Enhancement of Energy Security - Amazon S3 · 2017-12-25 · information Response to full...

Basic Policy

With more expected of natural gas following the 2011 Great East Japan Earthquake and fullliberalization of the gas and electricity retail sectors having unleashed major changes in Japan'senergy industry, Tokyo Gas Group recognizes that providing affordable, stable supplies of energy,ensuring customer safety, and delivering better services stand high on the list of the public'sconcerns. We are also committed to strengthening LNG value chains at home and abroad and todeveloping stable energy supplies and energy infrastructure and offering energy solutions in Japanand the countries in which we do business by accelerating our overseas expansion.

Enhancement of Energy Security

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Stable Supply

<Reasons for identification of material aspects>To meet public demand for secure, low-priced supplies of energy given higher expectations ofnatural gas following the Great East Japan Earthquake and the transformation of Japan's energymarket as a result of reforms to the electricity and gas systems.To contribute to efforts to expand competitive power generating capacity and increase electricitysales so as to ensure safe and stable supply, and to provide optimal energy solutionsincorporating value-added as well as gas and electricity services.To contribute to the development of energy services and energy infrastructure overseas byapplying the Tokyo Gas Group's accumulated technologies.

Performance in FY2016: Overview and AssessmentCriteria for evaluating indicators

Target achieved (100% or above)Target not achieved but improved from previous fiscal year (not 100% achieved but improvedfrom previous fiscal year)Target not achievedQualitative indicators with no evaluation axis are evaluated on the basis of whether or notprogress has been made since the previous fiscal year.

Target(CSR indicator)

FY2016 results Evaluation

LNGprocurementto ensurestable andaffordablesupply

Further diversification of LNG procurement■April 2016: Began studying the possibility of forming a strategicpartnership on LNG procurement with Kansai Electric Power Co., Inc.,and agreed to pursue collaboration contributing to greater flexibility inLNG procurement.■August 2016: Began receiving LNG from the Gorgon LNG Project inAustralia.■Continued construction of four LNG tankers built to a new andhighly economically efficient design capable of transiting the PanamaCanal in order to transport LNG from Cove Point in the U.S. from2017.■LNG under long-term contracts: 12 projects in 5 countries (as ofend March 2017)Contract volume: approx. 14.25 million tons (FY2016)Proven global natural gas reserves: 186.6 trillion m3Source: "BP Statistical Review of World Energy 2017"

LNG Project Contract Volume (as of April 2017)

Project name

Contractvolume (Unit:10,000tons)

Start ofoperation Period

Brunei 100 1973 20＋20＋10 years(until 2023)

Malaysia (Satu) 260 1983 20＋15 years(until 2018)

Australia (WesternAustralia) 53 1989 20＋8 years

(until 2017)


Malaysia (Dua) 90 1995 20 years(until 2015)

Qatar 35 1998 24 years(until 2021)

Malaysia (Tiga) 34 2004 20 years(until 2024)

North West Shelf(NWS) Expansion 107 2004 25 years

(until 2029)

Darwin (Australia) 100 2006 17 years(until 2022)

Sakhalin 110 2009 24 years(until 2031)

Pluto (Australia) 150 2012 15 years(until 2025)

Queensland Curtis(Australia) 120 2015 20 years

(until 2035)

Gorgon (Australia) 110 2016 25 years(until 2039)

Ichthys (Australia) 105 2017(planned) 15 years

Cove Point (U.S.) 140 2017(planned) 20 years

Cameron (U.S.) Approx. 52(8 cargoes) 2020 Approx. 20 years


Diversificationandexpansion ofoverseasbusiness

Promotion of overseas business■June 2016: Joined the Eagle Ford shale gas development project inthe U.S.■Gas Malaysia Energy Advance Sdn. Bhd., a joint venture formed byTokyo Gas, Tokyo Gas Engineering Solutions Corp., and Gas MalaysiaSdn. Bhd., began supplying energy services to a Toray Group plant inMalaysia.■Developed and actively participated in new projects utilizing localnetworks in Southeast Asia and North America.

Promotion ofinfrastructuredevelopmenttoaccommodatewider use ofnatural gas

Development of natural gas infrastructure in and around thenorthern Kanto area■Installed additional vaporizers at Onahama Satellite Terminal,Sodegaura LNG Terminal, and Hitachi LNG Terminal.■Continued preparations for construction of a second LNG tank atthe Hitachi LNG Terminal, scheduled for completion in 2020.■Planned construction of a new tank at Sodegaura LNG Terminal.Development of trunk lines■Began constructing the Koga-Moka Line to connect to our existingnetwork, scheduled for completion in FY2017.■Formulated plans for construction of the Ibaraki Line (betweenHitachi and Kamisu), slated for completion in FY2020.

Enhancement of competitive power generating capacity and expansion of electric power sales

■April 2016: Commenced study of a technological partnership onLNG power plant operation and maintenance with Kansai ElectricPower Co., Inc., and reached agreement on pursuing such apartnership.■May 2016: Entered alliances with 45 wholesalers to sell low-voltageelectricity to residential and commercial customers beyond ourservice area.

Key Future Initiatives from FY2017


Key initiatives

LNGprocurementto ensurestable andaffordablesupply

Further diversification of LNG procurement■Second half: Scheduled to begin receiving shipments from the Cove Point(U.S.) and Ichthys (Australia) projects.■Commencement of cargo swaps and other new forms of LNG trading tooptimize transportation costs.■Exploration of partnerships with LNG players in Japan and overseas.

Diversificationandpromotion ofoverseasbusiness

Promotion of overseas business■Development of presence in mainly the mid- and downstream sectors inpartnership with leading firms in Southeast Asian (such as PETRONAS in Malaysiaand Pertamina in Indonesia).■Establishment of Manila Representative Office. Activities to win new projects inthe Philippines.■Acquisition of new projects in the upstream and power generating sectors inNorth America.

Promotion ofinfrastructuredevelopmenttoaccommodatewider use ofnatural gas

Accommodation of growing gas demand in the northern Kanto area■Expansion of facilities at Hitachi LNG Terminal.Enhancement of gas pipeline network to expand stable supply■Construction of Koga-Moka Line with a view to completion in fall 2017 (earlierthan originally planned).■Selection of final route and commencement of construction of Ibaraki Line toimprove supply stability and expand transportation capacity by adding furtherlooping to our high-pressure pipeline network.

Enhancementof competitivepowergeneratingcapacity andexpansion ofelectric powersales

Expansion of power generating capacity■Construction of Kobelco Power Moka plant.■Consideration of construction of new power plants, etc. to expand generatingcapacity.Expansion of renewable generating capacity■Promotion of projects employing various business schemes to developrenewable generating capacity in general (including solar, wind, and biomass).■Establishment of Prominet Power Co., Ltd. to develop photovoltaic powergeneration projects.Development of risk management arrangements■Establishment of Power Marketing & Trading Dept. and improvement of riskmanagement techniques.■Risk control of both procurements and sales, and optimization of short- to mid-term procurement and sales portfolios.Partnerships with gas wholesalers■Development of partnerships with city gas suppliers that form businessalliances to sell low-voltage electricity, expansion of number of electricity servicecontracts, and rollout of Emergency Home Assist Service.■Development of partnerships with ENNET and Synergia Power, and study ofarrangements to expand partner suppliers in the high-voltage sector.Partnerships to promote total energy business■Strengthening of activities of Gas Network Consortium 21 (“Gasnet 21”).■Business alliance in the city gas business with Saisan (a memorandum ofunderstanding to form a comprehensive alliance in the total energy business wassigned with Saisan, an LPG supplier, in FY2016).

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The Pursuit of Safety

<Reasons for identification of material aspects>To improve our readiness for a major earthquake and allow customers to use gas with greaterpeace of mind.To enhance the energy security that supports safe and secure living.To contribute to energy system innovation to support energy conservation and CO2 emissionsreduction.




FY2016 results Evaluation

Implementationof measuresagainstearthquake,tsunami, andother disasters

Implementation of measures against earthquakes, tsunami,and other disasters to ensure greater disaster resilience andsafe supply of gas■June 2016: Divided the large head office block into smallerblocks, increasing the number of low-pressure blocks from 220 to252.Response to disasters■April 2016: Sent a Service Restoration Task Force of 1,300personnel to assist recovery following the Kumamoto earthquakes.

Replacementandimprovement ofsafety of aginggas pipes

Implementation of safety measures, including measures foraging pipes■Raised awareness of aging buried white gas house pipes that didnot undergo work in FY2015 by mentioning the issue during safetyinspections and on similar occasions, and performed improvementwork upon request.

