C O N T E N T S
Letter from the Chairman
1 | Relevant data
2 | Managing and supervisory boards
3 | Economic and social context
4 | Argentine electricity market
5 | Description of our management activities
6 | Fiscal year results
7 | Corporate social responsibility
8 | Communication
9 | Board of Directors’ Proposal
Appendix I – Corporate governance report
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, 2020, 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-eighth fiscal year.
The year that ended December 31, 2020 will be unforgettable for all of us. On this
occasion, I am not referring to our country’s macroeconomic instabilities, which continued to
occur, or the regulatory shifts that have affected our activity for the last 20 years, which also
continued to occur, but rather to the global pandemic caused by the COVID-19 virus. The
pandemic has led us to face, both as a society and as a Company, an unprecedented situation
with no easy solutions and which will leave a mark on the Company, which will surely define the
near, and, in March 2021, still uncertain future, significantly.
Less than one month had elapsed since the approval by the Board of Directors of the
2019 financial statements when the mandatory lockdown was implemented. By the end of
February, envisioning this situation, we set up a Crisis Committee, with the participation of
renowned experts to help us with epidemiological issues, and prepared to face the sanitary and
operational scourge.
We began by defining a service continuity plan, incorporating several measures and
protocols that took into account the new aspects related to our people’s health and safety. The
essential nature of our service implied the continuity of on-site work for more than 2,700
employees and an acceleration in virtualization processes so that more than 1,700 people could
work from home, including the closure of 25 commercial offices, the immediate activation of the
backup control center in the event of infection, generation of permanent communication channels
with our people, contractors and customers, and innumerable anecdotes and situations to
resolve.
This health emergency context accelerated the digital transformation process initiated in
2018. Although the Company already had robust and proven systems in place as a result of years
of sustained investment, 2020 put them to test and triggered their widespread use in all the
Company’s processes. This implied increasing the systems’ processing capacity by 50% to not
only support the growth of digital interactions but also strengthen cybersecurity-related aspects.
I would also like to highlight the company’s commitment to contributing to the fight against
the COVID-19 through a number of actions aimed at cooperating with the community and the
authorities. On the one hand, we contributed through different works to the management of the
COVID situation in hospitals and care centers of our concession area, such as the Dr. René
Favaloro Hospital (La Matanza), Austral University Hospital (Pilar) -which implied the carrying out
of works in record time– by providing electricity supply and technical equipment. It also involved
donating transformers and the laying of low-voltage lines to hospitals of the Municipalities of Tigre,
Moreno, Tres de Febrero, and Hurlingham. Furthermore, we donated two mobile units to function
as laboratories for the early detection and prevention of COVID-19. On the other hand, we
supported the scientific community and its research by strengthening its technical capabilities
through donations to the IBYME-Conicet, University of San Martín, Fleni and CEMIC.
Additionally, and applying all the necessary protocols to take care of our personnel, we
continued developing our activities, among which the following stand out: renewal of 4,200
medium-voltage and 51,000 low-voltage columns, pruning of more than 150,000 trees, meter
inspections of nearly 1.4 million customers, 671 thousand of which were normalized after the
detection of fraud and anomalies that directly impact our billing, and the carrying out of inspections
to 100% of T2 and T3 Customers. Pursuant to the requirements of the law for customers who are
dependent on electricity for medical reasons, we created the Diagnosis Center, through which we
monitored the 2,500 registered customers.
From the regulatory point of view, as we noted in our letter of 2019, all the uncertainties
about the transfer of jurisdiction were finally resolved with the annulment of the entire process -
and therefore, the company’s definitive return to the federal jurisdiction under the ENRE’s
authority-, and the future creation of a Tripartite Agency comprised of the Federal Government,
the Province of Buenos Aires and the City of Buenos Aires.
Returning to the topic of the new regulatory developments, it is important to point out that
on September 19, 2019, the Company had 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
had also been 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 rates for an initial period of up to 180 days, period which has been successively extended most
recently until March 31, 2021. As a result of these measures, edenor’s electricity rates have not
been adjusted since February 2019 –adjustment which included inflation until December 2018-
with two years having elapsed without recognizing the increases in distribution costs, even when
inflation in 2019 was the highest annual rate since 1991 and that in 2020 surpassed an additional
36%. Although the government has expressed its intention to begin to adjust rates from March
2021, as of to date, we are not certain that this will happen and if it actually occurs, how such
adjustment would finally affect the Company’s revenue.
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 the 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 authorities, but ensuring the sustainability of
the public service, object of the concession, with any subsidies from the public coffers being
granted only to help those who need them. As always, we are at the disposal of the authorities to
discuss ideas and projects aimed at improving this distribution.
We also understand social concerns about the level of electricity rates. In this regard, 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 850, an amount that has
not changed for the last two years and 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.
We believe that a definitive solution should also be found to deal with the payment of the
consumption of the vulnerable neighborhoods and shantytowns for which today no one takes
responsibility. Nevertheless, it is noteworthy that the Federal Government has assumed the debts
accumulated by the Province of Buenos Aires from 2017 to the end of fiscal year 2020, having
been agreed that the amounts owed, which total ARS 2,600 million, will be allocated to an
investment plan for the improvement of the network, to be carried out throughout 2021 and 2022.
Another important aspect regarding our level of revenues is related to the fall in demand
recorded in recent years. 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. Although electricity
sales grew 1% in 2020, they are approximately 20% lower than the estimated demand for this
same year when the Tariff Structure Review was carried out in 2016, estimate which served as
the basis for determining the electricity rates applicable to the entire five-year period.
A distinguishing feature of 2020 is the significant increase in delinquent payments due to
the difficulties experienced by many customers during the year, which we expect will begin to
normalize as economic activity recovers. Despite the freeze on rates for the last two years, due
to the health situation, residential consumption has increased on average by 11.3% and could
have affected some customers’ ability to pay.
However, while the demand for electricity, as we have said, has decreased in recent
years, the maximum demand for power continues to increase year after year, with the new record
demand for power amounting to 5,248 MW in February 2021. This situation requires that the
planned investments be carried out without delay, making it imperative that the Distributor’s
economic and financial equation be restored and given predictability, so much so that in 2020
alone we put into service another 475 MVA of power to increase our network’s installed capacity.
Among the significant works carried out we can mention the incorporation of 235 MVA capacitor
banks in 220 kV busbars of Rodriguez substation that improve both the security conditions in
energy supply and the security of all the AMBA’s system; and the putting into service of the new
“Jose C. Paz”, “Libertad” and “El Cruce” substations, adding power and reliability to the network.
In order to put those substations into service, the construction of 17.6 km of new high-voltage
electrical transmission lines, in addition to the renewal and adjustment of 6.6 km of other electrical
transmission lines, was necessary. The investments made in the 2020 period also include the
expansion of the medium-voltage and low-voltage networks by 290 km and 276 km, respectively,
together with the installation of 253 distribution transformers and the incorporation of 482 new
medium-voltage network “remotely controlled” switchgear pieces of equipment.
All the investments made are an essential part of the support to the continuous
improvement of the Service and Product Quality, which can be reflected in the reduction of both
average frequency (SAIFI) and average duration (SAIDI) indicators.
Finally, with regard to our revenues, we cannot fail to mention the permanent increase of
electricity theft. In trying to solve this problem, we incorporated new customers through the
installation of “MIDE” (Energy Integrated Meter) meters program, which allows customers with
irregular income to adapt their electricity purchases to their income as well as to improve their
consumption administration. Additionally, we are already managing 31,000 of these meters
remotely, through concentrators. Despite the implementation of these measures, the theft of
electricity continues to be an immense challenge for the Company. In spite of some detected
cases of very noticeable fraud, 349 pre-court agreements, 125 criminal complaints filed and 42
arrests made by the security forces, an enormous effort of all the staff, a new energy balance
system and the development of micro-balances in gated communities, we have not been able to
reduce non-technical losses. This being the case, they remained at high levels amounting to
19.6%, despite the different 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 and
2020, affecting such ratio.
As I previously stated, 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 63% and their
frequency by more than 51% since we embarked on that path, over-complying with the
demanding path defined by the RTI. To achieve this, in edenor, we have continued to invest the
totality of the available funds as no dividends have been distributed by the Company since 2001.
The year’s investments, though lower than those of prior years due to the effect of the sanitary
measures, meant a considerable effort on the company’s part in our present reality. In 2020 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.
With reference to our relationship with customers, we may conclude that 2020 was the
year of edenordigital. The restrictions of the ASPO (Mandatory and Preventive Social Isolation),
the communication campaigns we made, and the user-friendliness of our app made it possible
that 1 out of 2 residential customers made use of edenordigital by the end of this fiscal year. This
migration to the digitization process places us at the forefront of public utility companies. Today,
edenordigital is for many companies a model of how to interact with customers, both to manage
their claims and to inform about commercial and technical matters.
We launched several initiatives to reduce service restoration times, which helped
consolidate this path of improvement, among them the relocation of operational centers, the
implementation of systems that allow us to take advantage of outages to carry out the necessary
adjustments, the use of forecasting tools for maintenance activities, the implementation of tree
pruning programs in HV and MV lines, the keeping in service of 700 high-voltage circuit breakers,
the incorporation of 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 2,350 remote control
points and nearly 4,900 remote supervision points in our entire network, which resulted in 30% of
medium-voltage switching operations being controlled remotely.
This ambitious investment plan and the sustained improvements in our management
activities allowed us to achieve the best customer satisfaction index of the last 8 years. The result
obtained in such index, which stood at 82.1%, constitutes an achievement of each and every
member of edenor and a recognition of this effort by our customers.
I would also like to refer to the loss for the year, which amounts to ARS 17,698 million,
and includes an ARS 9,766 million gain on the “Result of exposure to the changes in the
purchasing power of the currency” (RECPAM) and an ARS 12,178 million loss (after tax) on the
impairment of Property, plant and equipment, as a consequence of the previously mentioned
regulatory situation that impact the cash flows projection used by the Company. The operating
result, before the effect of the impairment of assets, decreased by ARS 9,142 million, from a profit
of ARS 6,465 million in 2019 to a loss of ARS 2,676 million in 2020, due mainly to the freeze on
electricity rates that does not allow for the offsetting of the increase in costs owing to inflation and
the higher uncollectibility charge as a consequence of the significant increase in delinquent
payments. These effects could not be offset in spite of a rational management of costs, which
together with the lack of access to the financial market, led the Company, as a measure of last
resort, to partially postpone payments to CAMMESA for the energy acquired in the MEM as from
the maturity taking place in March. We expect that this emergency situation will be promptly
rectified in order that we can honor our debts as we have always done when the regulatory
framework is complied with.
The electricity distribution service 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 the entire edenor team for its
professionalism, effort and cooperation in the development of operation and support tasks that
allowed us to successfully meet the demand and the many new challenges taken up during such
a particular and challenging year, and to the Board of Directors and Supervisory Committee’s
members as well for always accompanying us along this path in a proactive manner.
Although the recently announced transfer of the Company’s shares has not yet been
approved by the regulatory authorities, I would like to take this opportunity to thank the current
shareholders for the years of support to the Company management that allowed for investment
levels never achieved before in the history of edenor, surpassing USD 1,700 million since 2014,
with the consequent improvement in the quality of the service while the number of customers and
the demand for electricity continued to grow considerably, and without receiving dividends for
almost 20 years. I would like to wish the new shareholders and all the members of edenor every
success in this new stage.
Finally, I would like to express my gratitude to all the Company members for their
commitment and effort during the nearly 10 years I have had the honor and pleasure of being the
chairman of the Company. It was a period full of learning experiences and achievements, the
memories of which I will cherish forever. At the end of 2020 we can be proud that we have
achieved the best service quality indexes, our customers’ highest satisfaction and the best
commitment and internal climate index since we began conducting surveys. Therefore, I invite
you to continue making every effort to make 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 continue improving.
Ricardo Torres
Chairman
G L O S S A R Y
ADR
ASPO
AT
BCRA
BT
BUSHING
ByMA
CAMMESA
CIF
CNV
COSO
CPD
edenor
E FACTOR
ENRE
FOB
GWh
IMF
INDEC
IRAM
ITF
IVR
kV - V
kW
LEBAC
LLW
LNG
MEM
MERVAL
MIDE
MINEM
MSCI
MT
MULCON
MVA
MW
MWh
NYSE
PESA
ROLL-OVER
RTI
SAD
SAIDI
SAIFI
SEC
SEE
SOX
SRRyME
TAM
American Depositary Receipt
Mandatory and Preventive Social Isolation
High voltage
Central Bank of Argentina
Low voltage
Transformer terminals
Bolsas y Mercados Argentinos
(Buenos Aires Stock Exchange)
Compañía Administradora del Mercado Mayorista Eléctrico
(the company in charge of the regulation and operation of the wholesale electricity market)
Cost Insurance and Freight
National Securities Commission
Committee of Sponsoring Organizations of the Treadway Commission
Company’s Own Distribution Cost
Empresa Distribuidora y Comercializadora Norte S.A.
Stimulus Factor
National Regulatory Authority for the Distribution of Electricity
Free on Board
Gigawatt hour
International Monetary Fund
National institute of Statistics and Census
Argentine Standardization and Certification Institute
Tax on financial transactions
Interactive Voice Response
Kilovolt - Volt
Kilowatt
Central Bank bills
Live-Line Working
Liquid Natural Gas
Wholesale Electricity Market
Mercado de Valores de Buenos Aires
(Buenos Aires Securities Market)
Energy Integrated Meter
Energy and Mining Ministry
Morgan Stanley Capital International
Medium voltage
Multiple Concentric
Megavolt-ampere
Megawatt
Megawatt-hour
New York Stock Exchange
Pampa Energía S.A.
Risk associated with debt maturity mismatches and with the refinancing of debt
Tariff Structure Review
On-site Customer Service
System Average Interruption Duration Index
System Average Interruption Frequency Index
Securities and Exchange Commission
Electric Power Secretariat
Sarbanes-Oxley Act
Renewable Resources and Electricity Market Secretariat
Mobile Annual Rate
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.
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, 2020 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 0.55% as of December 31, 2020]. 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.
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:
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 Bylaws, 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 Ordinary and Extraordinary Shareholders’ Meeting held on April 28, 2020 appointed
the members and alternate members of the Board of Directors for fiscal year 2020. Furthermore,
the Board of Directors at the meeting held on May 11, 2020, subsequent to the Ordinary and
Extraordinary Shareholders’ 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:
Name
Position
Chairman
Ricardo Torres
Vice-Chairman
Gustavo Mariani
Director
María Carolina Sigwald
Director
Diego Martin Salaverri
Director
Maria José Wuille Bille
Director
Carlos Perez Bello
Director
Carlos Alberto Iglesias
Director
Haroldo Arian Montagu
Director
Diego Leandro Rozengardt
Director
Juan Santiago Fraschina
Director
Federico Bernal
Director
Hernan Ferrera
Alternate Director
Leandro Montero
Alternate Director
Daniel Flaks
Eduardo Abel Maggi
Alternate Director
Gerardo Ruben Tabakman Alternate Director
Alternate Director
Carlos Dionisio Ariosa
Alternate Director
Mariana de la Fuente
Alternate Director
Emilse Alejandra Juarez
Alternate Director
Maria Josefina Grosso
Alternate Director
Nicolas Sanvitale
Alternate Director
Martin Burgos Zeballos
Alternate Director
Benjamin Navarro
Class
Class A
Class A
Class A
Class A
Class A
Class A
Class A
Class B/C
Class B/C
Class B/C
Class B/C
Class B/C
Class A
Class A
Class A
Class A
Class A
Class A
Class B/C
Class B/C
Class B/C
Class B/C
Class B/C
Independence
Non-independent
Non-independent
Non-independent
Non-independent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Independent
Non-independent
Non-independent
Non-independent
Non-independent
Non-independent
Non-independent
Independent
Independent
Independent
Independent
Independent
In 2020, directors appointed by classes “B” and “C”, Alejandro Vanoli Long Biocca, Flavia
Matilde Marrodan and Gonzalo Guilardes Deinert; alternate director appointed by classes “B” and
“C”, Adriana Ávalos; and alternate directors appointed by Class “A” shareholders, Ariel Schapira
and Mariano Batistella; all of whom had been appointed at the Ordinary and Extraordinary
Shareholders’ Meeting held on April 28, 2020, tendered resignations, which were accepted by the
Board of Directors at its different meetings.
On September 23, 2020, Mr. Gustavo Capatti requested a six-month leave of absence
from his position as Director for the Class A due to personal reasons. Mr. Carlos Perez Bello, who
had been duly appointed as Alternate Director by the same class of shareholders at the Ordinary
and Extraordinary Shareholders’ Meeting held on April 28, 2020 and who, like Mr. Capatti,
qualified as independent, accepted to take office in Mr. Capatti’s place. This was also recorded
in the minutes of the Board of Directors meeting of October 30, 2020.
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.
Name
Ricardo Torres
Daniel Flaks
Eduardo Maggi
Gerardo Tabakman
Leandro Montero
Luis Lenkiewicz
Mariana De La Fuente
Carlos Ariosa
Position
Chairman and Chief Executive Officer
Technical Director
Operations Director
Customer Service Director
Finance and Control Director
IT and Telecommunications Director
Human Resources Director
Legal Affairs Manager
S U P E R V I S O R Y C O M M I T T E E
edenor has a Supervisory Committee in place, which is responsible for overseeing
compliance with the Bylaws, the shareholders’ resolutions and the applicable 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.
In accordance with the Bylaws, 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.
The Ordinary and Extraordinary Shareholders’ Meeting held on April 28, 2020 appointed
the members and alternate members of the Supervisory Committee for fiscal year 2020. The
composition of the Supervisory Committee at the date of issuance of this Annual Report is as
follows:
Name
Daniel Abelovich
Germán Wetzler Malbrán
Jorge Roberto Pardo
Martin Fernandez Dussaut
Marcelo Fuxman
Sandra Auditore
Position
President
Member
Member
Alternate Member
Alternate Member
Alternate Member
Class
A
A
B/C
A
A
B/C
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.
