The Tokyo Gas Group FY2018-2020

management plan

GPS2020
Tokyo Gas Group - Initiatives
for Energy and for the Future -

October 5, 2017
Tokyo Gas Co., Ltd.
 Introduction General image of GPS2020

Preface
I. Strengthening Bonds with Customers and Providing New Value (Key Strategy)
 Recommend Optimal Uses for “GPS (Gas & Power + Services)”
 Achieve Environmentally-friendly Energy Supply, Mainly for Natural Gas, in Overseas Markets
 Apply Aggressive Alliance Strategy with Various Players to Quickly Realize “GPS×G”
II. Initiatives for Strengthening Management Foundation for Supporting Key Strategies
 Enhance Energy Infrastructure
Raw Material Procurement and Production: Strengthen LNG Value Chain
Development of Power Source: Building an Optimal Power Source Portfolio Commensurate
with the Growth in Stock for Sales
Pipeline：Become a Slim yet Powerful Pipeline Business Operator
 Digitalization/Innovation, and Technology Development Initiatives
 Strengthen Organization and Personnel Platform
 ESG (Environment, Society, Governance) Initiatives
Initiatives for Realizing a Low-carbon Society
Contribute to Achieving Sustainable Development Goals (SDGs)
Initiatives toward Ensuring a Successful Tokyo 2020 Olympic and Paralympic Games
Establish Governance
III. Major Indicators

Introduction 1
 Introduction Current Initiatives toward Realizing Vision

 In November 2011, the Tokyo Gas Group released its Group Management Vision: "Challenge 2020
Vision - Initiatives by the Tokyo Gas Group for Energy and for the Future".
 In our previous management plans, “Hop" (FY2012-2014) and “Step" (FY2015-2017), our goals
were to realize a total energy and global corporate group. In addition to widely expanding our
business domains and areas, and forming seven business domains, we also built a new group
formation.

2011 2012 2013 2014 2015 2016 2017

Formulation of
Challenge 2020 Hop Step
Vision
A step in the right direction Major advancements toward the
The Great East Japan
Earthquake and realization of our vision
subsequent nuclear
power plant accident and < Main initiatives > < Main initiatives >
the issue of demand and
supply of electricity  Diversification of raw materials  Evolve the total energy business
forced the country to procurement / expansion of overseas  Accelerate global business development
examine the state of our business
energy, the foundation of  Construct a new group formation
 Upgrading and expanding infrastructure to
the lives of the public and  Drafting and releasing our corporate
industrial activities. contribute to safe and stable supply
message, "Supporting you Always and
Amid such an  Proposing energy solutions aligned with bettering every day"
environment, we aim to customer needs
make contributions
through the advancement
of the LNG value chain.

Introduction 2
 Introduction Positioning of the Jump Period

 During the “Jump” period, we will deploy the Tokyo Gas Group’s “GPSxG” system to generate real
new value in “the things we can do” while pressing forward with ongoing a comprehensive vision of non-
continuous reform (business transformation unprecedented in its boldness and fundamental reform of our
organizational structure). The 2020s will be a period of solid growth and forward movement.

2018 2019 2020

Jump

Transition from "Goals" to "Achievements"

Through a variety of means, we will deliver global gas and power along with services
that meet our domestic and overseas customers’ needs

Total energy （GPS） Global（×G）

 Provide optimal energy featuring gas and  Establish offices in strategic areas and concentrate
electricity as a packaged service. management resources to engage in proposal planning.
 Provide a one-stop offer for a full range of services  Contribute to building energy infrastructure in coordination
designed to meet life stages and needs of with the governments and enterprises in the fast-growing
residential customers. countries of Southeast Asia and other regions as the energy
 We will provide energy services and engineering supply and demand structure of these regions continues to
for our commercial and industrial customers to evolve.
reduce their energy usage and costs.  Build a firm foundation for profitability in North America and
other regions where deregulation and market trading of
energy is advancing, while acquiring and using the know-how
that will contribute to our other businesses in Japan and
abroad.
Introduction 3
 Introduction The New Era

 As we go forward with our management planning, we are focusing here on three specific
perspectives.
 The three perspectives are: “The era of natural gas,” “The era of single-source providers of
electricity and gas,” and “The era of multi-dimensional innovation fueled by rapid digital
evolution”.

The Era of Single-Source The Era of Multi-Dimensional Innovation

The Era of Natural Gas
Providers of Electricity and Gas Fueled by Rapid Digital Evolution

 With its excellent stability,  For many years, customers in  Digital technologies, including
favorable economics, and Japan have only been able to IoT, big data, and AI, are
environmental characteristics, buy electricity from power evolving with unprecedented
natural gas is an increasingly companies and gas from gas speed and are having an
important energy source both in companies. enormous impact on daily life
Japan and around the world.  With the full deregulation of and industry. These technologies
 Going forward, natural gas will power and gas retail market, promise to spur the kinds of
become more widely used and consumers in Japan can now innovations never before seen.
in more regions as it expands purchase both power and gas  Although it is difficult at this
dynamically on a global scale. from a single supplier, just as in stage to forecast the future, we
the EU and the US. believe we must pay close
 With this change, it is now attention as look ahead.
possible to design and build an
optimal energy system for
Japan.

Introduction ４
 I-1 Recommend Optimal Uses for “GPS (Gas & Power + Services)”

 The full deregulation of the electric power retail market has made it possible to offer not only gas
but gas and electricity as a set to all customers, including residential customers.
 To provide optimal plans for gas and electricity, we will use various means to deliver services that
meet the needs for lifestyle and business of customers and reach a greater number of
customers.

