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C O N T E N T S
Letter from the Chairman
1 | Relevant data
2 | Managing and supervisory boards
3 | Macroeconomic context
4 | Argentine Electricity Market
5 | Description of our management activities
6 | Fiscal Year Results
7 | Sustainability
8 | Board of Directors’ Proposal
Appendix I – Corporate Governance Report
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4
9
12
19
52
58
64
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L E T T E R F R O M T H E C H A I R M A N
To the Shareholders:
I hereby submit for your consideration the Annual Report, the Financial Statements and other
documentation relating to the fiscal year ended December 31, 2019, which the Board of Directors sends
for its discussion to the Company’s Annual General Meeting. The referred to documentation reflects the
Company’s performance in its twenty-seventh fiscal year.
The year ended December 31, 2019 was strongly influenced by the macroeconomic situation and
the political changes that significantly affected our activities, the results of operations, our customers’
situation and the outlook for fiscal year 2020.
From the regulatory point of view, as we noted in our letter a year ago, Law No. 27,467 was
enacted, instructing the Federal Executive Power to promote such actions that may be necessary to
transfer edenor to the jurisdiction of the City of Buenos Aires and the Province of Buenos Aires. We said
at that time that such decision, agreed-upon between the jurisdictions on February 28, 2019, was full of
implications and complexities, and today, that a year has passed, progress has been made on some
aspects while others have not been resolved and many of the uncertainties still remain. Additionally, the
comments made by the new authorities after the change of government at the national and provincial
level, make it difficult to predict when this process will end.
Among the progress made are the approval of the transfer of jurisdiction by both the legislative
and the executive bodies of the City of Buenos Aires and the Province of Buenos Aires, respectively, and
the agreement on the creation of a joint Regulatory Agency, which as of to date has not been set up. Also
significant was the agreement on the regularization of obligations entered into with the Energy
Secretariat, putting an end to the mutual pending claims originated in the 2006-2016 transition period. By
virtue of that agreement, the Company (i) waived any rights to which it could be entitled and abandoned
any actions against the Federal Government, including the complaint filed by edenor in 2013 for failure to
comply with the obligations resulting from the Agreement on the Renegotiation of the Concession
Agreement entered into on February 13, 2006, (ii) bound itself to settle debts for works and loans for
consumption (“mutuums”) originated in the transition period, (iii) undertook to pay users certain penalty
and compensation amounts related to that period, and (iv) agreed to make investments, in addition to
those agreed upon in the Tariff Structure Review, aimed at improving the reliability and safety of the
service. The agreement implies for the Company disbursements for a total approximate amount of ARS
7,600 million, including the payment of the generated income tax. In return, the Federal Government
partially recognized the claim duly made by the Company -referred to in caption (i) above-, by fully
offsetting pending obligations with the Wholesale Electricity Market (MEM) for electric power purchases
made during the transition period, partially cancelling the mutuums for investments granted by
CAMMESA also during that period, and cancelling penalties payable to the National Treasury; all that for
an approximate amount of ARS 6,900 million.
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Going back to the new regulatory developments, it is important to point out that on September 19,
2019, the Company agreed with the Energy Government Secretariat to maintain, during the six-month
period commenced on August 1, 2019, the electricity rate schedule that was in effect prior to the
commencement of such period for all electricity rate categories. It was also agreed that such deferral of
revenue would be recovered by the Company in seven monthly installments as from January 1, 2020.
However, on December 23, 2019, Law No. 27,541 on Social Solidarity and Production Reactivation was
enacted, which provided for a new freeze on tariffs, this time for a period of up to 180 days, maintained
the ENRE’s jurisdiction for one year and declared the intention of reviewing the results of the Tariff
Structure Review carried out and in effect since 2017.
As a result of these measures, edenor’s electricity rates have not been adjusted since February
2019 -adjustment that included inflation until December 2018- without recognizing the increases recorded
in distribution costs for more than one year, with inflation in 2019 reaching its highest level since 1991.
From the electricity distribution viewpoint, we can affirm that the totality of the real electricity rate increase
applied from 2016 to date was appropriated by the Federal Government and used to both reduce
subsidies and collect taxes, with the funds available for this Distributor being the same as, or even lower
than, those available in 2015 in constant currency.
While we are well aware of the economic situation that led to the declaration of the state of
emergency in energy matters, both in the country and in Province of Buenos Aires, it is our obligation to
warn about the need to find, as soon as possible, a solution that will allow for the compliance with this
Distributor’s obligations and rights within the applicable regulatory framework in pursuit of the objectives
declared by the National and Provincial authorities, but ensuring the sustainability of the public service,
object of the concession, without compromising eventual subsidies from the public coffers. As we have
always said, we believe that subsidies should be directed towards those who need them instead of
charging the cost of energy consumed by those who can afford it to the public purse. As always, we are
at the disposal of the authorities to discuss ideas and projects aimed at improving this distribution. We
believe that such discussion should also include the situation of low-income neighborhoods and
shantytowns, whose consumption costs are not covered by the government as it did since 1992 and
result in a burden of nearly ARS 1,500 million per year on the company’s accounts.
Whilst we understand social concerns about the level of electricity rates, I believe that it is
important to highlight that, at the date of this annual report, 82% of edenor‘s customers pay a bill that, on
average, and including taxes, is below ARS 650, an amount that is not only one of the lowest in the
country but also much lower than the amount paid for services with almost the same penetration in
households such as cable TV or mobile telephony and Internet.
Another important aspect of our level of revenues is related to the fall recorded in the demand. In
this year energy sales fell 5.7% and are approximately 20% lower than the estimated demand for this
same year when the Tariff Structure Review that served as the basis for determining the applicable
electricity rates was carried out in 2016. The electricity rates should recognize the operating costs of an
efficient company, the depreciation, and a reasonable profitability over the network’s value, and are fixed
by the regulator taking into account the expected demand for the tariff period.
However, while the demand for electricity, as we have said, continued to decrease, the maximum
demand for power continues to increase year after year, and is currently at record high levels. This
situation requires that the planned investments be carried out without delay, so much so that only in 2019
we put into service another 1,540 MVA of power to increase our network’s installed capacity, making it
imperative that the Distributor’s economic and financial equation be restored.
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Finally, with regard to our revenues, we cannot omit mentioning the permanent increase of
electricity theft. Despite the incorporation of new customers through the installation of “MIDE” (Energy
Integrated Meter) meters, which allow customers with irregular income to adapt their electricity purchases
to their income as well as to improve their consumption administration, the theft of electricity continues to
be an immense challenge for the Company that, in spite of some detected cases of very noticeable fraud,
280 criminal complaints filed and 36 arrests, and an enormous effort of all the staff, we have not been
able to decrease. Thus, energy losses increased from 18.2% to 19.8% despite the actions implemented
to tackle them and a winter season with normal average temperatures, but with a noticeable fall in the
consumption of large users in 2019 that affects such ratio.
As I previously said, investment requirements cannot be delayed if we want to continue moving
along the path of service quality improvement we have followed since 2014. We are very proud of having
reduced the average duration of power cuts per customer by 52% and their frequency by more than 35%
since we embarked on that path. To achieve this, in edenor we have continued to invest the totality of the
available funds as no dividends have been distributed since 2001. The year’s investments, though lower
than those of 2018, meant a considerable effort on the company’s part and involved reinvesting the
totality of the profits in our network, fulfilling our commitment to the Regulator. In 2019 we achieved
99.82% network availability, the best record of the last 10 years and without a doubt one of the best in the
country, a fact that is reflected in the significant improvement of our customers’ satisfaction that continued
improving to reach 76.3% of satisfaction.
That increase in the level of satisfaction is also a reflection of the results of the new customer
service model deployed in all the customer service channels. In 2019 we launched a new version of the
edenordigital application, with a greater number of procedures, payment options and a more agile and
intuitive navigation; and in the contact center we implemented a new platform to facilitate self-
management. In the commercial offices we continued to make progress in the implementation of prompt
service sectors, called “experience centers”, which include on-site video, self-management kiosks and
direct customer service telephone lines, with the assistance of specialist staff, which allowed us to reduce
response times. In order to provide a better support to all these customer service channels we
implemented a centralized back office, thus allowing for the standardization and improvement of
communication with the customer. As for large customers, the exclusive and differentiated customer
service consolidated in the commercial offices as well as in the contact center and in edenordigital,
additionally, the installation plan of edenor’s first 1,000 smart meters was deployed for them. Finally, we
should mention the “Let’s talk with numbers” massive communication campaign, whose aim was to make
the general public aware of our activity’s data on costs, rates, investments and service quality through the
national media.
We launched several initiatives to decrease service restoration times that have helped
consolidate this path of improvement, among them relocating operational centers, using forecasting tools
for maintenance activities, implementing tree pruning programs in HV and MV lines, incorporating more
live-line working teams to decrease the need for power cuts to perform maintenance tasks and new
works, and the putting into service of more than 2,000 remote control points and nearly 3,800 remote
supervision points in our entire network.
I would also like to refer to the profit for the year, which amounts to ARS 12,134 million, but
includes an ARS 11,192 million gain on the “Result of exposure to the changes in the purchasing power
of the currency” (RECPAM, as per its Spanish acronym) and ARS 13,888 million (after tax) from the
recording of the previously mentioned Agreement on the Regularization of Liabilities. This implies that the
operating profit decreased by ARS 2,462 million or 40% as compared to that obtained in 2018, due
mainly to the fall in demand, the freeze on tariffs and the greater energy losses. These effects could not
be offset in spite of a rational management of costs and the ARS 565 million decrease in negative
financial results, which, nevertheless, continue to remain at high levels mainly as a consequence of both
the impact of the devaluation on the dollar-denominated debt and the increase in interest rates.
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The public service of electricity distribution involves us all, is essential for our daily lives and has
enormous challenges lying ahead. We must improve it, achieve universal access and make electricity
available to enable the planning of investments, thereby contributing to the development and growth of
employment that will lead to a more fair society for everyone. To our customers, we would like to ratify
each and every member of edenor’s undertaking to make every effort to, on a daily basis, provide a
better service, which is the essence of our mission.
Finally, I would like to express my recognition to all the Company staff for their professionalism,
effort and cooperation in the development of operation and support tasks that allowed us to successfully
meet the demand and the challenges taken up during the year; to the Board of Directors and Supervisory
Committee’s members for always accompanying us along this path in a proactive manner; and finally to
our shareholders, who, in spite of the many years of disregard for the applicable regulations and no return
on their invested capital, have maintained their trust in the Company, its employees and its management.
To all of them, my most sincere and deepest gratitude, because their continued support and trust during
all these years encourage us to continue making every effort to make of edenor a better company every
day, and in so doing contribute to the realization of our customers and employees’ personal aspirations,
and the development of the communities in which we serve and for which we devote all our efforts and
experience 24 hours a day, 365 days a year to continuing improving.
Ricardo Torres
Chairman
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G L O S S A R Y
ADR
IRAM
ITF
ByMA
LEBAC
BCRA
COSO
CAMMESA
CPD
CIF
SEE
edenor
MINEM
MIDE
FOB
GWh
HV
IVR
IMF
kV - V
kW
SOX
LNG
LLW
BT
MT
MVA
MW
MWh
MERVAL
MSCI
MULCON
INDEC
ENRE
CNV
NYSE
PESA
SRRyME
ROLL-OVER
TAM
SEC
E FACTOR
SAIDI
SAIFI
RTI
BUSHING
MEM
American Depositary Receipt
Argentine Standardization and Certification Institute
Bank transfer tax
Bolsas y Mercados Argentinos | (Buenos Aires Stock Exchange)
Central Bank bills
Central Bank of Argentina
Committee of Sponsoring Organizations of the Treadway
Compañía Administradora del Mercado Mayorista Eléctrico
(the company in charge of the regulation and operation of the wholesale electricity market)
Company’s Own Distribution Cost
Cost Insurance and Freight
Electric Power Secretariat
Empresa Distribuidora y Comercializadora Norte S.A.
Energy and Mining Ministry
Energy Integrated Meter
Free on Board
Gigawatt-hour
High voltage
Interactive Voice Response
International Monetary Fund
Kilovolt
Kilowatt
Ley Sarbanes-Oxley
Liquid Natural Gas
Live-line working
Low voltage
Medium voltage
Megavolt-ampere
Megawatt
Megawatt-hour
Mercado de Valores de Buenos Aires | (Buenos Aires Securities Market)
Morgan Stanley Capital Internacional
Multiple Concentric
National institute of Statistics and Census
National Regulatory Authority for the Distribution of Electricity
National Securities Commission
New York Stock Exchange
Pampa Energía S.A.
