Hokkaido Electric Power Incorporated : Hepco Group Report 2022 (Integrated Report)

INTEGRATED REPORT

HEPCO Group Report 2022

2022

CONTENTS

Editorial Policy

HEPCO Group participates in the following initiatives.

INTRODUCTION

Content & Editorial Policy・ ・・・ 1 Business Foundation・ ・・・・・・ 2

Corporate Philosophy & Vision・・ 3 President's Message・ ・・・・・・ 4

VALUE CREATION STORY

Value Creation Process・・・・・ 9

Management Vision 2030・ ・・ 13 Carbon Neutral by 2050・ ・・・ 17

ESG: OUR VALUE CREATION FOUNDATION

ESG Initiatives・・・・・・・・・・ 41

Environment・・・・・・・・・・ 43

Social・・・・・・・・・・・・・ 55

Governance・ ・・・・・・・・・ 61

VARIOUS DATA

SASB INDEX・・・・・・・・・・ 73

Financial Information・ ・・・・・ 77

The HEPCO Group Report is an integrated report that provides a systematic account for our stakeholders of the HEPCO Group's business operations, ESG activities, as well as other non- financial and financial information.

So that our stakeholders better understand the value that we provide and the ideals to which we aspire, this report presents those first in the form of our value creation process comprising the capital and business model that are the source of our value creation. This report also describes

The Task Force on Climate-Related Financial Disclosures (TCFD) Consortium, which is made up of companies and other organizations endorsing TCFD recommendations. More information is available on pp. 43 to 45.

Sustainability Accounting Standards Board (SASB) standards guide information disclosure. These are described in more detail on pp. 73 to 76.

The Carbon Disclosure Project (CDP) is an NGO working on environmental issues and headquartered in the United Kingdom. Since FY2021, the HEPCO Group has responded to the CDP's climate change questionnaire.

VALUE CREATION

INITIATIVES

Power Generation・ ・・・・・・・ 21

Nuclear Power・・・・・・・・ 23

Thermal Power・ ・・・・・・・ 26

Renewable Energies・ ・・・ 28 Retail Electricity Business・・ 31 Power Transmission & Distribution

Business・ ・・・・・・・・・・・・ 33

Peripheral Businesses

Hydrogen Utilization・ ・・・・ 37

Electrical Construction &

Communications Business・・ 39

Efficiency Enhancement

Initiatives・・・・・・・・・・・・・ 40

Corporate Information・・・・・・ 83

the progress we are making toward achieving our management vision and initiatives to be carbon neutral.

Thorough explanations are provided for each ESG factor, describing our climate change response based on the TCFD framework for our environmental criteria, diversity promotion and health and safety initiatives for our social standards, and efforts to enhance the effectiveness of our Board of Directors regarding corporate governance.

It is our hope that the format of this report will be understandable, easy-to-read, and provide our stakeholders with the information that they need.

We welcome your candid opinions and impressions, and hope you will share them with us.

[Publication date] October 2022

[Period covered] FY2022 (April 1, 2021 to March 31, 2022)

(Some information has been included that goes beyond the aforementioned period.)

[Inquiries] Investor Relations Group Corporate Planning Department

Hokkaido Electric Power Co., Inc.

Tel: [phone]

■ (Online Inquiries)

「Rainbow Post」 https://www.hepco.co.jp/mailpost/mailpost.html

Notes on Forward-Looking Statements

Future plans, forecasts and other outlooks about the HEPCO Group published in this report are based on currently available information and involve potential risk and uncertainty. Therefore, changes in future economic and market conditions, fluctuations in fuel prices, revisions of relevant laws and regulations, as well as changes in a variety of factors may lead to variations in actual performance, business conditions, and other expectations that differ from those anticipated in this report.

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HEPCO Group's

Business Foundation

Hokkaido

The HEPCO Group's business foundation is Hokkaido, the region where we have put down roots and developed our businesses. We will grow hand in hand with the development of this vast northern territory, a land of great bounty and, at times, trial.

Geography

Hokkaido is Japan's northernmost island, lying at roughly the same latitude as Chicago, Rome, Milan, and other major cities around the world (41~45 degrees north latitude).

Hokkaido covers 83,424km², accounting for 22% of Japan's land area. It is the largest prefecture and equivalent in size to Austria.