To reach a greater Residential customers Commercial and industrial customers

number of customers

Various Visits・stores Call center PCs・smartphones・IoT

means (Lifeval etc.) (Customer center)
Digital marketing Energy management ･･･

• Optimal proposals, implementation and maintenance for energy facility and

Meeting needs with equipment
various service
combinations
S(Service) •
•
Smart management utilizing smart meter, IoT and AI
Lifestyle and business support
• New value-add proposals that address low carbon, digitalization / new
technology

G(Gas) • Work to expand the use of city and LP gas

Gas & electricity ＆ • Expand number of customers by providing gas and electricity services as a
packages set by recommending optimal energy plans, that combine gas and electricity,
P(Power) as only Tokyo Gas can

I. Strengthening Bonds with Customers and Providing New Value (Key Strategy) 5
 Recommend Optimal Uses for “GPS (Gas & Power + Services)”
I-1 Residential customers

 The Tokyo Gas "total energy service plan" is a general energy plan offering value for money, peace
of mind, and simplicity and convenience that combines a gas and electricity packaged discount with
various services that customers can choose freely.
 Tokyo Gas, which has built a network with 11 million customers through its 130-year-old city gas
business, will provide optimal energy that corresponds to a customer’s actual level of use.
 We will continue establishing new pricing menus and service menus that more customers can feel
“profitable”. We will provide our electricity to 2.2 million customers by FY2020 and increase the
number of customers provided the one-stop service of supplying both gas and electricity.

Tokyo Gas "total energy service plan"

Gas ＆ Electricity Services

■ Gas rates ■ Electricity rates ■ Support services

+ Points linked to gas rates + Points linked to electricity ■ Simple, convenient web
■ Gas rates for designated gas rates services
equipment + Gas & electricity package ■ Fiber communications services
("Danran Plan", etc.) discount

Combine services to support daily life

Provide optimal energy that is in line
Deliver bargains, safety, simplicity and
with the customers actual energy use
convenience

I. Strengthening Bonds with Customers and Providing New Value (Key Strategy) 6
 Recommend Optimal Uses for “GPS (Gas & Power + Services)”
I-1 Residential customers

 Tokyo Gas Group aims to provide optimal recommendations to support its customers’ lives as only it
can do owing to its many years experience supporting the lives of customers and providing
them with gas and power.
 We want customers to think of Tokyo Gas when they have troubles in your daily life. To
nurture this recall, we are preparing an extensive menu of each customer’s life stages and
troubles in daily life that customers would like to have handled. We plan to develop a
platform that will offer one-stop services for gas and electricity.
 We aim to expand our new service menu as the Tokyo Gas “total energy service plan”, including
services through alliances with ventures and other companies.

Look to Tokyo Gas when you have troubles in daily life

Customer I want to talk to someone As two working parents,

Can I make my monthly about problems with our we are busy and want
utility bill lower? water equipment and facilities to reduce housework
Channels

Thanks to our customer center, A nearby Lifeval or Enesta Our website and myTOKYOGAS
customers can immediately call maintenance representative allow customers to use services
with questions about rates and will visit your home. and conduct procedures
Tokyo Gas Group

equipment! Ask us anything! whenever they want

Energy Facilities/equipment Services

Products

Trouble with water Residential Housework

Gas fixtures Housing fixtures equipment and facilities monitoring support
Gas LP gas Electricity
Energy conservation
Electrical Maintenance New domains･･･
Remodeling consulting
fixtures
Data

Gas and electricity usage data Condition of customer equipment・Visits thus far Data for devices using IoT ･･･

I. Strengthening Bonds with Customers and Providing New Value (Key Strategy) 7
 Recommend Optimal Uses for “GPS (Gas & Power + Services)”
I-1 Residential customers

 Strengthen alliances with wholesale gas suppliers and LP providers to expand the provision of
“GPS” to customers in the Tokyo Metropolitan area while also providing the support that helps
customers live pleasant lifestyles.

Initiatives towards Delivering GPS to a Greater Number of Customers

 Tokyo Gas will expand city and LP gas services to Deliver “GPS” to a
Customers greater number of
customers in areas not yet served by city gas or by Tokyo
not using our customers in the Tokyo
Gas.
gas services Metropolitan area
 We will collaborate with a variety of players in the LP gas
industry to increase the efficiency in our distribution
network and the safety, and will achieve a base of 1 million
LP gas customers in 2020.
customers
 Through our Business Alliance on Low-Pressure Power
Sales*, we will provide wide-ranging “GPS” services to
customer in the Tokyo Metropolitan area based on
collaboration with wholesale peripheral gas companies and
Peripheral gas LP gas sales companies.
company
customers  We will further natural gas services in coordination with
wholesale peripheral gas operators. We will deliver new
value to our customers by providing new products and
services in addition to gas and power.

✳ Business Alliance on Low-Pressure Power Sales: Partnerships with 48 wholesale gas businesses and LP gas sellers

I. Strengthening Bonds with Customers and Providing New Value (Key Strategy) 8
 Recommend Optimal Uses for “GPS (Gas & Power + Services)”
I-1 Commercial and industrial customers

 We are moving forward with the expansion of natural gas use by extending the length of the
pipeline network and lorry supply. At the same time, we plan to assist with energy solutions,
including energy conservation, CO2 reductions, and cost reductions via the use of natural gas and
gas equipment.
 Cooperating with ENNET and Synergia Power, We will provide competitive electricity to large
scale customers.
 We will continue proposing energy services to match customer needs and engineering projects
such as LNG terminals and pipeline construction with local operators.
Expansion of Natural Gas Use Nationwide Engineering Services and Energy Solution
(Extending Pipeline/ Lorry Supply)
Saku Central Hospital Services began in FY2016
(Nagano Prefecture)
 Promote regional energy use in the multiple buildings on the site to achieve
energy conservation and cost reductions.
 Installed a woodchip boiler to use renewable energy.
 As a general hospital, BCP
considerations are critical.
With this in mind, we proposed
a cogeneration system comprising
gas supply from highly seismic
resistant middle-pressure gas pipes
and functions to reengage power
automatically in the event of
a power outage.