Improvementof disasterresilience

Promotion ofswitch to saferappliances

Promotion of switch to safer appliances■Expanded adoption of "Si" sensor-equipped cooking stoves.Total sales of about 1.67 million units (as of end March 2017)■Owners of water and bath boilers, etc. lacking safety devices toprevent imperfect combustion were encouraged to switch to saferappliances as soon as possible by informing them of the risks bydirect mail and during periodic safety inspections of gas appliances.Periodic safety inspections■3,869 thousand periodic safety inspection visits were made inFY2016 and 3,516 thousand inspections were completed (excludesvisits when the occupant was absent).■Arrangements were introduced to make periodic safetyinspections more convenient for customers, including by increasingthe number of Saturday personnel in order to accommodatecustomer requests for changes to inspection dates, and notificationof customers by phone before arrival.

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Key initiatives

Implementationof measuresagainstearthquake,tsunami, andother disasters

Implementation of measures against earthquakes, tsunami, and otherdisasters to ensure greater disaster resilience and safe supply of gas■Implementation of disaster drills with retail suppliers to ensure safety in theevent of a disaster.■Sub-division of disaster prevention blocks

Replacementandimprovement ofsafety of aginggas pipes

Implementation of safety measures, including measures for aging pipes■Will raise awareness of aging buried white gas house pipes that did notundergo work in FY2015 by mentioning the issue during safety inspections andon similar occasions, and perform improvement work upon request.

Improvementof disasterresilience

Promotion ofswitch to saferappliances

Promotion of switch to safer appliances■Promotion of adoption of “Si” sensor-equipped cooking stoves andencouragement of owners of water and bath boilers, etc. lacking safety devicesto prevent imperfect combustion to switch to safer appliances as soon aspossible by informing them of the risks by direct mail and during periodic safetyinspections of gas appliances.Periodic safety inspections■Performance of periodic safety inspections and creation of more opportunitiesfor contact with customers

Provision of Better Products and Services

<Reasons for identification of material aspects>To provide information proactively and deliver better products and services based on customerfeedback, thereby enabling customers to use energy safely, securely, and comfortably in keepingwith the intent of electricity and gas system reforms.



Target(CSR

indicator)FY2016 results Evaluation

Provisionofproducts,services,and relatedinformation

Response to full liberalization of the electricity retail market■March 2017: Number of applications for electricity service reachedapproximately 728 thousand. Tokyo Gasʼs electricity and other serviceswere publicized (largely through direct promotion by LIFEVAL andEnesta) and steps taken to expand our partners and win more contracts.

Promotion of wider use of ENE-FARM ("EF") residential fuel cells

ENE-FARM units sold (approx.)

FY2014 14,000

FY2015 18,000

FY2016 18,100

Cumulative units sold 79,500

Expansion of use of gas cogeneration systems (CGS), commercial gas airconditioners, etc.＜CGS＞■April: Commenced development of a 2 MW-class high-efficiency CGS.■June: Installed the Tokyo Gas service areaʼs first cold energyextraction-type gas pressure differential power system at Toyosu SmartEnergy Center.■December: Improved the performance of a 1 MW-class CGS andlaunched an improved model in FY2017.

<Air conditioners>■April: Commenced sale in April 2016 of a 30 hp Smart Multi, Japanʼsfirst air-conditioning system to combine a gas heat pump and electricheat pump into one refrigerant system.Our ENESINFO remote control system permits energy and cost savingsto be achieved by optimizing the balance of use of the gas and electricheat pumps.

CGS capacitydeveloped

(MW)

Commercial gas air-conditioningcapacity developed

(RT)

FY2014 60 150,000

FY2015 60 150,000

FY2016 90 160,000

Stock 2020 3,920,000

Initiatives by Tokyo Gas LIFEVAL■Acted as a one-stop source of home-related services, includingperiodic safety inspections of gas appliances, meter reading,commencement and termination of gas services, and processing ofapplications for gas and electricity services, as well as the sale, repair,and installation of gas appliances and performance of kitchen, livingroom and plumbing renovation work.

Use of customer feedback and action to improve operations■20,250 comments received in total from customers

（1,781 expressions of thanks (8.8%), 1,772 complaints (8.8%), and16,697 system requests (82.4%))■Customer feedback was used to identify and analyze issues andimprove rate-related operations, arrangements for handling inquiries andapplications (by phone and online), and patrol work. Examples ofimprovements made were published on our website.

Construction of a group formation■April 2016: Established Tokyo Gas Liquid Holdings Co., Ltd. to unifythe sale of LPG, production and sale of industrial gas using cold energyof LNG, and cold storage operations, etc.

■May 2016: Chiba Gas, Tsukuba Gakuen Gas, and Miho Gas weremerged into Tokyo Gas, and two new branch offices (Sakura BranchOffice and Tsukuba Branch Office) were opened.

Provision of useful information to customers■April 2016: The UCHICOTO information site was launched to provideuseful home and lifestyle information.Link: UCHICOTO


Target(CSR

indicator)Key initiatives

Provision ofproducts,services, andrelatedinformation

Expansion of gas, electricity, and other services to residential customers■Creation of new Always Gas selection of gas rate options for residential customers.

■Launch of competitive rates and services offered through the Total Energy Service Plan

(Always Gas and Always Electricity).

■Launch of Gas Fixture Troubleshooting Support and Residential Monitoring Services.

Promotion of wider use of ENE-FARM ("EF") residential fuel cells■In the detached house market, we will continue to work on expandinginstallation by major custom and spec home builders, and will use theopportunities created by selling electricity to customers to encourage installation inexisting homes.■In the condominium market, we will pursue steady adoption in propertiescompleted in FY2017 while adjusting logistics, installation, and maintenancespecifications and systems. As well as promoting "whole building" installation, wewill also expand the total number of installations by offering "partial" solutions thatallow EFs to be installed in just some of the dwellings in a building.

Expansion of adoption of CGS, commercial air conditioners, etc.■Development of a high-efficiency GHP chiller that is approximately 20% moreefficient than conventional models. Scheduled to go on sale in October 2017.■24 hp model and 30 hp model (the latter combining a gas heat pump andelectric heat pump) to be added to the Smart Multi lineup and go on sale inOctober 2017.■Development of a super-efficient commercial fuel cell cogeneration system.Scheduled to go on sale in FY2017.■Development of a 2 MW-class high-efficiency gas engine cogeneration system.Scheduled to go on sale in FY2017.

Initiatives by Tokyo Gas LIFEVAL, Enesta, and Enefit■We will value communication with our customers, and together with solvingvarious customer problems will organize events that allow them to see, feel, andexperience gas appliances in actual use.■Proposal of plans tailored to customer lifestyles and needs through channelsincluding LIFEVAL, Enesta, and Enefitʼs interactions with customers, partnershipswith players in the housing sector, and other opportunities for customer contact.

Use of customer feedback and action to improve operations■We will continue to work to raise customer satisfaction by identifying andanalyzing issues and formulating and implementing improvements based oncustomer feedback.

Provision of useful information to customers■Distribution of official app for the myTOKYOGAS online membersʼ program

Further Diversification of LNG Procurement

We are committed to further diversifying our procurements of LNG so as to deliver stable andaffordable supplies of LNG.

■Triple diversification1 Procurement sourcesWe will broaden our procurement sources from mainly Asia and Australia today to North Americaand diverse other regions around the world.2 Contract conditionsWe will seek to diversify contract conditions by moving away from mainly oil-linked pricing toindexation against multiple indicators (such as the Henry Hub price) and eliminating destinationclauses to allow destination flexibility.3 LNG networkWe will seek to acquire gas fields, power stations, etc. on a global basis. By developing an LNGnetwork linking Asia, North America, and Europe, we will also aim to shrink regional disparities in market prices and create an environment in which supply and demand can be flexiblyadjusted.

Since Tokyo Gas first began procuring LNG from Alaska in 1969, our imports of LNG have risensteadily to meet growing demand. Tokyo Gas currently imports LNG under long-term contracts with12 projects in five countries, including Russia (Sakhalin) as well as other countries in the Asia-Pacificregion such as Malaysia, Australia, and Brunei.In March 2016, we entered a new contract to procure an additional 200,000 tons per year(approximately) of LNG from the Cameron LNG project in the U.S. Combined with the approximately520,000 tons of LNG that we had already committed to buy from the same project under a previouscontract and our contract for 1.4 million tons per year from the Cove Point project, also in the U.S.,we now have access to several sources of LNG at prices linked to the U.S. natural gas market(Henry Hub) price. We are also strengthening our partnerships with a variety of LNG buyers andother players. Overseas, these include PetroVietnam Gas in Vietnam, Korea Gas Corp., and CentricaLNG in Europe, and, in Japan, utilities such as Kansai Electric Power and Kyushu Electric Power.Diversifying our sources and contract terms and forming partnerships with buyers in Japan andoverseas will improve our access to stable, low-priced procurements of LNG.


