Tokyo Electric Power : TEPCO Integrated Report 2022

Integrated Report 2022

Purpose and value creation

TEPCO Group's Mission

Develop the future of energy Deliver a comfortable life

We commit to fulfilling our responsibilities to Fukushima. We pursue expanding possibilities in the world of energy and deliver value beyond the expectations of individual customers.

We strive to earn the trust of our customers and partners. We create value focusing on global carbon neutrality and regional disaster preparedness

for a safe and sustainable society.

• Top priority on safety
• Fulfill our responsibilities
• Customer-focused
• Dare to innovate

Mission

Vision

Values

Our Mission is to give all stakeholders, including regional residents , our customers, and business partners, "a comfortable life" not just by providing a stable source of electricity and gas, but also by providing value that exceeds each individual's expectations through our efforts to "Develop the future of energy". This is also our "Purpose" as an energy provider.

Our Vision looks five to ten years into the future. The TEPCO Group's business is built upon the trust of our stakeholders. In order to create a safe and sustainable society, we will engage in initiatives to create new value from carbon neutrality and disaster prevention as we aim to become a corporate group that continues to be trusted and chosen by the people

Our Values are the standards of conduct for achieving our Mission and Vision of which each and every employee have to remain constantly aware. The principles of conduct indispensable to the TEPCO Group are "top priority on safety" and "fulfill our responsibilities." We will grow as a company along with our employees by continuing to put the "customer- focused" and implementing "dare to innovate".

We are pursuing the possibilities of energy in order to provide value that exceeds the expectations of our customers.

In anticipation of changes to our energy supply-demand structure, we at the TEPCO Group are developing independent and distributed demand-side energy systems as we seek to create social value that centers around carbon neutrality and preparedness.

The TEPCO Group views the trend towards carbon neutrality as a business opportunity and we shall leverage our strengths, such as interaction with our customers and our technical prowess, etc., to drastically shift the focus of our business model from the sale of electricity to facility services that revolve around electricity thereby increasing corporate value.

TEPCO Integrated Report 2022

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Purpose and value creation

TEPCO Integrated Report 2022 Executive Summary

Mission

Develop the future of energy Deliver a comfortable life

We commit to fulfilling our responsibilities to Fukushima. We pursue expanding possibilities in the world of energy and deliver value beyond the expectations of individual customers.

Vision

We strive to earn the trust of our customers and partners. We create value focusing on global carbon neutrality and regional disaster preparedness for a safe and sustainable society.

Materiality

During FY2022, we identified 18 key business issues through significance assessments and are in the process of setting objectives for each of these issues. We have also selected executive officers to be in charge of each of these business issues and the degree to which objectives have been achieved will be one of the factors used to determine the remuneration given to these parties.

Examples of issues in important areas	key management issues (Material Issues	Financial objectives
(Board of Director management)	Managed by the Board of Executive Officers)
	Involvement in urban development and
[Fukushima Initiatives] Balancing	initiatives for eliminating harmful rumors
Contributing to recovery in Fukushima through
recovery with decommissioning (steady
the steady implementation of decommissioning/
initiatives for disposing of treated water)
	contaminated water countermeasures based
	upon the Mid/Long-Term Roadmap
[Business foundation] Human resource	Strategic development/deployment of human	Create annual profits
development and establishment of a new	on the order of ¥450
resources to maximize corporate value
billion from FY2030
corporate culture
		onward
[Nuclear power business] Nuclear	Cooperating with inspections and
power/nuclear fuel cycle (thoroughly	implementing safety measures in order to	(Renewable energy
implementing safety measures at the	recommence operation of the Kashiwazaki-
business) Earn net
Kashiwazaki-Kariwa Nuclear Power Station	Kariwa Nuclear Power Station
profits on the order
	Revamping our business portfolio in new areas
	of ¥100 billion in
	of business in order to increase corporate value	FY2030
[Increasing corporate value]	Implementing measures based on ESG strategies
Customer value creation/enlargement in
Increasing the value of offered retail energy services
anticipation of a carbon neutral society
(promotion of key businesses)	Establishment of a world-leading business
	management foundation
	Use of renewable energies for primary power sources
	Refer to pages 28-29 for details.

• TEPCO Integrated Report 2022

Fulfilling our responsibilities to Fukushima

In order to fulfill our responsibilities to Fukushima, the TEPCO Group is quickly and appropriately providing compensation, engaging in activities to promote recovery, and safely and steadily engaging in the decommissioning process while prioritizing efforts to regain the trust of regional residents.

Compensation and recovery initiatives based upon our "three resolutions*"

In conjunction with the lifting of evacuation orders, the situations of evacuees are changing in various ways. In light of this, we continue to listen carefully to each individual to understand their situation, and quickly provide suitable compensation based upon our three resolutions. Furthermore, we are providing both manpower and technical cooperation to ensure that the environment to which evacuees return is livable by contributing to national and local government projects to help businesses rebuild, and restoring/revitalizing town/city functions.