Niihama LNG Project

Operations slated for FY2021
(Ehime Prefecture)
 This project is; (i) to construct the LNG receiving terminal at Ehime works of
Sumitomo Chemical Company, and (ii) to supply natural gas to the new gas-
fired plant at the site (currently under consideration by jointly Sumitomo
Chemical Company and SUMITOMO JOINT ELECTRIC POWER.)
City gas  Joining Sumitomo Chemical Company and SUMITOMO JOINT ELECTRIC
Distribution area POWER, local energy provider Shikoku Electric Power Company and TGES ,
with a track record in Japan and overseas and knowhow for the relevant
business, are discussing the structure for the operation of the terminal,
including business model, operational structure (regarding receiving LNG,
Gas supply, etc.)

I. Strengthening Bonds with Customers and Providing New Value (Key Strategy) 9
 Recommend Optimal Uses for “GPS (Gas & Power + Services)”
I-1 Commercial and industrial customers

 Tokyo Gas is developing advanced EMS (Energy Management System) that will consolidate control
of cogeneration systems (CGS) and other equipment as well promoting regional use. With a view
toward the low-carbon societies of the future, we are also working on “smart menus” that will
introduce and use demand response, renewable energy, accumulators, VPP, and other strategies.

Regional Supplying of Energy (Redevelopment/industrial complex etc.) Development of VPP (Virtual Power Plant)
Tokyo Gas Engineering Solutions Corporation Calbee, Inc. Energy conservation

Kiyohara Industrial Complex Energy Center Photovoltaic power

(provisional name) Supply infrastructure Shin-Utsunomiya generation
Factory Negawatt power
Gas cogeneration system (30,000 KW scale) Use for adjustments on previous
1-hour market, real-time market
Kiyohara Factory
Electric Utilize power
power
R&D Group
system reforms
Steam/hot
water pipes
(install multiple units)
Electric cars
City gas Tokyo Gas Canon Inc.
lines ENE-FARM Resource aggregator
Accumulator IoT-based remote
Steam boiler (45t/h scale)
Photovoltaic power control
Steam Utsunomiya Plant generation
Hot water
Negawatt power System administrator,
retail (PPS)
Utsunomiya Optical Peak cut
Products Plant
System
power
Optics R&D Center
Optimal Commercial fuel cells
control
HISAMITSU PHARMACEUTICAL
CO., INC. Cogeneration
Energy management system
Heat pump
Utsunomiya Factory

Source: METI "Energy Resource Aggregation Business Committee

Data collection
(First Meeting) - Distributed Materials

Kiyohara Industrial Complex Completion in FY2018 “Demand Response” service Service started in FY2017
(Tochigi Prefecture)
 The Tokyo Gas Group has been participating in VPP validation projects
 Japan‘s first integrated energy-saving business serving multiple that can manage energy creation and saving energy as a power
plants, which supplies energy to the seven plants adjacent to each generation through integrated control of distributed power generations
other in the industrial complex. and facilities which consume electric power by using IoT.
 The Tokyo Gas Group serves point for multiple companies to  The Tokyo Gas Group are providing the “Demand Response” services as
centralize the fluctuating loads of each plant and supply energy using an aggregator to handle the power for adjusting market supply-
optimal operations. demand balance provided by general transmission and distribution
 This achieves a level of environmental load reduction not possible by operators, as well as using rechargeable batteries and renewable
each plant individually and enhances supply stability by enabling energy.
power and heat provision to each plant even in the event of a power  We will contribute to the optimal utilization of energy by our customers
outage. and all of society.

I. Strengthening Bonds with Customers and Providing New Value (Key Strategy) 10
 Recommend Optimal Uses for “GPS (Gas & Power + Services)”
I-1 Commercial and industrial customers

 In the real estate business, the development of our landholdings such as large-scale lots in Tamachi
and Toyosu (central Tokyo area) and small and medium-sized lots, We are rolling out an office and
housing rental, mainly in central Tokyo, based on the basic concept of our landholdings
rental business.
 We are also planning to buy and sell real estate to make it into optimized asset for rental business. In
addition, we expand the business in 2020s.

Office Building Example(msb Tamachi) Rental Housing Example (small and medium-sized lot in Tokyo)

 At our property with direct connection to JR Tamachi station, we are promoting the  We are aggressively engaging in the rental business, developing
development with smart energy network and measurements enhancement for small- to medium-sized lots.
Business Continuity Planning, BCP (installing emergency dual-fuel (oil and city gas)
 Currently, we are designing and planning a commercial and
power generation etc.) to achieve advanced and appealing urban development and
residential complex on land adjacent to a station in the Tokyo
rental business and the convenience for the relevant community.
Metropolitan area. (Construction is scheduled to begin in 2018 and
 We are constructing the buildings of Phase I (Tamachi Station Tower S and Pullman be completed by 2019.)
Tokyo Tamachi*1) and Phase II (Tamachi Station Tower N) with the the goal of
completing construction ahead of schedule as follows;
Phase I : in 2018 Phase II : in 2020.

*1: Pullman Hotels and Resorts: The premier hotel brand for travelers seeking the latest
in hotel accommodation, this marks their first hotel development in Japan.
*2: Phase I is a land rental project, Phase II is rental office project financed through
internal capital expenditures.