Renewable Resources and Electricity Market Secretariat
Risk associated with debt maturity mismatches and with the refinancing of debt
Rolling Annual Rate
Securities and Exchange Commission
Stimulus Factor
System Average Interruption Duration Index
System Average Interruption Frequency Index
Tariff Structure Review
Transformer terminals
Wholesale Electricity Market
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C O R P O R A T E P U R P O S E A N D C O N C E S S I O N A R E A
edenor’s corporate purpose is to provide electricity distribution and sale services within
the concession area and under the terms of the concession agreement, as well as to invest in
other electricity distribution companies and render consulting and advisory services related to its
business.
The electricity distribution and sale service is provided on an exclusive basis to all the
customers connected to the network within the area comprised of the following:
Region I: City of Buenos Aires, the area encompassing Dock "D", unnamed street, path
of the Autopista Costera (coastline highway), extension of Pueyrredón Ave., Córdoba Ave.,
Ferrocarril San Martín railway tracks, General San Martín Ave., Zamudio, Tinogasta, General
Paz Ave. and Río de La Plata river, and Province of Buenos Aires, the districts of San Martín,
Tres de Febrero, San Isidro and Vicente López.
Region II: Province of Buenos Aires, the districts of Morón, Ituzaingó, Hurlingham,
Merlo, Marcos Paz, Las Heras and La Matanza.
Region III: Province of Buenos Aires, the districts of San Fernando, Tigre, Escobar,
Malvinas Argentinas, San Miguel, José C. Paz, Pilar, Moreno and General Rodríguez.
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O U R S H A R E H O L D E R S
The share capital of edenor is represented by a total of 906,455,100 common,
registered, non-endorsable shares, with a par value of ARS 1 each and the right to one vote per
share, divided into three classes: the class “A” shares owned by the Controlling Group, the
class “B” free float shares held by the market, and the class “C” shares that remain from the
Employee Stock Ownership Program (ESOP).
The ownership of the Company’s common shares as of December 31, 2019 is as
follows:
S t o c k p e r f o r m a n c e
edenor is listed on ByMA, being one of the Argentine companies comprising the S&P
Merval index [with a weighting of 0.79% as of December 31, 2019]. Furthermore, it has a Level-
II ADR program in place, allowed to be listed on the NYSE, with each ADR representing 20
common shares.
Additionally, since December 2018, edenor is included in the Sustainability Index
developed by ByMA and the Inter-American Development Bank that seeks to identify and
recognize the leading companies in Environmental, Social, Sustainable Development and
Corporate Governance matters among those listed on ByMA.
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The following chart shows the development of edenor’s share price and volume traded
on ByMA over the last five years:
The following chart shows the development of edenor’s ADR price and volume traded
on the NYSE over the last 5 years:
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B O A R D O F D I R E C T O R S
The business of edenor is managed by the Board of Directors, which, in accordance
with the By-laws, is comprised of twelve directors and up to the same number of alternate
directors, who hold office for a term of one year and are eligible for re-election. The holders of
“Class A” common shares will be entitled to elect seven directors and seven alternate directors,
whereas the holders of “Class B” and “Class C” common shares will be entitled to jointly appoint
five directors and five alternate directors.
In turn, the Board of Directors delegates specific functions to an Executive Committee,
which, as the Audit Committee, is comprised solely of regular Board members. As for the Audit
Committee, it is entirely comprised of directors who qualify as independent.
The Annual General Meeting held on April 24, 2019 appointed the members and
alternate members of the Board of Directors for fiscal year 2019. Furthermore, the Board of
Directors at the meeting held on April 29, 2019, subsequent to the Annual General Meeting,
distributed the positions and approved the continuance of Mr. Ricardo Torres as chairman of the
Board.
The Board of Directors’ composition at the date of issuance of this Annual Report is as
follows:
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In 2019, alternate directors appointed by classes “B” and “C”, Francisco Bosch and
Patricio Ezequiel Jaccoud Girart, who had been appointed at the Annual General Meeting dated
April 24, 2019, and Adriana Avalos, who had been appointed at the General Ordinary
Shareholders’ Meeting dated August 8, 2019, tendered resignations, which were accepted by
the Board of Directors at the meeting held on December 20, 2019.
M A N A G E M E N T C O M M I T T E E
Detailed below is the list of edenor’s main executives:
S U P E R V I S O R Y C O M M I T T E E
the By-laws,
edenor has a Supervisory Committee in place, which is responsible for overseeing
compliance with
laws.
Furthermore, and without prejudice to the function developed by the External Auditor, the
Supervisory Committee must submit to the Annual General Meeting a written report on the
reasonableness of the information included in the Annual Report and the Financial Statements
submitted by the Board of Directors.
the shareholders’ resolutions and
the applicable
In accordance with the By-laws, the Supervisory Committee is comprised of three
members and up to three alternate members elected by the shareholders at an Ordinary
Shareholders’ Meeting for a term of one year and the right to reelection. The holders of “Class
A” common shares will be entitled to elect two members and two alternate members. The
holders of “Class B” and “Class C” common shares will be entitled to jointly appoint one
member and one alternate member.
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The Annual General Meeting held on April 24, 2019 appointed the members and
alternate members of the Supervisory Committee for fiscal year 2019. The composition of the
Supervisory Committee at the date of issuance of this Annual Report is as follows:
A U D I T C O M M I T T E E
Pursuant to Law No. 26,831 on Capital Markets, all listed companies are required to
have an Audit Committee comprised of at least three Board members, a majority of whom must
be independent, in accordance with the criteria set forth by the CNV.
The members of the Audit Committee are appointed by the Board of Directors and
elected from among Board members who have the highest level of experience in business,
financial or accounting matters. In compliance with the SEC’s regulations, an “Audit Committee
financial expert” must be appointed from among the members of the Committee.
R E M U N E R A T I O N P O L I C Y
The total remuneration for the Board of Directors and the Supervisory Committee is
fixed annually by the Annual General Meeting. For such purpose, the Board of Directors makes
a proposal following the provisions of the Business Organizations Law and the CNV’s
regulations. Additionally, in accordance with the provisions of Law No. 26,831 on Capital
Markets, the Board of Directors fee proposal is evaluated by the Audit Committee for the
purposes of issuing an opinion on the reasonableness thereof.
Upon approval of the total remuneration by the Annual General Meeting, the Board of
Directors, exercising the authority delegated by the Shareholders’ Meeting, assigns the
remuneration of each director.
Furthermore, it is the Shareholders’ Meeting that has the authority to authorize the
Board to pay directors and Supervisory Committee members advanced fees, subject to the
approval of the Annual General Meeting that approves the financial statements for the fiscal
year in question.
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The remuneration policy for executive directors and managers provides for a fixed
remuneration system related to both the level of responsibility required for the position and its
competitiveness as compared to similar positions in the market; and a variable remuneration
system associated with the business objectives and the degree of achievement of such
objectives.
The Board of Directors has not appointed a Remuneration Committee, delegating to the
Human Resources Department the approval of the general policy on the remuneration of
employees, as well as the duty to propose options and subsequently implement the specific
decisions and policies on these issues.
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G E N E R A L C O N T E X T
L O R E M I P S U M
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G E N E R A L C O N T E X T
E C O N O M I C A C T I V I T Y
As of the third quarter of 2019, the economic activity recorded a cumulative fall of 2.5%
as compared to the same period of the previous year, due mainly to the fact that private
consumption, public consumption and
investment decreased 7.8%, 1.1% and 17.8%
respectively.
The contraction in the activity reached 10 of the 16 economic sectors, with financial
intermediation (12.4%), wholesale, retail trade and repairs (9.4%), and manufacturing industry
(7.6%) being the most affected ones. These falls were partially offset by the hikes recorded in,
among other, the following categories: agriculture, livestock, hunting and forestry (26.3%),
private households with domestic service (5.8%), and mining and quarrying (1.1%). These falls
were partially offset by the 77.1% year-on-year increase of exports net of imports.
D E V E L O P M E N T O F P R I C E S
In 2019, the Cost-of-Living Index published by the INDEC showed a variation of 53.8%.
The greatest variations were recorded in the health (72.1%), communications (63.9%), and
household equipment and maintenance (63.7%) categories. The categories affected to a lesser
extent were housing, water, electricity and other fuels (39.4%), education (47.1%), and
recreation and culture (48.5%). As for wages, measured by the Permanent Workers’ Average
Taxable Remuneration (Remuneración Imponible Promedio de los Trabajadores Estables -
RIPTE) record, they recorded a year-on-year increase of 44.4% as of December 2019
compared to the same month of 2018.
F I S C A L S I T U A T I O N
In 2019, the Non-Financial Public Sector’s fiscal accounts recorded at December 2019
a cumulative primary and total deficit of 0.5% and 4.0% of GDP, respectively. The total annual
variation of tax revenues measured in Argentine pesos, according to the figures published by
the Federal Administration of Public Revenues (AFIP), closed 2019 with an increase of 47.4%
as compared to 2018. Furthermore, primary expenditure recorded in 2019 by the National
Treasury showed a year-on-year variation of 37.2%.
F O R E I G N T R A D E
According to the INDEC, the cumulative current account deficit as of the third quarter of
2019 reached USD 6,500 million, amount which represents approximately 1.4% of the GDP.
However, in the first three quarters of 2019, the trade balance recorded a surplus of USD 1,500
million, with Free on Board value exports amounting to USD 48,000 million, whereas the Cost,
Insurance and Freight value of imports was USD 38,500 million. During the period in question,
exports of primary products as well as agricultural manufacturing exports increased 26.3% and
2.6% respectively, whereas industrial manufacturing exports contracted 7.1%. Fuel and energy
exports increased 5.9% to USD 3,200 million. As for imports, there was a contraction compared
to the same period of 2018 in the following categories: automotive (56.5%), capital goods
(34.3%), fuel and lubricants (33.2%), consumer goods (28.6%), parts and accessories (19.1%),
and intermediate goods (13.5%).
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F I N A N C I A L S Y S T E M
The US dollar wholesale rate of exchange according to Communication A35000 of the
BCRA at December 31, 2019 was ARS 59.89/USD, recording a cumulative increase of 58.4%
as compared to the end of 2018 and a year-on-year average variation of 71.1%. The BCRA’s
international reserves at the end of the year totaled USD 44,800 million, which represents a
decrease of USD 20,900 million as compared to the level reached in the previous year. As for
the monetary base, it amounted to ARS 1,895,000 million, reflecting at the end of 2019 an
increase of approximately 34.5%, as compared to the previous year. Furthermore, the BCRA’s
stock of debt on account of bills issued totaled at the end of 2019 the equivalent expressed in
dollars of USD 17,800 million, showing a year-on-year contraction of 9%.
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L E G A L A N D R E G U L A T O R Y F R A M E W O R K
C O N C E S S I O N
The Concession was granted in 1992 for a term of 95 years that may be extended for
an additional maximum period of 10 years. The term of the concession is divided into
management periods, a first period of 15 years and subsequent periods of 10 years each. At the
end of each management period, the Class “A” shares representing 51% of the Company’s
share capital, currently owned by PESA, must be offered for sale through a public bidding.
It is worth pointing out that as a consequence of the Renegotiation of the Concession
Agreement, in the framework of Law 25,561 on Economic Emergency and Foreign Exchange
System Reform, and complementary ones, the ENRE provided that the first management period
set forth in the concession agreement will be regarded as fulfilled with the ending of the five-
year rate period that began on January 1, 2017 when the Tariff Structure Review established in
the Renegotiation Agreement became effective.
edenor has the exclusive right to distribute and sell electricity within the concession
area to all the customers who are not authorized to obtain their power supply from the MEM,
thus being obliged to supply all the electric power that may be required in a timely manner and
in accordance with the established quality levels. In addition, the Company must allow free
access to its facilities to any MEM agents whenever required, under the terms of the
Concession Agreement.
edenor’s performance is subject to the terms and conditions of its Concession
Agreement and the provisions of the regulatory framework comprised of Federal Laws Nos.
14,772, 15,336 and 24,065, resolutions and regulatory and supplementary regulations issued by
the authorities responsible for this matter.
In this context, edenor is responsible for the provision of the public service of electricity
distribution and sale with a satisfactory quality level, complying for such purpose with the
requirements set forth in both the Concession Agreement and the regulatory framework, and
carrying out the works and investments it deems suitable.
