Today TEPCO announced its Business Management Plan for FY2002.
This provides the targets for profits and financial improvements
in order to reinforce our competitive strength. It also includes
our plans for efficiency improvements, demand forecasting and power
supply, aimed at achieving these targets.
This is a concrete action plan to realize the goals of our management
vision, which was formulated in March 2001.
TEPCO will strive to increase efficiency, seeking to reinforce
management and competitiveness. In addition, TEPCO will lower
electricity rates from this coming April, along with efforts to
provide a wide variety of optional tariffs, and enhance customer
service in order to meet overall customer satisfaction. In the
continued pursuit of our mission as an electric utility, TEPCO
dedicates itself to the promotion of a stable electricity supply,
the preservation of resources and the environment, and the promotion
of the optimal energy mix, in which nuclear power will play an
essential role.
1. We establish targets for corporate profit and financial
improvements aimed at realizing the management vision
TEPCO has set targets for corporate profits and financial
improvements in order to realize our management vision. Details of
TEPCO's business objectives (averaged over three years from FY2002
to FY2004) are as follows:
· Ordinary Income: more than ¥300 billion
· ROA (Return on Assets): more than 4%
· ROE (Return on Equity): more than 9%
· Free Cash Flow: more than ¥550 billion
· Interest-bearing Debt: Reduction of more than ¥400 billion
· Equity ratio: Approx. in the range of 17% ( at the end of FY2004)
TEPCO will strengthen its management by implementing various
measures such as the "TEPCO Group Business Management Cycle" to
exploit the full resources of the group. The concrete business
objectives (averaged over three years from FY2002 to FY2004) are as
follows:
· Consolidated ROA: more than 4%
· Consolidated Free Cash Flow: more than ¥550 billion
2. We aim to lower capital investment in FY2002 to less than 800
billion yen for the first time in 25 years, by accelerating the pace
of efficiency improvements.
TEPCO will reduce capital investments by a flexible formulation of
power system capability, which reflects the further deregulation of
the electricity market and changes in electricity demand trends. In
order to do so, we will not follow a precedent, but promote the
optimization of designs and construction based on the condition of
local communities or sites, along with the rationalization of design
specifications, and the introduction and development of new technologies.
We are committed to reduce our average yearly capital investments to
less than approx. 740 billion yen for the period between FY2002 and
FY2004. The target for FY2002 is 797.8 billion yen. It is the first
time in the 25 years since 1977 that the capital investment plan has
been lower than 800 billion yen.
Over the three-year period from FY2002 to FY2004, average yearly
maintenance costs will be reduced by 50 billion yen down to approx.
480 billion yen, compared to the plan for FY2001 (approx. 530 billion
yen from FY2001 to FY2003). While the high level of supply reliability
is secured, TEPCO will implement maintenance which suits individual
facilities, lengthen the inspection cycle, prioritize target facilities,
and improve the efficiency of patrol and inspection procedures. This is
achieved by data collection and by improving the ability to analyze in
relation to facility evaluation.
3. We challenge the four highest priorities for FY2002.
TEPCO will focus on the following four priorities in FY2002, in line
with the new management vision.
(1) Ensuring customer satisfaction
In order to continue to be chosen by customers, we will lower
electricity rates this April, based on the results of efficiency
improvements made so far, as well as on the estimated effect of future
efficiency improvements. As an energy advisor, TEPCO will extend
proposal-based marketing,which has already been implemented for
extra-high-voltage customers who are eligible in the current
liberalized electricity market, to high voltage customers. At the
same time, we will provide lower voltage customers with a wide
variety of optional tariffs and services.
(2) Increased competitiveness and profitability
In order to adapt to growing competition in the energy market, TEPCO
will seek further streamlining efforts in such areas as management
procedures, procurement, and the construction, operation and
maintenance of facilities, in order to increase its competitiveness
and enhance the profitability of the group.
We regard deregulation of the electricity industry as a major
business opportunity to bring in a new source of profits. TEPCO
is also developing non-core activities and overseas businesses
which we expect to lead to further growth and expansion by
exploiting our management resources and the overall capabilities
of the group, which we have developed.
(3) Keeping pace with the community and ensuring public confidence
We will pursue our mission as an electric utility in relation to
realizing the optimal mix of fuels, stable power supply and energy
security achieved by the vertically integrated system of generation,
transmission and distribution. At the same time, we will contribute to
achieving a better environment by taking autonomous and active
measures such as the prevention of global warming and the recycling
of industrial waste, in order to conserve resources and the
environment.
TEPCO strives to achieve further public confidence in nuclear energy,
and also to promote renewable energy by installing renewable
energy power generation facilities of its own, as well as utilizing
the "Green Funds System" and the "Green Power Certification System."
(4) Promoting continuous change
Heading towards customer satisfaction, along with management efficiency,
we will reform organizational and management operations, such as the
merger of sales offices and field offices, which is scheduled to be
implemented from the summer of 2002. This will promote the autonomous
management of branch offices for the new era.
In addition, we will make further use of IT and further
strengthen R&D,leading to better customer satisfaction,
environmental preservation and efficiency improvements.
4. We forecast that the average annual growth in electricity sales and
system peak load will beat an historical low by FY2011.
With stagnant economic growth, increasing competition with alternative
energy sources, and energy conservation, it is estimated that the growth
in electricity sales and the system peak load will decline. With maximum
marketing efforts, we project an average annual growth of 1.5% in
electricity sales (after temperature adjustments) and 1.4% in the system
peak load (after temperature and transient factor adjustments) from
FY2000 to FY2011. These rates are still lower than the previous ones
which TEPCO set at an all-time low level. The forecasts have been
reviewed downward for four consecutive years.
In these circumstances, TEPCO will develop additional capacity
of 15,790 MW over the next decade, pursuing efficient facility
construction by taking into account stable power supply,energy
security and compatibility with the environment.
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