H o k k a i d o E l e c t r i c P o w e r C o . , I n c .
Intr oduction
The March 2011 accident at Tokyo Electric Power Company’ s Fukushima Daiichi
Nuclear Power Station caused radioactive contamination over a large area. The situation
developed into an unprecedented disaster with irreparable impacts on local residents.
Based on our resolution to remember how the disaster affected Fukushima people,
we at HEPCO are committed to the further enhancement of safety at the company’ s
Tomari Nuclear Power Station as well as ongoing efforts to pursue safety with a firm
determination, as a nuclear operator, that such an accident should never happen again.
Supply conditions have been challenging since May 2012, when all units were shut
down at the Tomari Nuclear Power Station – previously one of the company’ s main
power sources. We have asked customers to reduce their power consumption and
mo-bilized all available resources to support a range of related initiatives. These include
the postponement of equipment maintenance and increased output levels at thermal
power plants as well as efforts to prevent equipment problems and ensure rapid
recov-er y if troubles do happen. The efforts of evrecov-er ybody involved, including consumrecov-ers
who have successfully reduced their power consumption, are very much appreciated.
The extended shutdown of the Tomari Nuclear Power Station has resulted in a
dras-tic increase in expenses relating to fuel for thermal power generation. Despite our
unremitting efforts to enhance the efficiency of overall operations and measures to
improve the company’ s net assets, it was necessary to increase electricity rates in
Sep-tember 2013 and again in November 2014. The company is aware of the substantial
burden this has placed on its customers.
HEPCO will continue its efforts to ensure compliance in reviews based on the new
regulator y standards set by Japan’ s Nuclear Regulation Authority toward the early
resumption of operations at the Tomari Nuclear Power Station’ s reactors with every
consideration for safety. This will ultimately help to sustain the provision of a stable
power supply – the company’ s ultimate mission – and mitigate the burden on
custom-ers. The company will also concentrate its resources on further improvement of
man-agement efficiency and hope to be able to reduce electricity rates as promised once
the Tomari Nuclear Power Station resumes commercial operation.
Despite the challenging management environment, we will continue to take all steps
necessary to maintain a stable power supply in Hokkaido into the future. Such work
includes the introduction of new power sources, like the Ishikariwan Shinko Power
Station (HEPCO’ s first liquefied natural gas (LNG)-fuelled thermal power facility) and
the reinforcement of the Hokkaido-Honshu HVDC Link (also known as the Kitahon
HVDC Link).
As the use of renewable energy supports effective local resource utilization, HEPCO
plans to work toward the broader introduction of such energy while ensuring a stable
power supply.
The electricity retail market is scheduled for full liberalization in April 2016, which
will allow households and other low-voltage users to choose their power company.
HEPCO sees this forthcoming change in the management environment as an
opportu-nity for growth, and makes its efforts to remain the preferred choice of customers.
These include the provision of various services and electricity rate options involving
the use of smart meters, as well as consideration of electricity supply in combination
with other products and services.
The HEPCO Group remains committed to meeting the expectations of customers
and local communities through its business operations.
We appreciate the continued support and understanding of everybody involved.
September 2015
Financial Highlights
Consolidated Basis
Hokkaido Electric Power Co., Inc. and Consolidated Subsidiaries Millions of yen
Note: The U.S. dollar amounts represented here are the results of converting yen values at a rate of ¥120 = US$1 (the prevailing rate on March 31, 2015), and are included solely for convenience.
FY2015 FY2014 FY2015
Thousands of U.S. dollars (Note)
U.S. dollars (Note) Yen ¥ ¥ ¥ ¥ ¥ ¥ ¥
662,237
30,687
692,925
2,938
1,815,675
188,392
14.30
¥ ¥ ¥ ¥ ¥ ¥ ¥603,032
27,308
630,340
(62,972)
1,782,776
146,731
(306.34)
$ $ $ $ $ $ $5,518,641
255,725
5,774,375
24,483
15,130,625
1,569,933
0.11
Operating Revenue:
Electric utility operating revenue
Other business operating revenue
Net Income (loss)
Total Assets
Total Net Assets
Net Income (loss) (primary) per Share of Capital Stock
Non-Consolidated Basis
Hokkaido Electric Power Co., Inc. Millions of yen
Note: The U.S. dollar amounts represented here are the results of converting yen values at a rate of ¥120 = US$1 (the prevailing rate on March 31, 2015), and are included solely for convenience. FY2015 ¥ ¥ ¥ ¥ ¥ ¥ ¥
267,342
306,389
30,910
604,643
(64,207)
(312.34)
-FY2015 FY2014Thousands of U.S. dollars (Note)
U.S. dollars (Note) Yen ¥ ¥ ¥ ¥ ¥ ¥ ¥
286,938
339,386
37,604
663,929
4,230
20.58
-2,931,150
2,828,216
313,366
5,532,741
35,250
0.17
-Operating Revenue:
Residential (lighting)
Commercial and Industrial
Other
Profit and Dividends:
Net Income (loss)
Net Income (loss) (primary) per Share of Capital Stock
Cash Dividends per Share of Capital Stock
$ $ $ $ $ $ $
Contents
Introduction Financial HighlightsFields of Business
Initiatives for a Stable Power Supply
Toward Safety Improvement at the Tomari Nuclear Power Station
Securement of a Stable Power Supply
Improvement of Management Efficiency
Initiatives for the Future
Establishment of a Power Supply Structure for the Future
Broader Introduction of Renewable Energy Sources
Response to Changes in the Management Environment
Human Resource Development
Relations with Local Communities
and Society
Environmental Impact Reduction
Coexistence with Local Communities
Corporate Profile 1
2
3 - 4
5 - 6
7 8 9 -10 11-12 13 14 15 16
17 - 18 Note: HEPCO’s fiscal
H E PCO
Hokkaido Electric Power Co., Inc.