Failure to comply with the established guidelines will result in the application of fines,
based on the economic damage suffered by the customer when the service is provided in an
unsatisfactory manner, the amounts of which will be determined in accordance with the
methodology set forth in such Agreement and subsequent resolutions. The ENRE is the
authority in charge of controlling strict compliance with the pre-established guidelines.
In addition to that which has been previously described, by Law No. 27,467, which
approved the 2019 Federal Budget, the Federal Executive Power was instructed to take the
necessary steps in order for edenor to become subject to the jurisdiction of the Province of
Buenos Aires and the City of Buenos Aires as from January 1, 2019, and to promote the
creation of a new oversight body.
In this regard, on February 28, 2019, the Federal Government, the Province of Buenos
Aires and the City of Buenos Aires entered into an Agreement to Transfer the Public Service of
Electricity Distribution, duly awarded by the Federal Government to edenor under a concession,
to the jurisdiction of the Province of Buenos Aires and the City of Buenos Aires. It is worth
pointing out that edenor was not a party to such agreement.
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Consequently, on May 9, 2019, the Federal Government, the Province of Buenos Aires
and the City of Buenos Aires entered into an Agreement on the Implementation of the Transfer
of Jurisdiction of the public service of electricity distribution, for the concession area. Such
Agreement provides that the Province of Buenos Aires and the City of Buenos Aires jointly
assume the capacity as Grantor of such service, and that the public service provided by edenor
will continue to be governed by its concession agreement and the applicable national legal and
regulatory regulations.
On the same date, the Province of Buenos Aires (PBA) and the City of Buenos Aires
(CABA) also entered into an Agreement on the joint exercise of jurisdiction, pursuant to which it
was provided that both parties will jointly exercise the jurisdiction over the electricity distribution
and sale service in the area of edenor and Edesur S.A. Furthermore, the agreement provided
the Metropolitan Electricity Service Regulatory Authority (Ente
for
Metropolitano Regulador del Servicio Eléctrico – “EMSE”), as bipartite agency comprised of the
PBA and the CABA that will be in charge of the regulation and control of the aforementioned
public service.
the setting up of
Both Agreements were approved by the CABA by means of Legislative Resolution No.
161/19 and by the PBA by means of Executive Order No. 1289/19.
However, in the framework of the Economic Emergency declared by Federal Law No.
27,541 on Social Solidarity and Production Reactivation, it was provided that, during the
emergency period, the ENRE will retain the jurisdiction over edenor‘s public service of
electricity distribution, with all the previously described actions being thereby suspended.
W H O L E S A L E E L E C T R I C I T Y M A R K E T
In 1991, the Energy Secretariat creates the MEM, whose main participants are the
Distributors, Generators, Transmitters and Large Users, called Agents of the electricity market.
Additionally, the need to instantly match supply with demand and the impossibility of
storing electricity leads to a centralized dispatch that determines where, who and how much will
be generated at the same time. It is for this purpose that in July 1992, CAMMESA, the entity
responsible for the wholesale market, is created.
Over the last years, the Federal Government modified the conditions originally
established by means of different resolutions, thus having nowadays a significant and decisive
participation in the functioning of the MEM. However, since 2016 the Federal Government has
issued resolutions aimed at reducing subsidies and moving towards a more sustainable market
situation. Additionally, new laws and approved regulations affect and will affect market behavior
in the next years.
In 2015, as from the passing of Law No. 27,191, by means of the National Program for
the Promotion of Renewable Energy Sources, the share of renewable sources of energy in the
national electricity grid is expected to increase progressively until it reaches 20% of the energy
matrix by December 31, 2025.
18
These measures made it possible to meet the SAD’s record demands for power that
have been repeatedly surpassed over the last three years, to such an extent that the last peak
power demand recorded in February 2018 of 26,320 MW was fully met with domestic
generation, making it unnecessary to import. However, in 2019, the record demand amounted
to 26,113 MW, 613 MW of which were imported from Uruguay and 20 MW from Paraguay.
These imports were mainly due to the aforementioned countries’ renewable generation surplus,
rather than to a domestic generation deficit. The system’s spinning reserve during the peak
demand amounted to 1,880 MW (7.2%).
In 2017, by means of Resolution No. 1085/17, the SEE modifies significantly the
allocation of costs of the High Voltage and Extra High Voltage Transmission systems. The
changes implemented, applicable as from December 1, 2017, are as follow:
▪ MEM generators no longer pay for the use of the transmission networks, except for
the connection equipment entirely destined for each Generator;
▪
the total cost of each Transmitter is distributed among the users in its network, in
proportion to their demand for energy, no longer applying the calculation
methodology based on equipment use.
On December 27, 2017, Law No. 27,424 on Distributed Generation was published. The
law provides for the legal and contractual conditions for the generation of renewable energy by
the users of the distribution network, for self-consumption, and eventual injection of surplus
energy produced into the grid. This law was regulated on November 2, 2018.
C A M M E S A
The operation of the MEM is managed by CAMMESA, the body in charge of the
dispatch organized as a corporation (sociedad anónima), in which the Federal Government,
through the SEE, owns 20% of its share capital. The remaining 80% is owned, in equal
proportions, by the associations that represent MEM participants: Generators, Transmitters,
Distributors and Large Users.
CAMMESA is a non-profit corporation that is responsible, since its creation, for the
technical operation of the electricity system and the management of MEM transactions, in
accordance with the electricity regulatory framework and related regulations, which include,
among other responsibilities, the following:
▪ determining the technical and economic dispatch of electricity in the national
interconnection system (production schedule of all power generation plants of the power
system to meet the demand),
▪ planning energy capacity needs and optimizing energy use pursuant to the regulations
periodically issued by the SEE,
▪ acting as agent of the various MEM participants,
▪ purchasing from or selling electricity to other countries by performing the respective
import/export operations,
▪ managing the availability of the generation system,
▪ supervising the operation of the term market and managing the technical dispatch of
electricity in conformity with the agreements entered into in that market;
19
▪ managing the supply and trust agreements for the new thermal and nuclear power
plants, especially for non-conventional sources of energy or those works within the
National Hydraulic Works Program.
The operating expenses of CAMMESA are covered by mandatory contributions made
by all MEM participants.
During the last years, due to the imbalance between production costs disbursed and the
amount collected from the Agents for their demand through prices that do not cover said costs,
the MEM lost its economic self-sustainability. The operating deficit of the MEM’s power and
energy compensation funds and accounts has been financed by the Federal Government
through loans granted to CAMMESA, a situation that is being gradually rectified by reducing
subsidies to the demand.
M E M P A R T I C I P A N T S
The main MEM participants are
the generation,
transmission and distribution of electricity, and, to a lesser extent, large users and electricity
brokers.
the companies engaged
in
- Generators
In Argentina, there are more than one hundred generation companies, there are fewer
auto-generation companies, and just a few co-generation companies, most of which operate
more than one generation plant. As of December 31, 2019, the installed capacity amounted to
39,704 MW, 62% of which derived from thermal generation, 27% from hydraulic generation, 4%
from nuclear generation and 7% from non-conventional sources of energy.
- Transmitters
Electricity is transmitted from power generation plants to distribution companies through
the high voltage electricity transmission system. Transmission companies do not engage in
purchases or sales of electricity, their service is governed by the Electricity Regulatory
Framework and related regulations issued by the competent authority. The majority of the
system is owned by Transener S.A., a company indirectly and jointly controlled by PESA.
Regional transmission companies own the remaining portion of the sub-transmission.
20
- Distributors
Each distribution company supplies electricity to customers and operates the related
distribution network in a specific geographic area pursuant to a concession agreement, which
provides, among other things, for the concession area, the quality of service required, the
electricity rates to be paid by customers for the distribution service and the obligation to satisfy
the demand. The ENRE monitors compliance by distribution companies, edenor and Edesur
S.A. with the provisions of the respective concession agreements and with the Regulatory
Framework Law No. 24,065.
- Large users
The MEM classifies Large Users of energy into three categories: Major Large Users
(GUMA), Minor Large Users (GUME) and Particular Large Users (GUPA). At present, each of
these customer categories purchases its energy demand directly from CAMMESA. Agreements
between parties (Generator and Large User) are only limited to the Energy Plus1 segment with
respect to the demand exceeding the base demand, i.e. the amount of energy the customer
consumed back in 2005.
the Renewable Energy Term Market, which establish
In 2017, by means of Resolution No. 281-E/17, the MINEM laid down the Regulations
for
the commercialization and
administration charges payable by Large Users who opt for the joint purchase of renewable
energy managed by CAMMESA. The Large Users who choose to meet their renewable energy
consumption quota directly through a generator, are allowed to enter into a supply contract
without having to incur the expenses of the joint purchases system.
E L E C T R I C I T Y R A T E A N D R E G U L A T O R Y S I T U A T I O N
In 2019, and continuing with the guidelines defined by the RTI process, the ENRE, by
means of different resolutions, approved: (i) the review of cost values (CPD) of February 2019
together with the stimulus factor, whose application was deferred until March 2019, and the
value to be applied for the thirty six remaining installments resulting from the gradual application
system established in ENRE Resolution No. 63/2017; (ii) the recovery of 50% of the CPD that
should have been applied in August 2019, which had to be recovered in six CPD variation-
adjusted installments; (iii) the disappearance of the energy-savings discount for T1R (small-
demand residential tariff) customers, whether or not framed under the social tariff benefit; (iv)
the increases of Power Reference Prices (PRP) and Stabilized Prices of Energy (SPE) in the
MEM for the February-October 2019 period; and (v) the amounts of the discounts related to the
Social Tariff, the Social Tariff caps and the discounts applicable to neighborhood sports clubs,
all of which sought to reduce the tariff gap and, consequently, the government subsidy.
1 Energy Plus is a contracting modality whose aim is to have additional generation in place in order to properly meet the
demand for electricity.
21
On May 10, 2019, edenor and the Energy Government Secretariat, on behalf of the
Federal Government, entered into an Agreement on the Regularization of Obligations, putting
an end to the mutual pending claims originated in the 2006-2016 transition period, pursuant to
which the Company (i) waived any rights to which it could be entitled and abandoned any
actions against the Federal Government, including the complaint filed by edenor in 2013 for
failure to comply with the obligations resulting from the Agreement on the Renegotiation of the
Concession Agreement (the "Adjustment Agreement”) entered into on February 13, 2006; (ii)
bound itself to settle debts for works and loans for consumption (“mutuums”) originated in the
transition period; (iii) undertook to pay users certain penalty and compensation amounts related
to that period; and (iv) agreed to make investments, in addition to those agreed upon in the RTI,
aimed at contributing to improving the reliability and safety of the service. In return, the Federal
Government partially recognizes the claim duly made by the Company -referred to in (i) above-,
by fully offsetting pending obligations with the MEM for electric power purchases made during
the transition period, partially cancelling the mutuums for investments granted by CAMMESA
also during that period, and cancelling penalties payable to the National Treasury.
On September 19, 2019 edenor and Edesur S.A. entered into an Electricity Rate
Schedules Maintenance Agreement with the Federal Government, pursuant to which the
Federal Government instructed the ENRE to maintain, during the six-month period commenced
on August 1, 2019, the electricity rate schedule that was in effect prior to the commencement of
such period for all electricity rate categories. The Distribution companies accepted that the CPD
adjustment, effective as from August 1, 2019, would be applied up to a maximum amount
equivalent to that collected by the Holders of the Concession during the previous six-month
period as recovery of the previous six-month period deferral, plus the adjustments that could
arise. The CPD value, with the half-yearly adjustment due as of July 31, 2019, would become
effective as from January 1, 2020. The generated difference of the CPD would be recovered in
seven monthly installments as from January 1, 2020. Furthermore, the Distribution companies
accepted that the update of the electricity rate schedule in relation to the seasonal prices of
energy would take place as from January 1, 2020, and that the difference generated between
seasonal prices would be recovered in 7 installments as from January 1, 2020. In the framework
of the agreement, the parties also agreed to postpone the payment of any penalty until March 1,
2020.
On December 27, 2019, the ENRE instructed edenor not to apply the electricity rate
schedules resulting from the provisions of the referred to Agreement, described in the preceding
paragraph, as such Agreement had lost its applicability due to the electricity rate emergency
provided for in Federal Law No. 27,541, with the electricity rate schedule that had been applied
since May 1, 2019 remaining in effect.