Due to Mr. Gustavo Jorge Capatti’s leave of absence from his position as Director, the
Board of Directors resolved at its meeting of October 1, 2020 to appoint Mr. Carlos Pérez Bello
in Mr. Capatti’s place, proposing as well that he be appointed as “Financial Expert” given his
technical skills and qualifications.
Name
Carlos Perez Bello [1]
Carlos Alberto Iglesias
Diego Leandro Rozengardt
Independence
Independent
Independent
Independent
[1] Appointed as Financial Expert at the meeting of October 1, 2020.
Class
A
A
B/C
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
of Directors and/or the Executive Committee 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.
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.
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 2020, the economic activity recorded a cumulative fall of 11.8%
as compared to the same period of the previous year, due mainly to the COVID-19 impact,
reducing private consumption, public consumption and investment by 14.6%, 5.4% and 22.3%,
respectively.
(-47.6%), construction
The contraction in the activity reached 15 of the 16 economic sectors, with hotels and
restaurants
(-16.5%),
manufacturing industry (-11.0%), and wholesale, retail trade and repairs (-8.5%) being the most
affected ones. These falls were partially offset by net exports as of the third quarter of 2020, in
contrast with net imports of 2019, due mainly to the sharp fall recorded in imports since the
lockdown.
transport and communications
(-32.1%),
D E V E L O P M E N T O F P R I C E S
With regard to the development of prices, in 2020, the Cost-of-Living Index published by
the INDEC showed a variation of 36.1%. The greatest variations were recorded in the clothing
and footwear (+60.0%), recreation and culture (+48.0%), and food and non-alcoholic beverages
(+42.1%) categories. The categories affected to a lesser extent were communications (+7.6%),
housing, water, electricity and other fuels (+17.6%), and education (+20.1%). 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 34.9% as of December 2020 compared to the same month of 2019.
F I S C A L S I T U A T I O N
Furthermore, at December 2020 the Non-Financial Public Sector’s fiscal accounts recorded
a cumulative primary and total deficit of 7.0% and 9.1% 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 with a year-on-year increase of 32.2%.
Additionally, primary expenditure recorded in 2020 by the National Treasury showed a year-on-
year variation of 63.5%.
With regard to the financial situation, the US dollar wholesale rate of exchange according
to Communication A35000 of the BCRA at December 31, 2020 was ARS 84.15/USD, recording
a cumulative increase of 40.5% as compared to the end of 2019 and a year-on-year average
variation of 46.3%. The BCRA’s international reserves at the end of the year totaled USD 39.4
billion, which represents a decrease of USD 5.5 billion as compared to the level reached in the
previous year. As for the monetary base, it amounted to ARS 2,470 billion at the end of 2020,
reflecting a 30.3% increase compared to the previous year. Furthermore, the BCRA’s stock of
debt on account of bills issued totaled at the end of 2020 the equivalent expressed in dollars of
USD 35 billion, showing a year-on-year increase of 97%.
F O R E I G N T R A D E
Finally, with regard to foreign trade, according to the INDEC’s data, the cumulative current
account surplus as of the third quarter of 2020 reached USD 4.3 billion, amount which represents
1.2% of the GDP. This is mainly explained by the trade balance surplus, in which Free on Board
value exports totaled USD 41.9 billion, whereas the Cost, Insurance and Freight value of imports
was USD 30.4 billion. During the period in question, exports of primary products increased 5.4%,
whereas agricultural and industrial manufacturing exports contracted by 8.3% and 31.1%,
respectively. Fuel and energy exports reversed their trend and recorded a year-on-year fall of
28.5%. As for imports, the contraction compared to the same period of 2019 is explained by the
decreases recorded in the following categories: automotive (45.4%), %), fuel and lubricants
(40.3%), parts and accessories (34.2%), capital goods (21.8%), intermediate goods (9.6%) and
consumer goods (7.7%).
S A N I T A R Y S I T U A T I O N
“SARS-Cov2”, the severe acute respiratory syndrome coronavirus 2 that causes
coronavirus disease, “COVID-19”, was reported for the first time in December 2019 in Wuhan,
China.
In the months that followed, the disease spread rapidly across the world and on March 11,
2020 the WHO recognized the coronavirus disease (COVID-19) as a pandemic.
This disease has caused a severe social, economic and financial impact. Most of the
world’s countries implemented exceptional actions, which had an immediate impact on their
economies, as rapidly evidenced by the falls recorded in production and activity indicators. The
governments’ immediate response to these consequences was the implementation of tax aids to
sustain their citizens’ income and thereby reduce the risk of a breakdown in the chain of
payments, avoiding an economic and financial crisis.
In Argentina, the PEN implemented a series of measures aimed at reducing the circulation
of people, providing for the Mandatory and Preventive Social Isolation (“ASPO”), as from March
20, 2020, initially allowing for the circulation of only those people related to the provision of
essential products and services, among which was the electricity supply service provided by
edenor. All that had a disruptive social and economic effect in the first months, as a significant
part of the country’s economic activity, particularly the commercial activity, was paralyzed. The
situation was alleviated by the gradual relaxation of the lockdown measures and the reactivation
of the economic system.
On November 7, 2020, by means of DNU (Executive Order issued on the grounds of
Necessity and Urgency) No. 875/2020, the PEN provided for the Mandatory and Preventive Social
Distancing, instead of the ASPO, progressively eliminating most of the restrictions on circulation.
As from that date, economic, industrial, commercial or service-related activities can be carried out
only if an operational protocol has been approved by the health authority. Furthermore, rules of
conduct applicable to all the population were established, such as wearing masks in shared
spaces, cleaning one’s hands frequently, disinfecting surfaces, keeping rooms well ventilated,
and complying with the protocols set by the health authorities, among others.
All these pandemic-related aspects have significantly affected the Company’s results and
operation.
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, the first of which had a duration 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.
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 for
the setting up of the Metropolitan Electricity Service Regulatory Authority (Ente 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.
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 the public service of electricity
distribution, with all the previously described actions being thereby suspended.
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 fiscal year 2020, the Company made different presentations to the ENRE detailing the
estimates of the electricity rate schedules that were to be applied during the year according to the
terms of the Electricity Rate Schedules Maintenance Agreement entered into by and between the
Company and the Federal Government in the framework of the economic emergency and in
accordance with Law No. 27,541 on Social Solidarity and Production Reactivation.
Included among the aforementioned presentations are the adjustment requests of the
Company’s Own Distribution Costs (CPD), pursuant to the provisions of Appendix XV of ENRE
Resolution No. 63/2017 “Procedure for determining the electricity rate schedule”, in accordance
with the following detail:
(1) The CPD adjustment applicable in August 2019
was deferred until January 2020 by means of the
Electricity
Schedules Maintenance
Agreement.
Rate
The indicated CPD and the other concepts detailed in the “Electricity Rate Schedules
Maintenance Agreement” entered into with the Federal Government on September 19, 2019,
neither transferred to tariffs nor authorized to be collected by other means accumulate as of
December 31, 2020 a total of approximately ARS 20,939 million, excluding interest.
Furthermore, on December 16, 2020, by means of Executive Order No. 1020/20, the PEN
provided for the commencement of the Tariff Structure Review renegotiation process, which may
not exceed two years, suspending until then the Agreements relating to the respective Tariff
Structure Reviews in effect, with the scope to be determined in each case by the Regulatory
Authorities, providing as well that Interim Renegotiation Agreements, which modify to a limited
extent the particular conditions of the tariff review imposing a Transitional Tariff System, may be
entered into until a Definitive Renegotiation Agreement is reached. In this framework, the freeze
on electricity rates was extended until March 31, 2021, or until the new transitional electricity rate
schedules resulting from the aforementioned Transitional Tariff System come into effect.
Additionally, the ENRE’s administrative intervention provided for by Executive Order No.
277/20, was extended until December 31, 2021, or until the tariff review renegotiation is finalized.
In this regard, on January 19, 2021, the ENRE issued Resolution No. 16, providing for
the commencement of the transitional tariff adjustment procedure, with the aim of setting a
Transitional Tariff System until a Definitive Renegotiation Agreement is reached, and inviting
edenor to participate in it in accordance with the provisions of Executive Order No. 1,020. To that
end, the Regulatory Authority has requested as a first measure that it be provided with certain
financial information as well as with information about the 2021-2022 investment plan, on the
basis of the investment plan set forth in the 2017 RTI.
Consequently, by means of Resolution 40/2021, the Energy Secretariat implemented a
“Special System for the Regularization of Payment Obligations” of Electricity Distribution
Companies that are agents of the MEM for the debts held with CAMMESA and/or the
WHOLESALE ELECTRICITY MARKET whether on account of the consumption of energy, power,
interest and/or penalties, accumulated as of September 30, 2020. It also implemented a “Special
System of Credits” for those Electricity Distribution Companies that are agents of the MEM and
have no debts with CAMMESA and/or the MEM or whose debts are regarded as being within
reasonable values vis-à-vis their levels of transactions as of September 30, 2020.
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 participants are the Distribution,
Generation and Transmission companies, and Large Users, 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.
These measures made it possible to meet the SADI’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 2020, the record demand amounted to 25,791 MW,
10 MW of which were imported from Paraguay. These imports were mainly due to Paraguay’s
hydraulic generation surplus, rather than to a domestic generation deficit. The system’s spinning
reserve during the peak demand amounted to 1,857 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;
▪ 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 companies engaged in the generation, transmission
and distribution of electricity, and, to a lesser extent, large users and electricity brokers.
- 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, 2020, the installed capacity amounted to 41,951
MW, 60% of which derived from thermal generation, 26% from hydraulic generation, 4% from
nuclear generation and 10% 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.
- 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.
In 2017, by means of Resolution No. 281-E/17, the MINEM laid down the Regulations for
the Renewable Energy Term Market, which establish 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.
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.
In this chapter, we will comment on the main new developments, progress and
achievements made throughout 2020, which were developed according to the priorities
established for all our activities:
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
edenor’s demand for electricity in 2020 amounted to 25,124 GWh, which represents a 1%
increase as compared to that of 2019. The MEM’s demand for electricity amounted to 127,306
GWh, showing a reduction of 1% as compared to 2019.
140.000
130.000
120.000
110.000
100.000
M
E
M
D E M A N D [ G W h ]
133.111
132.426
132.925
128.880
127.306
26.838
25.950
25.906
24.960
25.124
90.000
2016
2017
2018
2019
2020
Demanda MEM [GWh]
30.000
28.000
26.000
r
o
n
24.000
e
d
22.000
e
20.000
Additionally, in 2020 the maximum value of power reached by edenor amounted to 5,144
MW, 0.39% higher than that of 2019, whereas the maximum peak recorded by the MEM was
25,191 MW.
Furthermore, according to the data provided by CAMMESA, the MEM’s installed capacity
as of December 31, 2020 amounted to 41,951 MW.
The development of power is the following:
27.000
26.000
25.000
24.000
23.000
22.000
21.000
20.000
19.000
18.000
M
E
M
P O W E R [ M W ]
25.380
25.628
26.320
26.113
25.791
4.892
4.985
5.151
5.124
5.144
2016
2017
2018
Potencia MEM
2019
Potencia EDN
2020
6.000
5.000
r
o
n
e
d
e
4.000
E N E R G Y S A L E S
The amount of energy sold in 2020 totaled 20,179 GWh, which represents a 1% increase
as compared to 2019. The graph below shows the development of sales over the last 5 years.
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 2020 was supplied by the following sources: fossil fuels (oil, natural gas and coal) 61.3%,
hydroelectric 21.7%, nuclear 7.5% and renewable sources, wind and solar photovoltaic 9.5%.
In 2020, there was an increase in the use of fuel oil and diesel fuel (68% and 53% higher
than in 2019, respectively) as a primary source for electric power generation, mainly as a
consequence of complying with the agreements on the export of energy to Brazil, as from the
second half of the year. There was a significant reduction in the consumption of natural gas for
generation purposes (5% lower than in 2019), owing mainly to a slightly lower demand due to the
ASPO. Additionally, there was a significant increase in the domestic offer of natural gas, which
resulted in a reduction of LNG import volumes.
In 2020, edenor purchased the total amount of energy in the market at an average annual
monomic price of ARS 2,187.21/MWh.
The development of the average purchase price over the last few years is shown in the
following graph:
S e a s o n a l M a r k e t A v e r a g e P r i c e [ U S D / M W h ]
30,5
31,0
35,3
26,0
18,7
2016
2017
2018
2019
2020
E N E R G Y L O S S E S
The TAM of total losses2 for 2020 amounted to 19.61%, which represents a decrease
compared to the 19.90% of the previous year.
The absolute value of losses in GWh was lower than that of 2019. The greatest losses
occurred in the first quarter as a result of the political context associated with the socioeconomic
framework.
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.
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.
In 2020, the plan launched in previous years, which consisted in having 250,000 MIDE
self-managed meters in place in 2020, continued to be implemented. The plan is aimed at
normalizing clandestine consumers, inactive customers and chronic delinquent customers. In
2020, 25,466 MIDEs were installed, 24,540 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 and artificial
intelligence tools aimed at improving effectiveness in the routing of inspections to reduce energy
theft.
In 2020, over 518,000 inspections of Tariff 1 meters were carried out with a 54%
effectiveness. Regarding the recovery of energy, in addition to the normalization of customers
with MIDE meters, clandestine consumers with conventional meters were normalized. In all the
cases, a striking rate of repeat fraud practices was noticed.
E L E C T R I C I T Y L O S S R o l l i n g A n n u a l R a t e %
17,0
17,1
18,2
19,9
19,6
2016
2017
2018
2019
2020
The TAM of losses grows by 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.
E N E R G Y R E C O V E R Y
Fraud and energy theft, such as the tampering of meters or clandestine connections,
represent one of the Company’s most problematic issues.
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 the Negotiation area for billing and
collection management purposes.
The pandemic and the economic / social context impacted this process considerably.
To mitigate this situation, in 2020 we redefined the energy recovery plan, setting for such
purpose flexible policies that allowed for the improvement of collections, without resorting to the
disconnection of the electricity supply. Additionally, the segmentation of cases to be recovered
was strengthened and new communication channels were developed.
As a fundamental complement, 35% of in-person customer service staff received training
to conduct telephone negotiations with those customers (T1 and T2) whose inspection resulted
in technical and/or fraud-type anomalies.
In the fiscal year, the Company recovered unbilled consumption of energy from customers
with fraud or technical anomalies, billing for these concepts an amount of ARS 1,717 million.
Billed energy in MWh, broken down by rate category was as follows:
Energy Recovery
[MWh]
218.878
32.617
28.528
5.727
23.892
27.326
11.500
12.148
86.024
2018
2019
2020
T1
T2
T3
E L E C T R I C I T Y R A T E S
During 2020, no electricity rate increases were applied due to the fact that on September
19, 2019, the ENRE instructed the Company not to apply the electricity rate schedules resulting
from the provisions of the Electricity Rate Schedules Maintenance Agreement entered into by and
between the Company and the Federal Government on September 19, 2019.
Due to this context, the Company made the following presentations to the ENRE:
- February 10, 2020, calculation of the electricity rate schedule that was to be applied
since February 2020, according to the terms of the aforementioned agreement.
- April 29, 2020, calculation of the electricity rate distortion caused by the decrease in
the physical demand in relation to the projected demand for the 2017-2021 RTI,
requesting the incorporation thereof into the electricity rate schedule to be approved
by the regulatory authority.
- May 4, 2020, ex-post adjustments related to pass-through deficiencies observed
between November 2018 and January 2020 that were to be applied in one electricity
rate schedule since May 2020.
- June 17, calculation of the electricity rate schedule that was to be applied since July
2020, according to the terms of Electricity Rate Schedules Maintenance Agreement
entered into on September 19, 2019 by and between the Company and the Federal
Government.
- August 5, calculation of the electricity rate schedule that was to be applied since
August 2020, according to the terms of the above-mentioned Electricity Rate
into consideration new ex-post
Schedules Maintenance Agreement,
adjustments related to pass-through deficiencies observed between November 2018
and April 2020.
taking
- October 29, ex-post adjustments related to pass-through deficiencies observed
between May 2020 and July 2020, to be incorporated, together with previously
submitted differences, within the electricity rate schedule that should have been
applied in November 2020.
Furthermore, by means of Executive Order 311/2020, on March 25, 2020 the Federal
Government prohibited public utility companies from suspending or cutting off services to users
due to delinquency in payment or non-payment of up to three consecutive or alternate bills, from
March 1, 2020 and for a period of 180 days. This Order was extended for 180 days by Executive
Order No. 543/2020.
Additionally, during 2020, the ENRE continued to inform 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.
Finally, in line with that which has been previously indicated in Chapter 4 under
ELECTRICITY RATE AND REGULATORY SITUATION, on December 16, 2020, by means of
Executive Order 1020/2020, the PEN provided that the renegotiation of the tariff structure review
may not exceed two years from the date on which this executive order came into effect,
suspending until them the agreements relating to the RTI in effect, for reasons of public interest.
▪ 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:
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
C U S T O M E R S
In the new context of 2020 and as a result of the provisions of the mandatory and preventive
social isolation (ASPO), the greatest challenges were to maintain and improve the satisfaction
of our 3,152,000 customers, enhance the operating efficiency and continue migrating
customers to digital channels.
All of them under edenor‘s fundamental axes: efficiency and proximity.
The development of our customers over the last few years is as follows:
Development of the number of Customers
(in thousands)
3.040
3.119
3.152
2.950
2.866
2016
2017
2018
2019
2020
The actions planned at the beginning of the year, aimed at the achievement of these goals,
were:
-
Implementing improvements in the contact center to meet the higher demand for this
channel.
- Completing the implementation of the new customer service model in all commercial
offices.
- Developing communication campaigns to promote customer digitization.
-
Improving edenordigital by incorporating new online forms of payment and procedures.
- Adopting new actions for the management of delinquent payments, through collection
agencies and communication campaigns.