Project nameContract volume

(Unit: 10,000tons)

Start ofoperation Period

Brunei 100 1973 20 + 20 + 10 years (until2023)

Malaysia I (Satu) 260 1983 20 + 15 years (until 2018)

Australia (Western Australia) 53 1989 20 + 8 years (until 2017)

Malaysia II (Dua) 90 1995 20 years (until 2015)

Qatar 35 1998 24 years (until 2021)

Malaysia III (Tiga) 34 2004 20 years (until 2024)

North West Shelf (NWS)Expansion 107 2004 25 years (until 2029)

Darwin (Australia) 100 2006 17 years (until 2022)

Sakhalin II 110 2009 24 years (until 2031)

Pluto (Australia) 150 2012 15 years (until 2025)

Queensland Curtis (Australia) 120 2015 20 years (until 2035)

Gorgon (Australia) 110 2016 25 years (until 2039)

Ichthys (Australia) 105 2017(planned) 15years

Cove Point (U.S.) 140 2017(planned) 20years



LNG Project Contract Volume (as of April 2017)

Enhancement of LNG Transportation Arrangements

Through our wholly owned subsidiary Tokyo LNG Tanker Co., Ltd., we efficiently manage our ownfleet of tankers, which transport LNG under long-term contracts from Malaysia, Australia, and Russia(Sakhalin).Four LNG tankers are being built to a new and highly economically efficient design capable oftransiting the Panama Canal. These will be used to ship LNG mainly from Cove Point in the U.S.

Energy Horizon

<Link>▶ Technically recoverable quantities of conventional and unconventional gas resources

Acceleration of Overseas Business Development

We aim to further increase and stabilize earnings by leveraging the overseas operations and humanresources developed to date, and we will explore involvement in new projects (principally inSoutheast Asia and North America) and development of operations in new areas.

■Business development in Southeast AsiaDemand for natural gas is projected to grow in Southeast Asia, and we are accelerating our businessexpansion, particularly in the mid- and downstream sectors, by forming partnerships with leadinglocal companies.We are also opening a new representative office in Manila to launch activities to win new projects inthe Philippines.［Key Initiatives in FY2016］

Thailand: Participated in operation of Bang Bo Power Plant (350,000 kW).Vietnam: Became involved in procurement and sale of LNG and construction and operation of anLNG receiving terminal through LNG Vietnam.

■Business development in North AmericaWe aim to win new projects in the upstream and power generating sectors in North America, wherethere are abundant opportunities for market entry.［Key Initiatives in FY2016］

Joined a shale gas development project in the U.S. (in the Eagle Ford Shale in southern Texas).Joined a natural gas power generation project at the Empire generation facility in New York State,U.S.


Eagle Ford

Projects that Tokyo Gas has joined

Project name Hostcountry Project details Year of

entry Interest

Bayu-Undan / Darwin LNG Australia Production, liquefaction,and sale of natural gas 2003 3.07%

Pluto LNG Australia " 2008 5%

Gorgon LNG Australia " 2009 1%

Queensland Curtis LNG Australia " (coalbed methane) 2011 Production:1.25%

Liquefaction2.50%

Ichthys LNG Australia " 2012 1.575%

Barnett shale gas U.S. Production and sale ofnatural gas (shale gas) 2013 25%

Eagle Ford shale gas U.S. Production and sale ofnatural gas (shale gas) 2016 25%

Gas Malaysia Malaysia City gas supplybusiness 1992 14.8%

Bajio Mexico Natural Gas powergeneration business 2004 49%

MT Falcon Mexico " 2010 30%

T-Power Belgium " 2012 26.66%

Cove Point LNG U.S. Liquefaction of naturalgas and sale of LNG 2013 49%

LNG Vietnam Vietnam

Procurement and saleof LNG, constructionand operation of LNGreceiving terminal

2016 10%

Empire U.S. Natural gas powergeneration business 2016 25%

EPEC Thailand " 2016 28%

Examples of Tokyo Gas Engineering Solutions' Overseas Projects

Engineering project in ThailandSince November 2013, TGES has been the project management consultant (PMC) for designand construction work on the second phase of capacity expansion at PTT LNG Co., Ltd.'s MapTa Phut LNG Receiving Terminal in Thailand. This is the first time a Japanese company hasbeen contracted to provide project management consultancy services for a project at anoverseas LNG receiving terminal. The terminal's expansion will contribute to improved energysupply stability in Thailand.

Map Ta Phut LNG Receiving Terminal during Phase II construction

Energy services in the U.S.In 2015, TGES America Ltd. was founded and embarked on its first energy service project,which was the provision of steam and other energy services to a new plant built in SouthCarolina by the Toray Group. Energy services consist of heat, electricity, water, and otherenergy services that are efficiently bundled and delivered by an energy service provider usingfacilities such as gas cogeneration systems, boilers, air conditioners, and water treatmentplants. They are designed to solve a variety of energy-related issues experienced by thecustomer.

Plant providing energy services

With more now expected of natural gas following the 2011 Great East Japan Earthquake and withfull liberalization of the gas and electricity retail markets unleashing major changes in Japan's energyindustry, Tokyo Gas Group recognizes that the stable supply of energy stands high on the list of thepublic's concerns. The Group is committed to manufacturing city gas in accordance with theseexpectations.

Stable Production of City Gas and Strict Quality Control

■Stable production of city gasOur four city gas production terminals provide each other with mutual backup so that stable suppliesof city gas can continue to be delivered to customers even in the event of problems such as a poweroutage. We also have in place highly reliable power receiving systems with core facility redundancyto ensure supply continuity.The facilities at each of these terminals incorporate highly reliable technologies. Work is also beingperformed steadily to upgrade aging facilities, improve earthquake resistance, and enhance safety inorder to further reinforce production stability.

■Observance of statutory requirements regarding control of calorific value, combustibility,etc.To ensure delivery of high-quality city gas to customers, characteristics including calorific value andcombustibility are tested once per day, as required by law, in the course of everyday operations. Wealso independently conduct routine monitoring to further raise quality levels, and we ensure that ourfacilities are properly maintained and managed though periodic maintenance and daily inspections.

■Strategic development of production facilitiesWe are strategically developing our production facilities from a long-term perspective thatemphasizes economic performance and comprehensively takes into consideration all relevantfactors, such as the projected future demand for city gas. In order to popularize and expand the useof natural gas as called for in our Challenge 2020 Vision, we brought the Hitachi LNG Terminal intocommercial operation in March 2016 to meet growth in demand in and around the northern Kantoregion.The Hitachi LNG Terminalʼs facilities include a large jetty capable of receiving large LNG tankers anda 230,000 kl aboveground LNG tank that is the largest of its kind in the world. Preparations forconstruction of a second tank in fiscal 2020 are now underway.

Hitachi LNG Terminal

■Maintenance of skillsThe Group actively practices knowledge management contributing to further improvements inperformance and abilities by sharing and utilizing the precious knowledge (including skills andexpertise) cultivated in the course of many years of terminal operations, and by strengtheningindividual employees' own knowledge. We also provide organized, effective training in order tosmooth the transfer of skills to future cohorts of engineers.


With more now expected of natural gas following the 2011 Great East Japan Earthquake and fullliberalization of the gas and electricity retail markets having unleashed major changes in Japan'senergy industry, Tokyo Gas Group recognizes that stable access to low-priced energy stands high onthe list of the public's concerns and it is committed to developing its electric power business to meetthese expectations.

Expansion of Competitive Generating Capacity

■Expansion of Generating CapacityAmid the major changes afoot in the energy environment, including reforms to the electric powerand gas systems, Tokyo Gas believes in the importance of delivering total solutions combining gasand electricity to supply energy in a manner that matches customer needs better than ever before.This depends on securing stable access to power sources, and to this end we are exploring thedevelopment of a "power source portfolio" that combines natural gas power plants with sources ofelectricity generated using other fuels.