By means of Federal Law No. 27,541 on Social Solidarity and Production Reactivation
in the Framework of the Economic Emergency, regulated by Executive Orders Nos. 58 and
99/19, the state of emergency was declared in economic, financial, fiscal, administrative,
pension, tariff, energy, sanitary, and social matters. Additionally, the Federal Executive Power
was authorized both to maintain the electricity and natural gas rates under federal jurisdiction
and to initiate either a renegotiation process of the RTI in effect or an extraordinary review, in a
maximum term of 180 days, with the aim of reducing the real burden on households, shops and
industries for 2020. The provinces were invited to adhere to these policies on the maintenance
of rate schedules and renegotiation or extraordinary review of rates in their jurisdictions.
The Federal Executive Power was authorized to assume the administrative control of
the ENRE and the ENARGAS for a term of one year and it was provided that during the
declared emergency period, the ENRE will retain the jurisdiction over the public service of
electricity distribution provided by edenor and Edesur S.A.
22
23
In this chapter, we will comment on the main new developments, progress and
achievements made throughout 2019.
For the sake of a better understanding, we must mention the values based on which all
of our activities are carried out:
B U S I N E S S M A N A G E M E N T
D E M A N D F O R E L E C T R I C I T Y
In 2019, edenor’s demand for electricity amounted to 24,960 GWh, which represents a
3.65% decrease as compared to that of 2018. The MEM’s demand for electricity amounted to
128,880 GWh.
24
Additionally, in 2019 the maximum value of power reached by edenor amounted to
5,124 MW, 0.52% lower than that of 2018, whereas the highest peak recorded by the MEM was
26,113 MW.
Furthermore, according to the data provided by CAMMESA, the MEM’s installed
capacity as of December 31, 2019 amounted to 39,704 MW.
The development of power is the following:
E N E R G Y S A L E S
The amount of energy sold in 2019 amounted to 19,447 GWh, which represents an
8.2% decrease as compared to 2018. The graph below shows the development of sales over
the last 5 years.
25
E N E R G Y C O S T
In Argentina, most of the electricity generated is of thermal origin. The energy
consumed during 2019 was supplied by the following sources: fossil fuels (oil, natural gas and
coal) 62%, hydroelectric 27%, nuclear 4% and renewable sources, wind and solar photovoltaic
7%.
In 2019, there was a reduction in the use of fuel oil and diesel fuel (54% lower than that
of 2018) as a primary source, which generated lower production costs due to the progressive
increase in the use of natural gas to supply generation of thermal origin. Additionally, the
combination of two effects -energy savings in winter due to mild temperatures and a greater
supply of domestic natural gas- resulted in a significant reduction of LNG import volumes.
In 2019, edenor purchased the total amount of energy in the market at an average
annual monomic price of ARS 2,116.95/MWh, equivalent to USD 35.3/MWh.
The development of the average purchase price over the last years is shown in the
following graph:
E N E R G Y L O S S E S
The TAM of total losses2 for 2019 amounted to 19.86%, which represents an increase
compared to the 18.20% of the previous year.
The absolute value of losses in GWh was higher than that of 2018. The greatest losses
occurred in the last four-month period as a result of the political context associated with the
socioeconomic framework.
2 Technical losses: those that are the necessary consequence of electricity transmission and distribution. Non-technical
losses: those due to theft, defective installation or metering flaws that prevent the correct metering of customer
consumption.
26
In Regions II and III, new shantytowns continue to appear, along with the growth of the
existing ones. The theft of energy in these areas continues to be the main factor behind the
increase in total losses.
In 2019, the plan launched in previous years continued to be implemented, substantially
increasing the installation of MIDE self-managed meters, under a plan that consists in having
250,000 meters in place in 2020. The plan is aimed at normalizing clandestine consumers,
inactive customers and chronic delinquent customers. In 2019, 75,160 MIDEs were installed,
57,000 of which are currently enabled.
The installation of the new type of MULCON network, which had begun by the end of
2018, continued, leveraging the MIDE meter’s functionalities and increasing invulnerability in
neighborhoods with a high fraud rate.
Furthermore, we continued working on the development of analytical tools and artificial
intelligence aimed at improving effectiveness as to where inspections to reduce energy theft are
directed.
In 2019, 485,000 Tariff 1 (small demand) meter inspections were carried out with a 52%
effectiveness. As for energy recovery, in addition to the normalization of customers with MIDE
meters, clandestine consumers were normalized by installing conventional meters. In all the
cases, a striking rate of repeat fraud practices was noticed.
The TAM of losses growths owing to an absolute factor, the losses in GWh, and a
relative factor, caused by the strong decrease in the billing of Large Users, in which fraud is
minimal.
27
E N E R G Y R E C O V E R Y
As a consequence of the inspections carried out, and according to the type of fraud, an
analysis of the billing is performed, whose result is sent to Negotiation for billing and collection
management purposes.
Thanks to the inspections carried out, in 2019, the amount of unbilled consumption of
energy recovered totaled ARS 803.1 million.
Moreover, the recovery of energy in MWh, broken down by tariff category is as follows:
E L E C T R I C I T Y R A T E S
SEE Resolution No. 366/18 set forth the increases of Power Reference Prices (PRP)
and Stabilized Prices of Energy (SPE) in the MEM for the 2019 February-April, May-July, and
August-October three-month periods. Furthermore, it increased the value of the National Fund
of Electricity (FNEE) to ARS 80/MWh, and maintained the values set forth in SEE Resolution
No. 75/18 for both the High-Voltage Electric Power Transmission and the Regional Distribution.
In 2019, the ENRE informed the distribution companies, as well as the Province of
Buenos Aires and the City of Buenos Aires, by note, about the amounts of the Social Tariff
discounts, the Social Tariff caps and the discounts applicable to neighborhood sports clubs to
be financed by both jurisdictions.
In the months of February and March 2019, by means of ENRE Resolutions Nos. 25
and 27/2019, new electricity rate schedules were set, which included:
28
• application of new seasonal prices for the February-April 2019 three-month period;
• application of the new value of the National Fund of Electricity (FNEE) of ARS
80/MWh;
• deferred adjustment of CPD unit parameters, which should have been applied in
February 2019. This comprised:
✓ application of a -1.59% S Factor for February 2019;
✓ a 78.05% adjustment of the CPD;
✓ updating of the remaining thirty six installments due to the differences
between VAD values, ENRE Resolution No. 33/2018;
✓ application of five installments to recover the owed 50% of August 2018
✓
CPD;
recognition of the ITF difference as provided for in section 1 of ENRE
Resolution No. 307/2019.
On April 30, 2019, SRRyME Resolution No. 14/19 was published, approving the
definitive winter scheduling for the MEM submitted by CAMMESA, related to the May-July and
August-October three-month periods. This resolution divided the distributor general demand into
Residential and non-Residential, and maintained the Distributor ≥ 300 kW Large Users
category. Additionally, it modified the Power Reference Prices (PRP) and the Stabilized Price of
Energy (SPE) related to the May-October 2019 period.
Subsequently, as from May 1, 2019 and by means of ENRE Resolution No. 104/2019, a
new electricity rate schedule, which reflects the new seasonal prices of SRRyME Resolution
No. 14/19, was set for the May-July 2019 three-month period, with increases being only
generated by the new seasonal prices of energy for all non-residential customers.
In this regard, in October 2019, SRRyME Resolution No. 38/2019 approved the
seasonal scheduling for the November 2019 – April 2020 periods and provided as well that the
power reference price, the energy reference price for residential consumers and the energy
reference price for the Distributors’ Large Users and for the other non-residential consumers, in
effect since August 2019, will remain unchanged until April 2020.
Moreover, on September 19, 2019 an Electricity Rate Schedules Maintenance
Agreement was entered into between the Federal Government and the Company, in which a
series of issues related to different rate adjustments were defined. This agreement finally
ceased to be in force inasmuch as on December 27, 2019 the ENRE instructed edenor not to
apply the electricity rate schedules resulting from the provisions thereof, and to continue
applying the electricity rate schedule that had been approved by ENRE Resolution No. 104/19
of April 30, 2019.
29
▪ Position of the electricity rate in the international market:
The following histograms show a comparison of edenor’s electricity rates with those in
effect in the international market:
30
C O M M E R C I A L M A N A G E M E N T
C U S T O M E R S E R V I C E
We have been applying a customer service model that places the customer at the
center of our action. Based on the permanent innovation in new trend-setting service
experience tools, we keep high quality parameters, oriented towards customer needs and
expectations.
Throughout 2019, we strengthened this new model that has allowed us to improve our
customer service, consolidate the digital channels and facilitate the management of procedures.
The pillars of this model are:
▪ Operating efficiency;
▪ Automation and digitization;
▪ Knowledge of customers;
▪ Communication to customers;
▪ More payment channels;
▪ Customer segmentation.
In 2019, through the Customer Service Department, we developed actions that implied
major changes for the internal as well as the customer-related management, with the aim of
promoting excellence through innovation and continuous improvement with an efficient service.
The most important projects of 2019 were:
- Customer service model
The customer service model implemented in the previous year consolidated. The
model is primarily focused on customer satisfaction and is primarily aimed at achieving both
operating efficiency and migration of customer contacts to the digital channels.
The new customer service model
is rooted
in
the
following
implemented
developments:
▪
edenordigital
With the aim of improving and consolidating the digital management for our
customers, in 2019 we implemented a new version of the application for both its
web format and cell phones.
This version offers customers a better navigation that allows for a faster and more
intuitive user experience.
Furthermore, among the changes and improvements implemented, the following
stand out:
Incorporation of Large Users;
✓ New log in options;
✓ Greater security;
✓
✓ New payment options and new procedures;
✓ 100% digital management of procedures;
✓ More communication with the customer;
31
✓ Signing up for the digital bill.
As for management activities carried out through edenordigital during 2019, the
following stand out:
✓ 900,000 monthly visits;
✓ 544,000 bill downloads per month;
✓ 75,000 payments per month;
✓ 5,000 procedures per month.
▪ Contact center
We implemented a new platform that enables an omnichannel management,
facilitates self-management and provides more information to the agent in order to
better attend to our customers’ needs.
Furthermore, we improved the automated telephone customer service by means of
a smart menu that offers different options according to the customer’s context,
thereby speeding up procedures and enhancing self-management.
Among the improvements made, the following are worth pointing out:
✓ Greater self-management thanks to the new IVR with thirty new query
and management options;
✓ New forms of identification within the IVR;
✓ Priority attention to Large Users;
✓
Improvement of the communication with our customers, making more
than 150,000 personalized calls.
▪ Commercial offices
In 2019, eleven offices incorporated the new model, which is expected to be
implemented in all our commercial offices during 2020. The main feature of these
new offices is a new sector that provides customers with prompt service, called
“experience center”, which includes new solutions to remote assistance and self-
management, such as the on-site video (36 positions and more than 50,000
managed turns), self-management kiosks, and 25 direct customer service
telephone lines to carry out procedures, make claims and inquiries. This sector is
supported by specialist staff, called “self-management service agents”, who
provide guidance and advice to customers on the use of the self-managed devices
available in the center.
This change is part of the new customer service concept, and its implementation
ends up impacting decisively on the reduction of response times and the customer
contact quality at the commercial offices.
Among the main indicators of this new model, the following can be mentioned:
✓ 40% improvement in response times.
✓ 50% of the customers manage their procedures in the first few meters of
the experience center.
32
▪ Large Accounts
In 2019, we consolidated the exclusive and differentiated customer service for
Large Accounts.
As part of the transformation of the customer service provided to this customer
segment, we reorganized and defined the meter-reading, billing, delinquent
payments portfolio and collection management processes, which allowed for a
significant
indicators, strongly
impacting on customer satisfaction.
improvement of comprehensive management
In addition to the account executives, we implemented in the commercial offices a
customer service that gives priority to T2, multi-account, and corporate customers
and real estate developers, which allows them to carry out procedures and make
payments and inquires in any office through a personalized customer service that
gives them priority.
Furthermore, exclusive service lines were created in the contact center, providing
them with a better service. In this way, these customer segments can have a more
agile and direct form of communication with edenor.
▪
Centralized back office
With the aim of standardizing and improving the communication processes with the
customer after the first contact has been made in the different customer service
channels, and in conjunction with the plan for the modernization of commercial
offices and implementation of the new customer service model, in 2019 we
planned and carried out the centralization of the customer service back office work,
the main purpose of which is to process customer contacts in an efficient and
timely manner in order to minimize the number of interactions for the same
its
the analysis and
procedure and standardize
communication to the customer.
thereof and
resolution
Among the relevant indicators, we can mention the following:
✓ 65% improvement in the resolution of digital procedures in the first
contact;
✓ 30% improvement in procedure management productivity.