All that which had been planned was strongly affected by the arrival of the pandemic that
forced us not only to change the way of working, but also to accelerate the making of the planned
improvements in the main processes, which began to be gradually impacted by the ASPO
implemented by the Federal Government from March 20, 2020. Additionally, new projects
emerged to adapt the processes to the “new normal”.
Some of the ASPO’s direct impacts on the Company’s relationship with customers were:
- Temporary closure of in-person payment locations (external entities).
- Reading estimates, due to the fact that from March to May 2020 the reading activity had
not been deemed essential.
- Suspension of delinquent payment-related electric actions (ban on electricity shut-offs
and disconnections due to non-payment), currently in effect.
- Closure of commercial offices, currently in effect.
The closure of commercial offices intensified that which has been taking place throughout
the last few years in relation to the fact that our customers prefer to contact the Company via the
digital contact channels:
As a result of this situation, during 2020 we focused on the following axes:
- Customer service;
- Reading;
- Billing;
- Delinquent payments;
- Energy recovery;
- Communication.
We describe below the actions carried out in each of these axes.
C U S T O M E R S E R V I C E
Commercial offices
In 2020, the necessary remodeling works were completed in order for all the commercial
offices to have the features of the new customer service model with a sector that provides
customers with prompt service, called “experience center”. This innovative concept comprises
solutions to remote assistance and self-management. This change ends up impacting decisively
on the reduction of response times and the customer contact quality at the commercial offices.
Experience centers
When the health emergency was declared, by means of executive order 311/2020
published in the Official Gazette, the ENRE instructed electricity distribution companies of the
metropolitan area to suspend in-person customer service, which resulted in the closure of the
totality of the commercial offices during the ASPO.
Therefore, customer service agents began to work from home, accessing their PCs and
telephone lines remotely. This progress, which could be rapidly implemented for all the staff, made
it possible to ensure a prompt and accurate management of the different requirements received
by the available customer service channels.
Among the new contact options, at the beginning of July we made available to the
customers the “Call manager” functionality, which not only allows customers to schedule online
the day and hour at which they will be contacted by phone, but also provides them with an e-
mailbox to attach the documentation required in each case. Between 600 and 1,000 daily contacts
were managed, with requests for new meters being one of the main required procedures.
With regard to the management of our Large accounts, during 2020 we strengthened the
segmentation of communications towards this segment. We implemented a new visual identity
system, with a different design as to images and content for Tariff 2, Tariff 3 and Official Accounts
customer categories.
This also implied the strengthening of contact channels, with a focus on the availability of
account executives, the exclusive customer service telephone line for each segment and the
enhancement of the digital channel.
Additionally, we implemented a differentiated customer service for real estate developers.
For that segment we appointed a specific customer service team, which will not only take into
account those customers’ needs and inquiries, but also cooperate with them in the carrying out
of their projects.
Finally, with the aim of increasing our customers’ level of satisfaction with customer service,
increasing both the capillarity and proximity to the customer, we developed a pilot test in two
totally self-managed customer-service points in the CABA and in San Miguel. These new spaces
called “edenor cerca” are part of the customer service integral improvement plan and are ready
to begin operating as soon as the ENRE gives its approval.
Each of them has state-of-the-art technology in place that allows customers to have their
inquiries, complaints, claims and procedures solved in a fast and autonomous way. In both of
them, the one located in the CABA and the one in San Miguel, customers may use the following
devices:
- On-site videos: personalized customer service with a customer service agent through
video calls for the management of commercial and technical procedures.
- Kiosk: Self-management of payments, claims and procedures in an easy and fast way.
San Miguel
CABA
edenordigital
The gradual migration process of our customers to digital channels that has been taking
place in the last few years accelerated with the closure of the commercial offices, which in addition
to the lockdown, changed customer habits as they had to resort to other channels for carrying out
procedures with the Company.
To cope with the accelerated digitization of customers, we implemented new developments
in record time to cover all our service-related procedures through the different channels.
Therefore, during the year we incorporated new procedures to achieve a 100% digital
management, such as:
- New meter request for T1 and T2 customer categories;
- SOS recharge request for self-managed meters (MIDE);
- New partial payment and payment plan installment options;
-
- Signing up for the digital bill.
Incorporation of payment with debit card;
Furthermore, with the aim of optimizing digital experience, we simplified customer
registration in the platform, extended the infrastructure for a better performance and incorporated
satisfaction surveys in each transaction.
Total transactions in 2020:
Note: (1) As of 12/31/2020.
In 2020, we also developed the “edenordigital premium” project, a tool for the exclusive
use of customers with smart meters. In addition to positioning edenor at the forefront of the
industry, the platform will provide those customers with the following benefits:
- More information on their (daily and hourly) consumption and statistics for decision making
on the use of energy.
- The capacity to manage their accounts in a comprehensive way.
With this initiative, the Company embarks on a transition from “digital” customers to “Smart”
customers, which allows it to open the window to the IOT (Internet Of Things) world. The Project
is currently in the testing stage, which is expected to conclude at the beginning of 2021.
Contact center
The other channel most used by customers is the contact center, and this was no exception
in 2020. The main challenge we had to face was to rapidly absorb all the procedures and
requirements that could not be channeled through the in-person channel, as well as all the
inquiries that arose due to the impossibility of making readings, as instructed by the ENRE. This
resulted in the rise in demand for the different channels that required an enormous flexibility and
speed. During the first 4 months of the lockdown, the contact center saw its demand increase by
35% and social networks by 167%.
To accompany this change in customer behavior, the following improvements were made:
- We increased the number of agents in the contact center;
- We unified the telephone lines of T1 customers and generated a new, single telephone
number (0800-666-1000) in order for them to carry out all types of procedures, including
inquiries about power outages;
- We doubled the telephony infrastructure;
- We increased the offer of administrative processes and procedures;
- We implemented the call back option, which allows customers, in the event that all
agents are busy with other calls, to book the time for us to call them back;
- We incorporated a new management platform for social networks and e-mail contacts.
Reorganization of teams | back office
In 2020, different tasks of the back office area were automated and consolidated, which
allowed us to satisfactorily meet the rise in demand for procedures, inquiries and claims through
digital channels.
The number of procedures initiated in edenordigital increased 90% compared to the pre-
pandemic period. Nevertheless, edenor was able to respond to customers’ requests within 3 days
upon submission thereof.
D E L I N Q U E N T P A Y M E N T S
The impact of the closure of the in-person payment locations usually used by customers
(external agencies and the company’s own commercial offices) as well as the impossibility of
carrying out field actions (service suspension and cutoffs) impacted the Company’s numbers
negatively.
Delinquent payment values grew 130% as compared to 2019. In this regard, the steps
taken by collection agencies, which, through different channels, kept customers permanently
informed about their outstanding balances and the authorized payment locations where they
could pay their debts, were a determining factor.
Additionally, we continued with the e-mail marketing proactive campaigns addressed to
customers with early delinquent payments. With regard to Large Accounts, more than 17
thousand personalized calls were made, which prompted payment by thousands of customers of
this segment.
Moreover, taking into consideration our customers’ economic situation as a consequence
of the pandemic, we offered more flexible methods of payment and extended debt financing
possibilities. In addition, we incorporated a channel for bank transfers, facilitating Large Accounts’
transactions.
Development of the delinquent payment balance in average days delinquent (includes all
rates)
Development of delinquent payment balance in
average days delinquent (includes all rates)
26,7
11,36
2017
13,89
11,64
2018
2019
2020
R E A D I N G
As we have previously mentioned, meter reading was not initially deemed an essential
activity when the ASPO was implemented; therefore, readings could not be conducted for nearly
one billing period. As from May, they were included in the list of authorized activities and meter
readings were resumed.
Due to the regulatory authority’s directive, there was a two-month period during which the
consumption of all customers was estimated, a situation which in a normal context only occurs
exceptionally.
Although the Company had never been faced with a similar situation as to the number of
estimated readings, we could minimize the impact using historical consumption formulas and
making adjustments in the cases with significant changes in customer behavior.
Of the 3 million total customers whose consumption was estimated, less than 0.7% of them
filed claims, which were timely and properly resolved.
B I L L I N G
In the billing area, processes and teams were reviewed and reorganized, innovations were
introduced in alternative circuits, and six (RPA) robots were developed and implemented in the
billing processes of T1 customers category, which helped improve billing times, optimize available
resources, reduce errors and improve quality.
We developed an intensive campaign to promote sign-ups for the digital bill, which resulted
in more than 450 thousand Tariff 1 customers signing up for the digital bill and more than 14
thousand Tariffs 2 and 3 customers receiving their bills by e-mail on a monthly basis.
C O M M U N I C A T I O N W I T H C U S T O M E R S
Communication played a pivotal role that allowed us to maintain a more constant and closer
relationship with our customers. Changes in the way in which procedures were to be managed
as well as information on new developments were periodically communicated through our main
channels: e-mail marketing, website www.edenor.com (with an exclusive section with all the
necessary information to help our customers during the lockdown), social networks, and
edenordigital. We also used the mass media for institutional campaigns.
The main campaigns conducted in this year were:
• Good energy: Energy to be united, always
In February, we launched a campaign called Good energy, whose objective was to show
the improvement recorded in some quality indicators, such as the reduction in the number of
outages associated with the Investment plan.
This campaign was present in the print media, public spaces, radio spots and in social
networks.
Its continuity was affected by the arrival of the pandemic and the measures taken thereafter
that forced us to focus on the communication of Edenor’s management-related issues with the
aim of keeping customers informed about the continuity of customer service.
• The best Argentine energy
By mid-2020, the “The best Argentine energy” institutional campaign was conducted, aimed
at giving continuity to the “Good energy” campaign. In this case, the campaign focused on
communicating that edenor is a private and Argentine company that invests in the country, that
generates quality employment and that is committed, on a long-term basis, to service quality.
The campaign was present in cable television, newspapers’ portals, social networks, radio
and digital media.
• Consumption
In November we launched the “Consumption” campaign, which consisted of a series of
communication actions addressed to residential customers, in order to both educate them about
Edenor’s mode of meter reading and billing and, at the same time, raise awareness of electricity
use and savings.
Furthermore, e-mail marketing targeted communications were sent with specific messages
to customers whose consumption trends showed an increase in the summer season.
Finally, recommendations for controlling energy consumption and making an efficient use
thereof were provided, with a focus on cooling and heating appliances.
• Digitization
Due to the special context we are facing worldwide, in 2020 digital procedures
predominated. The “Stay home” concept was installed in society and measures were promoted
to prevent people from going to crowded places and thereby avoid the spread of COVID-19.
Backed by this situation, in edenor, we continued focusing on digitization, offering every
day more and better digital tools so that our customers can manage service-related issues from
the safety of their homes.
Throughout the year, we promoted the use of edenordigital, our online office, which is
available 24 hours a day, 365 days a year at edenordigital.com or its version for mobile devices.
Through this platform, customers can visualize and pay their bills, carry out the main
procedures or request technical service.
Furthermore, we added new functionalities to our consumption simulator.
Through simulador.edenor.com our residential customers can calculate the approximate
cost of their bills by simulating the use of their appliances.
By doing this, it is possible to have a clear idea of the cost of electricity and the importance
of its smart use.
MIDE CUSTOMERS
Energy integrated meters (MIDE) allow customers with irregular income to adjust their
electricity purchases and improve the management of their consumption.
In 2020, in the wake of the pandemic, Edenor made available an SOS recharge to those
customers who had difficulty making the recharge as a consequence of the lockdown. This
ensured the availability of their electricity supplies during the mandatory and preventive social
isolation without leaving their homes.
By the end of 2019, only 7.46% made virtual recharges. In 2020, 32.51% of MIDE
customers made at least one online purchase, thereby verifying the agility, convenience and
safety of recharging their electricity meters.
In order to become fully aware of this segment’s perception and level of satisfaction, in the
second half of 2020 customers with self-managed meters were surveyed to find out about their
user experience.
The results show that 65% of customers are satisfied or very satisfied with MIDE meters.
Level of satisfaction of MIDE customers
On a 1 to 5 scale, where 1 is not at all satisfied and 5 is very satisfied
Furthermore, among the most significant aspects, it stood out that 81% of customers
believes that the MIDE meter is easy to use, and 69.5% affirmed that it allowed them to control
their consumption and reduce electricity costs.
SOCIAL NETWORKS
The Company’s profiles in social networks became strategic communication channels after
the adaptation of online contents to the situation faced by the society and our customers as a
consequence of the pandemic and the ASPO.
Therefore, Facebook consolidated as the informative social network for our customers,
whereas Twitter made it possible to provide journalists, stakeholders and the media with
information on sensitive topics. LinkedIn, became Edenor’s natural channel as “employer brand”,
to search for new professionals and disseminate actions related to good human resources
practices, corporate social responsibility (CSR), investments and institutional actions.
As of December 31, 2020, edenor had 247,952 followers on the three social networks,
which represents an increase of 28.7% compared to 2019, to wit:
- Facebook: 142,738
- Twitter: 55,249
- LinkedIn: 49,965
CUSTOMER SATISFACTION
Customer satisfaction is a key factor to assess the organization’s global performance and
help evaluate management efficiency and improvement plans, putting the customer at the center.
Year after year, with the aim of identifying customer needs and expectations, we conduct
different studies about our image, service, customer service, requirements and customer
expectations.
Included among them are those that have been historically conducted, such as the general
satisfaction survey, as well as the new studies and methods that have been incorporated to
become familiar with the customer.
In this regard, different surveys were conducted:
General Satisfaction Survey
The General Satisfaction survey is conducted annually, since 1993, with the aim of
becoming aware of the customers’ opinion, taking into account that they could have or could have
not actually been in contact with the company. It is the way they perceive the different aspects of
the service, evaluating the organization’s global performance.
In 2020, residential customers’ satisfaction stood at 82.1%, which represents one of the
highest values of the last 10 years, with a positive increase of 5.8% as compared to 2019.
1.
General Satisfaction Level
2.
General Satisfaction broken-down by tariff segment
Image Study
In 2020, the third edition of edenor’s Image and Positioning study, addressed to the people
living in the Buenos Aires Metropolitan Area (CABA and Greater BA), was conducted.
This study allows us not only to become aware of our customers’ satisfaction with the
service, but also to identify their main perceptions about the electricity sector, along with their
level of brand knowledge and assessment.
Among the different attributes customers expect to find in an ideal utility company, together
with those the Company has, those that increased the most were that edenor is a company that
generates employment, that provides a good service and that is innovative.
Transactional Studies
Since 2018, transactional surveys have been conducted to understand and analyze
customer satisfaction after an interaction with the commercial offices, one of the main points of
contact the Company had until the beginning of 2020.
Due to the special context we are facing worldwide, digital procedures had a predominant
role in 2020, with our online office edenordigital becoming a key channel for our customers. This
is why we incorporated an in-app transactional survey after customer interaction has been
completed.
The results showed that more than 4 out of every 5 people who used edenordigital are
satisfied or very satisfied with its use, reaching more than 81% of respondents.
Furthermore, it stands out that 86.28% was able to carry out procedures successfully and
59.13% would recommend the use thereof to friends or relatives.
Focus Group
On this occasion, the purpose of this qualitative study was to understand and become fully
aware of the MIDE customers’ situation, their relationship with the consumption of services, the
valuation of energy, its use, cost and impact on household economy.
Among the main conclusions, it stood out that the MIDE was a solution for the majority of
these users, as they have irregular incomes and, therefore, cannot afford the monthly billing of
the service. The customers also pointed out that the MIDE allowed them both to have greater
control over their electricity consumption, and to administer the recharges according to their
households’ electricity needs.
Additionally, they highlighted the advantage of having the service recorded in their names,
as this provides them with a proof of address that can be used for other issues and rectifies their
situation of informality.
Furthermore, the implementation of the MIDE taught them which appliances use the most
power, and, more than anything else, they valued the sense of predictability and the control they
had over expenses.
The ease of use and recharge contributed to customer satisfaction and acceptance of this
new modality.
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 79 HV/HV, HV/HV/MV
and HV/MV transformer substations and interconnections with HV customers, which represents
19,199 MVA of installed capacity and 1,538 kilometers of 220 kV, 132 kV and 27.5 kV high-voltage
networks. The MV/LV and MV/MV distribution system is comprised of 18,607 transformers, which
represents 9,078 MVA of installed capacity, 11,687 kilometers of 33 and 13.2 kV medium-voltage
lines, and 27,636 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:
Kilometers of transmission lines
26.549
26.808
27.118
27.505
27.636
10.437
10.742
11.054
11.454
11.687
1.452
1.462
1.527
1.529
1.538
2016
2017
2018
2019
2020
Alta tensión
Media tensión
Baja tensión
Installed Power (MVA)
7.668
7.791
8.428
2016
8.035
8.271
8.728
2017
8.404
8.755
9.028
2018
8.817
9.171
9.078
9.371
9.828
9.828
2019
2020
AT/AT
AT/MT
MT/MT y MT/BT
I N V E S T M E N T S
Investments made in 2020 amounted to ARS 10,039 million. 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 achieve them,
different protocols and organizational forms had to be adapted as a consequence of the COVID
situation, in addition to the temporary delays suffered due to the fact that Electric Power Works
had not been originally included among the activities deemed essential at the beginning of the
ASPO.
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 the increase of capacity, the installation of
remote control equipment in the medium-voltage network, the connection of new electricity
supplies, and the installation of energy meters suited for prepaid sales.
Furthermore, we continued making investments aimed at the protection of the
environment and public safety.
In comparative terms, the level of investments has increased over the last few years. The
development thereof is detailed in the following graph:
INVESTMENTS
(in million of ARS)
7.611
8.624
10.039
4.137
2017
2018
2019
2020
In 2020, investments went to the following accounts:
794
2.686
Main works performed
(in millions of ARS)
HV Network Structure
3.594
MV Network Structure
LV Network Structure
Network improvements
Systems, land and buildings,
furniture / equipment & other
1.853
1.112
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 II, Matheu III, Parque Pilar and Zappalorto local thermal power plants;
additionally it exchanges energy with other companies at transmission, distribution and distributed
generation level.