I. Strengthening Bonds with Customers and Providing New Value (Key Strategy) 11
 Achieve Environmentally-friendly Energy Supply,
I-2 Mainly for Natural Gas, in Overseas Markets

 We plan to expand the breadth and depth of our business, depending on the characteristics of each region,
by leveraging our global LNG value chain experience. In addition we will strength our presence in LNG
market, such as “Tokyo Gas is a truly LNG player”.
 As the structure of the global natural gas market undergoes a change, we will increase the ratio of
midstream and downstream businesses in our portfolio of overseas bases to build a stable profit
platform that is not influenced by fluctuations in commodity prices.
 We are also setting our sights on undertaking new fields of business, including floating LNG receiving
terminals * and renewable energy etc., and entering new regions where we expect market growth and
where we can leverage our strengths.
* floating LNG receiving terminals: LNG floating storage and regasification unit terminal (FSRU)

In North America where there is a substantial demand for energy, and

Amid rapid economic growth, the supply- deregulation and market trading of energy is advancing, we will continue to
demand structure for energy is changing in participate in up-, mid- and downstream businesses to acquire and use
countries in Southeast Asia and other knowhow that will contribute to our other businesses in Japan and abroad,
regions. We aim to work with the respective and at the same time establish an earning base.
governments of and companies in these
countries to contribute to the building of
energy infrastructures and the introduction of
natural gas in these regions.

To New
* Business field
* Area

In Australia, where we have been engaged in acquiring

upstream interests, we will work to maximize the value of
existing investment projects

I. Strengthening Bonds with Customers and Providing New Value (Key Strategy) 12
 Achieve Environmentally-friendly Energy Supply,
I-2 Mainly for Natural Gas, in Overseas Markets

Contribute to Natural Gas Infrastructure Development in Southeast Asia

 As a Group we will provide broad-based value, from natural gas engineering to know-how for
operation, energy conservation services.
 In Southeast Asia, the supply-demand structure for natural gas changed with market liberalization,
and as the result, some countries that exported LNG became the one of the countries that import
LNG. We aim to elevate our presence by engaging all the value chain development in this
region, including contribution in the field of LNG procurement.

Distribution and
LNG procurement LNG receiving terminal Power plant Energy services
use promotion

[Vietnam] Established LNG VIETNAM Joint Stock [Vietnam] Invested in PVGD [Malaysia] Established GMEA
Company (July 2017) (May 2014)
(August 2016) Acquired stock of PetroVietnam Low Pressure Established to provide energy services to industrial
Three-company joint venture with PetroVietnam Gas Joint Gas Distribution Joint Stock Company (PVGD), customers in Malaysia. First project was the
Stock Corporation and Bitexco Group of Companies. In the subsidiary of PetroVietnam Gas Joint Stock installation of a 32,000 kW cogeneration system for
Vietnam, we are aiming to engage in LNG procurement and Corporation that oversees their gas distribution Toray Group Malaysia. (Supply started in FY2016)
sales as well as LNG receiving terminal construction and business.
operation. Planning to start operations in 2022.

[Bangladesh]LNG receiving terminal [Thailand] Bang Bo Power Plant

(July 2017) (October 2016)
TGES and Nippon Koei Co., Ltd. received a joint Participated in Bang Bo Power Plant project
order from Petrobangla to conduct a feasibility (350,000 kW) in the suburbs of Bangkok
study and design for an on-shore LNG receiving （Operation started in FY2003）
terminal.

<Memorandum Concerning Value Chain Development>

[Malaysia] Petronas LNG Ltd. : Memorandum of Collaboration (October 2016)
[Indonesia] PT Pertamina : Strategic Alliance -Cooperation for Development of LNG Value Chain in Indonesia (February 2015)
[Vietnam] PetroVietnam Gas : Memorandum of Understanding for cooperation on the LNG Value Chain Development (March 2012)

I. Strengthening Bonds with Customers and Providing New Value (Key Strategy) 13
 Achieve Speedy “GPS×G” via Aggressive Alliances
I-3 with Diverse Players

 We plan to fortify our alliances all along the LNG value chain, including LNG trading and power
exchange and collaborative development with energy companies, to build an optimal energy
supply system.
 As an alliance that contributes to transforming our business model, we aim to move forward
with partnerships with a diverse lineup of players, including ventures, in fields such as renewable
energy source development and utilization as well as new service development and digitization.

Overseas business ・LNG procurement City gas production, power generation and Supply, sales, services
 Joint participation in overseas projects transportation  Expand city gas and power sales
(overseas corporations, etc.)  Power plant construction, power (energy, construction,
 Shale gas and other upstream exchange (power companies, etc.) communications industries, etc.)
development  Collaborative distribution of LP gas  National expansion of engineering
 LNG trading (LP gas operator) services (local corporations, etc.)
(Japanese and international LNG players)  Development of renewable energy  Development of service menu
sources

<Partnership on power generation business> <Development of new service menus>

● Power generation plant construction We are working with venture businesses to create new service

Customer
menus not bound by existing business frameworks.
To secure 5.0 million kW competitive proprietary
Furomimi (July 2017/partner: OTOBANK Inc.)
power sources in 2020s, we aim to move forward with
New lifestyle proposal
partnership with the companies which has wealth of
experience for construction and operation regarding - "Enjoy audio books while taking a bath"
power plants. User manuals collaboration (Oct. 2017/ partner: TRYGLE Co., Ltd.)
Centralized management service for home gas equipment
● Photovoltaic power and home appliances Furomimi
In Japan, we invested in Shizen Energy Inc., which has Predicting heat shocks (Oct. 2017/partner: Japan Weather Association)
a track record that includes the development of a nearly Service provides notifications as a general guide on the risk of heat shocks
600,000 kW solar power plant. We will aim for the quick Partnerships under consideration
acquisition of a 60,000 kW solar power source. Terminal that protects children by sending indoor or outdoor
(press release Feb, 2017) GPS coordinates to a smartphone. This services will utilize
GPS and Wifi hot spot data. Terminal to protect children
Technology development
◆ Investment in ventures and venture capital in energy sector and alliance with them ◆ Open innovation-based technology development

I. Strengthening Bonds with Customers and Providing New Value (Key Strategy) 14
 II-1 Enhance Energy Infrastructure

Raw Material Procurement and Production: Strengthen LNG Value Chain

 Amid increasing likelihood of changes in LNG demand in tandem with the Japanese energy market
deregulation, we look to improve our procurement through trading with alliance partners, while
securing volume flexibility, including a higher ratio of LNG short-term and spot procurement.
 We plan to continue with flexible terminal operations by leveraging synergistic benefits at jointly-
operated LNG terminals while creating facilities with improved competitive strength including
LNG procurement.

