Tohoku Electric Power Incorporated : Financial Results for the Fiscal Year ended March 31, 2022 (FY2021) and Financial Forecasts for the Fiscal Year ending March 31, 2023 (FY2022)

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April 28, 2022

Financial Results for the Fiscal Year ended March 31, 2022 (FY2021) and Financial Forecasts for the Fiscal Year ending March 31, 2023 (FY2022)

Tohoku Electric Power CO., Inc. released its financial results for FY2021 (April 1, 2021 through March 31, 2022)

and Financial Forecasts for FY2022 today.

࠙Consolidated Financial Resultsࠚ

Total electricity sales volume increased to 84.1 TWh, a year-on-year increase of 1.9%, due to an increase in retail electricity sales volume in reaction to the significant drop in the previous year resulting from COVID-19.

In addition, operating revenue decreased to ¥2,104.4 billion, a year-on-year decrease of ¥182.3 billion or 8.0%, due to the impact of the adoption of "Accounting Standard for Revenue Recognition*1."

Regarding ordinary loss, although depreciation decreased due to a change in the depreciation method, ordinary loss was ¥49.2 billion, a year-on-year decrease of ¥116.7 billion due not only to an impact of the time lag between fuel cost and fuel cost adjustment charges caused by soaring fuel prices, but also to an increase in electricity procurement costs resulting from rising JEPX prices and the shutdown of thermal power stations damaged by the earthquake off the coast of Fukushima Prefecture in February last year and March this year.

Regarding net loss attributable to owners of the parent, a gain on sales of shares of subsidiaries and associates was recorded as extraordinary income, a restoration cost of facilities damaged by the earthquake off the coast of

Fukushima Prefecture this March was recorded as extraordinary loss, and a loss on return of imbalance income and expenditure*2*3 in the Tohoku Electric Power Network was recorded as extraordinary loss. In addition, income taxes-deferred increased due to a partial reversal of deferred tax assets based on recent business performance trends. As a result, net loss attributable to owners of the parents was ¥108.3 billion, a year-on-year decrease of ¥137.7 billion.

Consolidated cash income*4 for this period was ¥257.3 billion.

*1 Accounting Standard for Revenue Recognition

With the adoption of the "Accounting Standard for Revenue Recognition" from April 2021, the "Electricity

Business Accounting Rules" has also been revised. Grant under act on purchase of renewable energy sourced electricity and surcharge for promoting renewable energy sourced electricity based on Feed-in Tariff Scheme for renewable energy, which were previously recorded as operating revenue, will no longer be recorded. The adoption of this standard has resulted in a decrease of ¥452.9 billion in operating revenue for FY2021, while expenses have also decreased by the same amount. Therefore, there is no impact on income.

*2 Imbalance

The difference between the planned and actual daily demand and supply submitted by the electric power generators and retail electricity providers to the power transmission and distribution business operator through the organization for cross-regional coordination of transmission operators is called Imbalance. The power transmission and distribution business operator supply or purchase the equivalent of this difference, then settle the balance based on the unit price of the imbalance rates.

*3 Loss on return of imbalance income and expenditure

Since the imbalance rates soared due to the tight supply and demand balance of electricity in January 2021, the

Electricity and Gas Industry Subcommittee held in December 2021 decided that a fixed amount of the imbalance rates paid by retail electricity providers, which were calculated based on a unit price of 200 yen/kWh or higher than the market price, will be deducted monthly from the wheeling fee from April. On this basis, Tohoku Electric

Power Network filed an application for special approval under the proviso of Article 18, Paragraph 2 of the

Electricity Business Act on January 27, 2022 to deal with it. Then, this adjustment is recorded as an extraordinary loss in the consolidated financial statements.

*4 Consolidated Cash Income

Consolidated cash income has been set as a financial target in the Tohoku Electric Power Group's medium- to long-term vision "Working alongside next." (Target for ¥320 billion in FY 2024)

Consolidated cash income = Operating income + Depreciation + Amortization of nuclear fuel + Share of profit of entities accounted for using equity method (Operating income doesn't include time lag between fuel cost and fuel cost adjustment charges.)

