Tokyo Electric Power Co. Holdings Inc.

This report does not constitute a rating action. Overview Key strengths Key risks Leading position in greater Tokyo's electricity market, accounting for roughly a third of national electricity sales Exposure to large contingent liabilities related to the disaster at the Fukushima No. 1 nuclear power plant and off-balance sheet liabilities Highly predicable cost recovery in power transmission and distribution thanks to monopoly under existing regulations Strong pressure on the earnings capacity of the retail business due to resurgent competition Quasi-vertically integrated business model with close operational integration among group companies for the next year or two Huge free cash flow deficit continuing as capital expenditures remain high Likely extraordinary support in the event of stressed conditions, given continued government involvement

...We see an increased likelihood that Tepco Holdings group will be unable to maintain cash flow generation at the level commensurate with our current ratings. This is because we believe the group's profitability is likely to come under strong pressure due to intense competition in the Japanese electricity retail market. Uncertainty also persists over the early restart of the Kashiwazaki-Kariwa nuclear power plant. S&P Global Ratings sees a growing likelihood of the group's investments remaining high and its free cash flow staying significantly negative. The group's profit and cash flow generation could improve in the next one to two years if the Kashiwazaki-Kariwa plant resumes operations. Tokyo Electric Power Co. Holdings Inc. (Tepco Holdings) expects ordinary profit to decline slightly in fiscal 2025 (ending March 31, 2026) from Ñ254.4 billion in the previous fiscal year, according to its fourth Comprehensive Special Business Plan revised on March 17, 2025. The plan states ordinary profit...

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