With the aim of improving the quality of the service and meeting the growth in demand,
we made significant investments in the HV network, among which the following are worth
mentioning:
▪ Putting into service of two capacitive compensation banks of 220 kV and 117.7 MVA
each in Rodriguez Substation, with it being the first installation of this type in the
country
▪ Replacement of a 9 km-long section of a 132 kV oil-paper cable with an XLPE-type
dry cable in the electrical transmission line that links Malaver and Munro Substations.
▪ Putting into service of both the 132 kV busbars of José C. Paz Substation and the
first stage of the works to link that substation’s network with Morón – Matheu
Substations’ 132 kV electrical transmission lines. The second stage of the project is
expected to be put into service in the second quarter of 2021.
The works to replace with an XLPE-type dry cable the 132 kV oil-paper cable in the
electrical transmission line that links Puerto Nuevo - Austria Substations continued. These works
are expected to be put into service in 2021.
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 40 MVA Libertad Substation with two new 132 kV
electrical transmission lines for a total length of 0.24 km that link this substation to Zappalorto
and Merlo Substations;
▪ Putting into service of a new 132/13.2 kV - 80 MVA transformer in José C. Paz Substation;
▪ Replacement of a 132/13.2 kV - 40 MVA transformer in Colegiales Substation with a 132/13.2
kV - 80 MVA transformer;
▪ Completion of installation works of the new 13.2 kV switchboards in Ramos Mejía Substation,
thus completing remote control in the totality of medium-voltage disconnectors in Edenor’s
Substations, in addition to normalizing the network’s structure.
▪ Completion of installation works of the 13.2 kV switchboard in Matheu Substation.
The works related to the new 132/13.2 kV 2x80 MVA ARA San Juan Substation and the
132/13.2 kV 2x40 MVA Oro Verde Substation continued. These works are expected to be put into
service in 2021.
D I S T R I B U C I O N S T R U C T U R E
Works performed:
Installation of 37 new feeders in new and existing Substations;
▪
▪ Closure between MV feeders of Substations and installation of 281 new MV/LV
transformer centers and 516 power increases, which resulted in a net increase of
installed capacity of 241 MVA.
N E T W O R K I M P R O V E M E N T S
The improvements made comprised all voltage levels. The most significant ones are
detailed below:
▪ HV network: replacement of bushings in 500/220 kV, 220/132 kV and 132/MV kV
transformers. Continuation of the replacement plan of metering transformers.
Replacement of 132 kV and 220 kV circuit breakers/disconnectors, and of 132 and
220 kV line protection switchboards;
▪ MV network: replacement of disconnectors in substations and installation of internal
arc protections in switchboards. Significant replacement of old technology
underground network, change of medium and low-voltage transformers, and change
of pieces 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 2020, and as already 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.
Among the main operation and maintenance-related activities carried out throughout 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
✓ 4,470 MV line poles, 28% of which were replaced by reinforced concrete
columns.
✓ 52,349 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, 204,881 trees were pruned or trimmed.
✓
▪
Inspections in distribution networks
✓ 5,176 Km of MV networks.
✓ 16,750 Km of LV networks.
✓ 4,752 inspections of Transformer Centers.
✓ 2,152 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 5,600 tasks, which include 1,194 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
✓ 35,715 installations of new electricity supplies
✓ 42,218 delinquent payment-related electric actions
✓ 517,651 energy recovery-related inspections in T1 customers
✓ 22,805 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
✓ 2,692 LV underground splices
✓ 2,731 MV underground splices
▪ Operational adjustments due to the pandemic
Adjustment of job posts, ways of working and protocols. Creation of a new backup
control center room to operate safely and protected in the context of the COVID
pandemic.
Compliance with maintenance and investment plans, maintaining the operational
capacity at all times in spite of the restrictions and limitations caused by the
pandemic.
▪
Implementation of the new SCADA
Progress was made on the implementation of the new SCADA and the new IDMS
that will become operational soon.
▪ Diagnosis center
Extension of the diagnosis center’s functions to include incident follow-up of
customers who are dependent on electricity for medical reasons, large accounts and
sensitive customers.
▪ Centralization of administrative activities
Centralization of the administrative activities performed in regions and areas, which
made it possible to unify and optimize the operating back office’s processes.
▪ Effectiveness Project
Making of an integral diagnosis of operational processes and their nexus, which
resulted in eight proposals to improve the effectiveness of actions, triggering work
plans for their implementation.
▪ Operational Back Office Project
Progress was made on this project aimed at optimizing indirect labor, which resulted
in 63 process automation or centralization initiatives that are currently being carried
out with different levels of progress.
▪ Response to outages reported at night
Operational capacity during nighttime hours continued to be extended to 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.
▪ Vehicles managed by the mobile teams themselves
The use by the operational staff of the Company’s self-managed vehicles was
intensified, reducing readiness and transfer times from their domiciles to places of
work on streets and public spaces.
▪ Energy theft
✓ 25,466 “MIDE” self-managed meters installed, 24,492 of which are
currently enabled, reaching 208,203 enabled MIDE meters in the entire
concession area.
✓ Continuation of specific control operations
residential
neighborhoods and gated communities. Due to the context of the
pandemic and the regulator’s requirements, the number of control
operations planned for 2020 could not be met.
in some
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 2020, 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:
✓ 581 new remote control operational points in the MV distribution network, achieving a
total of 2,294 over the existing 1,600 MV feeders.
✓ Incorporation of 180 remote supervision points in the MV network.
✓ Commencement of an adjustment and improvement plan in large customers’ points of
supply with remote control and automatism.
✓ Commencement of an inspection and adjustment plan of protections in the MV
distribution network (outside Substations).
✓ Extension of the application of IT Security concepts in the remote control networks of 5
substations. At present, 44 remote control pieces of equipment in substations are
protected against cyber-attacks.
✓ Synchronism correction of the remote control system in 42 substations, achieving
completion in all of them.
✓ Technology renewal of the remote control equipment in 4 substations.
✓ With the remote control implementation achieved both in substations and the MV
distribution network, one out of three switching operations was performed from a
distance by remote controls.
✓ The availability of remote operations in Edenor’s control center was of 99.93 %.
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.
▪ Further extension of LLW (Live line working) capacity. Six new LLW light teams,
comprised of two members, are expected to be formed in 2021 in order to avoid
interrupting the electricity supply due to maintenance tasks in the MV network.
▪
Implementation of “Section breakers” in MV lines, which allowed for the carrying out
of maintenance works in 279 live circuit breakers without cutting off the supply of
electricity to customers.
▪ Commencement of the procedure that will allow for the replacement of poles and/or
columns with LLW techniques.
▪ Commencement of the procurement process for the acquisition of an equipment with
a medium-voltage flexible cable called “Big Jumper”, which, through LLW
techniques, will allow for the bridging of up-to-300 meter-long MV network sections
without interrupting the supply.
▪ Maintenance of the interdisciplinary working group for the “Follow-up of status and
identification of fault patterns in HV metering transformers” with the aim of routing
maintenance and replacement tasks based on results. This group, jointly with
Transener’s technical staff, incorporated under its control the risk matrix of HV
transformers’ bushing insulators.
▪ The working groups with Transener’s technical staff, which had been implemented
in 2018, remained active.
▪ Replacement of 124 HV metering transformers and of the totality of silicon carbide
surge arresters with zinc oxide ones.
▪ Hiring, for the first time, of a DRONE service provider to overfly and thermograph a
HV three-phase double circuit line, achieving very good results. The incorporation of
this technique in the maintenance of our network is currently being analyzed.
▪ Replacement of the totality of bushings in 9 transformers, (five 300 MVA units, three
80 MVA units and one 40 MVA unit).
▪ Replacement of 37 MV disconnectors, in line with the objective of completely
removing PVA technology from our facilities.
R E S E A R C H A N D D E V E L O P M E N T
▪ The paper “Digitization of the electricity network in Edenor” was presented in the 4.0
International Congress on Industry held in Buenos Aires.
▪ A paper on the use of artificial intelligence to accurately estimate the amount of
energy consumed by customers in a specific period of time was presented in the
CIGRE congress held in Toronto.
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
In 2020, based on our operational needs, the fleet was increased compared to the previous
year, amounting as of December 31, 2020 to a total of 1,487 units.
We acquired 88 brand-new units and began to prepare the Company’s first two pickup
bucket trucks. Additionally, we began to use the multifunctional hydraulic crane in the field. The
acquisition process of 12 insulated bucket trucks with a working height of 15 meters was initiated.
Furthermore, we continued improving the vehicle maintenance application. At present,
each user can visualize the repairs on his entire fleet. The number of our internal customers also
increased from 350 to 2,177.
We developed inspection processes by means of digital control forms to be used in the
vehicle maintenance application, making it possible to ensure the quality of the repairs.
Improvements were made to the mechanical maintenance contracts to make repair
processes more fluid, and smart fuel controller boards were developed.
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 seventh 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 2020.
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:
As can be seen in the annual development of these indicators, the significant decrease
recorded in the interruption frequency indicator, as compared to the previous year, was reflected
in a similar proportion in the total interruption duration indicator. As it has already been mentioned
in other occasions, investment actions in distribution networks, and their ripening over time, often
lead to a decrease in the frequency indicator. This effect also carries through to the total duration
indicator even when average interruption duration remains practically unchanged.
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.
Voltage and disturbances measuring campaigns were suspended by the end of March
2020, by virtue of the provisions of ENRE Resolution 3/2020 in the framework of section 1 of DNU
297/2020, which provided for the “Mandatory and Preventive Social Isolation”. It is expected that
those campaigns will be resumed when so provided for by the ENRE.
Affecting the customer (*)20162017201820192020SAIFI (number of times)8,679,026,946,154,64SAIDI (hours)25,8427,5522,6515,9412,23(*) Rolling Annual Rate at December of each year.
T E L E C O M M U N I C A T I O N S A N D I N F O R M A T I O N
T E C H N O L O G Y M A N A G E M E N T
The context of the pandemic undoubtedly accelerated the transformation that the Company
had already been promoting throughout the last few years by making profound changes in
technology, business processes and the culture of work.
Our Digital Transformation strategy was challenged and encouraged at the same time in a
very special environment. This context gave us the opportunity to propose and implement
substantial changes to adapt ourselves to the new real.
In this regard, immediately after the mandatory and preventive social isolation (ASPO) was
implemented, we were able to mobilize more than 1,700 employees so that they could continue
working from home. It is worth pointing out that both the technology infrastructure and the high
digital maturity of business processes allowed the Company to continue operating with no
disruption whatsoever.
2020 was the year in which we strengthened the area’s strategic role, promoting new ways
of operating with the incorporation of cutting-edge technologies and new ways of working.
Thus, we continued adding and developing new digital capabilities and deepening the
consolidation of our information, technology and business processes strategy.
D I G I T A L A R C H I T E C T U R E
Data management is one of the enablers of the transformation we are pursuing. Becoming
a data-driven company implies that we must have a foundational architecture in place to support
it.
In that regard, we designed the new Big Data & Analytics reference architecture, which
offers a technology and best practices-based framework that will enable us to take advantage of
the benefits of advanced analytics, while strengthening information security and processing
capacity of large volumes of data. Implementation thereof will begin in 2021.
We also continued consolidating the application integration platform we had implemented
in 2019, migrating new operational and commercial circuits to the Red Hat technology.
It is noteworthy that, as a result of these works, the Company was awarded the Red Hat
Innovation Awards 2020, participating among nearly 60 companies worldwide.
I N N O V A T I O N , P R O C E S S E S A N D I N T E G R A T E D
M A N A G E M E N T S Y S T E M
The consolidation of the practice of Management by Processes was accompanied by the
implementation of several process analysis and redesign projects, among which the following
stand out: New Supplies, Sales of Services and Collection Management. All of them were
accompanied by the required technology components and by role and organization adjustments.
Furthermore, the Integrated Management System (IMS) has been successfully recertified
under ISO 9001 and 14001/2015, and OHSAS 18001/2007 standards.
With regard to the automation of processes, new transactional robots (RPA) were added
for the analysis of files, recovery calculation and energy rebilling. With these new robots, we were
able to achieve the recovery of ARS 20 million per month.
The way of working during the pandemic required a higher and better level of digital literacy.
To that end, we launched an online space called “Café en red” (Online Café), whose objective is
to bring technology closer to our new employees and accompany them in their use. Throughout
more than 30 editions, we were able to get 3,200 employees to participate in that space. In 2021,
we will continue developing it.
In terms of innovation in ways of working, we made progress with the development and
incorporation of agile methodologies across the organization under the “Scrum” framework. We
are convinced that these collaborative and multidisciplinary methods accelerate the production of
“value deliverables”. In that regard, we have 5 teams underway and 50 people were trained in
both scrum master and product owner.
Finally, as part of the Service Center launched in 2019, we launched the new “Edenor
Soluciones” portal, a space of interaction that allows technology users to channel and follow up
their requirements and services. In 2021, this portal will be used to channel other areas’ internal
requirements.
C O M M E R C I A L P R O C E S S E S
The restrictions imposed in the first phase of the ASPO through the Regulatory Authority
meant, among other things, the closure of the commercial offices, the need to estimate readings
and the granting of payment facilities to avoid shutting off the service due to delinquency in
payment. As a consequence of these changes, several systems and applications of the
commercial cycle had to be adapted.
One of the main axes in the Digital Transformation strategy is the digital interaction with
our customers. During the pandemic, digital channels played a predominant role and the modern
platforms of both Edenor Digital and the contact center, implemented in 2019, were able to
successfully meet the increase in both customers and transactions.
With regard to Edenor Digital, we extended its scope, adding the possibility of carrying out
new procedures, such as that concerning new supplies, and making payments through new
channels, such as debit cards and e-wallets.
We also doubled the contact center‘s channels capacity and adjusted it so that agents
could work from home. At the same time, new modules for the management of social networks
were put into operation.
With the new context we had to adapt our reading and billing system (Oracle CC&B) in
order to be able to process estimates, adapt the distribution of bills and manage delinquent
payments with different behavioral and situational segmentation models.
We also implemented an online appointment scheduling platform so that customers can
book the time either to go to the commercial offices (when they are reopened to the public), or to
receive telephone assistance from customer service agents.
As for the medium and large customers segment, we finished developing the prototype of
a new digital interaction platform, which will be launched in a first phase in 2021.
T E C H N I C A L A N D O P E R A T I O N A L S U P P O R T P R O C E S S E S
The smart electricity network is another of the axes of the Company’s Digital
Transformation. In that regard, we were able to install more than 3,500 smart meters in the
medium and large customer segments, using components of the smart metering architecture
developed last year.
Furthermore, we were able to remotely control more than 2,200 transformer centers, many
of which are connected through our own optic fiber network, whose length this year reached 2,500
kilometers, comparable in size with some local telecommunication companies.
The implementation project of the new ABB SCADA, which is at the final stage, continues
to progress and is expected to be implemented in the first months of 2021.
With regard to the management of fraud and technical losses, we developed and
implemented the first phase of a new energy balance system.
Additionally, we began to develop micro-balances of energy in more than 23 gated
communities, proactively detecting potential fraud.
Moreover, we implemented a mobile app so that the street crews can report nearby fraud.
In addition to this, we continued strengthening the non-technical losses predictive model,
based on machine learning.
With regard to supply management, we optimized the planning of those supplies that are
critical for the Company (meters, switchgears, transformers), by means of a new SAP supported
supply planning process. Thanks to this, improvements were achieved in both the availability of
supplies and the control and monitoring of stocks, optimizing the logistics chain with the
incorporation of real-time alerts of critical indicators.
D A T A
The data-based decision-making process benefitted from the consolidation of the Data Lab
(multidisciplinary team to resolve use cases) and the development of new analytics and self-
service advanced models.
This being the case, the machine learning-based predictive maintenance model for
medium-voltage faults, which began to be developed last year, achieved more than 80%
effectiveness. In view of that, we also began to develop a predictive maintenance model for high
voltage and are making progress with the development of a smart demand forecasting model.
Additionally, we generated data analysis dashboards and models for the management of
ENRE curves, the regulatory capital base, the reconciliation of supplies, the follow-up of
purchases, and the optimization of contacts, among others.
C Y B E R S E C U R I T Y
In accordance with the cybersecurity program launched in 2018, and taking into
consideration the criticality of this issue during the pandemic, the risk related to remote working
and the more than 21,000 devices we were able to connect to our network, we reinforced certain
chapters of the program, such as, for example, the Incident response plan and Raising
cybersecurity awareness at all levels of the organization.
In that regard, we performed a simulated computer attack to adjust response variables in
the event of these unexpected situations.
Additionally, we implemented the new security model for the new SCADA system, which
will be implemented soon.
Finally, we enabled the technology capabilities in order that more than 2,500 people could
connect through a new VPN platform, managing the necessary access to ensure the continuity
of the business and monitoring the infrastructure, the applications and the networks.
I N F R A S T R U C T U R E
Adjustments and new service and infrastructure monitoring activities were made to and
carried out in the entire platform that supports Edenor Digital, CC&B, MIDE, external collections
and the IVR, which allowed for the real-time measurement of performance and the achievement
of a 99.81% average availability of customer digital platforms and applications within the
Company.
We increased the installed capacity by 50% to support the growth of digital channels
(edenordigital, Corporate Website, payment hub, etc.).
Furthermore, smart meters monitoring activities were implemented, which make it possible
not only to identify errors in communication and meter readings before the closing of the billing
cycle (large customers) but also to ensure the reading for the balance in the purchase of energy.
We implemented a new storage platform (Dell PowerMax) that increases application
performance by 30% and improves user experience. A new RHEV virtualization farm, which also
improves the general performance and supports the future growth of applications, was also
implemented.
In order to also ensure a fluid and effective communication among our people, we
implemented and distributed collaborative tools such as Microsoft Teams, Cisco Webex and
Cisco Jabber, which resulted in about 20 million chats and 350 thousand virtual meetings in 2020.
Finally, we continued to make progress with the implementation of the new data backbone
project, which will be completed in 2021.