1

Key points of financial results and forecasts

Financial Result for FY2021

 Operating revenue : Impact of the adoption of Accounting Standard for

Revenue Recognition

 Ordinary Income : Impact of the time lag between fuel cost and fuel cost adjustment charges, rising JEPX prices and supply and demand due to the earthquake off the coast of Fukushima Prefecture

Financial and Dividend Forecast for FY2022

Summary of Financial Results

2

Operating revenue

¥2,104.4 billion

(a year on year decrease of ¥182.3 billion)

• • Operating revenue decreased due to the impact of the adoption of Accounting Standard for Revenue Recognition.

Ordinary income

-¥49.2 billion

(a year on year decrease of ¥116.7 billion)

• • Ordinary income decreased due to an impact of the time lag between fuel cost and fuel cost adjustment charges caused by soaring fuel prices, an increase in procurement costs resulting from rising JEPX prices and the shutdown of thermal power stations damaged by the earthquake off the coast of Fukushima Prefecture.

  Net Income Attributable to Owners of Parent

  -¥108.3 billion

  (a year on year decrease of ¥137.7 billion)

• • Gain on sales of securities (stocks of group companies) was recorded as extraordinary income.

• • Costs for restoration of facilities damaged by the earthquake off the coast of Fukushima Prefecture in March 2022 and loss on return of imbalance income and expenditure were recorded as extraordinary loss.

• • In addition, Income taxes-deferred increased due to a partial reversal of deferred tax assets based on recent business performance trends.

【Summary of Consolidated Financial Statements】

(billions of yen)

FY2020 (A)	FY2021 (B)	Change (B) - (A)	Change (B) / (A)
Operating Revenue*1	[ 2,286.8 1,867.2 ]	[ 2,104.4 2,104.4 ]	[ (182.3) 237.1 ]	[ 92.0 % 112.7 %]
Ordinary Income*1	[ 67.5 53.5 ]	[ (49.2) 56.7 ]	(116.7) [ 3.2 ]	[ - 106.1 %]
Net Income Attributable to Owners of Parent	29.3	(108.3)	(137.7)	- %
Consolidated Cash Income*2	302.3	257.3	(45.0)	85.1 %

*1 Lower figures of operating revenue are based on Accounting Standard for Revenue Recognition. Grant under act on purchase of renewable energy sourced electricity and surcharge for promoting renewable energy sourced electricity based on Feed-in Tariff Scheme for renewable energy, which were previously recorded as operating revenue, will no longer be recorded.

Those of ordinary income exclude time lag between fuel cost and fuel cost adjustment charges.

*2 Consolidate Cash Income = Operating income + Depreciation + Amortization of nuclear fuel + Share of profit of entities accounted for using equity method

(Operating income doesn't include time lag between fuel cost and fuel cost adjustment charges.)

Changing Factors in Consolidated Ordinary Income from the Corresponding Period Last Year

3

Decrease of -116.7 Billion Yen (67.5 → -49.2)

(billions of yen)

1.7

-16.6

Decrease in the

44.1

volume of retail Impact of supply electricity sales and demand due to the earthquake off the coast of

Change in depreciation method

Fukushima Prefecture

-50.0

OthersTime lag between fuel cost and fuel cost adjustment charges

24.1

67.5

Impact of JEPX prices increase

-120.0

-49.2

Ordinary income excluding time lag between fuel cost and fuel cost adjustment charges 53.5

Impact excluding Time lag between fuel cost and fuel cost adjustment charges：increase of about 3.2 billion yen

Ordinary income excluding time lag between fuel cost and fuel cost adjustment charges 56.7

• • Reaction to last year's impact ofCOVID-19

  5.7

• • Impact of temperature and competition

-4.0

FY2020

• Decrease in retirement benefit expenses 8.2

• Decrease in repair expenses 7.9

• Decrease in retirement expenses 3.3

FY2021