Tohoku Electric Power Incorporated : Financial Results for the Second Quarter of Fiscal Year ending March 31, 2024 (FY2023) and for FY2023

TOHOKU ELECTRIC POWER CO., INC.

October 31, 2023

Financial Results for the Second Quarter of Fiscal Year ending March 31, 2024 (FY2023) and for

FY2023

Tohoku Electric Power Co., Inc. released its financial results for the second quarter of FY2023 (April 1, 2023 through September 30, 2023) today.

【Consolidated Financial Results】

The result of the second quarter is as follows: Total electricity sales volume decreased to 37.4 TWh, a year-on- year decrease of 4.8% because of a decrease in retail electricity sales volume due to a decreased industrial operations and energy-saving initiatives as well as the decrease in volume of wholesale electricity sales outside the area despite the increase in cooling demand due to higher temperature in summer comparted to the previous year.

Net sales increased to ¥1,387.8 billion, a year-on-year increase of ¥48.1 billion or 3.6%, mainly due to an increased retail income after the electricity rates review for high-voltage or extra-high-voltage power customers despite the decrease in sales to Japan Electric Power Exchange, etc.

Ordinary income was ¥219.1 billion, a year-on-year increase of ¥351 billion due to a significant increase in income resulting from time lag between fuel cost and fuel cost adjustment charges due to the decrease in fuel cost as well as an electricity rates review.

Net income for the quarter attributable to owners of the parent was ¥155.3 billion, a year-on-year increase of ¥291.7 billion.

Thus, although income and expenditures have improved significantly, equity-ratio was 13.5%, a year-on-year increase of 3.0% mainly due to the high level of interest-bearing debt of ¥3,379.4 billion.

Consolidated cash income* for this period was ¥228.8 billion.

For the overview of the financial results, see the attached sheet.

*Consolidated cash income

We set consolidated cash income as a financial target in the Tohoku Electric Power Group's medium- to long-term vision "Working alongside next".

(Target for 320 billion yen or more 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.)

(Attach sheet 1) Digest of financial results & projected consolidated results

(Attach sheet 2) Summary of financial results for the second quarter of fiscal year ending March 31, 2024 (Japanese standard) (Consolidated)

1

Key points of financial results and forecasts

Financial Results for the first quarter of FY2023

（First time in 4 years since FY2019）

• Operating revenue : mainly due to decrease in sales to wholesale power exchanges and revisions to electricity rates.
• Ordinary income : mainly due to increase in income from retail electricity sales thanks to revisions of electricity rates and the time lag between fuel cost and fuel cost adjustment charge.

Financial and Dividend Forecasts for FY2023

Summary of Financial Results	2
➢ Operating revenue	¥1,387.8 billion (a year on year increase of ¥48.1 billion)
	• Operating revenue increased mainly due to decrease in sales to wholesale power
	exchanges and revisions to electricity rates.
➢ Ordinary income/loss	¥219.1 billion (a year on year increase of ¥351.0 billion)
	• Ordinary income increased mainly due to a significant increase thanks to the time lag

effect of the fuel cost adjustment system due to lower fuel prices, and an increase thanks to a review of electricity rates.

➢ Net Income Attributable to	¥155.3 billion (a year on year increase of ¥291.7 billion)
Owners of Parent

【Summary of Consolidated Financial Statements】

(billions of yen)

		FY2022/2Q		FY2023/2Q		Change			Change
		(A)		(B)		(B) - (A)			(B) / (A)
Operating Revenue		1,339.7		1,387.8		48.1			103.6	%
Ordinary Income*1		(131.9)		219.1		351.0			-
[	9.0 ]	[	124.1 ]	[	115.0	]	[	-	%]
Net Income Attributable to		(136.3)		155.3		291.7			-	%
Owners of Parent
Consolidated Cash Income*2		110.3		228.8		118.4			207.3	%
		Mar. 31, 2023		Sep. 30, 2023		Change
		(A)		(B)		(B) - (A)
Equity ratio		10.5%		13.5%			3.0%
	[13.2%]*3		[16.1%]*3			[2.9%]
Interest-Bearing Liabilities		3,375.6		3,379.4			3.8

*1 Lower figures 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.)