Japan Population by Region

Area:83,424km2 Population:5.18million

(Approx. 22% of Japan's land mass)	(As of January 1, 2022)
		Hokkaido
	Kinki	5.18million
Chugoku	22.27 million
7.23 million

Kyushu/Okinawa 14.29 million

	Tohoku
	8.57 million
	Kanto
	43.48 million
	Chubu
Shikoku	21.17 million
3.73 million

Source: "Municipalities Area Statistics of Japan, 2022" published by the Geospatial Information Authority of Japan, Ministry of Land, Infrastructure, Transport and Tourism (as of April 1)"

"Population, Population Movements, and Number of Households Derived from the Residential Basic Book (as of January 1, 2022)," Ministry of Internal Affairs and Communications

Climate

Almost all of Hokkaido has a subarctic climate. Temperatures are low throughout the year with considerable differences distinguishing each of the four seasons. Winters, in particular, will see continuing days with subzero temperatures.

Although there is substantial snowfall in winter, Hokkaido does not have a rainy season nor is it affected much by typhoons, consequently Sapporo has less rainfall than Tokyo.

Comparison of Sapporo and Tokyo Temperatures and Rainfall

(30-year average 1991~2020)

	Annual average	Annual rainfall
	temperature (℃)	(mm)
Sapporo	9.2	1,146
Tokyo	15.8	1,598

Sapporo & Tokyo monthly change

（℃）Average temperature (℃)		Sapporo		Tokyo	Rainfall (mm)	Sapporo	Tokyo（mm）
30												300
25												250
20
15												200
10
5												150
0												100
-5
-10												50
-15
-20	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug Sep	Oct	Nov	Dec	0

Prepared by HEPCO based on "Sapporo & Tokyo Averages (Annual & Monthly)" published by the Meteorological Agency

Food Self-Sufficiency

Over the long-term, Japan's food self-sufficiency rate tended to decline due to dietary changes such as greater consumption of livestock products, oils, and fats even as rice consumption has decreased. In recent years, this trend has remained flat.

Japan's calorie-based food self-sufficiency rate was 38% in FY2020, which is lower than other countries. However, Hokkaido's rate exceeds 200%, the highest nationwide.

Calorie-Based Food Self-Sufficiency Rate (FY2020)

（%）
250	233
									216
200
		169
150				131
			121
100					84
					70
						58
							50
50								38
0	Canada	Australia	States	France	Germany	United	Italy	Switzerland	Japan	Hokkaido
	United	Kingdom

Prepared by HEPCO based on "World Self-Sufficiency Rates" published by the Ministry of Agriculture, Forestry and Fisheries, and "FY2020 Figures" by the Hokkaido Regional Agricultural Administration Office.

HEPCO Group Report 2022

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• HEPCO Group Management Philosophy and Vision 】

The principal mission of the HEPCO Group is to keep the lights on in Hokkaido, support the regional economy as well as our

customers' lives even in a business climate of significant change.

Based upon our enduring management philosophy, all employees share the vision of the kind of company that the HEPCO Group

aims to be and work to sustainably enhance corporate value.

HEPCO Group Management Philosophy

Respect for	Contribution	Efficient
to local
humanity	management
communities

In fulfilment of our management philosophy, we recognize that the HEPCO Group cannot develop unless the local community also enjoys sustained development. We will always live up to our responsibility as a member of society, contribute to its development and the economy, as well as foster culture through the provision of products and services integrating electric power.

Corporate Vision

True to our slogan "light up your future," we support sustainable development of the region through fulfilment of our responsibility to supply energy.

Adopting a fresh perspective, we aggressively take on challenges to grow and develop further as a total energy services corporate group.

We manage our business operations in a nimble and agile manner, reinforce our business foundation, and meet the expectations of our stakeholders.

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Representative director Chief Executive Officer

President's Message

We will do our utmost to meet the carbon neutral challenge and blaze a trail for decarbonization in Japan

Management Philosophy & Mission

Since our founding in 1951, the HEPCO Group's primary mission has been to keep the lights on for the people of Hokkaido. We have strived to provide a stable supply of electric power by leveraging technology and reliably meeting the social challenges faced in each generation. Based on our management philosophy mandating 'respect for humanity,' 'contribution to local communities,' and 'efficient management' and our recognition that the HEPCO Group cannot develop unless the community develops, we have always valued conducting our business together with members of the local community.

We are all aware that addressing climate change is an urgent challenge the entire world faces. Against the backdrop of Russia's invasion of Ukraine and other events, I feel a renewed awareness has arisen of the value of electric power and the significance of electric power companies from the standpoints of the importance of energy security and self-sufficiency. The HEPCO Group is called upon to contribute to achieving carbon neutrality with the aim of eliminating greenhouse gas emissions as we continue to fulfill our mission of providing a stable supply of electric power. While maintaining our focus on the 'co-creation' approach that creates new value with the community, we will do our utmost to meet the challenge of being carbon neutral and contribute to the sustainable development of our region.

Leveraging Hokkaido's blessings

Hokkaido, the foundation of our business, is blessed with some of the most abundant natural energy resources anywhere in Japan. In addition to wind

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