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 Company’s payroll at the end of 2020, amounted to 4,776 employees. The following
graph shows the breakdown thereof:
Payroll as of 12.31.2020
888
549
Production
Management
Non-unionized
employees
3.339
With regard to the incorporation of personnel, in 2020 we adapted our recruitment, selection
and onboarding process to a virtual environment, which allowed us to continue incorporating
talent into the different areas, where we externally covered more than 80 vacant positions. In this
year we have incorporated a significant number of technology profiles that joined the Company
to promote the digital transformation process.
In turn, through our Programs, we incorporated 32 Young Engineers, 10 Young
Technicians and 17 Interns, who have begun their professional development path in edenor.
Furthermore, 39 positions were filled through the Internal Recruitment Program, with which
we continued promoting internal mobility, to invest in our employees’ development and their
integrated perspective.
Additionally, we continued with our plan aimed not only at building relationships with
universities and high schools that are key to our positioning as employer brand, but also at
strengthening alliances that allow us to invest in technical training and offer labor opportunities.
In this regard, we conducted workshops on first employment, addressed to students in the final
year of schools within our concession area; participated in digital job fairs; and offered talks with
experts to students and university graduates.
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,
the Company continues
into several Memoranda of
Understanding with the aforementioned unions with the purpose of improving productivity,
efficiency, and integral application of the multi-tasking and multi-professional approach in the
development of the tasks of personnel posts to increase the quality levels of the service provided
to customers, in addition to the signing of collective-bargaining wage agreements.
to enter
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.
With regard to the changes generated by the COVID-19, edenor complied with all the
measures set forth by the different governmental bodies, developing and applying the required
work protocols.
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 agreement entered into in 2019
continued to be in effect through January 2020. Furthermore, a new collective bargaining
agreement, effective until December 2020, was signed, which includes compliance with wage
guidelines set forth in Executive Order No. 14/2020 of the Federal Executive Power.
At the date of issuance of this Annual Report, there is no certainty about future collective
bargaining agreements.
C O N T R O L O F T H I R D C O M P A N I E S
In edenor, we are committed to monitoring compliance with labor, social security and safety
and health-related obligations by the companies that provide services under the terms of section
30 of law 20,744.
In order for this objective to be achieved, the service companies hired by edenor must
submit on a monthly basis the documentation that proves their compliance in due time and proper
manner with the requirements imposed by the law in relation to their business activities and
personnel.
Additionally, in pursuit of the continuous improvement and the implementation of new
technologies, we developed a digital platform in order for the companies to provide information
on a daily basis about the tasks assigned to their staff, together with the names thereof and the
place within the concession area where such tasks will be carried out, provided that compliance
with such staff labor obligations has been previously verified.
With regard to the actions taken as a consequence of the COVID-19, all contractors were
required to continue providing the services, to submit the work protocols approved by those
responsible for their health and safety regulations, and to ensure compliance with all the
measures taken by the different bodies.
T R A I N I N G A N D D E V E L O P M E N T
In 2020 we developed the TO BE a technician of 17 new technical areas, thus completing
since the Program was launched 27 tasks, including among them more than 250 videos/pílls on
technical instructions. The training courses on New Supplies, DIME (Market Discipline) T1, T2,
T3 and HV/MV Power Lines Repairs were attended by 1,724 people from the Distribution areas.
As for the Transmission area, 207 people participated in the training courses on Capacitor Bank,
HV Thermography, Bridging of Circuit Breakers, HV Profiling, Cleaning of Circuit Breakers, and
HV Delivery in Substations. 3,707 people have participated in the project since it was launched.
This high added value project contributes to the building of standards of excellence for
the service provided by edenor to its customers. Getting the tasks done right the first time, with
quality, with confidence and efficiently, in the end translates into a better service for our
customers. The tasks comprise the preventive and corrective maintenance and operation of the
Company’s low, medium and high voltage network.
A key achievement of the Project is to have coordinated efforts among the different areas
in order to share, transfer and get feedback on technical knowledge, ensuring a process of
improvement and sustainability.
Additionally, we began to design and facilitate different topics, giving priority by stages to
those that are key and with massive reach, which were structured as follows:
Stage
Module
Regulatory aspects
Different customer procedures
Indicators Management
Digital means
Technical aspects
Delinquent payments
Billing
New Supplies
Reading
Systems knowledge (e.g. CC&B)
1
2
3
4
This initiative comprised 2,987 hours of training provided through Webinars and e-learning
formats.
Furthermore, we began working on “Knowledge Management – Technical Department”
with the design of the Substations Design Program jointly with such Department. Its main
objectives are:
• To develop a HV Substations Project guide, taking into consideration all of edenor’s
particular requirements and documenting the experience acquired in already
implemented projects.
• To train with this material the new generations of project designers, young
professionals and the staff of the different operation areas related to the operation
and maintenance of these facilities.
• That the developed material be used as an introductory reference guide and as the
basis for new updates as we make progress with the technology renewals we will
apply in new works.
The Program has 5 sections with 2 chapters each. The material of sections 1, 2 and 3 was
developed and training on Section 1 was given.
With regard to training activities in general, the context of the pandemic, challenged us to
implement new virtual and online learning methodologies, as well as to provide facilitators with
the necessary tools in order for them to be able to give training successfully. As a consequence
thereof, in 2020 the hours of training received by our own personnel amounted to 69,394.
With regard to Promotions, in 2020 we continued making development-related interviews
promoting the filling of positions that imply a more complex role and with greater responsibility
than the positions held by prospective candidates, with internal candidates. The objective is to
generate opportunities for employee development based on merit and professional excellence,
with the aim of achieving organizational objectives through motivation and job satisfaction. 81
employees were promoted.
For the sixth consecutive year, we carried out the “Leaders Program” –whose format was
adapted to a virtual environment-, which consisted of different E-Learning modules that explored
edenor’s pillars, including theory and practical activities. Additionally, three Webinars -addressed
to Supervisors, Leaders, Chiefs, Assistant managers and Managers- were given with the
participation of different speakers who based their talks on edenor’s model. More than 600
participants attended these Webinars.
Among other development-oriented initiatives, we conducted 10 virtual workshops on
“Development Experiences”, which were attended by more than 100 participants, among
Specialists, Leaders and Chiefs, and whose main objective was to create spaces for conversation
about development and self-development in the Company, as well as to share the existing
projects and practices in connection therewith.
As for the “Performance Management Process”, Chiefs and Supervisors participated in
the elaboration of Performance Improvement Plans for the employees incorporated through the
Young Engineers or Young Technicians Program, who in 2019 had been evaluated with a below
expectations grade. Furthermore, in order to continue intensifying the adoption of the process by
the Operations Department, 7 Performance Management Workshops were given. The
workshops, which were addressed to Managers, Assistant managers, Chiefs and Supervisors,
aimed not only at reviewing the stages of the process, roles and characteristics, but mainly at
achieving both a deeper understanding of the Assessment stage, and, especially, a unified
assessment criteria.
Finally, we worked on a talent identification and action plan definition process to
accompany the transformation of the Information Technology and Telecommunications
Department leaders. We surveyed competencies through development interviews, online tests
and 360-degree feedback evaluations. Additionally, the “People Review” exercise was done to
assist in human resources planning according to the organization’s challenges, identifying
potential successors for different management-level positions.
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 2020 we continued improving and incorporating new functionalities to the
“integrated” human resources management platform, launched in 2017. It 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.
O C C U P A T I O N A L H E A L T H
In the sanitary context brought about by the health emergency due to the Covid-19, the
Human Resources Department and, particularly, the Occupational Health area, worked on
different actions aimed primarily at taking care of our employees
By the end of February 2020, a Crisis Committee was set up comprised of the different
Departments, whose objective was to assess the measures to be taken and define a plan for the
permanent continuity of operations. The Committee was advised by medical experts in the field
who validated different protocols, measures and recommendations for all staff members, which
were also submitted to the relevant regulatory bodies.
Staff in at-risk groups were exempt from the carrying out of in-person tasks, and the work-
from-home way of working was implemented for all those who could perform their duties without
being physically present at the workplace. For staff members who had to continue carrying out
in-person tasks in the electricity network, several organizational and health and safety prevention
measures were taken.
Furthermore, a series of talks on topics of interest in the current context was launched with
the aim of keeping our population informed and accompanied. The Healthy Energy program was
launched, incorporating the development of weekly workshops to improve the quality of life,
focusing on education and the adoption of healthy habits, covering from food aspects to the
incorporation of physical activity habits, seeking to reduce and even avoid the risk of infection of
COVID or other related diseases.
To support all these initiatives, a Medical Epidemiological Assessment Questionnaire was
implemented to be uniformly used within the medical services and to set the parameters of virtual
or in-person interviews of staff members with suspected symptoms or with close contact. A
COVID platform was developed in order for the different leaders to be able to not only report to
the medical service the cases with symptoms and contacts in their teams, but also follow up the
development of each of the reported cases in the same portal.
Finally, in the month of December a workspace booking application for the Company’s
different buildings was launched. The booking in advance not only ensures the minimum
distancing required but also offers the possibility of following up the possible close contacts of
any positive or suspected case that might arise.
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 2020, our priorities were to keep personnel informed of the measures to be taken into
account to protect themselves against the COVID-19 and of our role as an essential service, to
strengthen the sense of belonging, the proximity between the different areas and organizational
levels, promoting different communication spaces and channels.
In this regard, we conducted the “Pulse Survey”, which allowed us to continue thinking
about initiatives to help adapt to the new context of the pandemic.
Additionally, we conducted the Organizational Climate Survey, which allows us, based on
different factors, to become aware of the staff’s and their teams’ level of commitment to achieving
the business’ results. With the results obtained in both polls, we continued developing Action
Plans based on the strengths and improvement opportunities identified as a whole and in the
different areas.
S A F E G U A R D I N G O F A S S E T S
In 2020, the Security Operational Center (Centro Operativo de Seguridad – “COS”)
increased its activities, responding to and coordinating the mobile custody service requirements
of operational teams that perform electrical switching operations in different substations, while
safeguarding the Company’s assets.
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 2020, the Code of Ethics was updated and the acknowledgement process by all the
Company’s employees was developed digitally.
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.
Furthermore, different internal communication campaigns were conducted in order to
consolidate the employees’ knowledge of its contents. The channels used were publications in
“edenorcerca”, trivia contests, e-mails, and digital boards.
With regard to contractors, an initiative was launched to strengthen their Ethical
Commitment and that of their personnel. This included requiring that contractors adopt different
measures or reinforce existing ones, such as having their own Codes to which their employees
must adhere, conducting dissemination campaigns of the values included therein, and making
changes to their human resources selection and management processes.
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, 2020, 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.
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 2020, edenor posted a loss of ARS 17,698 million as compared to the ARS
16,518 million profit recorded in fiscal year 2019. We disclose below the development of the
Company’s results:
The operating result for fiscal year 2020 amounts to a loss of ARS 19,917 million, as
compared to the ARS 6,465 million operating profit recorded in the previous fiscal year, due
mainly to the recognition of an impairment in the Company’s Property, plant and equipment for
ARS 17,396 million. Indicators of impairment have been identified in the Company’s assets as of
December 31, 2020 according to the analysis performed by management in accordance with IAS
36, which include different possible scenarios and weighting factors such as the current
macroeconomic context and the medium- and long-term projections for the Company’s business.
Furthermore, the operating result was impacted by the lack of adjustment of electricity
rates, as a consequence of the freeze on rates provided for by the Federal Government
(prescribed by the Solidarity Law and extended by different executives orders), given the constant
increase in the operating costs -necessary to maintain the level of service- and the Argentine
economy’s inflationary context. The gross margin in 2020 and 2019, including transmission and
distribution expenses, was 15% and 19%, respectively. Additionally, this situation was
exacerbated by the effects of the COVID-19 pandemic, which has had a severe social, economic
and financial impact.
The result for the year 2020 shows a decrease of 207% as compared to the previous
year, due mainly to both the factors mentioned in the preceding paragraph and the Agreement on
the Regularization of Payment Obligations entered into in 2019 by and between the Federal
Government and edenor.
This Agreement consisted mainly of edenor‘s abandoning certain actions to which it
might be entitled against the Federal Government; paying debts for works, loans for consumption
(mutuums) and penalties in favor of users; and undertaking to make additional investments aimed
at improving the overall service. In return, the Federal Government fully offset pending payment
obligations with the MEM for electric power purchases and partially cancelled both the mutuums
granted by CAMMESA and certain penalties in its favor. As a consequence of the Agreement, a
pre-tax profit of ARS 23,270 million was recognized, which did not imply any inflow of funds
whatsoever; quite on the contrary, edenor must comply in the next 5 years with the agreed-upon
investment plan.
As a consequence of the aforementioned freeze on rates, the electricity rates are at May
2019 levels (see “Electricity Rates” - Chapter 5), therefore, the Company’s revenue decreased
25%, from ARS 122,437 million in 2019 to ARS 91,316 million in 2020. Furthermore, electricity
purchases in 2020 amounted to ARS 57,930 million, decreasing by 25% as compared to the
previous year. The demand for electricity remained relatively stable, recording an increase of 1%
in GWh.
With regard to operating costs, they recorded a decrease of approximately 3% as
compared to fiscal year 2019, basically due to both a reduction in the amount of penalties as a
consequence of the quality improvement in technical product and public safety, and the
Company’s own recording of recovered penalties. All that net of an increase in the charge for
doubtful accounts due to the rise in delinquent payments, owing mainly to the uncertainty caused
by the COVID-19 pandemic.
Furthermore, Other operating income and expense (including the impairment of Property,
plant and equipment) amounted in 2020 to a loss of ARS 17,241 million, as compared to the loss
recorded in 2019 for ARS 1,115 million. Without taking the impairment into consideration, Other
operating income and expense would amount to an ARS 155 million gain, due mainly to a
reduction in the charge for lawsuits and contingencies as compared to the previous year.
(1)IncludesrighttousepolesforARS421millionandARS386million,connectionchargesforARS47millionandARS83million,andreconnectionchargesforARS6millionandARS36millionfor 2020 and 2019, respectively.
In 2020, net finance costs amounted to ARS 11,111 million, as compared to the ARS
13,923 million recorded in 2019. This 20% decrease in net finance costs is mainly related to both
the decrease in the exchange difference loss (37% devaluation in August 2019) and a lower
amount of interest on penalties.
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
20202019$% ASSET Non-current assets 125,486 138,299 (12,813) -9% Current assets 23,310 24,334 (1,024) (4%) TOTAL ASSETS 148,796 162,633 (13,837) -9% LIABILITIES Non-current liabilities 43,730 48,650 (4,920) (10%) Current liabilities 42,168 33,463 8,705 26% TOTAL LIABILITIES 85,898 82,113 3,785 5% EQUITY 62,898 80,520 (17,622) (22%) TOTAL LIABILITIES AND EQUITY 148,796 162,633 (13,837) -9%(in millions of ARS)VariationAt December 31,
The variations recorded in the main assets and liabilities accounts as of December 31,
2020, as compared to the previous year, were as follow:
▪ Property, plant and equipment: its decrease is due mainly to the recognition of the
impairment of the Company’s Property, plant and equipment. Without taking the
impairment into consideration, it would reflect a 3% increase 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 increase is due mainly to the postponement of payments to
CAMMESA for the energy acquired in the Wholesale Electricity Market (“MEM”) as
from the maturities taking place in March 2020 as a consequence of the impacts
caused by the COVID-19 pandemic.
▪ Trade receivables: its decrease is mainly due to both the increase in the allowance
for doubtful accounts, as a consequence of the rise in delinquent payments, and the
decrease in electricity sales in meters in 2020.
▪ Borrowings: its decrease is mainly due to the payment of financial loans and
corporate notes throughout 2020.
C A S H F L O W S
In 2020, the level of cash and cash equivalents increased as compared to fiscal year 2019.
Cash flows provided by operating activities amounted to ARS 17,336 million, which were mainly
used for the financing of the investment plan for ARS 7,219 million, the payment of debt principal
and interest for ARS 2,354 million, and the repurchase of Corporate Notes for ARS 3,798 million.
20202019$% Net cash flows generated by operating activities 17,336 13,830 3,506 25% Net cash flows used in investing activities (7,219) (7,019) (200) 3% Net cash flows used in by financing activities (6,152) (6,905) 753 (11%)Decrease in cash and cash equivalents3,965 (94) 4,059 Cash and cash equivalents at the beginning of year 558 58 500 Exchange differences in cash and cash equivalents (364) 597 (961) Result from exposure to nflation 203 (3) 206 Decrease in cash and cash equivalents 3,965 (94) 4,059 Cash and cash equivalents at the end of the year4,362 558 3,804 (in millions of ARS)At December 31,Variation
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
NominalcurrencyFunctionalcurrencyNominalcurrencyFunctionalcurrencyRevenue77,896 91,316 73,669 122,437 Electric power purchases(49,394) (57,930) (46,814) (77,649) Subtotal28,502 33,386 26,855 44,788 Transmission and distribution expenses(13,367) (19,866) (10,348) (21,980) Gross gain15,135 13,520 16,507 22,808 Operating expenses(12,815) (33,437) (10,004) (16,343) Operating profit (loss)2,320 (19,917) 6,503 6,465 Agreement on the Regularization of Obligations- - 13,403 23,270 Net financial expense(9,241) (11,111) (7,435) (13,923) Gain on net monetary position- 9,767 - 15,236 (Loss) Profit before taxes(6,921) (21,261) 12,471 31,048 Income tax(208) 3,563 (2,598) (14,530) (Loss) Profit for the year(7,129) (17,698) 9,873 16,518 12.31.202012.31.2019(in millions of ARS)20202019Current liquidity0.550.73Current assets / Current liabilitiesImmediate liquidity0.510.65Cash and banks plus credits / Current liabilitiesSolvency0.730.98Equity / Total LiabilitiesAsset immobilization0.840.85Non-current assets / Total assetsEquity ratio0.420.50Equity / Total assetsProfitability before taxes(Loss) profit before taxes / Equity excluding profit or loss (0.26) 0.49
S U S T A I N A B I L I T Y
I N D U S T R I A L S A F E T Y
In the second quarter of 2020, the Occupational Safety team was reorganized on the basis
of the COVID protocols to continue performing its duties, supporting the Company’s operational
areas.
