Last year, fuel prices and wholesale electricity market prices both soared to record-breaking levels following the Russian invasion of Ukraine, resulting in a major increase in costs to supply electricity. In response to this, I headed an emergency management task force to review all costs, including reductions and deferrals, to the extent that our stable supply was not impeded. We implemented every management efficiency measure we could, including measures to improve our income and expenditures by 14.0 billion yen in FY 2022. Despite this, rising costs far outpaced our ability to improve management efficiency, leaving us with a severely damaged financial base. If these circumstances were to continue, we would become unable to procure fuel and maintain our facilities, which would in turn threaten to affect the stable supply of electricity. We were left with no choice but to make the difficult decision to raise electricity rates for all customers.
We shall continue to fulfill our primary mission of providing a stable supply of electricity, and shall strive to recover and strengthen our financial base as soon as possible. We also aim to achieve sustainable development by flexibly addressing social changes, such as achieving carbon-neutrality by 2050, as well as by responding in good faith to feedback from customers and communities.
In 2019, we established the Hokuriku Electric Power Group Long-term Vision covering the period through FY 2030. The Group’s vision is to develop alongside the Hokuriku Region, and to create new value nationwide and internationally; our two main strategies to achieve this are expanding our comprehensive energy business based in Hokuriku, and cultivating new growth businesses.
In light of the significant damage suffered by our financial base since the initial announcement of the Long-term Vision, we have established a new Mid-term Business Plan for FY 2023‒2027 that prioritizes improved profitability and a strengthened financial base through securing stable supply, thoroughly pursuing efficiency, and expanding our business domains. The Plan sets forth three pillars of management to serve as particular focuses.
The first of these is ensuring a stable supply, improving the financial balance, and strengthening the financial base. At the March 2023 review meeting for the Shika Nuclear Power Station ̶ itself a crucial factor in achieving carbon neutrality ̶ we were able to obtain understanding from the Nuclear Regulation Authority（ NRA） that the faults at the site are not active. We will continue to work toward an early restart of the power station, on the major premise that we shall continue to handle the screening process without fail, and earn the understanding of the community. We shall also maximize supply-demand balance through the use of AI technology to forecast hydroelectric power generation, to control thermal power facility boilers, and to forecast electricity demand.
The financial targets for the period covered by the new Mid-term Business Plan include achieving consolidated ordinary income of 45.0 billion yen or higher, and a consolidated equity ratio of 20% or higher（ by the end of FY 2027） from the perspective of fixing our damaged financial base, in order to continue to fulfill such social missions as delivering a stable supply of electricity and achieving carbon neutrality. In addition, from the perspective of management conscientious of capital efficiency, we shall ensure a consolidated return on equity（ ROE） of 8% or higher.
The second of these three pillars is working with local communities to promote decarbonization. In recognition of the fact that achieving a decarbonized society is a key issue for the Group’s sustainable growth into the future, we have set a very aggressive renewable energy development target of 1 million kW or higher（ 3.0 billion kWh/year or higher） by the early 2030s, toward achieving carbon neutrality by 2050. We are also working to decarbonize power sources, through efforts such as increasing biomass co-combustion ratios at coal-fired power stations, new construction and repowering of hydroelectric power stations, and offshore wind farms, and are working to develop next-generation power transmission and distribution networks for large-scale introductions of renewable energy sources. In addition to these, we are also working to contribute to the Hokuriku region’s decarbonization in collaboration with local governments.
The third pillar is expansion of new business domains for sustainable growth. To this end, we shall leverage the Group’s resources and strengths to achieve Group growth, by creating new pillars of growth beyond our electricity business. In our electricity business, we have expanded the Easy series, which is a household-oriented carbon-neutral service, as well as PPA sales to businesses. We are also working on community development projects like Actibase Fukui, and shall continue to expand into new businesses in the future.
In order to promote carbon neutrality and further increase corporate value, we shall make growth investments totaling 150.0 billion yen from FY 2023 through FY 2027. For investing, we shall carefully select the investments we make based on business evaluations via methods such as ROIC, while taking into account potential business risks and prioritizing profitability in order to achieve both growth and financial discipline. This past September, we also established the Investment Committee. Before making management decisions, we check and evaluate investment projects from objective, multifaceted perspectives, while also determining investment priority levels and making investments with a sense of speed.
In order to push forward with these three pillars, we shall strive to create comfortable work environments with thorough compliance enforcement, and to increase labor productivity.
Last fiscal year, we discovered an incident of customer information being improperly handled. We have since taken various steps toward preventing this from happening again, including establishing a new Committee for Proper Management of Information, chaired by the vice president. We shall continue to make efforts to foster and ensure an awareness of compliance, so that the Hokuriku Electric Power Group will remain a chosen and trustworthy partner to our customers.
In order to achieve our goals and accomplish each of our initiatives, we must also enhance the Group’s collective strength. To this end, we actively promote diversity, equity, and inclusion, such as by creating a working environment where employees can balance their personal and work lives, and where people can adopt diverse work styles. We also engage in management that values our human capital, including health activities such as encouraging employees to quit smoking, as well as efforts to improve labor productivity through technologies like DX and IoT. These are just some of the active efforts we are making throughout the Group.
The Group has developed alongside the Hokuriku region by delivering a stable supply of inexpensive, high-quality energy. Even in the midst of severe CHANGE, we must leap upon this CHANCE to achieve sustainable growth with the Hokuriku region, and fearlessly take on each CHALLENGE, further improving our corporate value and contributing to the Hokuriku region through the 3 Cs. Finally, I would like to express my sincere gratitude to all of our stakeholders, whose continued support of the Group’s business activities is greatly appreciated.
Thank you very much.