1.Tohoku Electric Power Co., Inc. 2.Tokyo Electric Power Co., Inc. 3.Chubu Electric Power Co., Inc. 4.Hokuriku Electric Power Co., Inc. 5.Kansai Electric Power Co., Inc. 6.Chugoku Electric Power Co., Inc. 7.Shikoku Electric Power Co., Inc. 8.Kyushu Electric Power Co., Inc. 9.Okinawa Electric Power Co., Inc. 1 2 3 4 5 6 7 8 9
Fields of Business
Area
22.1%
(as of October 1, 2014)
Population (as of January 1, 2015)
Number of households(as of January 1, 2015)
Hokkaido
Japan 83,424.22 km2
377,972.28 km2
Location
Longitude: 139° 20’ – 148° 53’ east Latitude: 41° 21’ – 45° 33’ north
Hokkaido Data
4.2% Japan 128,226,483 4.9% Hokkaido Japan 2,738,172 56,412,140 Hokkaido 5,431,658(Source: Ministry of Land, Infrastructure, Transport and Tourism’s Geospatial Information Authority of Japan website) (Source: Ministry of Land, Infrastructure, Transport and Tourism’s Geospatial Information Authority of Japan website)
(Source: Ministry of Internal Affairs and Communications website)
(Source: Ministry of Internal Affairs and Communications website)
Hydroelectric power plant
Another company’s hydroelectric power plant Thermal power plant
Another company’s thermal power plant Nuclear power plant
Geothermal power plant Photovoltaic power plant Substation Switching station
Another company’s conversion station Transmission line (275 kV) Transmission line (187 kV) Transmission line (100 kV – 110 kV) Another company’s transmission line (As of June 30, 2015)
Power Transmission/Distribution Facilities (as of March 31, 2015)
8,342 km 46,529 22,672 MVA 68,217 km 1,477,310 Transmission line route length
Number of support structures Number of substations Distribution line route length
Number of support structures 373 1,428 MW 4,213 MW 3,900 MW 148 MW 165 MW 2,070 MW 25 MW 1 MW 7,738 MW 55 12 6 1 5 1 1 1 70
Power Generation Facilities
(as of June 30, 2015) Hydroelectric power plants Thermal power plants
Steam power Gas turbine Internal combustion
Nuclear power plant Geothermal power plant Photovoltaic power plant Total
Mori
Shiriuchi
Hokkaido-Honshu (Kitahon) HVDC Link Date Tomari Hoheikyo Tomatoh-Atsuma Tomakomai Okuniikappu Niikappu Takami Shizunai Onbetsu Tomura Tokachi Nokanan Takisato Sunagawa Naie Uryu
Kyogoku Unit 2 & Unit 3 (under construction)
Shin Iwamatsu (under construction)
The Niseko area, where people enjoy skiing in winter and outdoor sports in summer Shiretoko, a Hokkaido tourist resource inscribed on the World Natural Heritage List
◎
Hokkaido’s tourism, agriculture and fisheries enjoying symbiotic relationships with nature
Hokkaido is approximately 83,000 km
2in area, accounting for more than one
fifth of Japan’s total landmass. The prefecture is characterized by its splendid
natu-ral scenery – beautiful coastal areas with capes, oddly shaped rocks and sandy
beaches, primarily natural forests, magnificent and varied mountains, lakes with
beautiful landscapes, and vast wetlands. Many tourists, both from Japan and
over-seas, visit Hokkaido to experience this magnificent natural environment.
Although wintertime conditions in Hokkaido are very harsh with heavy
snow-fall and severe cold, it is the ideal location for winter sports.
The fertile ground has allowed agriculture and the livestock industry to prosper.
Hokkaido boasts the nation’s largest production volume of wheat, potatoes,
onions, fresh milk and many other agricultural and livestock products.*
The production volume from the marine fishery and aquaculture industry in
waters surrounding the prefecture is also the largest in Japan.* Hokkaido prides
itself on a high food self-sufficiency rate thanks to these gifts from Mother Nature.
* Source: Ministry of Agriculture, Forestry and Fisheries website◎
Continuing to ensure a stable supply of electricity
Hokkaido has a population of approximately 5.5 million. Its population density
is about 65 people per km
2, which is approximately one fifth of the national
aver-age. The general impression of Hokkaido is one of vastness with an open-minded
atmosphere; this may be related to the character of the locality, which enables
people to lead relaxed lifestyles.
On the other hand, many difficulties must be overcome to deliver electricity
throughout this vast, sparsely populated land. To protect the natural
environ-ment, measures to tackle global warming are also necessary.
HEPCO operates the Tomari Nuclear Power Station with the highest priority on
safety based on 1) a motto, My Own Plant awareness, by which a sense of
re-sponsibility is instilled in staff for reactor facilities under their care, 2) a sense
of unity with partner companies, and 3) the principle of valuing the front line,
where the actual work takes place.
On the other hand, the accident at Tokyo Electric Power Company’s Fukushima
Dai-ichi Nuclear Power Station reminded HEPCO that nuclear power can cause
radioac-tive contamination resulting in serious consequences for the lives of local residents.
As such, HEPCO has identified severe accidents as the most serious potential
risk under its Management Policy as part of company-wide efforts to prevent
events and mitigate risks of severe accidents.
HEPCO has clarified its commitment to continued efforts for safety at the
Tomari Nuclear Power Station in its Quality Policy regarding Nuclear Power
Generation rather than resting on the laurels of its compliance with the
government’s new nuclear safety standards. The company’s top management
has re-emphasized its safety-first approach, as stipulated in the Quality
man-agement Policy, both to its own employees and to those of partner companies.
Top management policy
Promotion of safety to front-line workers
Consideration of natural phenomena
◎
Securement of resilience against
tsunamis
HEPCO has built a coastal levee with a
height of 16.5 meters above sea level and a
length of around 1,250 meters. This will
protect the station’s site from tsunami up to
around 15 meters high (the scale of the
w a ve s t h a t h i t To k yo E l e c t r i c Po we r
Company’s Fukushima Daiichi Nuclear
Pow-er Station in 2011).
Coastal levee
Firebreak
◎
Prevention of tsunami ingress into
buildings
HEPCO has installed watertight doors at
the entrance of buildings to prevent
tsu-nami inundation even if the coastal levee
is breached.
Such doors have also been installed at
en-trances to important areas of the building
to prevent flooding in areas housing safety
equipment.
Watertight door to building
◎
Prevention of forest fire spread
HEPCO has developed a firebreak around
the power station to prevent forest fires
from spreading to the site and affecting
power-generation facilities. Trees were
Cut down and removed to develop the
firebreak, which is 40 to 66 meters wide
and around 2,120 meters long.
HEPCO’s president providing guidance to Tomari Nuclear Power Station employees
In order to promote the safety-first
ap-proach to front-line workers, HEPCO’s top
managers pay frequent visits to the
sta-tion, directly convey their commitment to
safety improvement and actively discuss
related matters with employees of partner
companies and of HEPCO.
Prevention of containment breaches
HEPCO has installed water cannons to suppress the spread of radioactive substances
leak-ing and spreadleak-ing to the environment from the damage reactor buildleak-ing. Silt barriers
known as undersea curtains have also
been built to suppress the spread of such
materials into the ocean.
Suppression of radioactive material diffusion
Enhancement of emergency response capability through continued training
◎
Securement of water supply
Construction work is under way to install
three 5,000 m
3-capacity water tanks on
high ground 81 meters above sea level,
in addition to the station’s existing water
tanks, to secure greater supply. Water
from these tanks will be supplied using
gravity based on the difference in height.
Water tank (under construction)
◎
Securement of water-feed pumps
HEPCO has installed direct feed water
pumps that will feed water to steam
gen-erators and cool the nuclear reactors in
the event that an accident disables the
ex-isting pumps.
Pump for direct feeding of water to steam generators
◎
Securement of power supply
HEPCO maintains emergency diesel
gen-erators in case the station loses power
from its regular transmission lines. Work
is also under way to install permanent
back-up emergency power generators
that can be remotely operated from the
main control room in case the diesel
gen-erators are rendered unusable.
Permanent back-up emergency power generatorHEPCO has taken diverse safety measures at
the Tomari Nuclear Power Station. However,
accidents could occur, and emergency
re-sponse teams themselves are responsible for
ensuring safety. Accordingly, the company
works to enhance emergency response
capa-bility through practical training in regular
op-eration.
