Summary of Press Conference Comments Made by Satoru Katsuno, FEPC Chairman, on February 16, 2018

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1 Summary of Press Conference Comments Made by Satoru Katsuno, FEPC Chairman, on February 16, 2018 I am Satoru Katsuno, Chairman of the Federation of Electric Power Companies. Today, I will be talking about the use of risk information for improving nuclear safety and Japanese version of Connect & Manage for introducing and expanding the use of renewable energies. <Use of risk information for improving nuclear safety> Today s first topic is the use of risk information for improving nuclear safety. The Reference Material 1, which has been circulated to you, was used in my presentation at CRIEPI s Nuclear Risk Research Center Symposium 2018, held on February 8. Under strong resolve to never allow a nuclear accident like the one at the Fukushima Daiichi Nuclear Power Station to occur again, us nuclear plant licensees are striving to appropriately respond to the New Regulatory Requirements and actively work in partnership with CRIEPI s Nuclear Risk Research Center (NRRC), Japan Nuclear Safety Institute (JANSI) and other external organizations to attain an even higher level of safety beyond the regulatory framework. As shown on the bottom part of Page 2 of the reference material, in order to improve nuclear safety, it is important to work on the notion that you can never completely eliminate risks, and adopt Risk Management, in which nuclear licensees assume primary responsibility in implementing voluntary actions for safety improvement, expansion of emergency preparedness measures and appropriate risk management and reduction. As shown in Page 3, in order to continuously manage plant risks, we must make use of risk information, identify plant equipment and administration that need to be -1-

2 reinforced, and implement truly effective measures in a timely fashion. To this end, Risk-Informed Decision-Making (RIDM) is a very effective approach. In order to adopt RIDM, we have decided to establish a self-regulated management system for safety improvement at power stations of member licensees and compiled basic policies and plans into the Strategic Plan and Action Plan. For details, please refer to the reference material I mentioned earlier. As show n in the bottom part of Page 4, each of the licensees will enhance their technological and organizational capabilities for correctly understanding the status of its power stations and identifying issues to be addressed. Everyone involved in plant safety w ill correctly identify issues in terms of risk significance, make swift decision-making in the order of priority and implement improvement measures. Furthermore, quantified risks will be used to build positive relationship with society and regulatory authorities. As summarized in Page 8, nuclear licensees own capabilities must be improved as the premise of RIDM introduction. Under powerful leadership, we will continue to steadily implement necessary initiatives, promote R&D and actively utilize advanced risk assessment technologies for greater improvement of nuclear safety. Through these self-regulated risk management initiatives for nuclear plants, we aim to enhance plant performance and achieve S+3E. <Japanese version of Connect & Manage for expanded introduction of renewable energies> Next, let me talk about the Japanese version of Connect & Manage for expanded introduction of renewable energies. Take a look at the Reference Material 2, which has been circulated to you. -2-

3 The Mass Renewable Energy Introduction and Next-Generation Power Network Subcommittee, a panel of experts set up by the government late last year, is currently exploring ways of expanding the introduction of renewable energies while making maximum use of the existing power networks. At its second meeting convened on January 24, the Subcommittee set forth its policy of considering new grid-use rules after hearing electric utilities opinion about difficulty in connecting such energy to transmission lines, significant burden of connection costs, and extended time required for establishing connection. With regard to the issue of connection difficulty to transmission lines, the Subcommittee once again presented the concept of Japanese version of Connect & Manage, which flexibly utilizes existing transmission lines capacity to enable connection under certain conditions. As shown in Page 1, connection to transmission lines has been managed under rules set by OCCTO for details from consultation to contract signing. More specifically, from the perspectives of fairness and transparency, the current approach is first come, first served, offering connections in the order that applications are received across all utilities. The Subcommittee has also considered the perspectives of maintaining reliable power supply, as follows: Ensuring the status of power transmission even if one transmission line becomes faulty or suspended Assessing the anticipated electric current that flows through transmission lines based on the severest scenario across the year, rather than the annual average Taking into consideration, when assessing the connection capacity of transmission lines, operational power sources as well as power sources that existed before a connection contract was signed Let me reiterate that, as shown in Page 2, the operational capacity of transmission lines is determined based on the concept of maintaining the status of safe power transmission even if one transmission line becomes faulty under the principle of -3-

