Eurus Energy Japan has completed the Kamaishi Wind Farm in Iwate Prefecture.

The wind firm is located on hill areas across three municipalities of Kamaishi, Otsuchi and Tono. Consisting of forty-three 1MW turbines with a total capacity of 42.9MW, it is the largest operating wind farm in Japan. The plant will generate enough power to supply 30,000 homes, and the electricity will be sold to Tohoku Electric Power Company over the next 17 years.

Eurus Energy Japan has 9 wind farms in operation with a total capacity of 184.39MW including the newly built Kamaishi Wind Farm.

Eurus Energy Japan has completed the Nishime Wind Farm in Nishime town, Akita Prefecture in November.

The plant uses fifteen Vestas 2MW machines with a total capacity of 30MW. The electricity generated will be sold to the Tohoku Electric Power Company over the next 17 years. The capacity of each turbine is one of the largest in Japan.

Eurus expects to start operation of the 42.9MW wind farm in Iwate Prefecture in December this year.

Eurus Energy Japan has completed construction of Odanosawa Wind Farm, in Higashidori village, Aomori Prefecture, Japan.

Construction of the 13MW wind farm started in July 2003 and the plant has been online since October 1, 2004. It is made up of ten Bonus 1.3MW turbines and will generate enough power to supply 10,000 homes. The electricity generated will be sold to the Tohoku Electric Power Company over the next 17 years.

Eurus Energy Japan has 7 wind farms in operation with a total capacity of 111MW.

In accordance with the Sales and Purchase Agreement signed on 28 January 2004, 10% of the Company's issued shares were transferred from Tomen Corp to TEPCO. Consequently, Eurus Energy Holdings is held 60% by TEPCO and 40% by Tomen.

Eurus Energy Japan completed construction of the Kihoku Wind Farm, located in Kihoku-cho, Kagoshima Prefecture. To mark the occasion, it held a completion ceremony, to which it invited the Governor of Kagoshima Prefecture, the Mayor of Kihoku-cho, and numerous guests, on February 13.

Construction of this wind farm, which at 20.8MW of total capacity is the largest in Kyushu, began in January 2003, and commercial operation began in February 2004.

The wind farm consists of 16 Bonus Energy 1.3MW turbines that together generate enough power for approximately 12,000 ordinary households. These turbines are expected to supply electricity to Kyushu Electric Power Company over the next 15 years.

Including the capacity of the Kihoku Wind Farm, Eurus Energy Japan is now operating wind power facilities with total capacity of approximately 100MW. Counting facilities currently under construction, the company plans to boost this figure to over 300MW by 2006.

Since its establishment in September 2002, Eurus Energy Holdings Corporation has been a 50/50 joint venture of Tomen Corporation and Tokyo Electric Power Company (TEPCO). The two shareholders, however, have decided to transfer shares equivalent to 10% of all outstanding Eurus Energy Holdings shares from Tomen to TEPCO, and concluded a sale agreement for that purpose as of January 28. Consequently, as of March 31, 2004, Eurus Energy Holdings shares will be owned 60% by TEPCO and 40% by Tomen.

Due to the development of new projects and need for additional capital spending, Eurus Energy Holdings has significant capital requirements. To achieve stability and diversification of future financing, the company is planning to begin preparations for an initial public offering sometime during FY2005.

The nature parks that occupy approximately 14% of Japan's land area include many locations with wind conditions ideal for wind power. To date, however, very few wind power facilities have been installed. Promotion of the installation of wind power facilities, where possible, in nature parks is necessary to achieve the country's wind power target.

Despite that, however, the Basic Position on the Installation of Wind Power Generation Facilities in National and Quasi-National Parks (Outline Proposal) presented by the National Park Division of the Ministry of the Environment's Nature Conservation Bureau at the 4th conference of the above-mentioned Commission, held on December 15, 2003, emphasizes environmental conservation with a particular focus on scenery and would prohibit any installation of wind power generation facilities on park lands. We believe this proposal is notably one-sided as an environmental policy.

To encourage a fair discussion of this issue among citizens, four organizations, including a discussion group composed of wind power enterprises represented by the Chairman of Eurus Energy Holdings, held a press conference at the Energy Press Club on January 15.

This press conference addressed the following three points:

1. Visual impact (scenic views)
2. Public benefit
3. Implementation of quantitative standards

The January 20th edition of the Weekly Economist, which was sold beginning January 13th, carried an article (P.72-73) titled, "An Impudent TEPCO Gutting the Adoption of New Energy." About Eurus Energy this article had the following to say.

• Eurus' agreements and winning bids standout, particularly in the Tohoku area of Japan, where its winning bid was so low competitors found it unprofitable.
• Projects are difficult to perform unless the developer is also under the umbrella of the power company, making mutual support possible.
• The national government, because of the provisions of the RPS (Renewables Portfolio Standard) system, has left all decision making on wind power to the market and has, thereby, created a situation in which both the buyer and seller of the RPS value are electric power companies, making fair competition impossible and causing wind power in Japan to fall into decay.

Our response is as follows:

Eurus Energy's competitiveness is world class and stems from experience and know-how it accumulated as it pioneered wind power projects over more than 15 years in the US, Europe and Japan. The article referred to above contents said that Eurus' being the only company to submit a bid for capacity exceeding 200MW in response to Hokkaido Electric Power's solicitation of bids demonstrated a lack of fairness. This bid, however, was the result of over four years of efforts Eurus made to develop excellent projects in Hokkaido by being the only developer to establish an office in Sapporo, staff it full time and commit development capital. Additionally, the fact that the Hamatonbetsu project was scaled down due to interconnection capacity was the result of a notification by Hokkaido Electric Power made on the day bids were unsealed, at the location they were unsealed, and not a response to a later objection by other bidders.

Eurus' Tohoku Electric Power bid was made at a price resulting from various types of efforts. Eurus, for example, spent over three years to perform detailed studies and analyses of local wind and, based on that knowledge, procured the most appropriate wind power generation equipment at competitive prices by relying on purchasing capabilities developed through past projects in Japan and abroad. Furthermore, it worked to minimize operating and maintenance expenses by making the most of its local office, which it strategically developed over four years.

Additionally, all of Eurus' projects employ project finance, which uses bank capital collateralized by the cash flow of the individual project. Project financing is not possible where the project is not economically viable on stand-alone basis, which means there is no need for pricing support from Tokyo Electric Power.

Eurus believes that to promote the adoption of new energy sources, it must develop advantageous sites and boost its competitiveness on all fronts, including cost, regardless of the system. Eurus will strive to become even more competitive and intends to continue its efforts to expand its wind power and other renewable energy businesses.