In order to prevent hydrogen explosions, Passive
Autocatalytic Recombiners (PARs), which remove
hydrogen by recombining hydrogen and oxygen
without using electricity, and electric hydrogen
combustion devices known as igniters, which
heat hydrogen for combustion using a heater,
are being installed in the containment vessel.
Training using a water-supply vehicle
Sea
Water cannons Large-capacity
seawater pumping vehicle
Silt barriers
Reactor containment vessel Reactor building PARs (left), IGNITER (right)
In light of the tight power supply situation caused by the prolonged shutdown
of the Tomari Nuclear Power Station, HEPCO has examined and implemented a
range of supply measures to ensure a stable power supply.
0.13
Duration Frequency
Duration (min./household) Frequency (Number of times/household) Duration and frequency of power outages per household per year
(FY) 2006
2001 1991
1981 2007 200820092010 2011 20122013 2014
*The duration of power outages significantly increased in FY 2013 as compared to the previous fiscal year due to an extended outage caused by a blizzard in November.
0 50 100 150 200 250
0.0 0.4 0.8 1.2 1.6 2.0 248
42
14
9 7 6 5 7 6
48
9 9 8
1.78
0.41
0.18 0.13 0.19 0.16
0.10 0.10 0.12 0.13 0.11 0.19
2015 Daily inspection at a thermal power plant
Training for transmission facility inspection as part of contingency efforts for disaster situations
Emergency power supply systems
◎
Reinforcement of equipment maintenance and patrols
To ensure supply capability, HEPCO has continued to operate its thermal power
plants at high capacity and deferred regular inspections. As this creates a higher
risk of unplanned shutdowns, the
com-pany will continue the range of
initia-tives it has implemented for the
preven-tion of equipment problems and for
early recovery in the event that troubles
do happen. Related efforts include more
frequent patrols and the
implementa-tion of extensive non-regular
inspec-tions and repairs.
HEPCO works to maintain and improve
its emergenc y response capabilit y
through practical training for all possible
scenarios, including large-scale natural
disasters (e.g., typhoons, earthquakes
and blizzards) and tight supply-demand
situations caused by disconnection of
large-scale power sources from power
systems.
Prevention of power outages and support for prompt recovery
Hokkaido is characterized by harsh natural conditions associated with its vast land area
and cold snowy winters. Despite this, the frequency of power outages has been
re-duced through various
initiatives such as
ap-propriate equipment
maintenance and the use
of unique technologies.
HEPCO has also sought
to reduce the duration of
any outages that do
oc-cur through measures
such as developing a
sys-tem to quickly identify
faults in transmission
and distribution lines
to-ward prompt recovery.
◎
Major supply measures
・
Ongoing installation of emergency
power supply systems
・
Enhanced output levels at thermal
power plants
・
Power purchase from customers with
private power generation facilities
・
Commencement of commercial
opera-tion at the Kyogoku Power Staopera-tion’s
Unit 1 (200 MW; October 2014)
Supply measures in response to the extended
shutdown of the Tomari Nuclear Power Station
Capacity reinforcement for response to natural
disasters and other emergency situations
HEPCO achieved a cost reduction of 77.4 billion yen in FY 2015 as a result of a
management efficiency plan intended to save over 70 billion yen as announced
by the company when it requested approval to raise electricity rates again in
October 2014.
FY 2015 results of efficiency enhancement efforts
HEPCO engages in ongoing company-wide efforts to enhance the efficiency of its
activities as a whole.
Steady enhancement of management efficiency
Improvement of Management Efficiency
◎
Reduction of power supply and demand costs
HEPCO seeks to reduce fuel costs and other expenses via a range of initiatives
in-cluding the adoption of various fuel procurement methods (e.g., diversification
of procurement areas/contract periods). The company also purchases low-cost
electricity using retail power exchanges and procures domestic coal (which is
more economical than oil) wherever possible.
◎
Reduction of personnel costs
HEPCO seeks to cut personnel costs through initiatives such as the reduction of
executive compensation and employee salaries/allowances.
◎
Reduction of maintenance costs
HEPCO seeks to enhance construction efficiency through the development and
implementation of new technologies, the introduction of new construction
methods and the coordination of construction periods. Efforts to reduce
equip-ment procureequip-ment costs are also ongoing through initiatives such as the
expan-sion of competitive bidding and the review of equipment specifications.
(Unit: 100 million yen)
Cost item
Personnel
Power supply and demand
Capital investment
Maintenance
Sundries
Asset sales
Total
Results Details of major efficiency enhancement
165
175
36
223
154
20
774
Sunagawa Power Station (use of domestic coal) *The total differs from the sum of the numbers due to rounding.
・Reduction of executive compensation, employee salary/allowance and employee benefit costs ・Reduction of fuel costs and power purchase costs ・Retail power exchange usage
・Reduction of equipment procurement costs ・Reduction of PR-related costs and other costs
・Real estate and stock sales
・Reduction of equipment procurement costs ・Review of construction periods
・Review of construction methods and specifications ・Reduction of equipment procurement costs ・Development and implementation of new
tech-nologies and construction methods ・Review of construction periods
LNG tank construction
HEPCO plans to construct the Ishikariwan Shinko Power Station (its first liquefied natural gas (LNG)-fuelled thermal power facility) as part of its efforts to address the aging
of thermal power plants, diversify fuel types and distribute power sources in order to ensure a stable power supply into the future.
The company will steadily proceed with construction toward the scheduled opening of Unit 1 in February 2019.
◎
High thermal efficiency and outstanding
environmental performance
HEPCO will use the combined cycle
power-genera-tion method for the Ishikariwan Shinko Power
Sta-tion. This approach involves a combination of gas
and steam turbines, and offers higher thermal
effi-ciency than the conventional power generation
method of using steam turbines only.
Natural gas, which will be used as fuel for the
pow-er station, has suppow-erior environmental ppow-erfor-
perfor-mance because it emits less CO
2during
combus-tion than other fossil fuels.
Fuel type
Unit 1 Unit 2 Unit 3
*Construction plan submitted in line with the Electricity Business Act
Output (1708.2 MW) Natural gas
569.4 MW 569.4 MW 569.4 MW
Commencement of construction*
(provisional)
Commencement of operation
(provisional) August 2015
November 2018 November 2025
February 2019 December 2021 December 2028
Architectural rendering of the Ishikariwan Shinko Power Station
Since August 2014, HEPCO has been constructing an LNG tank at the Ishikari LNG Terminal (operated by Hokkaido Gas Co., Ltd.) to supply gas fuel to the power station.
Construction of the Ishikariwan Shinko Power Station
Ishikariwan Shinko Power Station outline
Natural gas
To power transmission line
Generator Steam turbine
Steam
Air
Compressor Gas turbine Combustor
Heat recovery steam generator (HRSG)
Flue gas denitrizer Stack
Switching station
From intake Feed-water pump
Exhaust gas
Steam drum
Condenser
Sea
To outlet Transformer
Sea water pump Conceptual diagram of the Ishikariwan Shinko Power Station
Vaporized LNG to be channeled via gas pipeline from the Ishikari LNG terminal
Penstock Underground
power plant
Upper reservoir
Lower reservoir Kyogoku Dam
Tailr ace tunnel
Lower reservoir Overview of the Kyogoku Power Station Underground power plant
HEPCO is proceeding with the construction of the Kyogoku Power Station (200 MW × 3 units). This is the company’s
first pure pumped-storage hydroelectric power facility, and allows flexible response to rapid changes in electricity
demand. The commercial operation of Unit 1 began in October 2014.