■Developing the foundations of our electric power businessTokyo Gas has the largest total generating capacity of any of the new entrants to the electricitymarket. In 2020, we will expand the generating capacity in which we have a stake from 1,600 MWat present to about 3,000 MW as we put in place the infrastructure to ensure supply stability. Weare promoting the construction of power plants that use natural gas in order to further develop thefoundations of our electric power business, and in doing so we are paying particular attention to thefollowing considerations in order to ensure stability of supply: (1) proximity to areas of demand, (2)mitigation of environmental load through use of leading-edge high-efficiency combined cycle powergeneration facilities, and (3) attainment of efficient and stable operation leveraging synergiesachieved by locating plants in the vicinity of our LNG terminals.With the entry into service of Unit 3 of the Ohgishima Power Station in February 2016, Tokyo GasGroup now has stakes in power plants operated by Tokyo Gas Baypower (100 MW, wholly owned byTokyo Gas), Tokyo Gas Yokosuka Power (240 MW, 75% stake), Kawasaki Natural Gas PowerGeneration (420 MW x 2 units, 49% stake), and Ohgishima Power (400 MW x 3 units, 75% stake).It has also decided to receive the entire output (approximately 1,200 MW) of the Moka PowerStation, which Kobelco Power Moka Inc. (a wholly owned subsidiary of Kobe Steel, Ltd.) is preparingto build in Moka, Tochigi Prefecture. (The plant's first unit will be completed in late 2019, and itssecond in early 2020.) In May 2015, we established a new company called Chiba-Sodegaura EnergyCo., Ltd. to explore development of coal power plants with Idemitsu Kosan Co., Ltd. and KyushuElectric Power Company Inc.Alongside using natural gas to generate electricity, we are helping to promote wider use ofrenewables. We have our own wind power facility at the Sodegaura LNG Terminal, and we havejoined other wind power generation projects by investing in Shonai Wind-Power Generation Co., Ltd.(giving us a 30.2% stake) and purchasing electricity generated by Kuroshio Furyoku Hatsuden K.K.In February 2017, we entered a capital and business tie-up with Shizen Energy Inc., a developer ofsolar power and other renewable resources, and together we will be conducting development workwith the aim of creating 60 MW of solar power generating capacity as soon as possible.


The Tokyo Gas Group's Electricity Supply Infrastructure (as of June 2017)

■Stable generation of electricityThe Group's thermal power plants use natural gas produced at our LNG terminals. These plants areoperated, monitored, and undergo daily checks and periodic inspections to ensure continued supplystability. Looking ahead, we will continue to leverage our expertise in the gas business to meetsociety's demands and expectations as a total energy company by delivering more affordableelectricity while doing our best to maintain safety, ensure supply stability, and protect theenvironment.

<Link>▶ Contribution to the Environment / Efforts in the Electric Power Business

We are developing our natural gas pipeline network in order to ensure long-term gas supplycontinuity and keep pace with the growth in demand for city gas and the expansion of our servicearea.

Pipeline Network Development to Meet Demand and Service AreaGrowth

In order to realize its Challenge 2020 Vision, Tokyo Gas is pushing ahead with effectively developingits pipeline network and maintaining stability of supply so as to meet further growth in customernumbers (including residential customers), as well as extensive latent demand throughout the Kantoregion (especially in industry).Our high-pressure pipeline network was expanded by the completion of the Saito Line in October2015, and the Ibaraki-Tochigi Line in March 2016. These connect the Hitachi LNG Terminal with ourthree existing terminals in Tokyo Bay, thereby improving supply stability in and around the northernKanto region. Steady progress will continue to be made on the Koga-Moka Line linking the Saito Lineand Ibaraki-Tochigi Line with the aim of completing it in fiscal 2017. We will also commence work onthe Ibaraki Line being built to improve supply stability and expand transportation capacity by addingfurther looping to our high-pressure trunk lines. This line is expected to be completed by fiscal2020. As regards training and improving the skills of the engineers required to maintain this infrastructure,in fiscal 2017 we will further step up our inspections of key supply facilities, such as high-pressurepipelines, key medium-pressure lines, and facilities for receiving gas from other companies. At thesame time, we will sustain our efforts to ensure supply stability by, for example, enhancingemergency backup systems and organizing emergency drills.

Supply Infrastructure of Tokyo Gas Group


Key Supply Infrastructure Expansion Plans

Purpose Name of line Section Planned entry intoservice

Expansion of regionalinfrastructure

Koga-MokaLine Koga City-Moka City FY2017

Ibaraki Line Hitachi City-KamisuCity FY2020

Initiatives at the Supply Control Center

The Supply Control Center centrally monitors and controls the operational status of city gasproduction and supply facilities in the Tokyo metropolitan area 24 hours a day and 365 days a year.Using the Group's own highly reliable wireless communication network, it gathers data on the statusof city gas production and supply facilities in real time, and sends out appropriate instructionsconcerning the city gas output of LNG terminals, adjustment of pressure by governor stations,storage and supply by gas holders, and other operations in order to ensure that city gas services areunimpeded by periodic inspections of LNG terminals and high-pressure lines and maintenance work.In the event of a disaster, the center gathers data, analyzes the extent of the damage, and initiatesinitial response action (such as discontinuation of gas service) to prevent secondary disasters.Working with the Cabinet Office and Tokyo Metropolitan Government, it shares information ondamage via special-purpose communication terminals, discusses responses via teleconferencing,and works to prevent the spread of the damage.

Supply Control Center

Transmission Service for New Entrants to the Liberalized Gas RetailMarket

We have responded to the new environment created by complete liberalization of the gas retailmarket by establishing a Transmission Service Center. The centerʼs role is to assist new entrants thatseek to use our gas pipelines by taking applications for transmission service and billing users afterthe commencement of service. To ensure neutrality and fair treatment of all retail suppliers, thecenterʼs offices are physically isolated and use of information on retail suppliers for any purposeother than the provision of transmission service is prohibited.

Work on Aging Gas Pipes and Other Facilities

■Replacement of aging cast-iron and other pipesWe are accelerating action to ensure the safety of our gas pipes while effectively upgrading andimproving such facilities as aging cast-iron pipes and other old piping.Each of the pipeline network centers responsible for our gas pipelines formulates and steadilyimplements annual plans for surveying, inspecting, replacing, and improving facilities according totheir priority.

Replacing an aged gas pipe

■Replacement of aged white gas pipesWhite (galvanized) gas pipes laid at customers' sites can corrode underground. We are in theprocess of replacing these pipes (with the customers' permission) with polyethylene and othercorrosion-resistant pipes.Where white gas pipes are located in high-risk buildings, we explain to individual customers whythey need to be replaced and encourage them to request us to perform the necessary improvementwork. In the case of other buildings as well, we take advantage of such opportunities as periodicinspections to encourage customers to order improvement work.

■Performance of periodic inspections for gas leaksUnder the Gas Business Act, we conduct periodic inspections to ensure early detection of gas leaksalong roads, and immediately make repairs if a leak is detected. Inspections are planned,performed, and managed as required by Gas Business Act-related legislation and directives. We alsoplan and continuously conduct our own gas leak inspections in addition to the periodic inspectionsrequired by law.

Patrols of High-Pressure Gas Trunk Lines

High-pressure gas trunk lines are the arteries that deliver city gas from our four LNG terminals tothe Tokyo metropolitan area and the rest of the Kanto region. To ensure safe transportation of gas,we are working to maintain these trunk lines using all possible measures and the latest equipment.One important way in which trunk lines are maintained is by means of regular pipeline patrols.Pipeline patrols are performed to confirm that no construction work has been performed by othercompanies without first confirming the location of nearby gas pipes with Tokyo Gas, and also thatthere has been no road damage (such as cracking and subsidence) that might affect our gas pipes.Pipeline patrols also inspect gas supply facilities to confirm that pressure regulators (which adjustgas pressure) and valves (for shutting off the flow of gas) are not producing any unusual noises orvibrations. The various inspections performed during daily pipeline patrols ensure that the highestsafety standards are maintained.

Pipeline patrol

Testing seismic resistance with a 3D shaking table Evaluation of pipeline behavior using numerical analysis

Delivering Gas Safely

■Technologies underpinning the city gas businessFor our customers to be able to use gas safely, it is essential that we as a gas supplier possess morebasic and specialized knowledge and core technologies than anyone else, be it regarding gas itself orthe facilities and appliances that supply and use it. We are committed to strengthening, maintaining,and further developing the essential core technologies that underpin our customers' safety andpeace of mind.We are conducting R&D and expanding our specialist knowledge with a particular focus oncombustion technologies and heat transfer and fluid analysis technologies essential to ensuring thatgas use is both safe and efficient, technologies for assessing materials and seismic performanceessential to ensuring the safety of the gas infrastructure (in particular the pipeline network), and gasanalysis techniques for maintaining the high quality of the gas we supply to our customers. Shouldan incident arise due to a disaster or hardware failure, our specialist engineers in all relevant fieldsrespond immediately, determine the cause, and implement countermeasures to prevent arecurrence.The core technologies developed as a result of these activities are being applied in other fields aswell. Heat transfer and fluid analysis simulation technologies are used to create the mostcomfortable thermal environment for the human body, while advances we have made in materialevaluation techniques have led to improved gas appliance durability. In these and other ways, ourresearch is helping our customers save energy and enjoy more comfortable, convenient lifestyles.