Tokyo Gas Group in Dynamics of LNG Trading Enhancement of LNG Storage

Alliance partners Efficiency of transportation, LNG Projects

in the world Trading to adjust
our storage capacity etc.
・LNG Sellers

LNG supply
responding to Spot LNG trading
large demand in liquidity market

 We are planning to construct the No.2 Storage

LNG Buyers LNG
Tank (Capacity : 230,000 kL) in Hitachi LNG
Spot market receiving Terminal
Operation started for FY2020

II. Initiatives for Strengthening Management Foundation for Supporting Key Strategies 15
 II-1 Enhance Energy Infrastructure

Development of Power Source: Building an Optimal Power Source Portfolio Commensurate with the Growth in Stock for Sales

 In line with the growth of stock for sales, we plan to develop proprietary power sources and
power source alliances (electricity purchasing agreements with electric power companies), and
secure power sources by procuring from the open market.
(Target : 3 million kW in FY2020, 5 million kW in 2020s)
 We aim to acquire a 400,000 kW renewable energy power source by early part of the 2020s.
We plan to actively find and invest in projects.

Procurement of alliance power generation and

Scope of Group power sources Group power generation
 Secure 3 million kW proprietary power source by FY2020.  Kobelco Power Moka Inc. (Gas-fired power generation -
approx. 1.2 million kW, all purchased by Tokyo Gas
Group) Construction progressing smoothly towards start
Aiming for the scope of operations in 2019.
of 5 million kW  To further expand power source, we are continuing
evaluations for the Chiba-Sodegaura thermal power plant
(joint investment with Kyushu Electric Power and
Idemitsu Kosan) and a thermal power plant project in
Ibaraki Prefecture, among others.
3 million kW
Operations to begin in FY2019

1.6 million kW

2020s

Own power Own power sources Alliance, market

sources (existing) (replacements, new) procurement

* Renewable energy sources include own sources (new) Kobelco Power Moka power plant
* Figures indicate own sources (own equity) Completion (image)

II. Initiatives for Strengthening Management Foundation for Supporting Key Strategies 16
 II-1 Enhance Energy Infrastructure

Pipeline: Become a Slim yet Powerful Pipeline Business Operator

 Under the newly deregulated conditions after reinventing ourselves as a gas pipeline operator, in
addition to securing transparency, neutrality, and fairness, we will continue to implement safety
measures (to address aging cast iron piping, etc.) and measures to prevent earthquake disaster
in order to ensure the safe and stable provision that is required to expand the use of natural gas.
 We will partner with retail operators to continue to maintain a high standard of safety as we have
thus far, thereby enabling all customers to safely use city gas.
 To help reduce the price for transportation service, we will strive for further optimization of
operations, expand our pipeline network, and secure demand to expand gas transportation
volume.

Provision and Improvement of infrastructure for natural gas / Safety Measures Comprehensive disaster training (partner with retailers)

 We are steadily advancing the construction of the pipeline from Koga to Moka with the
goal of completing construction ahead of schedule in FY2017.
 We are constructing the Ibaraki Line, which will strengthen our ability to provide a
stable supply through the loop creation of our high pressure pipeline network, with the
goal of completing construction by FY2020. (Reference to slide 33 “Building an Energy
Infrastructure (Figure for 2020s)）
 As the safety measures, we are continuing the initiatives for our 3 principles ;
Prevention [Install the earthquake-proof gas infrastructure], Emergency response
[Avoid the secoundary disaster], Restoration [Restart to supply promptly].

 In FY2017, we invited METI, new gas retailers and

others to observe our training. We confirmed
cooperation and roles during a large-scale disaster.
Our aim is to be ready to fully handle disasters as
we have been thus far.

II. Initiatives for Strengthening Management Foundation for Supporting Key Strategies 17
 Digitalization/Innovation, and Technology
II-2 Development Initiatives

Digitalization Initiatives
 We are effectively introducing IoT, AI, mobile devices, and digital technologies using big data while
drawing on our technical capabilities and the strengths of a sales network closely linked to localities.
Production  Predict the failure at LNG receiving terminals and power generation plants, Efficiency of operation and maintenance
Generation  Stop and restart to supply by remote controlling the pressure regulator with earthquake prevention system, SUPREME
Transportation  Optimize to distribute the LP gas cylinders by using the data for gas demand gathered with the technology of frequent remote metering

 Provide the best service for our customers based on the result of digital marketing
Sales
 Highly develop the energy management system to achieve the automatic optimized operation for energy equipment with remote control
Services  Advance in quality of services and work saving for operators at the Call Center by the introduction of voice-recognition system etc.

Digitalization to provide Enhance digital channel

the best services meeting

the needs of customers
Customer
 In addition to Lifeval and the
customer centers, Tokyo Gas offers Lifeval Customer center Website Mobile EC sites
an array of digital channels,
including our website and mobile
apps. Customer can handle
Strengthen value

myTOKYOGAS Service introductions, Gas, electricity applications

procedures on their own easily and enrollment
provision

• My page (rate confirmation, etc.)

when they want to. We are really • Services with points rebates
• Residential monitoring
• Support for
moving/relocation Sign up for gas
improving customer convenience. • Equipment trouble • Gas service and electricity
• Emergency home connection/cutoff package
 We are developing the digital assist • Support for electricity for greater savings
when moving
Easy to subscribe right now

• Other trouble application

infrastructure that will allow us to
utilize big data to deliver services
and information customized to
the needs of each customer. Marketing platform Customer information platform
Create digital
platform

• Analyze customer needs and optimize • Customer attributes

• Distributing, delivering optimized services via the • Details of contract with Tokyo Gas Group
channels customers desire • Negotiation history with Tokyo Gas Group
(rate history, gas equipment repair history, etc.)