The same methodology was implemented for the delinquent payments, billing and
meter-reading processes, which made it possible to homogenize the tasks, unify
the working criteria and coordinate the operational actions more efficiently.
- New website
In July we launched the new, fully revamped, institutional website with an intuitive,
customer-focused navigation and easy access to the information.
33
The site’s main innovations are:
✓ Direct access to edenordigital;
✓ Support center;
✓ Predictive search;
✓ Weather alerts;
✓ Exclusive site for investors.
- Smart Meter (remote management)
In 2019, we began the development of the installation plan of the first 1,000
customers with smart meters in the Large Accounts segment, among which the
security forces, airports, embassies, the media and edenor’s major customer stand
out.
In this first stage, the smart meter-related billing accounted for 10% of the
Company’s total billing.
The main operational improvements of these technologies are:
✓ Ensuring the carrying out of remote readings;
✓
✓
Issuing potential fraud alerts;
Issuing outage alarms, which also allows us to monitor the network of the
affected customers more accurately, thereby reducing claim response
times;
✓ Offering customers more information on their consumption behavior in
order for them to administer energy use more efficiently, while offering
them multiple additional services.
C O M M U N I C A T I O N A S T H E B A S I S F O R A C H I E V I N G P R O X I M I T Y
T O T H E C U S T O M E R
-
“Let’s talk with numbers” and “Your energy advances” campaign
In 2019, we conducted a mass communication campaign focused on two axes:
“Let’s talk with numbers”, whose aim was to make the general public aware of our
activity’s data on costs, rates, investments and service quality. The communication was done by
means of an open letter and five ads in nine newspapers, and was reinforced by posts on social
networks.
“Your energy advances” made it possible to inform about positive content through
advertising initiatives with familiar language and daily life scenes. The main piece was a video
that was broadcast on our own channels (website and YouTube), in addition to postings on
Twitter and Facebook. This axis made also possible to provide information on edenor‘s works
in each neighborhood through the “obras.edenor.com” web portal. From there, our customers
can know about the works that are being carried out in all the municipalities of the concession
area.
The “Let’s talk with numbers – Your energy advances” campaign included email
marketing, online advertising and offline radio ads, the development of audio-visual material,
postings on social networks, communications on the institutional website and internal
communications.
34
- Consumption campaign
In summer months (December 2018 and January 2019), we launched educational
campaigns with the aim of providing our customers with information about their historical
consumption in order that they could estimate the cost of their bills and take steps to reduce
consumption.
The main purpose of these campaigns is to raise awareness among our customers of
the efficient use of electricity and provide them with useful tools for them to apply in their
homes.
O U R C U S T O M E R S E R V I C E M A N A G E M E N T I N N U M B E R S
As of December 31, 2019, we have a total of 3,118,450 customers, the development of
which over the last years is as follows:
All the previously mentioned noteworthy events and actions had an impact on our
customer service channels:
✓ 26 commercial offices distributed in the entire concession area;
✓ Call Center (contact center);
✓ Website;
✓ edenordigital (virtual office);
✓ Chatbot3 system;
✓ Social networks (Twitter and Facebook);
✓ SMSs.
In 2019, monthly interactions between our customers and edenor through these
channels once again surpassed one million:
3 A chatbot is a program that simulates human conversation by providing automated replies to inputs made by the
user.
35
- Social networks
Our profile in LinkedIn strengthened its institutional presence, showing the actions that
were developed in the different in-company training programs. Additionally, it strengthened
edenor‘s employer brand, in both job searches and the incorporation of new professionals
In 2019, the development of Facebook and Twitter social networks as channels to
respond to customer claims, inquires and procedures continued. Interactions grew 82.77%
compared to the previous year.
36
We detail below the number of interactions made in 2018 and 2019 in Facebook and
Twitter:
C U S T O M E R S A T I S F A C T I O N S T U D I E S
We believe it is important to know our customers’ opinion and identify their needs, in
addition to measure their degree of satisfaction with the service.
For such purpose, different surveys were conducted:
▪ General satisfaction: to measure the satisfaction of customers of the different
electricity rate categories concerning different aspects of the service, by
assessing technical and commercial attributes;
▪ Transactional satisfaction: to know the satisfaction associated with customer
▪
interaction with the commercial offices;
Image study: to establish edenor’s image and positioning in the Buenos Aires
Metropolitan Area (CABA and GBA).
▪ Focus Group: on important issues for the Company, such as delinquent
payments and losses.
In 2019, residential customers’ satisfaction stood at 76.3% -with the Company once
again ranking second among other public utility companies-, which represents a 2.2% increase
compared to 2018 and shows a positive trend over the last years.
37
The graph below shows the development of the indicator over the last five years:
R E A D I N G , B I L L I N G A N D C O L L E C T I N G
In 2019, we carried out more than 17 million readings. This process has a high
effectiveness percentage; 94.83 % of the cases are billed in first instance.
Technology adaptations, such as remote meter readings, the changes made in
procedures, and the opening of new contact channels to coordinate meter readings notably
reduced the number of cases that could not be billed in first instance, avoiding estimated
consumption.
This degree of effectiveness impacts directly on the quality of the billing. Less than
0.076 % of the readings have given rise to a claim.
In 2019, estimated consumption cases accounted for 0.27% of total consumption billed.
Therefore, the subsequent processes of the commercial cycle have a regular flow; bill
distribution tasks are more organized, due dates become more predictable and cash flows
predictability is improved.
N E W T E C H N O L O G I E S A P P L I E D T O O U R B I L L I N G A N D B I L L
D E L I V E R Y P R O C E S S E S
We implemented a new app, especially designed for cell phones, that is used by 100 %
of our bill distribution agents. With this application, we:
▪
improve the quality of the commercial service, providing customers with more
accurate information on actual delivery;
▪ monitor task progress online;
38
▪
improve the logistics of bill delivery by geo-referencing delivery addresses and
improve the supporting documentation in the case that a customer or the control
authority makes a claim;
▪ optimize the process by reducing manual controls;
▪
▪
contribute to the environment by drastically reducing the use of paper;
reduce the amount of space used for documentation storage purposes and facilitate
access thereto more directly by keeping past years’ information in digital form;
can conduct field surveys that require supporting documentation and agile report by
applying this app to other functionalities.
▪
D E L I N Q U E N T P A Y M E N T S
In 2019, the delinquent payment level recorded an increase in pesos of 75.6% as
compared to 2018, due to the worsening of the socioeconomic situation and the effect of the
electricity rate increase applied during 2019, which raised the amount of the average balance
per customer. In equivalent days of billing (“average days delinquent”), the increase amounted
to 19.33%.
Throughout 2019, several actions were performed to control delinquent payments,
among which the following can be mentioned:
• Payment strategies to facilitate new payment channels;
• Suspension of the electricity supply service to customers with significant
outstanding balances;
• Special notices prompting payment;
• Personalized calls to negotiate and prompt payment;
• Sending of e-mails informing about unpaid balances;
• Management and follow-up plans;
• More flexible payment plans;
• Management of inactive accounts, including external collection agencies.
The development of the delinquent payment balance, measured in average days
delinquent, over the last years is as follows:
39
T E C H N I C A L M A N A G E M E N T
E D E N O R ’ S N E T W O R K
The system through which we supply electricity is comprised of 80 HV/HV, HV/HV/MV
and HV/MV transformer substations, which represents 18,999 MVA of installed capacity and
1,529 kilometers of 220 kV, 132 kV and 27.5 kV high-voltage networks. The MV/LV and MV/MV
distribution system is comprised of 18,484 MV/LV transformers, which represents 8,817 MVA of
installed capacity, 11,454 kilometers of 33 and 13.2 kV medium-voltage lines, and 27,505
kilometers of 380/220 V low-voltage lines.
The table below shows the most significant data related to the transmission and
distribution system for the last years:
40
I N V E S T M E N T S
Investments made in 2019 amounted to ARS 9,919 million in constant currency and
ARS 8,624 million in nominal currency. The execution of investment projects was given priority
over any other disbursements as a way to maintaining the provision of the public service, object
of the concession, under safe conditions.
In order to meet the demand, improve the quality of the service and reduce non-
technical losses, the majority of the investments were aimed at increasing capacity, installing
remote control equipment in the medium-voltage network, connecting new electricity supplies,
and installing prepayment energy meters.
Additionally, we continued making investments aimed at the protection of the
environment and the safety on the streets and public spaces.
The development of investments in nominal currency is detailed in the following graph:
41
In 2019, investments went to the following accounts:
T R A N S M I S S I O N S T R U C T U R E
Our HV transmission network takes energy mainly from the Argentine Interconnected
System through the Rodríguez and Ezeiza Substations, and the Puerto Nuevo, Nuevo Puerto,
Costanera, Matheu, Parque Pilar and Zappalorto local thermal power plants; additionally it
exchanges energy with other companies at transmission and distribution level.
With the aim of improving the quality of the service and meeting the growth in demand,
we carried out significant works in the HV network, among which the following are worth
mentioning:
▪ Putting into service of the expanded 500/220 kV Rodriguez Substation, with a
new 800 MVA transformer bank;
▪ Putting into service of a new 220/132 kV - 300 MVA transformer in Edison
Substation and a new 11 km-long 220 kV electrical transmission line that links
Malaver and Edison Substations;
▪ Replacement of an 8 km-long section of a 132 kV three-phase oil-paper cable
with an XLPE-type dry cable in one of the electrical transmission lines that link
Malaver and Munro Substations. Continuation of replacement works of the
second electrical transmission line, which is expected to be put into service in
the third quarter of 2020;
▪ Continuation of works to link José C. Paz Substation with Morón – Matheu
Substations’ 132 kV electrical transmission lines. The first stage of the project is
expected to be put into service in the third quarter of 2020.
42
S U B T R A N S M I S S I O N S T R U C T U R E
Some of the main works performed were:
▪ Completion of the new 132/13.2 kV 2 x 80 MVA Aeroclub Substation with two
new 132 kV electrical transmission lines for a total length of 8 km that link this
substation to Casanova Substation;
▪ Putting into service of a new 132/13.2 kV - 80 MVA transformer in Ramos Mejía
Substation with part of the new 13.2 kV switchboard;
▪ Replacement of two 132/13.2 kV - 40 MVA transformers in Paso del Rey
Substation with two 132/13.2 kV - 80 MVA transformers;
▪ Replacement of two 132/13.2 kV - 40 MVA transformers in Altos Substation
with two 132/13.2 kV - 80 MVA transformers;
▪ Replacement of two 132/13.2 kV - 20 MVA transformers in Puerto Nuevo
Substation with two 132/13.2 kV - 40 MVA transformers.
Moreover, a series of works, mainly related to the adapting and revamping of different
substations, continue to be performed. These works are expected to be completed throughout
2020.
D I S T R I B U T I O N S T R U C T U R E
Works performed:
Installation of 36 new feeders in new and existing Substations;
▪
▪ Closure between MV feeders of Substations and installation of 506 new MV/LV
transformer centers and 547 power increases, which resulted in a net increase
of installed capacity of 413 MVA.
N E T W O R K I M P R O V E M E N T
The improvements made comprised all voltage levels. The most significant ones are
detailed below:
▪ HV network: replacement of 132 kV and 220 kV disconnectors, and of 132 and
220 kV line protection switchboards;
▪ MV network: replacement of circuit breakers in substations and installation of
internal arc protections in switchboards. Putting into service of a new
switchboard in Migueletes Substation and continuation of assembly works of a
new switchboard in Del Viso Substation. Significant replacement of old
technology underground network, change of medium and
low-voltage
transformers, and change of equipment in transformer centers;
▪ LV network:
replacement of underground and overhead network.
Reinforcement of network with product quality problems.
D I S T R I B U T I O N T E C H N I C A L M A N A G E M E N T
In 2019, and as mentioned in the different captions of this chapter, it was possible to
improve the quality of the service while continuing with the plans and projects implemented in
prior years. The results obtained represented a significant improvement in SAIFI and SAIDI
service quality indicators.
43
Among the main operation and maintenance-related activities carried out during the year,
the following are worth mentioning:
D I S T R I B U T I O N
▪ Special Maintenance plans: change and adjustments of line poles
✓ 4,346 MV line poles, 30% of which were replaced by reinforced
concrete columns
✓ 69,385 LV line poles
▪ Pruning plan in MV network
✓ Consolidation of the procedure consisting of three inspections per year
with the related adjustments, which contributed to reducing faults
created by vegetation contact on power lines.