By the end of the year, 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 for certification
purposes in 2021, following the guidelines of the new 2018 ISO 45001 standard.
To achieve these Occupational Health and Safety-related guidelines, we performed several
activities -whose results were reflected in the improved accident indicators of the last years-,
among which we can mention the Working safely with electricity, Virtual Reality project.
We continued to explore new emerging teaching technologies capable of both
strengthening the way our technicians learn and validating their knowledge, as it is a priority that
this be done efficiently and in an integrated fashion with the operational needs. It is with this aim
that we decided to provide a mass impact training program (more than 3,000 operational
supervisors and technicians) on “Working safely with electricity” using Virtual Reality.
Furthermore, the project launched in the previous year, which redefines the assignment
and management process of Personal Protective Equipment, Tools and Other equipment,
continued, thus optimizing a cross-cutting process that impacts the management of such
elements directly.
The frequency and severity rate of accidents over the last years is as follows:
EDENOR IN THE COMMUNITY – CSR
2020 was the year in which the CSR area consolidated. It can be affirmed that the Company
has a consolidated, already underway and with a view to the future, CSR plan in place,
consolidating the stance taken by a company committed to society in terms of actions aligned
with education, employment, and sustainability as a whole.
The COVID-19 pandemic that began in March was no obstacle to carry out the Programs
that comprised the 2020 CSR Plan. To cope with this new social scenario, some Programs were
virtualized and others were adapted.
Accidentology20162017201820192020Frequency rate44.89%32.51%30.18%21.52%12.70%Severity rate1.78%1.01%1.14%0.76%0.58%
The initiatives developed were:
• Comprehensive relationship building plan with educational institutions;
• Scholarship and mentoring program;
• Electricity access and smart consumption program;
•
• COVID 19 – Support to scientific research institutions and hospitals;
• Support to volunteer firefighters.
“edenorchicos” educational program
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 in 2020, 25% of them occurred in third-party facilities,
such as inside houses or street lighting columns. Although these accidents occur in facilities that
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 2020, 61% 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.
Furthermore, information about public safety issues in general 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. The implementation began in 1999, in the meter-reading, billing, collection,
procurement and logistics processes, and, as from 2005, was extended to all edenor‘s processes.
In October 2020, the external recertification 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 successfully passed.
The certifying entity IRAM highlighted as strengths the organization’s response capacity,
which allowed for both the recovery of all the operations in a minimum period of time, sorting the
problems and coping with the restrictions resulting from the COVID-19 pandemic, and the
implementation of the ARIS tool, which not only facilitates the management process of
documented information, but also -due its design- ensures the use of consistent terminology and
style in all generated documents (Technical processes).
The main innovations incorporated into the Quality Management System (ISO
9001:2015) were: customer-focus; leadership; people’s commitment; process approach; better
evidence-based decision making; relationship management; risk and opportunity analysis;
change planning; and context and third-party analysis.
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).
C O M M U N I C A T I O N O N P R O G R E S S
C O M P A C T
( C O P )
- G L O B A L
In accordance with the policy of transparency in our operations, the Company submitted its
Communication on Progress to the UN Global Compact, reporting progress made in each of the
10 principles promoted by this initiative. These principles cover topics such as environment,
human rights, labor regulations and anti-corruption. The report details the actions, challenges and
goals assumed by the Company and the work performed to meet them.
The Global Compact COP is available on both the Company’s official website and the
internal network “edenorcerca”.
We set up a strategic alliance with the aim of raising awareness among customers and the
general public of the importance of a smart electricity consumption to help care for the
environment. This action contributed to strengthening the Company’s commitment to complying
with the Sustainable Development Goals.
B O L S A S
Y
S U S T A I N A B I L I T Y I N D E X
M E R C A D O S
A R G E N T I N O S
( B Y M A )
The Company is included in the “Sustainability Index” implemented by Bolsas y Mercados
Argentinos (BYMA) and the Inter-American Development Bank (IDB).
This is the first index of this type that has been launched in Argentina and the Company
has been chosen due to its management and commitment to the sustainable development of the
community in which it is embedded.
This index has a non-commercial nature and evaluates the performance of issuers listed
on BYMA in the four ‘ESG-D’ pillars. More than 400 indicators are surveyed, although the BYMA
matrix evaluates 76 and averages the results obtained in the following axes: “Environmental”,
“Social”, “Corporate Governance” and “Sustainable Development”.
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.
ENVIRONMENTAL AUTHORIZATION
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.
MONITORING PROGRAM
In this year, Level of Noise and Electromagnetic Field measurements were made in 12
(twelve) substations; electromagnetic field measurements were also made in 17 (seventeen)
High-voltage lines/cables and in 84 (eighty-four) transformer centers. The results obtained were
very good, complying with the limits required by the regulations for this type of facilities.
Furthermore, throughout the year Electromagnetic Field measurements were made in
order to be granted the administrative easement of Edenor’s transformer centers; with the results
of each of such measurements being in compliance with the legislation. Not only was compliance
with regulations in accordance with the requirements of Energy Secretariat Resolution 77/98
analyzed but the use given to the premises adjacent to centers was also taken into account in
order to determine the possibility of current or future incidence of the electrical equipment’s
electromagnetic emissions.
TRAINING
In 2020,
training activities were developed:
“Environmental Awareness”, “PA-02 Waste Management” and “Environmental Management
addressed to Young Professionals”. A total of 950 participants attended these training activities.
following Environment-related
the
B O A R D O F D I R E C T O R S ’ P R O P O S A L
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, 2020 will be submitted for approval
purposes to the next Shareholders’ Meeting.
A L L O C A T I O N O F R E S U L T S
Due to the negative results for fiscal year 2020, and taking into consideration that the
Ordinary and Extraordinary Shareholders’ Meetings held on April 24, 2019 and April 28, 2020
resolved to allocate the results for fiscal years 2018 and 2019 to the setting up of a voluntary
reserve for investments -pursuant to the terms of section 70, paragraph 3 of Business
Organizations Law No. 19,550-, and given that in accordance with the order of priority for the
absorption of losses -as provided for by the applicable regulations (section 11 and related sections
of CNV General Resolution 633/13, Title IV Chapter III)- such absorption must first be made
against voluntary reserves -should there exist any- and only after these reserves have been
exhausted, against the statutory and legal reserves, the Board of Directors proposes that this be
so resolved by the shareholders at the Annual General Meeting to be held on April 27, 2021.
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 2020.
A P P E N D I X I : C O R P O R A T E G O V E R N A N C E R E P O R T
With the aim of strengthening the Code as a tool to promote a culture of good governance,
taking into account the OECD-G20 corporate governance principles and the best international
practices, on June 19, 2019 the National Securities Commission issued General Resolution No.
797/19, which updated the Code of Corporate Governance submitted annually by the entities
authorized to make a public offer of their securities. In this regard, the Code incorporates the
educational content that instructs companies on the benefit and the importance of adopting the
principles and practices of good corporate governance, providing guidelines that justify those
practices and transmit their purpose.
A) THE ROLE OF THE BOARD OF DIRECTORS
Principles
I. The Company must be led by a professional and qualified Board of Directors that will be in
charge of laying the necessary foundations to ensure the company’s sustainable success. The
Board of Directors is the guardian of the company and the rights of all its Shareholders.
II. The Board of Directors must be in charge of determining and promoting the corporate culture
and values. In its actions, the Board of Directors must ensure compliance with the highest
standards of ethics and integrity based on the company’s best interests.
III. The Board of Directors must be in charge of ensuring a strategy inspired in the company’s vision
and mission and aligned with its values and culture. The Board of Directors must constructively
engage with the management to ensure the proper development, implementation, monitoring
and modification of the company’s strategy.
IV. The Board of Directors will exercise a permanent control and supervision over the company’s
management, ensuring that the management takes measures towards the implementation of
the strategy and the business plan approved by the Board.
V. The Board of Directors must have the necessary mechanisms and policies in place to exercise
its and each of its members’ duties in an efficient and effective way.
1. The Board of Directors generates an ethical work culture and sets out the company’s
vision, mission and values.
The Issuer complies with the principles and applies the recommended practice. In this regard,
the Board of Directors undertakes the administration in a diligent and prudent manner,
permanently supervising the management of the Company. The Board is comprised of
professional and qualified members to lay the necessary foundations to ensure the Company’s
sustainable success, guaranteeing to that effect the highest standards of ethics and integrity,
ensuring the Company’s vision, mission and strategy.
The Company has an Integrity Program in place pursuant to the provisions set forth in Law No.
27,401 on Criminal Liability of Legal Entities and the guidelines issued in this regard by the Anti-
Corruption Office, comprised of a set of internal mechanisms and procedures for promoting
integrity, supervision and control, aimed at preventing, detecting and rectifying irregularities
and illegal acts.
In this framework and in line with good corporate governance policies, the Board of Directors
approves the Code of Ethics, applicable to all the employees, Board of Directors and Supervisory
Committee members, contractors, subcontractors and suppliers, in order to set the general
guidelines that must govern the Company’s and all its employees’ conduct in the performance
of their duties and in their business and professional relationships. Any amendment to the Code,
as well as any waiver or exception to compliance with its provisions, must be approved by the
Board of Directors. Furthermore, the Board of Directors has Internal regulations in place, the
purpose of which is to define its powers and responsibilities. Directors must perform their duties
with due diligence, care and discretion and pursuant to the provisions of Business Organizations
Law No. 19,550 as amended, the regulations of the National Securities Commission and those
of the markets in which the Company's securities are listed, helping promote transparency and
always ensuring that the best interests of edenor and its shareholders as a whole are preserved.
2. The Board of Directors sets the company’s general strategy and approves the strategic
plan developed by the management. In so doing, the Board of Directors takes into
consideration environmental, social and corporate governance factors. The Board of
Directors oversees its implementation using key performance indicators and taking
into consideration the best interest of the company and all its shareholders.
The Issuer applies the recommended practice as the Board of Directors is in charge not only of
the business management, but also of formulating and approving the Company’s general
policies and strategies, as well as the management objectives and annual budgets; all of that
taking into consideration the Company’s particular circumstances and the environmental, social
and corporate governance factors.
The Board of Directors meets periodically, participating actively and with a high degree of
involvement in the management of the Issuer. Furthermore, on an annual basis, the Board
approves the investment budget and the financial budget, providing throughout the fiscal year
a detail of the degree of compliance thereof.
In order for the Board of Directors to exercise permanent control and supervision of the
management of the Company, at Board meetings the Finance and Control Director presents a
summary of the monthly Management Report, showing the income statement for the year and
accumulated comparatively with the previous year and the cash flow statement.
That information is supplemented with periodic reports made by the Management on
compliance with, deviations from, and/or adjustments to both the annual budget and the
Issuer's business plan, analyzing their progress and proposing adjustments taking into
consideration the Company’s particular circumstances. In so doing, the Board of Directors
ensures that the management takes measures toward the implementation of the strategy and
the business plan.
3. The Board of Directors oversees the management and ensures that it develops,
implements and maintains a proper internal control system with clear reporting lines.
The Issuer applies the recommended practice. In this regard, the Issuer has a policy in place that
defines the components and principles of its internal control system, as well as the
responsibilities for its proper functioning.
In compliance with current regulations, the Issuer has selected as control framework the criteria
set forth in the document “Internal Control - Integrated Framework” issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO Report), 2013 version.
The internal control system is designed by setting strategic compliance items and establishing
mechanisms for detecting deviations in order to evaluate and correct them, observing and
complying with the legal framework, the corporate governance rules, codes and policies to
which the entity is subject.
The Management, under the supervision of the Board of Directors, sets the Company’s
objectives, which must be aligned with its mission, vision and strategies. These high-level
objectives reflect how the Company seeks to create and preserve value for its shareholders. The
setting of objectives is key in the Company’s strategic planning process.
Furthermore, the Board of Directors sets the policies and provides and approves the rules and
regulations.
Internal control is a strategic aspect of management, a coordinated set of methods and
measures adopted to promote operational efficiency and effectiveness and encourage
adherence to the policies issued by management.
Finally, the Issuer has a Policy in place with respect to fraud prevention that facilitates the
reporting of alleged irregularities inside the Company.
Although each and every member of the organization is responsible for the internal control, all
the above-mentioned regulations are supervised by the Chairman and the General Management
and are approved by the Audit Committee.
4. The Board of Directors designs the corporate governance structures and practices,
implementation, monitors their
designates the person responsible for their
effectiveness and suggests changes if necessary.
The Board of Directors approves the Code of Corporate Governance along with the Annual
Report for each year. The Code is prepared in accordance with current regulations and adopts
the corporate structures and practices recommended by the CNV, the Securities Exchange
Commission (SEC) and the self-regulating markets in which the Company’s securities are listed.
Furthermore, the Board of Directors approves the different corporate governance policies
applicable to the entire Company. In this regard, the Board of Directors has approved the
following policies: Best Stock Market Practices, Related-Party Transactions, among others.
In the way described, the Issuer applies the recommended practice.
5. The members of the Board of Directors have sufficient time to exercise their duties in
a professional and efficient manner. The Board of Directors and its committees have
clear and formalized rules for their operation and organization, which are disclosed in
the company’s website.
The Issuer applies the recommended practice given that each member of the Board of Directors
performs his/her duties with due diligence, care and discretion and pursuant to the provisions
of Business Organizations Law No. 19,550 as amended, the regulations of the National Securities
Commission and those of the markets in which the Company's securities are listed.
edenor’s Board of Directors has Internal Regulations in place that describe the duties of both
the office of director individually and the Board of Directors as a whole, detailing the frequency
of meetings, the form in which meetings are convened and the mechanism for attending the
meetings.
The office of director is personal and cannot be delegated; the director must always act in the
best interests of edenor and its shareholders as a whole. The Directors who are appointed for
the first time are instructed on their powers, responsibilities, regulations and internal policies,
the characteristics of the business, the market in which the Company operates and the
regulations on the functioning of the Issuer's bodies.
The Board of Directors’ members are obliged to keep the Company’s business and edenor’s
information to which they have access confidential, and to comply specifically with the
Company's rules, regulations and policies in order to exercise their duties professionally and
efficiently.
As for the Committees, they are where the Board of Directors’ members make direct contact
with different issues and monitor the effective application of the strategic guidelines in order to
achieve the Company's goals.
Each committee has its own regulations that govern its functioning, and is under the authority
of edenor’s Board of Directors. The oversight, reporting, advisory and proposal-making duties
arise from the regulations and the legislation and regulations in force.
Furthermore, the participating directors draw on the information about the day-to-day
management, eventually recommending adjustments to the strategic guidelines, new policies
or amendments to those in force.
B) THE CHAIRMANSHIP IN THE BOARD OF DIRECTORS AND THE CORPORATE SECRETARIAT
Principles
VI. The Board of Directors’ Chairman is responsible for ensuring the effective fulfillment of the Board
of Directors’ duties and for leading its members. The Chairman must generate a positive work dynamics
and promote the constructive participation of Board members, as well as ensure that the members
have the necessary elements and information for decision making. This also applies to the Chairmen of
each of the Board of Directors’ committees regarding their duties.
VII. The Board of Directors’ Chairman must lead processes and establish structures seeking the Board
of Directors’ members commitment, objectivity and competence, as well as the best possible
performance of the board as a whole and its development according to the company’s needs.
VIII. The Board of Directors’ Chairman must ensure that the entire Board of Directors is engaged and is
responsible for the General Manager’s succession.
6. The Board of Directors’ Chairman is responsible for the proper organization of Board
meetings, prepares the agenda ensuring the cooperation of the other members, and
ensures that they receive the necessary materials sufficiently in advance so as to
participate in the meetings in an efficient and well-informed manner. The Chairmen
of the committees have the same responsibilities for their meetings.
The Issuer applies the recommended practice. In this regard, the Board of Directors’ Chairman,
jointly with the Corporate Secretariat in charge of the Legal Affairs Department, ensures the
effective fulfillment of the Board's duties and the participation of all its members in decision-
making.
The Company guarantees the availability of relevant information in a safe, equal manner and
sufficiently in advance for decision-making of the Board of Directors, in accordance with the
provisions of regulations in effect, its Bylaws and the Board of Directors’ Internal Regulations.
For that purpose, the meetings are called within the legally established time periods and
sufficiently in advance via e-mail, in line with edenor’s “Zero Paper” Policy, attaching to the
Agenda of the meeting the information and documentation relating to each of the items to be
discussed, in order to be duly analyzed by all the Board of Directors’ members prior to the
meeting.
Furthermore, both the Board of Directors’ Chairman and the Secretariat are available to deal
with all the inquiries and/or needs the Directors and/or Supervisory Committee members may
have in the fulfilment of their duties, made either via email or by telephone, for arranging
meetings and/or preparing reports.
In turn, if applicable, the Executive Directors in charge of the different areas participate in the
Board of Directors’ meetings, in order to make the pertinent presentation on the issues that are
the subject of the meeting and answer any inquiries that may arise.
7. The Board of Directors’ Chairman ensures the proper internal functioning of the Board
of Directors through the implementation of formal annual evaluation processes.
The Issuer applies the recommended practice as the Board of Directors’ Chairman ensures the
proper functioning of the Board and the implementation of formal processes for its evaluation.
In so doing, the Board’s performance in managing and directing the Company is evaluated
through the approval of the actions taken by each of the directors throughout the fiscal year.
It is the Annual General Meeting of each year that has the authority to evaluate the actions
taken by the Board of Directors, in accordance with the provisions of the Business Organizations
Law.
The Board of Directors’ members comply with the provisions set forth in the Bylaws and in the
Board of Directors’ Internal Regulations. Furthermore, all of the Board of Directors’ resolutions
are recorded in the minute book of such body and give an account of its performance. In this
regard, the last Shareholders’ Meeting that approved the actions taken by the Directors was
held on April 28, 2020 and the evaluation of the actions taken by the Board of Directors relating
to the year ended December 31, 2020 will be considered by the next Annual General Meeting
to be called in a timely manner.
