Okinawa Electric Power: R&I Affirms AA/a-1+, Stable

Jan 11, 2018

R&I Affirms AA/a-1+, Stable: The Okinawa Electric Power Co., Inc.

Rating and Investment Information, Inc. (R&I) has announced the following:

ISSUER:

The Okinawa Electric Power Co., Inc.

Issuer Rating: AA, Affirmed

Rating Outlook: Stable

Commercial Paper: a-1+, AffirmedRATIONALE:

The Okinawa Electric Power Co., Inc. (OEPC) supplies electricity to Okinawa Prefecture. With no nuclear plant, it is insulated from risks that could arise directly from a nuclear power business. Partly because serving many remote islands makes facilities utilization somewhat inefficient, supportive measures including preferential tax treatments are in place for OEPC. Since it launched a liquefied natural gas (LNG) thermal power plant, the company has not revised electricity rates, failing to pass higher fuel costs resulting from the change of the energy mix on to rates. Its LNG sale and purchase agreement stipulates that OEPC will ultimately increase its LNG purchase to 400,000 tonnes per year. It will be essential to build a solid revenue/expenditure structure by that time through rate revisions that have reflected the changed energy mix.

There is no power exchange in the Okinawa region, and customers who switched their electricity suppliers as a result of Electric Power Development Co., Ltd.'s move to supply electricity to power producers and suppliers, for example, account for a very small proportion of OEPC's total sales. Moreover, OEPC is exempt from the legal unbundling of the transmission/distribution sector. The competitive environment for the company will therefore likely change at a modest pace compared to that for major power utilities. With large investment projects completed, the debt-equity structure is at a relatively sound level for an electricity company. Because OEPC's creditworthiness is underpinned by the country's institutional framework, including preferential tax treatments and other supportive measures, its rating is constrained by Japan's sovereign creditworthiness.

The primary rating methodologies applied to this rating are provided at "R&I's Basic Methodology for Corporate Credit Ratings" and "Electricity". The methodologies are available at the web site listed below, together with other rating methodologies that are taken into consideration when assigning the rating.

https://www.r-i.co.jp/en/rating/about/rating_method.html

R&I RATINGS:

ISSUER:	The Okinawa Electric Power Co., Inc. (Sec. Code: 9511)
Issuer Rating
RATING:	AA, Affirmed
RATING OUTLOOK:	Stable

■Contact : Sales and Marketing Division, Customer Service Dept. ■Media Contact : Corporate Planning Division (Public Relations)TEL.[phone] [e-mail].[phone]

Rating and Investment Information, Inc.

TERRACE SQUARE, 3-22 Kanda Nishikicho, Chiyoda-ku, Tokyo 101-0054, Japanhttps://www.r-i.co.jp

Shelf Registration (Bonds)

ISSUE AMOUNT (mn): ISSUE PERIOD: RATING:

JPY 30,000

From Apr 01, 2017 to Mar 31, 2019

AA, Affirmed (Preliminary)

Sec. Str. Bonds No.9

Issue Date May 22, 2003

Maturity Date Mar 20, 2018

Issue Amount (mn)

JPY 10,000

RATING:

AA, Affirmed

Sec. Str. Bonds No.18

Issue Date Dec 18, 2008

Maturity Date Dec 20, 2018

Issue Amount (mn)

JPY 10,000

RATING:

AA, Affirmed

Sec. Str. Bonds No.19

Issue Date Apr 13, 2010

Maturity Date Apr 24, 2020

Issue Amount (mn)

JPY 10,000

RATING:

AA, Affirmed

Sec. Str. Bonds No.21

Issue Date Jun 17, 2011

Maturity Date Jun 18, 2021

Issue Amount (mn)

JPY 10,000

RATING:

AA, Affirmed

Sec. Str. Bonds No.22

Issue Date Jun 22, 2012

Maturity Date Jun 24, 2022

Issue Amount (mn)

JPY 10,000

RATING:

AA, Affirmed

Sec. Str. Bonds No.23

Issue Date Mar 10, 2015

Maturity Date Mar 25, 2025

Issue Amount (mn)

JPY 5,000

RATING:

AA, Affirmed

Sec. Str. Bonds No.24

Issue Date Jun 22, 2016

Maturity Date Jun 25, 2026

Issue Amount (mn)

JPY 10,000

RATING:

AA, Affirmed

Sec. Str. Bonds No.25

Issue Date Jun 16, 2017

Maturity Date Jun 25, 2027

Issue Amount (mn)

JPY 10,000

RATING:

AA, Affirmed

■Contact : Sales and Marketing Division, Customer Service Dept. ■Media Contact : Corporate Planning Division (Public Relations)TEL.[phone] [e-mail].[phone]

Rating and Investment Information, Inc.

TERRACE SQUARE, 3-22 Kanda Nishikicho, Chiyoda-ku, Tokyo 101-0054, Japanhttps://www.r-i.co.jp

Commercial Paper

ISSUE LIMIT (mn): SUPPORT: RATING:

JPY 40,000

Unsecured a-1+, Affirmed

A preliminary rating is assigned when a provisional credit rating is needed for an individual obligation on which final terms have not been determined. A credit rating finally assigned may differ from the preliminary rating depending on, among others, the details of the actual contract of the individual obligation.

■Contact : Sales and Marketing Division, Customer Service Dept. ■Media Contact : Corporate Planning Division (Public Relations)TEL.[phone] [e-mail].[phone]

Rating and Investment Information, Inc.

TERRACE SQUARE, 3-22 Kanda Nishikicho, Chiyoda-ku, Tokyo 101-0054, Japanhttps://www.r-i.co.jp