In the year, 171,880 trees were pruned or trimmed.
✓
▪
Inspections in distribution networks
✓ 5,506 Km of MV networks
✓ 16,198 Km of LV networks
✓ 5,055 inspections of Transformer Centers
✓ 3,368 thermographic inspections
✓ Complete census of “Not Measured” equipment installations (Public
lighting, traffic lights, cable television equipment, etc.).
▪ Leveraging MV planned installation procedures
When a facility is put out of service on a scheduled basis, a complete
examination is made along with the necessary adjustments to take advantage
of the power cut. Through this procedure, more than 6,800 tasks, which include
1,553 replacements of MV line poles, were carried out in the year being
reported.
▪ Tasks performed by distribution mobile teams:
✓ 48,682 grouped LV interruptions
✓ 225,175 responses to individual LV claims
✓ 55,707 installations of new electricity supplies
✓ 239,183 delinquent payment-related electric actions
✓ 485,000 energy recovery-related inspections in T1 customers
✓ 34,596 energy recovery-related inspections in T2 and T3 customers;
✓ 237,424 switching operations in the MV network during planned works
✓ 70,035 switching operations in the MV network during forced events
✓ 3,234 LV underground splices
✓ 3,358 MV underground splices
44
▪ Response to outages reported at night
Continuing with that which had been implemented in 2018, the night crews in
addition to the repair crews that are always on standby helped reduce
interruption times.
▪ Problem in customer internal installation verification service
We continued to use the system on a technology platform that links consumer
needs to technicians distributed in the concession area in order to early detect
cases of internal problems in the customer’s facilities and thereby avoid
unsuccessful interventions.
▪ Energy theft
✓ 75,160 “MIDE” self-managed meters installed, 57,000 of which are
currently enabled, reaching 199,728 enabled MIDE meters in the entire
concession area
✓ 240 special control operations in shopping areas, gated communities,
and industrial parks at night.
✓ 2,377 anti-fraud control operations
R E M O T E C O N T R O L A N D R E M O T E S U P E R V I S I O N
In 2019, we continued working on the remote control and remote supervision plan of the
MV/HV networks, and the upgrades in remote control equipment in Substations:
✓ 671 new remote control operating points in the MV distribution network,
achieving a total of 1,713;
✓ 2,851 remote supervision points in the MV network were achieved;
✓ 5 substations were adapted in order for them to be protected against
cyber-attacks;
✓ New remote control systems and adjustments in 20 Substations;
✓ A distributed energy-related remote control project was carried out;
✓ With the remote control implementation achieved in both substations and
the MV distribution network, more than 30 % of operations in the year
were performed from a distance by remote controls.
45
T R A N S M I S S I O N
▪ Compliance with the Preventive Maintenance Plan of HV facilities and Substations
in accordance with regulations.
▪
Implementation, in July 2019, of 6 lightweight LLW (Live-line working) teams
comprised of two individuals that make it possible to carry out maintenance
activities in the MV network without affecting the service. In this way, we completed
the implementation of the 12 lightweight teams, achieving the following results:
✓ HV/MV live-line inspections: 2,590 KM
✓ HV/MV live-line adjustments: 4,500
✓ Live-line chamber cleaning tasks: 1,400
✓ HV live-line tasks: 1,150
▪ Development of new LLW techniques, such as cleaning of MV underground
chambers, bypassing and cleaning of 132 kV disconnectors, installation of “Section
breakers” that allow for the assembly and connection of switch disconnectors
without affecting the service. They can also be used in multiple tasks such as
replacement of line poles and renewal of conductors.
▪
Improvement of the training site and assembly of a low height power line at as
laboratory to provide training and develop new techniques.
▪ Creation of an interdisciplinary working group for the “Follow-up of status and
identification of fault patterns in HV metering transformers” with the aim of defining
where maintenance and replacement tasks should be done based on results.
▪ The working groups with Transener technical staff, which had been implemented in
2018, remained active.
▪ Replacement of 107 HV metering transformers and 45 silicon carbide surge
arresters with zinc oxide ones.
▪
Implementation of an infrared thermography plan in substations’ necks with HV
bars that was incorporated in the maintenance plan. Verification of the condition of
all the substations’ HV bars is carried out with the assistance of SACME, running
flow estimators that allow for the early identification of anomalies.
▪ Replacement of bushings in 20 transformers, 10 of them as a result of
improvement strategies (including 3 - 300 MVA units), 4 transformers with
improved technology after entering the factory on account of adjustment tasks, and
6 transformers due to findings detected in the PAMP.
▪ Preventive replacement of 3 HV/MV transformers for reconditioning purposes in
factory and encapsulation of MV connections in 22 transformers. This task enables
protection of bare outgoing MV distribution lines against contact with animals,
branches, and even strange thrown objects.
46
R E S E A R C H A N D D E V E L O P M E N T
▪ The paper “Use of self-managed meters – Accessibility of low-income population to
sustainable energy” was presented in 2019 CIRED International Congress on
Electricity held in Madrid.
▪ A letters patent application was filed for the “LV electricity distribution network for
special urban developments”. This network, known as MULCON (multiple
concentric), has vandal-proof features, which, associated with the MIDE self-
managed meters, allow sustainable access to the use of electricity.
▪ The paper "Criteria to Prioritize the Replacement of HV Instrument Transformers in
a Distribution Utility: A Practical Approach" was presented in 2019 CIRED
International Congress on Electricity.
L O G I S T I C S A N D S E R V I C E M A N A G E M E N T
F L E E T A N D R E A L P R O P E R T Y
In 2019, based on operating needs, we increased the fleet, compared to 2018, to a total
of 1,477 units.
Furthermore, we developed a vehicle maintenance application in order that the users of
the vehicles can request mechanical repairs, towing, and documentation from their cell phones.
Moreover, we changed the mechanical maintenance system to a fixed monthly fee
system, which reduces costs, administrative work, and management times.
Additionally, the implementation of the first multifunctional hydraulic crane, which allows
for greater versatility of tasks performed in groups, is to be noted.
As for real property, the new Pilar commercial office was finished, being the first of the
ten commercial offices where the “Roll Out” project was implemented. Furthermore, with regard
to the real estate asset to be constructed, which we acquired in 2015, and whose agreement
was terminated due to the construction firm RDSA’s default, in August 2018 we entered into a
settlement agreement that provided for the payment of USD 15 million as compensation. As of
December 31, 2019, we have received USD 14 million and have filed proof of claims for the
sum of ARS 2,125.9 million in RDSA’s insolvency proceedings.
L O G I S T I C S
• Technological innovation in pole loading and unloading: we implemented the use of
cranes with “log grapples” in the unloading and loading of poles, thereby replacing
the manual task of four workers by a mechanized task, minimizing the risk of
accidents in the operation.
47
• Digitization of logistic operations: we finished implementing the use of HandHeld4
devices in the twelve Logistic centers, with barcode reading technology. Tasks
were digitized, reducing to minimal levels the use of paper.
•
Improvement of Service level (SLA): we significantly reduced delivery and SLA
compliance times.
Q U A L I T Y M A N A G E M E N T
S E R V I C E Q U A L I T Y
The fifth six-month period of the RTI’s five-year period (2017-2021), which is governed
by the new Sub-Appendix IV to the Concession Agreement established by the RTI, began in
March 2019.
In addition to establishing district and commune-based service quality controls, a quality
improvement path with increasing requirements is implemented, regarding not only interruption
frequency limits and admissible interruption duration but also the cost of non-delivered energy.
Additionally, an automatic penalty mechanism was implemented in order that the discounts on
account of deviations from the established limits may be credited to customers within a term of
60 days as from the end of the controlled six-month period. As for the values of the definitive
penalties, the ENRE’s decision concerning the information submitted for each six-month period
is required.
The system of supplementary penalties established by ENRE Resolution No. 198/2018
has been maintained. According to such Resolution, supplementary penalties of 300 or 600
kWh per consumer based on the Feeder Six-month Period Path Factor (Factor de Sendero
Semestral del Alimentador - FSSA) and the Consumer Six-month Period Path Factor (Factor de
Sendero Semestral del Usuario - FSSU) were established as from the fourth six-month period of
the RTI five-year period, which commenced in September 2018. The penalties that may
eventually apply will have to be calculated and reported to the ENRE in a term of 120 calendar
days as from the end of the six-month control period and deposited in an escrow account.
The interruption frequency and the total interruption duration over the last five years are
detailed below:
Although the effect of the investment actions in distribution networks is reflected firstly in
the decrease of the interruption frequency indicator, the ripening of these investments and those
related to network maintenance and operation accompanied this effect with a clear
improvement in the total interruption duration indicator.
4 HandHeld device: It is a type of portable computer with a writing recognition system that can be held in one hand while
being used.
48
P R O D U C T Q U A L I T Y
With regard to product quality, the regulations that established a quality path for the RTI
five-year period (2017-2021) continue to be in effect, setting voltage deviation limits for MV and
LV supplies at a unified value of 8%, 5% exclusively for HV, and the cost of energy delivered in
poor condition at incremental values throughout the path for both voltage levels and
disturbances.
T E L E C O M M U N I C A T I O N S
T E C H N O L O G Y M A N A G E M E N T
A N D
I N F O R M A T I O N
Progress continued to be made with the transformation of edenor based on new
technologies and processes, seeking to adapt to the dynamic industry context to which we are
constantly exposed as a company. In that regard, in 2019 we began to implement the multi-year
plan developed with the consulting firm Bain & Company by the end of 2018, the purpose of
which is that both the technology and the area are prepared for the challenges posed by the
transformation of edenor.
Thus, we continued adopting new practices and working methodologies with a cross-
company vision of the processes, incorporating and developing new digital skills in the team
and making progress in consolidating a flexible and robust technology architecture.
D I G I T A L A R C H I T E C T U R E , I N N O V A T I O N A N D P R O C E S S E S
We began to implement the new Red Hat Fuse5 integration platform, addressing as a
priority the reengineering of the critical integrations associated with the management of street
works carried out by the staff. This plan, which is expected to continue in 2020, is currently
being developed with excellent results. We have implemented the project adopting agile
methods, as part of a pilot plan we launched in 2019 with this and other projects.
One of the elements of the Digital Transformation strategy is smart metering (smart
meters). This implies integrating smart meters of different manufacturers into our technical and
application infrastructure.
In order to address this challenge, we designed a smart meter reference architecture,
which represents a comprehensive framework that takes into consideration the technical
aspects as well as the decision-making criteria and conceptual framework when implementing
technologies, with the aim of ensuring that future trademarks and models of smart meters can
integrate swiftly into the infrastructure of our applications.
As regards processes, we implemented, after an evaluation and testing, sixteen
transactional robots (RPA) that allowed us to automate certain high-volume, repetitive
processes, saving approximately 4,000 man-hours per month, in addition to improving the
quality of the information.
With regard to our operational model, we put in place a Service Center aimed at
improving the efficiency of the resources in charge of customer support, incident resolution and
everyday technology services, producing a higher quality service, while optimizing response
times and quality.
5 Red Hat Fuse: It is a distributed integration platform designed for agile integration with standalone, cloud-based
integration deployment options for integration experts, application developers and business users.
49
C O M M E R C I A L P R O C E S S E S
We continued sustaining the development of an increasingly digital relationship with our
customers by implementing the new edenordigital, thus migrating to a completely redesigned
and new platform from the technological viewpoint, incorporating the possibility of carrying out
technology
procedures digitally and
architecture will enable us to support the growth of future applications and functionalities.
facilitating customer self-management. This new
Within the framework of the new commercial customer service model, digital experience
centers were developed and implemented in some commercial offices, including the installation
of 35 live chat sound and video booths and 20 self-service terminals.
We completed the implementation of the new Avaya contact center platform, a project
that had begun in 2018. We now have a state-of-the-art omnichannel technology, capable of
supporting the growth of digital procedures.
T E C H N I C A L , O P E R A T I N G A N D S U P P O R T P R O C E S S E S
In the framework of our strategy towards a new more flexible and robust technology
architecture, we migrated our ERP SAP to the Hana database and took it to the cloud. This
resulted in an optimization of the back office’s critical processes times, a better user experience
and a reduction in infrastructure costs.