■Research on preventing earthquake damage to gas supply infrastructureWe are conducting R&D into making pipelines and other elements of the gas supply infrastructuremore earthquake resistant so our customers can feel confident in the safety and stability of their gassupply in the event of a disaster. Experiments conducted using a 3D shaking table capable ofrecreating the level of shaking experienced during the 1995 Great Hanshin-Awaji Earthquake allowus to assess the safety of the various facilities comprising the gas supply infrastructure. We also usenumerical analysis to simulate real-world phenomena on a computer, allowing us to assess theseismic resistance of infrastructure taking into account the complex behavior of undergroundpipelines.The results of this research are being used not only to harden our own gas supply infrastructureagainst earthquakes, but throughout the entire gas industry. We will continue to pursue R&D to helpincrease the earthquake resistance of the gas industry as a whole.

Providing a range of technological support as a gas industry pioneer

In order to further improve the safety and ease of pipeline work as one element in ourdevelopment of environmentally friendly technologies, we are engaged in a range of projectsto develop, modify, and improve construction methods, including those used to lay andmaintain gas pipes. As a pioneer in the gas industry, we seek to contribute to higherstandards of pipeline safety and the development of the industry as a whole by activelyinforming other gas utilities of the advances achieved as a result of these efforts, and assistingthem in their introduction.We disseminate the fruits of our technological development through numerous channels,including technology dissemination seminars held by the Japan Gas Association, exchangeswith other gas utilities, and the provision of technological support by Tokyo Gas Group as awhole. We value the benefits for the entire industry of sharing our technologies, which haveso far been adopted by 70 gas utilities. We plan to broaden our activities to promote theindustry-wide adoption of cutting-edge Tokyo Gas technologies that combine safety, security,and environmental friendliness.

Tokyo Gas is taking measures against earthquakes and other disasters to ensure that customers canalways use gas safely and conveniently, 24 hours a day and 365 days a year. These measures fallunder three main categories: preventive measures, emergency measures, and recovery measures.Should a disaster strike, we will strive to minimize the impact on our customers.

Preventive Measures

Gas delivery facilities are built to high standards of earthquake resistance.Facilities involved in the production and supply of city gas possess not only high earthquakeresistance, but also double or even triple redundancy safety measures. Important facilities are builtto withstand major earthquakes as large as the Great Hanshin-Awaji Earthquake and Great EastJapan Earthquake.

Sodegaura LNG Terminal

High-pressure gas pipeline Gas holder Low-pressure gas pipeline

Emergency Measures

Gas supplies can be stopped swiftly to prevent secondary damage.In preparation for a major earthquake, Tokyo Gas has established an earthquake disaster preventionsystem that is able to stop the supply of gas to residences and commercial buildings using their gasmeters, and to entire regions through remote operation. The pipeline network is also divided intosmall "disaster prevention blocks" to minimize the inconvenience caused by the suspension of gasservice in one or more individual blocks.


■Systems to shut off gas supply to residences and commercial buildingsIn the event of a gas leak or an earthquake with a seismic intensity of 5 or more, the home gasmeter's safety device activates automatically to immediately shut off the gas supply. Gas valves andappliances around the home also have their own safety devices for double- and triple-layer safety.In the case of underground malls and high-rise buildings, the gas supply to an entire facility can behalted remotely by activating an emergency shut-off valve from the facility's disaster preventioncenter or administrator's office.

Gas meter

■Systems to shut off gas supply to an entire region that has suffered significant damageSeismographs have been installed in all district pressure regulators (pressure regulators that convertgas from medium to low pressure) at approximately 4,000 locations throughout our service area. Ifthe sensors detect a major earthquake, each district pressure regulator can automatically shut offthe gas supply to the area that it serves, and gas supplies can also be shut off by remote control.Our service area contains the highest concentration of seismographs in the world̶one forapproximately every 1.0 km2̶allowing us to efficiently monitor the safety of the entire area.

Tokyo Gas's "SUPREME" earthquake disaster prevention system utilizes a high concentration ofinstalled seismographs to swiftly ensure safety in the event of an earthquake. The system hasthe capacity to gather earthquake information from approximately 4,000 locations andmonitors the safety of the area through its ability to remotely shut down supply governors, aswell as estimate the damage sustained by gas pipes. When a large-scale earthquake occurs,the system utilizes the data that it acquires from its seismographs to ascertain the damagewithin five minutes of the onset of initial shaking. By around 10 minutes after the start of theearthquake, district pressure regulators are remotely operated to halt the supply of gas toareas where large-scale damage is expected.

Location of seismographs in the Tokyo Gas supply area and tremor strength in the southern Kanto region during the Great East Japan Earthquake of March 11,2011

Recovery Measures

Gas supply can be resumed, swiftly and safely.Tokyo Gas will work to resume service as quickly as possible in order to reduce the inconvenienceexperienced in areas where gas supplies have been stopped. We will make full use of our equipmentand systems, which are always maintained and at the ready on a daily basis, and will work togetherwith gas utilities nationwide to restore gas supplies as quickly as possible.In order to restore service to undamaged districts the same day that an earthquake occurs, webegan rolling out a "district pressure regulator remote restart system" in fiscal 2014, and areworking to extend the system to our entire service area.

■Establishment of a relief and support system for times of disasterBased on the lessons drawn from disaster relief support activities conducted in the wake of theGreat Hanshin-Awaji Earthquake and the Niigata Chuetsu Offshore Earthquake, Tokyo Gas has beenreadying mobile gas generation equipment (large PA-13A) at different locations to provide reliefsupport when gas supplies stop. This gas generation equipment can be used to supply facilities(kitchens, etc.) until normal gas service resumes, and will be provided to customers of high-priorityto society such as hospitals. Mobile gas generation equipment was actually used in the aftermath ofthe Great East Japan Earthquake.Following on from fiscal 2016, we will redouble our efforts in fiscal 2017 to develop supportmeasures, improve and enhance the information we have available on socially high-prioritycustomers, and provide education and training in relief support utilizing the actual equipment to beused in times of disaster.

Mobile gas generation equipment

Assisting Recovery from the Great East Japan Earthquake

To assist large-scale restoration activities, a system of cooperation has been developed for gasutilities nationwide to work with the Japan Gas Association to provide personnel andequipment toward restoration activities. In the wake of the Great East Japan Earthquake,Tokyo Gas Group resumed service to some 30,000 of its customers within about one week,and continued to provide support personnel for two months to six gas utilities (up to amaximum of 1,950 personnel in one day). The entire group worked together to repair pipesand restore gas service so that customers could have access to gas again as soon as possible.

Gas restorationactivities

Dispatch of Service Restoration Task Force after the Kumamoto Earthquakes

Damage caused in the Saibu Gas Co., Ltd. service area by the 2016 Kumamoto Earthquakes,the main shock of which struck during the early hours of April 16, 2016, led the Japan GasAssociation to issue a request for assistance from city gas companies across Japan. Togetherthese companies formed the "Service Restoration Task Force." Tokyo Gas took part, andcontributed some 1,300 personnel, more than it has ever sent on such a mission before.Thanks to these combined efforts, gas service was restored to all customers in the affectedareas by April 30.

Trucks used by the task force Assembly before patrol to restart gas supply

Routine Disaster Preparedness

Tokyo Gas has formulated a business continuity plan (BCP) in case of disaster and established adisaster prevention system that is always operational in order to be ready in case a majorearthquake strikes the Tokyo metropolitan area.

■Development of a business continuity plan (BCP)In order to cut off gas supplies to prevent secondary disasters while also continuing to provide safegas supplies to areas where damage is limited, Tokyo Gas reviews all of its business operations,which number more than 600, and ranks them in order of priority during a disaster.If the gas supply to an area is interrupted, we will make every effort to restore service immediately,including assigning the personnel normally responsible for operations that have been interrupted torecovery work until those operations have been restored.

■Establishment of backup centersOur systems are housed in a data center that meets high seismic standards, and we have alsoestablished a backup center in case of a major disaster. The backup center houses backupequipment and data (especially customer information and systems required to ensure safety in anemergency) so as to enable swift restoration of services after a disaster. Regular emergency drillsare held, and redundancy is built into the power supply and communication systems in order tominimize the impact on customers should an emergency arise.