II. Initiatives for Strengthening Management Foundation for Supporting Key Strategies 18
 Digitalization/Innovation, and Technology
Ⅱ-2 Development Initiatives

Digitalization to optimize the operation for using energy

 We developed the new system, “Helionet Advance”, which improve our existing “Helionet 21”, as follows ; (i) remote
monitoring system of the energy equipment in our customers’ office buildings and factories, (ii) remotely controlling the
equipment to implement automatic optimized operations.
 We will be installing this system in actual properties with the goal of contributing to energy and cost savings at our customers’
businesses and production facilities.

Examples of automatic
optimized operations:
Helionet Advance
・Electricity and heat demand
Helionet21
forecasting function Automatic Optimized Remote monitoring
・Calculation for optimized （Failure Prediction / Energy Saving
operation of energy
Operations Operational Support）
equipment, etc.

Remote Contorol Data collection

Electricity Optimal
Customer energy Helionet Advance regional lending
Saving Chilled On-site terminal
water Compressor
Boiler
Steam
Operations
CGS Refrigerator bundling
Air multiple
Automatic optimization of energy equipment customers

[Future initiatives] • Optimization for the operation for using energy ,including “demand response”
• More advanced failure prediction, optimized operations, etc. using AI and big data

II. Initiatives for Strengthening Management Foundation for Supporting Key Strategies 19
 Digitalization/Innovation, and Technology
II-2 Development Initiatives

Innovation and Technology Development Initiatives

 We will shift from our previous R&D focused on gas energy to an open innovation style of R&D
focused on a broad range of innovative energy technology.
 We will establish a dedicated department to gather information on a broad range of innovative
energy technology while also collaborating with advanced universities and venture
companies in Japan and overseas to absorb new technology and create innovation.
 To create innovation, we will establish an office in Silicon Valley, a hot spot for venture
companies, while engaging in investments in ventures and venture capital in the energy sector
and alliances with them.

New technology
Tokyo Gas First Launched development
established. LNG operation of initiatives started
earthquake Electric Renewable
Cargo
came to prevention 2017 power energy

Japan system
SUPREME
AI VPP
1885 1969 2001

Tokyo Gas History of Innovation Future innovation

1902 1981 2009 Block

chain IoT

First gas First natural Launched

equipment gas sales of
to receive a cogeneration world's first
patent in Japan residential fuel Rechargeable
Robotics
battery
in Japan cell

II. Initiatives for Strengthening Management Foundation for Supporting Key Strategies 20
 II-3 Strengthen Organization and Personnel Platform

Organizational Reforms

 We aim to conduct optimal organizational reforms to promote key strategies and platform enhancements
outlined in this plan.
 Ahead of the legal separation of the pipeline division scheduled for 2022, we are proceeding with
preparations to ensure a smooth transition to prevent inconveniencing customers.

Organizational reforms to promote key strategies and platform enhancements outlined in this plan

Strengthen “GPS” promotion functions

We will enhance our Group structure, including subsidiaries for promoting city gas,
electric power, and living services, to provide uniform “GPS” services to customers. (Related initiatives: Slides 6 - 8)
Response to maintain the Project to look into the optimization of gas production facilities in the Bay of Tokyo
We will set up a project team to properly handle the succession of Tokyo Electric Power and Tokyo gas contracts ahead of the
integration of the LNG and thermal power generation business with JERA, while ensuring the synergy of the cooperative operation in
the relevant receiving terminal in the past. (Related initiatives: Slide 15)
Secure renewable energy sources:
We will secure 400,000 kW power source from renewable energy sources by the early 2020s and establish a dedicated team to
aggressively develop and invest in projects for renewable energy sources. (Related initiatives: Slide 16)

Become a slim yet powerful pipeline business operator

Establish a pipeline network infrastructure company as a wholly-owned subsidiary that will specialize in the maintenance,
management and construction of pipelines. (Related initiatives: Slide 17)

Promote open innovation

Aiming to create innovation, we will establish an office in Silicon Valley, a hot spot for venture companies, and engage in investments
in ventures and venture capital in the energy sector and alliances with then. (Related initiatives: Slide 20)

Activities for a successful Tokyo 2020 Olympic and Paralympic Games

We will establish “Tokyo 2020 Olympic and Paralympic Games Promotion Dept. (provisional name)” to aggressively promote various
activities aimed at ensuring a successful Tokyo 2020 Olympic and Paralympic Games. (Related initiatives: Slide 25)

II. Initiatives for Strengthening Management Foundation for Supporting Key Strategies 21
 II-3 Strengthen Organization and Personnel Platform

Strengthen Personnel Platform

 We will move forward with personnel hiring, development and placement to support “GPSxG”.
 To ensure our ability to maximize the knowledge, abilities, and experience of personnel working in
the Tokyo Gas Group, we will promote diversity and workstyle reform.

Promote “GPSxG”

Strengthening of personnel Create an environment conducive for maximizing the use of knowledge,
to support growth skills, and experience

Personnel hiring and Promotion of diversity Workstyle innovation

Development (Support activities of diverse (Improve productivity/
personnel) achieve work-life balance)
 Hiring personnel with high  Empowerment of women  Work at home system
levels of expertise (new and
 Promotion of employment of people with (telecommuting)
mid-career hires)
disabilities  Improvement of productivity
 Strategic shift to growth
domains  Promotion of employment and by introducing AI etc.
empowerment of people with a foreign (Call center etc.)
 Foster growth of business citizenship
leaders  Reforms of offices
 Career support for seniors (Support
careers of employees over 50s and over)

II. Initiatives for Strengthening Management Foundation for Supporting Key Strategies 22
 II-4 ESG (Environment, Society, Governance) initiatives

Initiatives for Realizing a Low-carbon Society

 The Tokyo Gas Group contributes to a low-carbon society in Japan and around the world by
promoting the expansion of natural gas, the cleanest of all fossil fuels.
 As the Paris Treaty and other factors drive environmental policy, we will enhance our low-carbon
efforts, including increasing investments in renewable energy-based power generation and
future technologies.