4 securing emergency capacity. In light of this, the Subcommittee has begun exploring the establishment of the Japanese version of Connect & Manage, shown in Page 4, in a mechanism suitable to Japanese conditions, while referring to overseas examples. More specifically: For rationalization of anticipated current, calculate the anticipated current of transmission lines on a scenario close to the status of actual usage, rather than on the premise of all power sources operating at full capacity, and utilize available capacity. For N-1 power control, restrict connection to transmission lines instantaneously at the time of fault, and use part of the capacity reserved for emergency use. For non-firm connection, provide connection on the premise that transmission is enabled when the current is small to leave available capacity in transmission lines, but restricted when the operation capacity is exceeded. Application for the rationalization of anticipated current and partial operation of the N-1 power control is expected to commence in early FY2018. The characteristics and operation status of individual transmission lines must be taken into account in working out specifics. Yet, we believe it very significant to make effective use of existing power networks in working toward the introduction of renewable energies to the maximum extent. As an organization involved in practical administration, we will continue to provide active cooperation in examining details, while striving to make efforts to ac hieve stable power supply. This will conclude my segment today. END -4-

5 Reference material 1 Nuclear Risk Research Center Symposium 2018 Use of Risk Information for Improving the Safety of Nuclear Power Generation February 8, 2018 The Federation of Electric Power Companies of Japan

6 Operation restart status of nuclear power stations 1 The industry s effort to comply with the New Regulatory Requirements is still halfway through, with just 5 plants having managed to resume operation. Situations remain tough in terms of both power supply demand and business revenue expenditure. Nuclear power generation is an important source of electricity in Japan. On the premise of safety assurance, we will work on the restart of plant operations and improvement in plants capacity factor after operation restart so as to achieve S+3E, thereby contributing to the Japanese economy. Sendai ➊➋ Tomari ➊➋➌ Kashiwazaki Kariwa ➊➋➌➍➎➏➐ Shika ➊➋ Oma Tsuruga 1➋ Mihama 12➌ Oi 12➌➍ Takahama ➊➋➌➍ Shimane 1➋➌ Genkai 1➋➌➍ Ikata 1➋➌ Higashidori (Tohoku) ➊ Onagawa ➊➋➌ Fukushima Daiichi Fukushima Daini ➊➋➌➍ Tokai Daini Hamaoka 12➌➍➎ PWR BWR Higashidori (Tokyo) ➊ Approval obtained Application filed Decommissioning Compliance approval status Approved ( ) Application filed ( ) Application not filed PWR ( ) BWR ( ) Total Total Status of decommissioning units 12 2 The above data includes 3 plants under construction. 14 PWR BWR Total Decommissioning ( )

7 Basic approach to the initiatives for safety improvement 2 Reflecting upon lessons learned from the accident at the Fukushima Daiichi Nuclear Power Station, the industry has worked on building a mechanism for tackling nuclear plants risks and reinforcing countermeasures for external events of significant impact, e.g. mega earthquake and tsunami, so as to improve the safety of nuclear power plants. 1 Multiple safety measures Multiple protection Safety-first plant operation, maintenance and management Nuclear safety risks 2 Reinforced hardware measures Design-basis measures Severe accident measures 4 Remaining risks Unflagging efforts toward safety 3 Reinforced frontline response capability Reinforced response structure Thorough employee training and education Hardware and software approaches to safety improvement Licensees initiatives Identifying important-to-safety matters and implementing effective countermeasures Actively utilize new insight (facilities, administration, etc.). Maintain and improve technological capacities (for operation, maintenance, etc.) at power stations. Maintain and improve emergencyresponse capabilities. Implement safety-improvement measures based on risk information from PRA, etc. (in collaboration with the NRRC). Handle risks based on the results of peer reviews (in collaboration with WANO, JANSI, etc.). and other initiatives it is important to work on the notion that you could never completely eliminate risks, and adopt Risk Management, in which nuclear licensees assume primary responsibility in implementing voluntary actions for safety improvement, expansion of emergency preparedness measures and appropriate risk management and reduction.