*3 Equity ratio assuming 50% of the issued amount (140 billion yen) of the issued hybrid bonds as equity capital

Changing Factors in Consolidated Ordinary Income	3
from the Corresponding Period Last Year

• Income and expenditures have improved significantly due to an electricity rates review, increased operations in Joetsu Thermal Power Station, and time lag impact of fuel cost adjustment system due to lower fuel rates.
• Consolidated ordinary income was 219.1 billion yen, an increase of 351 billion yen from the corresponding period last year. (Income excluding time lag impact was 124.1 billion yen, an increase of 115 billion yen from the corresponding period last year.)

Increase of 351.0 Billion Yen（-131.9 → 219.1）

（billions of yen）

Time lag between fuel

cost and fuel cost

adjustment charges

FY2022.2Q -11.6 FY2023.2Q -15.0

Renewable energy grant	32.0
Network business	29.2
Decrease in hydropower due to
decrease in water output rate	-19.5
etc.

236.0

Current period

95.0

Rebound

from

FY2022.2Q

141.0

219.1

95.0

124.1

	Impact of exceeding	Revision of	13.0	46.4	Impact of time lag
	upper limit of fuel	electricity rate		Others	between fuel cost and
	cost adjustment unit	59.0	Increased operation	fuel cost adjustment
		price			charges
		of Joetsu
-131.9	-3.4						Ordinary income excluding
					time lag between fuel cost
		Increase of 351.0 Billion Yen		and fuel cost adjustment
				Charges
FY2022/2Q	Ordinary income excluding time lag between fuel cost and fuel cost	FY2023/2Q
			adjustment charges : increase of 115.0 billion yen

Impact of Time Lag between Fuel Cost and Fuel Cost Adjustment Charges	4
in the Second Quarter of FY2023

• The impact of the time lag in the same period of the previous year was a loss of 141.0 billion yen, but this fiscal year there was a profit of 95.0 billion yen, resulting in an improvement in profitability of 236.0 billion yen.
• The fuel cost adjustment unit price of the low-voltage regulation rate menu exceeded the upper limit, and the uncollectible income for this term was 15.0 billion yen. This was a decrease of 3.4 billion yen compared to the same period previous year.

FY2022/2Q

FY2023/2Q

Electricity Sales, Major Factors

5

➢Retail electricity sales	31.1 TWh (a year on year decrease 0.3 TWh)
	Decreased industrial operations and energy-saving initiatives, etc.
➢Wholesale electricity sales	6.3 TWh (a year on year decrease 1.6 TWh)
	Decreased contracts for full-time back up, etc.

(GWh)

	Electricity Sales*1			FY2022/2Q		FY2023/2Q	Change		Change
			(A)		(B)	(B) - (A)		(B) / (A)
	Lighting (Residential)	8,716		8,725	9	100.1	%
	Power	22,716		22,386	(330)	98.5	%
	Retail Electricity Sales*2			31,432		31,111		(321)	99.0	%
	Wholesale Electricity Sales*3	7,841		6,274	(1,567)	80.0 %
	Total of Electricity Sales			39,274		37,385		(1,889)	95.2	%
	*1 Individual figures of Tohoku Electric Power Co., Inc., excluding network business.
	*2 Retail Electricity Sales includes electric power for business use.
	*3 Wholesale Electricity Sales includes the volume of specified power interchange.
	Major Factors			FY2022/2Q		FY2023/2Q	Change
			(A)		(B)	(B) - (A)
	Crude Oil CIF Price ($/bbl.)		111.9		83.5	(28.4)
	Exchange Rate (¥/$)		134		141	7
	Hydro Power Flow Rate (%)		101.8		80.4	(21.4)
	Nuclear Power Utilization Rate (%)		-		-	-

