May 7, 2001

J-POWER has put together a "New Management Policy" with the two major goals of "organization-wide strengthening of competitiveness in the wholesale electricity business" and "further expansion and development of international and new business activities." This policy is directed toward the privatization anticipated to take place two years from now and further development thereafter, based on a Cabinet decision in 1997.

Rapid changes are continuing in the business environment surrounding the electric power industry, such as expectations of further advances in structural changes involving electric power supply and demand and its deregulation. In the face of such remarkable changes in the business environment, we have arrived at the conclusion that the above two points ? "organization-wide strengthening of competitiveness in the wholesale electricity business" and "further expansion and development of international and new business activities" - are indispensable in order for our company to achieve privatization and to accomplish the continued development of our businesses as an electric power and energy enterprise that is powerful enough to survive in an age of foreign and domestic competition, and thus we have decided to work together on a groupwide basis to attain these goals.

In this management plan, we have decided on the details of our future business endeavors based on this policy, and so we would like to present them here.

1. Organization-wide Strengthening of Competitiveness in the Wholesale Electricity Business: Promotion of "The Third Phase of the Restructure Plan"

The wholesale electricity business will continue to be our core business. We will pursue this business by continuing to achieve significant cost reductions, through measures that include a dramatic improvement in the efficiency of the work force throughout the entire group, and at the same time we will continue to strengthen our competitiveness.
To this end, we completed our efforts in the "Second Phase of the Restructure Plan" (fiscal 1998 through fiscal 2002) at the end of fiscal 2000, and by promoting "The Third Phase of the Restructure Plan," (a five-year plan extending from fiscal 2001 through fiscal 2005), which dramatically revises the Second Phase, we now aim to enhance the competitiveness of the wholesale electricity business, strengthen our financial position, and improve profitability.
The specific details of this plan are as follows.

1-(1) Review of Organizations

• The organizational system will be fundamentally overhauled. Specifically, we plan to 1) introduce theBusiness Department System with responsibility for business execution and profits, 2) streamline the headquarter organizations, 3) reorganize the group companies, and 4) integrate indirect operations between our company and each group company.

1-(1)-1. Reduction in the Number of Directors

• Having reviewed our board of directors system, along with a significant reduction in the number of directors (from twenty to twelve), we have decided to introduce an executive officer system, which we will move to with the re-election of officers in the coming fiscal year.

1-(1)-2. Dramatic Reduction of Employees and Costs;

• We will strive towards our goal of reducing controllable costs by at least 20% in fiscal 2005. At the same time, we will enhance the efficiency of our group work force by reducing the number of employees by 25% from 8,000 at present to 6,000 in fiscal 2005.

1-(1)-3. Improvement of Financial Position

• We are promoting the liquidity of commercial equipment (such as the facilities at headquarters) by changing from ownership to use, and together with future reductions in capital investment, we will reduce interest-bearing debt.

2. Reinforcing Efforts Aimed at Future Business Domains and New Business Fields

Thanks to J-POWER's business performance during the past 50 years in Japan and the past 40 years overseas, our strengths and management resources are evident in the electric power and energy fields. With this as a foundation, we have established five business domains for our future operations: "Domestic Electricity," "Overseas Electricity / Energy Investment," "Environmental Business," "Energy Resources," and "Engineering." Going forward, we have decided to promote business in these five fields proactively, and we will pursue the expansion of international business and new business, in particular.

2-(1) Future Business Domains

2-(1)-1. Domestic Electricity;

• While aiming for the steady development of the wholesale electricity business (hydropower, thermal power, and nuclear power), we also intend to promote expansion in fields we are already pursuing, such as wind power, waste-fueled generation business, PFI cogeneration, and MGT, implement concrete measures in upcoming projects, and commercialize biomass power generation, micro-hydro power, and SOFC (solid oxide fuel cells).
• We will also investigate electricity retailing-related businesses in order to respond precisely to future changes in the market environment.

2-(1)-2. Overseas Electricity / Energy Investment

• Making use of our consultancy experience in various countries overseas (57 countries, 182 projects) we have started up IPP projects in the Philippines, Thailand, India, China, and elsewhere. We will continue to expand these projects further and strengthen our efforts to nurture these as a second core business. To this end, we have decided to make capital investments on a scale of 50 billion yen through fiscal 2005 while undertaking appropriate risk management.

2-(1)-3. Environmental Business

• We have already commenced projects such as ESCO business and overseas afforestation, and while keeping an eye on global environmental problems and trends such as recycling, we will participate in Clean Development Mechanism (CDM) and Joint Implementation (JI) projects based on the Kyoto Protocol and undertake projects associated with waste materials.

2-(1)-4. Energy Resources Business

• We will participate in development, investment, sales, and trading in energy resource fields such as coal, DME, and gas.

2-(1)-5. Engineering

• J-POWER has already demonstrated results from its JNE optical fiber core line leasing network information service, LPG underground storage consulting, and building performance evaluation business, for example. Going forward, we will move ahead with the formation of a specific business model that is aimed at employing the J-Power Group's human resources and technologies from various fields, such as engineering, construction, electricity, machinery, communications, and chemistry, in responses to a wider variety of market needs.

2-(2) Active Measures

• We have already commenced specific projects to improve the organization of our International Activities Department and Business Development Department, and while attempting to inject more human resources into these fields, we will start up a system of innovation aimed at the discovery and investigation of business seeds. In addition, we will rapidly develop human resource training programs aimed at young employees engaged in these businesses.
• In addition, we will strengthen our business partnership strategy by promoting business in each domain through alliances.
• In order to expand new fields of business outside the wholesale electricity business, we have decided to invest capital selectively, and in combination with our overseas electric power business, we intend to realize a scale of investment of approximately 70 billion yen by fiscal 2005.

3. Specific Business Goals

In preparation for the privatization that is due to occur in fiscal 2003 and the further development of our businesses thereafter, we aim to further increase shareholders' equity and we will reinforce our profitability by thoroughly strengthening our competitiveness.
Shareholders' equity came to approximately 130 billion yen at the end of fiscal 2000, as the company managed to accumulate approximately 35 billion yen over the past three years. Going forward, we will strive toward the objective of achieving a shareholders' equity ratio of 20% in fiscal 2005 by strengthening profitability, reducing our assets, and conducting a post-privatization capital increase.
Although we foresee the continuation of declining rate levels due to the deregulation of electric power and other factors, in order to achieve this objective, we aim to expand the scale of profits with the objective of securing ordinary income of at least 40 billion yen in fiscal 2005.