8 Strategic plan for using risk information --- To-Be state of nuclear business administration 3 In order to continuously manage power station risks, it is necessary to utilize risk information to identify areas that need reinforcement in plant equipment and administration, and implement effective measures in a timely fashion. The Strategic Plan for RIDM Introduction has been compiled to introduce decision-making based on risk information (Risk-Informed Decision-Making: RIDM) to plant management. Self-regulated management system for safety improvement (1) Performance, monitoring and evaluation (3) Decision -making (2) Risk assessment (4) Corrective Action Program (CAP) (5) Configuration management Technological foundation Process Human resources Note) Corrective Action Program (CAP): A mechanism for identifying and resolving issues at nuclear licensees, encompassing processes from assessing the issues relevance to safety, defining priority order for response and managing the progress through to full resolution. Note) Configuration management: Initiative for maintaining consistence in three elements, i.e. design requirements, physical facility configuration and facility configuration information

9 To-Be state of nuclear business administration 4 Issues concerning the management system with RIDM (1) Performance monitoring and evaluation Operation, maintenance and management capabilities for system performance monitoring, equipment reliability diagnostic technology, etc. Organizational and individual performance improvement program (2) Risk assessment Plant-specific PRA that eliminates serviceability as much as possible (3) Decision-making and implementation Management that can choose and carry out total optimization solutions taking into consideration uncertainty associated with risk assessment (4) CAP Process of ensuring to collect data on irregular statuses at low threshold from all workers Screening process in line with risk importance (5) Configuration management Sufficient ability to manage plant design so that it is not left entirely to manufacturers System for controlling facility configuration management information For all the functions, it is important to develop technological foundation / processes and foster human resources. Importance of leadership, organizational safety culture and organization-wide initiatives Accurately understand plant performance, and enhance the technological and organizational capability for identifying issues. Everyone involved in plant safety must use a common set of risk-based assessment criteria to correctly identify issues, make swift decision-making in the order of priority based on comprehensive knowledge and implement improvement measures. Use PRA to quantify risks, and build positive relationship with society and regulatory authorities, using risks as the common language.

10 Example of governance structure (Chubu Electric Power Company) 5 Hamaoka Nuclear Safety Advisory Board Internal and external experts Report President Chubu Electric Power Group Nuclear Safety Charter Nuclear Safety Improvement Board Report Opinion Advisory Board External experts On-site check Instruction Internal audit department Internal audit Report of audit results Report Instruction Chairman: President Members: Vice President General Manager of Nuclear Power Division General Manager of G Management Strategy Division Directors in charge of other departments Report Collaboration Instruction Company-wide risk management Board of Directors Reporting of important risks G Management Strategy Division Individual departments Risk communication Nuclear Power Division Checking and evaluating the status of risk reduction initiatives Risk information, response measures Opinions of people in society Communication Promotion Group Initiatives for internal and external communication Coordination Information Opinion Dialog activities Nuclear Risk Research Center WANO, JANSI, etc. Preparedness for nuclear risks Use of third-party reviews by voluntary regulatory organization People in local communities and the rest of society In light of the results of risk analysis and assessment, it is important for management to make decisions based on integrated judgment so as to implement necessary safety measures.

11 Example of risk communication (Chubu Electric Power Company) 6 Carry out active dialog activities to foster mutual understanding with the people of local communities. residents. Explain risks rather than appealing safety. Opinion exchange sessions Plan and organize opinion exchange sessions with local community associations, women s organizations, etc., and participate in opinion exchange sessions organized by local governments. Informal forums for women Under themes of strong interest among women (e.g. aromatherapy, yoga), provide energy-related information to initiate exchange of opinions. Door-to-door dialog Make door-to-door house calls in Omaezaki City, where a nuclear power station is located, as well as its surrounding three cities. Information caravan Set up a booth outside shopping centers and other places that attracts people, so as to initiate dialogs. Opinion exchange session Informal forum for women Plant tour Plant tour for the residents of Omaezaki City and 11 surrounding municipalities who apply It is important to use risk information for providing the overall picture of nuclear plants risks and risk reduction activities (accidents impact and probability, multi-layered accident prevention measures, accident mitigation measures, etc.) in plain language.