■Comprehensive disaster prevention trainingWe have conducted comprehensive disaster prevention trainings since 1983 to improve employeesʼand organizationsʼ disaster resilience. As the fiscal 2017 comprehensive disaster prevention trainingwas the first since full liberalization of the gas retail market, one of its objectives was to confirm thatTokyo Gas Group and the new gas retailers understand their roles and know how to work togetherin the event of a major disaster so as to ensure that disaster response remains as solid as ever.Approximately 21,000 Group employees (including employees at Tokyo Gasʼs subsidiaries andpartner companies) took part in the training, which consisted of an initial response stage and arecovery stage. Teams from the Emergency Response Organization responded in accordance withguidelines without being informed in advance what the training scenario would be.

Headquarters during comprehensive disaster prevention training

■Disaster recovery systemsWe have put in place a system for comprehensively monitoring in real time the state of disasterrecovery activities. This allows all employees to share accurate information, thereby enabling swiftand appropriate action to be taken. Earthquake data aggregated by SUPREME is sent to employees'mobile phones just minutes after an earthquake, and the system can also be used to confirmemployees' safety and call them in to the office. Our earthquake data is also used by localauthorities and government agencies.

The "Disaster Information Station" site on the Tokyo Gas intranet

Safety management system

The Group's underlying mission as an energy supplier is to ensure safety. We recognize thatensuring safety is an extremely important issue that requires the direct involvement of topmanagement, and we have organized our management structure accordingly. Safety arrangementswere further enhanced in August 2006 by the establishment of the Safety Committee, which ischaired by the President, to coordinate and promote security measures. A Safety PromotionCommittee (chaired by the Chief Executive of the Pipeline Network Division) has also beenestablished, along with several permanent sub-committees, under the Safety Committee in order totackle various issues quickly and flexibly.In addition to these permanent committees, temporary Security Measures Committees are set upunder the Safety Committee to quickly address serious gas-related incidents or accidents thatrequire individual responses.In fiscal 2016, a total of 192 confirmed gas-related accidents occurred (105 at the consumer stage,87 at the supply stage, and none at the production stage), and we continued to work to reduce thenumber of such incidents.

Safety Management System

Safety Arrangements

Tokyo Gas has a 24/7/365 emergency mobilization system in place in readiness for gas leaks andother emergencies. We have developed robust arrangements to ensure customer safety under allcircumstances.

Tokyo Gas's Safety Arrangements


■Security Command CenterWhen Tokyo Gas Customer Center receives a report of a gas leak, the call is immediately transferredto the Security Command Center, which makes inquiries to ascertain the situation and offers safetyadvice. At the same time, Gaslight 24 teams are swiftly dispatched to the scene from their variouslocations by the Security Command Center. Our security system also has a hotline for coordinatingwith the fire department and police.

Security Command Center

■Gaslight 24 Gaslight 24 teams are on call 24 hours a day to provide an immediate response to gas leaks andother emergencies. Each location within the Tokyo Gas service area is staffed by specialists inemergency response procedures, and they are ready to respond immediately, around the clock,when the command comes in from the Security Command Center.

Gaslight 24 emergency vehicle

Periodic Safety Inspections of Gas Equipment

Tokyo Gas Group periodically inspects all its customersʼ gas appliances for safety at intervalsspecified by law under the Gas Business Act. As a general gas pipeline operator, we check for gasleaks on customersʼ premises, and we visit customers as a gas retailer to inspect their gasappliances and air supply and exhaust systems.We will continue to work to maintain and improve the quality of our work so that customers can usegas with confidence.

Enhancing the Quality of Gas and Water/Space Heating SystemInstallation Work and Preserving Engineering Expertise

Tokyo Gas not only makes life more comfortable through the use of gas appliances, but alsoprovides further "Safety, Security, and Reliability" to our customers.To help achieve this, we organize regular "Exhibitions of Technical Skills" and "EngineeringPresentations" with the aim of enhancing the quality of gas and water/space heating systeminstallation work and ensuring that engineering skills are maintained and passed on from one cohortof engineers to the next.At Exhibitions of Technical Skills, teams of installation engineers from Tokyo Gas, Tokyo GasLIFEVAL, and the entire Tokyo Gas Group (GASTIS)* show off their everyday engineering skills tomotivate each other to achieve even higher skill levels. Events such as these raise awareness andreinforce the "Safety, Security, and Reliability" that are our hallmark.*An organization formed by Tokyo Gas and its partners involved in marketing to sub-users in the housing market

Scenes from the Exhibition of Technical Skills

Tokyo Gas engages in all kinds of activities to ensure that customers can be confident of the safety ofgas equipment and appliances, both from a hardware aspect and from the services we provide.These efforts include performing periodic safety inspections of gas equipment in accordance with theGas Business Act, as well as providing information and raising awareness among our customers andappliance manufacturers regarding the safe use of gas.

Enhancing the Safety of Gas Appliance Products

The revised Consumer Product Safety Act came into effect in May 2007. In response, the VoluntaryAction Plan of Tokyo Gas Concerning Product Safety was developed to help us fulfill ourresponsibilities as a company that sells, repairs, and installs home gas appliances by ensuringproduct safety, while also developing a culture of product safety.In line with this Action Plan, the Group is working to ensure and enhance safety in order to meet thedemands and expectations of society. In conjunction with these efforts, we publish importantannouncements concerning home gas appliances on our website. Our aim is to create a culture ofsafety regarding gas appliances by, for example, promptly providing accurate information tocustomers on the correct use of their gas appliances and on product recalls and defects to ensurethat they can use home gas appliances safely and with confidence.The Group will continue to take swift and appropriate steps to further enhance the safety andquality of gas appliances in keeping with our core values of "Safety, Security, and Reliability."

■Voluntary Action Plans of Tokyo Gas Concerning Product Safety (established November 7,2007)Tokyo Gas defines the following Voluntary Action Plans to not only ensure product safety but also toestablish a culture of product safety, thereby strengthening our group values of "Safety, Security,and Reliability," and supporting our role as a company that sells, repairs, and installs home gasappliances.

Compliance with laws We shall comply with laws and regulations concerning product safety, formulate in-housevoluntary standards for repair and installation work, and strive to ensure product safety.

1.

Establishment of a product safety promotion system We shall improve our company's product safety promotion system to ensure product safety.

2.

Risk reduction of product-related accidents We shall contribute toward reducing the risk of product-related accidents by sending feedback onproduct-related accidents and problems that come to our attention to the manufacturers andimporters of gas appliances.

3.

System for collecting and transmitting information on product-related accidents If we learn of a product-related accident, the information shall be promptly forwarded not onlyto senior management, but also to related departments in the company, as well as to themanufacturers and importing companies.

4.

Maintenance and enhancement of product safety We shall promote awareness and disseminate information to our customers on the proper use ofgas products, provide follow-up to questions from customers on product safety, and commit tothe cultivation of a culture of product safety.

5.

Cooperation with manufacturers and importers When manufacturers or importers recover products due to recalls or other reasons, we shallcooperate with them to facilitate smooth product recovery.

6.


Development of Safer, More User Friendly Gas Appliances and Systems

■Improving gas appliance qualityWe established a dedicated unit to address quality issues in order to quickly identify and address thecauses of faults and accidents involving gas appliances nationwide, and we stepped up action onquality by setting up a new response unit in April 2011.If we judge that the technical cause of a fault needs to be determined, we immediately providefeedback to gas appliance manufacturers so that we can work together on identifying the cause and,where necessary, modifying specifications to deal with the issue.If an accident involving a gas appliance occurs, we work with gas manufacturers to swiftly analyzethe cause and formulate countermeasures in order to assuage customer concerns.We also share the knowledge gained from investigations of the causes of faults and analyses of dataon past repairs with other gas utilities and appliance manufacturers so that the information can beused to prevent new products from being affected and to raise quality levels. As an example of theongoing action we are taking to raise safety levels, all balanced-flue bath boilers sold since April 1,2011, have incorporated functionality to prevent erroneous ignition and users from forgetting toturn off the boiler as standard equipment. Some models also have added functionality to alert theuser (either by a control lamp that lights up or an error message displayed on the remote control)when an appliance has exceeded its design life and needs to undergo periodic inspection.

