Financial Instruments

(a) Policy for financial Instruments

(b) Details on financial instruments, related risks and risk management system

(c) Supplementary explanation of matters concerning the fair value and other of financial instruments Millions of yen

Thousands of U.S. dollars

2014 2013 2014

Based on capital investment and other plans for the electricity-related business, the Company raises necessary funds through the issuance of bonds and loans from financial institutions, and invests temporary surplus funds in short-term deposits and other. It also acquires short-term operating funds through loans from banks and the issuance of commercial paper.

The Company uses derivative transactions in order to avoid or reduce the risk of market-price fluctuations related to business activities rather than as speculative instruments to profit from price differentials caused by future market-price fluctuations.

The fair value of financial instruments based on their quoted market price, if available. When there is no quoted market price available, the fair value is determined based on reasonable estimates. Estimates of fair value contain uncertainties because they employ variable factors and assumptions.

Securities are primarily stocks in companies with whom the Company has business relationships. Although such stocks are exposed to market price fluctuation risk and the credit risk of their issuing companies, the Company regularly ascertains the market value of these securities and monitors the financial standing of the issuing companies.

Notes and accounts receivable are exposed to the credit risk of customers, but the Company manages account-due dates, remaining quantities and accounts for each customer in accordance with electricity supply contracts and other relevant regulations.

Some of the Company’s long-term loans payable carry floating interest rates, and are therefore exposed to the risk of interest-rate fluctuations. However, since the majority of the Company’s loans are based on fixed interest interest-rates, such risk is considered limited.

Most notes and accounts payable-trade are due within one year.

Bonds payable, loans and trade payables are exposed to liquidity risk, but the Company manages these items through monthly cashflow projections and other methods.

*1 Financial instruments whose fair values are not readily determinable are not included in the table above (See Note B).

*2 Recorded under “Long-term investments” in the consolidated balance sheets.

*3 Including those recorded under “Current portion of long-term debt” in the consolidated balance sheet.

Note A: Investment securities and Methods for estimating the fair value of financial instruments (1) Investment securities

(2) Cash and deposits, and (3) Notes and accounts receivable-trade

(4) Bonds payable

The fair value of bonds payable is according to their market prices.

(5) Long-term loans payable

(6) Short-term loans payable, and (7) Notes and accounts payable-trade

Note B: Financial instruments whose fair value is not readily determinable as of March 31, 2014 and 2013.

Carrying amount

Unlisted stocks ... ¥29,193 $283,427 Investment securities ... 693 6,728 Other ... 7 67

Carrying Fair Carrying Fair Carrying Fair

amount value Difference amount value Difference amount value Difference

¥ 1,530 ¥ 1,385 ¥ (144)

14,691 14,691 —

121,077 121,077 —

44,953 44,953 —

634,130 658,664 24,533 608,853 618,158 9,305

53,000 53,000 —

¥ 46,766 ¥ 46,766 ¥ —

¥ 2,930 ¥ 2,653 ¥ (276)

11,977 11,977 ―

77,357 77,357 ―

43,378 43,378 ―

609,127 634,086 24,959 472,470 482,865 10,394

53,020 53,020 ―

¥ 44,496 ¥ 44,496 ¥ ―

$ 14,854 $ 13,446 $ (1,398) 142,631 142,631 — 1,175,504 1,175,504 — 436,436 436,436 — 6,156,601 6,394,796 238,184 5,911,194 6,001,533 90,339 514,563 514,563 —

$ 454,038 $ 454,038 $ —

2014 2013 2014

(1) Securities*2

Held-to-maturity bonds ...

Available-for-sale securities ...

(2) Cash and deposits ...

(3) Notes and accounts receivable-trade ...

(4) Bonds payable*3 ...

(5) Long-term loans payable*3 ...

(6) Short-term loans payable ...

(7) Notes and accounts payable-trade ..

20 (d) Fair value of financial instruments

Millions of yen

Thousands of U.S. dollars

2014 2013 2014

¥

¥29,256 693 8

¥ $

The carrying amounts, fair values and their differences for financial instruments recorded in the consolidated balance sheets as of March 31, 2014 and 2013 are as follows:

Millions of yen Thousands of U.S. dollars

The fair value of equity securiteis is determined by their market price. The fair value of debt securities are determined by market price or those provided by correspondent financial institutions. For further information on investment securities by holding intent, see note 16. Investment Securities below.

The fair value of long-term loans payable bearing floating interest rates are based on the carrying amount because they reflect market interest rates within a short time, and fair values therefore approximates carrying amount .

The fair value of long-term loans payable bearing fixed interest rates is computed based on the present value of the overall principal and interest discounted at the interest rate assumed for a new borrowing with similar terms.

The fair value of these items is determined as their respective carrying amount because they are settled within a short time and their fair value therefore approximates their carrying amount.

The fair values for these items are determined as their respective carrying amount because they are settled within a short time and their fair value approximates their carrying amount.

These financial instruments have no market price, and it is expected that estimation of future related cash flows would involve excessive costs. Since their fair value is not readily determinable, they are not included in (1) Securities – Available-for-sale securities above.

Note D: Scheduled payments on bonds payable, long-term loans payable and other interest-bearing debts subsequent to Mach 31, 2014 and 2013.

Thousands of U.S. dollars Millions of yen

2014

2014 2013

Securities

Held-to-maturity bonds (corporate bonds)

Due after one year and within five years ... ¥ 30 $ 291 Due after ten years ... 200 1,941 Held-to-maturity bonds (unlisted foreign bonds)

Due after ten years ... 1,300 12,621 Cash and deposits

Within one year ... 121,077 1,175,504 Notes and accounts receivable-trade

Within one year ... ¥ 44,953

¥ 30 400 2,500

77,357

¥43,378 $ 436,436

Thousands of U.S. dollars

2015 ... 35,000 68,812 339,805 668,077

2016 ... 130,000 51,388 1,262,135 498,912

2017 ... 30,000 116,043 291,262 1,126,631

2018 ... 87,241 70,808 847,000 687,456

2019 ... 131,900 52,673 1,280,582 511,388

Thereafter ...

Thereafter ...

¥249,126 $2,135,922 $2,418,699

Millions of yen

Other interest-bearing debts are short-term loans payable due within a year.

Bonds payable Long-term loans payable Bonds payable Long-term loans payable 2014

21

$

$

¥

¥

2014 ... 85,000 23,797 2015 ... 35,000 65,898 2016 ... 130,000 48,474 2017 ... 20,000 93,096 2018 ... 87,241 44,020

¥251,900 ¥197,182

Millions of yen

Other interest-bearing debts are short-term loans payable due within a year.

Bonds payable Long-term loans payable 2013

¥ ¥

Note C: Scheduled redemptions for monetary receivables and debt securities with maturities subsequent to March 31, 2014 and 2013.

¥220,000