12 Initiatives for advancing the level of risk assessment 7 The NRRC has been set up within the CRIEPI to centrally undertake R&D on the mechanism of natural external events that do not occur very frequently but could deal substantial damage, the method of evaluating such events and advancement of PRA. Research examples at the NRRC Internal fires: Advancing PRA through the compilation of PRA guide, international research, testing, etc. Internal flooding: Compiling PRA guide, developing flooding simulation tools, etc. Tsunami: Using the Hamaoka Unit 4 as a model for developing tsunami PRA, and advancing PRA through assessment Severe accidents: Expanding knowledge on the progression of accidents and the integrity of PCV, etc. Other external events: Establishing a risk assessment method for tornadoes and volcanoes 3D fluid analysis on the behaviors of tsunami running up to a power station Impact force assessment of tsunami debris Incorporate the findings of research (external hazard, fragility, human reliability, equipment reliability, etc.) to licensees risk assessment as they become available to faithfully identify plant behaviors and reduce the uncertainty of risk assessment. Identify uncertainty and plant vulnerability as accurately as possible to make integrated judgment and decisions for enhancing plant safety and resilience. 2016

13 Summary 8 To achieve plant operation, it is important to ensure that licensees safety improvement initiatives are carried out autonomously and continuously. Licensees must assume primary responsibility in pursuing safety improvement and enhancement of emergency preparedness measures, and managing risks appropriately (risk management). Quantification of risks through probabilistic risk assessment (PRA) is important for risk management. Introduce risk-informed decision-making (RIDM) as an essential process. Licensees capabilities must be increased as the premise of RIDM introduction. Under strong leadership, licensees must promote necessary initiatives to attain the To-Be status of nuclear business administration. Promote R&D, continue making efforts to advance risk assessment technology and actively utilize advanced risk assessment to enhance plant safety and resilience. Through self-regulated initiatives for plant management, enhance plant performance to improve plants safety and capacity factor so as to achieve S+3E, thereby contributing to the Japanese economy.

14 (Reference) Excerpt from Strategic Plan and Action Plan for Utilizing Risk Information, a presentation material used in the Nuclear Risk Research Center Symposium 2018 (February 8, 2018) Strategic Plan for RIDM Introduction Phase 1 (up to 2020 or until the restart of plant operation) Advancing self-regulated plant management, using risk information Draw up specific initiatives and compile them into an action plan. Phase 2 (from 2020 or after the restart of plant operation) Continuously improving self-regulated plant management, and expanding the scope of RIDM use Expand the scope of RIDM use for day-to-day plant operation, maintenance and management Enhance necessary functions, such as PRA, to expand their scope of application to the mechanism of safety improvement management, incorporating RIDM, similar to in-service maintenance in the United States in the future. Phase 1 Phase 2 RIDM introduction and implementation Utilizing risk information with existing tools Developing necessary functions Implementing and utilizing RIDM in response to regulatory inspections Expanding functions in line with the introduction of RIDM Incorporating the results of R&D on external events into PRA

15 Reference material 2 Japanese version of Connect & Manage for expanded introduction of renewable energies February 16, 2018 The Federation of Electric Power Companies of Japan

16 Current approach to grid connection 1 From the perspectives of fairness and transparency, the current approach is first come, first served, offering connections in the order that applications are received across all utilities. If the grid has no available capacity at the time of receiving a new connection request, the grid needs to be reinforced. (Reference) Rules set by the Organization for Organization for Cross-regional Coordination of Transmission Operators, JAPAN (OCCTO) (Guidelines for Services for Electricity Transmission and Distribution) Article 92 Setting aside tentative capacity of transmission system General power transmission and distribution businesses shall, upon receiving a contract application for power generation facilities, etc., treat it as if the said power generation facilities, etc., applied for transmission grid connection, is already interconnected in handling subsequent applications in other grid access duties, and tentatively set aside capacity in the transmission system. ( ) Article 97 Securing the capacity of transmission system General power transmission and distribution business shall, ( ) as of issuing the notice of interconnection approval, secure the capacity of the transmission system that was set aside tentatively in accordance with Article 92. ( ) <After reinforcement> Equipment capacity Reinforcement work required to offer connection due to lack of available capacity Connection contract application (2) Connection offered without reinforcement work as the application is within available capacity. <Before reinforcement> Connection contract application (1) Secured for emergency use Available capacity Connection contract (3) Connection contract (2) Connection contract (1) Grid reinforcement Equipment capacity Administration capacity Secured for emergency use Available capacity Connection contract application (2) Connection contract application (1) Connection contract (3) Connection contract (2) Connection contract (1) Administration capacity (Source) Compiled based on a reference material used in the second meeting of the Mass Renewable Energy Introduction and Next-Generation Power Network Subcommittee.

