Corporate Information

Press Release (Mar 27,2006)
Fiscal 2006 Business Management Plan

Tokyo Electric Power Company (TEPCO) announced the establishment of
its fiscal 2006 Business Management Plan, setting out the issues and
main management targets that the TEPCO Group will address on a priority
basis over the next three years, with the aim of achieving further growth
and development and continuous improvement in corporate value.

In October 2004, TEPCO announced Management Vision 2010, the medium-term
management policy of the TEPCO Group for the period up to fiscal 2010.

The fiscal 2006 Business Management Plan serves as an action plan for working
toward the objectives of Management Vision 2010 over the coming three years
in line with the three Group Management Guidelines, "Win the Trust of
Society," "Compete and succeed," and "Foster People and Technologies," and
presents the targets to be achieved in the three-year period from fiscal 2006
through fiscal 2008.

The main points of the Fiscal 2006 Business Management Plan are as follows:

I. Win the Trust of Society
The entire TEPCO Group works together to provide a stable and secure supply
of energy, ensure safety and control quality, and strictly observe
corporate ethics, laws and regulations.

In response to the global warming, TEPCO also promotes safe, stable
operation of its nuclear power stations, improvement of thermal power
efficiency, increased use of renewable energy sources and utilizing the
Kyoto Mechanism in order to achieve the environmental contribution goals
set forth in Management Vision 2010 (reduce CO2 emission intensity to 20
percent below 1990 levels by fiscal 2010).

Outlook for Electric Power Demand
While the Japan's economy is expected to grow at a rate of around 1.5
percent per year for the medium to long term, the annual growth rate of
electric power demand is expected to average 1 percent (after adjustments
for air temperature) from fiscal 2004 to fiscal 2015 due to intensifying
competition from other energy producers and advances in energy conservation.
Although demand for cooling in summer mainly for residential and commercial
use is expected to increase, the average annual growth rate of peak demand
is expected to average 1.1 percent (after adjustments for air temperature)
from fiscal 2004 to fiscal 2015 due to factors such as promotion of thermal
storage air-conditioning units.

Despite an expected increase in industrial demand amid a gradual economic
recovery, electricity sales volume in fiscal 2006 is expected to decrease
0.4 percent year on year to 287.1 billion kWh due to a drop in demand for
cooling and heating following the hot summer and severe winter of fiscal
2005. This will be the first year-on-year decrease in three years.

Summer net peak demand (one-day peak at generation end) is expected to be
61.2 million kW, assuming normal summer temperatures.