8. The Chairman generates a positive and constructive work environment for all the
Board of Directors’ members and ensures they receive continuous training to keep up
to date and be able to fulfill their duties properly.
The Issuer applies the recommended practice. The Board of Directors’ Chairman, jointly with the
Corporate Secretariat, includes in the Agenda of the Board’s meetings the topics of interest to
keep the Board of Directors’ members continuously informed and up to date to properly fulfill
their duties. In this regard, updates regarding relevant regulations have been performed
throughout the year. Furthermore, the Audit Committee’s Annual Plan includes a Training Plan
for the Directors who are members of such Committee.
Furthermore, with regard to the Directors exercising executive functions, the Issuer, through the
Human Resources Department, develops training plans throughout the year in accordance with
the needs where applicable. They are regularly invited to lead training experiences related to
their functions and other business requirements. The Issuer has an annual training plan in place
that aims to support the professional development and facilitate the recruitment, development
and retention of its human resources, in addition to being oriented to respond to the technical-
functional needs detected in the annual review. The Training Plan includes activities and topics
aimed at developing a positive and constructive work environment for all the Board of Directors’
members, both for operational and management tasks. In doing so, they receive continuous
training to keep up to date and be able to properly fulfill their duties. Such activities are taught
through in-house courses or external courses in different educational institutions and
recognized organizations in the market.
9. The Corporate Secretariat supports the Board of Directors’ Chairman in the effective
administration of the Board and cooperates with the communication among the
shareholders, the Board of Directors and the management.
The Issuer applies the recommended practice. The Legal Affairs Department serves as the
Corporate Secretariat. It assists and the supports the Board of Directors’ Chairman in the
performance of his duties and ensures the proper functioning of the Board of Directors’
meetings and the Shareholders’ Meeting. It is responsible for providing Board members and
shareholders with the necessary information, supervising the proper recording of corporate
documentation, assisting the Board of Directors’ Chairman in preparing and complying with the
Agenda at Board meetings and Shareholder Meetings, distributing to the Directors all the
relevant information concerning the holding of Board meetings and the documentation to be
considered therein, and duly reflecting in the minute books the development of the meetings of
the managing body. In so doing, through the Legal Affairs Department, the formal and material
legality of the actions taken by the Board of Directors are ensured.
10. The Board of Directors’ Chairman ensures the participation of all Board members in
the development and approval of a succession plan for the company’s General
Manager.
Although there is no specific plan regulating the line of succession, the Issuer complies with the
principles and applies the recommended practice because the Regulations of the Company's
Executive Committee, comprised of Board members, set out among the Committee’s powers
the authority to approve the Company’s organizational chart at the Executive Directors level.
Furthermore, the Human Resources Department is in charge of assigning the responsibilities,
elaborating the succession plans, and programing and scheduling the competencies and training
of the main executives, including the General Manager, with a succession plan not being
currently deemed necessary.
C) COMPOSITION, NOMINATION AND SUCCESSION OF THE BOARD OF DIRECTORS
Principles
IX. The Board of Directors must have adequate independence and diversity levels allowing it to make
decisions in the company’s best interests, avoiding group thinking and decision-making by dominant
individuals or groups within the Board of Directors.
X. The Board of Directors must ensure that the company has formal procedures in place for the
proposal and nomination of candidates to hold positions in the Board of Directors under a succession
plan.
11. The Board of Directors has at least two members who meet the independence
requirement in accordance with the current criteria set forth by the National Securities
Commission.
The Issuer applies the recommended practice since the Board of Directors has adequate
independence and diversity levels in accordance with the Issuer’s Bylaws, the criteria set forth
by the CNV’s regulations, and the applicable regulations.
The Board of Directors is comprised of twelve regular Directors and up to twelve alternate
Directors appointed by the Shareholders' Meeting. Eleven regular Directors are external, i.e.
they are not Company employees, and eight of them are also independent.
The Board of Directors believes that it has the appropriate number of members for the proper
performance of its functions in accordance with the complexity of the Company and the size of
the businesses it carries out, allowing the Board to make decisions in the Company’s best
interests.
Furthermore, the Bylaws provide that for as long as the Issuer makes a public offer of its shares,
it must have an Audit Committee in place comprised of, at least, the majority of its independent
members. The same criterion is reflected in section I of the Audit Committee’s Internal
Regulations, likewise, the Issuer is subject to compliance with the Sarbanes-Oxley Act, which
imposes that all Audit Committee members must be independent. In this regard, all the
members of the Audit Committee are independent.
12. The Company has a Nomination Committee in place that is comprised of at least three
(3) members and is chaired by an independent director. If the Nomination Committee
is chaired by the Board of Directors’ Chairman, he/she will refrain from participating
in the discussions for the appointment of his/her own successor.
Even though the Issuer does not have a Nomination Committee in place, it complies with the
principles as described below.
The Issuer believes that the recommended practice does not apply inasmuch as the shareholders
at the Annual General Meeting appoint the directors, relying for such purpose on the proposal
made by the Board of Directors, which ensures that the general independence guidelines are
set and that the nomination of candidates will guarantee greater efficiency and transparency in
the compliance with their duties.
Furthermore, it is important to point out that edenor has two shareholders who hold more than
75% of the share capital and appoint all the members of the Board of Directors, all that in
conformity with the provisions of current regulations and observing the limits set forth in the
Bylaws.
13. The Board of Directors, through the Nomination Committee, develops a succession
plan for its members that guides the pre-selection process of candidates to fill
vacancies and takes into consideration the non-binding recommendations made by its
members, the General Manager and the Shareholders.
The Issuer complies with the principles and although it does not have a Nomination Committee,
applies the recommended practice, as the Board of Directors itself, when issuing its proposal for
the appointment of authorities, takes into consideration the requirements set forth in the
Bylaws and the current regulations, and evaluates the proposed Directors’ résumés in order to
ensure the highest quality standards. In this regard, it strongly promotes a composition with a
combination of experience and skills aligned with the Company’s needs.
Furthermore, the Executive Committee, comprised of Board members, approves the Issuer’s
organizational chart in relation to the line of succession of managers and its related changes,
which are timely informed to the Board of Directors based on the requirements of the position
concerned. The Executive Directors of the areas and the person in charge of the Human
Resources Department are in charge of the assignment of first-tier managers’ responsibilities,
the succession plans and the programming of their competencies, taking into account the non-
binding recommendations made by the Executive Committee, the General Manager and the
Shareholders.
14. The Board of Directors implements an onboarding program for its new elected
members.
The Issuer applies the recommended practice. In this regard, the Board of Directors’ Internal
Regulations provide that the Directors appointed for the first time are to be instructed on their
powers, responsibilities, internal regulations and policies, the characteristics of the business, the
market in which they operate and the rules on the functioning of the Company’s bodies.
The General Manager, who may be assisted by other managers of the Company, is in charge of
the onboarding. The onboarding process begins with a meeting with the Directors elected for
the first time to be held not later than 30 days after they have been appointed, and is
supplemented with the sending of the material and documentation about the Issuer, as well as
with meetings with other managers in order for them to have all their doubts cleared up and
become familiar with the Company’s business.
D) REMUNERATION
Principles
XI. The Board of Directors must generate incentives through the remuneration to align the management
-led by the General Manager- and the Board of Directors itself with the company’s long-term interests,
so that all the directors may comply with their obligations towards all shareholders on an equitable
basis.
15. The company has a Remuneration Committee in place comprised of at least three (3)
members, all of whom are independent or non-executive.
Even though the Issuer does not have a specific Remuneration Committee in place, it complies
with the principle and applies the recommended practice as described below.
The Shareholders’ Meeting dated April 18, 2017 approved the creation of a long-term incentive
plan in favor of edenor‘s employees under the terms of section 67 of the Law on Capital Markets.
Its implementation, administration and execution are the responsibility of the Implementation
Committee, comprised of three members of the Company's Executive Committee and Board of
Directors, which is in charge of generating the incentives to align all those covered by the plan.
In this framework, different incentive programs have been created for its executives in order to
align them with the Company's objectives and encourage them to fulfill their obligations on an
equitable basis. The Human Resources Department and the General Management approve in an
integrated and coordinated manner the remuneration setting process by which all the
employees, including the Managers, are evaluated in relation to the performance of their duties
on an annual basis. The Issuer has established a fixed and variable remuneration system that is
associated with the achievement of previously set objectives and the degree of achievement of
such objectives.
Furthermore, the remuneration of Board members is approved annually by the shareholders at
the Annual General Meeting, relying for such purpose on the prior opinion of the Company's
Audit Committee, comprised entirely of Independent Directors.
16. The Board of Directors, through the Remuneration Committee, establishes a
remuneration policy for the General Manager and the Board of Directors’ members.
The Issuer complies with the principle and applies the recommended practice as described
below.
The Audit Committee, in fulfilment of its responsibilities and as provided for in Section 5 of its
Regulations, renders an opinion on the reasonableness of the proposals for Company directors’
and managers’ fees and stock option plans formulated by the Board of Directors, among other
responsibilities.
The Committee will try to guarantee that such fees are for amounts similar to those of other
people in similar positions in domestic companies, taking into consideration several factors, such
as the issuer’s general financial position and the results of its operations. To this end, it may
consult with experts on remuneration matters, either by itself or through counselors.
Regarding the General Manager’s remuneration, due to the fact that he is a related party, his
remuneration is approved by the Company’s Board of Directors with the Audit Committee’s
prior opinion.
E) CONTROL ENVIRONMENT
Principles
XII. The Board of Directors must ensure the existence of a control environment -consisting of internal
controls developed by the management, internal audit, risk management, regulatory compliance and
the external audit-, which establishes the necessary lines of defense to ensure integrity in the
company’s operations and financial reports.
XIII. The Board of Directors must ensure the existence of an overall risk management system that
allows the management and the Board of Directors to efficiently guide the company towards its
strategic objectives.
XIV. The Board of Directors must ensure the existence of a person or department (according to the
size and complexity of the business, the nature of its operations and the risks to which it is exposed)
responsible for the company’s internal audit. This audit, conducted for the evaluation and auditing
of the company’s internal controls, corporate governance processes and risk management must be
independent and objective, and have clearly defined reporting lines.
XV. The Board of Directors’ Audit Committee will be comprised of qualified and experienced
members, and must fulfill its functions in a transparent and independent manner.
XVI. The Board of Directors must establish appropriate procedures to ensure the External Auditors’
independent and effective performance.
17. The Board of Directors determines the company’s risk appetite and also supervises
and guarantees the existence of an overall risk management system that identifies,
evaluates, makes decisions on the course of action and monitors the risks faced by the
company, including, but not limited to, environmental and social risks and those
inherent in the business in the short and long term.
The Issuer applies this recommended practice. The Issuer has risk management rules, which
describe the enterprise risk management (ERM) process implemented, presenting the
methodology used to identify and periodically update the risks that could affect the Company.
The rules are aligned with the Company's internal control policy and use the reference
framework set forth in the document "COSO Enterprise Risk Management - Integrated
Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in June 2017.
The Internal Audit Department, which is in charge of risk management, provides support to the
management team to keep the matrix of strategic risks and irregular conduct updated,
collaborating with the identification and evaluation of risks. In the Company's organizational
chart, it is under the authority of the General Manager and reports to the Audit Committee, to
which it submits for approval purposes its work plan, the progress of the work carried out
quarterly in the framework of the irregular conduct prevention program, and risk map.
Additionally, the Issuer has a policy on the internal control system, which describes the different
components of its control system and the responsibilities for its proper operation, as already
described in Recommended Practice No. 3.
Furthermore, once a year or whenever required by the circumstances, the Internal Audit
Department submits the risk management map and management results to the Board of
Directors. Additionally, the Issuer discloses the risks in its Financial Statements in accordance
with the provisions of the International Financial Reporting Standards. In the notes to its
Financial Statements, edenor discloses the “Financial Risk Management” detailing the
associated risks, and expressing in each case the position adopted. It also makes, a detailed risk
analysis in the annual report filed with the SEC on form 20F.
In relation to fraud prevention, the Issuer has a policy in place to facilitate the reporting of
alleged irregularities within the Company.
In this regard, the Audit Committee, in fulfilment of its responsibilities and as provided for in
Section 5 of its Regulations, oversees the application of the Company's information policies on
risk management, reporting thereon in its annual report. The Committee is comprised of
experienced and qualified members to audit and assess the risks faced by the Company, the
internal controls and the corporate governance processes to competently direct the Company
towards its purpose.
18. The Board of Directors monitors and reviews the effectiveness of the independent
internal audit and guarantees the resources for the implementation of an annual risk-
based audit plan and a direct reporting line to the Audit Committee.
The Issuer applies the recommended practice since the Internal Audit Department reports
directly to the Audit Committee and, administratively, to the Chairman and General Manager.
At the beginning of each fiscal year, the Internal Audit area must submit the proposed annual
audit plan to the Chairman and the General Manager and then submit it to the Audit Committee
for its evaluation and approval. On a quarterly basis, the Internal Audit area monitors
compliance with the annual plan and submits a progress report to the Audit Committee, the
Chairman and the General Manager. This report contains a summary of the tasks carried out and
the main findings.
On an annual basis, the Audit Committee assesses the independence level and performance of
the Internal Audit area in matters within its authority, and discloses its assessment in the Annual
Report. Furthermore, once a year or whenever required by the circumstances, the Internal Audit
Department submits the risk management map and management results to the Board of
Directors.
Thus, the Board of Directors monitors and reviews the effectiveness of the internal audit and
guarantees the resources for the implementation of an annual risk-based plan and a direct
reporting line to the Audit Committee.
The Internal Audit area works in accordance with the International Professional Practices
Framework (IPPF), issued by the Institute of Internal Auditors (IIA).
According to the "General Internal Audit Rule", the Internal Audit Department’s mission is to
improve and protect the organization’s value, providing risk-based analysis, advice and
assurance.
19. The internal auditor or the members of the internal audit department are
independent and highly qualified.
The Issuer complies with the principles and applies the recommended practice since, as already
mentioned in the previous practice, the Internal Audit Department reports directly to the Audit
Committee and, administratively, to the Chairman and the General Manager. Thus, Internal
auditing is an independent, objective, assurance and consulting activity, designed to add value
and improve the organization’s operations. It helps accomplish the objectives by bringing a
systematic, disciplined approach to assess and improve the effectiveness and efficiency of
business, risk management, control and governance processes.
Furthermore, the members of the Internal Audit department have policies and rules in place
that set the parameters to carry out their work with the required objectivity and transparency.
The rules apply to all the activities carried out by the Internal Audit team and are mandatory for
its members.
The Internal auditors apply the necessary knowledge, skills, and experience when performing
internal audit services. Therefore, the internal audit team’s members:
- participate only in those services for which they have sufficient knowledge, skills and
experience.
- strive to continually improve their skills and the effectiveness and quality of their
services.
To this end, the Internal Audit Department develops an annual training plan in order for its
members to gain the technical knowledge of the area and the industry, the necessary soft skills
and the tools to perform their duties in the most effective and efficient way.
Finally, it is worth noting that the Internal Audit Department’s mission is to improve and protect
the organization’s value, providing risk-based analysis, advice and assurance.
20. The Board of Directors has an Audit Committee in place that acts based on its
regulations. The committee is entirely composed of and chaired by independent
directors and does not include the General Manager. The majority of its members has
professional experience in financial and accounting areas.
The Issuer applies the recommended practice since it has an Audit Committee in place that acts
based on its regulations, which establish its functions and the main operating rules. It is entirely
comprised of independent Directors in compliance with the CNV’s regulations and the US
regulations, which include the Sarbanes-Oxley Act and other provisions required by the SEC for
foreign issuers listed on the NYSE.
Among its main duties, we can mention, among others, the following: (i) Supervising the
operation of the internal control systems and the administrative-accounting system, and of all
the financial information or other significant events submitted to the regulatory authorities in
compliance with the applicable reporting requirements; (ii) Expressing an opinion on the Board
of Directors’ proposal for the appointment of the external auditors to be hired by the Company
and ensuring their independence; (iii) Reviewing the external auditors’ plans, supervising and
evaluating their performance and issuing an opinion thereon when the annual financial
statements are submitted and published; (iv) Supervising the application of the Company's risk
management information policies; (v) Providing the market with complete information on
operations in which there is a conflict of interest with members of the corporate bodies or
controlling shareholders; (vi) Expressing an opinion on the reasonableness of the proposals for
Company directors’ and managers’ fees and stock option plans put forward by the Board of
Directors; (vii) Expressing an opinion on the compliance with legal requirements and on the
reasonableness of the conditions for the issuance of shares or securities convertible into shares,
in the event of a capital increase excluding or limiting the preemption right; (viii) Rendering a
well-founded opinion on related-party transactions in the cases provided for by the Law; and
(ix) Providing any report or opinion required by current regulations, with the scope and
frequency set forth therein and their eventual amendments.
When electing Audit Committee members, the Board of Directors evaluates their professional
experience along with independence factors, skills, knowledge of the Company's business and
the industry, among others, in order for them to exercise their duties in a transparent and
independent manner.
The Committee is comprised of experienced and qualified members to audit and assess the risks
faced by the Company, the internal controls and the corporate governance processes to
competently direct the Company towards its purpose.
21. The Board of Directors, with the Audit Committee’s opinion, approves a policy for the
selection and monitoring of external auditors, which sets forth the indicators that are
to be considered when submitting to the Shareholders’ Meeting a recommendation
on the retention or replacement of the external auditor.
In compliance with the provisions of Section 18, Title V, Chapter III of the CNV’s regulations and
the Audit Committee’s Internal Regulations, upon the presentation and publication of the
annual FFSS, the Committee in its annual report, assesses the external auditor’s independence,
planning and performance under objective parameters and issues a well-founded opinion
thereon.
Therefore, the indicators to be considered to submit to the Shareholders' Meeting the
recommendation on the retention or replacement of the external auditor are determined in the
above-described way.