HEPCO will steadily continue construction toward the scheduled commencement of Unit 2’s commercial operation
in November 2015.
HEPCO plans to reinforce the existing Hokkaido-Honshu
(Kitahon) HVDC Link (600 MW) by adding a new 300MW route.
The company began construction in April 2014 and will steadily
proceed with the work toward the commencement of
opera-tions in March 2019.
300 MW 250 kV (DC) 122 km
Commencement of work: April 2014
Commencement of operation: March 2019 (provisional) Capacity
Voltage Length
Schedule
Construction of the Kyogoku Power Station
Reinforcement of the Kitahon HVDC Link
Upper reservoir
Imabetsu Converter Station
Hokuto Converter Station
(Seikan Tunnel) Ono
Shiriuchi Kita-Nanae
Existing route
Tappi Cable Head Yoshioka Cable Head
Conventer Cable head Substation Thermal power plant Non-HEPCO substation
Existing and new Kitahon HVDC Link routes (as of March 31, 2015) Outline of reinforcement work
New route for reinforcement
Hokuto – Imabetsu DC Trunk Line
HEPCO has actively worked to expand the introduction of renewable energy
sources, such as hydroelectric power, wind power and photovoltaic power. As of
the end of FY 2015, the capacity of renewable energy source installations in
Hok-kaido reached 2,600 MW.
Wind power (which has been increasingly introduced) accounted for around 320
MW of the total, while photovoltaic power (whose usage has rapidly increased
since the launch of a feed-in tariff scheme) accounted for around 610 MW.
0 200 400 600 800 1,000 1,200 1,400 1,600 (MW) (FY) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
156 156 159 170 241 243 258 258 257 276 289 289
2014 2015
1
7 37 78
318 560* 316
2 3
9 11 13 17
22 31
104 354
1,170
Wind power introduction Photovoltaic power introduction
Renewable energy introduction – facts and figures
The government reviewed the feed-in tariff scheme in January 2015 amid a rapid
expansion of renewable energy introduction centering on photovoltaic power
since the scheme’s launch.
HEPCO continues to connect renewable energy sources to its grid based on the new
operation rules* because previously accepted applications for grid connection of
photovoltaic power sources had reached the interconnection capacity of 1,170 MW.
612
63 43 4 5 7
Hydroelectric 1,605 Photovoltaic 612 Wind power 318
Geothermal 25 Biomass 65 Soya
104 MW
6 MW
Rumoi
66 MW Kamikawa24 MW
Hidaka 12 MW 1 MW Kushiro 2 MW 90 MW Okhotsk 92 MW Tokachi 128 MW Iburi 111 MW 14 MW Nemuro 23 MW 13 MW Ishikari 10 MW 73 MW Sorachi 29 MW Shiribeshi 3 MW 21 MW Oshima 4 MW 20 MW Hiyama 1 MW 83 MW (MW）
Photovoltaic power generation
· installed capacity: 612 MW
*As of March 31, 2015
Wind power generation · installed capacity: 318 MW
Wind and photovoltaic power generation sources introduced by the Subprefectural Bureau
Capacities of renewable energy source installations in Hokkaido (2,625 MW in total as of March 31, 2015)
Introduction of wind power and photovoltaic power in Hokkaido
Connection of photovoltaic power sources to the
grid under new operation rules
*The rules allow utility companies to ask renewable-power producers to curlail output without compensating for any resulting loss if renewable-power generation facilities connected to the grid exceed the interconnection capacity and could therefore hinder supply-demand balance.
*HEPCO plans to expand wind power interconnection capacity to 560 MW based on verification tests to be conducted using the Kitahon HVDC Link in conjunction with Tokyo Electric Power Company (TEPCO).
Commencement of feed-in tariff scheme (July 1, 2012)
HEPCO is engaged in a national project to
verify the feasibility of using a large-scale
storage battery system.
Under the project, such a system was
installed at the Minami-Hayakita
Substa-tion. Work is currently under way to verify
its performance in regulating output
fluc-tuations of wind power and photovoltaic
power generation and to develop
opti-mum control technology.
To make effective use of
pre-viously untapped hydro
energy, HEPCO promotes the
construction of small and
medium hydroelectric power
plants and the improvement
of existing hydroelectric
power plant outputs.
To further expand the introduction of wind power generation, HEPCO plans to
conduct verification tests using the Kitahon HVDC Link in conjunction with Tokyo
Electric Power Company (TEPCO). This will expand wind power interconnection
capacity by 200 MW to 560 MW.
Architectural rendering of the demonstration facility
Name Location Output Outline
16 MW
Shintoku-cho
Shin Iwamatsu Power Station (to be constructed)
Iwamatsu Power Station (to be abolished)
Installation site
Demonstration facility
Demonstration period
Demonstration items
Minami-Hayakita Substation (Abira-cho, Yufutsu-gun, Hokkaido)
Redox flow batteries (rated output: 15 MW; rated capacity: 60 MWh)
FY 2014 – FY 2019
Demonstration project outline Future plan
Large-scale Storage Battery System
Demonstration Project
Utilization of untapped energy in
hydroelectric power generation
Verification testing for broader
introduction of wind power generation
Livestock manure is a community-based source of renewable biomass energy
closely related to Hokkaido’s key livestock industry. HEPCO engages in R&D on such
biomass power generation in conjunction with Hokkaido University to develop
technologies for output control and methods of effective energy use.
Research and development on biomass
power generation using livestock manure
·Development of a frequency variation control technique based on the use of a storage battery system as a power source for frequency regulation
·Development of an operation method to handle surplus power (power margin to systematically reduce power system output) ·Evaluation of redox-flow battery performance
·Others
Shin Iwamatsu Power Station
The output of the aged Iwamatsu Power Station will be increased in conjunction with the upgrade of its generator and hydraulic turbines (subsequent operation as the Shin Iwamatsu Power Station).
■
1st phase: establishment of the Organization for Cross-regional Coordination of
Transmission Operators, Japan (OCCTO)
OCCTO was established in April 2015 to provide guidance on cross-regional interchanges of elec-tricity between providers when power shortages arise. Its mission also involves helping to develop the electricity transmission and distribution network required for inter-regional use of electricity. HEPCO will respond appropriately to ensure smooth operation with OCCTO.
■
2nd phase: full liberalization of the electricity retail market
The electricity retail market will be fully liberalized in April 2016.HEPCO will offer appealing products and services to its customers in order to remain their preferred choice.
■
3rd phase: legal separation of the power transmission and distribution sectors
In April 2020, the power transmission and distribution sectors will be legally separated into differ-ent companies.HEPCO will work to further secure the neutrality of general electricity transmission and distribu-tion as legally stipulated. The company will also establish a system to demonstrate the overall po-tential and efficiency of the HEPCO Group, and will additionally study ways to benefit customers.
