Tohoku Electric Power : Financial Results for the Fiscal Year ended March 31, 2017 (FY2016) and Financial Forecasts for the Fiscal Year ending March 31, 2018 (FY2017)

TOHOKU ELECTRIC POWER CO., INC.

April 27, 2017

Tohoku Electric Power Co., Inc. (the "Company") today submitted a summary of its financial statements for year ended March 31, 2017 on the Tokyo Stock Exchange.

【Consolidated financial results】

Consolidated operating revenue for FY2016 decreased ¥146.0 billion or a 7.0% decrease from the previous year to ¥1,949.5 billion and ordinary revenue decreased ¥148.8 billion, or a 7.1% decrease from the previous year to ¥1,955.8 billion, mainly due to a decline in revenue from electricity sales because of decreases in the volume of electricity sales and fuel cost adjustment charges, despite an increase in the grant under Act on Purchase of Renewable Energy Sourced Electricity.

With respect to expenses, despite an increase in retirement benefit expenses caused by a decrease in discount rate for actuarial calculation, consolidated ordinary expenses decreased ¥100.8 billion or a 5.2% decrease from the previous year to ¥1,851.1 billion, thanks to a decrease in fuel costs because of a fall in fuel prices and an appreciation of yen, as well as our thorough streamlining efforts.

As a result, consolidated ordinary income decreased ¥47.9 billion or a 31.4% decrease from the previous year to ¥104.7 billion.

Net income attributable to owners of parent decreased ¥27.3 billion or a 28.1% decrease from the previous year to ¥69.9 billion.

* The grant is based on "Feed-In-Tariff scheme for renewable energy". It is offset by purchase costs of renewable energy; therefore its effect on our income is immaterial.

【Electricity Sales Volume】

The electricity sales were down to 74.3TWh, a 1.1% decrease year-on-year. Even with increases in cooling and heating demand caused by more hot summer days in the latter half of summer and more cold days in winter than the previous year, a decrease in contract demand lowered the electricity sales in total.

【Dividend】

Our basic dividend policy is to distribute stable dividends, taking into consideration the Company's business performance of the relevant fiscal year and the medium- to long-term financial prospects.

While the situation for resumption of our nuclear power units remains unclear, the Company is facing business landscape transformations: severe competition caused by ongoing Electricity System Reform and weak growth in power demand. It is prerequisite for the Company to build solid business foundation to grow not to mention to be prepared for existing business risks such as natural disasters.

In spite of such operating environment, the Company secured certain level of profits for this period, resulting from our continuous thorough streamlining efforts. The profit level was lower than that of the previous fiscal year, because the Company had gained significant benefit from the time lag effect between fuel cost and fuel cost adjustment charges in FY2015. Tohoku EPCO Group continues to take firm steps to strengthen our earnings base under our new formulated "Tohoku EPCO Group Mid-Term Management Policies (FY2017 to FY2020)."

Comprehensively deliberating the facts described above, the Company decided to pay the year-end dividend of 20 yen per share for FY2016.

【Financial forecasts for fiscal 2017】

The Company projects lower electricity sales volume for FY2017; nevertheless, due to an increase in fuel cost adjustment charges and other factors, consolidated operating revenue for FY2017 is expected to be approximately ¥2,070.0 billion, a 6.2% increase compared to the previous year.

Consolidated ordinary income for FY2017 is expected to be approximately ¥90.0 billion, a 14.0% decrease compared to the previous year, reflecting a time lag effect between fuel cost and fuel cost adjustment charges and other factors while the Company projects lower maintenance expenses for the period.

Net income attributable to owners of parent is expected to be approximately ¥60.0 billion, a 14.2% decrease compared to the previous year.

【Dividend Forecast for FY2017】

With regard to the dividend for FY2017, the Company intends to pay 20 yen per share for both interim and year-end dividends by taking into account overall business environment, earnings and improvement of financial positions.

Consolidated (Billions of yen)

Non-consolidated (Billions of yen)

【Additional Information】

On October 1, 2016, the "Act for Partial Revision of the Spent Nuclear Fuel Reprocessing Implementation Act" (2016 Act No.40, hereinafter referred to as the "Revised Act") and the "Ordinance for Partial Revision of the Ordinance on Accounting at Electricity Utility and Other Provisions" (a ministerial ordinance by the Ministry of Economy, Trade and Industry No.94 issued in 2016) were enforced, and along with them the Accounting Rules of Electric Utility Industry were revised.

The Company, before the enforcement of the act, had reserved the present value of the amount necessary for spent fuel reprocessing, which were calculated in accordance with the volume of spent fuel generated from operation of its nuclear power stations. After the enforcement, the Company pays an amount corresponding to the volume of spent fuel generated from operation of its nuclear power stations to the Nuclear Reprocessing Organization of Japan as a contribution, and records it as electric utility operating expenses. Through the contribution payment, the Company fulfills its responsibilities

to bear the expenses as a nuclear operator. On the other hand, in proportion to the contributions received, the Organization reprocesses the irradiated nuclear fuel.

According to these revisions, the Company reversed 63,131 million yen of reserve fund for reprocessing of irradiated nuclear fuel, 68,667 million yen of provision for reprocessing of irradiated nuclear fuel, and 15,518 million yen of provision for preparation of reprocessing of irradiated nuclear fuel. The Company also posted other non-current liabilities of 4,155 million yen. In this consolidated fiscal year, the Company paid 15,553 million yen to Nuclear Reprocessing Organization of Japan, the amount notified from the Minister of Economy, Trade and Industry pursuant to the provision of paragraph 1 of Article 7 of Revised Act.