With regard to the contractor management model, we carried out an integral review of
the supplies management process and implemented a technology solution. This translated into
a more accurate inventory in the contractors’ warehouses, avoiding inefficiencies in the stock of
supplies and improving supply times. Additionally, we developed a mobile application to
manage the contractors’ daily reports, seeking to achieve greater efficiency and higher quality
information.
D A T A
To help drive business decisions, we also took into consideration the development of
the governance model and the quality and analysis of data, seeking to introduce more
advanced forms of analysis and intelligence practices, from the technology tools as well as from
the development of analytical competencies.
In this line of action, we implemented several information models that incorporate
artificial intelligence (machine learning). In 2019, we applied them to trace energy losses and
fraud, predict faults in MV lines, and carry out customer segmentation according to payment
behavior.
We also implemented six self-service-focused information models, which implies that
the information remains available to all the areas so that they can self-manage in the analysis of
the data they may require.
Additionally, in the year being reported we developed ten use cases under the “Data
Lab” concept; experimental and multi-disciplinary work teams formed to answer business-
related questions, on the basis of data analysis. In 2020 we will continue building this path as an
initiative that promotes the development of analytical skills in the entire organization.
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C Y B E R S E C U R I T Y
While making progress with the development of the multi-year industrial cybersecurity
plan, a new infrastructure that manages the separation of the industrial network (SCADA/DMS,
among others) and the corporate network was implemented with the aim of preventing
unauthorized traffic exchange between both networks and improving responsiveness in the
event of a cyberattack.
The email platform was substantially improved, with capability to not only detect and
block known and unknown advanced threats, but also protect our infrastructure from phishing,
ransomware and spoofing.
Furthermore, as part of the SAP migration to the cloud project, the new landscape was
implemented on AWS (Amazon Web Services), following the best security practices for the
design, maintenance and operation of the new infrastructure.
Additionally, we worked on the design of the Disaster Recovery Plan (DRP), seeking to
respond and recover in the minimum time possible the business’ core applications in the event
of serious incidents.
I N F R A S T R U C T U R E
Continuing with the development of a future smart grid, fiber optic cables continued to
be laid to extend connectivity to transformer centers, substations, buildings and commercial
offices, thus having more than 400 transformer centers connected and increasing the capacity
of our own fiber optic network with nearly 1,500 Km in operation.
Moreover, as part of the development of the metering network, we were able to connect
to our central systems nearly 2,500 meters distributed in all the concession area. This implied
working on the monitoring, connectivity maintenance, and system integration of all remotely-
managed and remotely-read meters.
In this regard, we implemented a new monitoring service to anticipate anomalies in both
remotely-read and smart meters, in edenordigital, and in self-management terminals, among
others.
We also put in place an online portal that provides information about the availability
level of edenor‘s services and critical applications.
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H U M A N R E S O U R C E S M A N A G E M E N T
O U R E M P L O Y E E S
The following graph shows the development and breakdown of edenor’s staff:
With regard to the incorporation of personnel, in 2019 we continued to recruit talent
through the Young Engineers and the Young Technicians programs. Additionally, through the
Internal Recruitment Program we continued to promote the filling of positions with internal
candidates, to support employee development and with the aim of increasing motivation and job
satisfaction.
As for the Young Engineers Program, in 2019, the 9th edition was developed with the
incorporation of 28 new engineering professionals, who received an induction training to help
them know the business and were appointed to supervisory positions.
Additionally, through the Young Technicians Program, 42 applicants, all of them
graduates from the technical schools of our concession area, joined the Company as members
of the mobile teams to perform tasks in the electric power network transmission and distribution
areas.
Furthermore, with regard to the Internship Program, in 2019, 35 university students
applied to join the technical as well as the support areas.
L A B O R R E L A T I O N S
The Company’s labor relations with its employees are built around constant dialogue,
which is reflected in the collective bargaining agreements entered into with the Sindicato de Luz
y Fuerza (Electric Light and Power Labor Union) (production personnel) and the Asociación del
Personal Superior de Empresas de Energía (Association of Energy Companies’ Supervisory
Personnel) (supervision personnel).
Those Collective Bargaining Agreements (CCTs) are approved by the competent
authorities, and the working conditions arising therefrom continue to apply until the signing of a
new agreement by virtue of the provisions of Section 12 of Law No. 14,250, pursuant to which a
collective bargaining agreement shall remain valid after its expiry if it is not renewed.
Furthermore, we continued to enter into several Memoranda of Understanding with
the aforementioned unions with the purpose of improving productivity, efficiency, and integral
52
application of the multi-tasking and multi-professional approach in the development of the tasks
of personnel posts.
Adding to these aspects are the incorporation and adoption of new technologies and
the introduction of changes in organizational structures, work plans and management systems,
including the realignment of positions, responsibilities, work shifts and integration of different
workplaces, thus allowing for the optimization of the Company’s human resources in the
different operation areas.
C O L L E C T I V E B A R G A I N I N G N E G O T I A T I O N S
With regard to wage agreements, the collective bargaining agreements entered into in
2018 continued to be in effect through October 2019. Furthermore, a new collective bargaining
agreement, effective from November 2019 until January 2020, was signed.
The terms and conditions of the new wage agreements are described in Note 5.2 to
the Financial Statements.
T R A I N I N G A N D D E V E L O P M E N T
In 2019, we developed the work plan, applying the experience gained in the previous
year when we launched the “Technical Knowledge Management” project.
In order to communicate the project information, the videos of the surveyed tasks
were made available through a digital platform.
Training on the different topics was attended by 1,724 employees from the
Distribution, DIME (Market Discipline) T1, T2, T3 and HV/MV power lines Repairs areas.
With regard to the Transmission area, 283 people participated in the training courses
on Capacitor Bank, HV Pruning and HV Deliveries in Substations. In all the training courses on
Technical Knowledge Management, both the members of the Mobile Teams and the
Supervisors were trained.
Furthermore, for the fifth consecutive year, we carried out the “Leaders Program”,
which consisted of five workshops addressed to supervisors, leaders, chiefs, assistant
managers and managers, although registration was optional. Additionally, an edition of
Introduction to Leadership Discipline addressed to specialists was held at the Torcuato Di Tella
University. A total of 317 people participated on this occasion.
With regard to Development, we conducted, among other initiatives, 18 workshops
on “Development Experiences”, which were attended by 220 people, among specialists,
leaders, chiefs, assistant managers and managers. The main objective was to create spaces for
conversation about Development and Self-development, as well as to share the existing
projects and practices in connection therewith.
As for the Performance Management Process, we continued to extend its adoption
to include the operational staff. Furthermore, we incorporated a goal library aligned with
edenor’s strategic map, thereby contributing to the sustainability of the process with the
business’ goals, and worked on the redesign of the competency model, which will be reflected
in the 2020 cycle.
We conducted the second “People Review” to assist in human resources planning
according to the challenges of the organization, identifying potential successors for Board and
Management-level positions, on the basis of a detailed analysis of the available talent and the
action plans thereon.
53
Furthermore, we worked on a talent identification and action plan definition process to
accompany the transformation of the Customer Service Department. We surveyed the
competencies for more than 100 people among supervisors and those in charge of Commercial
Offices, the Large Accounts Department and the Channels Management Under-Department.
Detailed below is a summary of the hours of training of our own staff:
In November 2019, seven participants earned the certificate of completion of primary
studies as a result of the program launched last year, which offered our employees an
alternative plan to finish their studies in accordance with the provisions of the EPPA PBA. This
program promotes personal development and is a key aspect of both edenor‘s commitment to
its employees and its commitment to contributing to an integrated society with increased
opportunities.
H U M A N R E S O U R C E S M A N A G E M E N T P L A T F O R M
In 2019 we continued improving and incorporating new functionalities to our human
resources management platform. “Integrated” is an open and collaborative platform that not
only combines and integrates several information systems into one single management space,
but also seeks employee self-management and decentralization to enhance the performance of
leaders over their work teams.
Among the platform’s modules and tools we can mention the following:
✓
✓
✓
✓
✓
✓
✓
“We manage”: administration and self-management of information,
requests and inquiries.
“We choose”: management of employee recruitment.
“We connect”: benefits, integration and communication space.
“We prevent”: management of staff health and safety.
“We improve”: performance management process to be main players in
the achievement of the Company’s results.
“We learn”: acquisition of knowledge and skills, and continuous learning
management.
“We honor”: access to the recognition program to honor outstanding
management activities.
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I N T E R N A L C O M M U N I C A T I O N A N D W O R K E N V I R O N M E N T
In 2019 our actions were aimed at strengthening the personnel’s sense of belonging
levels, promoting different
the different areas and organizational
and closeness
to
communication spaces and channels.
The main actions developed were:
▪
“Communication meetings”
▪ Digital relationship, communication and management platform “edenorcerca”,
accessible from a mobile application, PC/notebook or any other digital device.
The aim of this platform is to provide employees with a space for simplifying
their daily management, as well as to facilitate real-time access to information;
▪ Digital billboards, clearly visible to all the staff, where edenor updates are
broadcast;
▪
“turecibo.com” platform (electronic payslip platform), where certain important
employee notices are included;
▪ Active Network: it is a group of employees who spontaneously volunteer to
become part of a team, whose function is to share information, be multipliers
of ideas and contents, form bonds and create spaces for dialogue, perform an
active listening and contribute innovative ideas to improve on a daily basis the
way in which we communicate in edenor.
In this regard, we conducted an Organizational Climate Survey, which allows us to
become aware of the staff’s level of commitment. In this edition, the satisfaction index was 88%
-a figure higher than the average of the market-, which, as in the last few years, continues to
indicate that edenor is a very good place to work. Furthermore, the commitment and labor
climate indexes increased 82% and 69%, respectively. The staff’s participation continues to
grow as to the number of replies. With the results obtained, we continued developing action
plans based on the identified strengths and improvement opportunities.
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P R O C E S S E S A N D C O N T R O L
C O D E O F E T H I C S
In the framework of our Strategic Vision review, the Code of Ethics approved in 2015
and updated in 2019 continues to be applied.
The Code provides a roadmap to how we are expected to conduct ourselves and lays
the foundation for delivering the service of excellence we set out to achieve.
The Code of Ethics is available on both the integration, communication and
management platform “edenorcerca” and the platform where employee payslips are stored.
I N T E R N A L C O N T R O L S Y S T E M
As from 2007, and upon entering the international capital market through the listing of
our securities in the United Stated, we had to make sure that business processes and financial
information are in line with the control framework required by domestic and international
regulations. Within these regulations, compliance with the Sarbanes-Oxley Act (“SOX”) passed
in 2002 and regulated by the Securities Exchange Commission (SEC) is deemed essential.
That Act sets forth strict conditions for companies listed in the American market, which must be
observed in order to avoid penalties with a high personal and institutional impact. Therefore, we
have implemented a continuous process for risk surveying, documentation and controls that
allows us to assess the effectiveness of the internal control system over economic and financial
reporting. Since 2008, an annual evaluation of this process is performed, and its result is
included in the certification submitted to the SEC by the CEO and the CFO.
As of December 31, 2019, Management has assessed the effectiveness of the internal
control system, using the criteria set forth in the conceptual framework defined by the COSO
(2013), and concluded that an effective internal control on the issuance of its financial
statements has been maintained.
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A N A L Y S I S O F E C O N O M I C R E S U L T S
In fiscal year 2019, edenor posted a profit of ARS 12,134.1 million as compared to the
ARS 6,608.2 million profit recorded in fiscal year 2018. We disclose below the development of
the Company’s results:
The operating profit for fiscal year 2019 amounts to ARS 3,598.1 million, as compared
to the ARS 6,060.5 million operating profit recorded in the previous fiscal year. The effects
caused by the application of the RTI made it possible to gradually restore edenor’s economic
and financial position in these last two fiscal years and until mid-2019 fiscal year. However, the
constant increase in the operating costs -necessary to maintain the level of service-, the
Argentine economy’s inflationary environment and the sustained recession since mid-2018, in
addition to the freeze on tariffs in the last months of 2019 should be taken into account.
The profit for 2019 fiscal year shows an 84% increase compared to the previous fiscal
year, due mainly to the Agreement on the Regularization of Obligations entered into in 2019 by
and between the Federal Government and edenor.
This Agreement provided mainly that edenor agrees to abandon any actions to which it
may be entitled against the Federal Government; to settle debts for works, mutuums and
penalties in favor of users; and to make additional investments aimed at improving the overall
service. In return, the Federal Government fully offset pending obligations with the MEM for
electric power purchases and partially cancelled the mutuums granted by CAMMESA and
certain penalties in its favor. As a consequence of the Agreement, a pre-tax profit of ARS
17,094.8 million was recognized, which does not imply any inflow of funds whatsoever; quite on
the contrary, edenor must comply in the next 5 years with the agreed-up investment plan.