FY 2014
▲
(Compiled by HEPCO in February 2013 based on a report published by the Expert Committee on Electricity System Reform and other materials) FY 2015
1st phase April 2015
2nd phase April 2016
3rd phase April 2020
OCC TO Commencement of operation
Preparations for intensified competition
Electric power system reform
In preparation for the full liberalization of the electricity retail market
and the intensified competition it will bring, HEPCO seeks to provide
appealing products and services in order to remain the preferred choice
of its customers.
Specific products and services under consideration include:
Toward further growth
◎Consideration of electricity sales outside Hokkaido
As part of efforts to expand its commercial sphere, HEPCO is extensively
considering sales of electricity outside Hokkaido with an eye to potential
developments such as the establishment of alliance with other businesses.
◎Consideration of gas supply business
With the completion of environmental impact assessment for the
Ishikariwan Shinko Power Station (HEPCO’s first liquefied natural gas
(LNG)-fuelled thermal power facility), LNG Tank construction and other
related initiatives have shifted into high gear. Accordingly, HEPCO added
gas supply to the list of business activities included in its articles of
incor-poration in FY 2015 in anticipation of future commercial development.
With an eye on trends of institutional reform for gas business, HEPCO
plans increased consideration of commercial gas supply and a wide
range of related matters in order to ensure customer satisfaction.
National government road map for electricity system reform
Amendment to the Electricity Business Act (1st phase)
▲Amendment to the Electricity Business Act (2nd phase)
▲Amendment to the Electricity Business Act (3rd phase)
Full liberal-ization of the electricity re-tail market
Abolition of rate regula-tions
Legal separation o f t h e p o we r transmission/dis tribution sectors Transition
pe-riod for aboli-t i o n o f r a aboli-t e regulations
○
Provision of new electricity tariffs based on the use of smart meters to
support efficient power usage by customers
○
Introduction of combined sales and points services based on
partner-ships with operators in different industries (e.g., telecommunications
carriers)
○
Improvement of online services and functions for even better
cus-tomer satisfaction
Response to Changes in the Management Environment
Human Resource Development
HEPCO is currently undergoing a generational change, with many veteran employees reaching retirement age and passing their duties on to younger workers. Against
this background, the company works to secure the necessary personnel for a stable power supply into the future, facilitate personnel training and ensure the transfer of
skills and techniques to junior workers.
◎In-house training facilities
Systematic human resource development and transfer of technical expertise
This center helps nuclear power plant operators
and maintenance workers as well as related
engi-neers to build knowledge and improve technical
expertise.
This center provides thermal power plant
engi-neers with opportunities to improve their skills in
plant operation and maintenance and build
capacity to respond to the deterioration of aged
equipment.
This center is designed to produce the technical
specialists required to ensure a stable power
supply based on education and training using
facilities and equipment.
Recycling of coal ash to produce soil improvement materials
The prolonged shutdown of the Tomari Nuclear Power Station after the Great East Japan Earthquake of March 2011 has caused a significant increase in CO2 emissions due to the increase in thermal power generation.
To support the establishment of a low-carbon society, HEPCO is committed to reducing CO2 emissions through a range of demand- and supply-side initiatives, including safe and stable nuclear power generation.
◎
Promotion of measures against global warming
HEPCO promotes a range of CO
2emission control initiatives, such as the
utiliza-tion of nuclear power generautiliza-tion on the major premise of guaranteed safety, the
expansion of renewable energy introduction (e.g., hydroelectric, wind and
pho-tovoltaic power), the improvement of efficiency in power generation,
transmis-sion and distribution, and the promotion of energy conservation.
◎
Promotion of a recycling-based society
HEPCO promotes the 3 Rs – reduction, reuse and recycling of waste – with the
target of recycling approximately 95% of all industrial waste produced (e.g., coal
ash and rubble) by FY 2017. The company also promotes green procurement,
which involves prioritising the purchase of environmentally friendly products.
Impacts of prolonged Tomari Nuclear Power Station shutdown
2015 2014
2013 2012
2011
(FY) 11.42
89.7
58.6
4.3 15.60
21.44
0.0 0.0 20.77 20.35
Environmental initiatives
Utilization of nuclear power generation
Promotion of energy conservation Expansion of renewable
energy introduction
improvement of power generation efficiency and reduction of transmission/distribution loss Expansion of renewable
energy introduction
Recycling of scrap electric wire to produce copper materials
CO2 emissions Tomari Nuclear Power Station facility utilization factor (%) 0 5 10 15 20 25 Facility utilization factor (%) CO2 emissions (million t-CO2)
0 20 40 60 80
100 Shutdown of Tomari Nuclear Power Station Unit 3
Shutdown of Tomari Nuclear Power Station Unit 1
and Unit 2
Coexistence with Local Communities
HEPCO actively engages in IR activities to allow
appropriate capital market evaluation. These
include timely and appropriate disclosure of
information to shareholders and investors as
well as the organization of regular company
information sessions and individual meetings
with institutional investors and others.
We also strive to further improve our corporate
value by reflecting opinions and feedback in
management policies.
HEPCO values communication with customers as
exemplified by the promotion of its business
activities and the provision of useful daily living
information via social media channels including
Facebook, Twitter and YouTube.
Tomarin-kan
Nuclear Power PR Center
Tomatoh-Atsuma Thermal Power Station
Hokuden Karyoku Naruhodo Center
Science games at
Omoshiro Laboratory
HEPCO Facebook page Company information session
Communication with shareholders and investors
HOKUDEN ASSOCIA is a member of the HEPCO
Group and a Special Subsidiary Company (a status
provided to businesses giving special consideration
to people with disabilities), in which people with
disabilities engage in printing, bookbinding, closed
caption production, merchandise sales and other
activities. HEPCO will continue to support the social
independence and social participation of people
with disabilities through employment.
Sales of Japanese larch soapSupport for the social independence and
social participation of people with disabilities
Communication of information using SNSs
PR facilities
This facility showcases a life-size nuclear reactor model and other exhibits to help visitors under-stand how nuclear power gener-ation works.
This facility gives visitors oppor-t u n i oppor-t i e s oppor-t o l e a r n a b o u oppor-t oppor-t h e mechanisms behind thermal power generation and provides an overview of the Tomatoh-Atsuma Thermal Power Station.
Organization Chart
(as of June 30, 2015)Corporate Profile
Chairman of the Board
Yoshitaka Sato
President and Director
Akihiko Mayumi
Member of the Board, Executive Vice President
Member of the Board, Executive Vice President
Member of the Board, Executive Officer
Member of the Board, Executive Officer
Member of the Board, Executive Officer
Member of the Board, Executive Officer
Member of the Board, Executive Officer
Member of the Board, Executive Officer
Member of the Board, Executive Officer
Director
Senior Corporate Auditor
Senior Corporate Auditor
Corporate Auditor Corporate Auditor Corporate Auditor Osamu Sakai Hiroyuki Onmura Taiji Togashi Masahiro Mori Hiroyuki Hayashi Michihiro Soma Ichiro Sakai Yutaka Fujii Hiroaki Furugori Ryoko Sasaki Kimihiro Honma Kanji Abe Shigeki Ichikawa Jun Hasegawa Yukihiro Shimomura
Internal Audit Sec. Secretary Office
Corporate Planning Dept. Planning Division
Environmental Affairs Office
Information Systems & Telecommunications Dept. Research & Development Dept.