17 Available capacity of power networks (transmission lines, etc.) 2 To determine the available capacity of a power network, it is necessary to examine not only power sources currently interconnected but also power sources that are due to be interconnected in the future (booked power sources). It is also necessary to set aside some capacity for emergency use in case of single facility (e.g. single transmission line) fault. <Use of transmission lines, etc.> (*When operation capacity is defined based on single-line capacity) Set aside for emergency use Equipment capacity (2-line capacity) Used at the time of accident Each transmission line consists of three wires (phases). The above picture shows two transmission lines. Administration capacity (1-line capacity) Actual transmission volume (1) Actual transmission volume (2) Actual transmission volume (3) Reserved Solar energy Reserved Wind energy Reserved Thermal energy, etc. (Source) Compiled based on a reference material used in the first meeting of the Mass Renewable Energy Introduction and Next-Generation Power Network Subcommittee. Morning Noon Evening

18 Long-term cross-regional grid policy by OCCTO 3 OCCTO drew up a long-term policy (long-term cross-regional grid policy) that defines the direction for developing and updating cross-regional interconnection systems across the nation from the perspective of cross-regional administration. The policy was released in March Identifying issues concerning mid- to long-term facility formation The growth of electricity demand is slowing down. In order to accept new interconnection needs in the conventional approach to facility formation and grid use, substantial reinforcement is needed to distribution facilities. That would reduce the capacity factor of distribution facilities, applying an upward pressure on wheeling fees. The organization made a departure from the previous concept of making grid reinforcement in response to interconnection capacity, and drew up the concept of distribution facility formation with emphasis on forming efficient facilities on the premise of making the maximum use of existing facilities. (Source) Compiled based on a reference material used in the 20 th meeting of the Cross-Regional Grid Development Committee

19 Considerations for Japanese version of Connect & Manage 4 Connect & Manage Initiative Rationalization of anticipated current N-1 power control (instantaneous power limit at the time of N-1 fault) Non-firm connection (power source connection on condition of limiting output at normal times) Administration restriction Facility formation Not managed in principle Power limit at the time of N-1 fault (standalone fault of a power facility) Considering connectability before connection based on available capacity Reinforcement when the anticipated current exceeds administration capacity Power limit when normal administration capacity is exceeded Providing connection on the premise of output limit for newly-connected power sources regardless of available capacity known in advance Making decisions on reinforcement based primarily on cost-to-benefit assessment Details Rationalizing and enhancing the accuracy of anticipated current Probability assessment of power source operations Output evaluation of naturally variable power sources Expanding administration capacity by using a relay system to instantaneously limit power sources at the time of N-1 fault Connecting, without facility reinforcement, new power generation operators that have agreed to output limit at the time of grid constraint Congestion (Normal times) No (Normal times) No (Normal times) Yes (At the time of fault) Yes Respond by restricting power sources *1 (At the time of fault) Yes Respond by restricting power sources *2 (At the time of fault) Yes *1: Using load-dispatch instruction to restrict power output *2: Using a relay system to instantaneously limit power output (Source) Reference material 1-(1) used in the 26th meeting of the Cross-Regional Grid Development Committee

20 Considerations for Japanese version of Connect & Manage 5 For the future expansion of grid use Adopt rationalization of anticipated current and N-1 power control to expand available capacity, so as to achieve greater expansion of grid use. Considering the fact that some transmission lines have the annual average usage rate of around 20-30%, work toward early introduction of the non-firm connection mechanism, which promotes grid use at times of low electric current, e.g. at night and at off-peak seasons. Application of N-1 power control to expand administration capacity Administration capacity Available capacity Introduction of non-firm connection to make it easier to use available grid capacity Maximum current (anticipated) Anticipated current Annual Rationalization of anticipated current to increase the accuracy of anticipated maximum current (Source) Reference material 3 used in the 30 th meeting of the Cross-Regional Grid Development Committee