Reduce CO2 Development of Future

Promote “smart”
emissions at the renewable Global expansion technologies
energy
customer energy sources (Hydrogen, etc.)

 Promote expansion and  Promote optimization  Approach renewable  Expand natural gas  Promote development
fuel conversion for of energy (gas, energy sources infrastructure and of technology of the
customers unable to electricity and thermal (photovoltaic power utilization technology use of hydrogen
access to city gas etc.) supply and generation and wind cultivated in Japan to (ultra-efficient fuel
 Develop and expand demand using regional power generation, overseas markets to cells with power
use of high-efficiency energy networks etc.) with a sense of contribute to low- generation efficiency
equipment (Fuel cell  Contribute to the urgency, including carbon and of 65%, etc.)
[EneFirm] and development of a low- alliance with the sustainable growth on  Promote use of fuel
cogeneration etc.), and carbon society by relevant companies a global scale cell vehicles (FCV) for
provide solutions to use applying smart energy
natural gas network, including
 Aim for 400,000 kW corporate fleets
“Demand Response” power generation  Promote development
 Expand the way of from renewable
using natural gas (LNG with distributed power of hydrogen-related
sources and energy sources by the technologies,
bunkering : as fuel for
rechargeable batteries, early 2020s including fuel cells and
ships)
etc.  Build the business use of hydrogen
model including use of derived as a by-
renewable energy product of other
sources processes

II. Initiatives for Strengthening Management Foundation for Supporting Key Strategies 23
 II-4 ESG (Environment, Society, Governance) initiatives

Contribute to Achieving Sustainable Development Goals (SDGs)

 The Tokyo Gas Group conducts a full range of business activities in the LNG value chain
(procurement, transportation, city gas production and supply, power generation and energy
solutions) to ensure the safe and stable supply of energy to our customers, the majority of whom
reside in the Tokyo Metropolitan area. We also apply our domestic and global experience and
knowhow towards constructing energy infrastructure in Southeast Asia.
 Through our business activities, we aim to contribute to the achievement of UN Sustainable
Development Goals (SDGs).

Contribute to the achievement of SDGs as a pioneer in the city gas business

 Since our founding, the Tokyo Gas Group has contributed to the expansion of city gas.
 After becoming the first company to import LNG to Japan in 1969, we converted raw
materials to natural gas, the lowest carbon among fossil fuels. We also promoted the
wider use of natural gas by development technologies, including CGS and combustion
technologies. Today we provide city gas to over 11 million customers.
 By engaging in smart energy networks, we are contributing to urban development, Energy Economic Innovation
growth
including the improvement of energy efficiency for entire regions and enhancing added
value, such as adding disaster prevention functions.
 After the full deregulation of energy market, we will provide a variety of services
combining gas and electricity to continue contributing to the enrichment of our
customers’ life and to urban development.
 Southeast Asia is expected to see a growth in demand for natural gas and an expansion
of LNG imports. In this region, we are contributing to economic growth and helping Urban Climate change Partnerships
development measures
solve environmental issues by partnering with local governments and corporations to
promote the development of an energy infrastructure and the wider use and
sophisticated use of natural gas.

II. Initiatives for Strengthening Management Foundation for Supporting Key Strategies 24
 II-4 ESG (Environment, Society, Governance) initiatives

Initiatives toward Ensuring a Successful Tokyo 2020 Olympic and Paralympic Games (2020 Tokyo Olympics)
 Through its energy supply operations in the Tokyo Metropolitan area, Tokyo Gas will contribute to the
success of the Tokyo 2020 Olympic and Paralympic Games that will be held right here in the Tokyo area
in 2020 as an official partner in the 2020 Tokyo Olympic and Paralympic games. (gas and gas public service)
 Viewing the Tokyo 2020 Olympic and Paralympic Games as an opportunity to promote coexistence*, we are
advancing initiatives towards achieving this vision. At the same time, we will endeavor to institute
sustainable initiatives that will continue after the games are over.
 We will establish “the 2020 Tokyo Olympic and Paralympic Games Promotion Department (provisional
name)” to aggressively promote various activities aimed at ensuring a successful Tokyo 2020 Olympic and
Paralympic Games.
✳Societies and cities in which people respect and support one another, whether
they are people with disabilities, senior citizens, working people, children,
regardless of nationality, living in security and harmony

Advanced energy initiatives

society and contribute to local

Stable and secure energy supplies
in Harumi and other areas

To promote coexistence in
(LNG terminals, pipelines, etc.)
(in Tokyo)
Activities
to show what

development
Supporting sports for the disabled “only” Tokyo Gas Development of businesses that
（building momentum toward success offer services that improve the
in the 2020 Tokyo Paralympics) can do quality of life and support communities
with a view to
2020 and beyond

Engagement as a local company

in general social issues

II. Initiatives for Strengthening Management Foundation for Supporting Key Strategies 25
 II-4 ESG (Environment, Society, Governance) initiatives

Establish Governance
 To ensure sustainable growth, the Tokyo Gas Group’s Bord of Directors will involve in decision-maiking that
will promote the independent growth and development of each of its businesses and monitor
appropriately.
 We will continue to study ways to build better governance systems that also take external trends into
account.

 Issues to deal with during governance evaluations

From focus on Tokyo Gas

From individual business to From restricted business to From focus on Tokyo Metro
Issues to united structure for
multiple businesses competitive business area to global expansion
Tokyo Gas and affiliates

▼ ▼ ▼ ▼

Business expansion that Management that balances

Devise strategy to address
Response Portfolio management considers geographical centripetal and centrifugal
increasing volatility
risks forces

<Points of governance evaluations>

Board of Directors
Audit & Supervisory

Involvement in decision-making
Board members

Audit Appropriate monitoring

Supervise

Business operations

Subsidiary

II. Initiatives for Strengthening Management Foundation for Supporting Key Strategies 26
 Major Indicator: Electric Power
III (No. of Customers, Sales Volume)

 We will increase the number of customers to whom we provide one-stop services for gas and electric
power up to 2.2 million customers by FY2020.
 We will provide 31 billion kWh in FY2020.