■All cooking stove burners fitted with sensorsThe gas industry (gas energy suppliers, gas appliance manufacturers, and distributors) hasvoluntarily made it a standard requirement that all burners on all home gas cooking stoves (exceptsingle-burner tabletop stoves) made since April 2008 should be fitted with safety sensors to preventoverheating of cooking oil, safety devices to detect flame failure, and self-extinguishing functionalityin order to make them even safer. Stoves of this kind have been dubbed "Si" sensor-equippedcooking stoves in order to help raise awareness of gas cooking stove safety.The Gas Business Act was subsequently revised some months later in October 2008 to require thatstoves also be fitted with sensors to prevent overheating of cooking oil and to detect flame failures.In March 2008, even before the law was amended and the industry had adopted the abovevoluntary standard, we began fitting all our gas cooking stoves (except single-burner tabletopstoves) with "Si" sensors. We had sold a total of around 1.67 million such appliances by the end ofMarch 2017.*1

We recently added further safety functions to our high-end models, including a pan detectionfunction that automatically lowers the flame when a pan is removed from the burner in order toreduce the risk of a user accidentally setting his or her clothing alight.*1 Excluding single-burner tabletop cooking stoves.

■Development of more advanced alarmsTo ensure that customers can use gas safely and securely, we are developing combined home fire,gas, and carbon monoxide alarms and home fire alarms.We developed an alarm that combines the ability to detect fires, gas leaks, and carbon monoxideresulting from incomplete combustion in the one unit. When the device is triggered, it emits analarm sound and voice alert. This unit went on sale in 1999.We continue to expand our lineup of alarms. In February 2010, we launched a battery-poweredindoor fire alarm with a battery life of 10 years, and we have also launched a wireless networkedfire alarm system that wirelessly activates the system's other alarms when the alarm at the site of afire goes off.Since 2006, we have been conducting R&D on power-saving gas sensors, resulting in the launch inOctober 2015 of a super low power battery-powered home gas and carbon monoxide alarm.

Combined home fire, gas, and carbon monoxide alarm

■Development of domestic ultrasonic gas meter and PHS communication terminal forResidential MonitoringDomestic gas meters not only measure customers' gas consumption but also contribute to safety bymonitoring gas usage. Hence they are known as "smart meters."*2

Working with Osaka Gas Co., Ltd., Toho Gas Co., Ltd., and appliance manufacturers, we havedeveloped a new kind of "ultrasonic" gas smart meter for installation mainly in homes that uses anultrasonic sensor to measure the flow of gas. As ultrasonic gas smart meters are extremely simplein construction and have no mechanical moving parts, they are much more compact thanconventional diaphragm gas meters. In fact, they can pack the same functionality as a conventionaldiaphragm gas meter into a device that is around one third of the size and weighs half as much as aconventional meter, making them more visually attractive and also installable in a wider range oflocations.We have also developed a PHS device that will run for at least 10 years on three lithium batteries(2,400 mAh, 3 V) to function as a wireless terminal for our Residential Monitoring Services, which isa remote gas shutoff and monitoring service that we provide to residential customers. Use of a PHScommunication terminal allows stable service to be provided to customers without relying on alandline connection.We launched the first-generation ultrasonic gas meter equipped with communications functionalityas well as conventional safety functions in July 2005, followed by a second-generation modelboasting more advanced communications functionality at the end of 2010. A considerably morecost-effective third-generation model began to be rolled out on a pilot basis in the second half offiscal 2016, and approximately 760,000 ultrasonic gas meters were in use as of the end of fiscal2016. Installation of PHS communication terminals has also been underway since December 2012,and approximately 180,000 were in use as of the end of fiscal 2016. We are now developing thetechnologies needed to introduce new smart meters from fiscal 2018 with the aim of using these toprovide various other services to go alongside our automatic meter-reading and ResidentialMonitoring Services.*2 Gas meters equipped with embedded safety devices and microcontrollers.

Ultrasonic gas meter (top) and PHS communication terminal (bottom)

■Development of multistage radio relay transceiverWorking with Osaka Gas Co., Ltd., Toho Gas Co., Ltd., and appliance manufacturers, we aredeveloping a multistage radio transceiver that relays residential gas meter readings and other datathrough multiple meters. Signals are sent and received between transceivers intermittently onceevery five seconds instead of continuously, which conserves power. Thus, despite being batterypowered, the transceiver can run for as long as 10 years. The problem with conventionaltransceivers was that their communication range was limited to the reachable range of radio. Itmeant they could only be used in buildings of five stories or less where radio waves could reachmeter readers standing on the ground. Long communication time was also an issue. However, asthis new transceiver is capable of transmitting data by multistage relay, it allows meters to be readwirelessly in commercial buildings and housing complexes of six stories or more.We initiated wireless reading of meters in our own Tokyo Gas employee housing on May 7, 2014. InApril 2017, we also began using this wireless technology for our My Tsuho service for apartmentowners. This makes it possible to reliably capture data on such things as gas meter readings atresidences where PHS reception is poor, thereby allowing service provision to be extended to largeapartment buildings.

A multistage radio relay transceiver

Network overview

Encouragement of Switchover to Safer Appliances

Since January 2007, we have been working to promote the switchover to safe appliances. Forexample, we have been encouraging customers who have water heaters and bath water heatersthat are not equipped with incomplete combustion avoidance devices to switch to using saferappliances as soon as possible by sending them direct mail and explaining the benefits of switchingduring periodic safety inspections of their gas equipment. In fiscal 2016, we continued to promotethe replacement with safer models of the following devices that are not equipped with incompletecombustion avoidance devices: small water heaters, wire mesh stoves, conventional flue type waterand bath water heaters, and forced exhaust type water heaters (with downdraft diverters). As aresult, the number of appliances in our service area that we have targeted for replacementdecreased from about 160,000 at the launch of the initiative to 18,417 at the end of March 2017.We will continue to encourage customers to switch to using safer models and work to steadilyimprove safety, thus ensuring that our customers can feel secure in using their gas appliances.If an owner of an appliance such as a water or bath water heaters that is not equipped with anincomplete combustion avoidance device switches to a gas retailer other than Tokyo Gas, we willprovide information on the equipment that they own to their new gas retailer in accordance withJoint Use (6) of “Handling of Customer Information.”

Progress in Switchover to Safer Appliances

Air supply &exhaust method Target appliances

Number of unitstargeted for

replacement atlaunch of initiative

Number of units atend of FY2016

Open-type gasappliances

Small water heaters 37,000 2,499

Wire mesh stove 4,200 444

Semi-closed-typegas appliances

Conventional flue type waterheaters & bath water heaters / forced exhaust type waterheaters (with downdraftdiverters)

120,000 15,474

Ensuring the Safety of Commercial Appliances

To ensure safe and comfortable use of the commercial gas appliances used in restaurant kitchensand similar locations, we urge users to replace old-style gas outlets and rubber tubes and to installsafety devices such as gas alarms and automatic gas shutoff devices.Since November 2006, we have installed commercial ventilation alarms free of charge atapproximately 180,000 restaurants and other businesses that use gas appliances in commercialkitchens in order to prevent carbon monoxide poisoning incidents. (The customers eligible for freeinstallation are those who use gas in commercial kitchens and customers that use any of the 13types of commercial gas appliances specified by Tokyo Gas.) These alarms are certified for six yearsof use and are replaced before they expire.

Commercial ventilation alarm

End Mar. 2007 No data

End Mar. 2008 24,000

End Mar. 2009 100,000

End Mar. 2010 142,500

End Mar. 2011 153,292

End Mar. 2012 157,977

End Mar. 2013 166,095

End Mar. 2014 171,623

End Mar. 2015 177,092

End Mar. 2016 180,406

End Mar. 2017 183,692

* Estimates up to the end of March 2010.

Customer-oriented Structure and Activities

■Customer-oriented CS MindsetIn order to continue to be the customer's first choice, we place emphasis on delivering satisfactionas well as products. This emphasis informs the basic stance of Tokyo Gas Group encapsulated by the"CS Mindset" laid down in Our Code of Conduct. The CS Mindset serves as the policy on which webase our judgments and actions. We will continue to ensure that all individuals in Tokyo Gas Groupare thoroughly aware of the CS Mindset to ensure that we remain a corporate group that alwaysputs the customer first.

Elements of the CS Mindset

■Arrangements for promoting customer satisfactionOpinions and requests received from customers via calls to our Customer Center, direct customercontact, service quality surveys, and other channels are shared within the company, all the way upto top management. This feedback is actively utilized in our daily improvement activities and toenhance quality.


■Customer Satisfaction Promotion CommitteeImproving customer satisfaction (CS) is a Tokyo Gas Group management priority, which is why weestablished a Customer Satisfaction Promotion Committee in fiscal 2004. Composed of the membersof the Corporate Executive Meeting and chaired by the President, this committee deliberates issuesthat are difficult for individual workplaces and departments to resolve by themselves, as well asother issues that need to be considered by the company as a whole. A CS Improvement PromotionSubcommittee has also been established, composed of leaders of the departments that come intofrequent contact with customers, in order to promote a variety of programs to enhance customersatisfaction.