Sales Dept. General Affairs Dept. (only in Sapporo) Branch Offices
Sales Dept. (only in Sapporo) HEPCO Contract Center
Service Offices Distribution Dept.
Engineering Dept.
Thermal Power Dept.
Nuclear Power Quality Assurance Office Nuclear Power Dept.
General Power Network Centers Trunk Network Work Center
Tomari Nuclear Power Office Hydropower Centers
Hydroelectric Power Plant Construction Offices Thermal Power Plant Construction Office Hydropower Dept.
Civil Engineering Dept.
Personnel & Labor Relations Dept. Public Relations Dept.
General Affairs Dept.
Accounting & Finance Dept. Purchasing & Contracting Dept.
Tomari Nuclear Power Station Power Network Centers Central Information and Telecommunications Office
Power Wheeling Center Central Load Dispatching Center
Fuel Office Coal Ash Recycling Promotion Office
Nuclear Fuel Management Office
General Training Center
Business Ethics Office Litigation Office Power Plant Siting Office
Thermal Power Plants Geothermal Power Plant Internal-combustion Power Plants
Tokyo Office Chairman President Executive Vice Presidents Executive Officers
Customer Service Division
Power Network Division
Power Generation Division
Business Support Division
Nuclear Power Promotion Division Secretariat Corporate Auditors Corporate Auditors Office
Corporate Data
(as of March 31, 2015)Board of Directors and Auditors
(as of June 25, 2015)Established
Capital Stock (non-consolidated)
Number of Shareholders
Total Assets (non-consolidated)
Number of Contracts
Peak Demand
(generating end, record renewed on January 12, 2011)
Electricity Sales (FY 2015)
Gross Income (ordinary revenue in FY 2015)
Number of Employees (non-consolidated)
May 1, 1951
¥114,291 million 84,854 1 ¥1,749,602 million 3,628,167 400,790 4,028,957 5,788 MW 11,236,731 MWh 2,428,869 MWh 16,144,550 MWh 29,810,150 MWh ¥668,989 million 5,709 Residential
Commercial and industrial Total
Hokkai Electrical Construction
Hokkaido Electric Meter Industry
HOKUDEN KOGYO
HOKUDEN SOGO SEKKEI
Hokkaido Power Engineering
The Tomatoh Coal Center
HOKUDEN ECO-ENERGY
Hokuden Service
Hokkaido Telecommunication Network
Hokuden Information Technology
HOKUDEN ASSOCIA
Hokkaido Records Management October 1, 1944
August 1, 1954
April 2, 1956
July 1, 1974
November 1, 1974
July 1, 1982
December 11, 1982
March 20, 1985
April 1, 1989
June 1, 1991
June 29, 2007
April 2, 2001
*Employee numbers are as of March 31, 2015.
Company name/Date of establishment (millions of yen)Capital Stock Employees*Number of Principal Business
1,288
174
298
152
1,220
40
118
2,008
239
396
34
22 1,730
30
95
30
1,660
5,000
1,860
50
5,900
200
300
10
HEPCO Group Companies
(as of June 30, 2015)Electrical and telecommunications works, civil engineering and construction, piping, air-conditioning and water supply/drainage facility works, disaster prevention/security equipment works
Maintenance, manufacture and sales of electricity meters, agency business of inspection, tests and installation of electric meters, machinery and equipment
Comprehensive construction consulting services in the fields of civil engineering, construction, electricity, environment and energy
Thermal power generation business, commissioned operation of thermal power plants, construction, maintenance, repair and operation of power generation facilities and various types of plants, consulting services
Unloading, storage and delivery of overseas coal, marine transport agency business, customs clearance
Hydroelectric power generation business, sales of electric power generated by solar power and other renewable energy, commissioned operation and maintenance of power generation facilities, consulting services
General management of buildings, civil engineering and construction, environmental conservation (e.g., greenery maintenance and management), sales of fuel, equipment and materials, public bathhouse business, cleaning/security service business, utility pole advertising
Business related to electricity meter inspection and electricity billing, design, investigation and maintenance of power distribution equipment, general consultation services concerning repair of housing appliances in all-electric homes, proposals for energy conservation
Telecommunications services, such as Ethernet communications networks and Internet connections, installation, maintenance, supervision and consulting of information communications networks, sales of network-related ma-chinery and equipment, security business
Consulting, development, operation and management, and education regarding information processing systems, sales of information processing equipment and software, Internet data center services, other information processing-related services
Design, printing and bookbinding, production of closed captions, sales of corporate merchandise and gift products, sales of everyday sundries, food, etc.
Head Office
2, Higashi 1-chome, Odori, Chuo-ku, Sapporo, Hokkaido 060-8677, Japan Tel: (81) 11-251-1111 URL: www.hepco.co.jp
Tokyo Office
Marunouchi Kitaguchi Building, 6-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005, Japan Tel: (81) 3-3217-0861
Enemo, the corporate mascot
Financial Section 2015
Year Ended March 31, 2015
1 Five-Year Summary (Consolidated Basis)
3 Financial Review (Consolidated Basis)
5 Business Risk
7 Consolidated Balance Sheets
9 Consolidated Statements of Operations
10
Consolidated Statements of Changes in Net Assets
11
Consolidated Statements of Cash Flows
13
Notes to Consolidated Financial Statements
14
Independent Auditor’s Report
29
Contents
Millions of yen
2015 2014 2013 2012 2011
. ... ...
.
Hokkaido Electric Power Co., Inc. and Consolidated Subsidiaries Fiscal years ended March 31, 2015, 2014, 2013, 2012 and 2011
Five-Year Summary (Consolidated Basis)
Statements of operations:
Operating revenue ... Operating income (loss)...
Net income (loss) ... Comprehensive income ... Ordinary income (loss)...
Net income (loss) (primary) ...
Cash dividends ... Net assets ...
Assets and capital:
Total assets ... Net assets ...
Financial indications(%):
Return on shareholders’ equity ...
2
Shareholders’ equity ratio ... Price earnings ratio* ...
*1
Per share of capital stock (yen):
Cash flows:
Cash flows from operating activities ... Cash flows from investing activities ... Cash flows from financing activities ... Cash and cash equivalents at end of period ...
Number of employees*3...
Diluted net income per share is not provided for 2011 and 2015 as there are no dilutive securities.
Diluted net income per share is not provided for 2012, 2013 and 2014 as there are no dilutive securities and the Companies recorded net loss. Price earnings ratio is not provided for 2012, 2013 and 2014 as the Companies recorded net loss.
Accounting for Hokkaido Electric Meter Industry, Hokuden Service and Hokuden Information Technology was previously conducted under the equity method. Since 2013, these organizations have been treated as consolidated subsidiaries in view of their importance.