Outlook for Electricity Sales Volume and Peak Demand
Electricity Sales Volume
Peak Demand (one-day peak at generation end)
Power Generation Facility Plan TEPCO will continue to steadily promote the best mix of power sources centered on nuclear power based on its fundamental duty to ensure stable supply and energy security, with overall consideration of factors such as economics, operability and environmental compatibility.
Major Power Generation Facility Plans
Wide Area Power Generation Development Plan
Generating Capacity at Fiscal Year-End & Power Output
II. Compete and Succeed Amid intensifying competition, the entire TEPCO Group will work together to achieve customer satisfaction by providing total solutions that meet their increasingly diversified and sophisticated needs quickly and accurately. The Group will also promote cost reduction in all fields. Promote Marketing Activities Aimed at Customer Satisfaction TEPCO aims to expand electricity sales volume by around 5 billion kWh over the three year-period from fiscal 2006 through fiscal 2008, in line with the Management Vision 2010 target of expanding cumulative electricity sales volume by at least 10 billion kWh over the period from fiscal 2004 through fiscal 2010. 1) Corporate and Large-scale Customers .TEPCO will offer efficient energy systems that contribute to reducing costs, energy consumption and CO2 emissions through an optimal combination of various electricity rate options and electrical equipment and systems tailored to each customer's current needs and plans. .To meet diverse and sophisticated customer needs, TEPCO and its Group companies will work together to become a one-stop source of total solution services encompassing not only the supply of electricity, gas, steam and other types of energy, but also planning, construction and maintenance of facilities including telecommunications; environmental review; off-balance-sheet transactions; business outsourcing; and other matters. 2) Household Customers .TEPCO will encourage customers to adopt all-electric housing by promoting its comfort, energy efficiency, environmental friendliness, dependability, safety and superior economy through mass media advertising such as television commercials and the Switch! campaign. In addition, TEPCO will continue conducting marketing activities that target house planners, builders and sellers, with the aim of increasing the ratio of all-electric new housing to 22 percent (roughly equivalent to 95,000 homes) by fiscal 2008.
Electricity Sales Volume Expansion Targets
All-Electric New Housing Targets
Promote Cost Reductions TEPCO's goal under Management Vision 2010 is to improve operating efficiency in fiscal 2010 by at least 20 percent compared with fiscal 2003. To achieve this, TEPCO will mobilize the Group's overall strengths to reduce costs in all fields in ways such as rationalizing facility configuration, operation and maintenance and reviewing business processes, with facility safety and securing quality as major premises. Capital Expenditure Levels TEPCO will undertake an average of around ¥620 billion in annual capital expenditures over the three-year period from fiscal 2006 through fiscal 2008, which is unchanged from levels in the previous plan.
Capital Expenditures
Reduce the Number of Employees TEPCO will reduce the number of employees to a total of 37,500 by the end of fiscal 2008 through strict application of ongoing measures to increase efficiency, including operational and organizational revisions and facility automation.
Number of Employees and Electricity Sales Volume per Employee
Develop Profitable New Businesses to Ensure Growth Potential Based on thorough selection and concentration, TEPCO will work to achieve sustainable growth and development for the entire TEPCO Group by promoting new businesses in the four areas of information and telecommunications, energy and the environment, living environment and lifestyle-related and overseas.
Initiatives in the Four New Business Areas
Operating Revenues and Operating Income Targets for Businesses Other than Electric Power Reflecting the comprehensive alliance with KDDI in the information and telecommunications business, TEPCO has revised the numerical targets of Management Vision 2010 (previously, operating revenues of at least ¥600 billion and operating income of at least ¥60 billion in businesses other than electric power) as shown below. In conjunction with this, TEPCO aims to achieve the following targets in its fiscal 2006 business management plan. Specific Targets for Businesses Other than Electric Power Under Management Vision 2010: .Operating revenues of at least ¥300 billion .Operating income of at least ¥50 billion by fiscal 2010 Under the Fiscal 2006 Business Management Plan: .Operating revenues of around ¥270 billion .Operating income of around ¥40 billion by fiscal 2008
Operating Revenue Targets for Businesses Other than Electric Power & Operating Income Targets for Businesses Other than Electric Power
Reference Information and Telecommunications Business .TEPCO will commence offering full-scale integrated fiber-to-the-home (FTTH) services with KDDI. .TEPCO will offer a variety of services that utilize high-speed PLC* and other information and telecommunications technologies, including Internet, energy management, home security and home electronics control services. *High-speed PLC (Power Line Communication): High-speed telecommunications using existing electrical distribution lines and household wiring Gas-related Business .TEPCO will promote development of LNG upstream divisions, the LNG carrier business and LNG sales to strengthen its capabilities in supplying liquefied natural gas (LNG) for thermal power generation and to expand revenue potential. .TEPCO will aggressively develop its gas supply business to enable it to provide total solutions that meet the wide-ranging energy needs of its customers.
Gas Supply Business - Operating Revenue Targets
Overseas Business TEPCO aims to generate new growth and development by seeking new business opportunities overseas. It will promote power generation projects, diverse investments and a consulting business that employs TEPCO's technological capabilities and expertise.
Major Investment Projects
III. Foster People and Technologies The entire TEPCO Group will work together to create enjoyable and satisfying workplaces, strengthen and improve technologies and employee skills, and develop technical strategies that support future growth.
IV. Management Targets Income and Free Cash Flow The entire TEPCO Group will work across all businesses to achieve higher profitability by thoroughly improving efficiency and increasing operating revenues through aggressive promotion of marketing activities aimed at customer satisfaction. At the same time, it will work to secure free cash flow by curbing capital expenditures and other cash outlays, and improve asset efficiency in ways such as rationalizing facility operations and reducing assets. Through such efforts, TEPCO aims to achieve the following targets on a three-year average basis over the period from fiscal 2006 through fiscal 2008. Specific Targets .Ordinary income (Consolidated) At least ¥380 billion (Non-consolidated) At least ¥350 billion .Return on assets (ROA) (Consolidated/Non-consolidated) At least 4% .Free cash flow (Consolidated/Non-consolidated) At least ¥400 billion
Ordinary Income and ROA (Non-consolidated)
Balance Sheet Improvement Improving the balance sheet is a critical task for TEPCO in an operating environment characterized by major changes, such as the increase in scope of liberalization and intensifying competition among types of energy. TEPCO will take measures to increase the shareholders' equity ratio, such as selectively allocating free cash flow to reduce interest-bearing debt. Specifically, TEPCO aims to achieve the following targets by the end of fiscal 2008 in order to meet the numerical target of Management Vision 2010 of increasing the shareholders' equity ratio to at least 25 percent by fiscal 2010. Specific Targets .Shareholders' equity ratio (Non-consolidated): at least 23% (as of the end of fiscal 2008) (Non-consolidated interest-bearing debt to be reduced by at least ¥700 billion over the period from fiscal 2006 through fiscal 2008)
Shareholders' Equity Ratio and Interest-bearing Debt(Non-consolidated)
Management Vision 2010 (Medium-Term Management Policy of the TEPCO Group) Based on the TEPCO Group's management philosophy of contributing to better lifestyles and environments by providing superior energy services, TEPCO established three Group Management Guidelines under Management Vision 2010 - to win the trust of society, to compete and succeed, and to foster people and technologies - and set five numerical targets in line with these guidelines.
Numerical Targets 2010 to be achieved by fiscal 2010
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