Without taking the effects of the aforementioned Agreement into account, the profit for
the year would have amounted to ARS 1,776.2 million, which would imply a 73% decrease
compared to the profit posted in 2018.
As a consequence of the electricity rate increases of February and May 2019 (see
“Electricity Rates” - Chapter 5), in 2019 revenue from sales amounted to ARS 89,943.8 million,
which represents a 5% increase as compared to 2018. Furthermore, energy purchases in 2019
increased 16%, as compared to the previous year, to a total amount of ARS 57,041.8 million.
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With regard to operating costs, they recorded a decrease of approximately 6% as
compared to fiscal year 2018, basically due to both a reduction in the amount of penalties as a
consequence of the improvement in the technical product quality and the safety on streets, and
the decrease in retroactive adjustments made by the ENRE due to the signing of the Agreement
on the Regularization of Obligations entered into in 2019.
Furthermore, as of December 31, 2019 and 2018 Other operating expense, net
amounted to ARS 1,970.4 million and ARS 2,031.0 million, respectively.
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In 2019, the net financial expense amounted to ARS 9,076.7 million, as compared to
the ARS 9,641.8 million recorded in 2018. This 6% decrease in net expense is mainly related to
both the decrease in the exchange difference loss and the interest generated by the commercial
and financial (mutuums) debts with CAMMESA, which were partially cancelled in 2019 by
means of the Agreement on the Regularization of Obligations.
A N A L Y S I S O F T H E F I N A N C I A L A N D C A S H P O S I T I O N
F I N A N C I A L P O S I T I O N
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The variations recorded in the main assets and liabilities accounts as of December 31,
2019, as compared to the previous year, were as follow:
▪
▪
▪
Property, plant and equipment: its increase is due mainly to the Board of
Directors’ express decision to prioritize the execution of investment projects with
the aim of maintaining the provision of the public service, object of the concession,
under safe conditions.
Trade payables: its decrease is due to the decrease of our debts with CAMMESA,
mainly as a consequence of the settlement of the balance owed as of March 31,
2015 by means of the Agreement on the Regularization of Obligations entered into
in 2019.
Trade receivables: its slight increase is mainly due to the effect of the electricity
rate increases applied as from February 1, 2019 and May 1, 2019.
▪ Borrowings: its decrease is mainly due to the repayment of financial loans and the
repurchase of corporate notes during 2019.
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C A S H F L O W S
In 2019, the level of cash and cash equivalents continued to show a net decrease as
compared to fiscal year 2018. Cash flows provided by operating activities amounted to ARS
10,158.3 million, which were mainly used for the financing of the investment plan for ARS 5,156
million, the repurchase of own shares for ARS 599 million, the payment of debt principal and
interest for ARS 2,941.3 million, and the repurchase of Corporate Notes for ARS 1,531.1
million.
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C O M P A R I S O N O F V A L U E S
C U R R E N C Y
I N N O M I N A L A N D C O N S T A N T
The table below details the comparative values of the statement of income, both in
nominal and constant currency:
M A I N F I N A N C I A L R A T I O S
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I N D U S T R I A L S A F E T Y
In the first quarter of 2019, we restructured our organizational chart in order for the
Technical Department to play an accompanying and active role in the “Technical Strategy” in
line with the business digital transformation process that is currently being developed by
edenor. Within this framework, the Occupational and Industrial Safety area became part of the
Human Resources Department.
By the end of 2019, the annual audit conducted by the IRAM on Industrial Safety
Management was satisfactorily passed, which allowed us to maintain the OHSAS 18001
Certification obtained in 2005.
The Occupational Health and Safety management programs were updated
certification purposes in 2020, following the guidelines of the new 2018 ISO 45001 standard.
for
To achieve these Occupational Health and Safety-related goals, we performed several
activities, whose results were reflected in the improved accident indicators of the last years.
The table below details the frequency and severity rate of accidents over the last years:
P U B L I C S A F E T Y
In this regard, the annual audit conducted by the IRAM on the Public Safety System
(PSS) according to ENRE Resolution No. 421/11, was successfully passed, thus maintaining
the related certification.
With regard to third party accidents, 22% of them occurred in third-party facilities, such as
inside houses or street lighting columns. Although these accidents are not under the
responsibility of edenor, they must be recorded and reported in accordance with the Regulatory
Authority’s requirements.
According to the analysis of the accidents recorded in 2019, 60% of them are the result of
vandalism and third party negligence.
Additionally, we continued to hold periodic meetings with contractors to discuss public
safety-related issues. At such meetings, the results of the inspections performed, the goals
achieved, the analysis of deviations found, and the street accidents suffered by their staff are
presented to the contractors, who are also provided with guidelines for the training to be given
to their workers.
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With regard to external communication, we began to hold meetings on public safety
issues with the municipalities.
Furthermore, information about public safety issues and recommendations in the event
of weather alerts continued to be provided, using for such purpose the social networks, which
are also used to report electrical hazards in the streets.
Q U A L I T Y
As a fundamental pillar of the Integrated Management System (IMS), all the processes
have been implemented and are certified under the ISO 9001:2015 Quality Management
Systems international standard. It began to be implemented in 1999, in the meter-reading,
billing, collection, procurement and logistics processes, and, as from 2005, it was extended to
all edenor‘s processes.
In October 2019, the external maintenance audit of the Integrated Management System
(IMS); ISO 9001 Quality Management System; ISO 14001 Environmental Management
Systems; and OHSAS 18001 Occupational Health and Safety System was conducted and
successfully passed. The certifying entity IRAM highlighted as strengths the technical level and
the commitment to the service of the interviewed technical staff, as well as the assignment of
technology and financial resources to improve the service and the customer service.
The main innovations incorporated into the Quality Management System (ISO
9001:2015) were: customer-focus; leadership; people’s commitment; process approach;
improvement; evidence-based decision making; and relationships management.
These principles aim at promoting a quality culture among the organization’s individuals
to seek their commitment and participation.
The purpose is to secure the individuals’ involvement in the compliance with the
Integrated Management System (IMS) Policy, which governs our System’s actions and supports
the application of our Competitiveness and Sustainability Model.
At the same time, we actively participated in the Argentine Standardization Institute
(IRAM); the Argentine Society for Continuous Improvement (SAMECO): the Quality, Continuous
Improvement and Environment-related sharing experience commissions; the Ibero-American
Foundation for Quality Management (FUNDIBEQ), the National Quality Award (PNC) and the
Argentine Professional Institute for Quality and Excellence (IPACE).
S U S T A I N A B I L I T Y R E P O R T – G L O B A L C O M P A C T R E P O R T
In 2019, we issued the sixth sustainability report, which covers the 2017-2018 biennium.
The report details the actions, challenges and goals in economic development, environmental
care, customer management and employee development-related topics. All of them aligned with
the Sustainable Development Goals promoted by the United Nations.
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In line with our commitment to the Global Compact’s ten principles, we have integrated
the Communication on Progress (COP) into the Sustainability Report.
The report was translated into English for the first time, demonstrating a clear
commitment to all our stakeholders.
The Sustainability Report is available in our official website and the “edenorcerca”
intranet.
E N V I R O N M E N T A L M A N A G E M E N T
edenor is certified under ISO 14,001:2015 standard since 1999.
E N V I R O N M E N T A L I M P A C T
In 2019, we received the Environmental Clearance Certificate granted by the Provincial
Agency for Sustainable Development of the Province of Buenos Aires for certain works projects
developed in such district.
Additionally, with the guiding principle of contributing to the quality of life of our
customers, the Special Authorization Certificates were obtained for each of our warehouses,
ensuring proper management in the handling and final disposal of hazardous waste. Those
certificates were granted by the Provincial Agency for Sustainable Development of the Province
of Buenos Aires and the National Environment and Sustainable Development Ministry.
M O N I T O R I N G P R O G R A M
Level of noise and electromagnetic field measurements were made in different facilities
of edenor. The results obtained were positive, extensively complying with the limits required by
the regulations for this type of facilities.
C O M M U N I T Y A C T I O N S – E D U C A T I O N A L P R O J E C T S
In 2019, the Corporate Social Responsibility (CSR) area was created, within the Human
Resources Department, with the aim of enhancing and integrating all the actions carried out by
edenor in the communities where we operate. For this purpose, the Electricity inclusion
project, the “edenorchicos” Educational Program and the Scholarship and mentoring
program were developed.
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Furthermore, we continued with the 2nd edition of the “Professionalizing Practices
Program” for young students from technical schools.
In the same line, we also conducted four “Workshops on First Employment”
addressed to those who had been awarded a scholarship by Pampa Foundation in order to
provide them with the necessary tools for their first job interviews. Additionally, we participated
in different solidarity and exchange events with municipalities of the Buenos Aires urban sprawl
and in seven job fairs with the aim of getting in contact with young students and generate a
talent base for future employment opportunities.
S U S T A I N A B L E E N E R G Y
D I S T R I B U T E D G E N E R A T I O N
In 2019, Law No. 27,424 on “Program for the Promotion of Distributed Generation of
Renewable Energy Integrated in the Public Electricity Grid” was regulated. The law allows users
to install in their premises renewable energy generation equipment for self-consumption and
sale of generation surpluses injected into edenor‘s network.
We were the first distribution company of the country to connect a user-generator under
the aforementioned law. This first user-generator installed a photovoltaic generation equipment
comprised of twelve solar panels and twelve micro-inverters, for a total of 3 kW peak power.
At the end of 2019 edenor had 22 user-generators.
T A R I F F 3 R E M O T E M A N A G E M E N T P R O J E C T
In 2019, we began to implement the first phase of the T3 customer meters
modernization plan. This phase consists in replacing 1,000 conventional meters with smart
meters. It is expected that the total universe of T3 customer meters will be replaced between
2020 and 2022.
Smart meters have advanced tools for fraud detection, handling, real-time information
on service and product quality events, as well as greater capabilities to gather data on electrical
variables. These attributes will allow for an improved network planning to offer our customers
new businesses and value added services.
In parallel with equipment replacement, we put in place and linked our commercial
system with the reading software of the new smart meters.
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S M A R T M E T E R F O R M E D I C A L L Y D E P E N D E N T O N P O W E R
C U S T O M E R S
Continuing with the actions developed to provide medically dependent on power
customers with a preferential customer service, we launched a smart meter installation pilot
plan in a reduced number of cases, approximately 10 % of the universe. Based on the results of
this pilot plan, the entire universe of medically dependent on power customers, 1,400
customers, is expected to be provided with smart meters.
The main purpose of the project is to take advantage of the service quality, last gasp,
and power restore real-time notification functions offered by these meters.
R E M O T E L Y - M A N A G E D M I D E
In 2019, we increased the number of remotely-managed MIDE smart meters to a total
of 26,000, distributed in 139 transformer centers.
L A S T G A S P P R O J E C T
With the aim of making power outage and restoration detection in sensitive customers
more efficient, and building synergy with the smart meter implementation projects, we began to
develop tools to achieve an automatic alert generation in this group of customers.
The last gasp and power restore real-time events relayed from the meters are
monitored in a specific visualization portal developed for our Control Center.
As a next stage in the process, we will integrate this with the interruption management
system.
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A P P R O V A L O F F I N A N C I A L S T A T E M E N T S
As required by section 234 of the Business Organizations Law, we hereby inform that
the Financial Statements for the year ended December 31, 2019 will be submitted for approval
purposes to the next Shareholders’ Meeting.
A L L O C A T I O N O F P R O F I T S
In compliance with current legal regulations, and given that the fiscal year’s result
amounted to a profit of ARS 12,134.1 million, subject to the adjustments provided for by CNV
General Resolution 777 that will be calculated and reported in accordance with the applicable
indexes available prior to the Shareholders’ Meeting, this Board of Directors unanimously
resolves to propose that the Annual General Meeting allocate the profit for the year in the
following manner: ARS 606.7 million to the Statutory Reserve and ARS 11,527.4 million to the
discretionary reserve for future investments and other requirements.
A C K N O W L E D G E M E N T S
Finally, we would like to thank all our employees, who make of edenor the country’s
largest electricity distribution company. To all of them, to our shareholders, advisors, suppliers
and, mainly, to our customers, our deepest gratitude for having accompanied us during 2019.
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