*1
*2
*3
8,252 8,130
11,027 11,069 10,938
106,941 (107,282) 32,977 53,593 ¥ 126,535 (125,348) (19,231) 20,956 ¥ 94,331 (114,154) 50,763 152,016 ¥ (41,215) (113,125) 176,809 77,357 ¥ ¥ 13,912 (130,484) 160,292 121,077 ¥ ¥ ¥ ¥ ¥ (20.12) 19.54 2.96 24.37 1.88 9.81 (53.62) 10.78 — 27.76 66.08 — (38.76) 7.58 — (350.55) 50.00 1,538.44 ¥ 58.10 50.00 1,945.50 ¥ 14.30 — 613.70 ¥ ¥ ¥ ¥ (646.08) — 871.17 ¥ ¥ (306.34) — 657.60 ¥ ¥ ¥1,618,850 327,280 ¥1,641,561 410,741 ¥1,815,675
188,392 ¥ ¥
¥ ¥1,660,740 190,403 ¥ ¥1,782,776 146,731 ¥ 634,439 2,482 (72,066) ¥ 566,272 43,198 11,982 ¥ 692,925 4,750 2,938 (73,036) 11,619 ¥ ¥ ¥ ¥ 582,990 (115,493) (9,669) 29,287 (9,343) (128,184) (132,819) ¥ (131,591) ¥ 630,340 (80,168) (95,370) (62,972) ¥ (54,171) (6,551) ¥ 0 100 200 300 400 500
2011 2012 2013 2014 2015
Net assets Shareholders’ equity ratio
(billions of yen)
Net assets/Shareholders’ equity ratio
0 10 20 30 (%) 1
Operating revenues (left) Operating income (loss) (right) 700 500 600 300 400 200 100 0 (100) (200)
2011 2012 2013 2014 2015
Operating revenues/Operating income (loss)
GWh
2015 2014 2013 2012 2011
Other data (Non-consolidated):
Electricity sales:
Non-eligible customers
Eligible customers ... Residential ...
Electric power supply:
Generated by ...
Purchased power (net) ... Hydroelectric ... Fossil fuel ... Commercial and industrial ...
12,078 2,651 17,416 12,124 2,507 17,671 11,818 2,696 20,564 12,681 24,349 10,663 16,258 784 83 101 130 4,865 3,797 6,283 (3,429) (258) (8) (46) (172) (22) 16,670 32,145 32,302 31,184 3,773 3,858 3,422 35,083 32,898 28,685 (4,328) (3,963) (3,754) 32,145 32,302 31,184 11,595 2,602 23,441 — 145 6,772 3 12 (23) 16,439 30,636 3,875 27,461 (3,577) 30,636 11,236 2,429 22,804 — 162 6,809 (47) 16,145 29,810 3,394 26,360 (3,324) 29,810 Nuclear ... Renewable ...
Interchange power (net) ... Power used for pumped storage ... Transmission loss and other ...
2 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 Electricity Sales
Residential Commercial and industrial Eligible customers
(GWh) 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
Electric Power Supply (Generated by)
Hydroelectric Fossil fuel Nuclear Renewable
(GWh)
2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 31,239 32,898
35,083
28,685
27,461 30,636
31,451 32,302 32,145 31,184 32,302 32,145
31,184 30,636 29,810
32,898 35,083
28,685 27,461
Financial Review (Consolidated Basis)
Operating Performance
Electric Power Segment
Other
3
In the fiscal year ended March 31, 2015, operating revenue of Hokkaido Electric Power Co., Inc. Group (hereafter “the HEPCO
Group”) increased by ¥62,584 million (+9.9%) from the previous year to ¥692,925 million on a consolidated basis.
Meanwhile, operating expenses decreased by ¥22,334 million (−3.1%) from the previous year to ¥688,175 million.
Consequently, the HEPCO Group recorded operating income of ¥4,750 million, which was an increase of ¥84,919 million over
the previous year’s loss. It also recorded net income of ¥2,938 million due to the reversal of the entire reserve for fluctuation in
water levels despite factors such as the reversal of some deferred tax assets following the amendments to the Corporation Tax
Act and other statutes. The reserve for fluctuation in water levels had been retained until the end of the previous year to prevent net-asset impairment.
Electricity sales during the current fiscal year decreased by 2.7% from the previous year to 29.8 billion kWh on a consolidated basis.
Electricity sales to residential and commercial/industrial customers decreased by 3.7% to 13.7 billion kWh, primarily due to
efforts by such customers to reduce power consumption and lower heating demand caused by temperatures higher than those of the
previous winter.
Electricity sales to eligible customers decreased by 1.8% to 16.1 billion kWh, due chiefly to efforts to reduce power consumption
and also as a result of falling production in industrial customers.
Operating revenue in the electric power segment increased by ¥59,205 million (+9.8%) year on year to ¥662,237 million despite
decrease in electricity sales, due primarily to electricity rates raise and impacts of the feed-in tariff (FIT) scheme for renewable energy. Operating expenses decreased by ¥24,907 million (−3.6%) year on year to ¥660,954 million, chiefly due to lower fuel prices
and efforts to enhance the efficiency of overall operating activities, such as measures to reduce expenses in personnel, maintenance
and miscellaneous costs.
Consequently, the HEPCO Group recorded operating income of ¥1,283 million, which was an increase of ¥84,112 million over the previous year’s loss.
Operating revenue from other business increased by ¥3,379 million (+12.4%) year on year to ¥30,687 million, due chiefly to
increased sales in the construction industry. Operating expenses rose by ¥2,572 million (+10.4%) from the previous year to ¥27,221 million, mainly because of increased sales costs in the construction industry.
Financial Position
(Assets)
(Liabilities)
(Net assets)
Cash Flows
(Cash Flows from Operating Activities)
(Cash Flows from Investing Activities)
(Cash Flows from Financing Activities)
4 As of March 31, 2015, total assets stood at ¥1,815,675 million, up ¥32,899 million (+1.8%) from the previous year.
The rise in total assets was mainly due to capital investment, such as the construction works to secure safety of the Tomari Nuclear Power Plant, despite a decrease due to depreciation.
Net assets totaled ¥188,392 million, up ¥41,660 million (+28.4%) from the previous year, primarily due to an increased capital surplus caused by the issuance of preferred stock.
As a result, the shareholders’ equity ratio increased by 2.2 points from 7.6% of the previous year to 9.8% at the end of current
fiscal year.
Net cash provided by operating activities increased by ¥80,418 million (+578.0%) from the previous year to a net inflow of ¥94,331 million, chiefly due to a pre-tax loss turning into a pre-tax income.
Net cash used in investing activities decreased by ¥16,329 million (−12.5%) from the previous year to a net outflow of ¥114,154 million, chiefly due to acquisition of property, plant and equipment.
Net cash provided by financing activities decreased by ¥109,529 million (−68.3%) from the previous year to a net inflow of ¥50,763 million, chiefly due to a decrease in loans payable despite proceeds from the issuance of preferred stock.
Cash and cash equivalents at year-end stood at ¥152,016 million, up ¥30,939 million from the previous year.
Business Risk
(1) Nuclear power generation
(2) Facility faults
(3) Institutional changes surrounding electricity business and other considerations
(4) Economic conditions
(5) Weather conditions
(6) Fuel cost fluctuations
5
Major risks that could affect the HEPCO Group’s financial performance are outlined below. The forward-looking statements provided here speculate on possible scenarios as of June 26, 2015. The HEPCO Group recognizes these risks and seeks to avoid them or
deal with them if they occur.
The HEPCO Group works to maintain the reliability of power-generation/distribution facilities through steady implementation of
inspections/maintenance and other considerations. However, the group may incur costs in relation to the restoration of such facilities in the event of faults caused by natural disasters, mechanical failure or other influences.