Furthermore, throughout the fiscal year, the Committee holds meetings with the external
auditors, at least quarterly, for the review of edenor’s interim FFSS and whenever deemed
necessary.
In view of the above, the Issuer complies with the principles and applies this recommended
practice.
F) ETHICS, INTEGRITY AND COMPLIANCE
Principles
XVII. The Board of Directors must design and establish appropriate structures and practices to promote
a culture of ethics, integrity and regulation compliance that prevent, detect and address serious
corporate or personal misconduct.
XVIII. The Board of Directors will ensure the implementation of formal mechanisms to prevent or, failing
that, deal with conflicts of interest that may arise in the administration and management of the
company. It must have formal procedures in place that seek to ensure that related-party transactions
are conducted in pursuance of the company’s best interests as well as the equal treatment of all its
shareholders.
22. The Board of Directors approves a Code of Ethics and Conduct that reflects the
company’s ethical and integrity values and principles, as well as its culture. The Code
of Ethics and Conduct is informed to and binding on all the company’s directors,
managers and employees.
The Issuer complies with the principles and applies the recommended practice. The Issuer has a
Code of Ethics in place that describes the principles and practices to which edenor is committed.
They serve as a guide in the daily actions of its employees and contractors, and reaffirm the
Company's ethical conduct guidelines, aligned with those of its controlling shareholder, the
Pampa Energía group.
The Code of Ethics is publicly available on the Issuer's website, additionally it is informed to and
binding on all the employees and members of both the Board of Directors and the Supervisory
Committee, and governs the conduct and relationships in the Company’s workplace.
Furthermore, the Code is included in the general contracting conditions, and to the extent that
its principles are compatible with the nature and modalities of each business relationship, such
principles are to be applied to edenor’s relationship with contractors, subcontractors, suppliers
and consultants, according to laws in effect.
Failure to comply with the terms of the Code may result in the application of disciplinary
sanctions and/or corrective measures,
including the termination of the employment
relationship. Without prejudice to the foregoing, Code violations may also constitute violations
of the applicable law and result in the application of administrative, civil and/or criminal
penalties to both the staff and the Company.
None of the people subject to compliance with the Code may claim ignorance of the Code, or
authorize, consent to or tolerate Code violations.
The Human Resources Department will be in charge of assessing the seriousness of the violation
and determining the sanction to be applied, according to the current internal regulations.
Furthermore, it may request that the issue be dealt with by the Ethics Committee comprised of:
- The General Manager.
- The Human Resources Director.
- The Internal Audit Manager.
The Issuer also has a policy of best stock market practices (P58) in place, which regulates the
trading of edenor’s securities.
This policy has been implemented in order to avoid the use of privileged information by edenor’s
employees or Board of Directors or Supervisory Committee members who, by reason of their
duties and/or position, may have access to material non-public information, and use it to trade
securities, in order to gain an advantage for themselves or for others, either directly or indirectly.
The terms of such policy agree with the guidelines prescribed by section 117 of Law No. 26,831
on Capital Markets, all rules issued for its implementation in section 1, Title XII, Chapter III, Part
I of the National Securities Commission’s Regulations (TR 2013), the provisions of the Securities
and Exchange Commission of the United States of America, the federal laws of the United States
of America on financial instruments, and the Sarbanes-Oxley Act (the "Regulatory framework").
23. The Board of Directors sets up and periodically reviews an Ethics and Integrity
Program, based on the risks, the dimension and financial capacity. The plan is visibly
and unequivocally supported by the management, which appoints an in-house officer
to develop, coordinate, supervise and periodically evaluate the program’s
effectiveness. The program provides for: (i) periodic training for directors, managers
and employees on ethics, integrity and compliance issues; (ii) internal channels for
reporting irregularities, which are open to third parties and properly communicated;
(iii) a policy against retaliation protecting whistle-blowers, and an
internal
investigation system that respects the rights of the individuals under investigation and
imposes effective sanctions for violations to the Code of Ethics and Conduct; (iv)
policies on integrity in bidding procedures; (v) mechanisms for the Program’s periodic
risk analysis, monitoring and evaluation; and (vi) procedures ensuring the integrity
and background of third parties or business partners (including due diligence
procedures to verify the absence of irregularities and illegal acts or the existence of
vulnerabilities in corporate transformation and acquisition processes), including
suppliers, distributors, service providers, agents and brokers.
The Issuer applies the recommended practice as it has an Integrity Program in place pursuant to
section 23 of Law 27,401, comprised of a set of internal mechanisms and procedures for the
promotion of integrity, supervision and control, aimed at preventing, detecting and rectifying
irregularities and illegal acts. The main rules and regulations comprising it are: (i) the Code of
Ethics; (ii) Internal Control System; (iii) Monetary limits for the exercise of delegated powers; (iv)
Policy on best stock market practices; (v) Policy to facilitate the reporting of possible
irregularities; (vi) Policy for entering into contracts; (vii) General Internal Audit Rules; (viii) Risk
Management Rules; (ix) General Contracting Conditions; (x) Procedures associated with the
aforementioned rules.
The above-mentioned rules were analyzed in detail in 2018-2019, agreeing on certain proposed
amendments in line with the provisions of Corporate Criminal Liability Law No. 27,401 and the
guidelines issued by the Anti-Corruption Office.
The rules are based, among other things, on the following basic premises: (i) obligation to
protect whistle-blowers and prohibition against retaliation; (ii) ensuring open and competitive
procedures in the selection of suppliers; (iii) zero tolerance of bribery or improper payments
made in the name or the interest of edenor; (iv) prohibition against giving gifts and/or making
small amount payments to public officers, and reporting these situations; (v) prohibition against
receiving gifts for amounts greater than 50 dollars as a business courtesy, with the Ethics
Committee’s prior authorization being required if such amount is surpassed.
The Issuer has worked throughout 2019 on the review and adaptation of the Company's internal
policies and procedures, and on the preparation and implementation of a training program
addressed to the Company’s different levels based on their roles and responsibilities. In this
regard, in December 2019, a Compliance specialist provided training, within the framework of
Corporate Criminal Liability Law No. 27,401 and the guidelines issued by the Anti-Corruption
Office, to the Company’s Board members and managers.
The Issuer continues working on this matter to periodically provide new training activities,
which, due to the health emergency situation, are planned for next year.
The Issuer believes that training activities are necessary to raise awareness at the different levels
of the Company.
Furthermore, the Issuer has a policy in place to facilitate the reporting of alleged irregularities
within the Company as well as the protocols to deal with them. Both documents aimed at
implementing mechanisms that allow for the adequate reception, treatment and follow-up of
reports made, among other issues, on questionable accounting practices, corruption,
embezzlement and misuse of assets, and other possible violations to the Code of Ethics.
Additionally, it describes the different reporting channels available, including the Ethics Hotline,
consisting of a series of anonymous channels operated by an external provider, which makes it
possible both to guarantee the reporter’s anonymity and that the information reported meets
the highest standards of integrity and confidentiality. The entire process is supervised by the
Audit Committee, which, at least quarterly, is informed by the Internal Audit Department of all
the cases received, analysis carried out and resolutions adopted.
24. The Board of Directors ensures that formal mechanisms are in place to prevent and
deal with conflicts of interest. In the case of related-party transactions, the Board of
Directors approves a policy that sets out the role of each corporate body and defines
how to identify, manage and disclose transactions that are detrimental to the
company or only to certain investors.
The Issuer complies with the principles and applies the recommended practice. The Board of
Directors ensures that formal mechanisms are in place to prevent and deal with conflicts of
interest.
The Issuer has internal policies in place that reaffirm the guidelines of ethical conduct. In fact,
the Code of Ethics specifically includes a section that defines the expected behavior in relation
to conflicts of interest. The Code governs the conduct and relationships in the Issuer's workplace
and, to the extent that its principles are compatible with the nature and modalities of each
business relationship, such principles are also applicable to edenor’s relationship with
contractors, subcontractors, suppliers, consultants and other stakeholders.
With regard to related-party transactions, edenor’s Board of Directors, in accordance with the
provisions of the Law on Capital Markets, approves and reports to both the CNV as a "relevant
event" and the markets where the Issuer is listed, those related-party transactions that exceed
the established limits on the Company's shareholders equity. In compliance with the provisions
of the aforementioned Law, the Audit Committee issues an opinion on such transactions prior
to the treatment of the issue by the Board of Directors.
In addition, the Issuer discloses its agreements with related parties in the interim and annual
Financial Statements in accordance with current regulations in this regard and in compliance
with the provisions of section 72 of the Law on Capital Markets.
With the aim of ensuring that related-party transactions are conducted in pursuance of the
Company’s best interest and the equal treatment of all its shareholders, the Issuer complies with
the annual publication of its controlled and related companies through the Financial Information
Highway, detailing the degree of control and percentage interest held.
Additionally, the Issuer has an internal procedure in place for entering into contracts, which
includes the defined mechanism to identify related parties. This seeks to reasonably ensure that
"related-party" transactions are conducted on an arm’s length basis, for which purpose they
must be subject to this specific prior authorization and control procedure that is carried out
under the coordination of the Issuer’s Legal Affairs Department and which involves the
participation of both the Board of Directors and the Audit Committee.
Furthermore, the internal controls, the risk management and the internal audit activity are part
of the mechanisms to identify and avoid detrimental conflicts of interest, by means of specific
controls on such transactions.
Finally, the Audit Committee is responsible, among other duties, for providing the market with
full information on transactions in which there is a conflict of interest with members of the
corporate bodies or controlling shareholders and issuing a well-founded opinion on related-
party transactions in the cases provided by the Law.
G) SHAREHOLDER AND STAKEHOLDER PARTICIPATION
Principles
XIX. The company must give equal treatment to all the Shareholders. It must guarantee equal access
to non-confidential information that is relevant for decision-making at the company’s shareholder
meetings.
XX. The company must promote the active participation of all Shareholders based on appropriate
information, especially regarding the composition of the Board of Directors,
XXI. The company must have a transparent Dividend Distribution Policy aligned with the strategy.
XXII. The company must take into account the interests of its stakeholders.
25. The company’s website discloses financial and non-financial information, providing
timely and equal access to all Investors. The website has a specialized section to
address Investors’ inquiries.
The Issuer applies the recommended practice. In this regard, all shareholders are given equal
treatment, and mechanisms are established to guarantee equal access to non-confidential
information that is relevant for decision-making. For this purpose, the Issuer has a public access
website, where market, financial and non-financial information is gathered and disseminated,
providing access to all interested parties, investors and shareholders, as well as a channel that
allows them to interact with each other. The site not only provides relevant information on the
Company (Bylaws, economic group, composition of the Governing Body, financial statements,
Annual Report, etc.) but also gathers customer concerns in general.
As for investors, the Issuer has information mechanisms in place for them and a specialized area
to receive and manage their inquiries and concerns, which should not imply the disclosure of
confidential information or information not previously disclosed to the public. The website
contains the contact information of the Planning and Investor Relations Manager, who is in
charge of providing information and answering inquiries from potential investors, analysts and
shareholders.
Additionally, the Issuer has presence in social media (Facebook, Instagram, Twitter and
LinkedIn), through which it not only publishes relevant information on the organization but also
interacts with its followers.
The Entity guarantees that the information disclosed by electronic means complies with the
highest standards of integrity and confidentiality, seeking to preserve the data and information.
The systems used safeguard and protect the information and its reliability, having strong safety
mechanisms in place and complying with the data protection regulations that prevent
unauthorized persons from having access to, modifying, deleting and/or damaging the
information provided.
26. The Board of Directors must ensure that there is a process in place for the
identification and classification of its stakeholders and a communication channel for
them.
The Issuer complies with the principles and applies this recommended practice. In this regard,
the Board of Directors ensures that specific policies and procedures are in place for the
identification, classification, management and resolution of conflicts that may arise among the
members of the Managing Body, First-tier Managers and Supervisory Committee members in
their relationship with the Issuer or people related thereto.
The Company has specific procedures set out in the Code of Ethics, the Policy for entering into
Contracts and the Policy on Best Stock Market Practices that are applicable to the Board of
Directors, employees, contractors, subcontractors, suppliers, etc.
Furthermore, the Company ensures the existence of communication channels to be in contact
with its stakeholders. For this purposes, the stakeholders can access the Company's website
where they can find public information and express their concerns and make inquiries through
the Responsible and Planning and Investor Relations Manager, who is in charge of providing
information and answering the inquiries of potential investors, analysts and shareholders.
Additionally, and as already mentioned in the previous practice, the Issuer has official accounts
in the most popular social media (LinkedIn, Facebook, Twitter, YouTube) allowing customers to
inquiries through them, thereby maintaining a continuous
send their concerns and
communication with the community.
The Issuer also has a mobile application (edenordigital) for customers to carry out procedures
and make inquiries in a fast and simple way. Among the app’s functions, customers can visualize
their bills and pay them with a credit or debit card, make claims, calculate the approximate value
of their next bills, receive service interruption notices, request technical support, among other
procedures and operations. The tool provides a direct communication channel between the
Issuer and the customers.
27. The Board of Directors submits to the Shareholders, prior to the holding of a
Shareholders’ Meeting, a “provisional information package” that allows Shareholders
-through a formal communication channel- to make non-binding comments and to
share dissenting opinions on the recommendations made by the Board of Directors,
with the latter having to expressly pronounce on the comments received that it deems
necessary when the final information package is sent.
The Issuer applies the recommended practice as indicated below.
The Board of Directors, through the Corporate Secretary, ensures that the relevant and/or
required information is available to the shareholders, sufficiently in advance for decision-making
and proper analysis. In this regard, the Issuer complies with all the requirements set forth in the
applicable legal regulations; and observance of these forms to call for a Shareholders’ Meeting
is effective and does not undermine the principle of equal treatment to shareholders.
The Issuer's Shareholders are called to participate in Shareholders’ Meetings through the
publication of legal notices and in the CNV’s Financial Information Highway (FIH) in the form and
for the period set forth in the applicable current regulations along with the relevant
documentation and the recommendation of the Board of Directors as provided for in the Bylaws,
the Business Organizations Law and the Law on Capital Markets. In addition, for further
information purposes, the Issuer's website has an investor relations channel available, which
includes all types of relevant information (FFSS, filings before regulatory authorities, relevant
events, etc.) and where shareholders and/or the general investing public can also make
inquiries.
Additionally, the Issuer receives inquiries and/or concerns by telephone or email that are
channeled through the Legal Affairs Department. Such is the case of the shareholder ANSES that,
prior to each Shareholder Meeting, submits a Note to edenor containing questions and a request
for documentation regarding each item of the Agenda, which is submitted sufficiently in
advance.
To promote the active participation of all Shareholders based on appropriate information, the
Issuer's Bylaws sets forth that Ordinary and/or Extraordinary Shareholders’ Meetings will be
called by the Board of Directors or the Statutory Auditor in the cases provided for by law, or
when deemed necessary by any of them or when requested by the shareholders of any class
representing at least FIVE PERCENT (5%) of the share capital. In the latter case, the request will
specify the items to be dealt with and the Board of Directors or the Statutory Auditor will call
the Shareholders’ Meeting to be held within a maximum term of FORTY (40) days after the
receipt of the request. If the Board of Directors or the Statutory Auditor fails to do so, the
Shareholders’ Meeting may be called by the controlling authority or court order.
28. The company’s bylaws provide that Shareholders may receive the information
packages for Shareholders’ Meeting through virtual means and participate in
Shareholders’ Meetings through the use of electronic means of communication that
allow for the simultaneous transmission of sound, images and words, ensuring
compliance with the principle of equal treatment to participants.
Although they are not contained in the Company's Bylaws, the Issuer complies with the
application of the principles as it gives equal treatment to all the shareholders, guarantees equal
access to non-confidential information that is relevant for decision-making in the Company’s
Shareholders’ Meetings and promotes their participation in the Shareholders’ Meetings. As
already explained in previous practices, edenor facilitates the necessary means to keep a
permanent and fluid dialogue with its shareholders.
The Issuer calls the shareholders to participate in Shareholder Meetings through the means set
forth in both the Bylaws and current regulations, which are effective and do not undermine the
principle of equal treatment to shareholders.
Due to the widely known health emergency situation occurred in 2020, and in compliance with
the Mandatory and Preventive Social Distancing provided for by current regulations, and in
accordance with the provisions of General Resolution No. 830/2020 of the National Securities
Commission (CNV), that authorized the holding of remote shareholder meetings during the
period of the state of health emergency and restriction on free movement, even for those
issuers whose Bylaws do not have an explicit provision thereon, as is the case of the Company,
Shareholders’ Meetings in 2020 were held remotely by audiovisual electronic means, which
allowed for: a) the free accessibility of all the participants to the Shareholders’ Meeting; b) the
possibility to speak and vote at the Shareholders’ Meetings through the simultaneous
transmission of sound, images and words during the entire Shareholders’ Meeting, ensuring the
principle of equal treatment to all the participants; and c) the digital recording of the
development of the entire Shareholders’ Meeting and the preservation of a digital copy.
Furthermore, taking into account the good corporate governance practices and the current
regulatory framework, the Company expects to amend the Bylaws at the next Shareholders’
Meeting in order to make the holding of remote Board of Directors’ meetings possible,
incorporating the necessary technology.
29. The Dividend Distribution Policy is aligned with the strategy and clearly provides for
the criteria, frequency and conditions under which dividends will be distributed.
The Issuer complies with the principles, even though it does not have a Dividend Distribution
Policy in place. In this regard, and in compliance with this recommendation, the Issuer is still
currently analyzing the implementation of a Dividend Distribution Policy, taking for such purpose
into account the needs, the economic circumstances of the fiscal year, the statutory provisions,
the results of operations, the future capital requirements, the financial conditions and the
availability of funds. No dividends have been distributed since 2001, due to the fact that profits
were reinvested; therefore, to date, the issuer does not have such a Policy.
Nevertheless, the Board of Directors will prudently evaluate the possibility of making a proposal
for the distribution of dividends to its shareholders in each fiscal year, taking into account the
possibilities and the regulatory, legal and contractual limitations.