts company-wide comprehensive disaster prevention drills, and participates in disaster prevention drills organized by government agencies. Okinawa is a region frequently struck by typhoons, and natural disaster risk exists as a persistent regional characteristic.

In the event of damage from a cyberattack, business performance may be affected by disruptions to power supply, decline in social credibility and brand image, and the incurrence of response costs and compensation payments. As countermeasures, the Company is developing mechanisms and systems for early detection and response, conducting security education and training, and promoting information sharing with other operators and related organizations. In light of national cybersecurity policy trends, the Company is also working to strengthen company-wide cybersecurity, including expediting decision-making through regular reporting to management.

In the event of a leakage of customers' personal information (including specific personal information), business performance may be affected by a decline in social credibility and brand image and the payment of damages. As countermeasures, the Company has established and disseminated a privacy policy, developed internal regulations on the protection of personal information, and conducted training through e-learning, among other measures. The Company states that it is difficult to reasonably foresee the likelihood and timing of this risk materializing.

In the event of conduct that violates corporate ethics, business performance may be affected by a decline in social credibility and brand image and the payment of damages. As countermeasures, the Company has established a "Corporate Ethics Committee" chaired by the President, conducts lectures and awareness-raising activities on legal compliance, and has established a "Corporate Ethics Consultation Desk" both internally and externally, ensuring thorough protection of whistleblowers. The Company states that it is difficult to reasonably foresee the likelihood and timing of this risk materializing.