Economic stagnation could affect the HEPCO Group’s financial performance, as electric power sales depend on economic and
production activities.
Fuel expenses are influenced by fuel-price and exchange-rate fluctuations. Accordingly, the HEPCO Group seeks to achieve a
balanced mix of power sources and diversify price fluctuation risk by using different contracting methods for fuel purchases. The group also operates a rate adjustment system by which fuel cost fluctuations are automatically reflected in electricity rates. However, significant fuel cost fluctuations and other factors could affect the group’s financial performance.
The HEPCO Group has positioned to ensure the safety of the Tomari Nuclear Power Plant as its top management priority. Under its president’s stewardship, the group is working to further improve the plant’s safety based on a Safety Enhancement Plan compiled in June 2014. Specifically, in addition to the emergency safety measures implemented for the facility since the March 2011 disaster, the
group has also worked to further enhance safety and reliability of the plant while conforming to new governmental regulatory requirements. It implements a variety of safety measures, including nuclear emergency drills for major accidents and other emergencies, and seeks to reinforce and improve the system put in place for such contingencies. In response to the July 2013 enforcement of new regulatory requirements, the group has been working to pass reviews on related conformity by submitting
applications for permission regarding nuclear reactor establishment/changes and other necessary documentation.
However, future developments relating to the review and other considerations could further prolong the suspension of the Tomari Nuclear Power Plant’s operations. This, along with ongoing higher fuel expenses, may affect HEPCO Group’s financial performance.
Future developments in the government’s energy policy could affect the HEPCO Group’s financial performance. These include detailed institutional design concerning electricity system reform, including full liberalization of the retail market and the separation of
power generation and transmission, as well as examination of an ideal energy mix and other matters.
Other factors that could influence financial performance include future developments in the area of environmental regulations concerning global warming as well as institutional reviews and cost fluctuations relating to the backend costs associated with nuclear
power generation and nuclear fuel cycle policy.
The financial performance of electric utility companies is affected by temperature and other weather variables because electric power sales depend on such conditions.
(7) Interest-rate fluctuations
(8) Business other than electricity
(9) Personal information management
The HEPCO Group had an interest-bearing debt of ¥1,298.1 billion at the end of fiscal 2015. This could influence the group’s financial performance depending on changes in market interest rates.
However, such influence is expected to be limited because most of the HEPCO Group’s interest-bearing debt has fixed interest
rates.
The HEPCO Group engages in business activities outside the field of electric power based on prior evaluation and appropriate management. Any deterioration of business environments and other factors could make it difficult for the group to engage in commerce as expected.
The HEPCO Group seeks to ensure appropriate management of personal information relating to its customers and other stakeholders based on the “Act on the Protection of Personal Information” by improving internal rules and providing employee training. However, unforeseen problems involving personal information leakage could affect the group’s financial performance.
Hokkaido Electric Power Co., Inc. and Consolidated Subsidiaries as of March 31, 2015 and 2014
Millions of yen
ASSETS 2015 2014 2015
Noncurrent assets ... $13,031,000
Electric utility plant and equipment (Notes 5 and 6) ... 9,310,225
Hydroelectric power production facilities ... 1,885,566
Thermal power production facilities ... 678,266
Nuclear power production facilities ... 1,984,316
Transmission facilities ... 1,407,708
Transformation facilities ... 658,808
Distribution facilities ... 2,291,058
General facilities ... 357,466
Other electric utility plant and equipment ... 47,008
Other noncurrent assets (Notes 5 and 6) ... 484,008
Construction in progress ... 797,916
Construction in progress ... 796,858
Retirement in progress ... 1,050
Nuclear fuel ... 1,212,433
Nuclear fuel in processing ... 1,212,433
Investments and other assets ... 1,226,400
Long-term investments ... 384,850
Deferred tax assets (Note 17) ... Net defined benefit asset (Note 16) ...
248,358
Other ... 477,016
Allowance for doubtful accounts ... (566)
Current assets ... 2,099,625
Cash and deposits (Note 12) ... 1,266,800
Notes and accounts receivable-trade ... 417,016
Inventories ... 311,783
Deferred tax assets (Note 17) ... 49,375
Other ... 58,558
Allowance for doubtful accounts ... (3,933) Total Assets ...
¥1,563,720 1,117,227 226,268 81,392 238,118 168,925 79,057 274,927 42,896 5,641 58,081 95,750 95,623 126 145,492 145,492 147,168 46,182 29,803 116,733 14,008 57,242 (68) 251,955 152,016 50,042 37,414 5,925 7,027 (472) ¥1,815,675 ¥1,556,356 1,008,848 106,130 87,242 237,231 173,813 79,293 274,353 44,545 6,238 58,264 196,403 196,293 109 129,574 129,574 163,266 48,192 37,031 15,677 62,451 (87) 226,419 121,077 44,953 47,490 3,726 9,654 (482) ¥1,782,776 $15,130,625
See notes to consolidated financial statements.
Consolidated Balance Sheets
Thousands of U.S. dollars (Note 1)
Millions of yen
LIABILITIES AND NET ASSETS 2015 2014
Thousands of U.S. dollars (Note 1)
2015
See notes to consolidated financial statements.
Noncurrent liabilities ... $10,573,191
Bonds payable (Notes 7 and 14) ... 4,409,441
Long-term loans payable (Notes 7 and 14) ... 4,542,691
Provision for reprocessing of irradiated nuclear fuel ... 461,658
Provision for reprocessing of irradiated nuclear fuel without specific plans ... 73,758
Asset retirement obligations (Note 18) ... 613,150
Other ... 135,341
Current liabilities ... 2,987,500
Current portion of long-term debt (Notes 7 and 14) ... 1,517,883
Short-term loans payable (Note14) ... 350,000
Notes and accounts payable-trade ... 336,358
Accrued taxes ... 115,333 80,149
Other ... 667,908
Reserves under the special laws ... Reserve for fluctuation in water levels ...
Total liabilities ... 13,560,691
Net assets (Note 1):
Shareholders’ equity ... 1,380,100
Common stock ... 952,425
Capital surplus ... 416,650
Retained earnings ... 162,416
Treasury stock ... (151,391)
Accumulated other comprehensive income ... 103,616
Net unrealized gains on available-for-sale securities ... 43,858
Minority interests ... 86,208
Total net assets ... 1,569,933
Total Liabilities and Net Assets ...
¥1,268,783
529,133
545,123
55,399
8,851
73,578
Net defined benefit liability (Note 16)... 40,456 337,133
16,241
358,500
182,146
42,000
40,363
13,840
—
—
—
—
1,627,283
165,612
114,291
49,998
19,490
(18,167)
12,434
5,263
Remeasurements of defined benefit plans (Note 16) ... 7,170 59,750 10,345
188,392
¥1,815,675
67,949 ¥1,336,470 599,130 540,040 60,659 8,511
71,343 38,436
18,348
280,182 104,290 53,000 46,766 8,175
19,391 19,391 1,636,044
113,978 114,291 21,174
21,197 4,076 17,121 11,555 146,731
¥1,782,776 $15,130,625
8