Completing decommissioning while coexisting with the region

In order to move safely and steadily forward with the decommissioning of the Fukushima Daiichi and the Fukushima Daini nuclear power stations, which includes initiatives to handle water treated with multi-nuclide removal equipment (ALPS treated water), and promote "balancing recovery with decommissioning" by vitalizing decommissioning-related industries, we shall engage in two-way communication with regional residents as we aim to complete decommissioning while coexisting with the region.

*1. Provide compensation to everyone who needs it; 2. Provide compensation quickly and meticulously; 3. Respect settlement proposals

Refer to pages 78-87 for details.

Stable supply

The TEPCO Group engages in initiatives to secure supply and minimize price fluctuations so that our customers can use electricity without worry. Securing supply

The power supply-demand situation from the end of March until the end of June 2022 was tight, however by implementing supply-side countermeasures along with demand-side countermeasures, such as enlisting the cooperation of society to save electricity, etc., we were able to avoid power outages. As we head into winter, we shall secure enough supply through a public appeal for additional supply power. Furthermore, in order to stabilize supply-demand, we are aiming to recommence operation of nuclear power stations by making every effort to improve safety, such as cooperating with additional inspections by the Nuclear Regulatory Agency, and obtaining the understanding of regional residents, which is the most important matter. Minimizing price fluctuations

In light of the drastic fluctuations and rising prices in Japan's wholesale power market, we have revised electricity rates for our special high-voltage and high-voltage customers. We know that this will cause an inconvenience, but we are accelerating initiatives to save energy and electricity along with customers in order to reduce this burden. In particular, we are expanding our energy-conservation/electricity-saving services and also providing assistance for air-conditioning cleaning and the purchase of equipment used to manage power use, which are unique measures taken by the TEPCO Group.

Refer to pages 30-31 for details.

Purpose and value creation｜TEPCO Integrated Report 2022 Executive Summary

Aiming to increase corporate value and create social value ~An overview of ESG initiatives~

Environment

The TEPCO Group views the trend towards carbon neutrality as a business opportunity and we have announced our carbon neutrality business plan as a

Business model reform and urban development initiatives

We will drastically shift the focus of our business model from electricity (kWh) sales to facility services that closely impact our customers. Furthermore, we shall promote initiatives to enlarge the scope of these new services on the order of entire communities.

Past business of TEPCO

Future business of TEPCO

strategy for creating value that will help us achieve our vision. Furthermore, we are also developing information disclosure pertaining to climate change, which includes carbon neutrality objectives, based upon stakeholder engagement and TCFD guidance that was revised in 2021.

Carbon neutrality declaration

FY2030 objectives	2050 objectives
Reduce CO2 emissions originating from the	Reduce CO2 emissions originating from
sale of power to 50% of FY2013 levels*1	the supply of energy to essentially zero

*1: From Scope 1, 2 and 3 power sales. Scope 1 and 2 emissions will be reduced to FY2019 levels

	Community
	Corporation
	Household
kWh sales business	Aggregation
	Facility
kWh	kWh

Electrical and environmental values Aggregation business

＋

Customer-oriented facility

service business

＝

We will reform the business model to realize a carbon neutral society together with individuals, corporations and local governments.

• The achievement level of the FY2030 objective is approximately 85% (CO2 emissions: 80 million tons CO2)*2 and the CO2 emission coefficient is 0.452 kg-CO2/kWh*2

*2: Latest figures

Scenario analysis

The results of our analysis of multiple carbon neutrality scenarios suggest several things.

• We expect an increase in demand-side electrification and distributed power sources, household power generation and consumption, as well as locally- produced/locally-consumed power.
• The fluctuation output of solar and wind power creates the risk of mismatched supply and demand, so the key to stable supply is to "store and use" power by leveraging storage batteries and hydrogen, etc.
• We expect an increase in the use of CO2-free electricity, such as renewable energies, etc., as well as the use of hydrogen/ammonia, etc.

Reflecting the revised TCFD guidance

We are further disclosing information pertaining to climate change based on the revised TCFD.

• Director remuneration reflects ESG performance level
• Carbon neutrality measure cost
• Carbon neutrality-related investment
• Internal carbon pricing
• Climate-relatedassets
• The financial impact of risks/opportunities and response strategies
• Transition plan

Refer to pages 32-41 for details.

Social	Refer to pages 42-49 for details.

Human capital investment linked to management strategy

Our human resource management strategy focuses on for priority issues

(1)Human resource strategies that accelerate "ambidextrous management"

(2)Diversity and inclusion (3)TEPCO work innovation (4)Foundation strengthening Refer to pages 50-55 for details.

Promoting initiatives to respect human rights

In August 2021, we announced the TEPCO Group's Human Rights Policy that is based on the United Nations' Guiding Principles on Business and Human Rights, and we engage in human rights due diligence while also constructing mechanisms to handle complaints and taking remedial action.

Refer to pages 57-58 for details.

Governance

Improving the effectiveness of the Board of Directors

In order to ensure the objectivity of assessment processes and results, we enlisted the assistance of a third party during our FY2021 effectiveness assessment. As with last fiscal year, the Board of Directors has been deemed effective, but we are striving to further improve effectiveness through further improvements.

Refer to pages 23 for details.

TEPCO Integrated Report 2022

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