No. of customers Electric power sales volume

2.2 million 31 billion

contracts kWh

1.0 million 15 billion

contracts kWh

Second year since

deregulation of the
power sector
FY2017 FY2020 FY2017 FY2020

III. Major Indicators 27

 Major indicator: Gas
III (No. of Customers, Handling Volume)

 We will increase the number of customer of city gas up to 11.9 million by FY2020.
 We will provide 2O.7 billion m3 in city gas and LNG in Japan in FY2020.

No. of customers (with city gas meters) Gas handling volume

11.9 million
contracts 20.7 billion
m3
11.5 million
contracts 19.1 billion
m3

FY2017 FY2020 FY2017 FY2020

III. Major Indicators 28

 III Major indicator: Operating profit

 Although we face a severely competitive environment following deregulation, we will maintain total income
for gas and electric power.
 Although service domains (living services, engineering services, urban development services) and the
overseas business domain are in periods where we seek to prioritize investments, we also will increase the
profitability of existing businesses.
 For the Group overall, we will achieve solid growth that enables income of 130 billion yen in FY2020.

■ Operating Profit + equity income

130 billion yen

107 billion yen

FY2017 FY2020 Future

将来

海外
Overseas サービス・その他
Services/Others ガス・電力
Gas/Electricity

III. Major Indicators 29

 III Major indicator: Profit Structure by Business

 With the gas business as our foundation, we plan to build a business portfolio that includes the
electric power, services, and overseas businesses.

■Image of profit breakdown in 2020

Overseas
20%

Gas
Services/ 50%
Others
20%
Electric
power
10%

Electric Overseas
Gas power Services/others

III. Major Indicators 30

 Major Indicator: Consolidated Cash Flows Overall Image
III and Financial Benchmarks

 We will use our operating cash flow, which grows owing to stable total profits for the gas and electric power
businesses, for capital expenditures, investments, and loans during FY2018-2020 to establish
“sustainable growth” and “earning power”.
 Increase external loans while maintaining financial stability. Maintain ROE of 8% and a total payout
ratio of 60% to respond to the expectations of shareholders and investors.

■ Cash flow distribution method for FY2018-2020

Cash provided by cash flows: 1,180 billion yen (3 years)

Consolidated operating cash flow 810 billion yen (69%) External loans 370 billion yen (31%)

Capital expenditure Investment and loans Shareholder return (dividends, treasury stock)

730 billion yen (62%) 290 billion yen (25%) 160 billion yen (13%)*
*60% of consolidated net profit in
Cash out 1,180 billion yen (3 years) FY2018 to in FY2020

FY2017 FY2020
Consolidated operating cash flow 244 billion yen 280 billion yen
Profitability ROE 5.5％ Approx. 8％
Shareholder returns Total payout ratio 60%
Stability Debt-to-equity ratio 0.71 Approx. 0.9

III. Major Indicators 31

 Major Indicator: Investments in Infrastructure Development,
III Future Growth

 Continue base investments that will enable the safe and stable delivery of city gas to more customers
while ensuring flexible procurement of LNG and facilities management to promote investment efficiency.
 To achieve further growth in the 2020s, conduct investments in the electric power business,
services, and overseas business.

Total investment
Business Investment scenario
(3 years)

• Investments for security, stable supply, and expansion of city gas usage
500 billion yen (Maintenance of pipeline facilities etc.)
Gas
(49%) • Large-scale capital expenditures on Ibaraki Line construction, Hitachi terminal
expansion, and construction of customer information management system etc.

• Our own thermal power source to deliver gas and power to more customers
30 billion yen (Mainly in the 2020s. Also promote power source procurement through new
Electric power alliances and other means not reliant on investments)
(3%)
• Construct/acquire renewable energy sources for a low-carbon society

• Digitization investments, venture investments, technology development for the

230 billion yen creation of portal sites, databases, management systems, and mobile platforms for
Services, other the creation and optimal deliver of new services that improve profitability and meet
(23%) the needs of customers.
• Energy service and engineering business

(including real
100 billion yen • Real estate development for rental business
estate)

260 billion yen • Build energy infrastructure with focus on midstream and downstream
Overseas
(25%) • Invest in projects with low volatility and potential for stable returns

【FY2018 to FY2020】 1,020 billion yen (Average of 340 billion yen/year)

III. Major Indicators 32

Reference Building an Energy Infrastructure (Figure for 2020s)

Moka power plant(from FY2019)

Wholesale supply from Kobelco
Power Moka Inc.
Hitachi-Onahama trunk line
(Still under consideration)
Koga-Moka trunk line
(operational in October 2017)

Hitachi LNG terminal

Phase II Gunma trunk line
(Still under consideration) Northern
Kanto area
Develop new
demand Ibaraki trunk line
(slated for operation in FY2020)

Kawasaki gas-fired
power generation
New power generator
(Still under consideration)
Ohgishima
power station

Legend
Power station
New power generator LNG terminal
(Still under consideration) Tokyo Gas high pressure pipeline
Negishi LNG terminal
Under construction
Pipeline still under consideration
Connection to Minami Fuji pipeline Minami Fuji pipeline
(Still under consideration)
Tokyo Gas Baypower High-pressure pipeline by other companies
Co., Ltd. Tokyo Gas supply area
Tokyo Gas Group supply area
Tokyo Gas Yokosuka Sodegaura LNG terminal Wholesaler supply area
Power Company, Ltd. Other operator supply area
Ohgishima LNG terminal

33
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