■CS Meetings Held in Each DepartmentIn order to listen to our customers and swiftly respond to their needs, each business departmentand group holds various CS meetings for the following purposes: to gain an understanding of thecurrent situation via customer feedback; to deliberate and implement business improvement plans;and to discuss and share information on CS programs.

■Service Quality SurveysTo help us meet diversifying customer needs, we monitor satisfaction by conducting "service qualitysurveys" of key services that bring us into contact with our customers.

Survey Details

Servicessurveyed

Periodic safety inspections of gas equipment, commencement of gas service,paid-for TES inspections, explanation of TES use, and appliance repairs

Surveymethod Mail questionnaires

Surveycontent Quality of work performed and satisfaction with service personnel

Service Quality Surveys Conducted in FY2016 (Satisfaction with Service Personnel)

Percentage responding "satisfied" or "somewhat satisfied" (5-step scale)

Periodic safety inspections of gas equipment 93.8%

Commencement of gas service 92.4%

Paid-for TES inspections 94.0%

Explanation of TES use 92.2%

Appliance repairs 95.7%

■Support Provided by the Customer CenterTokyo Gas's Customer Center provides wide-ranging telephone support for the entire Group. Toallow customer inquiries to be answered as swiftly and accurately as possible, we are enhancingsupport arrangements in a number of ways. These include optimized shift scheduling based onimproved personnel management and detailed forecasts of when calls are most likely to be received,and the development of arrangements for handling specialized inquiries (including technicalquestions on construction work and appliances).

■Use of FeedbackIdentifying issues from our feedback databaseFeedback received by the Customer Center and other departments and by sales personnel whocome into contact with customers is swiftly directed to the departments responsible so that anynecessary action can be taken. A database of these feedback flows is retained in our customerfeedback system to enable us to track and analyze customer expectations of the Group and identifyissues that need to be addressed.

Breakdown of customer feedbackWe received 20,250 comments from customers in fiscal 2016. These consisted of expressions ofthanks (8.8%), complaints (8.8%), and system requests (82.4%).The Customer Center continuously gathers a wide range of customer feedback and focuses inparticular on system requests.

Breakdown of Customer Feedback

Improvement of services based on customer feedbackCustomer feedback is utilized by individual departments to improve their operations, and a portion isreported to customers via our website.

Customer feedback“Please make a myTOKYOGAS app, because at the moment you have to open the browser onyour smartphone every time you want to access it.”“I want to be able to access handy functions like Cookpad straight from the top of themyTOKYOGAS site.”

Improvements madeWe developed an app for accessing Tokyo Gasʼs myTOKYOGAS online membersʼ program.＜Appʼs main functions＞Using the app, you can check charges, your usage, and Paccho points balance, use Cookpad,* andfind out information on local shopping deals and discounts.The myTOKYOGAS app is downloadable for free from the App Store and Google Play.*Available only to gas and electricity package plan customers.

Customer feedback“I want details of what rubber tubing to use and the connection so I can connect my gas applianceto the gas.”

Improvements madeTo prevent accidents caused by incorrectly connected appliances, we revamped the “Connecting GasAppliances to the Gas” to include explanations and illustrations showing what type of rubber tube touse and other relevant information.

Actively Informing the Customer

To ensure that our customers can use energy safely, securely, and comfortably, we offer community-based customer support and actively provide appropriate information.

■Tokyo Gas websiteWe use our website to take applications for gas and electricity services and to provide usefulinformation to customers, including lifestyle news and announcements on services in the event ofemergencies such as earthquakes and gas leaks. We publish business data and information forcorporate customers as well as individuals via our website.We also run members' sites for our gas and electricity customers: the "myTOKYOGAS" site, whichallows residential customers to check their monthly gas and electricity usage and charges in oneplace and also exchange points earned by using our services for gifts or making donations to theJapanese Para-Sports Association and environmental causes, and the "myTOKYOGAS Business" site,which provides commercial and industrial customers with visualizations of their monthly gas andelectricity usage and charges.

"myTOKYOGAS" members' site for residential customers

■FacebookTokyo Gas also has an official Facebook page. This provides customers with a convenient source ofinformation on a range of topics, including news on Tokyo Gas, recipes and other ideas, entertainingcontent such as Pacchoʼs Diary, and information on how to use gas safely and prevent accidents.

■Ensuring proper information provisionProper information provision in accordance with the law and voluntary standardsAlthough Tokyo Gas Group endeavors to provide customers with the accurate information that theyneed to make purchasing decisions, an administrative order was issued against us by the SecretaryGeneral of the Consumer Affairs Agency regarding the content of an event leaflet in July 2017. Wehave taken this order very seriously, and the Group will be making a concerted effort to reinforcecompliance with the Act against Unjustifiable Premiums and Misleading Representation and ensureproper advertising and labeling. We will continue to make every effort to provide consumers withaccurate information by working closely with legal affairs personnel when producing leaflets,catalogs, and pamphlets. We will also continue to provide appropriate information and labeling inaccordance with Japan Industrial Standards (JIS) and Japan Gas Appliances Inspection Association(JIA) guidelines, our own internal regulations, and other relevant standards to ensure safe use ofthe Groupʼs products and services by customers. The Group will adhere to the sales rules publishedby the Ministry of Economy, Trade and Industry to guide the sales practices of new entrantsfollowing the full liberalization of the electricity and gas retail markets, and we will make sure thatinformation is provided and sales activities are conducted properly without using any language thatmight mislead the customer.

Training session for legal affairs personnel

Event at a Tokyo Gas LIFEVAL showroom Installing a gas appliance

The Tokyo Gas Group's locally based service network

Tokyo Gas LIFEVAL network was set up by Tokyo Gas to deliver individualized service and developclose ties with customers in order to better meet their specific needs. It functions as a one-stopshop for products and services that will improve quality of life. As of April 1, 2017, the networkconsisted of 32 corporations in 62 blocks.Our Tokyo Gas LIFEVAL showrooms handle the arrangements for a range of city gas-related tasks,including periodic safety inspections, meter readings, commencement and termination of gasservice, the sale, repair, and installation of gas appliances, and applications for gas and electricityservice. They help local residents enjoy safe, environmentally friendly, comfortable lives by providinginformation on plumbing renovations(especially for kitchens and bathrooms) and energyconservation and generation in the home, and they are also active in organizing events, such ascooking classes using the latest equipment, that allow customers to see, feel, and experience gasappliances in actual use.Tokyo Gas provides LIFEVAL personnel with various objective-based and level-specific training toenable them to master and improve their technical abilities and service skills. As well as assistingwith human resource development, Tokyo Gas helps the network deliver better services andproposals by gathering and sharing customer feedback on LIFEVAL.The Group further provides various services through its Enesta and Enefit outlets to contribute tocomfort in everyday life.

Always Reliable Services Menu

Our Always Reliable Services are a selection of services designed to deliver peace of mind regardingeverything from gas appliances to life at home in general. Emergency Home Assist was launched inApril 2016, followed by Gas Fixture Troubleshooting Support and a revamped Residential Monitoringservice in April 2017.

■Gas Fixture Troubleshooting SupportThis service provides free onsite support and repair in the event of problems with city gas waterheaters and cooking stoves.* Engineering fees and the cost of replacement parts are borne by the customer. Some appliances and areas are not covered by this service.

■Emergency Home AssistThis service provides 24/7/365 onsite emergency support and repair in the event of plumbingproblems, broken windows, or getting locked out.Customers who qualify for Tokyo Gasʼs gas and electricity package discount are exempt from themonthly fee for this service until March 2018. Service users have expressed themselves delightedwith the speed with which plumbing problems are dealt with and the convenience of having freesupport.


■Residential MonitoringResidential Monitoring is a paid-for service launched in April 2017. It allows customers to checkwhether they have forgotten to turn the gas off and receive messages regarding their gas usage byconnecting residential usersʼ gas meters to Tokyo Gasʼs Station 24 via communications equipment.In addition to the remote gas check and shutoff service and automatic notification service alreadyprovided by our My Tsuho service, Remote Monitoring also offers a “no gas used yesterday”notification service that informs registered family members if a customer did not use any gas theprevious day.The remote gas check and shutoff service lets users check, either online or by making a simplephone call, whether they accidently left the gas on when they went out. If they did, then Tokyo Gascan turn the gas off for them remotely. The automatic notification service, meanwhile, informscustomers by phone if it detects gas usage that is out of the norm (such as when gas has been usedfor a prolonged period). And the new “no gas used yesterday” notification service sends regularemails to pre-registered family members if gas has not been used at all between midnight andmidnight the previous day. This makes it possible for customers who live away from their family tolet them know that they are well every day. This service can also email family members if acustomer did not use any gas at all the previous day.

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