					Segment Information (Consolidated)		6
													(billions of yen)
					FY2022/2Q(A)	FY2023/2Q(B)	Change (B) - (A)		Major factors for change
				Operating	Ordinary	Operating	Ordinary	Operating	Ordinary
				Revenue*	Income	Revenue*	Income	Revenue*	Income
			Power		1,010.4		1,139.6		129.2		• Increased income due to the revision of
				(131.4)	186.0	317.4		electricity rates, etc.
		Generation					•	Increased income due to the operations of
		and Sales		910.4		1,084.9		174.5			high-efficiency Joetsu Thermal Power Station,
							etc.
					541.3		412.4		(128.9)		•	Decreased income due to a decreased
									renewable energy electricity wholesale supply,
		Network			7.5		36.7		29.2		etc.
						•	Increased income due to a decreased
					304.8		181.9		(122.9)
									procurement costs in demand and supply
												adjustment market transactions.
					123.8		127.2		3.3		•	Increased income and profit mainly due to an
	Construction		0.4	0.9	0.4		increase in air-conditioning duct work for
		65.8	66.3	0.4		general customers and power distribution and
									transmission work.
					108.7		113.0		4.3		•	Increased income and profit due to an increase
			Others		7.2	8.6	1.3		in optical fiber loan income for general
								customers in the information technology &
					58.5		54.6		(3.9)			telecommunications business and a decrease in
									depreciation and amortization expenses, etc..
		Subtotal		1,784.3	(116.1)	1,792.4	232.3	8.0	348.5
	Adjustment		(444.6)	(15.7)	(404.5)	(13.1)	40.0	2.5
			Total		1,339.7	(131.9)	1,387.8	219.1	48.1	351.0
										* Lower figures of operating revenue are sales to outside customers.
		Changing Factors in Consolidated Ordinary Income
					Power
			FY2022.2Q	Network	Construction	Others		Adjustment	FY2023.2Q
			Generation

And Sales

Ordinary		29.2		0.4
317.4
See P9
Loss
-131.9
	See P8

1.3

Information and communications business etc.

2.5

Dividend income etc.

Ordinary

Income

219.1

Ordinary income excluding

time lag of fuel cost adjustment system

9.0

Increase of 351.0 billion yen

[ Ordinary income excluding time lag between fuel cost and fuel cost

adjustment charges : increase of 115.0 billion yen ]

Ordinary income excluding

time lag of fuel cost adjustment system

124.1

		Balance Sheets (Consolidated)		7
							(billions of yen)
		Mar. 31, 2023	Sep. 30, 2023		Change
		(A)	(B)		(B) - (A)
Total Assets	5,211.9	5,316.2	104.3
	Non-current	4,005.1	4,076.5	71.3	Construction in progress : 84.5
	Assets
	Current Assets	1,206.7	1,239.6	32.9
Total Liabilities	4,580.8	4,520.9	(59.8)
	Non-current	3,467.3	3,454.0	(13.3)
	Liabilities
		1,113.4	1,066.9	(46.5)
	Current Liabilities
Net Assets	631.0	795.2	164.1	Net income attributable to owners of
parent : 155.3
Interest-Bearing	3,375.6	3,379.4	3.8	Bonds	:	(35.0)
Liabilities	Commercial papers	:	45.0
Equity Ratio	10.5%	13.5%	3.0%
[13.2%]*	[16.1%]*	[2.9%]

*Equity ratio assuming 50% of the issued amount (140 billion yen) of the issued hybrid bonds as equity capital

Financial status (consolidated)

8

Interest-Bearing Liabilities		Equity		Equity ratio （Right scale）

（billions of yen, ％）

3,500														3,375	3,379	30
3,000	22.8				2,763								2,760			25
			2,714
		20.5	2,446			2,561	2,471	2,435	2,424			2,433
2,500					2,381	2,412
									17.3	17.9	18.3	18.5				20
	2,048	2,051						16.8
2,000			13.9			14.6	15.2						14.8
				12.6										13.5	15
				11.3
1,500													10.5
																10
1,000	892	827								762	791	826
							694	730	699		715
			584			601	629
			483	535							548
													5
500
0																0
	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023	FY

(As of Sep. 30)

Note : Green line shows equity ratio assuming 50% of the issued amount (140.0 billion yen) of the issued hybrid bonds as equity capital